H. Rept. 112-632 - 112th Congress (2011-2012)
July 31, 2012, As Reported by the Ways and Means Committee

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House Report 112-632 - RUSSIA AND MOLDOVA JACKSON-VANIK REPEAL ACT OF 2012




[House Report 112-632]
[From the U.S. Government Printing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-632

======================================================================



 
              RUSSIA AND MOLDOVA JACKSON-VANIK REPEAL ACT 
                                OF 2012

                                _______
                                

 July 31, 2012.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Camp, from the Committee on Ways and Means, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 6156]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 6156) to authorize the extension of 
nondiscriminatory treatment (normal trade relations treatment) 
to products of the Russian Federation and Moldova and to 
require reports on the compliance of the Russian Federation 
with its obligations as a member of the World Trade 
Organization, and for other purposes, having considered the 
same, report favorably thereon without amendment and recommend 
that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Summary and Background...........................................2
      A. Purpose and Summary.....................................     2
      B. Background..............................................     2
      C. Legislative History.....................................     7
 II. Section-by-Section Summary.......................................7
      A. Title I: Permanent Normal Trade Relations for the 
          Russian Federation.....................................     7
      B. Title II: Trade Enforcement Measures Relating to the 
          Russian Federation.....................................     9
      C. Title III: Permanent Normal Trade Relations for Moldova.    12
III. Votes of the Committee..........................................13
 IV. Budget Effects of the Bill......................................13
      A. Committee Estimate of Budgetary Effects.................    13
      B. Statement Regarding New Budget Authority and Tax 
          Expenditures Budget Authority..........................    13
      C. Cost Estimate Prepared by the Congressional Budget 
          Office.................................................    14
  V. Other Matters To Be Discussed Under the Rules of the House of 
     Representatives.................................................15
      A. Committee Oversight Findings and Recommendations........    15
      B. Statement of General Performance Goals and Objectives...    15
      C. Information Relating to Unfunded Mandates...............    15
      D. Applicability of House Rule XXI 5(b)....................    15
      E. Congressional Earmarks, Limited Tax Benefits, and 
          Limited Tariff Benefits................................    16
 VI. Changes in Existing Law Made by the Bill, as Reported...........16
VII. Views...........................................................17

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    H.R. 6156 amends Title IV of the Trade Act of 1974 to 
remove the Russian Federation (Russia) and Moldova from the 
list of countries subject to that provision. It also contains 
provisions to address concerns about Russia's compliance with 
its World Trade Organization (WTO) obligations, address 
bilateral trade issues between the United States and Russia, 
and promote the rule of law in Russia.

                             B. Background


The Jackson-Vanik amendment

    At present, the trade status of Russia and Moldova is 
subject to the Jackson-Vanik amendment to Title IV of the Trade 
Act of 1974, the provisions of law governing the normal trade 
relations (NTR) status of nonmarket economy countries that were 
ineligible for NTR treatment as of the enactment of the Trade 
Act.
    Prior to 1951, the United States extended 
nondiscriminatory, or unconditional, NTR treatment to all of 
its trading partners in accordance with obligations undertaken 
when the United States joined the General Agreement on Tariffs 
and Trade (GATT) in 1948. However, the Trade Agreements 
Extension Act of 1951 directed the President to withdraw or 
suspend the NTR status of the Soviet Union and all countries 
under the domination of Communism. As implemented, this 
directive was applied to all then-existing communist countries 
except Yugoslavia. Poland's NTR status was restored by 
Presidential directive in 1960.
    Title IV of the Trade Act of 1974, which includes the so-
called ``Jackson-Vanik amendment,'' represented a 
liberalization of the 1951 law. Title IV authorizes the 
extension of NTR treatment to nonmarket economies that both 
meet freedom-of-emigration requirements and conclude a 
commercial agreement with the United States. Title IV also 
authorizes the President to waive the freedom-of-emigration 
requirements of that title and to extend NTR status to a 
nonmarket economy country if he determines that doing so will 
substantially promote the freedom-of-emigration objectives. 
This waiver may be extended on an annual basis upon a 
Presidential determination and report to Congress that such 
extension will substantially promote the freedom-of-emigration 
objectives of the 1974 Trade Act. Under the Jackson-Vanik 
amendment, the President's waiver authority continues in effect 
unless disapproved by the Congress--either generally or with 
respect to a specific country--within 60 calendar days of the 
expiration of the existing authority.
    In 1990, the United States and the Soviet Union signed a 
bilateral trade agreement as required under Title IV of the 
Trade Act of 1974. The agreement was subsequently applied to 
U.S.-Russian trade relations. The United States extended NTR 
treatment to Russia under the Presidential waiver authority 
beginning in June 1992. Since September 1994, Russia has 
received NTR status under the full compliance provision. 
Presidential extensions of NTR status to Russia have met no 
congressional opposition. Moldova acceded to the World Trade 
Organization in July 2001 and has received NTR status under the 
full compliance provision since 1997, also without 
congressional opposition.

