House Votes for Manufacturing Jobs, Passing

Permanent Normal Trade Relations (PNTR) with Russia

Russia joined the World Trade Organization in August.

The House of Representatives overwhelmingly approved a bill to establish Permanent Normal Trade Relations (PNTR) with Russia, by a vote of 365-43, on November 16. The NAM issued a Key Vote letter supporting the Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012 (H.R. 6156).

Russia officially joined the World Trade Organization (WTO) in August and passage of PNTR legislation has languished, allowing other nations to take advantage of Russia’s WTO membership while the United States remained on the sidelines.

Manufacturers continue to urge the Senate to take up PNTR legislation quickly. Without PNTR, manufacturers in the United States will continue to have a significant disadvantage in the growing Russian market. Russia imported nearly $300 billion in goods in 2011, yet the United States accounted for less than 5 percent of those imports. Clearly, there is room for growth.

According to the President’s Export Council, U.S. exports to Russia could double in the next five years with PNTR in place. Russia already has full access to the U.S. market, so failure to pass PNTR legislation will only hurt American manufacturing workers.

How Congress Can Help

Congress must establish PNTR with Russia for U.S. companies to benefit from Russia’s WTO membership and the commitments Russia has made as part of its accession package. To establish PNTR, Congress must graduate Russia from the Jackson-Vanik amendment. Since 1992, U.S. presidents of both political parties have certified annually that Russia complies with the Jackson-Vanik amendment provisions. The United States maintains Normal Trade Relations (NTR) status with Russia, not the unconditional PNTR required by the WTO.

If Congress fails to act on PNTR, America’s foreign competitors will have an advantage in accessing the nearly $300 billion Russian import market. Since Russia already has open access to the U.S. market, the only entities hurt by failure to provide Russia PNTR would be NAM members and other U.S. companies. Russia is the world’s ninth largest economy and is already Europe’s largest consumer market.

Did you Know?

Machinery and equipment comprised 44 percent of Russian imports in 2010. In dollars, Russia’s imports of machinery and equipment grew at least 40 percent annually from 2004 to 2010. According to recent reports, 60 percent of Russian industrial enterprises will be seeking to replace obsolete and outdated equipment within the next five years. Russia will continue to be a large and growing market for machinery exports.

Russia is forecast to become the world’s 6th largest car market by 2015. Already, 34 percent of the cars sold in Russia are imported. Another 42 percent are manufactured in Russia by foreign companies.

Russia has 8 percent of the world’s farmland, and the country needs to replace 70 percent of its aging agricultural machinery in order to efficiently develop its agricultural resources. Russia’s imports of U.S.-made agricultural equipment are expected to grow 140 percent between 2011 and 2013.

Key industries in Russia rely on high-quality chemicals, but domestic producers fulfill only half of the market demand. There are major market opportunities for U.S. chemical manufacturers.

Over the next 20 years, Russia is expected to need more than 1,000 new passenger airplanes—at a value of about $95 billion. Russia has agreed to gradually lower tariffs on wide-body commercial aircraft from the current 20 percent down to 7.5 percent over the next four years.

By joining the WTO, Russia has agreed to bind its tariffs on manufactured goods at an average rate of 7.3 percent— down from the current average of 9.5 percent.