[Senate Report 112-226]
[From the U.S. Government Publishing Office]
Calendar No. 461
112th Congress Report
SENATE
2d Session 112-226
======================================================================
RUSSIA AND MOLDOVA JACKSON-VANIK REPEAL AND MAGNITSKY RULE OF LAW
ACCOUNTABILITY ACT
_______
September 20, 2012.--Ordered to be printed
_______
Mr. Baucus, from the Committee on Finance,
submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany S. 3406]
[Including cost estimate of the Congressional Budget Office]
The Committee on Finance, having considered an original
bill (S. 3406) to authorize the extension of nondiscriminatory
treatment (normal trade relations treatment) to the products of
the Russian Federation and Moldova, to require reports on the
compliance of the Russian Federation with its obligations as a
member of the World Trade Organization, and to impose sanctions
on persons responsible for gross violations of human rights,
and for other purposes, reports favorably thereon without
amendment and recommends that the bill do pass.
CONTENTS
Page
I. Report and Other Materials of the Committee......................2
A. Report of the Committee on Finance...................... 2
B. Summary of Committee Consideration of the Agreement..... 2
1. Background.......................................... 2
2. Committee Consideration............................. 4
C. Trade Relations with Russia............................. 5
1. United States-Russia Economic Relations............. 5
2. United States-Russia Trade Data..................... 6
D. Trade Relations with Moldova............................ 7
1. United States-Moldova Economic Relations............ 7
2. United States-Moldova Trade Data.................... 7
E. General Description of the Bill......................... 9
Title I--Permanent Normal Trade Relations for the
Russian Federation................................. 9
Title II--Trade Enforcement Measures Relating to the
Russian Federation................................. 9
Title III--Sanctions With Respect to Persons
Responsible for Gross Violations of Human Rights... 11
Title IV--Permanent Normal Trade Relations for Moldova. 13
F. Vote of the Committee in Reporting the Bill............. 13
II. Budgetary Impact of the Bill....................................13
III. Regulatory Impact of the Bill and Other Matters.................15
IV. Additional Views of Senator Debbie Stabenow.....................16
V. Changes in Existing Law Made by the Bill, as Reported...........17
I. REPORT AND OTHER MATERIALS OF THE COMMITTEE
A. Report of the Committee on Finance
The Committee on Finance, having considered an original
bill (S. 3406) to authorize the extension of nondiscriminatory
treatment (normal trade relations treatment) to the products of
Russia and Moldova, to require reports on the compliance of the
Russian Federation with its obligations as a member of the
World Trade Organization (WTO), and to impose sanctions on
persons responsible for gross violations of human rights, and
for other purposes, reports favorably thereon and recommends
that the bill do pass.
B. Summary of Committee Consideration of the Agreement
1. Background
THE JACKSON-VANIK AMENDMENT
Section 401 of Title IV of the Trade Act of 1974 requires
the President to continue to deny nondiscriminatory treatment
(normal trade relations treatment) to any country not receiving
such treatment at the time of the law's enactment on January 3,
1975. Section 402 of Title IV, also referred to as the Jackson-
Vanik amendment, provides that the President may extend normal
trade relations treatment on a conditional basis to a country
that is in full compliance with certain specified freedom-of-
emigration conditions. Section 402 also authorizes the
President to waive full compliance with the freedom-of-
emigration requirements if the President determines that such a
waiver would encourage freedom of emigration. Before the
President may extend conditional normal trade relations to a
country subject to Title IV, that country must first conclude a
bilateral commercial agreement with the United States pursuant
to section 405 of Title IV. The Russian Federation received
conditional normal trade relations status in 1992 under a
presidential waiver after concluding a bilateral commercial
agreement. In 1994, the President determined that Russia was in
full compliance with Title IV. That determination has been
continuously confirmed in semiannual reviews since 1994.
Likewise, Moldova received conditional normal trade relations
status in 1992 under a presidential waiver after concluding a
bilateral commercial agreement. In 1997, the President
determined that Moldova was in full compliance with Title IV.
That determination has been continuously confirmed in
semiannual reviews since 1997. Moldova acceded to the WTO on
July 26, 2001.
THE WTO AND NORMAL TRADE RELATIONS
WTO rules require that WTO member countries provide each
other with unconditional or permanent normal trade relations.
Because countries subject to the Jackson-Vanik provision are
only provided annual normal trade relations, and only if they
meet the conditions of Jackson-Vanik, the United States has had
to pass legislation revoking the application of the Jackson-
Vanik amendment and providing permanent normal trade relations
(PNTR) status to countries subject to Jackson-Vanik when those
countries joined the WTO.
The Russian Federation applied to join the WTO in June
1993, and the WTO Working Party on Russia's accession was
established on January 16-17, 1993. On May 31, 2006, U.S. and
Russian negotiators signed a bilateral agreement on the
conditions for Russia's accession into the WTO. The Working
Party agreed to Russia's accession package on November 10,
2011. The WTO Ministerial Conference invited Russia to join the
WTO on December 16, 2011. Due to the application of Jackson-
Vanik, the United States was unable to grant unconditional
normal trade relations status to Russia. As a result, the
United States invoked the ``non-application'' provision of
Article XIII of the WTO Agreement. This means that, absent the
extension of PNTR, when Russia joins the WTO on August 22,
2012, neither Russia nor the United States will be bound by the
WTO Agreement with respect to each other. Therefore, Russia
will not be required to extend to the United States the full
benefits of its WTO accession commitments.
