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US Cold War trade rule stays as Russia joins WTO

24 august 2012, 12:23
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Russian activists attending a rally against the country's entry to the World Trade Organisation. The sign reads: "If we enter WTo, we'll be eating GMO". ©AFP
Russian activists attending a rally against the country's entry to the World Trade Organisation. The sign reads: "If we enter WTo, we'll be eating GMO". ©AFP
The Obama administration welcomed Russia's membership in the World Trade Organization Wednesday, but said US exporters would be disadvantaged unless Congress repeals Russia's Cold War-era trade status, AFP reports.

"We congratulate Russia on joining the World Trade Organization," the nation's top trade envoy, US Trade Representative Ron Kirk, said in a statement.

"However, in order for American manufacturers, workers, service providers, farmers and ranchers to take full advantage of Russia's WTO membership, Congress must act to terminate Jackson-Vanik and authorize permanent normal trade relations for Russia."

The acting US commerce secretary, Rebecca Blank, also called on Congress to lift the 1974 Jackson-Vanik rule and accord Russia permanent normal trade relations (PNTR), a status required under WTO rules.

"This will increase US exports, strengthen our economy, and create thousands of American jobs," Blank said in a separate statement, noting that Russia was bringing more than 140 million consumers and a $1.8 trillion economy into the global rules-based trading system.

"The Obama administration is committed to working with Congress to pass this legislation so that American businesses can enjoy the same benefits in Russia's market that our foreign competitors now have," she said.

State Department spokeswoman Victoria Nuland cited "strong and long" US backing for Russia to come into the WTO in a regularly scheduled news briefing.

"You've heard both President (Barack) Obama and President (Vladimir) Putin, and President (Dmitry) Medvedev before him, talk about the fact that we don't have the volume of trade between our two countries that we should have, given the size of our economies," the spokeswoman told reporters.

The Jackson-Vanik amendment to the Trade Act of 1974 tied bilateral trade policy to human rights, depriving the Soviet Union of permanent normal trade relations to pressure Moscow to allow Jewish emigration.

Under Jackson-Vanik, the US president must certify to Congress every year that Russia permits free emigration in order to grant PNTR on an annual basis.

But that status conflicts with WTO rules now that Russia has joined the Geneva-based international trade body.

The WTO mandates than any advantage granted by one WTO member to another must be extended to all members.

Obama, certain lawmakers and businesses have been pushing Congress to remove the legislation, arguing that it had outlived its usefulness.

The US Chamber of Commerce, the world's largest business organization, warned that Russia could retaliate if Congress fails to normalize trade relations.

"Until Congress approves PNTR with Russia, Moscow will be free to deny the United States the full benefits of its reforms," Chamber president and chief executive Thomas Donohue said.

Under Russia's accession to the WTO, Moscow agreed to apply a final tariff ceiling of 7.8 percent for goods, compared with a 2011 average of 10 percent.

"The United States gives up nothing -- not a single tariff -- in approving" normal trade relations, Donohue said. "It's a true jobs bill, and won't cost taxpayers one penny."

"Because of our inaction on PNTR, European and Asian companies have won a head start in the Russian market."

Russia, which became the 156th WTO member Wednesday after 18 years of negotiation, was the United States's 14th largest supplier of goods imports in 2011, led by oil imports.

US goods exports to Russia have climbed steadily in recent years, and jumped almost 40 percent from 2010 to $8.3 billion last year.

The National Association of Manufacturers joined the calls to bury the Cold War relic.

"With the unemployment rate at 8.3 percent and the manufacturing sector slowing down, we have to do more to reach new markets and take full advantage of trade opportunities," the association said.

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