Russia Set to Have Priority Trade Status

PNTR means greater market access and lowering of tariffs.

WASHINGTON — The Senate passed legislation granting permanent normal trade relations to Russia on Thursday, which will give U.S. retailers and brands broader access to Russia’s market.

This story first appeared in the December 7, 2012 issue of WWD.  Subscribe Today.

The Senate passed the bill, which also extends PNTR to Moldova, on a 92-4 vote. President Obama has said he will sign the legislation.

“The Senate’s historic bipartisan vote today moves us closer to having our trade with Russia covered by the rules of the World Trade Organization,” said U.S. Trade Representative Ron Kirk. “As a result, American businesses and workers will have better access to the growing Russian market on the same terms as their global competitors, and the United States will have WTO procedures available to help ensure that Russia abides by its commitments. We are eager for America’s businesses and workers to begin to reap the benefits of applying the WTO rules and procedures to our bilateral trade.”

Concerns over human rights abuses stalled the legislation from advancing in Congress, but lawmakers ended up supporting the bill after a measure was added that penalizes Russian officials who were responsible for the beating death in 2009 of Sergei Magnitsky, a Russian tax attorney.

The House had previously approved the measure and once the bill is signed into law, U.S. retailers and apparel brands stand to gain from Russia entering a global rules-bases system and its commitments to lower tariffs on imports and easing of direct investment opportunities. 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.