Moldova joined the WTO on July 26, 2001. Due to the
application of Jackson-Vanik, the United States was unable to
grant unconditional normal trade relations status to Moldova.
As a result, the United States invoked the ``non-application''
provision of Article XIII of the WTO Agreement, meaning that to
date, neither Moldova nor the United States have been bound by
the WTO Agreement with respect to each other. Therefore,
Moldova has not been required to extend to the United States
the full benefits of its WTO accession commitments.
THE MAGNITSKY BILL
Senator Cardin introduced S. 1039, ``The Sergei Magnitsky
Rule of Law Accountability Act,'' on May 19, 2011. The purpose
of the bill is to impose sanctions on persons that were
responsible for or benefited financially from the detention,
abuse, or death of Sergei Magnitsky, were involved in the
criminal conspiracy uncovered by Sergei Magnitsky, or were
responsible for extrajudicial killings, torture, or other gross
violations of internationally recognized human rights committed
against individuals seeking to expose illegal activity carried
out by officials of the Government of the Russian Federation or
to obtain, exercise, defend or promote internationally
recognized human rights and freedoms anywhere in the world. The
Senate Committee on Foreign Relations approved the bill by
voice vote on June 26, 2012. For further information on this
bill, see Senate Report 112-191 of July 23, 2012.
2. Committee Consideration
Chairman Baucus convened two hearings of the Committee on
Finance to consider PNTR with Russia. The first, with private
sector and non-governmental organization representatives, was
held on March 15, 2012. Testifying at the hearing were: Mr.
Samuel Allen, Chairman and CEO of Deere & Company; Mr. Ronald
Pollett, President and CEO of GE Russia; Mr. Watty Taylor,
President of the Montana Stockgrowers Association; Mr. Paul
Williams, President and Chairman of the Board of the American
Society of Composers, Authors and Publishers; and Mr. Al
Larson, Chairman of the Board of Transparency International
USA.
The second Committee on Finance hearing, on June 21, 2012,
was with senior Administration officials. Testifying at the
hearing were: Ambassador Ron Kirk, U.S. Trade Representative;
Tom Vilsack, Secretary of Agriculture; and Ambassador William
J. Burns, Deputy Secretary of State.
The Finance Committee also received numerous statements for
the record, all of which either supported PNTR with Russia or
were neutral. For example, the Committee received statements of
support for PNTR from Russian democracy activists such as the
Moscow-based Helsinki Group, American and Russian Jewish groups
such as NCSJ and the American Israel Public Affairs Group, six
former U.S. Trade Representatives, the U.S. Chamber of
Commerce, the National Association of Manufacturers, and the
American Farm Bureau Federation.
Senator Baucus, for himself and Senators Thune, Kerry, and
McCain, introduced S. 3285 on June 12, 2012 to establish PNTR
with the Russian Federation. Senator Lugar, for himself and
Senators Kerry, McCain, Hagan, and Cardin, introduced S. 309 on
February 8, 2011 to establish PNTR with Moldova. The Moldova
bill was later cosponsored by Senators Burr, Crapo, Lieberman,
and Shaheen.
On July 13, 2012, following consultation with Ranking
Member Hatch, Chairman Baucus announced his mark of an original
bill to establish PNTR with Russia and Moldova that combined
elements of S. 3285 and S. 309, as well as additional elements
proposed by Senator Hatch, in particular the enforcement, anti-
corruption, rule of law, and investor protection requirements
found in Title II of the bill. One such requirement is for USTR
to report on Russia's implementation of its WTO commitments on
sanitary and phytosanitary (SPS) issues. Members of the
Committee understand that this report will, among other issues,
cover Russia's treatment of the feed additive ractopamine.
On July 16, 2012, Senators Cardin, Kyl, Schumer, Snowe,
Cantwell, Coburn, Menendez, Thune, Burr, Cornyn, and Grassley
proposed an amendment to add the Sergei Magnitsky Rule of Law
Accountability Act of 2011, as reported out of the Senate
Committee on Foreign Relations on June 26, 2012. On July 17,
2012, following consultation with Ranking Member Hatch,
Chairman Baucus announced a modification of his mark that added
Senator Cardin's amendment. While numerous concerns were
expressed regarding Russia's foreign policy, these were
considered to fall outside of the scope of PNTR legislation,
which has typically focused on trade and human rights concerns.
The Committee on Finance met in open executive session on
July 18, 2012 to consider favorably reporting the Chairman's
mark of the bill on Russia and Moldova PNTR, as modified. Five
amendments were offered. The first amendment, by Senator
Cornyn, sought to add Magnitsky sanctions for enablers of mass
atrocities. It was withdrawn. The second amendment, by Senator
Cornyn, would have delayed the effective date of PNTR until
Russia ceased arms transfers to Syria. The amendment failed by
a roll call vote of 8 ayes, 16 nays. Ayes: Grassley (proxy),
Snowe (proxy), Kyl, Crapo, Roberts, Enzi, Cornyn, Coburn. Nays:
Baucus, Rockefeller, Conrad, Bingaman (proxy), Kerry, Wyden,
Schumer, Stabenow, Cantwell, Nelson, Menendez, Carper, Cardin,
Hatch, Thune, Burr.
