In an update to Russia officially joining the World Trade
Organization (see “Russia officially joins the World Trade Organization", August21, 2012), US President Obama signed into law which ends the 1974 legislative
provision known as the Jackson-Vanik amendment and extends permanent normal
trade relations to both Russia and Moldova.
The 1974 Jackson-Vanik amendment tied trade relations
between the United States and the former Soviet Union to the emigration of Jews
and other Soviet minorities.
According to President Obama, “The legislation will ensure
that American businesses and workers are able to take full advantage of the WTO
[World Trade Organization] rules and market access commitments that the United
States worked so hard to negotiate.”
Combined with the signing of this law, Obama also signed
legislation that sanctions alleged Russian human rights abuses. Known as the Magnitsky
Act, it blacklists Russian officials allegedly implicated in the prison death
of lawyer Sergei Magnitsky.
Based on data from the office of the US Trade
Representative, Russia is the US’ 20th largest trading partner, with
$42.9bn in trade for 2011, growing double-digits since 2010. Exports totaled
$8.3bn, while imports totaled $34.6bn.
Major US exports to Russia for 2011 included machinery
($2.2bn), automotive vehicles ($1.1bn), aircraft ($741m), meat ($697m), and
optic and medical instruments ($548m).
Major US imports from Russia for the same time period include
mineral fuel ($25.4bn), iron and steel ($1.7bn), precious stones ($1.4bn),
inorganic chemical ($1.4bn), and fertilizers ($1.1bn).
Despite the growing trade between the two countries, trade
harmony between the two countries appear to already be under strain as Russia
recently announced it would not accept meat imports from the US because of the
presence of ractopamine in which is a food additive known for reducing fat
content in beef and pork. The drug is
said to turn fat into muscle in livestock.
The United States claims the ban is Russia’s response to the
passage of the Magnitsky Act by the US Senate and accuses Russia of violating
World Trade Organization rules.
The World Trade Organization will likely be called upon to
officiate between the two countries. Questions surround Russia’s intentions of
joining the WTO while the US cracks down on human rights violations as a
condition of trade. Transportation and logistics providers will need to monitor
this tradelane carefully as more trade conditions/bans may occur.
Dec. 20 Update: Russian President Vladimir Putin is contemplating signing a bill banning US adoptions of Russian children. According to news agencies, Putin regards this as a "legitimate response" to the US passage of the Magnitsky Act.
Open dialogue is needed between the two countries in order for both to benefit from a potential strong trade relationship.
Dec. 29 Update: Putin has signed a bill banning US adoptions of Russian children. A new cold war brewing?
Open dialogue is needed between the two countries in order for both to benefit from a potential strong trade relationship.
Dec. 29 Update: Putin has signed a bill banning US adoptions of Russian children. A new cold war brewing?
