H. Rept. 112-632 - RUSSIA AND MOLDOVA JACKSON-VANIK REPEAL ACT OF 2012112th Congress (2011-2012)
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112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-632
======================================================================
RUSSIA AND MOLDOVA JACKSON-VANIK REPEAL ACT
OF 2012
_______
July 31, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Camp, from the Committee on Ways and Means, submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany H.R. 6156]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 6156) to authorize the extension of
nondiscriminatory treatment (normal trade relations treatment)
to products of the Russian Federation and Moldova and to
require reports on the compliance of the Russian Federation
with its obligations as a member of the World Trade
Organization, and for other purposes, having considered the
same, report favorably thereon without amendment and recommend
that the bill do pass.
CONTENTS
Page
I. Summary and Background...........................................2
A. Purpose and Summary..................................... 2
B. Background.............................................. 2
C. Legislative History..................................... 7
II. Section-by-Section Summary.......................................7
A. Title I: Permanent Normal Trade Relations for the
Russian Federation..................................... 7
B. Title II: Trade Enforcement Measures Relating to the
Russian Federation..................................... 9
C. Title III: Permanent Normal Trade Relations for Moldova. 12
III. Votes of the Committee..........................................13
IV. Budget Effects of the Bill......................................13
A. Committee Estimate of Budgetary Effects................. 13
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority.......................... 13
C. Cost Estimate Prepared by the Congressional Budget
Office................................................. 14
V. Other Matters To Be Discussed Under the Rules of the House of
Representatives.................................................15
A. Committee Oversight Findings and Recommendations........ 15
B. Statement of General Performance Goals and Objectives... 15
C. Information Relating to Unfunded Mandates............... 15
D. Applicability of House Rule XXI 5(b).................... 15
E. Congressional Earmarks, Limited Tax Benefits, and
Limited Tariff Benefits................................ 16
VI. Changes in Existing Law Made by the Bill, as Reported...........16
VII. Views...........................................................17
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
H.R. 6156 amends Title IV of the Trade Act of 1974 to
remove the Russian Federation (Russia) and Moldova from the
list of countries subject to that provision. It also contains
provisions to address concerns about Russia's compliance with
its World Trade Organization (WTO) obligations, address
bilateral trade issues between the United States and Russia,
and promote the rule of law in Russia.
B. Background
The Jackson-Vanik amendment
At present, the trade status of Russia and Moldova is
subject to the Jackson-Vanik amendment to Title IV of the Trade
Act of 1974, the provisions of law governing the normal trade
relations (NTR) status of nonmarket economy countries that were
ineligible for NTR treatment as of the enactment of the Trade
Act.
Prior to 1951, the United States extended
nondiscriminatory, or unconditional, NTR treatment to all of
its trading partners in accordance with obligations undertaken
when the United States joined the General Agreement on Tariffs
and Trade (GATT) in 1948. However, the Trade Agreements
Extension Act of 1951 directed the President to withdraw or
suspend the NTR status of the Soviet Union and all countries
under the domination of Communism. As implemented, this
directive was applied to all then-existing communist countries
except Yugoslavia. Poland's NTR status was restored by
Presidential directive in 1960.
Title IV of the Trade Act of 1974, which includes the so-
called ``Jackson-Vanik amendment,'' represented a
liberalization of the 1951 law. Title IV authorizes the
extension of NTR treatment to nonmarket economies that both
meet freedom-of-emigration requirements and conclude a
commercial agreement with the United States. Title IV also
authorizes the President to waive the freedom-of-emigration
requirements of that title and to extend NTR status to a
nonmarket economy country if he determines that doing so will
substantially promote the freedom-of-emigration objectives.
This waiver may be extended on an annual basis upon a
Presidential determination and report to Congress that such
extension will substantially promote the freedom-of-emigration
objectives of the 1974 Trade Act. Under the Jackson-Vanik
amendment, the President's waiver authority continues in effect
unless disapproved by the Congress--either generally or with
respect to a specific country--within 60 calendar days of the
expiration of the existing authority.
In 1990, the United States and the Soviet Union signed a
bilateral trade agreement as required under Title IV of the
Trade Act of 1974. The agreement was subsequently applied to
U.S.-Russian trade relations. The United States extended NTR
treatment to Russia under the Presidential waiver authority
beginning in June 1992. Since September 1994, Russia has
received NTR status under the full compliance provision.
Presidential extensions of NTR status to Russia have met no
congressional opposition. Moldova acceded to the World Trade
Organization in July 2001 and has received NTR status under the
full compliance provision since 1997, also without
congressional opposition.
