Improving Agriculture Trade with Russia
*A version of this column was submitted to The Hill newspaper, which will soon post it on their Congress blog at this link.
Three years since Secretary of State Hillary Clinton famously pushed for a reset of relations between the United States and Russia, the two nations have made progress. International relations being not unlike a dance where both partners like to take the lead, strides and swings forward do not come without a misstep or two. With Russia’s accession to the World Trade Organization (WTO), we have an opportunity to create a more harmonious trade partnership where both nations play to their strengths and grow our markets.
The economic benefits for the United States are real. Russia’s accession creates a ripe opportunity to broaden market access for American agricultural products including beef, pork, and poultry - a commodity that has been mired in an uncertain off-and-on trade status in recent years. U.S. food and agricultural exports to Russia totaled nearly $1.3 billion in 2010 with $336 million of that in red meats and $311 million in poultry. These sales were during a time in which Russia had a nearly seven-month ban on U.S. poultry products due to differences in sanitary protocols, which resulted in an arbitrary trade barrier.
Russia is the third largest export market for U.S. poultry, representing over 500,000 American jobs. Given that poultry is my home state of Georgia’s primary agricultural product, leading the nation in poultry production, broadening access to Georgia poultry is in the best interest of our economy. Russia, with its educated population, growing middle class and with one of the world’s fastest-growing economies, is a market hungry for more chicken, turkey and other agricultural products. By 2014, Russian retail food and beverage sales are forecast to increase in real terms by 20 percent from just over $200 billion in 2010 to more than $240 billion. As part of its WTO accession commitments, Russia is to maintain a 250,000 ton tariff rate quota (TRQ) for chicken halves and leg quarters with an in-quota tariff of 25 percent. If Russia were to eliminate these TRQs on poultry, the tariff rate applied to U.S. exports would be 37.5 percent.
With Russia’s accession to the WTO, we are assured of substantive benefits to U.S.-Russia trade relations. Russia is the largest economy to have remained outside the WTO, and its membership will tie Russia to the same set of trade rules that apply to the organization’s 153 other Members. These rules will ensure fairer treatment of our exports, likely cuts in tariffs and greater protections for intellectual properties. Assurances have been made for Russia to comply with WTO rules and standards, such as sanitary and phytosanitary measures of meat and other agricultural products. Such assurances should prevent scientifically baseless stymies like the one leading to the aforementioned seven month ban.
Russia will continue to be a welcoming and influential trading partner for the years to come. Our official trade policy must reflect this market reality. We must do what we can to support our businesses and products in that and other growing markets. There will come a point where we must take serious consideration into the continued relevance of the Jackson-Vanik amendment with respect to Russia. That could lead to graduation from the terms of the 1974 amendment or replacing Jackson-Vanik with a statement that fully acknowledges the current geopolitical climate while expressing our continued support for democracy and human rights rather than an outdated Cold War posture.
Since the Clinton Administration, the Executive Branch has found Russia to be in full compliance within the requirements of Jackson-Vanik, resulting in a yearly Normal Trade Relations status. Whether we extend Permanent Normal Trade Relations to Russia or not, Congress and the Administration must continue to work to ensure the negotiated access of our products to Russia and the world. I urge my colleagues and our Russian counterparts weighing the ratification of their accession to realize that in trade as in security issues, in order to continue the easing of tensions, we must continue to cultivate a shared vital interest in mutual success.