Russia's accession to the World Trade Organization and benefits to the 
        United States

    Russia first applied to join the General Agreement on 
Tariffs and Trade (GATT--now the WTO) in 1993. To join the WTO, 
Russia completed the required two-step process that would 
provide significant benefits to U.S. employers, workers, 
farmers, and ranchers: (1) concluding a bilateral agreement 
with each WTO member that requested one, including the United 
States; and (2) finishing the multilateral negotiation with all 
participating WTO members as a whole.
    The U.S. bilateral talks, aimed at opening Russia's market 
to U.S. exports and investment, are not a free trade agreement 
but an agreement setting out the terms of Russia's accession to 
the WTO. Russia made significant concessions to join the WTO, 
agreeing to reduce its tariffs on manufactured goods from 
almost 10 percent to less than 8 percent; improve market access 
for U.S. service providers in a broad array of industries; 
address longstanding issues related to U.S. exports of beef, 
pork, poultry, and other agricultural products; and improve its 
intellectual property rights (IPR) laws and enforcement. The 
United States also worked with other countries to increase 
Russia's quotas on meat imports and to require Russia to 
eventually phase out its local content requirements in the auto 
sector.
    The multilateral talks focused on establishing Russian 
compliance with WTO rules, including agriculture, goods, 
services, intellectual property rights, treatment of state-
owned or -controlled enterprises, transparency, customs, and 
other issues. For example, Russia must provide a notice and 
comment process when considering proposed measures involving 
trade in goods, services, and intellectual property; provide a 
scientific justification for sanitary and phytosanitary (SPS) 
measures that are more stringent than international standards; 
and adopt WTO standards for IPR protection. Russia must also 
reduce more than one-third of its tariffs immediately upon 
accession and subsequently reduce tariffs on most goods within 
three years. In addition, Russia agreed to join the WTO's 
Information Technology Agreement (ITA) immediately upon 
accession, which will require Russia to eliminate its tariffs 
on high-tech products. Russia also agreed to submit an offer to 
join the WTO Government Procurement Agreement within four years 
of accession.
    The results of these bilateral and multilateral 
negotiations are contained in Russia's WTO accession package, 
which also sets out Russia's commitments to revise and apply 
its trade regime in compliance with WTO rules. If Russia does 
not comply with any of these obligations set forth in the 
accession package, WTO members can use the WTO's dispute 
settlement mechanism to enforce their rights.
    This package was finalized on November 10, 2011, and Russia 
was subsequently invited to join the WTO on December 16, 2011. 
Russia's accession package was ratified by the Russian 
government on July 21, 2012, which subsequently notified the 
WTO. As a result, Russia will accede to the WTO on August 22, 
2012.

