Russia’s 18-year campaign to gain entrance into the World Trade Organization (WTO) will come to an end this summer. The WTO is scheduled to vote on Russia’s certain admission in July with Russia acceding to membership in August. In preparation for its admission, Russia has agreed to implement a long list of economic reforms. Russia, the world’s 11th largest economy, and the last major economy to join the WTO, presents many opportunities for its trade partners.
U.S. businesses, however, will not benefit from more open trade with Russia, including lower tariffs and access to the WTO to resolve trade disputes, unless Congress takes quick action before its August recess to pass one law and repeal another.
Currently, trade relations between Russia and the U.S. are subject to the Jackson-Vanik amendment, an outdated law designed to put pressure on communist countries by linking trade with human rights abuses. If the U.S. fails to terminate Jackson-Vanik as applied to Russia and affirmatively grant Russia unconditional Permanent Normal Trade Relations (PNTR or Most-Favored Nation status), it will be in violation of WTO rules and Russia could deny U.S. companies the benefits of its accession-related reforms.
Sen. Max Baucus (D-MT) introduced such a measure June 12—repealing Jackson-Vanik and extending Permanent Normal Trade Relations to Russia—with bipartisan support from International Trade Subcommittee ranking member John Thune (R-SD), Foreign Relations Committee Chairman John Kerry (D-MA) and Armed Services Committee ranking member John McCain (R-AZ). However, Sen. Baucus also announced his support of The Sergei Magnitsky Rule of Law Accountability Act of 2012 (the Magnitsky Act) with versions currently being considered in the House and Senate, which freezes assets and denies visas to Russian officials linked to human-rights abuses. Predictably, the Russians have voiced displeasure with the Magnitsky Act and business leaders hoping for quick passage of PNTR to Russia have urged Sen. Baucus not to link the two measures.
To further complicate matters, while the White House has identified granting PNTR to Russia as its chief trade priority this year—and doing so has the widespread support of industry—eight Republican members of the Senate Finance Committee have called for a closer examination of Russian barriers to U.S. exports, theft of intellectual property, public protests surrounding Vladimir Putin’s election and Moscow’s continued support of the Assad regime in Syria before taking action. Congress has a lot to resolve before August.
Update on Miscellaneous Tariff Bill
INDA and other groups successfully secured sponsors in both chambers of Congress to introduce Miscellaneous Tariff Bills (MTBs) covering various categories of rayon, including bills that provide duty suspensions for two new categories of rayon. Rep. Sue Myrick (R-NC-9th) and Sen. Kay Hagan (D-NC) introduced the following five bills proposing the elimination or reduction of tariffs on rayon:
1) H.R. 4603/S. 3089:
• Corresponds to HTS heading 9902.23.33, described as “staple fibers of viscose rayon, not carded, combed, or otherwise processed for spinning, measuring 1.67 to 16.67 decitex and having a fiber length each measuring 20 mm or more but not over 150 mm;”
• Extends the existing duty suspension that reduces the tariff from 4.3% to 0%;
2) H.R. 4582/S. 3090:
• Corresponds to HTS heading 9902.25.59, described as “staple fibers of viscose rayon, not carded, combed or otherwise processed for spinning;”
• Extends a duty reduction from 4.3% to 3.4% that was not included in the 2010 MTB;
3) H.R. 4583/S. 3091:
• Corresponds to HTS heading 9902.55.04, described as “viscose rayon staple fibers having a decitex of less than 5.0 (provided for in subheading 5504.10.00);”
• Extends existing duty reduction that lowers the duty from 4.3% to 1.8%;
4) H.R. 4586/S. 3120
• New category of rayon that measures 1.3 to 1.66 decitex and has a fiber length each measuring 20 mm or more but not more than 150 mm;
• Provides for a duty suspension;
5) HR 4585/S. 3140
• New category of rayon that measures 1 to 1.3 decitex and has a fiber length each measuring 20 mm or more but not more than 150 mm;
• Provides for a duty suspension.
More than 1300 unique bills were introduced and then referred to trade agencies for vetting. The International Trade Commission is currently working to confirm that each petition meets two key criteria: 1) that they are non-controversial, meaning no competing domestic production, and 2) the tariff revenue that the U.S. government foregoes as a result of the duty suspension does not exceed $500,000. If the lost tariff revenue would exceed the $500,000 threshold, the government can offer a tariff reduction instead of a duty suspension.
Meanwhile, the House Ways and Means Committee and Senate Finance Committee announced May 25 that they would be accepting public comments on the various bills through June 22. INDA submitted comments to both committees voicing industry support for the rayon MTBs, and provided template letters for INDA member companies wanting to register their approval. However, just when we thought progress was being made with ample time before duty suspensions expire at the end of the year, Sen. Rob Portman (R-OH) and Sen. Claire McCaskill (D-MO) decided to reach across the aisle to totally revamp the MTB process. Charging that the current process presents too much opportunity for corruption and violates the Republican moratorium on earmarks, the two senators unveiled legislation on June 12 that would have the ITC choose which tariff suspensions to submit to Congress for approval. The bill, which is similar to an earlier proposal from Sen. Jim DeMint (R-SC), surprisingly puts them at odds with House Republicans, who said earlier this year they do not consider the MTBs earmarks and would not oppose the process.
It is unclear whether the Portman/McCaskill bill will stall consideration of the current MTB petitions, even though the process is well underway. Sen. Portman has said it is not his intention to slow the current bill, and House Ways and Means Committee Chairman Dave Camp (R-MI) and Senate Finance Chairman Max Baucus (D-MT) are both working to move the MTB forward. As always, INDA will be sure to keep readers informed of any developments.
National Mattress Recycling Program
INDA has joined a growing coalition of associations and other non-profits supporting industry-proposed federal legislation creating a national mattress-recycling program.
The proposal, advanced by the International Sleep Products Association (ISPA), aims to promote responsible recycling of used mattress materials by creating an independent “Mattress Recycling Council,” which would establish a recycling program overseen by the U.S. Department of Commerce.
The proposal also directs the U.S. Consumer Product Safety Commission (CPSC) to establish a national product safety standard for the processing, labeling and sale of used and renovated mattresses. Fees collected on mattresses sold at retail and remitted to the Mattress Recycling Council would be used to fund the initiative. More information: www.sleepproducts.org.