The Obama Administration endorses repealing a Cold War-era law that used trade restrictions to punish former Soviet bloc nations for restricting the emigration of citizens.
Acting Commerce Secretary Rebecca Blank backed the repeal of the Jackson-Vanik Amendment yesterday at a Capitol Hill lunch hosted by the Senate Aerospace Caucus and the Aerospace Industries Association (AIA) trade group. The Jackson-Vanik Amendment restricts United States trade relations with communist, or formerly communist, nations that restricted emigration and other human rights.
Blank said when new opportunities arrive to increase trade with foreign nations, the United States needs to make sure its aerospace industry competes “on a level playing field.”
“We can’t afford to leave any export or job creation opportunities on the table,” Blank said during her speech. “That’s one reason why the administration is calling to repeal the Jackson-Vanik Amendment, in order to establish Permanent Normal Trade Relations (PNTR) with Russia when it enters the World Trade Organization (WTO) at the end of August.”
Senate Finance Committee Chairman Max Baucus (D-Mont.) said yesterday in a statement Russia’s legislature approved an agreement to join the WTO, so it will formally become a member in 30 days.
The repealing of Jackson-Vanik amendment could be a boon to the U.S. aerospace industry at a time when domestic defense spending could decrease.
Blank said the U.S. aerospace industry already exports “hundreds of billions” of dollars in aircraft and parts to Russia each year, and if Congress takes action to repeal the Jackson-Vanik Amendment, the United States will see tariffs on exports to Russia “drop from as high as 20 percent to 7.5 percent for wide body aircraft, 12.5 percent for narrow body aircraft and about 5 percent for engines.”
“If we don’t repeal Jackson-Vanik, our relationship with Russia will not be subject to lower tariffs and WTO rules that all other WTO members will experience,” Blank said.
Deputy Secretary of State William Burns told the House Ways and Means Committee June 20 that lifting Jackson-Vanik and extending PNTR to Russia does not require the United States to change any of its tariffs, services, market access, or other WTO commitments.
“It simply makes permanent the treatment we already have extended to imports from Russia every year since 1992 and ensures that the WTO Agreement will apply between us,” Burns said.
The Senate Finance Committee yesterday approved legislation which would terminate application of the Jackson-Vanik Amendment to Russia and authorize President Obama to extend PNTR to Russia, according to a Commerce Department statement. It still has other congressional hurdles to pass before becoming law.