H.R. 6156: Russia and Moldova Jackson-Vanik Repeal Act of 2012

H.R. 6156

Russia and Moldova Jackson-Vanik Repeal Act of 2012

Sponsor
Rep. Dave Camp

Date
November 15, 2012 (112th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

On Thursday, November 15, 2012, the House is scheduled to begin consideration of H.R. 6156, the Russia and Moldova Jackson-Vanik Repeal Act of 2012, under a closed rule providing 90 minutes of debate, with 60 minutes equally divided and controlled by the chair and ranking minority member of the Committee on Ways and Means and 30 minutes equally divided and controlled by the chair and ranking minority member of the Committee on Foreign Affairs. The bill was introduced by Rep. Dave Camp (R-MI) on July 19, 2012, and referred to the Committee on Ways and Means. On July 26, 2012, a mark-up was held and the bill was ordered to be reported without amendment by voice vote. The Legislative Digest for H.R. 6156 reflects the text reported by the Rules Committee and includes a title similar to H.R. 4405, the Sergei Magnitsky Rule of Law Accountability Act of 2012.

Bill Summary

H.R. 6156 would grant Russia and Moldova permanent normal trade relations in order for the United States to receive the benefits and open markets as a result of Russia joining the World Trade Organization (WTO) on August 22, 2012.

Title I—Permanent Normal Trade Relations for the Russian Federation

The bill would authorize the President to determine that title IV of the Trade Act of 1974 (relating to nations that do not receive nondiscriminatory trade treatment), no longer applies to the Russian Federation. Following such a determination, the President would be authorized to extend nondiscriminatory treatment (normal trade relations treatment) to the products of that country.

Title II—Trade Enforcement Measures Relating to the Russian Federation

The bill would require reports from the United States Trade Representative (USTR) to the Committee on Finance in the Senate and the Committee on Ways and Means in the House on the implementation by the Russian Federation of agreements relevant to its accession to the World Trade Organization (WTO) and enforcement actions by USTR to ensure the full compliance of the Russian Federation with its obligations as a member of the WTO.   

The bill would also require reports jointly from the USTR and Secretary of State on the promotion of the rule of law in the Russian Federation to support and protect U.S. trade and investment in the country. The legislation would also direct the Secretary of Commerce to establish and maintain a dedicated phone hotline and secure website for the purpose of allowing U.S. entities to report instances of bribery, attempted bribery, or other forms of corruption in the Russian Federation and to request assistance with issues relating to corruption. Within a year of the Russian PNTR effective date, the Secretary of Commerce would be required to report to Congress on corrupt activity reported via the hotline or the website.

The bill would also require reports on Russian laws, policies and practices that deny fair and equitable market access to U.S. digital trade. Finally, the bill would direct the USTR to continue efforts to reduce trade barriers in the Russian Federation on U.S. exports.

Title III—Permanent Normal Trade Relations for Moldova

The bill would authorize the President to determine that title IV of the Trade Act of 1974 no longer applies to Moldova. Following such a determination, the President would be authorized to extend nondiscriminatory treatment (normal trade relations treatment) to the products of that country.

Title IV—Sergei Magnitsky Rule of Law Accountability Act of 2012

Within 120 days of enactment, the bill would require the Departments of State and Treasury to compile, publish, and report on a list of persons responsible for or who financially benefited from the detention, abuse or death of Sergei Magnitsky, or were involved in the criminal conspiracy uncovered by Sergei Magnitsky, or is responsible for extrajudicial killings, torture or other gross violations of internationally recognized human rights committed against individuals seeking to expose illegal activity carried out by the Russian Federation or to obtain, exercise, defend or promote internationally recognized human rights and freedoms. The list will be updated as new information becomes available, and the legislation also contains instructions for removal from the list. Listed persons would be ineligible for entry into the United States, have any existing visas revoked, and have their financial assets frozen. The Treasury Department would be required to create the regulations governing frozen assets. Within one year of enactment, the Secretaries of State and Treasury would be required to submit a report to Congress on actions taken to carry out Title IV. 

Background

According to H. Rept. 112-632 from the Committee on Ways and Means, “[a]s part of the agreement establishing the WTO, WTO members agreed to apply most-favored-nation tariff treatment (known as normal trade relations (NTR) under U.S. law) ‘immediately and unconditionally’ to the goods of other WTO members. However, the United States cannot permanently extend this treatment to Russia (often known as permanent normal trade relations (PNTR)) due to the requirements of the Jackson-Vanik amendment to Title IV of the Trade Act of 1974, which require annual or conditional NTR. If a WTO member determines that it cannot comply with this or any other WTO rules toward a newly acceding member, it can ‘opt out’ of its obligations toward that member by invoking the non-application provision. In doing so, the WTO member declares that the WTO obligations, rules, and mechanisms (such as binding dispute settlement) will not apply to its trade with the new WTO member. Because of the application of conditional NTR under U.S. law, the United States invoked non-application toward Russia on December 12, 2012.”

