Kyl vs. Russia: Round 2

Senate Minority Whip Jon Kyl (R-AZ) announced in a hearing Thursday that he will mount an opposition to the repeal of U.S. trade sanctions on Russia, complicating the Obama administration’s plan to repeal the 1974 Jackson-Vanik law.

The administration has begun the process of repealing the sanctions law, which prevents the U.S. from granting Russia Permanent Normal Trade Relations (PNTR) status, which in turn prevents U.S. businesses from taking full advantage of Russia’s recent accession to the WTO. But several lawmakers and leading Russian opposition figures believe the United States shouldn’t do that without replacing those sanctions with the Sergei Magnitsky Rule of Law Accountability Act of 2011 — legislation meant to promote human rights in Russia that is named for the anti-corruption lawyer who died in a Russian prison, after allegedly being tortured, two years ago.

U.S. Ambassador to Moscow Mike McFaul said this week that the administration no longer believes any such "weird linkage" is necessary to accompany the repeal of Jackson-Vanik. But Kyl, who led the Senate opposition to the New START treaty with Russia in 2010, promised there would be a fight over the Jackson-Vanik issue this year in the Congress.

"It isn’t a slam-dunk," Kyl said in a Thursday hearing of the Senate Finance Committee on the issue. "We still need to determine whether America is getting a good deal through Russia’s WTO accession and whether more should be done to protect our interests."

Kyl said that Russia still hasn’t ratified a bilateral investment treaty that would protect U.S. businesses there and complained that Russia fails to remit royalties to American firms, something not covered under WTO rules. He also said that Russia’s "blatant disregard for human rights and the rule of law is every bit as relevant today as it was decades ago."

"Human rights cannot be divorced from the discussion of our economic relationship with Russia, particularly since some of the most egregious cases of abuse involve citizens exercising their economic and commercial rights," Kyl said, referring to the Magnitsky case by name and expressing his support of the legislation. He charged that McFaul was "simply denying reality" in rejecting a connection between human rights and economics.

"When two parties enter into a contract, it’s essential that both parties operate in good faith," Kyl said. "There is scant evidence that the Russian state operates in good faith. There’s a troubling pattern of intimidation, disregard for the rule of law, fraudulent elections, human rights abuses, and government-sanctioned anti-Americanism."

The hearing was stacked with representatives of the business community. The witnesses were Samuel Allen, chairman and CEO of Deere & Company, Ronald Pollett, president and CEO of GE Russia, Watty Taylor, president of the Montana Stockgrowers Association, and Paul Williams, president of the American Society of Composers, Authors and Publishers. It also included a long representative of the human rights community, Alan Larson, chairman of the board of Transparency International USA.

Committee chairman Max Baucus (R-MT), who traveled to Russia last month, is leading the drive in the Senate to repeal the law.

"Russia joining the World Trade Organization presents a lucrative opportunity for the United States economy and American jobs," Baucus said at the hearing. "We can all agree on that. We must all embrace rather than escape this opportunity."

"We must pass permanent normal trade relations, or PNTR, to ensure our exporters can access the growing Russian market," Baucus said. "If the United States passes PNTR with Russia, U.S. exports to Russia are projected to double within five years. If Congress doesn’t pass PNTR, Russia will join the WTO anyway and U.S. exporters will lose out to their Chinese and European competitors."

Senate Foreign Relations Committee chairman John Kerry (D-MA), who is also a member of the Finance Committee, backed up Baucus at the hearing.

"I’d say to Senator Kyl and others who are sort of questioning this thing: We’re still kind of talking past each other a little bit here and I think missing the point. Russia’s going into the WTO," he said. "Russia’s in the WTO. And if we don’t lift Jackson-Vanik we’re denying our own workers. That’s all that happens here."