The third amendment, by Senator Schumer, was withdrawn. It
would have required a new report on Russia's compliance with
the WTO Information Technology Agreement. The fourth amendment,
by Senator Menendez, to ensure effective enforcement of
intellectual property rights in Russia, was withdrawn.
The fifth amendment, by Senator Kyl, sought to clarify that
a report by the Secretary of Commerce on a corruption hotline
and website will include reporting on outreach by Commerce on
the availability of these resources. The amendment passed by
voice vote.
The Committee then favorably reported the bill, as amended,
by a roll call vote of 24 ayes and 0 nays. Ayes: Baucus,
Rockefeller, Conrad, Bingaman (proxy), Kerry, Wyden, Schumer,
Stabenow, Cantwell, Nelson, Menendez, Carper, Cardin, Hatch,
Grassley (proxy), Snowe (proxy), Kyl, Crapo, Roberts (proxy),
Enzi, Cornyn (proxy), Coburn (proxy), Thune, Burr. Chairman
Baucus filed the reported bill, S. 3406, on behalf of the
Finance Committee on July 19, 2012.
C. Trade Relations With Russia
1. United States-Russia Economic Relations
Russia has the sixth largest gross domestic product (GDP)
in the world at $2.2 trillion (compared to $14.6 trillion in
the United States). Following the collapse of the Soviet Union,
Russia implemented broad economic reforms in the 1990s that
privatized most industry, with notable exceptions in the energy
and defense-related sectors. Russia is the largest economy
outside of the WTO.
Russia's economy has relied heavily on oil and gas exports,
and these account for nearly three quarters of the $33.6
billion of Russia's exports to the United States in 2011. The
2009 recession and the accompanying collapse in oil prices
highlighted the problems with this approach, and Russian
policy-makers have since been professing the importance of
diversifying and creating an innovation-based economy.
U.S.-Russia trade grew at an annual rate of 35 percent in
2010 and 37.9 percent in 2011. Russia is currently our 20th
largest goods trading partner with $42.9 billion in total (two-
way) goods trade during 2011. U.S. goods exports to Russia
totaled $8.3 billion, and goods imports from Russia totaled
$33.6 billion. The U.S. goods trade deficit with Russia was
$26.3 billion in 2011. The top U.S. exports to Russia in 2011
were machinery, vehicles, aircraft, meat (poultry and pork),
and optic and medical instruments. The five largest imports
from Russia in 2011 were mineral fuel (oil), iron and steel,
precious stones (platinum), inorganic chemical (enriched
uranium), and fertilizers.
U.S. exports of agricultural products to Russia totaled
$1.2 billion in 2011, making Russia the 19th largest U.S.
agricultural export market. Leading categories of U.S.
agricultural exports to Russia include fresh/chilled/frozen
beef and pork, and poultry meat. U.S. imports of agricultural
products from Russia totaled $34 million in 2011.
2. United States-Russia Trade Data
The following tables summarize the top U.S. merchandise
exports to Russia and the top U.S. merchandise imports from
Russia from 2010 through 2012.
TOP 10 U.S. DOMESTIC EXPORTS AT FAS VALUE TO RUSSIA--BY HARMONIZED TARIFF SCHEDULE (HTS) CHAPTERS, RANKED BY
2011 EXPORTS, YTD = YEAR TO DATE (JAN. TO MAY)
----------------------------------------------------------------------------------------------------------------
2011 2011 YTD 2012 YTD
HTS Code--Product 2010 ($ 2011 ($ Percent ($ ($
millions) millions) of total millions) millions)
----------------------------------------------------------------------------------------------------------------
ALL CATEGORIES................................... 5,968 8,285 100% 3,224 4,290
84.--NUCLEAR REACTORS, BOILERS, MACHINERY AND 1,651 2,168 26.17 904 1,040
MECHANICAL APPLIANCES; PARTS THEREOF............
87.--VEHICLES, OTHER THAN RAILWAY OR TRAMWAY 484 1,111 13.41 476 709
ROLLING STOCK, AND PARTS AND ACCESSORIES THEREOF
88.--AIRCRAFT, SPACECRAFT, AND PARTS THEREOF..... 276 741 8.94 265 609
2.--MEAT AND EDIBLE MEAT OFFAL................... 649 697 8.41 197 366
90.--OPTICAL, PHOTOGRAPHIC, CINEMATOGRAPHIC, 382 548 6.61 170 212
MEASURING, CHECKING, PRECISION, MEDICAL OR
SURGICAL INSTRUMENTS AND APPARATUS; PARTS AND
ACCESSORIES THEREOF.............................
85.--ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS 395 546 6.59 206 284
THEREOF; SOUND RECORDERS AND REPRODUCERS,
TELEVISION RECORDERS AND REPRODUCERS, PARTS AND
ACCESSORIES.....................................
39.--PLASTICS AND ARTICLES THEREOF............... 285 369 4.45 172 143
28.--INORGANIC CHEMICALS; ORGANIC OR INORGANIC 143 180 2.17 48 61
COMPOUNDS OF PRECIOUS METALS, OF RARE-EARTH
METALS, OF RADIOACTIVE ELEMENTS OR OF ISOTOPES..