Russia's accession to the World Trade Organization and benefits to the
United States
Russia first applied to join the General Agreement on
Tariffs and Trade (GATT--now the WTO) in 1993. To join the WTO,
Russia completed the required two-step process that would
provide significant benefits to U.S. employers, workers,
farmers, and ranchers: (1) concluding a bilateral agreement
with each WTO member that requested one, including the United
States; and (2) finishing the multilateral negotiation with all
participating WTO members as a whole.
The U.S. bilateral talks, aimed at opening Russia's market
to U.S. exports and investment, are not a free trade agreement
but an agreement setting out the terms of Russia's accession to
the WTO. Russia made significant concessions to join the WTO,
agreeing to reduce its tariffs on manufactured goods from
almost 10 percent to less than 8 percent; improve market access
for U.S. service providers in a broad array of industries;
address longstanding issues related to U.S. exports of beef,
pork, poultry, and other agricultural products; and improve its
intellectual property rights (IPR) laws and enforcement. The
United States also worked with other countries to increase
Russia's quotas on meat imports and to require Russia to
eventually phase out its local content requirements in the auto
sector.
The multilateral talks focused on establishing Russian
compliance with WTO rules, including agriculture, goods,
services, intellectual property rights, treatment of state-
owned or -controlled enterprises, transparency, customs, and
other issues. For example, Russia must provide a notice and
comment process when considering proposed measures involving
trade in goods, services, and intellectual property; provide a
scientific justification for sanitary and phytosanitary (SPS)
measures that are more stringent than international standards;
and adopt WTO standards for IPR protection. Russia must also
reduce more than one-third of its tariffs immediately upon
accession and subsequently reduce tariffs on most goods within
three years. In addition, Russia agreed to join the WTO's
Information Technology Agreement (ITA) immediately upon
accession, which will require Russia to eliminate its tariffs
on high-tech products. Russia also agreed to submit an offer to
join the WTO Government Procurement Agreement within four years
of accession.
The results of these bilateral and multilateral
negotiations are contained in Russia's WTO accession package,
which also sets out Russia's commitments to revise and apply
its trade regime in compliance with WTO rules. If Russia does
not comply with any of these obligations set forth in the
accession package, WTO members can use the WTO's dispute
settlement mechanism to enforce their rights.
This package was finalized on November 10, 2011, and Russia
was subsequently invited to join the WTO on December 16, 2011.
Russia's accession package was ratified by the Russian
government on July 21, 2012, which subsequently notified the
WTO. As a result, Russia will accede to the WTO on August 22,
2012.
Need to grant Russia PNTR to realize the benefits of Russia's
concessions
As part of the agreement establishing the WTO, WTO members
agreed to apply most-favored-nation tariff treatment (known as
normal trade relations (NTR) under U.S. law) ``immediately and
unconditionally'' to the goods of other WTO members. However,
the United States cannot permanently extend this treatment to
Russia (often known as permanent normal trade relations (PNTR))
due to the requirements of the Jackson-Vanik amendment to Title
IV of the Trade Act of 1974, which require annual or
conditional NTR. If a WTO member determines that it cannot
comply with this or any other WTO rules toward a newly acceding
member, it can ``opt-out'' of its obligations toward that
member by invoking the non-application provision. In doing so,
the WTO member declares that the WTO obligations, rules, and
mechanisms (such as binding dispute settlement) will not apply
to its trade with the new WTO member. Because of the
application of conditional NTR under U.S. law, the United
States invoked non-application toward Russia on December 16,
2012.
If the United States does not grant Russia PNTR by the time
that Russia becomes a WTO member, the Committee believes that
U.S. companies, workers, and farmers will be disadvantaged
versus their competitors from other WTO members because the
United States would not benefit from all of Russia's
concessions. For example, U.S. service providers would not have
greater access to Russia's growing services market because they
would not be covered by Russia's service market access WTO
commitments. As a result, Russia could impose WTO-inconsistent
restrictions on U.S. banks, insurance companies,
telecommunications firms, and other service providers, but not
on those from other WTO members. Russia also would not be
required to comply with WTO rules regarding SPS standards,
intellectual property rights, transparency, and agriculture
when dealing with U.S. goods and services, and the U.S.
government would likewise not be able to use the WTO's dispute
settlement mechanism if Russia violates its WTO commitments.
Further, the country-specific tariff-rate quotas (TRQs)
negotiated as part Russia's accession (particularly for
agricultural products) would not be available to U.S.
exporters.
The Committee believes that in many ways, granting Russia
PNTR can be viewed as only a legal technicality. The United
States already annually provides Russia with NTR treatment and
has done so every year without fail for the last two decades.
Granting Russia this yearly treatment on a permanent basis, as
the United States does for over 150 countries, does not
constitute special treatment, but brings significant gains to
the United States.
