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22 February 2012
printUS-Russia: trading in controlled access zone
On Monday Russian President Dmitry Medvedev met with Max Baucus, chairman of the U.S. Senate Committee on Finance. According to the Kremlin's press office, the main topic discussed was the repeal of the Jackson-Vanik Amendment that for almost 40 years has seriously hindered the development of the Russia-American trade relations.
In general, the trade and economic relations between Russia and the U.S. are on the rise, believes Michael McFaul, the new U.S. Ambassador to Russia. On Monday he wrote in his blog: «The U.S. Ministry of Trade just published the figures summarizing the U.S. trade in 2011, and the data relating to the U.S. – Russia trade relations can be considered to be good news».
Over the year 2011 the trade volume between Russia and the U.S. reached a record level of USD 42.9 billion. American export grew by 39%, while import from Russia by 21%. «Some people are tempted to view the US-Russia relations as a zero sum game. These figures demonstrate how wrong this old time thinking is», says the diplomat.
At the same time McFaul underlines that after joining the WTO, Russia's trade with the rest of the world will inevitably grow. «American companies want to participate in this growth. However, in order to let American companies compete with other players on the Russian market on equal terms, the U.S. has to extend to Russia normal trade relations and terminate the application to Russia of the so called Jackson-Vanik Amendment”, points the diplomat. The U.S. Administration is working with the Congress to that effect, he informs.
By the way, that work began back in 1989.
Let us remind that in early 1970s the U.S. introduced the so called «Jackson-Vanik Amendment» that restricted trade relations with the U.S.S.R. because back then the Soviet authorities did not allow free emigration of Jews from the country. This Amendment was also applied to other countries that limited free emigration.
In 1989 after the issue of free emigration was resolved President Bush (the senior) during the Malta summit talks promised to Gorbachev to repeal that limiting Amendment for the first time. Afterwards, all U.S. presidents that followed made the same promise. However, the Amendment is still in place and is just being frozen on a regular basis. Meanwhile, the U.S. has repealed the Amendment towards China and the former USSR republics.
«These archaic schemes and barriers that were built during the old version of international relations without doubt are now hindering the development of our relations”, this assessment of the Amendment was given by prime-minister Vladimir Putin during his meeting with Ñhevron management.
There is a measure of common sense in this story. Russia and Israel already canceled entry visas between the two countries, while the Jackson-Vanik Amendment is still on the agenda between the two countries.
But the main thing is that the formal existence of the Amendment serves as an “acid test”. Its preservation means that the “normal trade relations” with Russia work on temporary basis and depend on the U.S. Administration’s will. Today they are freezing the Amendment, and tomorrow perhaps they won’t. Such uncertainty is not the best environment for doing business. And for Moscow it is yet another reminder of the discrimination.
On the other hand, this Amendment is a clear burden in the time when Obama's Administration is trying to raise the export potential of the U.S. economy at any cost.
«If the Congress does not pass the law to repeal the Amendment towards Moscow now when Russia is entering the WTO, the U.S. will not be able to get the benefits of that event. This puts many of our companies at a disadvantage compared to other countries. Unlike other WTO members, we will not be able to use the regular mechanisms provided by the WTO», said Robert Hormats, the Under Secretary of State, during the hearings in the Senate.
Let us add that both sides are interested in that. During various times in the history of bi-lateral trade there existed serious disagreements regarding the U.S. imports of rolled metal and mineral fertilizers from Russia. Periodically there were scandals regarding the U.S. exports of poultry meat to Russia.
Hormats stressed that «granting the status of normal trade partner to Russia is President Barak Obama's top priority». According to him, «The Congress can assist in this issue by repealing the Jackson-Vanik Amendment towards Russia before the summer».
It is believed that the Senate hearings on the trade with Russia will be scheduled for March, while the law on reestablishing permanent normal trade relations is likely to be introduced during the subsequent two months, says the Wall Street Journal.
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