U.S. Companies Worry About Effect of Russia Joining W.T.O.

New York Times

After two decades of negotiations, Russia will finally join the World Trade Organization on Wednesday. The lower trade barriers that come along with membership will open up new opportunities for foreign companies to do business in Russia.

But American companies are guaranteed no such advantages — and may even face higher Russian tariffs than their competitors from other countries.

Because of broader policy concerns about the Kremlin’s crackdown on dissidents and its support for rogue governments, Congress has balked at the Obama administration’s request to grant Russia permanent normal trade relation status. That status is important since the W.T.O. requires that any country that seeks to benefit from it must apply the same trade rules to all member countries.

Major American exporters to Russia, like Caterpillar, Deere and General Electric, are worried about the potential impact on their business from the Congressional inaction. Across all sectors of the economy, Russia will lower import tariffs to 7 percent, from about 15 percent today, for the 155 countries in the trade organization. Although Russian officials say they do not have any immediate intention of applying discriminatory tariffs against American companies, they could legally do so at any time.

Russia was the last major economy that was not part of the trade group, and joining is expected to be a boon for Russian consumers and businesses. Exporting companies in Europe, Asia and the United States eagerly await open access to a population of 142 million people with growing incomes and an expanding middle class.

The World Bank estimates that W.T.O. membership will add three percentage points to Russia’s gross domestic product once the new tariffs are phased in.

Russia negotiated for membership for 18 years, beginning when the W.T.O. was called the General Agreement on Tariffs and Trade. That is longer than any major W.T.O. entrant, including China, for which permanent trade status was also a battle in Congress. Presidents Clinton, Bush and Obama all supported Russia’s inclusion, and the country won accession last year, with formal membership coming this week.

After Russia joins the W.T.O., most other countries in the world will have recourse to the global trade group’s means for resolving disputes and can demand the lower, favorable tariffs negotiated during Russia’s application process.

Whatever the economic implications for American companies, members of Congress have suggested that granting Russia permanent normal trade relations would in effect turn a blind eye to Russia’s support for rogue governments, its defiance of Western efforts to isolate Syria and Iran, and President Vladimir V. Putin’s crackdown on dissent at home.

“The Obama administration has not articulated a clear and coherent strategy regarding Russia,” Senator Orrin G. Hatch, Republican of Utah and a member of the Senate Finance Committee, said in June. “Instead, they ask Congress to simply pass permanent normal trade relations and remove Russia from long-standing human rights law, while ignoring Russia’s rampant corruption, theft of U.S. intellectual property, poor human rights record and adversarial foreign policies.”

Just last week, Russian authorities sentenced members of the punk band Pussy Riot to two years in prison for holding an anti-Putin concert, and then arrested the chess champion Garry Kasparov, who was protesting outside the court, and accused him of biting a policeman.

To grant the favored trade status, Congress must repeal a cold-war-era trade sanction intended to compel the Soviet Union to allow Jewish and other religious minorities to freely emigrate. Russia has not imposed restrictions on such emigration for about 20 years.

Some members of Congress from both parties, but not the Obama administration, support replacing that restriction with a human rights law addressing current issues of government corruption and police abuse. The proposed law — named after the whistle-blowing lawyer Sergei Magnitsky, who died in pretrial detention in 2009 — would block visas and freeze assets of Russians implicated in human rights abuses.

Mr. Hatch noted that exports to Russia account for only about half of 1 percent of all American exports. American businesses are also protected by a 1992 bilateral trade treaty that guarantees equal treatment with companies from other nations, though this lacks the enforcement mechanism of the W.T.O.

For companies with major Russian exports, an extended Congressional delay could be dire. Earlier this year, several chief executives testified to Congress that their market share in Russia and jobs at factories, research and development centers and head offices in the United States could suffer.

“The United States will be in violation of W.T.O. rules that require every member to grant every other member permanent normal trade relations,” said Andrew Somers, the president of the American Chamber of Commerce in Russia. “To many congressmen, it looks like they would be rewarding Russia for bad behavior. But in fact, they will not be rewarding Russia at all, because Russia is already in the W.T.O.”

For some goods, the new tariffs take effect immediately. In other sectors, like automotive manufacturing, the tariffs are phased in over up to seven years.

Yekaterina Y. Mayorova, deputy director of trade negotiations at the Russian ministry of economy, said in an interview that the initial drop in tariffs to take effect later this week would not discriminate against American companies. “We are not preparing any special tariffs for the United States, though legally we are not obliged to offer the same conditions,” she said.

But several large companies are at risk. G.E. competes with Siemens of Germany to sell medical imaging devices, and the market for Caterpillar’s big bulldozers is crowded with European and Asian manufacturers, all with sharp elbows.

Russia, with its heavy dependence on mining and energy industries, is one of the top 10 export markets for Caterpillar, and the company sold $2 billion worth of machines there over the last five years.

After Russia joins the W.T.O. and without permanent normal trade relations, “American companies like Caterpillar will be at a disadvantage compared to Chinese, Korean, Japanese and European competitors,” said Jim Dugan, a Caterpillar spokesman. Losing sales in Russia could affect hiring decisions at United States factories, where Caterpillar employs 55,000 people.

The company’s gigantic mining trucks illustrate the risks to American exporters. Tariffs on the vehicles will decrease to 5 percent, from 15 percent, under W.T.O. rules.

Depending on their size, these trucks costs $1 million to $7 million, meaning the Russian government could, without risking recourse under the W.T.O., ask Caterpillar to pay $100,000 to $700,000 more in tariffs than its principal Japanese competitor, Komatsu, for each American-made truck sold in Russia.

Caterpillar is also facing mounting competition from a Chinese maker of big bulldozers, Shantui, and an upstart German engineering group, Liebherr, that makes construction cranes but is now competing with Caterpillar for pipe-laying equipment for the petroleum industry.

“This will really help them,” Bill Pigman, an American dealer of heavy equipment in Moscow, said in an interview. “Why do you have to play brinksmanship? Congress is threatening Cat’s toehold in Russia.” займ на карту займ на карту онлайн https://zp-pdl.com https://zp-pdl.com/apply-for-payday-loan-online.php hairy women