If it does not grant PNTR, the United States would still be
able to assert under its 1992 bilateral trade agreement with
Russia that Russia should continue to grant MFN treatment for
tariffs and other customs related issues for U.S. goods (i.e.,
treat them the same as goods from other WTO members) and apply
the technical regulations and standards under that and
subsequent agreements. However, these rights and commitments
are significantly narrower and less meaningful than those
provided in the WTO, and the United States would not have
recourse to an enforcement mechanism should Russia choose to
increase tariffs or otherwise violate the terms of the
agreement.
In sum, the Committee strongly believes that commercial
benefits of Russian WTO accession to the United States are
significant if Congress grants PNTR. The Committee expects that
Russia's significance as a market for U.S. goods and services
will grow upon its WTO accession. Russia is the largest economy
not yet in the WTO, and the Russian market will expand as its
middle class grows and its economy further diversifies. Because
Russia must open up its market by reducing tariffs and other
trade barriers on goods and services upon joining the WTO, U.S.
exports to Russia could double or triple within five years.
Moreover, the Committee notes that not granting Russia PNTR
will not prevent Russia from joining the WTO. On the other
hand, the Committee believes that granting Russia PNTR is a
small step that achieves significant gains. The United States
does not have to change a single tariff or make any concessions
for Russia to join the WTO. Instead, only Russia has to cut its
tariffs and take on new obligations, many of which were won by
U.S. negotiators.
Enforcement tools created by H.R. 6156
In addition to the new opportunities for U.S. employers,
workers, farmers, and ranchers created by the concessions that
Russia has made to join the WTO, the Committee believes that
H.R. 6156 would establish powerful new tools to ensure that
Russia's WTO obligations are fully implemented and enforced and
to hold Russia accountable. Specifically, the bill would
require USTR to annually report on whether Russia's WTO
commitments are fully implemented. These reports would also
describe Russia's progress in joining the WTO's Information and
Technology Agreement and Agreement on Government Procurement.
If Russia is not fully implementing a WTO obligation or is not
making adequate progress in joining the additional WTO
agreements, USTR would be required to describe its action plan
to address these problems and report on enforcement actions
against Russia to ensure Russia's full compliance. The bill
would also require action to advance the rule of law and fight
corruption in Russia and focus on tackling Russia's trade
barriers beyond WTO rules, such as a bilateral SPS equivalency
agreement and an intellectual property rights action plan.
These powerful tools will help to assure that the United States
makes the most of Russia's concessions.
Moldova's accession to the World Trade Organization
In 1992, the United States and Moldova signed a bilateral
trade agreement as required under Title IV of the Trade Act of
1974. Moldova also applied to join the GATT and subsequently
the WTO in 1993. Moldova was invited to join the WTO on May 8,
2001, and acceded to the WTO on July 26, 2001. As in the case
of Russia, the United States was required to invoke non-
application regarding Moldova on May 2, 2001, because U.S. law
required the application of conditional, annual NTR to Moldova
under the Jackson-Vanik amendment.
Other significant issues
The United States' relationship with Russia is broader than
trade and economic issues. Russia and the United States
successfully cooperate in some areas of foreign policy and
national security. However, many Members of this Committee have
deep concerns about the Russian government's lack of respect
for human rights and certain aspects of Russia's foreign
policy.
The most recent concern about Russia's human rights record
is due to the death of Russian tax lawyer Sergei Magnitsky, who
was investigated by the Russian government on allegedly
baseless tax evasion and tax fraud charges. Magnitsky was later
arrested and died under mysterious conditions in November 2009,
allegedly from mistreatment and torture, after being held 11
months without trial. The Russian government eventually
acknowledged that his death was a criminal act but has done
little to pursue those responsible.
The events surrounding the death of Sergei Magnitsky
resulted in the introduction of legislation to hold accountable
those responsible for human rights violations. H.R. 4405,
currently pending in the U.S. House of Representatives, would
impose visa restrictions and asset freezes on those involved in
human rights violations in Russia. The House Foreign Affairs
Committee considered H.R. 4405 on June 7, 2012, and reported it
out favorably by voice vote, as amended. Similar legislation
was introduced in the U.S. Senate, S. 1039, but it would cover
human rights violators globally and is not limited to Russia.
This bill was included as an amendment to S. 3406, which would
grant PNTR to Russia and Moldova. The Senate Finance Committee
considered S. 3406, as amended, on July 18, 2012, and reported
it out favorably by a unanimous vote.
The Committee shares the deep concerns about the Russian
government's lack of respect for human rights and supports
amending H.R. 6156 to include such ``Magnitsky'' legislation
before consideration by the U.S. House of Representatives.