Need to grant Russia PNTR to realize the benefits of Russia's 
        concessions

    As part of the agreement establishing the WTO, WTO members 
agreed to apply most-favored-nation tariff treatment (known as 
normal trade relations (NTR) under U.S. law) ``immediately and 
unconditionally'' to the goods of other WTO members. However, 
the United States cannot permanently extend this treatment to 
Russia (often known as permanent normal trade relations (PNTR)) 
due to the requirements of the Jackson-Vanik amendment to Title 
IV of the Trade Act of 1974, which require annual or 
conditional NTR. If a WTO member determines that it cannot 
comply with this or any other WTO rules toward a newly acceding 
member, it can ``opt-out'' of its obligations toward that 
member by invoking the non-application provision. In doing so, 
the WTO member declares that the WTO obligations, rules, and 
mechanisms (such as binding dispute settlement) will not apply 
to its trade with the new WTO member. Because of the 
application of conditional NTR under U.S. law, the United 
States invoked non-application toward Russia on December 16, 
2012.
    If the United States does not grant Russia PNTR by the time 
that Russia becomes a WTO member, the Committee believes that 
U.S. companies, workers, and farmers will be disadvantaged 
versus their competitors from other WTO members because the 
United States would not benefit from all of Russia's 
concessions. For example, U.S. service providers would not have 
greater access to Russia's growing services market because they 
would not be covered by Russia's service market access WTO 
commitments. As a result, Russia could impose WTO-inconsistent 
restrictions on U.S. banks, insurance companies, 
telecommunications firms, and other service providers, but not 
on those from other WTO members. Russia also would not be 
required to comply with WTO rules regarding SPS standards, 
intellectual property rights, transparency, and agriculture 
when dealing with U.S. goods and services, and the U.S. 
government would likewise not be able to use the WTO's dispute 
settlement mechanism if Russia violates its WTO commitments. 
Further, the country-specific tariff-rate quotas (TRQs) 
negotiated as part Russia's accession (particularly for 
agricultural products) would not be available to U.S. 
exporters.
    The Committee believes that in many ways, granting Russia 
PNTR can be viewed as only a legal technicality. The United 
States already annually provides Russia with NTR treatment and 
has done so every year without fail for the last two decades. 
Granting Russia this yearly treatment on a permanent basis, as 
the United States does for over 150 countries, does not 
constitute special treatment, but brings significant gains to 
the United States.
    If it does not grant PNTR, the United States would still be 
able to assert under its 1992 bilateral trade agreement with 
Russia that Russia should continue to grant MFN treatment for 
tariffs and other customs related issues for U.S. goods (i.e., 
treat them the same as goods from other WTO members) and apply 
the technical regulations and standards under that and 
subsequent agreements. However, these rights and commitments 
are significantly narrower and less meaningful than those 
provided in the WTO, and the United States would not have 
recourse to an enforcement mechanism should Russia choose to 
increase tariffs or otherwise violate the terms of the 
agreement.
    In sum, the Committee strongly believes that commercial 
benefits of Russian WTO accession to the United States are 
significant if Congress grants PNTR. The Committee expects that 
Russia's significance as a market for U.S. goods and services 
will grow upon its WTO accession. Russia is the largest economy 
not yet in the WTO, and the Russian market will expand as its 
middle class grows and its economy further diversifies. Because 
Russia must open up its market by reducing tariffs and other 
trade barriers on goods and services upon joining the WTO, U.S. 
exports to Russia could double or triple within five years.
    Moreover, the Committee notes that not granting Russia PNTR 
will not prevent Russia from joining the WTO. On the other 
hand, the Committee believes that granting Russia PNTR is a 
small step that achieves significant gains. The United States 
does not have to change a single tariff or make any concessions 
for Russia to join the WTO. Instead, only Russia has to cut its 
tariffs and take on new obligations, many of which were won by 
U.S. negotiators.

Enforcement tools created by H.R. 6156

    In addition to the new opportunities for U.S. employers, 
workers, farmers, and ranchers created by the concessions that 
Russia has made to join the WTO, the Committee believes that 
H.R. 6156 would establish powerful new tools to ensure that 
Russia's WTO obligations are fully implemented and enforced and 
to hold Russia accountable. Specifically, the bill would 
require USTR to annually report on whether Russia's WTO 
commitments are fully implemented. These reports would also 
describe Russia's progress in joining the WTO's Information and 
Technology Agreement and Agreement on Government Procurement. 
If Russia is not fully implementing a WTO obligation or is not 
making adequate progress in joining the additional WTO 
agreements, USTR would be required to describe its action plan 
to address these problems and report on enforcement actions 
against Russia to ensure Russia's full compliance. The bill 
would also require action to advance the rule of law and fight 
corruption in Russia and focus on tackling Russia's trade 
barriers beyond WTO rules, such as a bilateral SPS equivalency 
agreement and an intellectual property rights action plan. 
These powerful tools will help to assure that the United States 
makes the most of Russia's concessions.

