Statement of the Hon. Peter Allgeier, Deputy United States Trade Representative

Testimony Before the Subcommittee on Trade
of the House Committee on Ways and Means

Hearing to Explore Permanent Normal Trade Relations for Russia

April 11, 2002

Ambassador Robert Zoellick has said in previous testimony before this Committee, and as my colleague Under Secretary of State Alan Larson emphasized this morning, the United States has begun a new era in its relations with Russia. Whether in the realms of security, foreign policy, or economics, President Bush has emphasized the need to move beyond Cold War strictures and stereotypes. As the President said in November during his meeting with President Putin, "we're working together to break the old ties, to establish a new spirit of cooperation and trust so that we can work together to make the world more peaceful."

To close out the history books of the Cold War, the President has urged the Congress to finally end Jackson-Vanik's application to Russia. The Jackson-Vanik Amendment was drafted twenty-eight years ago to bring about free emigration. We believe that the Amendment has served this purpose in Russia -- Russia has been in full compliance with Jackson-Vanik's emigration provisions since 1994. Continued application of Jackson-Vanik, however, is an indication to Russia that they continue to be suspect and viewed as a Cold War adversary.

On the economic front, the Russians have made great strides, as they work to significantly reform their economy. A key part of Russia's broader economic reform program is achieving membership in the World Trade Organization (WTO). President Putin has made WTO membership and integration into the global trading system a top priority, seeing this as part of Russia's economic reform program that is aimed at achieving sustainable growth, promoting high-tech industry, attracting international investment, and raising living standards for the Russian people. These efforts need to include action by the Russian Duma to establish an effective legal infrastructure for their economy as well as commitments that establish the parameters of liberalized market access in Russia for imported goods and services. USTR has been actively engaged in Russia's negotiations to join the WTO. We will continue to support Russia's efforts to promote economic reforms, establish the rule of law, and adopt WTO commitments for a more open economy.

Of course, intensifying our efforts to work with Russia on WTO accession does not mean that we will welcome Russia's entry into the WTO on any terms. We are negotiating with Russia to increase market access for U.S. exports -- in goods, services and agriculture -- and we will work with other WTO members and the Congress to ensure that the Russian Government implements the many rules of the WTO. Russia must follow through with its stated plans to make comprehensive changes to its legal and regulatory system in a number of areas -- standards, customs practices, sanitary and phytosanitary measures, and protection of intellectual property. Some of these changes are already underway, but it is up to the Russian Government to pass new laws and ensure that the laws in place are fully enforced in a manner consistent with the international trading system.

Last fall, responding to Russia's efforts to adopt the rules of the WTO and liberalize its trade regime, WTO members decided to produce an 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 will provide a framework for recording Russia's progress in adopting WTO provisions and for identifying areas in which further work is needed. This draft report was circulated to WTO members on April 2, and we are in the process of reviewing it very carefully. Later this month, we and other members of the Working Party will meet at the WTO for a "first reading" of this draft and for an initial assessment of what more needs to be done to bring Russia's laws and other measures into compliance with the rules of the WTO. Over the upcoming months, we will be working with the Russian Government -- in cooperation with the EU and our other WTO counterparts -- to establish and record the areas in which Russia has implemented WTO rules and to identify and address the remaining outstanding issues in Russia's draft Working Party report. We have been consulting regularly with Congress throughout Russia's WTO accession, and we look forward to continuing to consult closely with the Congress and this Committee in particular throughout the accession negotiations and the process of drafting Russia's Working Party report.

Since we began work on Russia's accession, we have maintained open communication with you and with the full range of U.S. interests. I believe that we have a good track record in working with you in the development of our negotiating positions on all WTO accessions. Our experience with Russia is no exception.

Over the past few months there has been increased attention by the Congress and certain domestic economic interests, in particular the agricultural community, regarding Russia's WTO accession negotiations. We have met with the agricultural community on several occasions over the past few months to discuss the various agricultural issues involved in these negotiations. These meetings have left us with an even stronger conviction that we share a common view of the objectives for agriculture in these negotiations. It is worth noting that many of the issues of interest to our agricultural community are shared, not only by the broader U.S. trade community, but by a number of Russia's other trading partners as well, e.g., Australia, Canada, Argentina, Brazil and New Zealand.

As with other WTO accession negotiations, in Russia's case we are seeking commitments that will provide meaningful market access improvements for U.S. agricultural and food products and that will address the unjustified use of food safety or other non-tariff measures as barriers to trade. These efforts support Russia's broad internal program to reform its agricultural sector along market principles.

We have also been engaged in intensive negotiations with Russia on tariff and non-tariff market access for industrial goods and services. While we have made some progress in these negotiations, we continue to consult closely with our industry advisors and Congressional staff on a full range of issues, including in areas such as civil aircraft, fertilizer and construction equipment. In the services area, we are continuing to push hard for increased access in telecommunications, distribution and financial services.

Every Administration since the inception of the WTO has had a good track record of setting the highest standards for new entrants to the WTO. We intend to continue to seek the highest level of commitments from Russia with respect to the adoption of WTO rules in its trade regime, the provision of guarantees of meaningful market access in goods and services, the establishment of limits on agricultural supports, and the enforcement of the rule of law in trade. The requirement that we and other WTO members reach a consensus on the terms for Russia's WTO accession guarantees that our concerns will be heard.

We would like to work with you to continue to move our relationship with Russia into a new and more cooperative era. Ending application of Jackson-Vanik will provide increased momentum to Russia's broad economic reform program. It will send a positive message at a moment when Russia is poised to make changes necessary to join the international trading community.