This summer, Russia will officially join the World Trade Organization, becoming the globe's last major economy to link up with the group of 154 nations. But whether the United States will be in a position to fully benefit from this historic economic moment is up to us.
Unless Congress passes a bill establishing permanent normal trade relations, known as PNTR, with Russia, the United States will find itself on the sidelines as foreign competitors take advantage of the growing Russian marketplace.
With the world's ninth-largest economy and more than 140 million consumers, Russia represents a once-in-a-generation opportunity for the overseas expansion of U.S. commerce. In 2011, U.S. businesses exported goods and services worth more than $10 billion to Russia. With the benefits that come from WTO membership and normal trade relations, that number could double or even triple.
The stakes are particularly high for Kentucky, which has long enjoyed a robust trading relationship with Russia. Our state's exports to Russia in 2011 reached nearly $40 million. Those exports helped create hundreds of jobs for Kentuckians, not only at local companies like Holmberg Forest Products in Louisville and Cincinnati Machine, but at locally based national brands like Papa John's.
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If Congress doesn't establish PNTR with Russia — automatically requiring Russia to extend the same benefits and protections to the United States — Kentucky businesses will quickly lose their foothold in Russia to foreign competitors.
Particularly hard hit would be our machinery sector. Kentucky sold $17.1 million worth of machinery to Russia last year, and our sales of $5.4 million worth of machine tools to Russia accounted for nearly half of that sector's exports.
Meanwhile, Russia's entry into the WTO requires it to reduce tariffs on such products by as much as 25 percent. When Kentucky's machinery sector is able to take advantage of more favorable trade terms, a surge in profits and hiring will follow, even before the new orders start rolling in.
This comes at a time when Russia's spending on its crumbling Soviet-era infrastructure is expected to top $500 billion over the next five years. As a state that provides precisely the sort of machinery and equipment needed for this work, Kentucky should be leading the call to welcome Russia as an equal trading partner.
Of course, trade works both ways. Global pipe producer TMK IPSCO, a subsidiary of the Russian TMK Group, maintains a plant just across the river in Cincinnati. It employs 300 people, all of whom could find their jobs in jeopardy in the absence of trade legislation from Congress.
So what's preventing Congress from acting? A 38-year-old trade clause known as the Jackson-Vanik Amendment that both Democrats and Republicans agree has long outlived its usefulness.
Passed at the height of the Cold War in 1974, Jackson-Vanik places strict restrictions on trade between the United States and countries that don't allow their citizens to emigrate freely. It was originally intended to pressure the Soviet Union to allow oppressed Jews to leave the country. With the Soviet Union a distant memory and daily flights running from Moscow to Tel Aviv, this amendment does not serve any constructive purpose in U.S. foreign policy.
In effect, Jackson-Vanik is already moot. Since 1992, every U.S. president has issued an annual certification of Russia's compliance with its emigration provisions. Yet it remains on the books.
If Congress fails to pass a short, simple bill to repeal Jackson-Vanik and grant full PNTR with Russia, Kentucky businesses will miss out on a historic opportunity.
With our country still suffering from the lingering effects of a global recession, now is not the time to let obsolete laws rob us of jobs and prosperity.