Continuing, “If the United States does not grant Russia PNTR by the time that Russia becomes a WTO member, the Committee believes that U.S. companies, workers, and farmers will be disadvantaged versus their competitors from other WTO members because the United States would not benefit from all of Russia’s concessions. For example, U.S. service providers would not have greater access to Russia’s growing services market because they would not be covered by Russia’s service market access WTO commitments. As a result, Russia could impose WTO-inconsistent restrictions on U.S. banks, insurance companies, telecommunications firms, and other service providers, but not on those from other WTO members.”

H. Rept. 112-632 also includes explanation of inclusion of the “Magnitsky Act”: “The United States’ relationship with Russia is broader than trade and economic issues. Russia and the United States successfully cooperate in some areas of foreign policy and national security. However, many Members of this Committee have deep concerns about the Russian government’s lack of respect for human rights and certain aspects of Russia’s foreign policy.

“The most recent concern about Russia’s human rights record is due to the death of Russian tax lawyer Sergei Magnitsky, who was investigated by the Russian government on allegedly baseless tax evasion and tax fraud charges. Magnitsky was later arrested and died under mysterious conditions in November 2009, allegedly from mistreatment and torture, after being held 11 months without trial. The Russian government eventually acknowledged that his death was a criminal act but has done little to pursue those responsible.

“The events surrounding the death of Sergei Magnitsky resulted in the introduction of legislation to hold accountable those responsible for human rights violations. H.R. 4405, currently pending in the U.S. House of Representatives, would impose visa restrictions and asset freezes on those involved in human rights violations in Russia. The House Foreign Affairs Committee considered H.R. 4405 on June 7, 2012, and reported it out favorably by voice vote, as amended. Similar legislation was introduced in the U.S. Senate, S. 1039, but it would cover human rights violators globally and is not limited to Russia. This bill was included as an amendment to S. 3406, which would grant PNTR to Russia and Moldova. The Senate Finance Committee considered S. 3406, as amended, on July 18, 2012, and reported it out favorably by a unanimous vote. 

“The Committee shares the deep concerns about the Russian government’s lack of respect for human rights and supports amending H.R. 6156 to include such ‘Magnitsky’ legislation before consideration by the U.S. House of Representatives.”

Following approval of H.R. 6156 by the Committee on Ways and Means, Chairman Camp (R-MI) stated: “Russia’s ascension to the WTO will happen on August 22, giving our foreign competitors more access to the Russian market. Today’s committee vote moves us one step closer to ensuring we have a level playing field when competing to sell our goods and services to the growing Russian market, which will help create more American jobs.  

“While it makes no sense to allow our competitors to get a leg up, we also recognize Russia must change its ways.  That is why Ranking Member Levin and I have expressed our strong support for the Magnitsky legislation to be paired with PNTR prior to floor action in the House.”

Cost

According to the Congressional Budget Office (CBO), implementing H.R. 6156 would cost $1 million over the 2013-2017 period, subject to appropriations. That amount includes affected agencies’ costs to hire additional staff, complete required reports, hold public hearings, and establish and maintain a secure phone line and Web site related to activities under the bill.

Establishing PTNR with Moldova and the Russian Federation could potentially increase tariff collections by lifting quotas on certain imported goods, but any such effects would be insignificant over the 2013-2022 period. Enacting H.R. 6165 would decrease revenues from visa fees and increase revenues from civil and criminal penalties imposed on those who violate the regulations, however, the provisions would affect few people and revenues deposited in the Treasury would not be significant in any year.

H.R. 6156 also includes language similar to H.R. 4405, the Sergei Magnitsky Rule of Law Accountability Act of 2012. According to CBO, H.R. 4405 would cost $1 million over the 2013-2017 period, subject to appropriations, for increased administrative expenses at the agencies. Enacting H.R. 4405 would decrease revenues from visa fees and increase revenues from civil and criminal penalties imposed on those who violate the regulations, however the provisions would affect few people and the net effect on revenues deposited in the Treasury would not be significant in any year. The bill would increase direct spending from criminal penalties, which are deposited in the Crime Victims Fund, and spent in subsequent years, however, any net effects associated with collecting and spending such penalties would not be significant in any year.