One of the last vestiges of the Cold War is set to end soon as Congress prepares to extend permanent normal trade relations (PNTR) to Russia and end the Jackson-Vanik Amendment that restricted trade for so long. Jackson-Vanik was put in place in 1974 to pressure countries that did not allow free emigration, in particular the Soviet Union and their refusal to allow Jews to emigrate freely. The law served its purpose at the time but it has been an anachronism for the last couple decades.
Russia will be joining the WTO next month after a full 18-year process of negotiating its accession to the global trade body. As part of their accession, Russia will reduce or eliminate thousands of tariffs, eliminate dozens of quotas, rewrite laws on trade and subject its decisions on trade issues to impartial international dispute settlement. But the U.S. will only benefit from this if we pass the PNTR legislation by August. Until that legislation is passed, Russia will be under no obligation to give the U.S. the same trade benefits it will offer to every other of the 154 WTO members.
Senator Max Baucus (D-MT) makes the case:
The economic case for PNTR is clear. Russia is the seventh-largest economy in the world. It is the largest economy currently outside the WTO. Regardless of what we do here in Congress, Russia will join the WTO this summer. We have a choice. If we do nothing, the 154 other countries in the WTO will gain new access to Russia’s growing market. We’ll be left on the sideline. American workers, businesses, farmers and ranchers will lose out to their competitors in China and Europe. But if we do pass Russia PNTR, U.S. exports to Russia are projected to double within five years, and that means thousands of new jobs here at home.The economic benefit to us could be pretty substantial. Russia only accounts for about 1% of our total goods exports, but it’s one of the fastest growing markets. So far this year our exports are up 37% compared to last year. Among our top 40 export markets, that’s our third fastest growing market, just after the UAE and Venezuela (say what you want about Chavez, he knows where to get the good stuff). When Russia starts lowering their trade barriers our exports are going to go nowhere but up.
Our top exports to Russia are things like aircraft, drilling equipment, vehicles, tractors, and turbines, the kinds of large-scale high-tech manufacturing we still do very well in the U.S. Doubling our exports to Russia as is being predicted means adding thousands of new manufacturing jobs in these industries in coming years.
There is still some opposition in Congress to extending PNTR to Russia. Senator Jon Kyl (R-AZ) and others argue we need to hold back in order to keep some leverage over Russia for political bargaining and keep the pressure on Russia to improve its human rights situation.
Hillary Clinton points out why that’s counter-productive.
As the demonstrations across Russia over the past six months make clear, the country's middle class is demanding a more transparent and accountable government, a more modern political system, and a diversified economy. We should support these Russian efforts.
When Russia joins the WTO, it will be required—for the first time ever—to establish predictable tariff rates, ensure transparency in the publication and enactment of laws, and adhere to an enforceable mechanism for resolving disputes. If we extend permanent normal trading relations to Russia, we'll be able to use the WTO's tools to hold it accountable for meeting these obligations.
Some argue that continuing to apply Jackson-Vanik to Russia would give us some leverage in these areas of disagreement. We disagree—and so do leaders of Russia's political opposition. They have called on the U.S. to terminate Jackson-Vanik, despite their concerns about human rights and the Magnitsky case. In fact, retaining Jackson-Vanik only fuels more anti-American sentiment in Russia.This one’s an easy win for the U.S. and American workers, and it's the best thing we can do to improve things in Russia right now, too.
Russia's membership in the WTO will soon be a fact of life. Failing to extend permanent normal trading relations will not penalize Russia, nor will it provide a lever with which to change Moscow's behavior. It will only hurt American workers and American companies. By extending those trading relations, we can create new markets for our people and support the political and economic changes that Russia's people are demanding. These reforms will ultimately make Russia a more just and open society as well as a better partner over the long term for the U.S.