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US exports to Russia to rise on WTO entry

By: | at 08:00 PM | Channel(s): International Trade  

U.S. goods exports to Russia could double to $19 billion after Russia joins the World Trade Organization, according to a report urging the U.S. Congress to permanently normalize trade with the former Cold War enemy.

But U.S. exporters could lose sales in Russia if Congress refuses to grant “permanent normal trade relations” (PNTR) to keep pressure on Moscow to improve its human rights record or address other concerns, the Peterson Institute for International Economics said in a policy brief.

Consequently, “the U.S. congressional vote on extending permanent normal trade relations could set the tone for economic relations between the United States and Russia for the next decade to come,” the report said.

With Russia hoping to finish its accession process this year, U.S. lawmakers could soon face a vote on the issue. The Obama administration has made approval of PNTR one of its trade priorities for 2011.

President Barack Obama, as part of his efforts to improve relations with Moscow, has pushed Russia to finish its bid to join the WTO after more than 17 years of negotiation, and he is pressing Congress to permanently normalize trade between the two countries.

That would require freeing Russia from the provisions of the so-called Jackson-Vanik amendment, a 1974 law that tied normal trade relations with Communist countries to rights of religious minorities to emigrate freely.

Russia’s WTO entry would create new export opportunities for U.S. poultry, pork and beef as well as other food goods such as wine, fruits and nuts, the report said.

U.S. drug and medical device manufacturers also should profit from Russia’s membership in the WTO, as should exporters of heavy industrial machinery such as tractors and oil and natural gas field equipment, the report said.

U.S. services companies in sectors ranging from telecommunications to finance to express delivery also should see increased business in Russia, it said.

The United States established permanent normal trade relations with China and Vietnam as those countries joined the WTO. In the case of China, the measure followed years of debate under the Clinton administration about China’s human rights record.

WTO Rule
Refusing to grant permanent normal trade relations to Russia would put the United States at odds with a WTO rule requiring members to “unconditionally” provide all other members the same market access.

Russia could respond by denying U.S. farmers and companies the market-opening benefits of its accession to WTO, putting them at a disadvantage to European, Chinese, and other competitors eager for new export opportunities.

Many members of Congress would like to see Russia join the WTO but are wary of permanently normalizing trade relations until they see the final details of the deal.

Concerns about Moscow’s record on human rights, its repression of political dissent and its commitment to democracy are also expected to figure into the debate.

U.S. Trade Representative Ron Kirk said on Wednesday the administration understands those concerns but wants to have an “adult conversation” with lawmakers about the consequences of not approving permanent normal trade relations. (Reuters)