The Committee is also deeply concerned about Russia's
continued support of the Syrian government, despite the Syrian
government's attacks on its own people. Russia has an extensive
history of providing weapons and political support to the
regime of President Bashar al-Assad of Syria, a country
designated by the Secretary of State as a ``state sponsor of
terrorism.'' It remains the top supplier of weapons to the
Syrian government, reportedly providing nearly $1 billion worth
of arms in 2011, and has unabatedly continued to ship arms to
the Syrian government during the ongoing popular uprisings.
Moreover, the Russian government has repeatedly blocked or
impeded efforts by the United Nations and individual countries
to find a peaceful resolution of the situation in Syria.
Finally, the Russian Navy also maintains its only permanent
warm-water naval port outside of the former Soviet Union in
Port of Tartus, Syria, which bolsters the Assad regime.
The Committee condemns Russia's continued sale of weapons
to Syria, opposition to multiple United Nations Security
Council Resolutions regarding Syria, and longstanding and
ongoing support for the regime of President Assad. The
Committee believes that the actions of the Russian government
have enabled the Assad regime to perpetrate mass atrocities,
including the slaughter of innocent civilians and the
displacement of thousands of people. The Committee urges the
government of Russia to immediately end all weapons sales to
Syria, support international sanctions against the regime, and
help with a peaceful transition of leadership within the
government of Syria.
Concerns have been expressed that the granting of PNTR
could send the wrong signal regarding the views of Committee
Members on these matters. To be clear, the Members of the
Committee deplore these actions by Russia. Just as Russia is
joining the international community through its accession to
the WTO, it must join the nations of the world in addressing
the violence against civilians in Syria and in safeguarding the
human rights of its own citizens.
C. Legislative History
Legislative hearing
On June 20, 2012, the Committee on Ways and Means held a
hearing on Russia's accession to the WTO and granting Russia
PNTR.
Committee action
H.R. 6156 was introduced on July 19, 2012, by Chairman
Camp, Ranking Member Levin, Trade Subcommittee Chairman Brady,
Trade Subcommittee Ranking Member McDermott, and
Representatives Reichert, Rangel, Roskam, Blumenauer, Paulsen,
and Crowley and was referred to the Committee on Ways and
Means. On July 26, 2012, the Committee ordered favorably
reported H.R. 6156 to the House of Representatives without
amendment.
II. SECTION-BY-SECTION SUMMARY
TITLE I: PERMANENT NORMAL TRADE RELATIONS FOR THE RUSSIAN FEDERATION
Section 101: Findings
PRESENT LAW
No provision.
EXPLANATION OF PROVISION
Section 101 states that Russia allows its citizens to
freely emigrate and has been found to be in full compliance
with the freedom of emigration requirements under Title IV of
the Trade Act of 1974 since 1994. Russia has received normal
trade relations (NTR) since concluding a bilateral trade
agreement with the United States in 1992. The Ministerial
Conference of the WTO invited Russia to accede to the WTO on
December 16, 2011.
REASON FOR CHANGE
The provision describes Russia's compliance with the
Jackson-Vanik amendment, the status of United States trade
relations with Russia, and Russia's invitation to join the WTO.
Section 102: Termination of Application of Title IV of the Trade Act of
1974 to Products of the Russian Federation
PRESENT LAW
Title IV of the Trade Act of 1974 sets forth the
requirements relating to freedom of emigration that must be
met, or waived by the President, in order for a nonmarket
economy country to be granted NTR. Title IV also requires that
a bilateral commercial agreement that provides for
nondiscriminatory, NTR status remain in force between the
United States and the nonmarket economy country receiving NTR
status. Finally, Title IV sets forth minimum provisions that
must be included in such an agreement.
As described above, an annual Presidential recommendation
under section 402(d) for a 12-month extension of authority to
waive the Jackson-Vanik freedom-of-emigration requirements--
either generally or for specific countries--may be disapproved
through passage by Congress of a joint resolution of
disapproval within 60 calendar days after the expiration of the
previous waiver authority. Congress may override a Presidential
veto within the later of the end of the 60 calendar day period
for initial passage or 15 legislative days after the veto.
EXPLANATION OF PROVISION
Section 102 authorizes the President to determine that
Title IV of the Trade Act of 1974 should no longer apply to
Russia and to proclaim the extension of NTR treatment to the
products of Russia. The effective date of the extension of NTR
treatment to the products of Russia is to be no sooner than the
effective date of Russia's accession to the WTO. The
application of title IV of the Trade Act of 1974 to Russia
terminates on the effective date of the extension of NTR
treatment to the products of Russia.
REASON FOR CHANGE
The Committee believes that increasing exports is an
important means to create U.S. jobs. Russia is the largest
economy not yet in the WTO, and the Russian market will expand
as its middle class grows and its economy further diversifies.
