U.S. May Repeal Jackson-Vanik Amendment

Once Russia joins the World Trade Organization, if Jackson-Vanik remains on the books, the U.S. will violate WTO rules. WTO members must grant each other permanent normal trade relations. Jackson- Vanik requires normal trade relations be granted to Russia only on an annual basis.

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RENEE MONTAGNE, HOST:

And anyone listening in on yesterday's debate at the Senate Foreign Relations Committee, you might have wondered whether the Cold War was really over.

At issue, whether to repeal trade a law aimed at pressuring the Soviet Union to allow Jewish emigration.

As Peter van Dyk reports from Moscow, remarkably it's a law that continues to have serious trade implications even today.

PETER VAN DYK, BYLINE: Politics have always played a role in U.S. business dealings with Russia. Usually it's just background noise for the American companies working here. But with Russia about to join the World Trade Organization, the talk about the 1974 Jackson-Vanik Amendment has become too loud to ignore.

ANDREW SOMERS: Under Jackson-Vanik, the president of the United States must certify to Congress every year that Russia permits free emigration.

DYK: Andrew Somers is the president of the American Chamber of Commerce in Russia.

SOMERS: The problem, aside from the rather ludicrous ritual that is going on, is that once Russia is a formal member of the WTO, the U.S., if Jackson-Vanik remains on the legal legislative books, the U.S. will be violating WTO rules.

DYK: That's because all WTO members must grant each other permanent normal trade relations. Jackson Vanik requires that normal trade relations be granted to Russia only on an annual basis. After Russia's accession to the WTO, the U.S. will lose out.

SOMERS: Right now, the average tariff across all sectors for importing goods into Russia is roughly 10 percent; analysis indicates that after accession tariffs will drop to about seven and a half percent. U.S. companies will not get the benefit of that seven percent, they'll stay at the 10 percent.

DYK: Somers says in the short term Russia joining the WTO will be better for the U.S. than for Russia. Unless, he warns, Jackson-Vanik remains on the books.

SOMERS: Congress will be giving European and Asian companies, and Latin American companies, a competitive advantage over their own company constituents.

DYK: The U.S. push for Russia to join the WTO was part of President Obama's reset with Moscow.

Art Franczek, president of the American Institute of Business and Economics here, knows repealing Jackson-Vanik could be a tough sell.

ART FRANCZEK: A lot of companies in the U.S. are going to approach their congressmen and say, look, we're going to lose X amount of million dollars a year, and you've got lots of congressmen from Arkansas that does chicken, from Montana who does beef, are going to get a lot of pressure on them to vote for it.

DYK: Opponents of repealing Jackson-Vanik, like Republican Senator Jon Kyle of Arizona, say Russia still falls short on human rights and the rule of law. But Russian opposition politician Boris Nemtsov - no friend of the Kremlin - says Jackson-Vanik is irrelevant; post-Soviet Russia allows free emigration. What's needed now, he says, is a bill to target corrupt Russian officials.

BORIS NEMTSOV: I think that replacement is a real chance, first of all, to show that you are ready to support Russian people, and you are against corruption and you are against murders.

DYK: The murder he was referring to was the death of Sergei Magnitsy, a Russian lawyer who was arrested after accusing officials of corruption and who later died in police custody. A proposed bill named for him would sanction Russian officials guilty of human rights violations.

For NPR News, I'm Peter van Dyk in Moscow.

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