Weekly Trade Spotlight: What U.S. Businesses and Workers Stand to Gain from Russia Joining the World Trade Organization
Last Monday, Russia notified the World Trade Organization (WTO) that it had accepted its terms of accession and is prepared to become the organization’s 157th member on August 22, 2012. As the United States welcomes Russia’s Membership in the WTO, the Obama Administration is working closely with Congress to ensure that the WTO Agreement will apply between the United States and Russia. When the WTO Agreement is in full effect between the United States and Russia, U.S. exporters will be able to access all of the job-supporting benefits that come with Russia joining the rules-based global trading system.
A significant benefit of Russia’s WTO Membership is improved market access for U.S. goods exports to Russia. Until now, Russia had no tariff bindings, meaning it could increase its tariffs without limit and without notice. Over the past few years, Russia has occasionally raised tariffs on a number of U.S. exports, such as combine harvesters, steel pipes and rolled products, rice, and processed cheese, just to name a few. As a WTO Member, Russia has not only reduced many tariff rates, it has established limits on the tariff level it can apply to all products, providing certainty and predictability to U.S. exporters.
These commitments will bring significant benefits to American farmers, ranchers, and manufacturers. For example, soybeans are the largest source of farm cash receipts in Ohio. Under the WTO Agreement, Russia has committed to cut soybean tariffs to zero, which could create significant opportunities for soybean farmers in the Buckeye State. Importantly, the WTO Agreement also provides the United States with the enforcement tools necessary to ensure Russia fulfills its WTO commitments.
Similarly, Russia has committed to provide greater and more predictable access to its services market. In sectors such as audio-visual, telecommunications, and financial services, Russia is allowing foreign companies to operate as 100 percent foreign-owned enterprises. These provisions will give U.S. service providers additional certainty and security to help them expand their businesses in Russia’s large and growing market.
As part of its WTO accession terms, Russia has also committed to provide stronger protection for U.S. intellectual property rights. Russia’s enhanced IPR commitments will support well-paying jobs in America’s innovative and creative industries.
Without the WTO Agreement in place, many of these job-supporting benefits would be unavailable to U.S. exporters, manufacturers, creators, and workers. At the same time, competitors from other WTO Member countries will soon begin to enjoy these benefits, which creates the potential for our exporters to be put at a disadvantage. That is why the Administration is working closely with Congress to secure legislation terminating the application to Russia of the Jackson-Vanik amendment, which currently precludes permanent normal trade relations (PNTR) with Russia. When adopted, legislation authorizing PNTR with Russia will provide American businesses, workers, and families an equal opportunity to access the full benefits of Russia’s WTO Membership.