WASHINGTON — The House passed legislation on Friday that would remove Cold War restrictions to trade with Russia and grant permanent normal trade relations to the country, giving U.S. companies access to benefits for which Russia agreed when it joined the World Trade Organization in August.
The House passed the bill, which would also extend PNTR to Moldova, on a 365-43 vote. The Senate is expected to take up the bill in the lame-duck session before the end of the year and the White House said this week it strongly supports the legislation.
Business groups have lobbied Congress vigorously on granting PNTR to Russia, but the legislation stalled before the election over some lawmakers’ concerns of human rights abuses in the country. Many House lawmakers ended up supporting the bill after a measure was added that penalizes the Russian officials who were responsible for the beating death in 2009 of Sergei Magnitsky, a Russian tax attorney.
“PNTR with Russia will increase exports and will help create economic growth and jobs here at home,” said House Ways and Means chairman Dave Camp (D., Mich.). “Additionally, it will give us a powerful new enforcement tool and will require Russia to comply with WTO rules.”
U.S. Trade Representative Ron Kirk said, “This vote brings us one step closer to the day when America’s businesses and workers will enjoy the full benefits of Russia’s World Trade Organization membership, and will no longer be disadvantaged compared to their global competitors.”
Once the bill is signed into law, U.S. retailers and apparel brands stand to gain from Russia entering a global rules-based system and its commitment to lower tariffs on imports and easing of direct investment opportunities.
“It will open up markets for U.S. apparel and footwear brands and we think it is definitely a good step,” said Nate Herman, vice president of international trade at the American Apparel & Footwear Association. “The Russian market is currently dominated by European brands and when you talk to big retail consultants, they think there is a lot of potential in Russia for U.S. brands.”
Under the terms of its WTO accession package, Russia agreed to reduce tariffs on some women’s and men’s apparel imports to 15 percent from 20 percent by 2015 and tariffs on textile materials, such as synthetic yarns or cotton fabrics, will be reduced to 8 percent from 10 percent by 2014.
Russia also agreed in its bilateral market access agreement with the U.S. in 2006 to allow foreign distributors to operate as 100 percent foreign-owned enterprises upon its entry into the WTO. The bilateral pact will also allow U.S. distributors to sell most products with “minimal limitations” and provides for direct sales by individual commission agents.