Moldova's accession to the World Trade Organization

    In 1992, the United States and Moldova signed a bilateral 
trade agreement as required under Title IV of the Trade Act of 
1974. Moldova also applied to join the GATT and subsequently 
the WTO in 1993. Moldova was invited to join the WTO on May 8, 
2001, and acceded to the WTO on July 26, 2001. As in the case 
of Russia, the United States was required to invoke non-
application regarding Moldova on May 2, 2001, because U.S. law 
required the application of conditional, annual NTR to Moldova 
under the Jackson-Vanik amendment.

Other significant issues

    The United States' relationship with Russia is broader than 
trade and economic issues. Russia and the United States 
successfully cooperate in some areas of foreign policy and 
national security. However, many Members of this Committee have 
deep concerns about the Russian government's lack of respect 
for human rights and certain aspects of Russia's foreign 
policy.
    The most recent concern about Russia's human rights record 
is due to the death of Russian tax lawyer Sergei Magnitsky, who 
was investigated by the Russian government on allegedly 
baseless tax evasion and tax fraud charges. Magnitsky was later 
arrested and died under mysterious conditions in November 2009, 
allegedly from mistreatment and torture, after being held 11 
months without trial. The Russian government eventually 
acknowledged that his death was a criminal act but has done 
little to pursue those responsible.
    The events surrounding the death of Sergei Magnitsky 
resulted in the introduction of legislation to hold accountable 
those responsible for human rights violations. H.R. 4405, 
currently pending in the U.S. House of Representatives, would 
impose visa restrictions and asset freezes on those involved in 
human rights violations in Russia. The House Foreign Affairs 
Committee considered H.R. 4405 on June 7, 2012, and reported it 
out favorably by voice vote, as amended. Similar legislation 
was introduced in the U.S. Senate, S. 1039, but it would cover 
human rights violators globally and is not limited to Russia. 
This bill was included as an amendment to S. 3406, which would 
grant PNTR to Russia and Moldova. The Senate Finance Committee 
considered S. 3406, as amended, on July 18, 2012, and reported 
it out favorably by a unanimous vote.
    The Committee shares the deep concerns about the Russian 
government's lack of respect for human rights and supports 
amending H.R. 6156 to include such ``Magnitsky'' legislation 
before consideration by the U.S. House of Representatives.
    The Committee is also deeply concerned about Russia's 
continued support of the Syrian government, despite the Syrian 
government's attacks on its own people. Russia has an extensive 
history of providing weapons and political support to the 
regime of President Bashar al-Assad of Syria, a country 
designated by the Secretary of State as a ``state sponsor of 
terrorism.'' It remains the top supplier of weapons to the 
Syrian government, reportedly providing nearly $1 billion worth 
of arms in 2011, and has unabatedly continued to ship arms to 
the Syrian government during the ongoing popular uprisings. 
Moreover, the Russian government has repeatedly blocked or 
impeded efforts by the United Nations and individual countries 
to find a peaceful resolution of the situation in Syria. 
Finally, the Russian Navy also maintains its only permanent 
warm-water naval port outside of the former Soviet Union in 
Port of Tartus, Syria, which bolsters the Assad regime.
    The Committee condemns Russia's continued sale of weapons 
to Syria, opposition to multiple United Nations Security 
Council Resolutions regarding Syria, and longstanding and 
ongoing support for the regime of President Assad. The 
Committee believes that the actions of the Russian government 
have enabled the Assad regime to perpetrate mass atrocities, 
including the slaughter of innocent civilians and the 
displacement of thousands of people. The Committee urges the 
government of Russia to immediately end all weapons sales to 
Syria, support international sanctions against the regime, and 
help with a peaceful transition of leadership within the 
government of Syria.
    Concerns have been expressed that the granting of PNTR 
could send the wrong signal regarding the views of Committee 
Members on these matters. To be clear, the Members of the 
Committee deplore these actions by Russia. Just as Russia is 
joining the international community through its accession to 
the WTO, it must join the nations of the world in addressing 
the violence against civilians in Syria and in safeguarding the 
human rights of its own citizens.

