A U.S.-Russia bilateral deal is one of the last hurdles to Russian membership in the WTO, which sets the parameters for global trade. Russia, the largest economy outside the WTO, has said it hopes to join within months.
But U.S. Republicans trying to claw back the legislative agenda after mid-term election gains could stall the bilateral deal by refusing to scrap the 1974 Jackson-Vanik amendment, the head of the American Chamber of Commerce in Moscow told Reuters.
"The administration would like assurances from Congress that if the president signs the WTO agreement, that Congress will simultaneously or shortly thereafter... abrogate Jackson-Vanik as it applies to Russia," Andrew Somers said an interview.
The White House needs Congress to repeal Jackson-Vanik before Russia joins the WTO, because failure to do so would prevent U.S. companies from enjoying the Russian tariff reductions that membership would bring, he said.
The White House is unlikely to push Jackson-Vanik until higher priority legislation is passed, such as ratification of the New START nuclear arms treaty with Russia and other trade deals, Somers said. Delays to them would delay WTO too, he said.
Speaking after several days of talks with administration officials in Washington, he said the White House appeared quietly confident that the legislative logjam in the Senate was starting to clear, opening the way for a WTO deal.
Geopolitics Trumps Trade
But Somers said Republicans may use discussion of Jackson-Vanik to register broad concerns about Russia given accusations that President Barack Obama is being too soft on the Kremlin.
"There are several politicians who have said we're going to make this an issue on Russia, not on the economic issues. Human rights, threats to neighbours, these kind of issues will be raised by those who fear Russia. They will try to steer the debate away from the economics and toward the geopolitics."
Jackson-Vanik tied normal trade relations with the Soviet Union to the right of Jews and other religious minorities to emigrate freely. Russia has been in compliance since 1994.
Russia has long railed against the amendment, which Prime Minister Vladimir Putin last year described as an anachronism used "to help solve narrow, selfish ... problems".
Somers predicted Jackson-Vanik would be repealed by mid-2011, with Russia gaining WTO membership late next year.
But if the U.S. administration fails to dispose of Jackson-Vanik by next summer, the political equation will start to change as 2012 presidential elections approach in both Russia and the United States, shifting priorities.
The trade issues, which U.S. Trade Representative Ron Kirk said last week were 95 percent solved, are less likely to delay WTO, Somers said, citing signs that Georgia, a U.S. ally that could block Russian membership, is more open to a deal.
The Kremlin, seeking to reduce Russian reliance on natural resources, says WTO membership would improve access to global markets for its goods. The World Bank has estimated that Russia, by entering the WTO, could increase gross domestic product by as much as 11 percent in the long term.
But Somers said the main benefit would be a boost to Russia's image among U.S. investors and multinationals.
"It's really more the geopolitics than tariffs. Business in the U.S. feels that once Russia is in the WTO it will be more open to world trade, more open to investment," he said.
WTO entry, combined with the Kremlin's drive to modernize Russia's economy, could double U.S. trade and investment in Russia over five years, said Somers.
But the impetus behind the deal for Obama is a farther-reaching wish to anchor Russia-U.S. relations just as they have created a foundation for U.S.-China ties, he said. (Reuters)
