President Obama, Use Your Legal Authority to Remove Russia From Jackson-Vanik!
In December 2011, the Russian Federation was invited to join the World Trade Organization (WTO). President Barack Obama phoned his Russian counterpart, President Dmitry Medvedev, to congratulate him. The White House released a statement hailing the move:
"Russia's membership in the WTO will lower tariffs, improve access to Russia's services markets, hold the Russian government accountable to a system of rules governing trade behavior, and provide the means to enforce those rules. Russia's membership in the WTO will generate more export opportunities for American manufacturers and farmers, which in turn will support well-paying jobs in the U.S. President Obama told President Medvedev that the administration is committed to working with Congress to end the application of the Jackson-Vanik amendment to Russia in order to ensure that American firms and American exporters will enjoy the same benefits of Russian WTO membership as their international competitors."
The reference to the Jackson-Vanik amendment - a U.S. law - means that as long as Washington continues to apply that discriminatory statutory provision against Russia, Moscow can discriminate against importation of American goods and services. In effect, U.S. exports to Russia would suffer as a unique exception to the Russians' WTO obligations.
What is the Jackson-Vanik amendment?
Enacted in 1974, Jackson-Vanik barred normal trade ties between the U.S. and communist ("non-market economy") countries unless they permitted free emigration of their citizens. During the 20-plus years since the fall of the Berlin Wall and the collapse of the Soviet regime, most previously communist countries formerly impacted by Jackson-Vanik have been permanently "graduated" from its provisions. But due to unrelated political issues, Russia has not, while receiving de facto access to the American market on a provisional basis. This is despite the fact that for years Russia has been in full compliance with the amendment's emigration requirements. Moreover, in 2002 the U.S. Department of Commerce determined Russia was no longer a "non-market economy," which, according to Richard Perle - a noted hardliner on Russia and drafter of the Jackson-Vanik language - itself is sufficient to release Russia from its provisions.
Russia is no longer a communist economy and fully permits free travel of its citizens. Looked at another way, Jackson-Vanik successfully fulfilled its mission: to help achieve the end of communist rule. Tens of thousands of people (including the family of Edward Lozansky, one of the authors of this statement) were able to leave the USSR. But for misplaced reasons, Jackson-Vanik remains in force against Russia long after the reasons for it have receded into history.
Congressional Action Not Required to End Jackson-Vanik
The December statement from the White House includes the hope that Congress finally will act to end Jackson-Vanik application to Russia. Missing from the statement and from the policy of the Obama Administration is acknowledgement of the fact that nothing in the plain language of the Jackson-Vanik law requires Congress to take any action at all to achieve that end. Instead, the plain language of the law gives that authority solely to the President.
In April 2011, Edward Lozansky and another author of this statement, Anthony Salvia, filed suit in U.S. federal district court to require President Barack Obama to use his existing legal authority to remove the Russian Federation permanently from Jackson-Vanik. (Lozansky and Salvia v. Obama, 1:11-cv-00737-CKK) In a detailed legal analysis, it was demonstrated to the court that the key operative provision of Jackson-Vanik* places the burden solely on the President, not Congress, to free Russia from trade restrictions. Indeed, since 1994 the administrations of Presidents Bill Clinton, George W. Bush, and Barack Obama have agreed that Russia is not in violation of free emigration standards - but they still did not act to remove Russia permanently from Jackson-Vanik trade provisions, inaccurately claiming the need for Congressional action. The Lozansky-Salvia suit decisively demolishes that claim.
In its response to the suit, nowhere did the Obama Department of Justice show where the law requires Congressional action - because it doesn't. Instead, the Department pointed out that the Congressional route always has been taken in the past when other countries have been removed from Jackson-Vanik trade restrictions. This observation is both accurate and irrelevant. The fact that legislative action has always been used previously has no bearing on whether the President has statutory authority to achieve the same end without Congressional action.
Whichever way the Court eventually rules, the case of Lozansky and Salvia v. Obama already has broken significant new legal ground. Even if the Court rules in favor of the Obama Administration on narrow procedural grounds, there is no question of the President's legal authority to remove permanently Jackson-Vanik discrimination against Russia and thereby to ensure WTO access of American exports to Russia on a par with those of our foreign competitors.
In the plain language of Jackson-Vanik, no Congressional action is required to 'graduate' Russia permanently from trade restrictions. The President can do so solely upon his determination that Russia is no longer in violation of emigration standards. The failure of successive administrations to lift this discriminatory treatment amounts to just passing the buck.
Why Does It Matter?
Continued application of Jackson-Vanik matters for three reasons:
First, as already indicated, the amendment hurts American interests more than Russia. Under WTO rules producers in other countries will be guaranteed access to one of the world's most important emerging economies. American producers will not.
Second, continued misapplication of the Jackson-Vanik amendment violates America's own commitment to the rule of law. In 1974 the amendment set in place a legal standard, and that standard long since has been met. Yet - over two decades since the fall of communism - the discriminatory law holding hostage America's trade relations with Russia remains in effect. Even though repeated administrations have claimed to be in favor of "graduating" Russia from Jackson-Vanik, the pretense continues that new and elusive legislation is required - despite the plain language of the law giving the President that authority. Laws should be enforced as they are written.
Third, misuse of Jackson-Vanik against Russia sends a dangerous, negative message about U.S. intentions toward Russia and the future of the "reset" between what remain the world's two greatest nuclear powers. Singling out Russia for trade discrimination signals that the United States still refuses full normalization of relations with Moscow - more than 20 years after the end of the Soviet regime! Congressional critics (and most of the Republican presidential candidates) are never short of reasons to criticize Russia on human rights, democratic reform, or other matters that can and should be debated on their own merits. Thus, the Administration's pretense that Congressional action is needed not only bottles up U.S.-Russia trade ties but invites treatment of Russia as a political punching bag. Do political concerns lead to trade barriers with such paragons of democracy and
human rights as China (graduated from the amendment in 2000) or Saudi Arabia (never subject to the amendment)? No. But Russia remains locked in a time-warp from the 1970s, still branded as the communist adversary that no longer exists.
Jackson-Vanik was meant to punish the USSR. Now it mainly hurts the U.S.
Mr. Obama, Tear Down This (Trade) Wall!
Rather than taking a slap at President Obama, we - all Republicans but supporters of the Obama Administration's "reset" with Russia - believe the Lozansky and Salvia v. Obama suit helps empower him either to use his existing authority to remove Russia from further Jackson-Vanik restrictions (other than a Congressional reporting requirement that has no effect on Russia's trade status or on Russia's WTO treatment of American products), or he can insist that Congress cease its obstructionism and do so itself. Given that Mr. Obama and his predecessors have had no qualms about encroaching on legal authority they don't have - the power to make war, which properly belongs to Congress - continued reluctance to use clear statutory authority rightly belonging to the President remains a mystery.
It's time for President Obama to show he is willing to act on the positive statement issued from the White House last month. While as a matter of politics Congressional action to graduate Russia is preferable, as a matter of law the Obama Administration should come to the conclusion that the President can act on his own - and is prepared to do so unless Congress moves without further delay.
James George Jatras is the former Foreign Policy Analyst, U.S. Senate Republican Policy Committee, former U.S. Foreign Service Officer
Edward Lozansky is president of American University in Moscow and Professor of the Department of World Politics at the Moscow State University.
Anthony T. Salvia is the former Special Advisor to the Undersecretary of State for Political Affairs (appointee of President Ronald Reagan)