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Senate Eyes Repeal of Cold War-Era Amendment to Boost Trade with Russia

Enacted in 1974, the Jackson-Vanik amendment was one of many Cold War-era efforts to cool U.S. trade with non-market economies. At the time it was designed as a direct response to taxes the Soviet Union levied on Jews attempting to emigrate from the country. Now the Soviet Union is no more, and even if it wasn't, the Jackson-Vanik amendment has been waived on an annual basis by every president for the last two decades.

Trade-minded lawmakers have recently proposed repealing the amendment as they seek to take full advantage of Russia's newly-minted World Trade Organization (WTO) membership. Jackson-Vanik stands in the way of establishing permanent normal trade relations (PNTR) between the Unites States and Russia, a goal that must be reached in order for U.S. companies to fully expand into Russia as it lowers tariffs and increases market access according to the terms of its WTO accession agreement.

"In order for U.S. businesses and workers to benefit from Russia joining the WTO, Congress must pass PNTR and repeal the Jackson-Vanik amendment," said Senate Finance Committee Chairman Max Baucus (D-MT). "Russia's entry into the WTO will be a one-way economic benefit that boosts our exports and creates jobs in the United States, so repealing Jackson-Vanik is an absolute no-brainer. Jackson-Vanik served its purpose and helped millions of Jews emigrate freely, but it is now a relic of the past."

Abolishing the amendment, Baucus noted, would also help to cool any lingering bitterness between the U.S. and Russia. "Repealing Jackson-Vanik weakens the ability of the hardliners in Russia to rally anti-American forces," he noted. "Russia is joining the WTO regardless of what the United States does, so we need to take advantage of this one-way opportunity to boost our economy and create jobs here at home while we can."

By "one-way," Baucus means that Russia is the only party that must make concessions, as per the terms of its WTO membership. The U.S. is not required to make any market access or tariff concessions to Russia, but can reap billions in benefits from the concessions made by Russia, as long as Jackson-Vanik is repealed and PNTR is passed.

Just this week, FCIB hosted a "Doing Business in Russia" webinar. To purchase a replay, click here.

Jacob Barron, CICP, NACM staff writer