Upon joining the WTO on August 22, 2012, Russia must open up
its market by reducing tariffs and other trade barriers on
goods and services, which could cause U.S. exports to Russia to
double or triple within five years. Becoming a WTO member will
not only require Russia to lower its trade barriers, but will
also require Russia to comply with all of the WTO's rules and
create a level playing field for U.S. exports by addressing
discriminatory practices, enforcing intellectual property
rights, creating transparency, and implementing uniform customs
rules and science-based measures. If Russia does not comply
with these obligations, WTO members can use the WTO's dispute
settlement mechanism to enforce their rights.
However, WTO rules do not require Russia to extend any of
these benefits to the United States unless Congress authorizes
the President to grant Russia permanent normal trade relations
(PNTR). Not granting Russia PNTR will only hurt U.S. companies,
workers, farmers, and ranchers because they will lose ground in
the Russian market to their foreign competitors. Moreover, the
United States does not have to change any tariffs or make any
concessions for Russia to join the WTO. Therefore, the
Committee strongly believes that granting Russia PNTR is in the
best interest of U.S. companies, workers, farmers, and
ranchers, as well as for the country as a whole.
TITLE II: TRADE ENFORCEMENT MEASURES RELATING TO THE RUSSIAN FEDERATION
Section 201: Reports on Implementation by the Russian Federation of
Obligations as a Member of the World Trade Organization and Enforcement
Actions by the United States Trade Representative
PRESENT LAW
No provision.
EXPLANATION OF PROVISION
Section 201(a) requires the United States Trade
Representative (USTR) to report annually to the Senate Finance
Committee and the House Ways and Means Committee on Russia's
implementation of its obligations as a member of the WTO, in
particular with respect to obligations relating to SPS issues
and intellectual property protection. USTR's report would also
cover Russia's progress on acceding to and implementing the WTO
Information Technology Agreement and the WTO Agreement on
Government Procurement. To the extent that USTR believes that
Russia is not fully implementing a WTO agreement or making
adequate progress in acceding to the above agreements, USTR is
required to include in the report its plans for addressing
those situations. In preparing the report, USTR must provide an
opportunity for public comment, including by holding a public
hearing.
Section 201(b) requires USTR to report within 180 days, and
annually thereafter, to the Senate Finance Committee and the
House Ways and Means Committee on enforcement actions taken by
USTR to ensure full compliance by Russia with its WTO
obligations.
REASON FOR CHANGE
The Committee believes that Russia must be held accountable
to fully implement its WTO obligations and that USTR must take
action when Russia does not meet those obligations. The
Committee expects that requiring USTR to annually report on
Russia's implementation of its WTO obligations and to pursue
enforcement actions when Russia does not meet those obligations
will help ensure that USTR is constantly vigilant concerning
Russia's compliance. The bill specifically directs USTR to
report on Russia's compliance with the WTO Agreement provisions
relating to SPS measures and intellectual property protection
because of the Committee's concern over the past difficulties
with Russia in those areas. The Committee also expects USTR to
press Russia to follow through with its obligations to join and
implement the WTO Information Technology Agreement and the WTO
Agreement on Government Procurement.
Section 202: Promotion of the Rule of Law in the Russian Federation To
Support United States Trade and Investment
PRESENT LAW
No provision.
EXPLANATION OF PROVISION
Section 202(a) requires USTR and the Secretary of State to
report annually on measures they have taken and results
achieved to promote the rule of law in Russia and to support
U.S. trade and investment by strengthening investor protections
in Russia, including the negotiation of a new bilateral
investment treaty; advocating for U.S. investors in Russia,
including by promoting the claims of U.S. investors in the
Yukos Oil Company; encouraging all parties to the OECD Anti-
Bribery Convention, including Russia, to fully implement their
commitments; promoting corruption-free customs, tax, and
judicial authorities in Russia; and increasing cooperation
between the United States and Russia to expand the capacity for
civil society organizations to monitor, investigate, and report
on suspected incidents of corruption.
Section 202(b) requires the Secretary of Commerce to
establish and maintain a hotline and secure website to allow
U.S. entities to report instances of bribery and corruption in
Russia that could affect them and to request U.S. assistance
relating to corruption issues in Russia. The Secretary of
Commerce is also required to report annually to the Senate
Finance Committee and the House Ways and Means Committee on the
instances of bribery, attempted bribery, and other forms of
corruption reported through the hotline and website; a
description of the regions where those instances are alleged to
have occurred; a summary of U.S. actions taken in response to
requests; and a description of the efforts to inform U.S.
entities of the availability of assistance through the hotline
and website. The identities of those reporting are not to be
included in the report.
REASON FOR CHANGE
The weak rule of law and the high level of corruption in
Russia have been significant barriers against U.S. exports to
and investments in Russia. The Committee intends that requiring
USTR and the State Department to report on specified activities
that increase the rule of law and decrease corruption in Russia
will promote progress in those areas and further trade and
investment with Russia. The Committee also believes that
requiring the Commerce Department to set up a phone hotline and
secure website to enable U.S. entities to report on corruption
and bribery in Russia will provide the U.S. government with
vital information on the nature and extent of this problem and
better enable assistance to U.S. entities that are the victims
of such practices.
