Uzbeki beki stan stan

Is it time to repeal the Jackson-Vanik Amendment?

In Ben Kurland on January 4, 2012 at 12:10 am

Yes.

On December 16th at its Ministerial Conference in Geneva, the World Trade Organization (WTO) formally accepted Russia’s bid for accession after its initial application 18 years ago. The WTO is the world’s largest rules-based trade organization that sets out to liberalize trade policy of its members and provide a dispute resolution mechanism that, believe it or not, is quite effective. Russia is the world’s 11th largest economy by GDP. What does this marriage mean? It means that Russia will have to begin liberalizing its trade policy, open up its markets to foreign goods, and remove restrictive tariffs. Russian Economic Development and Trade Minister Elvira Nabiullina, for example, called the deal a win-win situation and estimated that WTO accession could benefit Russian industry to the tune of 2 billion U.S. dollars a year from the removal of barriers to Russian goods. At the same time, the international community wins because the lowering of trade tariff allows for better access by foreign imports in the Russian market allowing for increased sales and beneficial competition.

For a good, short summary of how compliance will affect Russian imports you can look here.

Where is the sticking point? For the United States, it is the Jackson-Vanik Amendment. Passed in 1974, the amendment prevents the United States from extending Most Favored Nation (MFN) status to any country that restricts freedom of emigration. It was aimed at the USSR which the United States believed was violating the rights of its Jewish population to emigrate through a “diploma tax.”

So, what’s the big deal? The problem is that since Jackson-Vanik is still on the books, it represents a violation of WTO rules. If the US does not graduate Russia from Jackson-Vanik and offer Russia Permanent Normal Trade Relations (PNTR), it would mean that Russia does not have to extend to the US all of its WTO commitments. This hurts US exports by putting them at a disadvantage in an increasingly open market. It is also worth mentioning that the exit fees levied on Jewish emigrants was lifted in 1991 when the USSR collapsed and became the Russian Federation. Jackson-Vanik is like one of those joke laws you can read about online that may or may not be true… you never know. The only problem is that it is real and has the potential to harm the US export sector.

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