U.S.-Russian Trade Ties Face Some Political Snags
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MOSCOW -- With relations between Russia and the United States on edge over Syrian policy and strident anti-American statements by the Russian government in response to political protests here, the Obama administration and its Democratic allies in Congress have begun an aggressive push to end cold-war-era trade restrictions and make Russia a full trade partner.
The seemingly incongruous and politically fraught campaign to persuade Congress to grant permanent, normal trade status reflects a stark flip in circumstances: suddenly, after more than 35 years of tussling over trade, Russia has the upper hand.
In December, Russia became the last major economy to win admission to the World Trade Organization -- a bid that was supported by the Obama administration because it required Russia to bring numerous laws into conformity with international standards, including tighter safeguards for intellectual property. It was also part of the so-called reset in relations with the Kremlin.
But if Congress does not repeal the restrictions, adopted in 1974 to pressure the Soviet Union to allow Jewish emigration and now largely irrelevant, the United States will soon be in violation of W.T.O. rules. American corporations could be put at a serious disadvantage -- paying higher tariffs, for instance, than European and Asian competitors, which would immediately enjoy the benefits of Russia's new status.
A number of big-name companies have important interests in Russia, including Caterpillar, John Deere, Boeing and United Technologies.
"We would come out a big loser," Senator Max Baucus, a Montana Democrat and chairman of the Finance Committee, said in an interview in Moscow, where he met this week with President Dmitri A. Medvedev and other senior officials, as well as American business leaders, to discuss the trade situation. "Other countries will gain market share in Russia at the expense of the United States."
Mr. Baucus, whose committee has jurisdiction over tax and trade policy, arrived in St. Petersburg straight from winning a fierce fight on Capitol Hill to extend a temporary cut in payroll taxes, a fight that illustrated how excruciatingly difficult it is to pass legislation in a divided Congress these days even when Republicans and Democrats agree on the desired outcome.
Winning repeal of the 1974 trade restrictions, known as the Jackson-Vanick amendment, and approval of permanent normal trade relations with Russian will probably prove harder still.
First, there is the burst of anti-American talk that many observers of Russian-American relations say is the ugliest in recent memory. Prime Minister Vladimir V. Putin, who is running for president, has accused Secretary of State Hillary Rodham Clinton and the United States of stirring political unrest, including the huge street protests that have taken place here in recent months.
The newly arrived American ambassador, Michael A. McFaul, who was President Obama's senior adviser on Russia at the White House, has also come under attack, accused of being sent to foment revolution.
Then, there is Russia's effort to block international intervention in Syria, including its veto, along with China, of a United Nations Security Council resolution calling on President Bashar al-Assad to step down. To the dismay of American officials, Russia has continued to ship weapons, medicine, food and other supplies to Syria, essentially providing both a practical and political lifeline to Mr. Assad's government in the name of respecting Syria's sovereignty.
Mr. Baucus raised the American concerns about Syria in his meeting with Mr. Medvedev, who expressed a desire to work with the United States but reiterated a general sentiment among Russian officials that they had been betrayed after agreeing not to block a Security Council resolution authorizing a no-fly zone over Libya to protect civilians. In their view, the resolution was used to justify airstrikes that drove Col. Muammar el-Qaddafi from power.
Some officials here suggested that the meetings between Mr. Baucus and senior Russian leaders, including First Deputy Prime Minister Igor I. Shuvalov, Foreign Minister Sergey V. Lavrov, Economic Development Minister Elvira S. Nabiullina and Agriculture Minister Yelena Skrynnik, signaled that the anti-Americanism is largely presidential campaign theatrics intended for Russia's domestic audience and that Moscow is still committed to working with the United States.
The W.T.O. sets the rules governing global commerce and provides a forum for resolving disputes. Russia had sought to become a member for most of two decades, and some studies predict that it stands to gain as much as one percentage point in annual economic growth from membership. But even if the anti-Americanism subsides and order is restored in Syria, other obstacles remain.
More than two dozen members of Congress have signed on in support of legislation that would deny travel visas to Russian officials, and others around the world, linked to human rights abuses. The bill is named for Sergei L. Magnitsky, a Russian lawyer who was arrested and died in prison after trying to expose a huge tax fraud by government officials. His supporters say he was denied medical care.
Sponsors of the bill, including Senator Benjamin L. Cardin, Democrat of Maryland, say they intend to attach it to any legislation to normalize trade relations with Russia. Supporters include Senator John McCain, Republican of Arizona, who is a fierce critic of the Russian government. The Obama administration opposes the bill, saying that it interferes with the State Department and that steps have been taken to deny visas to accused violators of human rights.
"There is more that we can do to support human rights, civil society and freedom of expression in Russia," Senator Jeanne Shaheen, Democrat of New Hampshire, said in a recent floor speech. "Passing the Magnitsky bill is one of them."
Mr. Magnitsky's legal client, a British financier named William F. Browder, has made it a personal mission to win justice in the case, including approval of the legislation, and has hired a prominent Washington lobbyist to increase the pressure on Capitol Hill.
There are also humdrum issues of actual trade policy, including some agreements that need to be reached on regulations on pork products.
In trying to overcome the political obstacles, the Obama administration could face opposition from those who say that any concessions to Russia are not worthwhile, given the major disagreements on foreign policy, human rights and concerns about corruption, and especially because the amount of trade with Russia is small. There were slightly more than $8 billion in American exports to Russia in 2011, compared, for instance, to more than $100 billion to China.
To highlight the importance of the Russian market to individual companies, Mr. Baucus visited a John Deere factory in Russia, which he said helped support jobs in the United States, including at three suppliers in his home state, Montana.
In an interview, Mr. Baucus said that despite the uphill battle of passing any legislation in a presidential election year, he believed that Congress would ultimately see the wisdom of normalizing trade relations with Russia, or at least recognize that failing to do so would only punish American business.
"Even though this is an election year, the logic is unassailable," he said. "This makes good sense for America. It will help create more American jobs."
First Published February 25, 2012 12:01 am