Congress adjourned for its annual August recess last Friday without passing a bill to approve permanent normal trade relations (PNTR) with Russia.
This means that Russia will officially join the World Trade Organization (WTO) on August 22, and be well within its rights to increase tariffs on U.S. goods entering the country. Since Congress won't return to work until September 10, the failure to pass a bill before leaving Capitol Hill puts U.S. exporters at a competitive disadvantage in Russia, the world's ninth largest economy, at least until PNTR can be approved.
Immediate passage after the conclusion of the August recess isn't exactly a guarantee either, as Congress is expected to be preoccupied with looming defense cuts and the sequestration details of last year's debt ceiling agreement.
In the final week before the recess, neither chamber of Congress even tried to schedule a vote on two bills that would've approved PNTR with Russia by repealing the Jackson-Vanik amendment, a Cold War regulation that made U.S. preferential tariff rates for Russia products conditional on the country allowing Jews and other minorities to emigrate freely. The amendment is regularly suspended with little fanfare, but its presence on U.S. books allows Russia, under WTO rules, to discriminate against U.S. products until the regulation is eliminated.
Each version of the PNTR bill has been coupled with a version of the Magnitsky Act, named for anti-corruption lawyer Sergei Magnitsky who died in 2009 under mysterious circumstances after serving a year in Russian prison. The House's version would deny visas and freeze the assets suspected of involvement in Magnitsky's death, while the Senate's version would take a much broader approach, allowing the law to be applied to human rights violators outside of Russia and beyond the scope of the Magnitsky case.
Some iteration of the Magnitsky legislation was considered a prerequisite for any bill approving PNTR, as lawmakers were wary of being perceived as having given Russia a free pass on trade without any penalties related to the country's human rights record, especially in an election year. Analysts have noted, however, that PNTR has a time limit, while either version of the Magnitsky Act does not. Congress could easily have approved PNTR ahead of Russia's accession to the WTO and addressed the Magnitsky legislation at a later date.
- Jacob Barron, CICP, NACM staff writer