Committee on Ways and Means, Subcommittee on Trade, 4-11-02 Testimony

Opening Statement of the Hon. Sander M. Levin, a Representative in Congress from the State of Michigan

Hearing to Explore Permanent Normal Trade Relations for Russia

April 11, 2002

Thank you, Chairman Crane. Today the Committee considers whether to "graduate" Russia from the Jackson-Vanik amendment and whether to grant permanent normal trade relations (PNTR) to Russia. The question arises as to what factors we should base those decisions on. Additionally, since both the Jackson-Vanik amendment and conditional grants of NTR involve issues of leverage, we must determine whether and how to replace that leverage.

There are legitimate foreign policy reasons prompting the Administration's request that Russia be graduated from Title IV, given that Russia has been an important ally in the war against terrorism. That said, human rights/religious freedoms, and economic/commercial concerns remain.

At the outset, it is important to realize that Jackson-Vanik "graduation" and "granting PNTR" are two different actions, each with different policy implications. Although we often speak of the Jackson-Vanik Amendment and Title IV of the Trade Act of 1974 as if they are one and the same. In fact, that is not correct. I think it is important as we embark on what may be the first of many Jackson-Vanik "graduations" 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 "graduating" a country from Jackson-Vanik, we should consider both the Jackson-Vanik issues and the "trade policy" issues that were the underpinning of the other Title IV provisions.

Issues to Consider

Jackson-Vanik issues

First, we must consider what we might call the "traditional Jackson-Vanik issues." The Jackson-Vanik amendment was an historic piece of legislation. It set forth important criteria related to freedom of emigration necessary for certain countries to obtain normal trade relations with the United States. 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 of the Jackson-Vanik amendment, but also in the conduct of U.S. relations with the former Soviet countries for nearly thirty years.

It is appropriate, then, that 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. These were the issues at the core of the creation of the Jackson-Vanik amendment, and should be at the core of "graduation" from it.

Towards that end, I very much look forward to hearing from my dear colleague and friend Tom Lantos on these issues, as well from the other groups here today, including the NCSJ. I want to hear 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 on these vital issues.

PNTR issues

Separate from the Jackson-Vanik issues, are what might be called the trade policy issues. 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 something in return.

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 had completed its accession to the WTO or at least completed its WTO accession negotiations with the United States. The reason is obvious -- the ultimate vote on the PNTR legislation gives Congress an important lever to ensure that the trade negotiations with that country fully reflect U.S. priorities -- Congress' and the Administration's. As in the recent case of China, we could be sure that Congress was satisfied with the outcome only when those negotiations were completed.

Ensuring a strong role for Congress is appropriate given that Congress has a constitutional mandate to regulate trade with foreign nations. We must take that mandate seriously. In fact, we built a direct congressional role into our trade relations with countries subject to Title IV of the Trade Act of 1974 -- in section 405(b) Congress mandated that a number of provisions be included in bilateral trade agreements with such countries, and section 405(c) requires congressional approval for any such agreement.

So, we should not approach the granting of PNTR lightly. We should not grant PNTR without very strong assurances, and preferably something more than just assurances, that Congress will continue to have a strong influence in shaping trade relations with a country. 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 resolution of disputes such as the Russian poultry ban. 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 have well-established market systems, we need to seriously consider what types of structures we will need to ensure stable trade relationships with those countries. When we enacted the Trade Act of 1974, we created a special safeguard for trade with non-market economy countries. We did so out of the realization that a high level of government interference in an economy, and/or a lack of market structures, creates the real possibility of large and unpredictable import surges. We recently re-affirmed that basic logic when we established a special safeguard in the China PNTR legislation. We need to give serious consideration to keeping the special safeguard in place for many of these former Soviet countries until they make substantially more progress toward creating market economies.

Thank you again, Mr. Chairman.