War endangers Russia's WTO aspirations

Two bills that would grant Russia permanent normal trade status remain stalled in the Senate Finance Committee.

A senior Senate staffer said the bills could languish there in light of Russia's refusal to back U.S. military action in Iraq.

The bills, introduced by Sens. Richard Lugar (R-Ind.) and Max Baucus (D-Mont.) would permanently exempt Russia from the 1974 Jackson-Vanik Act, a bill that levies trade tariffs on non-free-market countries that limit the emigration of their citizens.

"The issue has completely fallen off and won't be dealt with in the foreseeable future," the senior staff member said, citing both Russia's reluctance to support the war and its temporary tariffs on U.S. chicken exports.

The bills were introduced in early March as "carrots" to entice Russia to support the U.S.-led war in Iraq. But both stalled soon afterward, when it was clear Russia would not support the U.S. position in the U.N. Security Council.

However, Richard Perle, a onetime top Hill staffer who helped write the Jackson-Vanik legislation, said the administration does not need congressional approval to grant Russia permanent normal trade relations.

"It doesn't need to be waived to allow Russia into the world economy," Perle said. "All that is necessary is for the administration to grant Russia free-trade status."

The White House, asked about the administration's policy toward Russia's trade status and the pending legislation, did not immediately respond.

This is Lugar's second attempt to normalize trade relations with Russia. His first was derailed last March when Russia banned U.S. poultry exports, citing health concerns related to salmonella and the antibiotics used by U.S. chicken farmers.

Many saw the ban, though, as retaliation against President Bush's tariff increase on Russian steel imports.

At the time, Russia consumed approximately $400 million in U.S. chicken exports.

The ban, which was eventually repealed, provoked opposition from key members of Congress, most notably Sen. Joseph Biden (D-Del.), now the ranking Democrat on the Foreign Relations Committee, whose state ranks seventh in broiler production.

A new Russian ban on American meat and poultry exports, instituted this past January - on top of Russian opposition to the war in Iraq - may result in a similar standoff.

The Baucus bill, co-sponsored by Rep. Sander M. Levin (D-Mich.), differs from the Lugar version in that it retains Congress's right to approve Russia's inclusion in the World Trade Organization (WTO).

Some policy analysts said U.S. designation of normal trade relations is the next critical step in Russia's WTO acceptance process.

"The Russian political elite feel the U.S. has adopted a hands-off policy regarding the WTO," said Leon Aron, a resident scholar and director of Russian studies at the American Enterprise Institute.

"Russia is annoyed by the presence of Jackson-Vanik," Aron said.

As it currently stands, the White House and Congress have enacted a waiver to grant Russia normal trade status on a year-by-year basis since 1994. So some trade analysts argue that the repeal of Jackson-Vanik would not have a huge practical effect on trade between the two nations.

"Trade between Russia and the United States is so small it doesn't matter," said Radek Sikorski, also of the AEI, who added that Russia's economy is the same size as that of Holland.

The United States is Russia's largest trade partner, with $9.5 billion in 2002, but that does not come close tothe U.S.'s trade with Western European countries. Trade between the United States and France, for example, totaled $47.4 billion in 2002.

"Russia exports oil," Sikorski said. "Russia can go anywhere with oil."

The repeal could have a huge symbolic effect, however.

"If the administration does repeal Jackson-Vanik, it could be a building block for future relations," Aron said.
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