House vote on Russia trade bill in doubt

Reuters News
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Posted: Jul 12, 2012 7:13 PM
House vote on Russia trade bill in doubt

By Doug Palmer

WASHINGTON (Reuters) - The Congress appears increasingly unlikely to approve a controversial bill to upgrade trade relations with Russia before the November elections, despite a push by the White House and U.S. business groups for votes this month.

"I think practically speaking no one expects Congress to deal with (permanent normal trade relations) before the lame-duck" session after the elections, said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, referring to the period between the November 6 congressional elections and the start of the new Congress in January, 2013.

"I think there's a background fear that this will become a political football if the House moves forward," Hufbauer said.

Congress is under pressure to lift a Cold War human rights provision known as the Jackson-Vanik amendment and approve "permanent normal trade relations," or PNTR, because of Russia's expected entry into the World Trade Organization in August.

If it does not act, Russia could deny U.S. firms some of the market-opening concessions it made to join the WTO, putting those companies at a disadvantage to foreign competitors in one of the world's 10-largest economies.

However, the push to pass the legislation comes at a low point in U.S.-Russia relations, with many U.S. lawmakers angry over Moscow's support for the government of Syrian President Bashar al-Assad and questioning Russia's commitment to democracy and human rights.

"Members are rightly concerned over recent developments in Russia, as well as Russia's policies with respect to Syria and Iran. This makes it incumbent upon the President to show leadership and for these issues to be addressed in a bipartisan fashion, enabling PNTR to move forward," a House Republican aide said.

Jackson-Vanik, passed in 1974, tied favorable U.S. tariff rates on Russian goods to the rights of Russian Jews to emigrate freely. The legislation is mostly symbolic now because both Democratic and Republican administrations have judged Russia to be in compliance since the 1990s. Even so, the measure is at odds with WTO rules requiring countries to treat all other members equally on an unconditional basis.

With less than 15 legislative days before Congress takes its traditional month-long August recess, business groups are pushing for lawmakers to act.

"We don't want U.S. companies on the outside looking in when Russia joins the WTO this summer," said Christopher Wenk, international policy director at the U.S. Chamber of Commerce.

But Representative Dave Camp, the Republican chairman of the House of Representatives Ways and Means Committee, has not introduced PNTR legislation and House Republican leaders have not made passing the bill a clear priority.

Also unclear is whether Republican presidential hopeful Mitt Romney supports approval of PNTR. His campaign did not respond to emails asking about his position. In contrast, the White House has made approval of the legislation a top trade priority.

An industry source said Romney assured a group of corporate CEOs last month that he supported the legislation. However, earlier this year he called Russia the "number one geopolitical foe" of the United States, making it awkward for him to lead a charge on PNTR.

MAGNITSKY BILL

Many lawmakers also are loathe to lift the Jackson-Vanik amendment without passing new legislation to punish Russia for perceived human rights abuses.

That has led to the "Magnitsky bill" already passed by committees in both the House and Senate. The bill is named after Sergei Magnitsky, an anti-corruption Russian lawyer who died in 2009 after a year in Russian jails.

The House version would deny visas and freeze the assets of Russians linked to Magnitsky's death, as well as those of other human rights abusers in Russia. The Senate version would extend the sanctions to human rights abusers anywhere in the world.

Russian officials have warned the legislation would further inflame relations. But many U.S. lawmakers are undeterred.

Senate Finance Committee Chairman Max Baucus, a Democrat, has promised to incorporate the Magnitsky legislation into PNTR, which his committee could vote on as early as next week.

But some question whether Senate Majority Leader Harry Reid, a fellow Democrat, would schedule a Senate vote without a clear signal from the House that it will proceed.

Camp has called for a "clean" bill without the Magnitsky legislation but has not found a Democratic co-sponsor for that approach.

"Chairman Camp remains committed to moving a clean PNTR bill through his committee as soon as the administration is able to identify a successful bipartisan path forward," Ways and Means spokeswoman Sarah Swinehart said on Thursday.

The Obama administration and business groups also prefer a clean bill, but few people expect PNTR to pass without the Magnitsky legislation.

"Nobody quite knows how that's going to be packaged, whether it's part of the PNTR bill or a separate bill, or whether it's going to be extended to cover corruption as well as human rights and therefore pick up some of Putin's buddies," Hufbauer said.

The business community's worst fear is the bills will move separately and the Magnitsky legislation will pass and PNTR will fail.

Bill Reinsch, president of the National Foreign Trade Council, which represents big U.S. exporters like Boeing and Caterpillar, said there was still time to pass PNTR this month if House Republican leaders decided they want to move.

"There's always time up there to do something if the will is there to do it. And so we continue to hope that the will is there and they'll get it done," Reinsch said.

(Reporting by Doug Palmer; Editing by Tim Ahmann and Paul Simao)