Financial Times
June 12, 2012

Moscow trade move on US agenda

Momentum is growing in Congress for legislation to normalise US trade relations with Russia in connection with its looming accession to the World Trade Organisation.

A bipartisan group of influential senators on Tuesday introduced a bill that would grant “permanent normal trade relations” status to Russia, calling for fellow lawmakers to approve the legislation over the next two months.

The bill – sponsored by Max Baucus, the chairman of the Senate finance committee – would also repeal the Jackson-Vanik amendment, a provision of US law designed in the 1970s to restrict trade with countries that restrict emigration.

“Jackson-Vanik served its purpose during the cold war, but it’s a relic of another era that now stands in the way of our farmers, ranchers and businesses pursuing opportunities to grow and create jobs,” said Mr Baucus. “We owe it to American workers and businesses to enable them to take advantage of the doors opening in Russia.”

The move comes amid persistent concerns harboured by many US lawmakers about Russia’s foreign policy – particularly with regard to Syria – as well as the pace of political and economic reforms, and human rights in the country.

In fact, Mr Baucus said he planned to introduce an amendment to the PNTR legislation called the “Magnitsky” bill – which is opposed by Russia – allowing the US to freeze assets and deny entry to Russian officials deemed responsible for human rights abuses.

The Obama administration has said it would prefer a “clean” bill, not tying PNTR with the Magnitsky rule, but nonetheless “welcomed” the introduction of the legislation in the Senate. “We will continue to work with Congress so that Americans can reap the full benefits of Russia’s WTO membership,” said Ron Kirk, US trade representative.

But despite the bipartisan move in the Senate, and strong support from corporate America, which has intensified its lobbying efforts in favour of PNTR with Russia, there will be signs of unease in parts of Congress.

Eight Republican members of the Senate finance committee on Tuesday sent a letter to Mr Baucus outlining “several important concerns” that still needed to be addressed.

These included the suppression of public protests, the threat of a Russian military officer to destroy US missile sites in eastern Europe, its support of the Syrian regime, and – on the economic front – the senators cited Russia’s history of protectionism, violation of intellectual property rights, and unresolved expropriations.

“We believe it will be necessary to satisfactorily address these and other issues if Congress is to successfully navigate a path toward granting PNTR to Russia,” said the letter, led by Orrin Hatch, the Utah senator.

But in a briefing with reporters on Tuesday, John Engler, the former Republican Michigan governor and president of the Business Roundtable, said US companies in Russia risked being put at a competitive disadvantage through higher tariffs and limited trade enforcement rights if PNTR were not approved. Punitive measures would do little to “pressure” the government.

A key voice on the issue could be Mitt Romney’s, the Republican nominee for president, who has labelled Russia “without question our number one geopolitical foe”.

An adviser to Mr Romney declined to comment on his stance regarding PNTR with Russia, but he is expected to appear before an audience of corporate lobbyists and executives on Wednesday in Washington and may have to clarify his views.

The bill presented on Tuesday was also co-sponsored by John Kerry, the chairman of the Senate foreign relations committee, John McCain, the top Republican on the Senate armed services committee, and John Thune, a South Dakota senator who is considered a possible vice-presidential pick for Mr Romney.

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