Bloomberg News

U.S. House Has Bipartisan Deal to Normalize Russia Trade

July 19, 2012

A bipartisan agreement on legislation to grant permanent normalized U.S. trade relations with Russia was announced by the chairman and top Democrat on the House Ways and Means Committee.

The agreement increases the likelihood that Congress will enact the measure before lawmakers leave for their August recess. That would allow U.S. businesses such as Caterpillar Inc. (CAT:US), Boeing Co. (BA:US) and General Electric Co. (GE:US) to take full advantage of Russia’s admission to the World Trade Organization next month.

The deal also cleared the way for inclusion of a provision to impose U.S financial and travel sanctions on Russian human- rights violators. That legislation, approved by another House committee and included in a Senate version of the trade bill, is a source of friction between Russia and the U.S.

U.S. Trade Representative Ron Kirk praised the agreement.

“More exports to Russia will mean more American jobs here at home,” Kirk said in a statement. “We look forward to working with Congress to put a final bill on the president’s desk as soon as possible.”

Without permanent normalization of Russia’s trade status, U.S. exporters couldn’t seek protection of WTO rules.

The deal was announced the same day as Russia vetoed a United Nations resolution to impose sanctions on Syria as violence in the capital of Damascus intensified. Several Republican senators said Russia’s veto may complicate a pending Senate vote on the trade issue. Still, they said withholding favorable trade status would hurt U.S. exporters, not Russia.

Political Component

Trade normalization “needs to be advanced” notwithstanding Russia’s veto because most people recognize that the political “component of our relationship needs to be kept separate from the trade component,” said Republican Senator John Thune of South Dakota.

U.S. businesses are those “that get hurt” by withholding normalized trade status from Russia, said Thune, a member of the Senate Republican leadership team.

Under the agreement announced today, the House Ways and Means Committee will draft legislation next week that will “mirror” the version approved yesterday by the Senate Finance Committee, said a statement by the House panel’s chairman, Michigan Republican Dave Camp, and top Democrat Sander Levin, also of Michigan.

Normalized trade relations “will ensure that U.S. workers, employers, farmers and ranchers have an even playing field when competing for business in Russia,” Camp said in a statement.

Human Rights

Camp said he will urge House leaders to include the human- rights provision approved by the House Foreign Affairs Committee in the trade measure.

Yesterday, the Senate Finance Committee unanimously approved legislation to normalize trade relations with Russia and repeal the 1974 Jackson-Vanik law that barred favorable trade status because the former Soviet Union wouldn’t allow Jewish citizens to emigrate.

The Senate measure included the human-rights provision similar to the one approved by the House Foreign Affairs Committee.

Another member of Senate Republican leadership, Roy Blunt of Missouri, said Russia’s veto at the UN is “not helpful,” nor is President Vladimir Putin’s “view of suppressing freedom.”

Still, “we benefit from a trade agreement, and particularly if it can have the right amount of human rights protection we should do it,” Blunt said.

The Finance Committee yesterday rejected by a 16-8 vote an amendment by Texas Republican John Cornyn to allow normalized trade relations only if the president certified that Russia had stopped selling arms to Syria and other state sponsors of terrorism.

Before the House deal was announced, Senate Majority Leader Harry Reid, a Nevada Democrat, said he didn’t know whether a Senate vote could be scheduled before the August recess.

“It’s important we do it,” Reid said. “I just don’t want to start some crazy debate on war in Pakistan or Syria.”

To contact the reporter on this story: James Rowley in Washington at jarowley@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net


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