December 05,2012

Press Contact:

Julia Lawless, Antonia Ferrier, 202.224.4515

Hatch Calls on Senate to Pass Bill to Grant Russia Permanent Normal Trade Relations

WASHINGTON – In a speech on the Senate floor today, U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, outlined the benefits of bipartisan legislation to grant permanent normal trade relations (PNTR) to Russia and called on his colleagues to support the Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012 (H.R. 6156), which is expected to be voted on in the Senate this week.

“Today, Congress will once again lead the way to help shape the future of U.S.-Russian relations,” said Hatch, whose Committee has jurisdiction over international trade policy.  “Approval of this bill will help establish a framework for addressing the myriad economic problems we face with Russia’s government. If the Administration uses these tools effectively, we will see the fruits of our efforts as we one day work side-by-side with a Russia free from corruption and in full compliance with its international obligations.”

Below is the text of Hatch’s full speech delivered on the Senate floor today:

Mr. President, we will soon vote on H.R. 6156, the Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012.  The trade elements of this bill are identical to legislation which passed the U.S. Senate Finance Committee by unanimous vote on June 19th, 2012.  The bill repeals the application of the Jackson-Vanik amendment to Russia and Moldova, which will enable U.S. workers and job-creators to fully benefit from Russia and Moldova’s accession to the World Trade Organization.  The bill will also put into place new tools to help stop human rights abuse and battle systemic corruption within Russia.  

After 18 years of hard fought negotiations under both Republican and Democratic Administrations, President Obama finalized the terms of Russia’s accession to the WTO on November 10, 2011.  Russia was invited to join the organization on December 16, 2011 and officially joined in August of this year.  Now that Russia is a member of the WTO, for our workers to benefit, Congress really has no choice but to extend permanent normal relations to Russia through repeal of the application of the Jackson-Vanik amendment.  

Russia is now a member of the WTO.  But they are under no obligation to extend the economic benefits of their membership to the United States unless we have normal trade relations.  Simply put, if Congress does not act, our workers and exporters will be at a serious disadvantage in trying to export their goods and services to the Russian market — and that will cost us jobs here at home.   Given our weak economic recovery, it is critical that Congress does everything it can to help U.S. workers compete.

There are many economic benefits to Russia’s WTO accession.  Under the terms of its accession, Russia must cut tariffs on manufactured products, reduce duties on farm products, open its service markets to U.S. firms, meet international intellectual property rights standards, and reduce customs clearance fees.  If Russia fails to meet any of its commitments, Russia will be subject to WTO dispute settlement proceedings.

Russia is an attractive market for American exporters.  It is the world’s 11th largest economy with more than 140 million consumers, and the last major economy to join the World Trade Organization.  American companies and workers must compete on a level playing field with their foreign competitors in Russia to succeed.  

When President Obama first asked Congress to remove Russia from long-standing human rights legislation and grant permanent normal trade relations for Russia he suggested that we do it unconditionally.  Even before Russia joined the WTO, President Obama and his team argued that Congress should quickly pass a clean bill.  Given the myriad problems we have with Russia, it is hard for me to understand this position. President Obama and his team appeared almost manic in their attempts to avoid offending President Putin and his government, or doing anything at all to upset their failed reset policy.  

Fortunately, just as Congress did in 1974 when they created Jackson-Vanik, we insisted on more.  Working side-by-side with our Senate and House colleagues, we drafted a bill which serves our economy and replaces the application of the Jackson Vanik amendment with policies more appropriate for the realities in Russia today.  We should all be justly proud of our bipartisan effort. Basically, the bill we will vote on fills many of the gaps in President Obama’s policy toward Russia.  

For example, rather than ignore continuing human rights abuse and corruption in Russia, my friends and colleagues, Senators McCain and Cardin, joined together with many others to craft a bill to help combat deep-rooted and institutionalized corruption within Russia.  This bill became the Sergei Magnitsky Rule of Law and Accountability Act.  By the end of this debate, the American people will be intimately familiar with the name Sergei Magnitsky.  Briefly, Sergei was a Russian tax lawyer, investigated by the Russian government for alleged tax evasion and fraud.  In reality, Sergei was targeted by government officials for his role in uncovering tax fraud and corruption within the Russian government.  Sergei was arrested and held for 11 months without trial.  While in prison, Sergei was subject to mistreatment and torture, and was eventually beaten to death.  Unfortunately, such sad stories are all too common in Russia today.

Rather than tolerate such injustice, my friends, Senators McCain and Cardin, introduced legislation to impose sanctions on individuals responsible for, or who benefitted financially from, the detention, abuse, or death of Sergei Magnitskty, as well as other human rights abusers.  Their efforts resulted in the inclusion of provisions in this bill which impose visa restrictions and asset freezes on those involved in human rights abuses in Russia.  