38.--MISCELLANEOUS CHEMICAL PRODUCTS............. 120 136 1.64 39 56
8.--EDIBLE FRUIT AND NUTS; PEEL OF CITRUS FRUIT 120 132 1.59 58 60
OR MELONS.......................................
ALL CATEGORIES................................... 5,968 8,285 100 3,224 4,290
----------------------------------------------------------------------------------------------------------------
TOP 10 U.S. DOMESTIC IMPORTS AT FAS VALUE FROM RUSSIA--BY HARMONIZED TARIFF SCHEDULE (HTS) CHAPTERS, RANKED BY
2011 IMPORTS, YTD = YEAR TO DATE (JAN. TO MAY)
----------------------------------------------------------------------------------------------------------------
2011 2011 YTD 2012 YTD
HTS Code--Product 2010 ($ 2011 ($ Percent ($ ($
millions) millions) of total millions) millions)
----------------------------------------------------------------------------------------------------------------
ALL CATEGORIES................................... 25,199 33,610 100% 13,017 11,921
27: MINERAL FUELS, MINERAL OILS AND PRODUCTS OF 17,319 23,869 71.02 9,223 8,284
THEIR DISTILLATION; BITUMINOUS SUBSTANCES;
MINERAL WAXES...................................
72: IRON AND STEEL............................... 1,369 1,675 4.98 683 1,189
71: NATURAL OR CULTURED PEARLS, PRECIOUS OR 710 1,404 4.18 509 303
SEMIPRECIOUS STONES, PRECIOUS METALS; PRECIOUS
METAL CLAD METALS, ARTICLES THEREOF; IMITATION
JEWELRY; COIN...................................
28: INORGANIC CHEMICALS; ORGANIC OR INORGANIC 1,279 1,380 4.11 285 225
COMPOUNDS OF PRECIOUS METALS, OF RARE-EARTH
METALS, OF RADIOACTIVE ELEMENTS OR OF ISOTOPES..
31: FERTILIZERS.................................. 641 1,127 3.35 665 294
76: ALUMINUM AND ARTICLES THEREOF................ 523 636 1.89 273 381
29: ORGANIC CHEMICALS............................ 609 584 1.74 284 170
75: NICKEL AND ARTICLES THEREOF.................. 731 565 1.68 314 158
81: BASE METALS NESOI; CERMETS; ARTICLES THEREOF. 336 275 0.82 124 130
3: FISH AND CRUSTACEANS, MOLLUSCS AND OTHER 267 268 0.80 124 100
AQUATIC INVERTEBRATES...........................
ALL CATEGORIES................................... 25,199 33,610 100 13,017 11,921
----------------------------------------------------------------------------------------------------------------
Sources: Data has been compiled from tariff and trade data from the U.S. Department of Commerce and the U.S.
International Trade Commission.
D. Trade Relations With Moldova
1. United States-Moldova Economic Relations
Moldova is Europe's poorest country, according to the World
Bank. Living standards are low for many Moldovans, particularly
in rural areas. Remittances from Moldovans working abroad
amounted to 22 percent of the country's GDP in 2010.
Moldova is currently negotiating an Association Agreement
with the European Union, which provides for cooperation in a
wide variety of spheres and holds out the possibility of an
eventual free trade agreement and visa-free travel.
In 2011, services comprised most of Moldova's GDP, at 63.5
percent, while industry comprised 20.3 percent and agriculture
comprised 16.2 percent. Major industries include sugar,
vegetable oil, food processing, agricultural machinery, foundry
equipment, refrigerators and freezers, washing machines,
hosiery, shoes, and textiles.
Bilateral (two-way) goods trade with Moldova totaled $46.5
million during 2011. U.S. goods exports to Moldova totaled
$31.4 million, and goods imports from Moldova totaled $16.1
million. The U.S. goods trade surplus with Moldova was $15.3
million in 2011. The top U.S. exports to Moldova in 2011 were
meat and edible meat offal, machinery, electrical machinery and
equipment, optic and medical instruments, and vehicles. The
five largest imports from Moldova in 2011 were beverages and
spirits, apparel, and footwear.
2. United States-Moldova Trade Data
The following tables summarize the top U.S. merchandise
exports to Moldova and the top U.S. merchandise imports from
Moldova from 2010 through 2012.
TOP 10 U.S. DOMESTIC EXPORTS AT FAS VALUE TO MOLDOVA--BY HARMONIZED TARIFF SCHEDULE (HTS) CHAPTERS, RANKED BY
2011 EXPORTS, YTD = YEAR TO DATE (JAN. TO MAY)
----------------------------------------------------------------------------------------------------------------
2011 2011 YTD 2012 YTD
HTS Code--Product 2010 ($ 2011 ($ Percent ($ ($
millions) millions) of total millions) millions)
----------------------------------------------------------------------------------------------------------------
ALL CATEGORIES................................... 34.5 31.4 100% 10.5 12.3
02.--MEAT AND EDIBLE MEAT OFFAL.................. 13.3 13.1 41.72 4.3 6.1
84.--NUCLEAR REACTORS, BOILERS, MACHINERY AND 2 4.2 13.38 0.8 1.2
MECHANICAL APPLIANCES; PARTS THEREOF............
98.--SPECIAL CLASSIFICATION PROVISIONS, NESOI.... 5.4 4 12.74 1.1 0.8
85.--ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS 0.8 2.8 8.92 0.7 0.6
THEREOF; SOUND RECORDERS AND REPRODUCERS,
TELEVISION RECORDERS AND REPRODUCERS, PARTS AND
ACCESSORIES.....................................
