Wednesday, December 4, 2013
By DANA CONNORS
AUGUSTA - By the end of August, Russia is expected to lower tariffs and eliminate other trade barriers in order to join the World Trade Organization. Russia's entry into the trade union presents the United States with an opportunity to reap enormous economic benefits -- but only if lawmakers strike down an outdated statute that could disadvantage American firms at the expense of foreign competitors.
Russia's legislative body, the Duma, plans to take up a vote on WTO membership Tuesday. Policymakers in the U.S. Congress will have a choice to make as well: permanently normalize trade with Russia or force American workers and businesses to lose out on more open access to the world's ninth-largest economy.
Maine already has strong trade ties to Russia, thanks to companies like General Electric and Procter & Gamble. In 2011, the state exported more than $13 million in goods to Russia. Normalizing trade would open trade with Russia even further and help protect the state's exports.
This is hardly a choice at all. If Congress grants Russia permanent normal trade relations, it sets the stage for doubling America's annual exports to the country -- from $11 billion today to $22 billion in 2017.
But if Congress fails to normalize trade with the country, WTO rules will allow Russia to deny benefits to the United States -- putting at risk that same $11 billion, and all the jobs that go with it.
Boost the economy or give our foreign competitors a leg up on international trade? It really is that simple. Russia is going to join the WTO no matter what the U.S. chooses, so legislators would be especially foolish to turn down this opportunity.
The complication is that in order to grant Russia permanent normal trade relations, legislators will have to scrap a 38-year-old trade restriction known as the Jackson-Vanik amendment. That law was designed to help ensure that Soviet Jews and victims of religious persecution had the right to freely immigrate to the U.S. by linking foreign trade status to immigration restrictions.
Jackson-Vanik was necessary at the time, but now it's outdated. In 1992, after the fall of the Soviet Union, Russia voted to allow free emigration for all citizens. America's leaders know all this, and have acted accordingly. Every year since 1992, Presidents from both parties have certified Russia as complying with the demands of Jackson-Vanik.
It's time to finally do away with this restriction that the United States has affirmatively decided to ignore for 20 years -- and permanently normalize trade with Russia.
Granting Russia permanent normal trade relations won't require the U.S. to adjust any of its trade tariffs, though it will make Russia accountable in international intellectual property agreements and WTO dispute resolution.
But these benefits will be ours only if Congress establishes permanent normal trade relations with Russia.
Normalizing trade opens valuable markets for American businesses at no cost to the United States -- it's estimated, for example, that Russia will need to spend $500 billion on infrastructure. That's a lucrative opportunity for American workers and businesses.
The state of Maine has a strong economic interest in seeing this deal work. Trade is already an important part of the economy: In 2010, the state's exports totaled $3.2 billion and made up 6.1 percent of the state's total economy. In 2008, exports were directly or indirectly responsible for 21,000 jobs in the state.
Thanks to WTO member rules, the state's trade position would become even stronger under a normalized trade regime.
Last year, the state exported a total of $13.9 million in goods to Russia alone, including $8.1 million in aircraft and parts. Once in the WTO, Russia will be required to reduce its tariffs on aircraft engines to 5 percent from 10 percent.
Cattle exports from Maine to Russia totaled more $5 million last year. Russia's WTO member agreement would help preserve that trade by making any changes to future livestock important rules subject to WTO challenge.
Unemployment in Maine clocked in at 7.2 percent in March. That's better than many states, but the question still remains: Can the state's economy really afford to turn down this opportunity?
Already there is bipartisan support for granting Russia permanent normal trade relations: Four U.S. senators recently introduced legislation to permanently wipe Jackson-Vanik from the books and grant Russia permanent normalized trade status in the process.
With Russia set to join the WTO no matter what, the course of action should be easy: Make Russia a permanently normalized trade partner, avoid putting American businesses at a disadvantage and bring on the economic benefits.
Dana Connors is president of the Maine State Chamber of Commerce.