Advisory of March 21, 2002, announcing the hearing

United States Trade Representative, Hon. Peter Allgeier, Deputy United States Trade Representative

U.S. Department of State, Hon. Alan P. Larson, Under Secretary for Economic, Business, and Agricultural Affairs, 

Ad Hoc Committee of Domestic Nitrogen Producers, and CF Industries, Robert Liuzzi

American Farm Bureau Federation, and Michigan Farm Bureau, Wayne Wood

Cox, Hon. Christopher, a Representative in Congress from the State of California

Lantos, Hon. Tom, a Representative in Congress from the State of California

NCSJ: Advocates on behalf of Jews in Russia, Ukraine, the Baltic States & Eurasia, Harold Paul Luks

SPI Spirits, Ltd., and Greenberg Traurig, LLP, Richard A. Edlin

U.S.-Russia Business Council, and Boeing Company, Hon. Thomas R. Pickering

SUBMISSIONS FOR THE RECORD

Bethlehem Steel Corporation, Bethlehem, PA; National Steel Corporation, Mishawaka, IN; and United States Steel Corporation, Pittsburgh, PA, joint statement

TO EXPLORE PERMANENT NORMAL TRADE RELATIONS FOR RUSSIA

Thursday, April 11, 2002

House of Representatives,
Committee on Ways and Means,
Subcommittee on Trade,
Washington, DC.

The Subcommittee met, pursuant to notice, at 10:05 a.m., in room 1100 Longworth House Office Building, Hon. Philip M. Crane (Chairman of the Subcommittee) presiding.

[The advisory announcing the hearing follows:]

Chairman CRANE. Good morning. This is a hearing of the Ways and Means Trade Subcommittee to consider granting permanent normal trade relations, or PNTR, to Russia and to assess U.S.-Russian trade relations. We are at a unique crossroad in the overall U.S.-Russian relationship, and I find this topic quite timely. As a cold warrior, I supported President Reagan's policies toward the Soviet Union. Reagan led both of our countries down a path that altered the course of history, and freedom and democracy triumphed.

As a result of those policies, today we face a very different Russia from the nation that existed when the Jackson-Vanik provisions were passed in 1974. Since the fall of the Soviet Union over a decade ago, Russia has taken tremendous steps toward increased political and economic freedom. Today Russia has a maturing democracy. Russian citizens have successfully participated in three democratic elections for President and the Duma, and another Duma election will be held next year.

Russia has also undertaken significant economic reforms. The process has had some problems along the way, but President Putin and his administration have made economic reform a priority. And I look forward to seeing private property rights and the rule of law firmly take roots in Russian society.

I also expect our U.S. trade negotiators to bring back the best possible World Trade Organization (WTO) accession package with Russia that addresses Congress' concerns, particularly with respect to the U.S. agriculture and fertilizer industries. I intend to follow this issue closely and consult with the Administration on the terms of Russia's accession.

In the meantime, I am extremely disappointed that Russia hasn't lifted its ban on U.S. poultry exports and has extended the ban at least an additional couple of days. I believe it will be very difficult for some Members to support PNTR for Russia unless this dispute is resolved in a way that is based on sound science. I note that in the written statement that Russian Ambassador Ushakov provided for the record of this hearing, he stated that we need to create--and, incidentally, the Ambassador, I understand, is here. Mr. Ambassador, would you stand for a second and just be recognized?

[Applause.]

[The statement follows:]

[By permission of the Chairman.]

Statement of His Excellency Yuri V. Ushakov, Ambassador, Russian Federation to the United States of America

Mr. Chairman and members of the Subcommittee:

With regard to the hearing on legislation making normal trade relations with Russia permanent, I would like to submit the following statement reflecting our position on this subject.

We welcome the U.S. Administration decision to seek the full and final exemption of the Russian Federation from the Jackson-Vanik amendment to the Trade Act of 1974. It will effectively remove one of the last vestiges of the Cold War in Russia-US relationship. It is our firm belief that the 28-year old amendment has outlived its purpose in view of changes of historic proportions that have taken place in Russia and in our bilateral ties. Moreover, at this critical juncture, when Russia and the United States stand together as allies in the fight against international terrorism, it would be more than natural to send just the right signal by removing Jackson-Vanik restrictions from the context of our bilateral relations. Our two countries are embarked on building a new quality of engagement and cooperation for the benefit of the world community. Symbols that link us to the past should no longer overshadow joint efforts to strengthen long-term stable relationship across the board – in the areas of strategic stability and international security, trade and economic interaction, people-to-people communications – based on the universal democratic and human values.

By all objective criteria modern Russia is no longer the country that was targeted by the Title IV of the Trade Act, including the Jackson-Vanik freedom of emigration provisions. As Presidents George Bush and Vladimir Putin stressed in their joint statement at the Washington/Crawford summit last November, our countries are determined to promote better economic, trade and investment relations. The achievement of these goals requires the removal of legislative and administrative barriers, as well as creation of a transparent and predictable investment climate.

Significant strides were made in building a free and democratic society based on the rule of law, pushing forward with far-reaching reform to radically transform Russia into a  viable market-oriented globally-integrated economy. As of today, only 12 percent of the enterprises are currently owned by the State, while the rest are privately-owned. An open investment regime has been established based on the non-discriminatory treatment of foreign investors. They are enjoying the right to full ownership of Russian firms and investment guarantees, as well as a favorable tax regime under production-sharing agreements.

Russia and the United States have expressed their commitment to advance common values by protecting and promoting human rights, tolerance, free speech and independent media, religious freedoms and the rule of law. The Russian Constitution and current laws guarantee personal freedoms, while outlawing intolerance and hate crimes, motivated by ethnicity or religion. Our emigration legislation is based on the principles of international law and is fully compliant with the international standards. There are no legal restrictions for anyone who is willing to leave the country or travel abroad.

Historically, the Jackson-Vanik amendment originated from the concerns of the American Jewish community about human rights, restrictions and persecutions affecting Jews and other minorities in the former Soviet Union. Since then, the situation has changed dramatically. Nowadays the Jewish community in Russia experiences a renaissance, with cultural and community centers, new synagogues established and old ones being reopened. President Vladimir Putin is personally engaged in these efforts, and the policy of the Russian government is to guarantee that all nationalities, religious and ethnic groups are not discriminated and live peacefully in their common home of Russia. Anti-Semitism is prosecuted to the full extent of the law.

Regretfully, despite all positive changes in economic and humanitarian spheres, the overwhelming support in the Russian-American business community for the extension of non-discriminatory treatment, Russia still does not enjoy the NTR status on a permanent basis. Such a situation adds an element of instability to our trade relations. The permanent presence of the risk that temporary waiver of Jackson-Vanik amendment for Russia will not be granted and higher tariffs will return does not encourage the establishment of long-term trade and investment projects in our two countries. The capabilities imbedded in the bilateral economic relationship have not been fully implemented.

One of the main priorities of our ongoing economic policy continues to be integration of the Russian Federation into the world economy and major international organizations dedicated to the promotion of free trade and competition. Currently we are actively involved in the negotiations on Russia’s accession to the World Trade Organization. The Russian State Duma has recently passed a huge portion of laws and regulations reflecting WTO requirements and providing for the enforcement mechanisms of WTO rules. At the last meeting of the Working Party on the accession of the Russian Federation to the WTO held in January, 2002, the legislative progress has been characterized by its Chairman as “very impressive and concrete”.

In accordance with our strategy for WTO accession, the Russian Government will continue focusing on making its legislation compliant with WTO norms and rules and intends to draft approximately fifty more new laws and amendments to existing ones in order to attain such compliance. We are taking necessary measures to ensure access of foreign goods, services and investments to Russian markets and are eager to participate as a WTO member in the new round of multilateral trade negotiations.

On the other hand, we do believe that negotiating process on Russia's accession to the WTO should not be a one-way road. We consider Russian membership in this organization as a mutually beneficial factor for all parties involved and would like to see real steps from our major trade partners to promote economic cooperation with Russia.

In conclusion, I would like to emphasize that after more than a decade of dramatic transformation in Russia and our bilateral relations it is imperative to get rid of the Cold War legacy. Normalization of trade is an important element inbuilding a new framework of trust and partnership between our countries. That is why we believe the proposed legislation that would end the application of the Jackson-Vanik amendment to the Russian Federation merits support of the US Congress.

Chairman CRANE. Thank you.

He stated that we need to create a transparent and predictable climate between our two countries. I agree, and this includes a commitment not to erect trade barriers in the name of sanitary concerns that are, in fact, based on politics. If there are legitimate concerns with some U.S. chicken processing facilities, then we should deal with this in a focused way. Instead, Russia has provided no good reason to continue a complete ban on all U.S. poultry. Russia's poultry ban has caused serious damage to our trade relationship, and I ask you, Mr. Ambassador, to send this message back home.

The Jackson-Vanik is fundamentally about freedom of emigration, and it is widely recognized that Russia has done a tremendous job with regard to the free emigration of Jews. For 8 years, Russia has been in full compliance with the freedom of emigration provisions in the law. I have a brother-in-law who is a Holocaust survivor, so this is something that is directly relevant to my family. The President says he wants PNTR for Russia to help further a new relationship with Russia. He wants it for geopolitical reasons. Well, I want it for economic reasons. This is good for Russia and for the United States.

With PNTR, U.S. investors and entrepreneurs will have more confidence in doing business in Russia. This confidence will foster more trade and investment between our two countries. It is no surprise to me that the U.S.-Russia Business Council, whose members are the pioneers doing business in Russia, is strongly advocating PNTR for Russia. In a speech at the U.S. Department of State last week, President Bush said, and I wholeheartedly agree, that free trade creates the habits of freedom, generates expectations of democracy, and promotes universal values of human dignity and human rights.

With this in mind, I believe it is appropriate and timely for the Congress to consider extending PNTR to Russia to remove one of the final vestiges of the Cold War. I look forward to hearing the testimony of our witnesses today, and I yield now to the Ranking Minority Member of the Subcommittee, Mr. Levin, for any remarks he would like to make. Mr. Levin?

[The opening statement of Chairman Crane follows:]

Mr. LEVIN. Thank you, Mr. Chairman. And welcome Mr. Lantos and to all those who are going to testify, the distinguished Secretary, Mr. Larson, the Ambassador, and everybody else.

Today, as Mr. Crane has mentioned, the Subcommittee considers whether to, we use the term, "graduate" Russia from the Jackson-Vanik amendment and whether to grant permanent normal trade relations. The question arises as to what factors we should base those decisions on.

Additionally, since both the Jackson-Vanik amendment and the conditional grants of normal trade relations (NTR) involve issues of leverage, we must determine whether and how to replace that leverage.

There are indeed legitimate foreign policy reasons prompting the Administration's request, especially given that Russia has been an important ally in the war against terrorism, and other developments within Russia. That said, human rights, religious freedoms, and economic commercial concerns do remain.

At the outset--and I think this needs to be kept in mind--it is important to realize that Jackson-Vanik graduation and granting PNTR are really two different actions, each with different policy implications. Although we often speak of the Jackson-Vanik amendment in Title IV of the Trade Act of 1974 as if they are one and the same, in fact, that is not correct. It is important as we embark on what may be the first of many Jackson-Vanik moves for former Soviet countries to understand this point, because it helps to identify all the issues that are at stake.

So when we talk about granting PNTR and moving the country out of Jackson-Vanik, we should consider both the Jackson-Vanik issues and the trade policy issues.