90.--OPTICAL, PHOTOGRAPHIC, CINEMATOGRAPHIC, 0.9 1.3 4.14 0.3 0.8
MEASURING, CHECKING, PRECISION, MEDICAL OR
SURGICAL INSTRUMENTS AND APPARATUS; PARTS AND
ACCESSORIES THEREOF.............................
87.--VEHICLES, OTHER THAN RAILWAY OR TRAMWAY 1.6 0.9 2.87 0.4 1.5
ROLLING STOCK, AND PARTS AND ACCESSORIES THEREOF
38.--MISCELLANEOUS CHEMICAL PRODUCTS............. 0.1 0.9 2.87 0.5 0.1
28.--INORGANIC CHEMICALS; ORGANIC OR INORGANIC 0 0.7 2.23 0.7 0
COMPOUNDS OF PRECIOUS METALS, OF RARE-EARTH
METALS, OF RADIOACTIVE ELEMENTS OR OF ISOTOPES..
88.--AIRCRAFT, SPACECRAFT, AND PARTS THEREOF..... 0.4 0.7 2.23 0.4 0.2
73.--ARTICLES OF IRON OR STEEL................... 0 0.7 2.23 0.6 0.2
ALL CATEGORIES................................... 34.5 31.4 100 10.5 12.3
----------------------------------------------------------------------------------------------------------------
TOP 10 U.S. IMPORTS FOR CONSUMPTION AT CUSTOMS VALUE FROM MOLDOVA--BY HARMONIZED TARIFF SCHEDULE (HTS) CHAPTERS,
RANKED BY 2011 IMPORTS, YTD = YEAR TO DATE (JAN. TO MAY)
----------------------------------------------------------------------------------------------------------------
2011 2011 YTD 2012 YTD
HTS Code--Product 2010 ($ 2011 ($ Percent ($ ($
millions) millions) of total millions) millions)
----------------------------------------------------------------------------------------------------------------
ALL CATEGORIES................................... 12.3 16.1 100% 4.1 7.6
22.--BEVERAGES, SPIRITS AND VINEGAR.............. 2.7 5.1 31.68 1.7 3.2
62.--ARTICLES OF APPAREL AND CLOTHING 3.2 4.3 26.71 0.6 1.1
ACCESSORIES, NOT KNITTED OR CROCHETED...........
63.--MADE-UP TEXTILE ARTICLES NESOI; NEEDLECRAFT 1.3 1.2 7.45 0.3 0.5
SETS; WORN CLOTHING AND WORN TEXTILE ARTICLES;
RAGS............................................
61.--ARTICLES OF APPAREL AND CLOTHING 1.3 1.1 6.83 0.3 0.4
ACCESSORIES, KNITTED OR CROCHETED...............
64.--FOOTWEAR, GAITERS AND THE LIKE; PARTS OF 0.6 0.8 4.97 0.3 0.3
SUCH ARTICLES...................................
42.--ARTICLES OF LEATHER; SADDLERY AND HARNESS; 1.3 0.7 4.35 0.3 0.2
TRAVEL GOODS, HANDBAGS AND SIMILAR CONTAINERS;
ARTICLES OF GUT (OTHER THAN SILKWORM GUT).......
19.--PREPARATIONS OF CEREALS, FLOUR, STARCH OR 0.4 0.6 3.73 0.1 0.3
MILK; BAKERS' WARES.............................
95.--TOYS, GAMES AND SPORTS EQUIPMENT; PARTS AND 0.4 0.5 3.11 0 0.1
ACCESSORIES THEREOF.............................
39.--PLASTICS AND ARTICLES THEREOF............... 0.1 0.5 3.11 0 0.8
84.--NUCLEAR REACTORS, BOILERS, MACHINERY AND 0.1 0.4 2.48 0.1 0
MECHANICAL APPLIANCES; PARTS THEREOF............
ALL CATEGORIES................................... 12.3 16.1 100 4.1 7.6
----------------------------------------------------------------------------------------------------------------
E. General Description of the Bill
Section 1. Short title; table of contents
This section provides that the short title of the act is
the ``Russia and Moldova Jackson-Vanik Repeal and Magnitsky
Rule of Law Accountability Act of 2012'' (the Act). Section 1
also provides the table of contents for the Act.
TITLE I--PERMANENT NORMAL TRADE RELATIONS FOR THE RUSSIAN FEDERATION
Section 101. Findings
Section 101 sets forth Congressional findings relating to
the Russian Federation's record in meeting the requirements of
Title IV of the Trade Act of 1974 (Title IV) and to the Russian
Federation's imminent accession to the WTO.
Section 102. Termination of application of Title IV of the Trade Act of
1974 to products of the Russian Federation
Section 102 authorizes the President to determine that
Title IV should no longer apply to the Russian Federation, and
to proclaim the extension of normal trade relations treatment
to the products of the Russian Federation. Section 102
terminates the application of Title IV to Russia on the
effective date of the President's proclamation, which shall be
no sooner than the date the Russian Federation accedes to the
WTO.
