I was bemused last week reading a long article in the Moscow Times on President Obama’s State of the Union address to Congress earlier in the week. It was interesting to see how the writer parsed each word of the speech relating to the important issue of granting Russia permanent normal trade relations as required under the terms of Moscow’s accession to the World Trade Organization.
The closest the President came to mentioning a repeal of the 1974 Jackson/Vanik provision or simply taking Russia off the list was to mention the need to level the playing field in countries like Russia. By the way, Russia is the only country on the list.
Misleading or just obtuse?
The State of the Union address is an opportunity for the chief executive to outline his plans for the upcoming year – relating especially to the Administration’s legislative agenda.
Repealing Jackson/Vanik – or at the minimum taking Russia off the list – would happen in a "New York minute" in Congress. But the President has to ask. For the past two decades at least the President has had no problem in annually waiving Jackson/Vanik to allow most-favored-nation treatment.
Why the hesitancy?
Some in Washington want to await the outcome of the election in Russia set for mid-March. Some in Congress want to await the outcome of the election in the United States this November.
Free-trade supporter Rep. Kevin Brady (R-Texas) – who chairs the House Ways and Means trade subcommittee – strongly backs permanent MFN for Russia, but said recently that it won’t be easy unless the White House gets behind the push. The President’s remarks in the State of the Union can’t – by any stretch of the imagination – be considered a "push."
So – as he has done in earlier trade issues – the President is putting the United States in a difficult and embarrassing position.
To demonstrate how easy Congressional removal of Jackson/Vanik restrictions on Russia could be, two House members – who can be described on sitting on the opposite poles of the political spectrum – recently established a Russia economic cooperation caucus. They are Rep. Gregory W. Meeks – a liberal Democrat from Queens, New York – and Rep. Dan Burton – a conservative from Indianapolis, Indiana. Given their wide divergence of thinking on almost everything else, it should not be difficult to gain significant support from members in the middle.
Approval in the Senate – which typically prides itself as the more diplomatic chamber of Congress – should be no problem.
Disparities in tariffs are only one aspect of the Jackson/Vanik problem. A senior US trade official explained to an informal gathering of Congressional staff last week that the lack of mutual WTO recognition between the countries creates some potentially serious problems. The United States would have no recourse to dispute settlement if Moscow – for instance – decides to ignore commitments it made bilaterally with the United States on such issues as agricultural imports and enforcement of intellectual property rights.
The day Russia was officially invited to join the WTO last December, both Moscow and Washington were forced to invoke non-application of Article 13 relating to universal permanent MFN treatment.
Jackson/Vanik forbids application of MFN treatment to nonmarket economies that restrict the free emigration of their citizens. Soviet restrictions on emigration are no longer an issue, to say the least. One mid-level Russian official commented to WTD a couple of years back that the law has had its effect and should be removed. He said it was written to pressure the Soviet Union to allow the emigration of Jews from the country – many wishing to go to Israel. The Soviet Union disintegrated and a wave of emigration took place. Now, he noted, those emigrates are returning in a bid to take advantage of opportunities in the rapidly expanding economy.
The official asked rhetorically, maybe Moscow should force them out of the country again to meet the requirements of Jackson/Vanik.
p.s. – Much of the reason for writing Jackson/Vanik into law by then-Rep. Charles Vanik was to help the Presidential bid of Sen. Henry M. (Scoop) Jackson. Shortly after the 1976 election – and Sen. Jackson’s loss in the primaries – Mr. Vanik started to back away from the law. He worked hard during the end of his tenure in the House in the late 1970s – and even afterwards as a Washington lawyer – to overturn the law. He even told WTD in those days that at a minimum he wanted Congress to take his name off the law.