As to Jackson-Vanik issues, we must consider what we might call the traditional Jackson-Vanik issues. That amendment was a historic piece of legislation, and Mr. Lantos is going to speak, as he always does, eloquently on that subject. It set forth important criteria related to freedom of emigration necessary for certain countries to obtain normal trade relations.

Even from its inception, however, the Jackson-Vanik amendment was not only concerned with freedom of emigration, but also reflected the American commitment to human rights and freedom of religion. This fact is evident not only in the Preamble but also in the conduct of U.S. relations with the former Soviet countries for over three decades.

It is appropriate, then, as we consider whether a country should be graduated from the Jackson-Vanik amendment, that we place a strong emphasis on freedom of emigration, religious freedom, and human rights issues--issues that motivated so many of us to go to the Soviet Union over the years of the past. These were the issues at the core of the creation of the Jackson-Vanik amendment and should be at its core as we consider countries moving from out of it.

So as I said, toward that end I very much look forward to hearing from my colleague and dear friend Tom Lantos on these issues as well as from other groups here today, including the NCSJ: Advocates on behalf of Jews in Russia, Ukraine, the Baltic States & Eurasia (NCSJ). I want to hear--and I think we all do--about Russia's progress to date on these issues, areas where Russia needs to do more, and Russia's commitment to continue that progress in the future.

Separate from the Jackson-Vanik issues per se are what might be called the trade policy issues, and just a few moments on those. These are the issues that inevitably arise when deciding whether to bring about a change in the status of a trading relationship. For the most part, Congress has not agreed to accept a major change in trade status with another country without a mutual benefit and action on both sides. In the context of other countries covered by the Jackson-Vanik amendment, in recent years Congress has generally not granted PNTR until after the country has completed its accession to the WTO or at least completed its WTO accession negotiations with our country.

The reason is obvious: The ultimate vote on PNTR legislation gives Congress an important lever to ensure that the trade negotiations with that country reflect fully our priorities, Congress' and the Administration's.

As in the recent case of China, we want to be sure of the outcome of these negotiations. Ensuring a strong role for Congress is appropriate given that Congress has a constitutional mandate to regulate trade, and we have to take that seriously. So we should not approach the granting of PNTR lightly. We should not grant it without strong assurances, and preferably something more than just assurances, that Congress will continue to have a strong influence in shaping trade relations.

For a start, if a country has not yet acceded to the WTO, the findings and statements of policy in any PNTR bill should reflect congressional priorities on trade issues, from meaningful market access, to intellectual property protection, to labor market standards, to satisfactory resolutions of disputes. So I will be very interested in hearing from the witnesses what mechanisms and tools they believe will ensure continuing leverage for the United States and for Congress should we grant PNTR for the Russian Federation.

Additionally, given that the countries falling under Title IV of the Trade Act of 1974 are in many cases non-market economies or do not yet have well-established market systems, we need to seriously consider what types of structures we will need to ensure stable trade relations with those countries.

When we enacted the Trade Act of 1974--and this is often not recognized--we created a special safeguard for trade with non-market economies. We did so out of the realization that a high level of government interference in an economy or a lack of market structures creates the real possibility of large and unpredictable import surges. We recently reaffirmed that basic logic when we established a special safeguard in the China PNTR legislation. We need to give serious consideration to keeping a special safeguard in place for many of these former Soviet countries until they make substantially more progress toward creating truly market economies.

Thank you again, Mr. Chairman.

[The opening statements of Mr. Levin and Mr. Cardin follow:]

Chairman CRANE. Thank you.

Today we will hear from a number of distinguished witnesses, and in the interest of time, I would ask that you keep your oral testimony to 5 minutes, and we will include longer written statements in the record.

Now I welcome my colleague, Mr. Lantos. Mr. Lantos, will you proceed?

Mr. LANTOS. Thank you very much, Mr. Chairman, distinguished Members of the Subcommittee. I am honored to have this opportunity, Mr. Chairman, to testify today on graduating the Russian Federation from the provisions of the Jackson-Vanik amendment and granting it permanent normal trade relations.

I request respectfully that my written statement be included in total in the record.

Chairman CRANE. Without objection, so ordered.

Mr. LANTOS. Mr. Chairman, let me put my testimony in perspective. When President Bush returned from his summit meeting in Shanghai, I was asked by the White House, as the only survivor of the Holocaust ever elected to Congress, and as the Democratic founding Chairman of the Congressional Human Rights Caucus, to lead the effort to repeal Jackson-Vanik. I agreed to do that because I felt the President needed all the support we could give him on a bipartisan basis in the post-September 11 environment. And I very much hope that as we move along in perfecting this legislation, we will be able to achieve the President's goal prior to his meeting with Mr. Putin in Moscow in late May.

Mr. Chairman, the tragic events of September 11 have presented the United States with a strategic opportunity to reassess our relations with Russia. We all know the history and the legacy of Jackson-Vanik. It succeeded in prying open the iron gates of the Soviet Union. Thousands of persecuted Soviet citizens were permitted to emigrate during the 1970s and 1980s under the pressure of this legislation. But, Mr. Chairman, Jackson-Vanik has taken on a much greater significance than simply encouraging free emigration.

This legislation was the first case in which Congress imposed economic sanctions in order to achieve a human rights objective, and Jackson-Vanik has come to symbolize our Nation's commitment to ensuring that human rights in the broadest sense are a fundamental principle of our foreign policy.

Since the end of the Cold War, the Russian Government has opened its borders, legal restrictions on emigration have been lifted, and Russian citizens now migrate and travel freely. Important progress has also been made in many other aspects of human rights. Although some human rights issues remain, the progress on human rights in Russia relative to the Soviet era has been enormous.

As a result of these developments, the President since 1994 has found Russia to be in compliance with the provisions of Jackson-Vanik, and waivers have been issued, as provided by law, so that these sanctions have not been applied to Russia for almost a decade.

Now the world has been transformed again. President Putin joined the United States in the struggle against international terrorism, despite strong domestic opposition, and I want to pay tribute to the President for his courage. I believe that the permanent removal of Jackson-Vanik and its Cold War stigma, a symbolic gesture by the United States, would permit President Putin to reassure the Russian public, which is wary of his new pro-Western approach.

At the same time, Mr. Chairman, we must reaffirm to the Russian Government and to the governments of all other countries to whom these restrictions still apply that observance of human rights is an essential element in their relationship with the United States of America. For this reason, it is essential that legislation to graduate Russia from Jackson-Vanik reaffirm our commitment to human rights.

Mr. Chairman, in November 2001, Secretary Powell and Russian Foreign Minister Ivanov exchanged letters to address some of the concerns of Members of Congress, religious organizations, and human rights groups regarding human rights issues in Russia. In the exchange Foreign Minister Ivanov gave assurances that the Russian Federation will continue to permit unfettered emigration, safeguard religious liberties, and enforce Russian laws against religious intolerance. Although this exchange of letters is an important step forward, many of my colleagues, and I must see stronger and more precise language on restitution of communal property, which includes religious, cultural, and educational property, nationalized by the Soviet Union in the 1920s and 1930s. The Russian Federation must agree to rescind legislation and procedures for registering religious organizations or at least give assurances that it will not be used to obstruct the activities of internationally recognized religious organizations, including the Roman Catholic Church, Baptists, Mormons, and others.

Mr. Chairman, I believe that the Russian Federation has passed good laws against hate crimes, but enforcement of these laws has been extremely uneven. I was very pleased to hear President Putin speak out against instances of anti-Semitism and hate crimes, but, clearly, more needs to be done.

Regional and local officials in Russia must strengthen enforcement of existing laws and publicly condemn egregious abuses of human rights and anti-Semitic incidents. Similarly, local authorities have obstructed or prevented the return to religious and ethnic minorities of communal property, including houses of worship. The government in Moscow should indicate a willingness to help deal with these problems with local government officials.

It is essential, Mr. Chairman, that the United States express its intention to pursue human rights issues as part of our ongoing foreign policy approach to Russia. As part of an effort to make this point, an informal U.S.-Russian forum to discuss these issues on a regular basis must be established. This forum may include, in addition to United States and Russian Government officials, representatives of private organizations in both countries with an interest in human rights and religious issues. This is an important way to involve American religious and human rights organizations such as the National Council for Soviet Jews or the U.S. Commission for International Religious Freedom in dealing with the end of Jackson-Vanik for Russia.

Russia has experienced greater centralization of authority and strengthening of the state at the expense of civil society. This trend has extended to all facets of Russian society, including the rights of independent trade unions and labor. In fact, recent Russian legislation seriously diminished workers' rights. I urge the Administration and the Congress to continue to raise these concerns. Conducting a consistent U.S. policy towards Russia includes all aspects of human rights, religious freedoms, and they would honor the legacy of Jackson-Vanik.

I also urge our Administration, Mr. Chairman, to work with Members on this Subcommittee that have been in the vanguard in dealing with trade issues, including Mr. Rangel and Mr. Levin, to ensure that appropriate attention is paid to the economic aspects of graduation.

Sunsetting Jackson-Vanik sanctions for Russia could be a rare win-win-win proposition. Russia would benefit from the lifting of a Cold War stigma. There is nothing Mr. Putin wants more earnestly than to leave behind this stigma of the Soviet era. The United States would benefit from closer relations with Russia as a crucial partner in our global war against terrorism. And religious and ethnic minority groups historically targeted for persecution in Russia would benefit from the reaffirming of a commitment to human rights, religious freedom, and labor rights.

The Jackson-Vanik, Mr. Chairman, represented one of America's signal victories in the Cold War, and it marked the historic milestone in the field of human rights. With the end of the Cold War and with the prospect of a new strategic partnership between Russia and the West in our fight against terrorism, it is only appropriate for Jackson-Vanik restrictions on Russia to end as well.

Mr. Chairman, I hope that we can work together to modify the text of H.R. 3553 or introduce new legislation that will include appropriate language regarding U.S. policy with respect to the matters I raise today, including an appropriate reporting requirement so that Congress can be kept abreast of developments regarding these matters.

Unless we can develop legislation with language reflecting these human rights concerns, I cannot in good conscience support the graduation of the Russian Federation from Jackson-Vanik. I have raised my concern with Dr. Rice, the President's National Security Adviser, and with Deputy Secretary of State Armitage. I believe that they understand and fully share my concerns, and I do believe we can find satisfactory legislative language. But I repeat, Mr. Chairman, that unless we can reach such an agreement, I will not support this legislation and will have to oppose it actively.

Mr. Chairman, I believe this is the only approach to honor the legacy of our late colleague Senator Henry Jackson and our former colleague Congressman Charles Vanik and to ensure continuing progress in Russia on these most crucial matters.

Thank you, Mr. Chairman, for the opportunity to present my views before your Subcommittee, and I am pleased to answer any questions you or your colleagues may have.

[The prepared statement of Mr. Lantos follows:]

Chairman CRANE. Thank you, Mr. Lantos.

Now we welcome to the Subcommittee our distinguished colleague from California, another colleague from California, Mr. Cox, and any written statements will be made a part of the permanent record.

STATEMENT OF THE HON. CHRISTOPHER COX, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. COX. Thank you, Mr. Chairman. I thank the Chairman and the other Members of the Subcommittee for convening this hearing today.

We are here this morning because, a decade after Russia's victory over the Soviet Union in the Cold War, Russia remains subject to Title IV of the Trade Act of 1974, including the Jackson-Vanik freedom of emigration provisions. These provisions were focused very specifically on Communist systems, prototypically the Soviet Union itself. And their purpose was to deny normal trade relations and other economic incentives to countries that denied their citizens the right to emigrate. That purpose is today totally opposite from our policy towards Russia.