                         C. Legislative History


Legislative hearing

    On June 20, 2012, the Committee on Ways and Means held a 
hearing on Russia's accession to the WTO and granting Russia 
PNTR.

Committee action

    H.R. 6156 was introduced on July 19, 2012, by Chairman 
Camp, Ranking Member Levin, Trade Subcommittee Chairman Brady, 
Trade Subcommittee Ranking Member McDermott, and 
Representatives Reichert, Rangel, Roskam, Blumenauer, Paulsen, 
and Crowley and was referred to the Committee on Ways and 
Means. On July 26, 2012, the Committee ordered favorably 
reported H.R. 6156 to the House of Representatives without 
amendment.

                     II. SECTION-BY-SECTION SUMMARY


  TITLE I: PERMANENT NORMAL TRADE RELATIONS FOR THE RUSSIAN FEDERATION


                         Section 101: Findings


                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 101 states that Russia allows its citizens to 
freely emigrate and has been found to be in full compliance 
with the freedom of emigration requirements under Title IV of 
the Trade Act of 1974 since 1994. Russia has received normal 
trade relations (NTR) since concluding a bilateral trade 
agreement with the United States in 1992. The Ministerial 
Conference of the WTO invited Russia to accede to the WTO on 
December 16, 2011.

                           REASON FOR CHANGE

    The provision describes Russia's compliance with the 
Jackson-Vanik amendment, the status of United States trade 
relations with Russia, and Russia's invitation to join the WTO.

Section 102: Termination of Application of Title IV of the Trade Act of 
               1974 to Products of the Russian Federation


                              PRESENT LAW

    Title IV of the Trade Act of 1974 sets forth the 
requirements relating to freedom of emigration that must be 
met, or waived by the President, in order for a nonmarket 
economy country to be granted NTR. Title IV also requires that 
a bilateral commercial agreement that provides for 
nondiscriminatory, NTR status remain in force between the 
United States and the nonmarket economy country receiving NTR 
status. Finally, Title IV sets forth minimum provisions that 
must be included in such an agreement.
    As described above, an annual Presidential recommendation 
under section 402(d) for a 12-month extension of authority to 
waive the Jackson-Vanik freedom-of-emigration requirements--
either generally or for specific countries--may be disapproved 
through passage by Congress of a joint resolution of 
disapproval within 60 calendar days after the expiration of the 
previous waiver authority. Congress may override a Presidential 
veto within the later of the end of the 60 calendar day period 
for initial passage or 15 legislative days after the veto.

                        EXPLANATION OF PROVISION

    Section 102 authorizes the President to determine that 
Title IV of the Trade Act of 1974 should no longer apply to 
Russia and to proclaim the extension of NTR treatment to the 
products of Russia. The effective date of the extension of NTR 
treatment to the products of Russia is to be no sooner than the 
effective date of Russia's accession to the WTO. The 
application of title IV of the Trade Act of 1974 to Russia 
terminates on the effective date of the extension of NTR 
treatment to the products of Russia.

                           REASON FOR CHANGE

    The Committee believes that increasing exports is an 
important means to create U.S. jobs. Russia is the largest 
economy not yet in the WTO, and the Russian market will expand 
as its middle class grows and its economy further diversifies. 
Upon joining the WTO on August 22, 2012, Russia must open up 
its market by reducing tariffs and other trade barriers on 
goods and services, which could cause U.S. exports to Russia to 
double or triple within five years. Becoming a WTO member will 
not only require Russia to lower its trade barriers, but will 
also require Russia to comply with all of the WTO's rules and 
create a level playing field for U.S. exports by addressing 
discriminatory practices, enforcing intellectual property 
rights, creating transparency, and implementing uniform customs 
rules and science-based measures. If Russia does not comply 
with these obligations, WTO members can use the WTO's dispute 
settlement mechanism to enforce their rights.
    However, WTO rules do not require Russia to extend any of 
these benefits to the United States unless Congress authorizes 
the President to grant Russia permanent normal trade relations 
(PNTR). Not granting Russia PNTR will only hurt U.S. companies, 
workers, farmers, and ranchers because they will lose ground in 
the Russian market to their foreign competitors. Moreover, the 
United States does not have to change any tariffs or make any 
concessions for Russia to join the WTO. Therefore, the 
Committee strongly believes that granting Russia PNTR is in the 
best interest of U.S. companies, workers, farmers, and 
ranchers, as well as for the country as a whole.

