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. Last Updated: 07/27/2016

Jackson-Vanik Hinged on WTO

Senior U.S. congressional advisers and trade officials flew back to Washington on Wednesday, taking with them hopes of improved trade ties but leaving little hope that the Jackson-Vanik amendment would be lifted before Russia was ready to enter the World Trade Organization.

Despite President George W. Bush's urging, Congress has refused to exempt Russia from Jackson-Vanik, which links emigration policies with trade status. Lawmakers balked after the Russian ban on U.S. poultry imports in March, which has since been lifted, and were not swayed by the U.S. decision to grant Russia market economy status in the spring. Congress is holding onto Jackson-Vanik as leverage in bilateral negotiations for Russia's bid to join the WTO, U.S. officials said.

"Congress would not otherwise have a vote on the decision of the U.S. administration to allow a country to join the World Trade Organization," Assistant U.S. Commerce Secretary Faryar Shirzad said in an interview Wednesday. "So for some members, the decision to lift Jackson-Vanik before Russia is ready to join the WTO would be premature."

"We don't know what's going to happen down the road. This is what Jackson-Vanik is all about," said a senior congressional trade adviser, who spoke on condition of anonymity. "Jackson-Vanik has been the mechanism Congress has used over the past decade to exercise leverage with the administration in negotiating an accession agreement."

About 10 countries subject to Jackson-Vanik have become members of the WTO in the past 10 years. In each case, Congress lifted the amendment only when bilateral negotiations were almost complete or after the country acceded to the WTO, the congressional adviser said.

"The decision to push for graduation ... was unprecedented but in [the administration's] view appropriate," Shirzad said.

The adviser said Congress used Jackson-Vanik in China's case to slow down approval of negotiations by six months. "That role of intervention caused the administration to be careful," he said.

Once Russia becomes a WTO member, Congress must either lift Jackson-Vanik or invoke nonapplication, which means neither country would have to treat the other as a WTO member. There is "virtually no chance" that Congress would fail to lift Jackson-Vanik, Shirzad said.

Moscow's expectations were high that Jackson-Vanik would be lifted when Bush attended a U.S.-Russia summit in the Kremlin in May. Some officials had said the amendment, which critics call a relic of the Cold War, might be scrapped within months.

The confirmation on Wednesday that Jackson-Vanik would be linked to WTO status shattered hopes that the amendment would be lifted any time soon. Russia expects to enter the WTO sometime between 2004 and 2007.

"Congress is not ready and is tying Jackson-Vanik to chicken or something else," said Deputy Economic Development and Trade Minister Maxim Medvedkov, Russia's chief WTO negotiator. "One thing at a time."

Shirzad spent two days meeting with Russian officials and business leaders leading a seminar on U.S. trade remedy laws and their impact on Russia as a market economy and discussing initiatives agreed upon by Bush and President Vladimir Putin at their May summit.

"I'm very optimistic about trade relations between our two countries," Shirzad said, although trade turnover between the two countries has fallen over the past year.

According to U.S. government statistics, U.S.-Russian trade turnover for the first nine months of 2002 dropped 9 percent to $6.4 billion from $7.1 billion over the same period last year.

Shirzad also sealed a deal with the Russian government on steel slab and initialed an agreement with producers on steel plates, which together could boost exports to the United States by about $55 million next year.

U.S. officials also urged the Russian government to continue reforming the domestic energy market. Moscow has vocally opposed efforts by the United States and the European Union to tie energy reform and WTO accession.

"The only time the U.S. gets concerned is if subsidies of something affect exports or competition by imports," the congressional adviser said. "Beyond that ... it's Russia's internal concern."

Both Shirzad and the adviser said the United States would have no beef with low energy tariffs as long as they were derived in an open, transparent, market-driven system.

"If low prices were the result of the market operating openly and freely, then we'd have no objections," Shirzad said.

"We said to [Russian officials] that the problem is 'you don't know, we don't know what the actual price is," the congressional adviser said.