The Jackson-Vanik Amendment and the “Magnitsky Bill”: Pros and Cons

In the U.S., there is growing support for the repeal of the Jackson-Vanik Amendment, which has prohibited normal trade with Russia for many years. Unfortunately, however, Congress is not removing the politicized anti-Russian Magnitsky bill from the agenda.

As an example of the former, 73 Republican congressmen sent a letter to President Barack Obama. The document notes that the process of Russia’s entry into the WTO is complete, and if the Russian Federation is not granted the status of a normal trading partner of the U.S., “U.S. exporters and their workers will not be able to take advantage of the benefits provided by this market.” Legislators also point out that the U.S. will be unable to use the WTO mechanism of hearing trade disputes with Russia if the amendment remains in effect. The authors add that they are “greatly concerned by some aspects of the broader U.S.-Russian relationship,” as well as “Russia’s actions around the world.” Nevertheless, discussion of the amendment centers on its likely outcome of causing “missed economic opportunities and job loss.” The letter was welcomed by a number of American business associations, including the American-Russian Business Council, the American-Russian Trade Coalition and the Emergency Committee for American Trade.

At the present, however, the fate of the amendment is being held hostage by America’s internal political affairs. Under these circumstances, it seems unlikely that the question will be resolved before 2013. Gary Hufbauer, an expert at the Peterson Institute for International Economics, addressed the issue. “Practically speaking, we can hardly expect Congress to take action on the amendment before the end of the election season.” That means that the matter can be determined only after January, when a new president is inaugurated and a new session of the highest legislative body begins.

On July 13, the day that the legislator’s letter was published, the Senate Finance Committee announced that it will vote next week on the question of repealing the Jackson-Vanik Amendment. At the same time, its chairman Max Baucus added that he “intends to offer the senators a chance to consider the ‘Magnitsky Bill’”* as well, which includes sanctions against Russians allegedly involved in the Nov. 2009 death in prison of Sergei Magnitsky, a lawyer for the Hermitage Capital Management fund.

This week Democratic Congressman James McGovern, one of the co-authors of the Magnitsky bill, again spoke in favor of tying the repeal of the amendment to the enactment of the anti-Russian law. “Increased trade with Russia must not be placed higher than human rights at a moment when the Russian government is increasingly limiting freedom at home and arming bloodthirsty regimes abroad,” he said, referring to “arms shipments to Syria and Sudan.”* McGovern says that “the document enjoys strong bipartisan support in the House of Representatives and the Senate, and I hope it will be passed soon.”*

One American expert on Russia, Leon Aron of the American Enterprise Institute, believes that the increasing support for the Magnitsky bill is due to a general consensus in Congress that Barack Obama’s policy on Russia lacks the necessary toughness, and “Congress felt that it really needed to react, to register a policy issue, but also kind of a moral outrage.” His counterpart at the Carnegie Endowment for International Peace, Matthew Rojansky, emphasizes that the Magnitsky bill is related to “some old Cold War stereotypes which can play well in election season.”

Last Wednesday, a delegation of Russian parliamentarians discussed the topic with their American colleagues. Their spokespeople confirmed at a press conference that U.S. lawmakers are prepared to study the results of the preliminary Russian parliamentary investigation into the “Magnitsky affair” and draw from them their own conclusion. The Russians, they said, proposed that lawmakers separate consideration of repealing the Jackson-Vanik Amendment from the adoption of the Magnitsky bill. Significantly, Benjamin Cardin, the author of the Magnitsky bill in the Senate, did not meet with the delegation, indirectly confirming that the bill is primarily political, with little concern for truth.

Moscow has repeatedly warned that if Congress passes the bill, it will negatively impact U.S.-Russian relations and will elicit an asymmetric response. As Russian President Vladimir Putin announced July 9, “replacing the Jackson-Vanik Amendment with an anti-Russian law or the current course on missile defense can only upset the strategic balance and cannot help but disturb us.”

Meanwhile, colleagues of the American “hawks” at the twenty-first annual meeting of the OSCE Parliamentary Assembly in Monaco passed the resolution “Rule of Law in Russia: Case of Sergei Magnitsky.” This document calls on the national parliaments of member states to “take action to impose visa sanctions and asset freezes on persons responsible for the false arrest, torture, denial of medical care and death of Sergei Magnitsky.”

*Editor’s Note: These quotations, while accurately translated, could not be verified in English.