Russia's continuing coverage under Jackson-Vanik requires an annual Presidential determination and a report to Congress that Russia is not violating freedom of emigration criteria. Since the collapse of the Soviet empire, these have become routine because, of course, today Russia's citizens enjoy complete freedom of emigration.

In 1992, following the collapse of the Soviet Union, Russia was first for 2 years extended waivers under this law, and subsequently the President has found Russia repeatedly in full compliance with the Jackson-Vanik emigration criteria. In recent months, the Bush Administration has repeatedly expressed its desire, therefore, to repeal this Soviet-era restriction on our relations with Russia.

Today, Russia's long record of Jackson-Vanik compliance, the perfect string of Jackson-Vanik compliance findings and reports since 1994, indicates to me, and I think to the Members of this Subcommittee that it is high time that the application of Jackson-Vanik to Russia be terminated.

As you know, Mr. Chairman, I chaired the Speaker's Advisory Group on Russia, which was tasked with focusing on Russia's development since the collapse of the Soviet empire, essentially the period of the Yeltsin administration. The Speaker formally tasked the leadership of six committees of the House to assess the results of U.S. policy toward Russia during the Yeltsin years.

Along with our colleagues, Representative Ben Gilman, then Chairman of the International Relations Committee, Porter Goss, then and now Chairman of the Intelligence Committee, Banking Chairman Jim Leach, the late Floyd Spence, Chairman of the Armed Services Committee, and Appropriations Committee Chairman Bill Young, as well as six other subcommittee chairmen, we spent 6 months examining the past decade of U.S.-Russian relations. And in September of 2000, we released our findings and our recommendations.

The Advisory Group recommended that the U.S. Government repeal Cold War-era laws that impede relations with Russia. We recommended that the committees of jurisdiction, specifically including the Ways and Means Committee, carefully examine all aspects of the current statutory framework governing U.S. relations with Russia, with the intention of removing Cold War-era restrictions on full and normal U.S.-Russian relations. It was evident to us then in September of 2000, as it is now, that a great deal of work has already been accomplished, particularly with the 1993 Friendship Act, which sought to remove many of the legal impediments to normal relations between the United States and Russia. But we found that Congress had not completed the job. We had not completed the process of amending the remaining statutory leftovers of the Cold War.

The Advisory Group also recommended the promotion of Russia's integration into the world economy. Even today, in 2002, many Russian policies directly or indirectly discourage foreign investment and international trade. The United States should encourage Russia to adopt and enforce laws and policies that will allow her to enjoy the benefits of participation in the international marketplace. The United States should work with Russia for the adoption and enforcement of laws and policies that would enable Russia to accede to the World Trade Organization under appropriate commercial terms.

The legislation that you are considering today, which will repeal Jackson-Vanik for Russia, is a direct response to these recommendations of the Speaker's Advisory Group on Russia.

As you know, the Bush Administration has strongly encouraged your action today. Since taking office, President Bush has made the improvement of bilateral economic relations with Russia an important tenet of his Administration's foreign policy. During last November's meeting with Russian Vladimir Putin, Bush stated that the United States is committed to "creating the conditions that will enhance our trade and investment relations and help Russia reach its economic potential." He added that "we will work together to build confidence in the climate for trade and investment between our two countries, including working together in an effort to accelerate Russia's WTO accession negotiations."

To accomplish these goals, the President has asked for the immediate repeal of Jackson-Vanik for Russia. In November 2001, the White House released a fact sheet announcing that the Administration had begun consultations with Congress and other interested groups on the possibility of graduating Russia from the Jackson-Vanik requirements. The result was the introduction by the Chairman of this full Committee of the legislation that we are considering today.

In a House leadership meeting with President Bush yesterday, he repeated to me and to the others present his hope that Congress would now remove this Cold War vestige and allow U.S.-Russian relations to move forward on a new path, as well as reduce the barriers for Russia's inclusion in international organizations.

I couldn't agree more with my colleague Mr. Lantos that during the past 28 years, the Jackson-Vanik has proven to be a valuable and successful tool in ensuring that human rights, specifically freedom of emigration but certainly not limited to freedom of emigration, have been respected. The law was an extraordinary success in this case in ensuring freedom of emigration in the former Soviet Union. Since 1975, 573,000 refugees, many of them Jews, evangelical Christians, and Catholics, from areas of the former Soviet Union have been resettled in the United States alone. The Russian Jewish community in the United States today numbers between 750,000 and 1 million, and some estimates run twice as high. An estimated 1 million more Jews emigrated to Israel during that time. In today's Russia, the complete freedom of emigration is unquestioned. For fiscal year 2001, 3,875 refugees from Russia were resettled.

This legislation is important both for its impact on the future development of U.S.-Russian relations and on the development of democracy in Russia. If sanctions are appropriate when the right to emigrate freely is curtailed, then it is equally true that there should be recognition for the consistent respect of that right.

As we have seen throughout Latin America, Eastern Europe, and Asia, a growing respect for human rights has empowered citizens to demand their governments be accountable to the rule of law. Repeal of Jackson-Vanik for Russia is a important step to signaling U.S. support for Russia's democratic and free market institutions.

Thank you, Mr. Chairman, for the opportunity to express my views on this important issue. I understand that Ambassador Ushakov is also present today, and I join you in welcoming him.

[The prepared statement of Mr. Cox follows:]

Chairman CRANE. Thank you, Mr. Cox. Mr. Levin?

Mr. LEVIN. Thank you both for excellent testimony. Let me just make a brief comment. I think the challenge is, in a sense, how to put the two of your testimonies together.

Mr. LANTOS. Could you speak into the mike?

Mr. LEVIN. I think the challenge is how to put your two testimonies together that are similar but not identical. And in that regard, I very much agree with the need to continue to improve our relationship with Russia and to recognize the changes that have occurred there. I very much agree with that.

I only suggest that we remember what the original purpose of the 1974 Act was, and that was to begin to ease trade relations between then the East and the West. And Jackson-Vanik was an amendment to that. So the 1974 Act was an effort to begin to develop economic relationships between these economies in these countries with very different structures. And, therefore, included within the 1974 Act as originally written were provisions like: How do you handle trade relations with a non-market economy (NME)? How do you handle issues like surges? And there was a specific provision on that.

And so while Russia has moved away from the command economy market, and in some respects substantially, there remains the issue of how we are going to handle those trade relations with still two quite different structures; and also, as Mr. Lantos has pointed out so well, how we are going to keep very mindful the need for Russia to improve, to continue to improve its human rights approaches.

So I think those are challenges that are not identical, and we need to find a way to address both sets of concerns. And I am hopeful we can do that. I don't think we will do it by ignoring either of them, but essentially by finding ways to meaningfully address them.

So I don't think there is a difference of opinion about the need to respond to the changes that are going on in Russia and to encourage them and build stronger relationships. The question is the structures within which that occurs. And in doing so, I think we have to remember the original purposes of the 1974 Act as well as the thrust of Jackson-Vanik, which has had true success.

Thank you.

Chairman CRANE. Thank you. Mr. Becerra?

Mr. BECERRA. Thank you, Mr. Chairman. Thank you to our two friends and colleagues for their testimony, and I think for the most part you are going to find that Members on this Subcommittee agree with the central focus of the two comments that Russia has certainly made some progress and certainly all of us would love to see it graduate from the Jackson-Vanik restrictions.

I would like to ask a question--oh, before I say that, Mr. Lantos, you mentioned in your testimony, written, at least, that perhaps Mr. Vanik and the widow of Congressman Jackson should perhaps be invited to attend any ceremonies that might take place when President Bush visits Russia and President Putin. And I would also suggest that--perhaps you were a little too modest, and I would suggest that perhaps Congressman Lantos also be invited by President Bush to attend because, if there has been a champion since 1974 on some of these issues, especially for Soviet Jewry in Russia and the greater Soviet empire at the time, it was certainly Tom Lantos. So I would hope that you would not neglect to add the name Tom Lantos, if you should write any letter urging the President to invite some important Americans to visit the country with him.

I would like to touch on one particular point. Recently, the Russian Duma passed some labor reform laws, and from what I can tell, it appears that those changes may have actually weakened the rights of individual workers and perhaps made it more difficult for collectively workers to enforce their rights and have a position, an equal bargaining or as close to an equal bargaining position vis-à-vis the employers. And I am wondering if either of you would like to comment on whether or not the Administration should receive legislation from this Congress that would graduate Russia which includes some specific language that details what we would like to see Russia do with regard to human rights and, within that, labor rights.

Mr. LANTOS. Let me first commend you, Congressman Becerra, for raising this issue. I think the changes in what used to be the Soviet Union and is Russia today are nothing short of cataclysmic. And I certainly didn't expect in my lifetime to see the implosion of the Soviet Union and to see the initially embryonic but increasingly more and more robust development of democratic institutions in Russia, with perhaps the single exception of the media.

I fully agree with you. I think it is remarkable what the Russians have done, but I think it is also important for us to realize that, given the czarist tradition of centuries and the Soviet tradition of 70 years, a democratic society is a long ways from functioning in the Soviet Union. Therefore, whatever we can do to specifically strengthen labor rights in addition to human rights and religious freedom in this legislation and to make it part and parcel of the monitoring process that I suggested to Dr. Condolezza Rice, the establishment of an informal forum on human rights should also include the observance of labor rights. I fully agree with your comments.

Mr. BECERRA. Thank you.

Mr. COX. If I might just add, I think the main point has been expressed by several here--Representative Levin, yourself, Mr. Lantos, perhaps others before I arrived. It is a very simple thing. Russia today is no longer a Communist country. It is not a police state. It is not the "prison of nations," to use Lenin's words, that it once was. That is not, however, to say that it doesn't have all sorts of transitional issues as it seeks to accomplish what has never been accomplished before, transition from such a Communist police state, an empire, into a nation and indeed a neighborhood of nations that are free and democratic.

The free press remains in question in Russia. Transparency in regulation hasn't yet been achieved. Private property rights remain in question. Labor rights remain in question and so on. And all of these things deserve the attention of Russia's leaders and our own.

The framework within which those attentions are paid, however, should be a framework that is similar in every major respect to that applied to our other friends and allies around the world, many of whom have human rights issues. And it is this unique distinction that Russia still labors under, which was manufactured not for it but for the Soviet Union that we seek to repeal here today.

Mr. BECERRA. I thank you for your comments. Mr. Chairman, I thank you for the time. I just want to make sure I add this last caveat.

When we talk about labor rights and what we would like to see done, certainly I think all of us recognize the progress that Russia has made and the Russian Federation has made, and I don't think any of us are wishing to impose upon Russia or anyone else our standards or what we believe. But certainly there are some core labor standards that exist internationally that we can all agree upon that we can all try to meet, and I think we speak in terms of what is internationally recognized as the rights of workers and certainly work with Russia in regards to that, and hopefully we do see something in the legislation itself, the language of the legislation to address those concerns.

Thank you, Mr. Chairman.

Chairman CRANE. Thank you. Mr. Cardin?

Mr. CARDIN. Let me thank both of our colleagues for their excellent testimony.