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


                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    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 Russia's 
implementation of its obligations as a member of the WTO, in 
particular with respect to obligations relating to SPS issues 
and intellectual property protection. USTR's report would also 
cover Russia's progress on acceding to and implementing the WTO 
Information Technology Agreement and the WTO Agreement on 
Government Procurement. To the extent that USTR believes that 
Russia is not fully implementing a WTO agreement or making 
adequate progress in acceding to the above agreements, USTR is 
required to include in the report its plans for addressing 
those situations. In preparing the report, USTR must provide an 
opportunity for public comment, including by holding a public 
hearing.
    Section 201(b) requires 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 
USTR to ensure full compliance by Russia with its WTO 
obligations.

                           REASON FOR CHANGE

    The Committee believes that Russia must be held accountable 
to fully implement its WTO obligations and that USTR must take 
action when Russia does not meet those obligations. The 
Committee expects that requiring USTR to annually report on 
Russia's implementation of its WTO obligations and to pursue 
enforcement actions when Russia does not meet those obligations 
will help ensure that USTR is constantly vigilant concerning 
Russia's compliance. The bill specifically directs USTR to 
report on Russia's compliance with the WTO Agreement provisions 
relating to SPS measures and intellectual property protection 
because of the Committee's concern over the past difficulties 
with Russia in those areas. The Committee also expects USTR to 
press Russia to follow through with its obligations to join and 
implement the WTO Information Technology Agreement and the WTO 
Agreement on Government Procurement.

Section 202: Promotion of the Rule of Law in the Russian Federation To 
               Support United States Trade and Investment


                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 202(a) requires USTR and the Secretary of State to 
report annually on measures they have taken and results 
achieved to promote the rule of law in Russia 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 OECD Anti-
Bribery Convention, including Russia, to fully implement their 
commitments; promoting corruption-free customs, tax, and 
judicial authorities in Russia; and increasing cooperation 
between the United States and Russia 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 and corruption in 
Russia that could affect them and to request U.S. assistance 
relating to corruption issues in Russia. The Secretary of 
Commerce is also required 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; a summary of U.S. actions taken in response to 
requests; and a description of the efforts to inform U.S. 
entities of the availability of assistance through the hotline 
and website. The identities of those reporting are not to be 
included in the report.

                           REASON FOR CHANGE

    The weak rule of law and the high level of corruption in 
Russia have been significant barriers against U.S. exports to 
and investments in Russia. The Committee intends that requiring 
USTR and the State Department to report on specified activities 
that increase the rule of law and decrease corruption in Russia 
will promote progress in those areas and further trade and 
investment with Russia. The Committee also believes that 
requiring the Commerce Department to set up a phone hotline and 
secure website to enable U.S. entities to report on corruption 
and bribery in Russia will provide the U.S. government with 
vital information on the nature and extent of this problem and 
better enable assistance to U.S. entities that are the victims 
of such practices.

 Section 203: Reports on Laws, Policies, and Practices of the Russian 
    Federation That Discriminate Against United States Digital Trade


                              PRESENT LAW

    Section 181 of the Trade Act of 1974 requires the Office of 
the United States Trade Representative to submit to the 
President, the Senate Finance Committee, and the appropriate 
committees in the House of Representatives an annual report on 
significant foreign trade barriers, known as the National Trade 
Estimate Report on Foreign Trade Barriers. The statute requires 
identification of acts, policies, and practices of each foreign 
country that constitute significant foreign trade barriers 
affecting U.S. exports of goods and services, foreign direct 
investment by U.S. persons, and U.S. electronic commerce, and 
an estimate of the trade-distorting impact of these barriers on 
U.S. commerce. The report must also include information on any 
action taken to eliminate any barriers identified. After 
submission of the report, the USTR must consult and take into 
account the views of the recipient congressional committees.

