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Policy

House Approves Russia Trade Bill

Commerce: U.S. chemical industry eyes greater access to a market closed since the Soviet era

by Glenn Hess
November 21, 2012 | APPEARED IN VOLUME 90, ISSUE 48

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Credit: Newscom
The House passed trade legislation that could lead to more delivery of U.S. products to Russian ports, such as the port city of St. Petersburg.
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Credit: Newscom
The House passed trade legislation that could lead to more delivery of U.S. products to Russian ports, such as the port city of St. Petersburg.

The House of Representatives has passed, with strong bipartisan approval, chemical-industry-backed legislation that would remove Soviet-era trade restrictions and ensure that U.S. companies receive the full benefits of Russia’s recent entry into the World Trade Organization (WTO).

“U.S. business cannot afford to be sitting on the sidelines while our foreign competitors strengthen their market positions in Russia,” says Randi Levinas, executive vice president of the more than 500-member Coalition for U.S.-Russia Trade, which includes some of the country’s largest chemical and drug manufacturers. The coalition has been lobbying Congress to normalize trade relations with Russia, the world’s ninth-largest economy.

The bill (H.R. 6156), which still must pass the Senate—where its future is uncertain—easily cleared the House by a vote of 365-43 on Nov. 16. It would establish permanent normal trade relations with Russia.

Without this status, Russia could deny U.S. exporters lower tariffs and other market-opening benefits that competitors, such as Europe and China, now enjoy. The U.S. also would not be able to use the WTO dispute-settlement system to challenge Russian trade actions.

The legislation would lift a 1974 trade restriction known as the Jackson-Vanik amendment, which linked the most favorable U.S. tariff rates on Russian goods to the right of Jews in the former Soviet Union to emigrate. WTO rules require normal trade relations on an unconditional basis.

U.S. exports to Russia of organic, inorganic, and miscellaneous chemical products have been rising. They totaled more than $360 million in 2011, up 14% from 2010.

Russia’s tariffs on chemicals and plastics currently average 6.7% and go as high as 20%. After full implementation of its WTO accession commitments, Russia’s average tariff on imports from the U.S. chemical sector will be reduced to 5.3%.

The trade bill includes an unrelated provision that would require the U.S. to deny visas and freeze the assets of Russian officials suspected of violating human rights. President Barack Obama has indicated that he will sign the measure if it clears Congress.

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