Mr. Lantos, I particularly want to thank you for bringing out the history of Jackson-Vanik, that it is more than just the emigration of Jews, that it is one of the finest hours in the history of our Nation as we led the world in saying that if you want to do normal business with the United States, there are certain minimum human rights standards that you must adhere to. And the United States has sometimes been alone in this battle. There are a thousand reasons you can come up with why you shouldn't use trade or economic issues when you are dealing with human rights issues. It seems like that for the rest of the world human rights has always been at the bottom on the list of those issues that are important. And you have stood for the importance of human rights in dealing with the United States, and I really applaud you throughout your entire career for making that the highest priority.

We use other mechanisms. We used in South Africa direct sanctions, and it worked. And the rest of the world said it wouldn't, and it did. And they finally joined us.

So I guess one issue that I want to ask you about is, as we start to graduate nations from Jackson-Vanik and grant permanent normal trade relations, I would hope that we would have an affirmative policy in this country to say that there will be other ways in which we will use U.S. economic presence to make sure that basic human rights standards are adhered to by nations that want to trade or do business with the United States. And I just really wanted you to comment on that. I hope that we don't mean by the graduation from Jackson-Vanik that that is the end of the U.S. interest on human rights records if you want to do normal business with the United States.

Mr. LANTOS. Well, first, let me thank you for your comments, Congressman Cardin.

I fully agree with you. I think the proposal that I made to Dr. Rice is a modest, reasonable, and readily acceptable proposal. I do not believe that there is any objection on Russia's part to accepting this proposal. As a matter of fact, the democratic forces in Russia welcome informal monitoring and the establishment of binational commissions that deal with these issues.

It is clearly in the best interests of the Russian people for us to continue to observe how human rights are respected in Russia. My feeling is that with very little good will on all sides, the criteria and the conditions that we outlined to the National Security Adviser can be incorporated in this legislation.

I very much hope that President Bush and President Putin will have a festive meeting in Moscow when Jackson-Vanik is recognized as a great achievement which has succeeded in accomplishing its goals. But I think it would be a very serious oversight on our part if we would merely sweep under the rug the need for continuing monitoring and continuing discussion with our Russian friends on these issues.

Mr. CARDIN. Well, I certainly agree with your position, and I look forward to working with you and hopefully we can resolve this issue in an amicable way.

Thank you, Mr. Chairman.

Mr. LANTOS. Thank you very much.

Chairman CRANE. I want to express appreciation to both of our distinguished colleagues from California for making their presentations today. And with that, you are relieved of further duties. We thank you.

I would now like to invite our second panel: the Honorable Peter Allgeier, Deputy United States Trade Representative (USTR); and the Honorable Alan P. Larson, Under Secretary for Economic, Business, and Agricultural Affairs, U.S. Department of State.

Gentlemen, if you will take your seats and proceed in the order I introduced you, and try and keep your oral testimony to 5 minutes or less. Those little lights give you a green light, yellow light, and red light. All written statements, though, will be made a part of the permanent record.

And with that, Ambassador Allgeier, you may proceed.

STATEMENT OF THE HON. PETER ALLGEIER, DEPUTY UNITED STATES TRADE REPRESENTATIVE

Mr. ALLGEIER. Thank you very much, Mr. Chairman, and thank you, Congressman Levin and the other Members of the Subcommittee, for inviting me to testify today on this important subject of termination the application of Jackson-Vanik to Russia. I will summarize my testimony and ask that the full testimony be submitted for the record.

The United States certainly has begun a new era in its relations with Russia. Whether in the realms of security or foreign policy or economics, President Bush has emphasized the need to move beyond Cold War strictures and stereotypes. As he said in November during his meeting with President Putin, "we're working together...to establish a new spirit of cooperation and trust" and working together "to make the world more peaceful."

As a concrete manifestation of this new relationship and moving beyond the outdated stereotypes, the President has urged the Congress to end Jackson-Vanik's application to Russia. In the first instance, the amendment has served its purpose. Russia has been in full compliance with Jackson-Vanik's emigration provisions since 1994. Secondly, continued application of Jackson-Vanik will impede our efforts to work together because it will be an indication to Russia that they continue to be suspect and viewed almost as a Cold War adversary.

I will focus, Mr. Chairman, on the economic front. There the Russians have made great strides in reforming their economy. A key part of Russia's broader economic reform program is achieving the standards that are necessary for membership in the World Trade Organization, and I would like to emphasize it is not just membership; it is achieving the standards, the requirements, and adhering to the obligations that are necessary for membership.

President Putin has made WTO membership and integration into the global trading system a top priority. We, of course, support Russia's efforts to promote economic reforms, to establish the rule of law in commerce, and to adopt and enforce the WTO commitments for a more open economy.

Let me add quickly that as we intensify our efforts to work with Russia on WTO accession, this does not mean that we will welcome Russia's entry into the WTO on just any terms. We are negotiating intensively and aggressively with Russia to increase market access for U.S. exports--manufactured goods, agricultural products, and services--and we will work with the other members of the WTO and, of course, with Congress to ensure that the Russian Government implements the many rules of the WTO.

Recently, the WTO produced the initial text of a draft Working Party report on Russia's accession. This is an important step forward in Russia's WTO accession process, and it provides the framework for recording Russia's progress in adopting the WTO provisions and making the changes in its domestic laws and regulations that are required to adhere to those provisions, and for identifying the areas in which additional work is needed, and for resolving those issues. So this is the framework in which the countries proceed with the accession process in the WTO.

This report was circulated April 2nd. We are reviewing it carefully, and all the members of the Working Party will convene in late April to have an initial reading, a first reading of this, and to provide an assessment, an initial assessment of what more Russia needs to do with its laws and its other measures to come into compliance with the WTO.

We have been consulting regularly with Congress throughout Russia's WTO accession. This is a formula that has proven successful in the past in other accession negotiations. We look forward to continuing to consult closely with the Congress and, in particular, with this Subcommittee as we go through the accession negotiations and the process of drafting Russia's WTO protocol and its other commitments.

Obviously there has been growing attention by the Congress and by domestic interests, economic interests in the United States with the accession process, particularly, I would say, by the agricultural community, but not exclusively. As we have conducted our consultations with the Congress and with the domestic economic interests, we believe even more strongly that we have a common view of the objectives for our accession negotiations.

In agriculture, let me say that these objectives are shared not just by the Congress but also by many of our trading partners who are active in the accession process: Australia, Canada, Argentina, Brazil, and New Zealand, for example.

In agriculture, we are pursuing commitments on market access, on sanitary and phytosanitary (SPS) procedures, on limiting agricultural support, and also ultimately eliminating export subsidies.

Let me mention the area of food safety and SPS. It is extremely important that these measures not be used for protectionist purposes. We attach great importance to resolving these issues in the course of accession and issues that we encounter in the meantime. We have a real-life example of the importance we attach to this. Unfortunately, Russia has failed to date to eliminate the ban on poultry and poultry products. We believe very strongly that we are in compliance with the standards of food safety. We have worked very hard at extremely high levels, at the Cabinet level, and the President has emphasized the importance of resolving this immediately. Our team is in Russia even today working to resolve that as quickly as possible.

Additional negotiations in the WTO obviously involve access for manufactured goods. Among the areas that we are working on particularly are civil aircraft, fertilizer that you mentioned, Mr. Chairman, in your statement, construction equipment, and also in services, important services such as financial services, telecommunications, and distribution. I should also mention intellectual property is an important objective.

So we intend to obtain the highest level of commitments from Russia with respect to the adoption of WTO rules, guarantees of meaningful market access in goods and services, and enforcement of the rule of law in trade.

I want to mention that the rule within the WTO is consensus, and the Russians will need to obtain the consensus of all the members, including the United States, in order to have a successful protocol of accession. That ensures that our concerns not only will be heard, but that we have sufficient leverage to resolve the full range of issues presented by Russia's trade regime.

We look forward to working, as I said, with the Congress as we move to complete this process, and we believe that ending the application of Jackson-Vanik will provide increased momentum to Russia's broad economic reform program and will encourage Russia to make the changes necessary to join the international trading community.

Thank you very much, Mr. Chairman.

[The prepared statement of Mr. Allgeier follows:]

Chairman CRANE. Thank you, Mr. Allgeier. Mr. Larson?

Mr. LARSON. Mr. Chairman, Mr. Levin, and respected Members of the Subcommittee, it is a great honor to be here. The reason I am here today is because President Bush and Secretary Powell strongly support ending the application of Jackson-Vanik to Russia.

Our relations with Russia no longer can be seen as a legacy of the Soviet Union. President Bush and President Putin are building a new relationship based on cooperation and shared interests. Breaking with the patterns of the past, President Putin has taken steps that have enhanced our own security, moved Russia closer to a market economy, and reaffirmed Russia's commitment to respect human rights and basic freedoms.

We also need to break with the patterns of the past. We need to demonstrate that we are ready to work with Russia as an equal partner, and the time has come to end Jackson-Vanik's application to Russia.

The Jackson-Vanik's original goal focused on promoting free emigration from the Soviet Union, and Jackson-Vanik achieved that goal, in large part because of the moral authority of our position. Since 1973, more than half a million refugees, many of them Jews, evangelical Christians, and Catholics, have emigrated to the United States, and in that same period, more than 1 million Jews have emigrated to Israel.

In the strategic and foreign policy arena, we are on the threshold of a new relationship. For example, President Putin has offered broad, strong, and tangible support for the war on terrorism. President Putin has accepted our offer to reduce operationally deployed nuclear weapons to between 1,700 and 2,200. He has opened the way to a closer, North Atlantic Treaty Organization, NATO-Russia relationship. He has closed the intelligence facility at Lourdes, Cuba, and the military base at Cam Ranh Bay, Vietnam. He has been working with us to try to quell tension in the Middle East and create lasting peace in the Balkans. Just yesterday, the Foreign Minister of Russia joined the Secretary-General of the United Nations and the leaders of the European Union (EU) in expressing support for Secretary Powell's mission in the Middle East.

President Putin has also been carrying out a series of economic reforms, and we are actively working with the Russian Government to accelerate and deepen them in order to bring greater prosperity to the Russian people, open new opportunities for American traders and investors.

Russia is committed to fulfilling the accession requirements of the WTO, and we are committed to ensuring that Russia does not enter the WTO until it has met these admission requirements.

In watching Russia move away from the Soviet era, we have witnessed a revival of religious life, marked by the restoration of synagogues, churches, and religious schools. President Putin has stated that Russia is a multi-ethnic state in which the right of all must be protected, and he has declared that while anti-Semitism may still exist, there is no justification for it, nor can there be.

As Mr. Lantos indicated, over the last 13 years very, very significant progress has been made on human rights. Ending Jackson-Vanik's application to Russia will not end our ongoing dialogue on human rights. As President Bush stated, "My Administration is fully committed to work with Russia to bring about progress in human rights, including safeguarding of religious liberty, enforcement of hate crime laws, and the restitution of religious community property." And I can report that progress is being made on the return of religious and communal property.

Among the areas where more work needs to be done is on Russia's new labor code. While it has some positive elements, we are pushing for further revisions that would increase the democracy, transparency, and accountability of labor relations in Russia.

Mr. Chairman, the Soviet era has ended. Russia has been in compliance with Jackson-Vanik since 1994. Ending Jackson-Vanik's application to Russia is the right thing to do, and now is the right time to do it.

Thank you.

[The prepared statement of Mr. Larson follows:]

Chairman CRANE. Thank you, Mr. Larson.

Ambassador Larson, I would like to ask you a question about the political motivations that are prompting the push for PNTR for Russia now. Will that not possibly give some pressure for a quick completion of Russia's WTO accession?

Mr. LARSON. Mr. Chairman, I don't think it does create that pressure. As Ambassador Allgeier indicated, there is a process in the WTO that is, first of all, based on consensus.

