The permanent normal trade relations (PNTR) would repeal the 1974 Jackson-Vanik Amendment ahead of Russia expectedly joining the World Trade Association later this year.
Section 402 of Title IV of the Trade Act of 1974, the Jackson-Vanik amendment, denies eligibility for NTR status as well as access to US government credit facilities as long as the country denies its citizens the right of freedom-of-emigration.
Senate Finance Committee Chairman, Max Baucus, International Trade Subcommittee Ranking Member, John Thune, Foreign Relations Committee Chairman, John Kerry and Armed Services Committee Ranking Member, John McCain introduced the legislation earlier this month.
Congress approval needed
The bill still needs to be passed by Congress and is expected to be put to a vote before the August recess.
The steps are required for American businesses to fully benefit from Russia’s expected World Trade Organization (WTO) accession this summer.
Only two countries, Cuba and North Korea, do not have Normal Trade Relations (NTR) with the US.
William R. Carteaux, president and CEO of SPI: The Plastics Industry Trade Association, issued a statement on behalf of its members and the US plastics industry, adding it will allow the manufacturing industry to take full advantage of Russia’s entry into the WTO.
“Without this change to our trade laws, our global competitors would be the only beneficiaries of Russia’s WTO accession and US manufacturing would miss out on a much needed boost to job creation and economic growth that a level playing field in the world’s ninth largest economy would bring.
“Between 2005 and 2010, total bilateral trade between the US and Russia doubled. Assuming a strong Russian economy, US merchandise exports to Russia could double following WTO accession from $9bn (in 2008) to $19bn.
“Since 2000, US plastics exports to Russia have increased by almost 700%. In joining the WTO, Russia has agreed to bind tariffs on manufactured goods at an average rate of 7.3%, down from the current average rate of 9.5%, so I see tremendous potential for our industry in Russia.”
Carteaux urged quick Congressional action to pass the proposed legislation, to ensure there was detrimental effect to market opportunities for manufacturers from any further delays.
Ecolab welcome move
In a statement posted on their website, Ecolab, who do business in Russia through their subsidiary Nalco, welcomed the bipartisan legislation.
The statement said: “This legislation is necessary to ensure that US companies are on a level playing field when competing with other global companies in this important market.
“…this legislation is vital for US companies to realize the full potential of Russia's WTO commitments.
“We support the passage of this legislation, and applaud Senators Baucus, Kerry, Thune and McCain for their leadership on this important issue.”
According to a document from the Congressional Research Service, Russia was the 31st largest export market for products including meat and machinery parts and 14th largest source of imports for the US in 2011.
“The surge in the value of imports is largely attributable to the rise in the world prices of oil and other natural resources—which comprise most of US imports from Russia—and not to an increase in the volume of imports.”
US imports increased more than 244%, from $7.8bn to $26.8bn from 2000 to 2008, and exports rose 343%, from $2.1bn to $9.3bn, it added.