Section 203: Reports on Laws, Policies, and Practices of the Russian
Federation That Discriminate Against United States Digital Trade
PRESENT LAW
Section 181 of the Trade Act of 1974 requires the Office of
the United States Trade Representative to submit to the
President, the Senate Finance Committee, and the appropriate
committees in the House of Representatives an annual report on
significant foreign trade barriers, known as the National Trade
Estimate Report on Foreign Trade Barriers. The statute requires
identification of acts, policies, and practices of each foreign
country that constitute significant foreign trade barriers
affecting U.S. exports of goods and services, foreign direct
investment by U.S. persons, and U.S. electronic commerce, and
an estimate of the trade-distorting impact of these barriers on
U.S. commerce. The report must also include information on any
action taken to eliminate any barriers identified. After
submission of the report, the USTR must consult and take into
account the views of the recipient congressional committees.
EXPLANATION OF PROVISION
Section 203 amends section 181 of the Trade Act of 1974 by
requiring that the annual National Trade Estimate Report on
Foreign Trade Barriers issued under section 181 include a
description of Russian laws, policies, and practices that deny
fair and equitable market access to U.S. digital trade.
REASON FOR CHANGE
An increasing share of U.S. trade is digital--that is, it
is conducted over the Internet and by other digital means. The
creativity and innovation of the U.S. economy makes the United
States a leader in digital trade. The Committee is disturbed by
policies all over the world that deny or unduly restrict market
access to U.S. digital trade. One example of such policies is
undue restrictions on cross-border data flows, on which digital
trade often relies. By requiring USTR to report on Russia's
laws, policies, and practices that deny fair and equitable
treatment to U.S. digital trade, the Committee intends that
barriers of this type be identified and analyzed.
Section 204: Efforts To Reduce Barriers to Trade Imposed by the Russian
Federation
PRESENT LAW
No provision.
EXPLANATION OF PROVISION
Section 204 requires the USTR to pursue the reduction of
Russian barriers to U.S. exports through efforts to negotiate a
bilateral agreement with Russia that would recognize U.S. SPS
measures as equivalent to Russian SPS measures, and through
efforts to obtain Russia's acceptance of an action plan to
provide greater protections for intellectual property rights
than those provided under the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights.
REASON FOR CHANGE
Russia's adoption of WTO obligations should significantly
help remove barriers to U.S. exports. However, more work
remains to resolve ongoing issues regarding SPS measures and
IPR protection that are not covered by WTO rules. The Committee
expects the Administration to negotiate a bilateral agreement
under which Russia would recognize U.S. SPS measures as
equivalent to its own SPS measures. Such an agreement would end
a major barrier to U.S. agriculture exports caused by the need
to comply with additional Russian rules after already meeting
U.S. food safety requirements. Regarding IPR protection, the
WTO Agreement on Trade-Related Aspects of Intellectual Property
Rights is focused on substantive intellectual property rights
and is limited in its ability to provide for IPR enforcement,
particularly against Internet piracy. USTR and the Russian
government have been discussing an action plan to address this
issue, but progress has been slow.
The Committee expects USTR to work diligently toward
concluding these bilateral agreements with Russia as quickly as
possible.
TITLE III: PERMANENT NORMAL TRADE RELATIONS FOR MOLDOVA
Section 301: Findings
PRESENT LAW
No provision.
EXPLANATION OF PROVISION
Section 301 states that Moldova allows its citizens to
freely emigrate and has been found to be in full compliance
with the freedom of emigration requirements under Title IV of
the Trade Act of 1974 since 1997. Moldova acceded to the WTO on
July 26, 2001.
REASON FOR CHANGE
The provision describes Moldova's compliance with the
Jackson-Vanik amendment and Moldova's accession to the WTO.
Section 302: Termination of Application of Title IV of the Trade Act of
1974 to Products of Moldova
PRESENT LAW
Title IV of the Trade Act of 1974 sets forth the
requirements relating to freedom of emigration that must be
met, or waived by the President, in order for a nonmarket
economy country to be granted NTR. Title IV also requires that
a bilateral commercial agreement that provides for
nondiscriminatory, NTR status remain in force between the
United States and the nonmarket economy country receiving NTR
status. Finally, Title IV sets forth minimum provisions that
must be included in such an agreement.
As described above, an annual Presidential recommendation
under section 402(d) for a 12-month extension of authority to
waive the Jackson-Vanik freedom-of-emigration requirements--
either generally or for specific countries--may be disapproved
through passage by Congress of a joint resolution of
disapproval within 60 calendar days after the expiration of the
previous waiver authority. Congress may override a Presidential
veto within the later of the end of the 60 calendar day period
for initial passage or 15 legislative days after the veto.