                        EXPLANATION OF PROVISION

    Section 203 amends section 181 of the Trade Act of 1974 by 
requiring that the annual National Trade Estimate Report on 
Foreign Trade Barriers issued under section 181 include a 
description of Russian laws, policies, and practices that deny 
fair and equitable market access to U.S. digital trade.

                           REASON FOR CHANGE

    An increasing share of U.S. trade is digital--that is, it 
is conducted over the Internet and by other digital means. The 
creativity and innovation of the U.S. economy makes the United 
States a leader in digital trade. The Committee is disturbed by 
policies all over the world that deny or unduly restrict market 
access to U.S. digital trade. One example of such policies is 
undue restrictions on cross-border data flows, on which digital 
trade often relies. By requiring USTR to report on Russia's 
laws, policies, and practices that deny fair and equitable 
treatment to U.S. digital trade, the Committee intends that 
barriers of this type be identified and analyzed.

Section 204: Efforts To Reduce Barriers to Trade Imposed by the Russian 
                               Federation


                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 204 requires the USTR to pursue the reduction of 
Russian barriers to U.S. exports through efforts to negotiate a 
bilateral agreement with Russia that would recognize U.S. SPS 
measures as equivalent to Russian SPS measures, and through 
efforts to obtain Russia'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.

                           REASON FOR CHANGE

    Russia's adoption of WTO obligations should significantly 
help remove barriers to U.S. exports. However, more work 
remains to resolve ongoing issues regarding SPS measures and 
IPR protection that are not covered by WTO rules. The Committee 
expects the Administration to negotiate a bilateral agreement 
under which Russia would recognize U.S. SPS measures as 
equivalent to its own SPS measures. Such an agreement would end 
a major barrier to U.S. agriculture exports caused by the need 
to comply with additional Russian rules after already meeting 
U.S. food safety requirements. Regarding IPR protection, the 
WTO Agreement on Trade-Related Aspects of Intellectual Property 
Rights is focused on substantive intellectual property rights 
and is limited in its ability to provide for IPR enforcement, 
particularly against Internet piracy. USTR and the Russian 
government have been discussing an action plan to address this 
issue, but progress has been slow.
    The Committee expects USTR to work diligently toward 
concluding these bilateral agreements with Russia as quickly as 
possible.

        TITLE III: PERMANENT NORMAL TRADE RELATIONS FOR MOLDOVA


                         Section 301: Findings


                              PRESENT LAW

    No provision.

                        EXPLANATION OF PROVISION

    Section 301 states that Moldova allows its citizens to 
freely emigrate and has been found to be in full compliance 
with the freedom of emigration requirements under Title IV of 
the Trade Act of 1974 since 1997. Moldova acceded to the WTO on 
July 26, 2001.

                           REASON FOR CHANGE

    The provision describes Moldova's compliance with the 
Jackson-Vanik amendment and Moldova's accession to the WTO.

Section 302: Termination of Application of Title IV of the Trade Act of 
                      1974 to Products of Moldova


                              PRESENT LAW

    Title IV of the Trade Act of 1974 sets forth the 
requirements relating to freedom of emigration that must be 
met, or waived by the President, in order for a nonmarket 
economy country to be granted NTR. Title IV also requires that 
a bilateral commercial agreement that provides for 
nondiscriminatory, NTR status remain in force between the 
United States and the nonmarket economy country receiving NTR 
status. Finally, Title IV sets forth minimum provisions that 
must be included in such an agreement.
    As described above, an annual Presidential recommendation 
under section 402(d) for a 12-month extension of authority to 
waive the Jackson-Vanik freedom-of-emigration requirements--
either generally or for specific countries--may be disapproved 
through passage by Congress of a joint resolution of 
disapproval within 60 calendar days after the expiration of the 
previous waiver authority. Congress may override a Presidential 
veto within the later of the end of the 60 calendar day period 
for initial passage or 15 legislative days after the veto.

