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20.03.12
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Jackson-Vanik Trades Places
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By Andrew Roth
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The clock is ticking for the Jackson-Vanik Amendment of 1974 as Russia prepares to finalize its accession to the World Trade Organization (WTO) this year. The Barack Obama administration, along with U.S. Ambassador to Russia Michael McFaul, has called for the law to be repealed as a relic of the Cold War. Yet conservative lawmakers are uneasy about the plan, citing concerns that lifting Jackson-Vanik will be seen as a sign of weakness by the upcoming Vladimir Putin administration. The opponents are now suggesting deals to take Jackson-Vanik off the books, but not without replacing the law with alternative legislation to censure Russia for corruption and civil rights abuses.
Just two days after Vladimir Putin won a disputed 64 percent in Russia’s presidential election, U.S. President Barack Obama announced that Jackson-Vanik, a law passed in 1974 to punish the Soviet Union for its restrictive immigration policy, was on the chopping block. “I think I’ve shown that I will go anywhere in the world to open new markets for American goods. That’s why we worked so hard to secure Russia’s invitation into the WTO. That’s why I have asked Congress to repeal Jackson-Vanik, to make sure that all your companies and American companies all across the country can take advantage of it. And that's something that we're going to need some help on,” Obama told a roundtable of businessmen on March 6.
The push to repeal Jackson-Vanik is quickly becoming the next flashpoint for clashes in Congress over U.S. policy toward Russia. Senate Minority Whip Jon Kyl said that supporters of lifting Jackson-Vanik in order to avoid punishing tariffs against American businesses after Russia’s WTO accession present the measure as a “slam dunk.” “But it isn’t a slam dunk,” he told a Finance Committee hearing, conveying concerns over both intellectual property protection and civil rights abuses in Russia. “When the U.S. Ambassador to Russia Michael McFaul suggests that there is no association between a country’s respect for individual liberties and its business environment, he is simply denying reality.”
Others are suggesting a quid pro quo exchange – Jackson-Vanik should be repealed, they say, but should be replaced with other legislation censuring Russians. Four senators are supporting a bill proposed by Democratic Senator Ben Cardin in 2011, the Sergei Magnitsky Rule of Law Accountability Act, which would publicly blacklist and freeze the accounts of Russian officials tied to civil rights abuses. The strategy has the benefit of support from several prominent members of Russia’s anti-Putin opposition, including Boris Nemtsov and corruption whistleblower Alexei Navalny. “Jackson-Vanik is a relic and its time has passed. But allowing it to disappear with nothing in its place, and right on the heels of the fantastically corrupt ‘election’ of March 4, turns it into little more than a gift to Putin,” wrote Boris Nemtsov and Garry Kasparov in a Wall Street Journal op-ed last week.
Putting aside questions over Russia’s business environment and civil rights record, the key factor driving the debate now is Russia’s imminent accession to the WTO. Experts expect Russia to finalize its accession to the WTO by July this year, leaving American businesses operating in Russia subject to retaliatory tariffs if the amendment isn’t shelved. Andrew Somers, the president of the American Chamber of Commerce in Russia, told National Public Radio that tariffs for American businesses in Russia would likely remain at the current rate of ten percent, and won’t be adjusted to the seven percent required by the WTO if Jackson-Vanik remains on the books.
Ariel Cohen, a senior research fellow at the Heritage Foundation, said that a simple repeal of Jackson-Vanik without new legislation was unlikely. “I don’t see Congress just lifting Jackson-Vanik in the current climate [in Washington]. That is connected not just to corruption and human rights issues, but also to Syria,” he said, referencing Russia’s recent veto of a U.N. resolution to censure Syria for human rights violations. Other signals, like a group of 17 senators protesting Defense Department purchases of Russian helicopters for use in Afghanistan, “give a clear indication of which way the wind is blowing on [Capitol] Hill,” he added.
A deadlock could last through this summer, until after Russia accedes to the WTO, said Matthew Rojansky from the Carnegie Endowment for International Peace. The Obama administration has already gone through difficult trials in passing initiatives linked to its “reset” with the Russian leadership. In passing the START Treaty in 2010, the Obama administration faced considerable opposition from republicans in the Senate, who argued that the treaty would limit the United States’ options for deploying an anti-missile regime and also lacked sufficient measures to monitor Russian nuclear arms. Only during Congress’ lame duck period in late 2010 was the treaty finally ratified with a 71 to 26 vote at what Rojansky called the “moment of least significance.”
Rojansky noted that while a swap of Jackson-Vanik for the Magnitsky Act was being presented as a “binary” choice, the two laws are considerably different in how they put pressure on the Russian government. “You can’t pressure the state in Russia in the same way that you could during Soviet times,” he told Russia Profile. “In Soviet times the damage was being done by a concerted policy on the part of the Politburo, which functioned as the integral state. That’s not the case in Russia today – a lot of the really bad stuff that happens is not being ordered by the Kremlin. Some of it probably is, but a lot of it is just ‘freelance’ bad behavior – and this is a function of lawlessness in general in Russia.”
Cohen, however, maintained that the Magnitsky Act would allow for a far more targeted approach to punishing corrupt Russian officials and effecting change in Russia. “Magnitsky is a laser gun that pinpoints targets, whereas Jackson-Vanik was simply a catch-all, a field artillery piece shooting shrapnel,” he said. “I hope that common sense will prevail and we will not punish American companies, but I also hope that Magnitsky will pass,” he added. “But don’t expect me to bet the farm on the logic of our elected representatives.” |
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