8/2/2019 Statement for Financial Services Committee Hearing on Russia PNTR

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Statement for the Record ofDaniel Cruise

Vice President for Global Public and Government AffairsAlcoa, Inc., and

Chairman, Russia Trade Relations Task ForceNational Association of Manufacturers

For the

Senate Committee on Financial ServicesHearing on

Russias WTO Accession-Implications for the United States

Thursday, March 15, 2012

The National Association of Manufacturers (NAM) welcomes this hearing on Russiasaccession to the World Trade Organization (WTO). As Chairman of the NAM Russia TradeRelations Task Force, I appreciate the opportunity to highlight the importance of broadeningopportunities for U.S. manufacturers overseas by granting Permanent Normal Trade Relations(PNTR) status to Russia.

The NAM is the nations largest industrial trade association, representing small and largemanufacturers in every industrial sector and in all 50 states. Its membership includes both largemultinational corporations with operations in many foreign countries, and small and medium-sized manufacturers that engage in international trade. The manufacturing sector employs

nearly 12 million Americans, and is the engine that drives the U.S. economy by creating jobs,opportunity and prosperity. Exports are vital to the success of American manufacturing, as theyconstitute 20 percent of U.S. manufacturing production and have increased at a rapid clip inrecent years. In fact, over the past decade, exports grew more than five times as fast asshipments to the domestic marketwith exports growing by 48 percent while domesticshipments grew by only 9 percent.

Russia is the 11th largest market in the world, with a $1.9 trillion economy and a growingmiddle class that values high-quality goods. Russia imported $310 billion in goods in 2011, yetthe United States accounted for only 4 percent of those imports. About 60 percent of U.S.exports to Russia fall into three main categories: aircraft; machinery (mostly parts for oil and gasproduction equipment); and meat. Russias demand for heavy equipment and other capital

goods, like construction equipment and aircraft, is strong. Russia and other former Soviet stateswill require 1,080 new planes valued at approximately $110 billion over the next two decades.Russia also has the worlds second-longest railway network, which moves 85 percent of thecountrys freight. A significant amount of Russias railcars and locomotives are aging and willrequire replacement in the next few years. The United States exported approximately $275million of oil and gas equipment to Russia in 2010, and opportunities will grow as Russia seeksmodern technologies and introduces greater efficiencies in its extraction techniques.

8/2/2019 Statement for Financial Services Committee Hearing on Russia PNTR

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Russia offers an excellent opportunity for U.S. manufacturers, and the PresidentsExport Council has estimated that U.S. exports to the country could double over the next fiveyears to $12 billion. This will create manufacturing jobs in a wide variety of industries and boosteconomic growth, if Congress establishes PNTR with Russia.

Russia was officially invited to join the WTO on December 16, 2011, and will formally

accede to the WTO upon action by the Russian Duma to ratify the agreement. The NAMstrongly supports PNTR with Russia because it will give manufacturers better access to theRussian market and commit Russia to an enforceable set of international standards.Manufacturers in the United States will benefit from tariff reductions, Russias commitment to

join the Information Technology Agreement, non-tariff barrier reductions, enhanced intellectualproperty rights protection and enforcement, and loosened restrictions on services trade. Each ofthese additional protections will help American manufacturers sell more goods in Russia.

The United States must establish PNTR with Russia before American companies canreceive the full benefits of Russias WTO membership. To establish PNTR, Congress mustgraduate Russia from the Jackson-Vanik amendment. The Jackson-Vanik amendment to theTrade Act of 1974 was enacted to help facilitate Jewish emigration from the then-Soviet Union,

and it has outlived its purpose. Russia terminated its exit fees and restrictions on Jewishemigrants in 1991, and Russian Jews can now freely emigrate. Since 1992, U.S. Presidents ofboth political parties have certified annually that Russia complies with the Jackson-Vanikamendment provisions. The United States maintains Normal Trade Relations (NTR) status withRussia, though it is not the unconditional PNTR required by the WTO.

Congress must enact PNTR with Russia so the U.S. can fully enforce Russias WTOobligations. If Congress fails to act on PNTR, Americas foreign competitors will have anadvantage in accessing the $200 billion Russian import market. Since Russia already has openaccess to the U.S. market, and is coming into the WTO with us or without us, the onlycompanies hurt by failure to provide Russia PNTR would be NAM members and other U.S.companies.

On behalf of the NAM, and the Russia Trade Relations Task Force, I strongly urge theSenate Finance Committee to support legislation that will graduate Russia from the Jackson-Vanik amendment and establish PNTR for Russia. The Russian market presents an enormousopportunity for American exports, and the protections that would be gained under Russias WTOaccession are significant. Since no other WTO member has a law similar to Jackson-Vanik, theUnited States is the only country that will not immediately benefit when Russia joins the WTO.Russia is an important part of U.S. manufacturers strategy to create and sustain jobs here inthe United States by enhancing our competitiveness abroad, and American manufacturers cantafford to be left behind.

I appreciate the opportunity to submit this statement on behalf of the NAM.

Manufacturers eagerly await further Congressional action on the establishment of PNTR withRussia and will continue to work toward creating future export opportunities within the rules-based global trade system.