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Senate Panel Approves Trade Relations With Russia

Wed July 18, 2012 - National Edition

WASHINGTON (AP) - A Russia trade bill that could double U.S. exports to Russia but complicate already frosty relations with the former Communist superpower advanced in the Senate on Wednesday.

Lawmakers rejected a provision that would have required the president to certify that Russia is no longer supplying arms to Syria.

The Senate Finance Committee combined the trade measure with a bill to punish Russian human rights violators.

Association of Equipment Manufacturers (AEM) President Dennis Slater released a statement praising the passage. "We are pleased to see the Senate Finance Committee Members recognize the urgency of the situation and act swiftly to remove this barrier between the United States and Russia," said Slater.

"Russia is currently the world’s 9th largest economy, and U.S. equipment manufacturers largely depend on the ability to have the same opportunities to benefit from normal trade relations as other countries," Slater continued. Currently, the U.S. agriculture and infrastructure sectors represent hundreds of millions of dollars in exports to Russia, but U.S. exporters pay tariffs applied at rates up to 25 percent. "Leveling the playing field for U.S. businesses and workers will propel our economy and create more jobs at home. AEM will continue to work with Congress to see that this legislation is sent to the President’s desk for signature without further delay," Slater concluded.

Getting the trade bill through Congress has been a top priority for business and farm groups, which see it as a jobs creator and a boost to the economy. "Without PNTR, U.S. companies and workers will be at a distinct disadvantage in the Russian market as our competitors in Europe, Asia and elsewhere begin to lock in sales and long-term contracts," said Caterpillar Inc. chairman and CEO Doug Oberhelman, who also chairs the Business Roundtable’s International Engagement Committee.

The committee’s unanimous vote to lift Cold War trade restrictions and establish permanent normal trade relations with Russia came against a background of strong objections to Russia’s poor human rights record, its threats against U.S. missile defenses in Europe, its failure to protect intellectual property rights, its discrimination against U.S. agricultural products and most recently its support for the Assad government in Syria.

Enacting permanent trade status is necessary if U.S. businesses are to benefit from the lowering of trade barriers that will take place when Russia enters the World Trade Organization next month.

Finance Committee Chairman Max Baucus, D-Mont., said current U.S. exports to Russia, about $9 billion a year, could double in five years if trade relations are normalized.

“There is no time to waste. America risks being left behind," Baucus said. "If we miss that deadline, American farmers, ranchers, workers and businesses will lose out to the other 154 members of the WTO that already have PNTR (permanent normal trade relations) with Russia." U.S. imports from Russia last year were four times the export level.

The trade bill has however struggled to gain momentum because of poor relations between the two countries.

"It is with some trepidation that we undertake this task," said Sen. Orrin Hatch of Utah, top Republican on the committee. "Despite President Obama’s reset policy, U.S.-Russian relations remain rocky at best."

The bill only advanced to a committee vote after Baucus agreed to link it to legislation, pushed by Sens. Ben Cardin, D-Md., and Jon Kyl, R-Ariz., that imposes sanctions such as visa denials and asset freezes on Russian government officials involved in human rights violations. The legislation, which has sparked strong criticism from Russian officials, specifically targets those involved in the case of Sergei Magnitsky, a lawyer who died in a Russian jail in 2009 after allegedly being subject to torture.

Sen. John Cornyn, R-Texas, proposed an amendment stating that the legislation would not go into effect until the president certifies that Russia is no longer supplying arms to Syria. "If it’s important to vindicate the rights of a single person," he said, referring to Magnitsky, "how much more compelling is it" to ensure that Russian arms aren’t being used to kill thousands of Syrian civilians. It was defeated, with opponents saying withholding permanent trade status would only hurt U.S. businesses, not Russia.

How to proceed with the trade issue has divided both parties. Last month Hatch and seven other Finance Committee members sent Baucus a letter listing the many troubling aspects of U.S.-Russia relations and questioning whether Russia would comply with WTO findings when disputes arise. But earlier this week 73 House Republican freshmen wrote President Barack Obama saying that "we will only hurt ourselves and lose out on economic opportunities and needed jobs" if full trade relations with Russia are not established.

It’s a "Hobson’s choice," said Sen. Mike Crapo, R-Idaho, at Wednesday’s committee meeting. By moving to help U.S. exporters Congress was put in the situation of rewarding the bad behavior of the Moscow government, he said.

While adding the Magnitsky provision to the bill, the measure eliminates another human rights act that has been the main stumbling block to permanent normal trade relations.

The bill repeals the 1974 Jackson-Vanik act that tied trade with the then-Soviet Union to Moscow’s allowing Jews and other minorities to leave the country. While Jackson-Vanik has long outlived its purpose, it has remained on the books, a mark of the continued difficult relations between the two countries.

It appears unlikely that Congress can act on the trade bill before Russia formally enters the WTO. Congress has only two more weeks before it takes off for its August recess, time likely to be taken up by election-related tax and spending bills.

On the House side, Ways and Means Committee Chairman Dave Camp, R-Mich., welcomed the Senate’s action and said he intended to introduce a bill in the next few days. He said he was working with the White House to find a Democratic co-sponsor so the bill could move through his committee on a bipartisan basis.

The bill also establishes permanent normal trade relations with Moldova. Baucus said the former Soviet republic, which joined the WTO in 2001, is the only WTO member that does not have permanent trade status with the United States.

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