Secondly, we are committed to making sure that the WTO standards and the interests of our constituencies are upheld as the accession process proceeds.

Third, we do believe that the Russian Government itself understands that accepting the disciplines of the WTO will further the reform efforts that they are trying to promote.

So I think on all three counts, there is every reason to expect that we can be absolutely diligent in making sure that there is not undue haste or undue pressure to do this on any terms other than commercially appropriate terms.

Chairman CRANE. Mr. Allgeier, on poultry, I want to make clear that it will be hard to find support in Congress to repeal Jackson-Vanik if Russia continues to play politics on that issue. And what is the status of the poultry ban?

Mr. ALLGEIER. Well, Mr. Chairman, we certainly understand very clearly the first point that you just made, and we have conveyed that to the Russians.

We reached an agreement with Russia at the end of March on a memorandum of understanding (MOU) that delineated what would constitute compliance with the food safety standards of Russia. We invited a Russian team of veterinarians here, took them around the country to show them our plants to provide the documentation. We believe we have complied with all elements of that MOU, and as I mentioned, our team is in Russia now, our embassy there, working through those documents with the Russian authorities, and we are committed to having that ban lifted immediately.

Chairman CRANE. A second question for Ambassador Allgeier. We will hear testimony later this morning from one of my constituents, Bob Liuzzi. He is with CF Industries based in my district in Palatine, Illinois. And Mr. Liuzzi is representing the U.S. nitrogen fertilizer industry, and he will focus on that industry's concerns with respect to U.S. imports of nitrogen fertilizer from Russia.

Russian nitrogen fertilizer producers benefit from government-set, low-priced natural gas that allows them to undersell producers from other countries. Mr. Liuzzi says the U.S. industry may go bankrupt if it has to wait until Russia's WTO accession for the issue to be resolved.

How is the Administration addressing today the legitimate economic and trade concerns of this strategic industry?

Mr. ALLGEIER. Yes, we met yesterday actually with Mr. Liuzzi. That was not the first time that we have met with the fertilizer industry of the United States. It is a significant and legitimate problem that they face due to the dual pricing of energy, specifically natural gas, in Russia. And in terms of the short term, we are working with them. There are a number of remedies possible under either U.S. law, for example, antidumping, but we also have a provision in our trade agreement to deal with selective safeguards if there is market disruption or a threat of market disruption.

We are prepared to work with the industry conscientiously to find the most appropriate solution to the problem.

Chairman CRANE. Thank you. Mr. Cardin--or, Mr. Levin, I am sorry.

Mr. LEVIN. Let me yield to Mr. Cardin. He has to go on the floor.

Mr. CARDIN. Thank you, Mr. Chairman, and thank you, Mr. Levin. I appreciate that.

Mr. Secretary, I particularly want to compliment the part of your testimony where you indicate that, "President Bush has reaffirmed this Administration's commitment to broad human rights and religious freedom principles on numerous occasions. He has pledged that the Administration will continue to work with Russia to help freedom and tolerance become fully protected in law and to safeguard religious liberty."

"We will continue to engage in an active dialogue with Russia on civil liberties and religious freedom issues and we will report regularly to the Congress on these issues."

I thank you for those statements. I think they are very important.

Mr. Ambassador, as I was listening to you talk about accession to WTO and the fact that it is consensus and the fact the United States plays a critical role, and as you ticked off all the economic issues that are going to be of concern to our country, I didn't hear you mention human rights issues. And I think this is an opportunity that we have with WTO accession by Russia, not just what we do with Jackson-Vanik but how we handle the accession issues.

There are serious problems that remain in Russia. As you have pointed out, as the Administration has pointed out, as Mr. Lantos has pointed out, yes, there has been tremendous progress made. We understand that. But there is still more progress that needs to be made. And Mr. Lantos has made certain suggestions as to how we can achieve that in the context of the legislation we have before us. But I would hope as we negotiate on the WTO agenda that we would be bringing these issues up and asking our friends in Russia to resolve these issues to make it easier for us to support the accession to the WTO. And I appreciate your comments on that.

Mr. ALLGEIER. Yes. Well, obviously, the WTO accession negotiations and even our other trade negotiations with Russia are only one part of our dialogue with them, and we work very closely with the State Department and the other departments to ensure that we are reinforcing the broad message to Russia that it is not just economic reform, but it is also continuing attention to human rights and other values that we hold high that is part of moving forward together.

Mr. CARDIN. Just be a little bit bolder about that. That is one of the things that I think Jackson-Vanik speaks to, the fact that Congress intended us to link economic issues with human rights issues, and use this opportunity to show that the United States maintains the highest priorities on human rights achievements. I just think that--I understand that sometimes these are quiet discussions, but I think some of us would feel a little more comfortable if you would highlight these issues as we go through some of the economic changes that are occurring in Russia.

Mr. ALLGEIER. Okay. I understand. Thank you.

Mr. CARDIN. Thank you, and I yield back to Mr. Levin, and I thank him for yielding to me.

Chairman CRANE. Mr. English?

Mr. ENGLISH. Thank you, Mr. Chairman.

Secretary Larson, this is obviously a very difficult issue and one that I think goes to the core of the Administration's trade policy in the region, which I am interested in, among other things, as Chairman of the Congressional Steel Caucus. And as part of the broader picture, I would like to ask you a question having to do with our recent situation in Europe.

There have been reports regarding EU threats to retaliate against U.S. products in response to the Administration's recent actions on behalf of the steel industry, in part precipitated by conditions in Russia. I find these reports to be particularly ironic, given that any retaliation at this juncture would clearly violate the rules of the WTO by bypassing the dispute mechanism entirely--a strange approach coming from some of the strongest apostles of multilateral trade policy.

It is also my understanding that the EU has drawn up a list of very sensitive items for possible retaliation. I have reviewed that list, and I am very concerned about the rhetoric coming out of Europe. Frankly, I think if we are going to have a strong trade policy, we need to have a very strong response to this situation.

Mr. Secretary, I want to know what you are telling the Europeans on this subject, and what we plan to do should they retaliate against us.

Mr. LARSON. First of all, Congressman, we have been working very closely with the U.S. Trade Representative's Office to explain the reasons for the President's decision. We recognize that it is a decision that many in Europe did not want. But we have pointed out that it is a decision that was taken after a great deal of pressure on and injury to our own industry, after following a deliberative process that is in compliance with WTO rules, and after looking to make sure that, to the maximum extent possible, we were not harming the interests of our trading partners.

We have also pointed out, as you just did, that there is a place to talk about differences of opinion of this type, and that is in the WTO.

We agree that in the cases where we have had problems with European actions, we have waited until the end of the WTO process to impose any sanctions, and we have only done that retaliation or the withdrawal of concessions at the time when the WTO process was over and Europe had failed to comply with any WTO decision. So we agree that if there were a move towards retaliation, that that would be not in compliance with WTO rules. It would be a strange, unilateral measure for Europe to take. And we are working very hard to encourage the Europeans to really see this in a more reasonable way and to realize that this is an issue that, if they have concerns about it, there is a place in which they can bring those up and a process in the--

Mr. ENGLISH. I am gratified to hear that. I must say I have carried the same message to Mr. Lamy when he has visited with me. I have carried the same message to some of my counterparts in the European Parliament. But having done all of that, there seems to be still an extraordinary rhetoric on their part.

What I am seeking from you is a specific assurance--my having worked with USTR, I know they are on the same song sheet, that they are putting forward a very strong message. I would like the same assurance that the State Department is working with USTR and carrying the same strong message that we are not going to tolerate the retaliation in this case. Can I have that assurance, Mr. Secretary?

Mr. LARSON. Congressman, you definitely do. We are on the same sheet of music. I think Ambassador Allgeier and I talk about three or four times in an average day about how to make sure that our respective activities dovetail so that we are sending the same strong message on this issue, as well as on others.

Mr. ENGLISH. Thank you, and I want to thank both of you for the strong position that the Administration has taken on steel. And, Mr. Chairman, I thank you for the opportunity to have posed this question.

Chairman CRANE. Thank you. Mr. Levin?

Mr. LEVIN. Thank you. Thank you very much.

I wanted to start off by indicating, Mr. Larson, Secretary Larson, I fully agree with what you have laid out under strategic and foreign policy considerations beginning on page three. And I hope we keep all of these in mind, including the progress in our relations with Russia.

I do want to talk a bit about the economic issue because you also mentioned, Mr. Secretary, that the principal goal of the Jackson-Vanik legislation in 1974 was to promote free emigration from the Soviet Union, particularly for Soviet Jews. That became the main focus of the 1974 Act, though it wasn't its original. It related to trade policy, and without in any way diminishing the importance--I want to elevate the importance of the Jackson-Vanik amendment--I want to go back to some of the economic issues and ask the Ambassador, you mentioned that there was a Working Group report that has just been issued in draft form. Has that been discussed? Has that been made available to Members of Congress?

Mr. ALLGEIER. I believe it has. If it hasn't, it should be, and it will be. Yes, it has been. I am assured that it has been.

Mr. LEVIN. The full text of it?

Mr. ALLGEIER. Yes, the 123 pages of it.

Mr. LEVIN. Okay. And is there a clear delineation of the Administration's objectives in the WTO Russian negotiations, accession negotiations? Is there an outline of what are considered the prerequisites?

Mr. ALLGEIER. Yes. We have our objectives that we have discussed, of course, with Congress and would be happy to lay out for you in writing, if that is something that you would like.

Mr. LEVIN. I am not sure they have been laid out in writing to us, and I would appreciate it if you would do that, because let me just say it as clearly as I can what the question in this regard is. The way the legislation is now written, essentially it would take out any formal role of Congress relating to the WTO accession of Russia. That is the effect of it. We will be consulted, but there will not be a required vote of any kind, because we don't vote on the accession itself. Right?

[The information is being retained in the Committee files.]

Mr. ALLGEIER. Right.

Mr. LEVIN. And when it came to the important negotiations with China, it was the vote on PNTR that became the formal way for Congress to be involved.

Now, one of the issues, for example, relates to Section 406, the surge provision, and when that was waived under the so-called Jackson-Vanik PNTR vote, we inserted into the legislation, as you know, a replacement for it. So the reason for the concern--and it has been more actively expressed on the Senate side, but it exists here--is the role of Congress and the impact of the elimination of an opportunity for Congress to vote.

So let me ask you this: As you have begun to think of Russia's accession--I will use this as just one example, because poultry is important and fertilizer is important, but we need to look at the overall framework of our economic relations. So I am picking out Section 406, the surge provision, as just one example.

What would you propose to replace it?

Mr. ALLGEIER. Okay. First of all, in terms of the role of Congress, of course, we take very seriously the necessity, the desirability of consulting with you, and, in fact, I believe that in the Uruguay Round implementing legislation, we are required to consult with Congress in the course of WTO accession. So there is in that sense--

Mr. LEVIN. That is to consult, but while we vote on the ultimate agreement in a round, like Uruguay, we have to implement it. That isn't true of a WTO accession. So I know there is a requirement of consultation, but that has its limits. It is different than our having the leverage of a formal vote.

So I am asking you, regarding Section 406 specifically, what are you suggesting be its replacement with Russia still being other than a market economy?

Mr. ALLGEIER. Two comments. First of all, specifically with respect to the selective safeguard provision that Section 406 provides in our domestic law, we, of course, have the trade agreement which would be in place until we have WTO accession. At that point we still--we will have to explore with Russia and our other trading partners who have the similar concerns to the ones you have raised whether it would be appropriate to have some sort of safeguard provision as part of their accession.