TITLE II--TRADE ENFORCEMENT MEASURES RELATING TO THE RUSSIAN FEDERATION
Section 201. Reports on implementation by the Russian Federation of
obligations as a member of the World Trade Organization and
enforcement actions by the United States Trade Representative
Section 201(a) requires the United States Trade
Representative (USTR) to report annually to the Senate Finance
Committee and the House Ways and Means Committee on the Russian
Federation's implementation of its obligations as a member of
the WTO, in particular with respect to obligations relating to
sanitary and phytosanitary (SPS) issues and intellectual
property protection. The USTR's report would also cover the
Russian Federation's progress on acceding to and implementing
the WTO Information Technology Agreement and the WTO Agreement
on Government Procurement. To the extent the USTR believes that
the Russian Federation is not fully implementing a WTO
agreement or making adequate progress in acceding to the above
agreements, the USTR would be required to include in the report
its plans for addressing those situations. In preparing the
report, the USTR must provide an opportunity for public
comment, including by holding a public hearing.
Section 201(b) requires the USTR to report within 180 days,
and annually thereafter, to the Senate Finance Committee and
the House Ways and Means Committee on enforcement actions taken
by the USTR to ensure full compliance by the Russian Federation
with its WTO obligations.
Section 202. Promotion of the rule of law in the Russian Federation to
support United States trade and investment
Section 202(a) requires the USTR and the Secretary of State
to report annually on measures they have taken and results
achieved to promote the rule of law in the Russian Federation
and to support U.S. trade and investment by strengthening
investor protections in Russia, including the negotiation of a
new bilateral investment treaty; advocating for U.S. investors
in Russia, including by promoting the claims of U.S. investors
in the Yukos Oil Company; encouraging all parties to the
Organisation for Economic Co-operation and Development Anti-
Bribery Convention, including the Russian Federation, to fully
implement their commitments; promoting corruption-free customs,
tax, and judicial authorities in the Russian Federation; and
increasing cooperation between the United States and the
Russian Federation to expand the capacity for civil society
organizations to monitor, investigate, and report on suspected
incidents of corruption.
Section 202(b) requires the Secretary of Commerce to
establish and maintain a hotline and secure website to allow
U.S. entities to report instances of bribery, attempted
bribery, and other forms of corruption in the Russian
Federation that could affect them and to request U.S.
assistance relating to these issues in the Russian Federation.
Section 202(b) also requires the Secretary of Commerce to
report annually to the Senate Finance Committee and the House
Ways and Means Committee on the instances of bribery, attempted
bribery, and other forms of corruption reported through the
hotline and website, a description of the regions where those
instances are alleged to have occurred, and a summary of U.S.
actions taken in response to requests. The identities of those
reporting will not be included in the report. The report will
also describe the efforts undertaken by the Secretary of
Commerce to inform U.S. entities doing business in Russia of
the availability of assistance with corruption problems through
the hotline and website.
Section 203. Reports on laws, policies, and practices of the Russian
Federation that discriminate against United States digital
trade
Section 203 amends section 181 of the Trade Act of 1974 by
requiring that the report under section 181 include a
description of laws, policies, or practices of the Russian
Federation that deny fair and equitable treatment to U.S.
digital trade.
Section 204. Efforts to reduce barriers to trade imposed by the Russian
Federation
Section 204 requires the USTR to pursue the reduction of
Russian barriers to U.S. exports through efforts to negotiate a
bilateral agreement with the Russian Federation that would
recognize U.S. SPS measures as equivalent to Russian SPS
measures, and through efforts to obtain the Russian
Federation's acceptance of an action plan to provide greater
protections for intellectual property rights than those
provided under the WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights.
TITLE III--SANCTIONS WITH RESPECT TO PERSONS RESPONSIBLE FOR GROSS
VIOLATIONS OF HUMAN RIGHTS
Section 301. Short title
Section 301 provides that this title may be cited as the
``Sergei Magnitsky Rule of Law Accountability Act of 2012.''
Section 302. Findings
Section 302 sets forth Congressional findings relating to
the death of Sergei Magnitsky, as well as human rights and
corruption issues in Russia more generally.
Section 303. Definitions
Section 303 defines the terms ``admitted,'' ``alien,''
``appropriate congressional committees,'' ``financial
institution,'' and ``United States Person.''
Section 304. Identification of persons responsible for the detention,
abuse and death of Sergei Magnitsky and other gross violations
of human rights
Section 304(a) requires the Secretary of State, in
consultation with the Secretary of the Treasury, to submit to
the appropriate congressional committees a list of each person
the Secretary of State determines meets one of the following
categories of criteria:
(1) Persons responsible for the detention, abuse, or
death of Mr. Magnitsky; persons who participated in
efforts to conceal the legal liability for the
detention, abuse, or death of Mr. Magnitsky; persons
who benefitted financially from the detention, abuse,
or death of Mr. Magnitsky; or persons involved in the
criminal conspiracy uncovered by Mr. Magnitsky; or
(2) Persons responsible for extrajudicial killings,
torture, or other gross violations of internationally
recognized human rights committed against individuals
seeking: (A) to expose illegal activity carried out by
officials of the Russian Government; or (B) to obtain,
exercise, defend, or promote internationally recognized
human rights and freedoms, such as the freedoms of
religion, expression, association, and assembly, and
the rights to a fair trial and democratic elections,
anywhere in the world; or
(3) Persons who acted as an agent of or on behalf of
a person in a matter relating to an activity described
in paragraphs (1) or (2).
