Washington Notebook: Congress drops the ball on Russia PNTR

   Once again the hyper-partisan Congress has failed to act on important legislation.
   The issue this time is Permanent Normal Trade Relations (PNTR) for Russia, which would help spur U.S. exports to the seventh largest economy in the world.
   U.S. businesses are big-time frustrated that Congress didn’t vote on giving most-favored nation trading status to Russia during a short session this month before lawmakers adjourned to head home and campaign for the November election.
   Russia is ready to slash tariffs on most goods by more than half, which would make U.S. products more affordable for Russia’s 140 million consumers. The lower tariffs were a condition for Russia’s accession to the WTO. Other countries are taking advantage of the lower duties, but U.S. businesses will continue to face an uphill sales battle until Congress waives a 38-year-old human rights law aimed at putting economic pressure on the former Soviet Union for harsh emigration restrictions on Soviet Jews. 
   Russia began allowing free emigration in 1991, but the so-called Jackson-Vanik amendment has remained on the books. Each year the U.S. president has certified that Russia meets the law’s conditions to be eligible for full trading rights. Under WTO rules trade must be unconditional if a country wants the benefits of the WTO’s favorable rules, which gives Russia the right to hold back on its obligation to lower tariffs on U.S. goods. And Russia doesn’t have to abide by other rules of the international trading system that apply to intellectual property rights, information technology, the use of science-based food-safety standards and to binding WTO dispute settlement.
   Despite its size, Russia is only the United States’ 20th largest trading partner. 
   U.S. exports to Russia account for only 1 percent of total exports. But last year, U.S. exports to Russia increased 40 percent, more than twice as fast as overall export growth. In April, U.S. goods exports to Russia reached a record $1 billion, according to the Commerce Department.
   The tragedy of this situation is that PNTR has strong support from Republicans and Democrats and in both houses of Congress. 
   “A vote to extend PNTR is not a favor to Russia. It is a vote to create and sustain jobs in the United States,” William J. Burns, deputy secretary of state, said in a Sept. 6 speech before the U.S. Chamber of Commerce in Washington.
   Who knows the exact reasons why Congress wasn’t able to move on the Russia trade bill. There were procedural issues to overcome in a packed legislative calendar and challenges reconciling a parallel human rights bill seeking to freeze the assets of human rights violators in Russia after an anti-government activist was murdered there earlier this year.
   Business groups are now pleading with Congress to pass PNTR when lawmakers return to Washington after the election for a “lame-duck” session. The prospects of a vote are anybody’s guess because Congress has so many other issues to deal with that it procrastinated on during the year, such as extending an important intelligence-gathering authority and certain welfare programs, shoring up the U.S. Postal Service’s finances, a farm bill, the debt ceiling, a variety of expiring tax rates, a continuing resolution to keep government funded for the rest of the fiscal year because of inaction on appropriations bills, and the looming cliff of automatic spending cuts unless the legislature votes on an alternative for the deficit.
   “The United States cannot afford further delay on this critical opportunity to help ensure that U.S. manufacturers, service providers, farmers and workers remain competitive in Russia’s growing market,” Business Roundtable President John Engler said in a statement.
   The Business Roundtable is an association of CEOs from leading U.S. companies.
   The Coalition for U.S.-Russia Trade, which includes the Business Roundtable and the U.S. Chamber of Commerce, wrote the Senate and House leadership last week seeking their support to address Russia trade as soon as possible after the election.
   At the U.S. Chamber, Undersecretary of Commerce Francisco Sánchez noted the aerospace industry exports hundreds of millions of dollars worth of aircraft and parts to Russia each year, but will compete at a distinct disadvantage with foreign companies in that nation.
   Other companies impacted include General Electric, Caterpillar and farm equipment maker John Deere, he said. GE, the largest foreign manufacturer operating in Russia, could triple sales in Russia by 2020 with PNTR. Caterpillar has exported $2 billion in products to Russia during the last five years and could sell even more with greater market access, which would spur hiring in its U.S. plants. 
   Passing PNTR “is a no brainer. The global economy moves quickly. And we can’t afford to leave any opportunities on the table. The potential of trade with Russia on the basis of PNTR is great, impacting a wide-range of sectors and companies,” he said. – Eric Kulisch