Mr. LEVIN. You haven't explored that yet?

Mr. ALLGEIER. Oh, yes, we have.

Mr. LEVIN. And where are those explorations?

Mr. ALLGEIER. Well, we are still looking at what would be most appropriate. We are in a fairly initial stage of the negotiations with Russia in the sense that we have this first Working Party report, and that will inform both us and the Russians, and our trading partners, of what needs to be done before they join the WTO. So that is one area that we and our trading partners are concerned about and will be looking to address appropriately in the accession.

Mr. LEVIN. Remember, these are bilateral agreements. Do you expect there will be a replacement for Section 406 in our bilateral agreement with Russia?

Mr. ALLGEIER. Actually, Section 406 is not the only basis for dealing with the selective safeguard provision in our bilateral agreement. Section 125 of the Trade Act actually provides that and would not require us to link it to emigration or anything like that.

Mr. LEVIN. Okay. Well, there is clearly a set of issues here, and we need to move ahead with these, I think, if you expect there to be the kind of action I think all of us would ultimately like. And there is a lot of territory to be covered, clearly I think in the House and, as you know, in the Senate, you aren't going to move--you eliminate the role of Congress in terms of a vote, that is an important change. And we need to take that into account.

Thank you.

Chairman CRANE. Thank you. Ms. Dunn?

Ms. DUNN. Thank you, Mr. Chairman.

I know that steel has been addressed, and also poultry has been addressed. I want to ask you about a couple of industries that are very important in my corner of the world, which is the Puget Sound area.

I know Ambassador Pickering will be before us later on. In his new position, I am sure he is watching very carefully over one of my favorite companies, the Boeing Company.

But let me ask you first, on the level of trade relations with Russia, I am concerned about the level of intellectual privacy piracy, and I would like to have you talk to me a little bit about the position of the USTR and the State Department and what kind of pressure you are exerting on Russia to enact and enforce intellectual property rights (IPR) laws to protect piracy of American products. According to my read, the numbers that come out of Russia are about $5 billion of company profits over the last 5 years.

Could you tell me what is going on in that area, please?

Mr. ALLGEIER. Yes. Protection of intellectual property has been a longstanding objective of the Administration in its relations with Russia, even outside of the WTO accession, first to obtain better laws--and there still needs to be work on that, and particularly on enforcement. We have a bilateral intellectual property group that addresses these issues, that takes on information and help from our private sector. We have made it very clear in the WTO accessions that scrupulous adherence to the obligations of the WTO, the so-called TRIPs, Trade-Related Aspects of Intellectual Property Rights, will be an essential part of our willingness to accept Russia's accession. We use our domestic law, the special 301 law. Russia is a priority watch list country. So I don't think there is any doubt in Russia's mind that this is a very high priority for us, and it is extremely important from an economic standpoint. So we will continue to press that.

Ms. DUNN. And, secondly, let me ask you about aircraft being sold in Russia. Washington State is the home of--we consider still Washington State the home of the airplane manufacturing industry. We actually do have 55 percent of that company still, the commercial line, in Seattle.

Chairman CRANE. Chicago's Boeing?

[Laughter.]

Ms. DUNN. Well, I hope you treat them as well as we treat them, Mr. Chairman.

But we have all kinds of industry in our Northwest, and so you have got the aircraft industry, you have got the medical device companies. What is the position of the negotiations on reducing and eliminating the tariffs that cost us so much as we try to export our top-level products?

Mr. ALLGEIER. Well, part of any country's accession package has to be a schedule of commitments on reducing their tariffs and getting rid of other non-tariff barriers. That will have to be an important part of the Russian package, and the two industries that you mentioned--medical equipment and civil aircraft--are two that we have been highlighting with them in our negotiations and will continue to. And we are pressing the Russians to join the civil aircraft code of the WTO as part of their accession package.

Mr. LARSON. If I could just add two quick points. One of the things that we are doing in this relationship that we are strengthening the business-to-business aspect of it. There is a business dialogue which I think provides a very good environment in which to both push our IPR concerns, because they do affect investment into Russia, something they want, but it also provides an avenue to pursue cooperation in sectors like the aircraft sector.

I do want to add that when large sales become a matter of political jockeying, the U.S. Government in the form of the U.S. Trade Representative, the Secretary of State, and others in the Administration have always been pushing to make sure that our suppliers get a fair opportunity to compete on the commercial merits and that politics from other quarters doesn't enter in.

Ms. DUNN. Good. And, you know, all of that has to do as much with jobs in my neck of the woods where we have lost 30,000 jobs because the Boeing Company has laid off workers. We have had to spend a lot of time this year making sure that those folks were well treated through Trade Adjustment Assistance Program for Workers, TAA, and through the unemployment pockets of money that we could bring home. So we also think highly of the product that is made in our neck of the woods. So we will be watching what you do with great interest, and I am happy to hear your reply.

Thank you.

Chairman CRANE. Thank you. Mr. Camp?

Mr. CAMP. Thank you, Mr. Chairman.

Ambassador Allgeier, I apologize for being called out of the room for part of your testimony, and I realize that you have addressed the poultry issue to some extent. But I just am very concerned that the ban isn't lifted. As you know, this is the largest foreign destination for poultry. It is unacceptable to me that this ban hasn't been addressed on March 31st when the protocols were signed. And from what I understand your testimony to be, we don't really know when the ban is going to be lifted. This has a tremendous ripple effect throughout the agricultural community and for support for trade in general in this country, because I don't really see any justification.

Can you tell me specifically when you think this ban will be lifted and exactly what steps will be taken? I realize there are ongoing discussions, but it is critical that this be addressed and be addressed in as expeditious a manner as possible.

Mr. ALLGEIER. Yes, we certainly agree with the importance of this issue and its ramifications for many, many States in the country. We were told by the Russians that the ban would be lifted by the 10th of April, and we are beyond the 10th of April. We are determined that this ban will be lifted in the next few days. That will obviously be for the Russians to decide, but that is our objective. We think it should be lifted now. We believe that we have demonstrated compliance with their standards, compliance with our standards, and that there is not a scientific basis for denying entry for our poultry products.

Mr. CAMP. Would you agree that we complied with all issues when we signed the protocol on March 31st?

Mr. ALLGEIER. Excuse me?

Mr. CAMP. Would you agree that the United States provided the Russian Government with all information and complied with all issues necessary to resolve the ban when the protocol was signed on March 31st?

Mr. ALLGEIER. Yes. Well, we felt that it was fair for them to conduct the inspections, but the inspections are over now, and we believe that both the inspections and the documentation that we have provided is adequate, is more than adequate to demonstrate that the ban should be lifted now.

Mr. CAMP. So the United States has met the obligations or conditions to lift the ban?

Mr. ALLGEIER. Yes, we believe we have.

Mr. CAMP. All right. Thank you.

Mr. ALLGEIER. We believe that quite strongly.

Mr. CAMP. Thank you, Mr. Chairman.

Chairman CRANE. Mr. Becerra?

Mr. BECERRA. Thank you, Mr. Chairman. And I thank the two of you for being here again.

A quick question for Secretary Larson, if I may. We recently granted Russia Generalized System of Preferences (GSP) status, and within GSP there is a requirement that the country observe and implement internationally recognized core labor standards. A question to you, because I know that the State Department and our embassy raised concerns before the Duma with regard to their new labor law. What do you plan to do, does the Administration plan to do, to try to ensure that those GSP requirements with regard to the internationally recognized core labor standards are adhered to?

Mr. LARSON. We will be having a very, very active process of diplomacy and advocacy on the labor issue, as we have continued to do on human rights and religious freedom issues. Our embassy and our consulates have been extraordinarily active on those issues.

Now, under the GSP program, though this isn't a direct quote, there is a standard that you referred to of taking steps towards the recognition of internationally recognized workers' rights. And there is set up under law a process for reviewing where GSP beneficiaries stand. It is a process that the U.S. Trade Representative's Office operates, but that the other agencies that have an interest and concern in this participate. And my expectation would be that with Russia, as with other countries, one would keep under review under that framework whether the country is taking steps and whether they are moving in the right direction.

I think there are many aspects of what Russia has done in this and other human rights-related areas that have been positive, but we have been very outspoken about some of the deficiencies that we do see in this draft legislation.

Mr. BECERRA. Would the Administration be supportive of including language in the legislation with regard to graduating Russia from Jackson-Vanik that would specifically incorporate those issues of seeing Russia taking steps towards addressing those core labor standards?

Mr. LARSON. Well, we do have a legislative framework that the Congress has set out that I think addresses that. So, I mean, without being definitive, my feeling is that we have a framework that the Congress and the executive branch have agreed on, and it is just a question of having that framework operate in the normal way.

Mr. BECERRA. One last question, Ambassador. You mentioned in your testimony that you think the Cold War issues are outdated, that Russia certainly is one of those former adversaries that now has become an ally and friend. You mentioned continued application of Jackson-Vanik, however, as an indication to Russia that they continue to be suspect and viewed as a Cold War adversary. We granted China permanent normal trade relations recently. In the spirit of Charlie Rangel, who is not here in this room at this moment, I would like to ask: Can you tell us why we don't address these same issues with Cuba?

Mr. LARSON. I think that there is a world of difference between where Russia is and where Cuba is. We have tried to summarize in my statement all of the extraordinary steps that Russia has taken over the last 13 years, and some of the particularly remarkable steps they have taken over the last year in working with us on the war on terrorism, moving forward on religious freedom, and things of that sort.

I cannot report that there has been progress on human rights--or labor rights, for that matter--in Cuba. There is oppression of any effort to organize political parties or dissident groups. People that try to express their opinion get jailed. Workers are taken advantage of when they go to work in some of these foreign investments that our European friends make in Cuba.

So for me, the difference between those two situations is a difference of night and day.

Chairman CRANE. Right. Thank you, Ambassador Larson, Ambassador Allgeier. I hate to interrupt but we are down to less than 2 minutes to make this vote.

Mr. ALLGEIER. Thank you, Mr. Chairman.

Chairman CRANE. We have three votes in succession, and so we are going to stand in recess subject to the call of the Chair for our next panel, but I want to express profound appreciation to Ambassador Larson and Ambassador Allgeier for your testimony.

With that, we stand in recess.

[Recess.]

Chairman CRANE. I apologize to you for the disruption here, and I can't control the voting over on the floor. But we had three recorded votes in a row, and we have other commitments. But I want to try and complete our hearing this morning with your testimony, and we will have Members filtering back here. But in the interim, I think we ought to get started.

And so I will start with the Honorable Thomas Pickering and then Bob Liuzzi, and then Dave Camp is going to get back here--he hopes to get back here--to formally introduce Mr. Wood. And then Harold Luks and Richard Edlin.

So we will start, and try and keep your oral remarks to 5 minutes or less, and any written statements will be made a part of the permanent record. So we will proceed with you, Ambassador Pickering.

STATEMENT OF THE HON. THOMAS R. PICKERING, SENIOR VICE PRESIDENT, INTERNATIONAL AFFAIRS, BOEING COMPANY, ON BEHALF OF THE U.S.-RUSSIA BUSINESS COUNCIL; FORMER UNDER SECRETARY FOR POLITICAL AFFAIRS, U.S. DEPARTMENT OF STATE; AND FORMER UNITED STATES AMBASSADOR TO THE RUSSIA FEDERATION

Mr. PICKERING. Thank you, Mr. Chairman. Good afternoon to you. Thank you for the opportunity to testify on such an important subject. It is an honor to be with you and a privilege and a pleasure to give this testimony.

