Russia's WTO Accession: Administration's Views on the Implications for the U.S.

William J. Burns
Deputy Secretary
Testimony before the Senate Committee on Finance
Washington, DC
June 21, 2012

Chairman Baucus, Ranking Member Hatch, and Members of the Committee, thank you for inviting me here today.

I have spent a good deal of my diplomatic career helping Administrations of both parties navigate our complicated relationship with Russia. I have seen moments of considerable promise, at the end of the Cold War and more recently in deepening cooperation on Afghanistan and nuclear arms reductions. I have seen moments of sharp differences, whether during the Russia-Georgia war in the summer of 2008 or over our enduring human rights concerns. And I have seen, through all those years, the importance of carefully assessing what’s at stake for the United States, and being clear-eyed about American interests and Russia’s long-term evolution.

That’s the prism through which I believe we can see, clearly and unmistakably, the importance of terminating application of Jackson-Vanik and extending permanent normal trade relations to Russia. Jackson-Vanik long ago achieved its historic purpose. Some argue that continuing to apply Jackson-Vanik to Russia would give us leverage with Russia. We disagree. And so do leaders of Russian’s political opposition, who have called on the U.S. to terminate Jackson-Vanik. That does not diminish their profound concerns about human rights and the Magnitskiy case -- concerns which we strongly share.

PNTR is not a gift to Russia. It is a smart strategic investment in one of the world’s fastest growing markets for U.S. goods and services. A vote to extend PNTR will be a vote to create and sustain jobs in America. When Russia joins the WTO later this summer, it will be required -- for the first time -- to establish predictable tariff rates, ensure transparency in enactment of laws, and adhere to an enforceable mechanism for resolving disputes. If we extend PNTR to Russia, we will be able to use WTO’s tools to hold it accountable for meeting these obligations. Until then, Russia’s markets will open, our competitors will benefit, but American companies will be disadvantaged.

We are under no illusions about the challenges that lie ahead. The fact is that U.S.-Russia relations are often an uneasy mix of competition and cooperation. And while it may be tempting to downplay Russia’s importance, we simply do not have that luxury. As a permanent member of the UN Security Council; as one of the world’s largest nuclear powers; and as the world’s single largest producer of hydrocarbons, Russia’s strategic importance to the U.S. will matter for many years to come.

To be sure, we have real and continuing differences with Russia. We disagree fundamentally about the situation in Georgia. On Syria, we are urging Russia to push the Syrian regime to implement Kofi Annan’s six-point plan, end the violence and work with the international community in promoting a serious and rapid political transition that includes Asad’s departure. We have consistently and directly stressed our concerns about human rights in Russia. And we have taken steps to address these challenges, including programs that support rule of law and civil society in Russia. Following the tragic death of Sergey Magnitskiy, we imposed restrictions to ensure that no one implicated in his death can travel to the U.S.

But we continue to believe that it is in America’s long-term strategic interest to work with Russia in areas where our interests overlap. Already our work together over the past three years has produced significant results, including the New START Treaty to reduce strategic nuclear weapons, an agreement on civil nuclear cooperation, and military transit arrangements to support our efforts in Afghanistan. With PNTR, we would add expanded trade to that list.

PNTR is also an investment in the more open and prosperous Russia that we would like to see develop. As the demonstrations across Russia over the past six months make clear, the country’s emerging middle class is seeking a more transparent and accountable government and a diversified economy. We should support these Russian efforts. PNTR and WTO membership by themselves will not suddenly create the kind of change being sought by the Russian people. But they can help open Russia’s economy and reinforce rule of law beyond just trade. PNTR should be one part of a stronger and fuller rule of law framework that we pursue with Russia, combined with investment protections such as a new Bilateral Investment Treaty and the OECD Anti-Bribery Convention, which Russia joined earlier this year.

Russia’s membership in the WTO will soon be a fact. Failing to lift Jackson-Vanik and extend PNTR will not penalize Russia nor will it provide a lever with which to change the government’s behavior. It will only hurt American workers and American companies. By extending PNTR, we can create new markets for our people and support the political and economic changes that the Russian people are seeking. PNTR is clearly in our economic self-interest, and it is an investment in a better partner over the long term for the United States.

Thank you.