EXPLANATION OF PROVISIONS
Section 302 authorizes the President to determine that
Title IV of the Trade Act of 1974 should no longer apply to
Moldova and to proclaim the extension of NTR treatment to the
products of Moldova. The provision would terminate the
application of Title IV of the Trade Act of 1974 to Moldova on
the date of the President's proclamation.
REASON FOR CHANGE
Moldova faces many challenges as it strives to grow and
develop its economy. Becoming a WTO member in 2001 was a
significant achievement for Moldova and has helped spur
economic reform. The Committee hopes that granting PNTR to
Moldova will increase trade and investment between the United
States and Moldova and will further strengthen relations
between the two countries.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statements are made
concerning the vote of the Committee on Ways and Means in its
consideration of the bill, H.R. 6156.
MOTION TO REPORT THE BILL
The bill, H.R. 6156, was ordered favorably reported by a
voice vote without amendment (with a quorum being present).
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the effects on the budget of this bill, H.R. 6156,
as reported: The Committee agrees with the estimate prepared by
the Congressional Budget Office (CBO), which is included below.
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with subdivision 3(c)(2) of rule XIII of the
Rules of the House of Representatives, the Committee states
that H.R. 6156 does not contain any new budget authority or
credit authority. The Congressional Budget Office estimates
that any change in fiscal years 2012, 2013, 2013 through 2017,
and 2013 through 2022, would be negligible.
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by CBO, the following report prepared by CBO is
provided:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 27, 2012.
Hon. Dave Camp,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 6156, the Russia
and Moldova Jackson-Vanik Repeal Act of 2012.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 6156--Russia and Moldova Jackson-Vanik Repeal Act of 2012
CBO estimates that implementing H.R. 6156 would cost $1
million over the 2013-2017 period, assuming appropriation of
the necessary amounts. The bill also would affect direct
spending and revenues; therefore, pay-as-you-go procedures
apply, but CBO estimates that any such effects would not be
significant in any year. H.R. 6156 contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandates Reform Act and would not affect the budgets
of state, local, or tribal governments.
H.R. 6156 would remove Moldova and the Russian Federation
from the list of countries specified under title IV of the
Trade Act of 1974 (the Jackson-Vanik amendment), thereby
granting them permanent normal trade relations (NTR) with the
United States. Those countries have had NTR status with the
United States for about 20 years, and CBO's baseline reflects
the expectation that they will maintain that status.
Establishing permanent NTR with Moldova and the Russian
Federation could potentially increase tariff collections by
lifting quotas on certain imported goods. CBO estimates,
however, that any such effects would be insignificant over the
2013-2022 period.
Based on information from the U.S. Trade Representative
(USTR), CBO estimates that implementing the provisions of H.R.
6156 would cost a total of $1 million over the 2013-2017
period, assuming the availability of appropriated funds. That
amount includes affected agencies' costs to hire additional
staff, complete required reports, hold public hearings, and
establish and maintain a secure phone line and Web site related
to activities under the bill.
CBO expects that enacting H.R. 6156 would decrease revenues
from visa fees and increase revenues from civil and criminal
penalties imposed on those who violate the regulations. CBO
estimates that the provisions would affect few people and that
revenues deposited in the Treasury would not be significant in
any year.
The legislation also would increase direct spending from
criminal penalties, which are deposited in the Crime Victims
Fund and spent in subsequent years. However, CBO expects that
any net effects associated with collecting and spending such
penalties would not be significant in any year.
On July 24, 2012, CBO transmitted a cost estimate for S.
3406, the Russia and Moldova Jackson-Vanick and Magnitsky Rule
of Law Accountability Act of 2012, as ordered reported by the
Senate Committee on Finance on July 19, 2012. The two bills are
similar except that H.R. 6156 does not contain provisions
regarding human rights violations. Because the human rights
provisions are not included in H.R. 6156, our estimate of costs
under that bill is lower.
The CBO staff contacts for this estimate are Sunita
D'Monte, Matthew Pickford, and Susan Willie. This estimate was
approved by Theresa Gullo, Deputy Assistant Director for Budget
Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE OF
REPRESENTATIVES
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee concluded that it is appropriate and timely to
consider H.R. 6156, as reported.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the performance goals and
objectives of the part of this legislation that authorizes
funding are for the establishment and operation within the
Department of Commerce of a dedicated telephone line and secure
website for allowing U.S. entities to report instances or
bribery, attempted bribery, or other forms of corruption in
Russia and to request assistance of the United States with
respect to issues relating to corruption in Russia.
C. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995 (P.L. 104-4). The
Committee has determined that the revenue provisions of the
bill do not impose a Federal mandate on the private sector. The
Committee has determined that the revenue provisions of the
bill do not impose a Federal intergovernmental mandate on
State, local, or tribal governments.
D. Applicability of House Rule XXI 5(b)
Clause 5(b) of rule XXI of the Rules of the House of
Representatives provides, in part, that, ``A bill or joint
resolution, amendment, or conference report carrying a Federal
income tax increase may not be considered as passed or agreed
to unless so determined by a vote of not less than three-fifths
of the Members voting, a quorum being present.'' The Committee
has carefully reviewed the sections of the bill and states that
the bill does not involve any Federal income tax rate increases
within the meaning of the rule.
E. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff
Benefits
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TRADE ACT OF 1974
* * * * * * *
TITLE I--NEGOTIATING AND OTHER AUTHORITY
* * * * * * *
CHAPTER 8--IDENTIFICATION OF MARKET BARRIERS AND CERTAIN UNFAIR TRADE
ACTIONS
SEC. 181. ESTIMATES OF BARRIERS TO MARKET ACCESS.
(a) National Trade Estimates.--
(1) * * *
* * * * * * *
(3) Inclusion of certain discriminatory laws,
policies, and practices of the russian federation.--For
calender year 2012 and each succeeding calendar year,
the Trade Representative shall include in the analyses
and estimates under paragraph (1) an identification and
analysis of any laws, policies, or practices of the
Russian Federation that deny fair and equitable market
access to United States digital trade.
[(3)] (4) Annual revisions and updates.--The Trade
Representative shall annually revise and update the
analysis and estimate under paragraph (1).
* * * * * * *
VII. ADDITIONAL VIEWS
H.R. 6156, the ``Russia and Moldova Jackson-Vanik Repeal
Act of 2012,'' recognizes the importance of ensuring that
Russia implements its existing WTO commitments and directs USTR
to take further action to secure WTO-plus commitments to
address several significant and longstanding trade issues.
Specifically, on enforcement, the bill requires the U.S.
Trade Representative (USTR): (1) to report on Russia's
implementation of all of its WTO commitments; (2) to describe
the Administration's plan to address any deficiencies; (3) to
seek public input in the assessment of Russia's compliance; and
(4) to submit a separate report on enforcement actions that the
USTR has taken to ensure that Russia has fully complied with
its WTO obligations. It also includes special reporting
requirements regarding Russia's progress in acceding to and in
implementing two additional WTO plurilateral agreements: the
WTO Information Technology Agreement and the WTO Agreement on
Government Procurement.
The bill also calls for the negotiation of new agreements
that exceed WTO rules to further address longstanding issues
with Russia's enforcement of intellectual property rights and
barriers to U.S. agricultural exporters.
Finally, the bill includes provisions to promote openness
and rule of law in Russia. These provisions include: (1)
requiring USTR to identify and address barriers to internet
access affecting U.S. digital trade; (2) requiring USTR and the
Department of State to submit an annual report on measures
taken to promote the rule of law in Russia, including by
promoting the claims of U.S. investors; and (3) requiring the
Department of Commerce to gather and report information on
bribery and corruption in Russia, and report on U.S. government
actions taken to assist U.S. entities affected by such bribery
and corruption.
Some have proposed that the enforcement of Russia's WTO
commitments could be further strengthened by providing the
Committee with the ability to request that the Administration
take ``appropriate action'' to address any deficiency. We favor
such a mechanism, but note that existing law (Section 301 of
the Trade Act of 1974) already provides ``any interested
person'' the right to petition for such an enforcement action.
There are no limitations on the definition of ``any interested
person'' in the statute, and this week we exchanged letters
with USTR confirming that Section 301 already enables the
Committee to request action, and requires USTR to respond
within a fixed timeline. Those letters are attached.
We also believe the Committee, as part of its
responsibility to provide oversight, should schedule regular
hearings with USTR and others to assess Russia's compliance in
the initial stages of its WTO Membership. USTR should be
notified well in advance that it will be called upon to do so,
and public comments on Russia's compliance should be submitted
in advance of the hearing to help inform the Committee of
outstanding issues.
Finally, we note the language in the Committee Report
regarding the Russian government's lack of respect for human
rights and Russia's continued support for the Syrian government
was developed on a bipartisan basis and has our full support.
There are serious outstanding trade issues we have with
Russia, ranging from the enforcement of intellectual property
rights to the rule of law. Russia's WTO membership will help us
to make progress on some of these issues. At the same time,
Russia's accession will not, by itself, fully resolve any of
these issues. We will need to continue to work actively to
address these issues at every opportunity. H.R. 6156 provides
us with additional tools for doing so.
Sander M. Levin.
Jim McDermott.