My name is Thomas R. Pickering. I am Senior Vice President, International Relations, at the Boeing Company. I am testifying today on behalf of the U.S.-Russia Business Council. I was Ambassador to the Russian Federation from 1993 to 1996 and followed Russian events as Under Secretary of State in 1997 through 2000.

I will focus my remarks this morning on terminating the application of the Jackson-Vanik amendment to Russia, extending permanent normal trade relations, and Russia's accession to the WTO. I will outline for the Subcommittee why each of these issues is important to the Business Council and Boeing, and why we believe that WTO accession and Jackson-Vanik are separate issues and should be treated as such.

Boeing and the Business Council, Mr. Chairman, support terminating the application of the Jackson-Vanik amendment to Russia, thereby discarding a remnant of the Cold War that is of no practical consequence. Russia has been in full compliance with the legislation, as we have heard this morning, since 1994, and its intent should not be altered ex post facto to deal with other unrelated objectives. If the requirements have been satisfied and the reason for them is obsolete, it should be terminated.

The changing nature of our strategic relationship with Russia has been startling and far-reaching. Russia's reaction to the September 11th attacks more than any other event best illustrates how the relationship has fundamentally shifted. President Putin was the first foreign leader to contact President Bush, offering condolences to the American people and his clear support for a strong response. That contact was followed by a series of concrete actions and policy decisions, many of which were contrary to previously held public positions of many senior Russian officials, some of whom currently serve as senior advisers to President Putin.

As our relationship continues to unfold in previously unimaginable ways and our security relationship is transformed, it is important that the trade and investment aspect of that relationship keep pace with the times. Removing Russia from annual Jackson-Vanik consideration is an important part of this evolution. Jews in Russia and others today are free to emigrate, and Russia is no longer a controlled economy. Terminating the amendment's application to Russia would help foster more normal trade relations between our two countries and demonstrate to countries that continue to restrict emigration that graduation is possible with the right sort of reforms.

Permanent normal trade relations for Russia is a logical event, even outside the Jackson-Vanik context. Russian exports to the United States include titanium and other materials that are important components in the aviation manufacturing industry. Continued access to these products contributes to the competitive position of Boeing and other U.S. manufacturers in global markets. We, therefore, encourage continued development of free, fair, and reciprocal trade with Russia. PNTR and eventual Russian membership in the World Trade Organization are important steps in this direction. Boeing and the Business Council support Russia's aspirations to join the WTO. Much is at stake in terms of market access and uniform acceptance of agreed rules of the game, including the elimination of tariffs on imported aircraft. However, it is our belief that WTO accession and the termination of the Jackson-Vanik amendment are separate issues, and they should be treated accordingly.

At no time since Russia applied for WTO membership has any U.S. official linked Jackson-Vanik to Russia's accession to the WTO. To do so now would be perceived as moving the goalpost on WTO accession and would treat Russia differently from all other former Soviet countries in the accession process.

The United States maintains the leverage necessary to address trade concerns with Russia as obviously Russia cannot accede to the WTO without our consent. The United States, regardless of the Administration in power, has an excellent track record in setting the highest bar for new entrants to the WTO. We are confident that the USTR, under the leadership of Ambassador Robert Zoellick, will continue to seek strong commitments from Russia.

Russia has been a good place for the Boeing Company to build industrial cooperation to grow our business. Our commitment to the market is strategic and long-term. There are currently 25 of our airplanes operating in Russia and 45 in the remaining former Soviet countries. The demand for modern aircraft exists, and we aim to increase our sales there significantly. This opportunity hinges on a commitment by the governments of both countries to facilitate and expand free and open trade between the United States and Russia. Graduating Russia from annual Jackson-Vanik review and extending PNTR are consistent with this principle and are steps supportive of America's industrial aspirations in the Russian market.

Further, failure to terminate Russia risks encouraging those in Russia who oppose free trade and more open relations with the United States. Failure to act risks a more closed and protectionist Russia.

In conclusion, while this decision involves the principle of free trade, it also involves the principles of good faith, upholding one's commitments, and standing by our friends and partners.

President Putin's policies of closer alignment with the West and his support for American positions come at some domestic political cost. Since Russian support in the war on terrorism is important to its success, it is obviously of continuing importance for the U.S. Government to keep faith with the Putin Government. In this context, it is, therefore, important we deliver on our word. The U.S. Government can and should take this step. It will yield benefits in the strategic bilateral relationship, but, most importantly, it is sound trade policy for the United States.

Thus, Boeing and the U.S.-Russia Business Council encourage you to terminate application of the Jackson-Vanik amendment to Russia.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Pickering follows:]

Chairman CRANE. Thank you, Mr. Ambassador. Mr. Liuzzi?

STATEMENT OF ROBERT LIUZZI, PRESIDENT AND CHIEF EXECUTIVE OFFICER, CF INDUSTRIES, LONG GROVE, ILLINOIS, AND CHAIRMAN, AD HOC COMMITTEE OF DOMESTIC NITROGEN PRODUCERS

Mr. LIUZZI. Thank you, Mr. Chairman, for the opportunity to be here. My name is Robert Liuzzi. I am President and Chief Executive Officer of CF Industries, a major farm cooperative and a major producer of nitrogen and phosphate fertilizer. I am testifying today in my capacity as Chairman of the Ad Hoc Committee of Domestic Nitrogen Producers, a group of U.S. companies that accounts for about 75 percent of total U.S. nitrogen production.

The U.S. nitrogen fertilizer industry is a major strategic industry for U.S. agriculture. Without our products, U.S. farmers cannot efficiently produce food or fiber. U.S. farmers consume approximately $9 to $10 billion worth of fertilizer yearly, the majority of which is nitrogen fertilizer.

Russia is the world's largest exporter of nitrogen fertilizer and a major competitor of ours. Accordingly, how the United States structures its trading relationships with Russia in legal terms has major implications for the economic well-being of U.S. nitrogen producers.

The major threat posed to the U.S. industry by Russian nitrogen producers derives from the fact that Russian energy policies provide an artificial advantage to Russian nitrogen fertilizer producers. Nitrogen is produced from natural gas feedstock, which accounts for 50 to 80 percent of the cost of producing such fertilizer. In the United States, we pay market prices for our natural gas. In Russia, the government sets the price of natural gas, the price at which it is supplied to industrial users, including nitrogen manufacturers. That price is, at best, 20 to 25 percent of the price of that same gas which is sold for export into Europe. Moreover, one Russian company, Gazprom, which produces and sells 94 percent of all the natural gas in Russia, is 40 percent owned by the Russian Government.

Given this artificially low price for natural gas, Russian nitrogen producers can place tremendous volumes of nitrogen product on the world market at prices far below what their competitors from market economy countries such as ours must charge to recover our costs. Unfair trade in Russian nitrogen products has repeatedly done severe harm to U.S. producers. Fortunately, however, we have been able to obtain antidumping relief from massive surges of Russian nitrogen imports in the past, as we did in 1987 against urea and in the year 2000 against ammonium nitrate.

Currently, there are several important administrative, legislative, and negotiating processes underway that could dramatically alter the legal structure governing U.S.-Russian trade. The outcomes of these processes will determine how Russian nitrogen will be sold in the United States and whether Russian nitrogen will be sold at a fair price or dumped.

Firstly, the U.S. Department of Commerce will soon decide whether or not to revoke non-market economy status for Russia under the antidumping law. Revocation of Russia's NME status will have serious negative implications for domestic nitrogen producers because we believe the antidumping law could not then be meaningfully applied to imports of nitrogen from Russia. We have urged the Commerce Department not to revoke Russia's NME status as long as the energy sector in Russia continues to operate on non-market principles. At a minimum, the Commerce Department should retain NME status for the nitrogen fertilizer sector and other energy-related sectors so long as Russia continues to price energy and petrochemical feedstock at non-market levels.

Secondly, at the Administration's request, Congress may soon decide to provide the President with the authority to terminate the applicability to Russia of Title IV of the Trade Act of 1974 and to proclaim permanent normal trade relation status for Russia. Unfortunately, termination of Title IV will leave the nitrogen industry without recourse to Section 406, the market disruption provision, for countries operating as non-market economies. We urge Congress to retain Section 406 for Russia, at least until Russia joins the WTO or operates its natural gas sector on a market basis. Alternatively, if Title IV is revoked in its entirety, we urge the Congress to pass a similar provision for Russia like the one in effect for China based on Section 406 that was passed as part of the China PNTR legislation.

Finally, we have been working with USTR on Russia's accession to the WTO. We believe that this negotiation affords an opportunity to get Russia to reform its energy and natural gas sector so that market forces and not the government determine pricing. As long as Russia refuses to allow market forces to determine the economics of nitrogen production in Russia, their exports, and the prices of those exports, the NME provisions of the dumping law and Section 406 or some like substitute must continue to apply to imports into the United States of nitrogen from Russia.

In conclusion, Mr. Chairman, I ask that you and the Subcommittee help us to address these issues regarding U.S.-Russian trade so that the impact on our industry will not be so negative. The legal structure of U.S.-Russian trade is our number one public policy issue, and the decisions that the Government makes in this area will determine whether our industry will survive or not. The stakes for us are high, and we urgently request your assistance.

Thank you again, Mr. Chairman.

[The prepared statement of Mr. Liuzzi follows:]

Chairman CRANE. Thank you, Mr. Liuzzi.

And now I would like to yield to our distinguished colleague, Mr. Camp, to introduce his constituent, Mr. Wood.

Mr. CAMP. Well, thank you, Mr. Chairman. Mr. Wood is the 16th President of the Michigan Farm Bureau, elected in December 2000, and is a fourth-generation Sanilac County dairy farmer. For more than a decade, he served as Vice President of the 17-member State Board of Directors and served on the Policy and Development Committee which recommended State and national policies for delegates, and has been very active certainly in his farm organization, which is a family farm partnership, and also very active in trying to recommend good legislation to Congress.

Wayne, it is a pleasure to have you here. Welcome to the Subcommittee.

Mr. WOOD. Thank you. Mr. Chairman, Ranking Member, and distinguished Members of the Subcommittee, the American Farm Bureau Federation, AFBF, appreciates the opportunity to testify on the important issue of granting permanent normal trade relation status to the Russian Federation.

I am Wayne Wood and, Mr. Chairman, I will make every attempt to live up to any preconceived expectations that the distinguished Mr. Camp has created for me.

The AFBF is the largest agricultural organization in the Nation with over 5.1 million member families. Our producer members cultivate every commodity grown in the United States and Puerto Rico and rely on trade for more than 30 percent of their farm income.

The ability to access Russia's market, on terms favorable to our farmers and provide a level of certainty and transparency, is critically important. That is why we welcome the eventual membership of Russia into the World Trade Organization to provide rules-based commitments for our bilateral trade relationship. However, there are a number of important issues outstanding in the agricultural concessions of Russia's accession agreement that must be satisfactorily addressed.

The Russian market remains largely untapped for our exports for a number of reasons, not the least of which are inconsistent regulations, arbitrary bans, and discriminatory preferences for other countries. These practices are not in accordance with international rules.

Chief among our concerns with Russia is the arbitrary, unjustified ban that Russian authorities placed on our poultry exports to its market last month. The ban lacked scientific merit and immediately shut the door on our largest poultry export market valued annually in excess of $660 million. The U.S. poultry exports to that market represent nearly 40 percent of our total foreign poultry shipments and constitute over 24 percent of the overall U.S.-Russian trade.

