Legislation in the US Senate to do business with Russia
The Plastics Industry Trade Association (SPI) has given the green signal for the legislation to be put forward in the Senate to ease the US companies’ efforts to do business with Russia.
The permanent normal trade relations (PNTR) would bring back memories of the 1974 Jackson-Vanik Amendment ahead of Russia expectedly joining the World Trade Association later on this year.
Section 402 of Tile IV of the Trade Act of 1974, the Jackson-Vanik amendment, denies eligibility for NTR status as well as access to US government credit facilities as long as the country denies its citizens the right of freedom-of-emigration.
William R. Carteaux, the president and CEO of SPI said that the Plastics Industry Trade Association issued a statement saying that it will allow the manufacturing industry to take full advantage of Russia’s entry into the WTO.
He added: “Without this change to our trade laws, our global competitors would be the only beneficiaries of Russia’s WTO accession and US manufacturing would miss out on a much needed boost to job creation and economic growth that a level playing field in the world’s ninth largest economy would bring”.
The bill still need the Congress’s thumb-up and will be put into a vote before August. Steps are needed in order for American businesses to benefit wholly from Russia’s expected World Trade Organisation (WTO) access this summer.
Carteaux continued: “Between 2005 and 2010, total bilateral trade between the US and Russia doubled. Assuming a strong Russian economy, US merchandise exports to Russia could double following WTO accession from $9bn (in 2008) to $19bn.
“Since 2000, US plastics exports to Russia have increased by almost 700%. In joining the WTO, Russia has agreed to bind tariffs on manufactured goods at an average rate of 7.3%, down from the current average rate of 9.5%, so I see tremendous potential for our industry in Russia”.
Carteaux urged quick Congressional action to pass the proposed legislation, to ensure there was detrimental effect to market opportunities for manufacturers from any further delays.
Ecolab, who do business in Russia through their subsidiary Nalco, were in favour of the bipartisan legislation.
The company said: “This legislation is necessary to ensure that US companies are on a level playing field when competing with other global companies in this important market.
“…this legislation is vital for US companies to realise the full potential of Russia’s WTO commitments. We support the passage of this legislation, and applaud Senators Baucus, Kerry, Thune and McCain for their leadership on this important issue”.
According to the Congressional Research Service, Russia was the 31st largest export market for products including meat and machinery parts and 14th largest source of imports for the US in 2011.
The firm added: “The surge in the value of imports is largely attributable to the rise in the world prices of oil and other natural resources – which comprise most of US imports from Russia – and not to an increase in the volume of imports”.
US imports rose more than 244%, from $7.8bn to $26.8bn from 2000 to 2008 and exports increased 343%, from $2.1bnto $9.3bn.
The legislation was introduced by Max Baucus, the Senate Finance Committee Chairman, John Thune, International Trade Subcommittee Ranking Member, John Kerry, Foreign Relations Committee Chairman and John McCain, the Armed Services Committee Ranking Member.