Section 304(b) requires the Secretary of State to update
the list required by subsection 304(a) as more information
becomes available.
Section 304(c) states that a person shall be removed from
the list required by section 304(a) if the Secretary of State
determines that the person did not engage in the activity for
which the person was added to the list.
Section 304(d) describes the form the list will take and
the extent of its public availability. It requires that, except
as permitted by subsections 304(d)(2)-(3), the list shall be
submitted in unclassified form and published in the Federal
Register. Section 304(d)(2) permits information to be submitted
in a classified annex if the Secretary of State determines that
it is necessary for the national security interests of the
United States to do so, and, prior to submitting a list
including a classified annex, provides the appropriate
congressional committees notice of and a justification for
including each person in the classified annex. Section
304(d)(3) requires that, not later than 300 days after the date
of enactment and annually thereafter, the Secretary review the
classified annex and provide to the appropriate congressional
committees a justification for continuing to include each
person in such an annex.
Section 304(e) requires the Secretary of State to provide a
response not later than 120 days after receiving a written
request from the chairperson and ranking member of one of the
appropriate congressional committees concerning whether a
specific person meets the criteria for being added to the list
requires by subsection 4(a). The response may be submitted in
classified form if the Secretary determines that it is
necessary for the national security interests of the United
States to do so.
Section 304(f) clarifies that the Secretary of State shall
publish the list required by subsection 304(a) without regard
to the requirements of section 222(f) of the Immigration and
Nationality Act (8 U.S.C. 1202(f)) with respect to
confidentiality of records pertaining to the issuance or
refusal of visas or permits to enter the United States.
Section 305. Inadmissibility of Certain Aliens
This section provides that an alien is ineligible to
receive a visa to enter the United States and ineligible to be
admitted to the United States if the alien is on the list
required by section 304(a), and that the Secretary of State
shall revoke, in accordance with section 221(i) of the
Immigration and Nationality Act (8 U.S.C. 1201(i)), the visa or
other documentation of any alien who would be ineligible to
receive such a visa or documentation under this title. The
application of this section may be waived by the Secretary of
State if the Secretary determines that such a waiver is
necessary to permit the United States to comply with the
Agreement between the United Nations and the United States of
America regarding the Headquarters of the United Nations,
signed June 26, 1947, and entered into force November 21, 1947,
or if the Secretary determines that a waiver is in the national
security interests of the United States and provides, prior to
granting such a waiver, notice of and a justification for the
waiver to the appropriate congressional committees.
Section 306. Financial measures
This section requires the Secretary of the Treasury to
freeze and prohibit all transactions in property and interests
in property of a person that the Secretary, in consultation
with the Secretary of State, determines has engaged in an
activity described in paragraph (1), (2), or (3) of section
304(a) if such property and interests in property are in the
United States, come within the United States, or come within
the possession or control of a United States person. The
Secretary of the Treasury may waive the application of this
section if the Secretary determines that such a waiver is in
the national security interests of the United States and, prior
to granting such a waiver, provides notice of and justification
for the waiver to the appropriate congressional committees.
Section 307. Report to Congress
This section requires the Secretary of State and Secretary
of Treasury to submit a report one year after the date of
enactment (and annually thereafter) to the appropriate
congressional committees. The report must describe the actions
taken to carry out this title, including the number of times
and circumstances in which persons described in section 304(a)
have been added to the list during the year preceding the
report and if few or no such persons have been added during
that year, the reasons for not adding more persons to the list.
The report must also describe efforts to encourage the
governments of other countries to impose sanctions that are
similar to the sanctions imposed under this title.
TITLE IV--PERMANENT NORMAL TRADE RELATIONS FOR MOLDOVA
Section 401. Findings
Section 401 sets forth Congressional findings relating to
Moldova's record in meeting the requirements of Title IV and to
Moldova's accession to the WTO.
Section 402. Termination of application of Title IV of the Trade Act of
1974 to products of Moldova
Section 402 authorizes the President to determine that
Title IV should no longer apply to Moldova, and to proclaim the
extension of normal trade relations treatment to the products
of Moldova. Section 402 terminates the application of Title IV
to Moldova on the date of the President's proclamation.
F. Vote of the Committee in Reporting the Bill
In compliance with section 133 of the Legislative
Reorganization Act of 1946, the Committee states that on July
18, 2012, S. 3046 was ordered favorably reported by a roll call
vote of 24 ayes and 0 nays. Ayes: Baucus, Rockefeller, Conrad,
Bingaman (proxy), Kerry, Wyden, Schumer, Stabenow, Cantwell,
Nelson, Menendez, Carper, Cardin, Hatch, Grassley (proxy),
Snowe (proxy), Kyl, Crapo, Roberts (proxy), Enzi, Cornyn
(proxy), Coburn (proxy), Thune, Burr.
II. BUDGETARY IMPACT OF THE BILL
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 24, 2012.
Hon. Max Baucus,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 3406, the Russia and
Moldova Jackson-Vanik Repeal and Magnitsky Rule of Law
Accountability Act of 2012.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure.
