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Forecast for U.S.-Russian Trade Relations in 2009 (Revised and Updated Version)


Forecast for U.S.-Russian Trade Relations in 2009 (Revised and Updated Version)

Increasing Russian assertiveness, including in foreign commercial relations, will provide the context of U.S. commercial and trade policy relations with Russia in 2009. This is reflected in Russian treatment of international energy companies and of intellectual property rights (despite recent progress in some areas) and restrictions on foreign financial services. Trade policy with Russia in 2009 will continue to be largely focused on Russia’s WTO accession negotiations.
 
The initiative on U.S. trade policy with Russia will lie with the Executive, although foreign policy sanctions proposals in Congress are possible in the event of renewed tensions. The U.S. bilateral agreement on Russian WTO accession was signed in November, 2006. At the conclusion of the accession process, the Congress will need to act on permanent normal trade relations for Russia in order for the U.S. to gain full benefits from its WTO accession. Negotiations for a Bilateral Investment Treaty remain incomplete. The “123 Agreement” on civil nuclear cooperation was withdrawn from congressional consideration following the Georgia invasion but can be taken up in the 111th Congress. The U.S.-Russia Energy Working Group continues to discuss collaboration on energy efficiency initiatives, clean coal technologies and fuel cell initiatives.

Russian accession to the WTO remains a U.S. policy priority, but Russian commitment to the process has been strongly linked to other perceived interests and has therefore been variable. Recently deflating commodity prices appear to have had a salutary effect on at least their rhetorical level of commitment. Accession talks had slowed in July of 2008 even before the invasion of Georgia and, although the invasion did not elicit punitive measures from the Congress, it did further slow down accession talks. Then in August Prime Minister Putin disparaged WTO membership and threatened to abandon commitments Russia had made during 15 years of accession talks, including bilaterals with the U.S. on leasing of aircraft, telecom equipment and phytosanitary measures. Russia’s top negotiator quickly reaffirmed their commitment to WTO accession on the prescient grounds that the financial crisis might grow into a commodity crisis and by November President Medvedev was urging quick accession.

U.S. exports of meat and poultry (Russia recently reduced their quota for chicken imports from the U.S., but raised the pork quota), treatment of state owned enterprises, IPR protection, and Russian treatment for foreign investment, especially in the energy and automotive sectors, will continue to be areas of potential dispute. On the positive side, the U.S. could support Russian entry into the OECD and, of course, in time grant PNTR, if not outright repeal of Jackson-Vanik.