Russia has already established WTO-illegal minimum import prices for meat and poultry, and recently the Duma passed legislation authorizing the implementation of tariff rate quotas, TRQs, for meat and poultry imports. We strongly oppose the implementation of quantitative restrictions on Russian meat and poultry imports.

The agricultural concessions offered by Russia to date for its accession to the WTO are unacceptable. The Doha Declaration calls for countries to eliminate export subsidies, yet Russia has requested authorization to use $726 million in export subsidies.

On domestic supports, Russia's accession offer calls for an eight-fold increase in its trade-distorting domestic supports from $2 billion to $16 billion, which indicates that Russia would like to further insulate its domestic producers from the global market forces.

Farm Bureau supports Russia's accession into the WTO once the following terms are met: One, elimination of agricultural export subsidies, consistent with the WTO accession agreement reached with China; two, Russian food and agricultural tariffs should be reduced sharply. Under no circumstances should Russia be permitted to establish new tariff rate quotas; three, trade-distorting domestic support should be limited to a level equal to or lower than historical levels of Russian support payments to its agricultural sector; four, Russia should not be permitted to nullify or impair its market access commitments through the use of sanitary or phytosanitary barriers; and, five, measures should be implemented to improve and standardize Russia's customs procedures consistent with acceptable international commercial practices.

The Farm Bureau seeks assurances regarding commitments to seek the objectives outlined above for Russia's WTO accession. We are working with the Administration closely on this matter and appreciate the efforts of the Office of the United States Trade Representative in attempting to build our sector's confidence that a meaningful accession package will be achieved. We encourage congressional endorsement of a strong WTO accession package from Russia.

In closing, the overall U.S.-Russian trade relationship strongly favors Russia with its exports to our markets reaching $6.5 billion, compared to $2.5 billion in U.S. exports. Every effort must be taken to ensure the arbitrary and unjustifiable poultry ban is resolved in a manner that rapidly restores our access to that market and ensures that actions of this nature are not allowed to disrupt the important relationship in the future. We recognize the significance of granting permanent normal trade relation status to Russia, but regret that we cannot endorse PNTR until this important issue is fully resolved.

Mr. Chairman, I thank you very much for the opportunity to present this position today, and I thank the distinguished Congressman Camp for the very eloquent introduction.

[The prepared statement of Mr. Wood follows:]

Chairman CRANE. Thank you, Mr. Wood. Mr. Luks?

STATEMENT OF HAROLD PAUL LUKS, CHAIRMAN, NCSJ: ADVOCATES ON BEHALF OF JEWS IN RUSSIA, UKRAINE, THE BALTIC STATES & EURASIA

Mr. LUKS. Thank you, Mr. Chairman. My name is Harold Luks. I am the Chairman of NCSJ. We are now known as the Advocates on behalf of Jews in Russia, Ukraine, the Baltic States and Eurasia. With me today is Mark Levin, our Executive Director, who has been with us for more than 20 years.

As a former congressional staffer in the House and Senate, I first worked on the waivers from Jackson-Vanik for Eastern European countries in 1978. And today is a historic hearing. We represent nearly 50 national Jewish organizations, including the Anti-Defamation League and B'nai B'rith (which have asked to be associated with this testimony), 300 local community councils and federations across the country. Mr. Chairman, I would like to take this opportunity to summarize our basic points.

First, we support the graduation of Russia from the Jackson-Vanik amendment, and we believe the Subcommittee should focus on the concept of graduation because it represents a turning point and an important step forward. We base our position first on the fact that there is free emigration, but, also that those individuals who are citizens of the Russian Federation have the opportunity now to choose the religion, culture, language, and faith of their forefathers, something that was denied to them during 70 years of Soviet rule.

Secondly, there are problems in the Russian Federation confronting the Jewish community. There are anti-Semitic incidents, some in more places than in others. Two, the Russian Government has interfered directly in Jewish communal affairs, such as by unilaterally choosing who should be viewed as the chief rabbi. And, police have broken into the central synagogue in Moscow and conducted a search. There have been confiscatory taxes imposed on Jewish organizations engaged in religious and humanitarian affairs. Finally, the 1997 law on religion which requires registration continues to be a problem.

Let me make one thing clear: We support graduation. We have addressed these issues with someone whom we have come to regard as a colleague and a voice of reason, and that is Ambassador Ushakov. But we look to the future with some trepidation given the uncertainties in the Russian Federation.

The focus of my remarks today is with respect to certain deficiencies which we see, Mr. Crane, in the bill which you have cosponsored, H.R. 3553.

I would like to take a moment to just step back in history. In his State of the Union message to Congress in 1904, Teddy Roosevelt condemned anti-Semitism in the Russian Empire. In 1911, the United States critiqued the U.S.-Russian trade treaty that dated from 1832. And, in 1912, Mr. Crane, the United States abrogated this treaty because of czarist policies against their Jewish minority.

The Jackson-Vanik was not the beginning of the U.S. commitment, and the Jackson-Vanik is not the end of this commitment. It is something that preceded us and we hope will live on after us, because it reflects the very best in American values and commitments to human rights and religious freedom.

Therefore, we are asking the Subcommittee for three very specific things, and they are set forth in our testimony: Number one, expand the findings section; number two, include a policy section within the bill that builds on the legacy left to us by Teddy Roosevelt so there is no ambiguity as to what the United States stands for; and, number three, in the Committee report, to address some of the bilateral mechanisms which were referenced by Mr. Lantos to continue the focus of the Congress and the President on human rights and religious freedom.

I would like to close by noting that, after the Holocaust, Jews who survived still had a memory of Jewish religion and faith because they were able to maintain it even in the camps. After 73 years of Soviet rule, that memory became barely recognizable. Jewish life in an organized way had all but ceased. The Jackson-Vanik was an instrument, Mr. Crane, that created an opportunity for Jews in the Soviet Union and now in Russia to rediscover their past. That is a Jewish issue.

But let me say, the treatment of Jews in the Russian Federation is a reflection of civil society, and when the Jewish minority is treated well, there is a much greater indication that Russia will become a member of the community of nations, engage in trade, welcome foreign investment, buy planes from Boeing, buy American agriculture, and export to us. We believe the two were never separated, and we believe they continue to work together.

The substantial progress that has been achieved by Jackson-Vanik and by many Members of this Subcommittee, in revitalizing Jewish life, has been a success. But it still reaches a small portion of the population. We want to make sure that our message, that NCSJ's message and the message of other Jewish organizations, can continue to be made inside Russia.

Congress can help to secure their future by articulating a clear U.S. policy: that they should have the freedom to choose their faith and their culture.

Mr. Crane, Mr. Levin, this is a noble cause, and we commend the good work of this Subcommittee and look forward to your good work to perfect the legislation before you.

Thank you very much.

[The prepared statement of Mr. Luks follows:]

Chairman CRANE. Thank you, Mr. Luks. Mr. Edlin?

STATEMENT OF RICHARD A. EDLIN, PARTNER, GREENBERG TRAURIG LLP, AND U.S. COUNSEL, SPI SPIRITS LTD, NETHERLANDS

Mr. EDLIN. Mr. Chairman, honorable Members of the Subcommittee, thank you very much for the opportunity to come and speak before you today. As it is late and I am last, I will take that opportunity to try to be brief as well. I am here representing the interests of Stolichnaya Vodka and its business partners throughout the United States and, indeed, the rest of the world.

Mr. Chairman, vodka is the second largest industry in Russia. Prior to the fall of the Soviet Union, trademarks to vodka were state-owned. They were owned by a company called SPI. Following the fall of the Soviet Union and the reforms of perestroika, those rights to those trademarks were passed from the state-owned company to a privately owned company of the same name, SPI. And since that time, in 1991, when privatization occurred, our client has invested tens of millions of dollars rebuilding the brand of Stolichnaya so that it is now, I believe, the largest selling distilled spirit in the world.

In that time, we have required our trade partners to similarly invest millions of dollars in building the brand Stolichnaya for sale throughout the world. Now, some 10 or 11 years after privatization has occurred, the Russian Government has determined to take back the trademarks and nationalize and monopolize the vodka industry.

Now, in testimony before the Commerce Department, Deputy Minister Sharonov clearly stated--and I was there in the room--clearly stated that the Government of Russia has no interest in owning the means of production of industries other than those required for the national defense or those that are typically owned by a government, such as printing currency. I believe that the Ambassador for the Russian Federation in his testimony before this Subcommittee also echoes the same government policy.

This, unfortunately, is not what is occurring within Russia today, and it is extremely important, as we take up the issue of normalizing trade relations with Russia, that we understand that we need to match what they say they intend to do with what they are doing today on the ground.

We are interested in only the most simple and basic form of international trade. All our clients has done since it has obtained the right to do so in privatization in Russia is buy vodka from Russian distilleries and export it throughout the world for sale.

What the Russian Government is now doing is blocking the export of vodka out of the country. There are 150,000 cases of vodka sitting in the Russian port of Kaliningrad which the government refuses to let out of the country. But it refuses to let it out of the country despite its own court orders requiring it to do so. It is attempting to usurp the same trademark rights that were given to SPI during privatization and usurp them for their own use. And it is doing so, again, despite court orders from Russian courts saying it has no right to do so.

As I listened to Ambassador Allgeier testify earlier today on issues of normalization of trade and Russian accession to the WTO, two issues come out very clearly from that testimony: the need for Russia to respect private property rights and the need for Russia to respect the rule of law. On both counts, Mr. Chairman, Russia is falling tragically short of its stated goals. Mr. Putin has expressed strongly on a number of occasions in a variety of fora that he intends to respect the privatization process and that is the government policy. However, Agricultural Minister Leganov, the same person who is charged with taking back these trademarks, has set up a privately owned enterprise to usurp those trademarks, and has monopolized the vodka industry within Russia. This is not something that American trading partners can tolerate. It is not a system that is reliable enough for companies throughout the world to engage in trade with Russia on.

If Boeing's 25 planes, as I understood Ambassador Pickering earlier today, if those 25 planes on the ground in Russia were nationalized by the government, it would be exactly the same thing as what Russia is presently doing to our client in the vodka industry. And everyone is at risk when one person is at risk. Until we have uniform rules that the Russian Government is willing to live up to, I respectfully suggest to this Subcommittee that the normalization of trade relations cannot be entered into and Russia cannot be permitted to ascend to membership in the WTO.

My final point, Mr. Chairman, is that Russia has been a very willing and very active participant in the war against terror. That is a noble effort from which Russia itself benefits. We should not link positive and progressive acts in the area of anti-terrorism to allow someone to fall short of positive and progressive policy in the area of international trade.

Thank you very much.

[The prepared statement of Mr. Edlin follows:]

Chairman CRANE. Thank you, Mr. Edlin. And let me, to all of our witnesses who testified today, express our apologies for the disruptions. This place doesn't run smoothly. But we appreciate your participation, and we will accept any written testimony or information that you have in addition to your oral testimony, which will be made a part of the permanent record. And that will be open until Wednesday, April 24th.

With that, that concludes our hearing, and I thank you again, all of you, for being here, and we stand adjourned.

[Whereupon, at 12:41 p.m., the hearing was adjourned.]
[Submissions for the record follow:]

Bethlehem Steel Corporation, Bethlehem, PA; National Steel Corporation, Mishawaka, IN; and United States Steel Corporation, Pittsburgh, PA, joint statement