S. 3406--Russia and Moldova Jackson-Vanik Repeal and Magnitsky Rule of
Law Accountability Act of 2012
CBO estimates that implementing S. 3406 would cost $7
million over the 2013-2017 period, assuming appropriation of
the necessary amounts. The bill would affect direct spending
and revenues; therefore, pay-as-you-go procedures apply, but
CBO estimates that any such effects would not be significant in
any year. S. 3406 contains no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act
and would not affect the budgets of state, local, or tribal
governments.
S. 3406 would remove Moldova and the Russian Federation
from the list of countries specified under title IV of the
Trade Act of 1974 (the Jackson-Vanik amendment), thereby
granting them permanent normal trade relations (NTR) with the
United States.
Those countries have had NTR status with the United States
for about 20 years, and CBO's baseline reflects the expectation
that they will maintain that status. Establishing permanent NTR
with Moldova and the Russian Federation could potentially
increase tariff collections by lifting quotas on certain
imported goods. CBO estimates, however, that any such effects
would be insignificant over the 2013-2022 period.
Title III of S. 3406 would require the Departments of State
and Treasury to compile, publish, and annually report on a list
of persons responsible for the death of Sergei Magnitsky or
human rights violations in foreign countries. Listed persons
would be ineligible for entry into the United States, have any
existing visas revoked, and have their assets frozen.
Based on information from the Departments of State,
Treasury, and Commerce, as well as the U.S. Trade
Representative (USTR), CBO estimates that implementing title
III of S. 3406 would cost a total of $7 million over the 2013-
2017, assuming appropriation of the necessary amounts. That
amount includes affected agencies' costs to hire additional
staff, complete required reports, hold public hearings, and
establish and maintain a secure phone line and Web site related
to activities under the bill. CBO also expects that enacting S.
3406 would decrease revenues from visa fees and increase
revenues from civil and criminal penalties imposed on those who
violate the regulations. CBO estimates that the provisions
would affect few people and that revenues deposited in the
Treasury would not be significant in any year. The legislation
also would increase direct spending from criminal penalties,
which are deposited in the Crime Victims Fund and spent in
subsequent years. However, CBO expects that any net effects
associated with collecting and spending such penalties would
not be significant in any year.
Title III of S. 3406 is similar to two other bills for
which CBO has prepared cost estimates. On July 5, 2012, CBO
transmitted a cost estimate for S. 1039, the Sergei Magnitsky
Rule of Law Accountability Act of 2012, as reported by the
Senate Committee on Foreign Relations on June 26, 2012. That
bill is identical to title III of S. 3406, and our cost
estimates are the same. On June 29, 2012, CBO transmitted a
cost estimate for H.R. 4405, the Sergei Magnitsky Rule of Law
Accountability Act of 2012, as ordered reported by the House
Committee on Foreign Affairs on June 7, 2012. Because the
provisions of H.R. 4405 would apply only to human rights
violations in the Russian Federation, our estimate of costs
under that bill is lower.
The CBO staff contacts for this estimate are Sunita
D'Monte, Matthew Pickford, and Susan Willie. This estimate was
approved by Theresa Gullo, Deputy Assistant Director for Budget
Analysis.
III. REGULATORY IMPACT OF THE BILL AND OTHER MATTERS
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee states
that S. 3406 will not significantly regulate any individuals or
businesses, will not affect the personal privacy of
individuals, and will result in no significant additional
paperwork.
The following information is provided in accordance with
section 423 of the Unfunded Mandates Reform Act of 1995 (UMRA)
(Pub. L. No. 104-04). The Committee has reviewed the provisions
of S. 3406 as approved by the Committee on July 18, 2012. In
accordance with the requirements of UMRA, the Committee has
determined that the provisions of S. 3406 contain no
intergovernmental mandates as defined in UMRA, and impose no
costs on state, local, or tribal governments.
IV. ADDITIONAL VIEWS OF
SENATOR DEBBIE STABENOW
Granting Russia PNTR status without strong oversight and
accountability would be another failed trade deal for American
manufacturers and farmers. While I am pleased with the
accountability measures added to the bill in Committee, I will
continue working with my colleagues to further strengthen these
provisions as this bill is considered on the Senate floor.
We must be willing to hold Russia, and all of our trade
partners, accountable to the commitments they made to join the
World Trade Organization. That includes commitments related to
improving labor standards, protecting intellectual property
rights, and enforcing against human rights violations. We need
to stand up for American businesses and workers so they have
the opportunity
to compete and win globally on a level playing field. To do
this, we must be tough with other countries that are violating
international trade law to give their own companies an anti-
competitive advantage.
V. CHANGES IN EXISTING LAW MADE BY THE BILL,
AS REPORTED
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
TRADE ACT OF 1974
* * * * * * *
TITLE I--NEGOTIATING AND OTHER AUTHORITY
CHAPTER 8--IDENTIFICATION OF MARKET BARRIERS AND CERTAIN UNFAIR TRADE
ACTIONS
* * * * * * *
SEC. 181. ESTIMATES OF BARRIERS TO MARKET ACCESS.
(a) National Trade Estimates.--
(1) * * *
* * * * * * *
(3) Inclusion of certain discriminatory laws,
policies, and practices of the Russian Federation.--For
calendar year 2012 and each succeeding calendar year,
the Trade Representative shall include in the analyses
and estimates under paragraph (1) an identification and
analysis of any laws, policies, or practices of the
Russian Federation that deny fair and equitable market
access to United States digital trade.
[(3)] (4) Annual revisions and updates * * *
* * * * * * *