This will be a powerful new tool to battle corruption within Russia, as corrupt Russian officials will no longer be able to travel to the United States or hide their ill-gotten gains in many western institutions.  The Magnitsky Act represents an admirable replacement of the Jackson Vanik Amendment to address the situation in Russia today.  President Obama opposed efforts to include their provisions, concerned that holding Russian government officials accountable for their crimes might offend President Putin and undermine the Administration’s ill-conceived reset policy.  I am proud that my House and Senate colleagues stood firm on the side of justice and demanded that these provisions be included.  Jackson-Vanik served its purpose with respect to Russia and should be revoked, but in its place we should respond to Russia’s continued corruption and human rights violations.

There were many other gaps in President Obama’s Russia policy.  To help fill these gaps, I worked with my Senate Finance Committee colleagues to add provisions to the Permanent Normal Trade Relations bill introduced by Chairman Baucus that address a number of these issues.  First, I worked with Senator Kyl to develop language to further advance anti-corruption efforts in Russia by requiring the U.S. Trade Representative and the Secretary of State to report annually on their efforts to promote the rule of law and U.S. investment in Russia.  We also included a provision to assist U.S. business, especially small businesses, to battle corruption in Russia by requiring the Secretary of Commerce to devote a phone hotline and secure website to allow U.S. citizens and business to report on corruption, bribery and attempted bribery in Russia and to request the assistance of the U.S. Government if needed.

I was also highly disappointed that the Administration did not finalize an SPS equivalency agreement with Russia before agreeing to let them join the WTO.  Under an SPS equivalency agreement, Russia would recognize our food safety standards as equivalent to its own, thereby reducing costs and burdensome paperwork on U.S. exporters.  Today’s bill requires the Trade Representative to continue efforts to negotiate a bilateral SPS equivalency agreement with Russia.  In an effort to apply continued pressure on the Administration to resolve these problems, we included language requiring the Trade Representative to report to Congress annually on Russia’s implementation of its WTO sanitary and phyto-sanitary obligations.  

Intellectual property rights protection in Russia remains poor.  To make sure that Russia meets its commitments in this area, we included language requiring the Trade Representative to report annually on Russia’s compliance with its WTO intellectual property rights obligations.  As part of its accession package, Russia committed to joining the WTO Information Technology Agreement.  Once they are a member, this agreement will allow a number of additional U.S. high technology products to be exported to Russia duty-free.  Unfortunately, Russia has to date failed to fully live up to this commitment, even though Russia became a member of the WTO in August.  To ensure that the Administration holds Russia’s feet to the fire, the Trade Representative must report annually on Russia’s compliance with this commitment as well as its commitment to join the WTO Government Procurement Agreement.

When Ambassador Ron Kirk testified before the Committee in June, he committed to continue efforts to develop an intellectual property rights action plan which implements Russia’s obligations under a 2006 bilateral IPR agreement with the U.S.  That agreement goes beyond Russia’s WTO commitments, requiring among other things that Russia take enforcement actions against Russia-based websites posting infringing content, implement the World Intellectual Property Organization copyright treaty and performances and phonograms treaty, and enact a system of data exclusivity for pharmaceuticals.  I understand the Administration is working on completing that action plan quickly, and that our workers will soon be able to benefit from the agreement reached in 2006.   To ensure that is the case, this bill requires the Administration to continue efforts to finalize that agreement.

Russia’s WTO commitments go far beyond intellectual property rights.  Given President Obama’s past reluctance to hold Russia accountable for its actions, I wanted to make a tool available to Congress and the American people to put pressure on the Administration to make sure that Russia lives up to its international commitments.  So we included language which provides an opportunity for public comment and hearings on Russia’s compliance with its obligations.  If there are areas where Russia is not in compliance with its obligations, the Administration is required to develop an action plan to address them, and then provide an annual report on their enforcement efforts to bring Russia into compliance.  I believe this package of modifications vastly improves the bill.  The Trade Representative’s General Counsel apparently agrees stating during Congressional testimony that this bill provides the strongest package of enforcement measures for us at USTR to move forward and ensure full compliance once Russia joins the WTO.

Mr. President, it was over thirty years ago that Senator Henry Jackson and Congressman Charles Vanik stood up to their President and demanded that the Administration address policies that denied individuals, especially Jews, the right to emigrate from Russia and other communist nations.  Their work became known as the Jackson-Vanik amendment.  The policies embodied in that amendment helped create the environment for literally hundreds of thousands of Jews to emigrate from the former Soviet Union, many of them to Israel.  

Jackson Vanik served its purpose in Russia, but today we act to address the issues on the ground in Russia as we debate this bill.  Today, Congress will once again lead the way to help shape the future of U.S.-Russian relations.  Approval of this bill will help establish a framework for addressing the myriad economic problems we face with Russia’s government.  If the Administration uses these tools effectively, we will see the fruits of our efforts as we one day work side-by-side with a Russia free from corruption and in full compliance with its international obligations.  Mr. President, I urge my colleagues to join me in support of this bill.