                       EXPLANATION OF PROVISIONS

    Section 302 authorizes the President to determine that 
Title IV of the Trade Act of 1974 should no longer apply to 
Moldova and to proclaim the extension of NTR treatment to the 
products of Moldova. The provision would terminate the 
application of Title IV of the Trade Act of 1974 to Moldova on 
the date of the President's proclamation.

                           REASON FOR CHANGE

    Moldova faces many challenges as it strives to grow and 
develop its economy. Becoming a WTO member in 2001 was a 
significant achievement for Moldova and has helped spur 
economic reform. The Committee hopes that granting PNTR to 
Moldova will increase trade and investment between the United 
States and Moldova and will further strengthen relations 
between the two countries.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the vote of the Committee on Ways and Means in its 
consideration of the bill, H.R. 6156.

                       MOTION TO REPORT THE BILL

    The bill, H.R. 6156, was ordered favorably reported by a 
voice vote without amendment (with a quorum being present).

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of this bill, H.R. 6156, 
as reported: The Committee agrees with the estimate prepared by 
the Congressional Budget Office (CBO), which is included below.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with subdivision 3(c)(2) of rule XIII of the 
Rules of the House of Representatives, the Committee states 
that H.R. 6156 does not contain any new budget authority or 
credit authority. The Congressional Budget Office estimates 
that any change in fiscal years 2012, 2013, 2013 through 2017, 
and 2013 through 2022, would be negligible.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by CBO, the following report prepared by CBO is 
provided:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 27, 2012.
Hon. Dave Camp,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 6156, the Russia 
and Moldova Jackson-Vanik Repeal 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.
    Enclosure.

H.R. 6156--Russia and Moldova Jackson-Vanik Repeal Act of 2012

    CBO estimates that implementing H.R. 6156 would cost $1 
million over the 2013-2017 period, assuming appropriation of 
the necessary amounts. The bill also 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. H.R. 6156 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.
    H.R. 6156 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.
    Based on information from the U.S. Trade Representative 
(USTR), CBO estimates that implementing the provisions of H.R. 
6156 would cost a total of $1 million over the 2013-2017 
period, assuming the availability of appropriated funds. 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 expects that enacting H.R. 6156 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.
    On July 24, 2012, CBO transmitted a cost estimate for S. 
3406, the Russia and Moldova Jackson-Vanick and Magnitsky Rule 
of Law Accountability Act of 2012, as ordered reported by the 
Senate Committee on Finance on July 19, 2012. The two bills are 
similar except that H.R. 6156 does not contain provisions 
regarding human rights violations. Because the human rights 
provisions are not included in H.R. 6156, 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.

   V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE OF 
                            REPRESENTATIVES


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee concluded that it is appropriate and timely to 
consider H.R. 6156, as reported.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the performance goals and 
objectives of the part of this legislation that authorizes 
funding are for the establishment and operation within the 
Department of Commerce of a dedicated telephone line and secure 
website for allowing U.S. entities to report instances or 
bribery, attempted bribery, or other forms of corruption in 
Russia and to request assistance of the United States with 
respect to issues relating to corruption in Russia.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (P.L. 104-4). The 
Committee has determined that the revenue provisions of the 
bill do not impose a Federal mandate on the private sector. The 
Committee has determined that the revenue provisions of the 
bill do not impose a Federal intergovernmental mandate on 
State, local, or tribal governments.

                D. Applicability of House Rule XXI 5(b)

    Clause 5(b) of rule XXI of the Rules of the House of 
Representatives provides, in part, that, ``A bill or joint 
resolution, amendment, or conference report carrying a Federal 
income tax increase may not be considered as passed or agreed 
to unless so determined by a vote of not less than three-fifths 
of the Members voting, a quorum being present.'' The Committee 
has carefully reviewed the sections of the bill and states that 
the bill does not involve any Federal income tax rate increases 
within the meaning of the rule.

  E. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED 

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, 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, 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 
        calender 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.--The Trade 
        Representative shall annually revise and update the 
        analysis and estimate under paragraph (1).

           *       *       *       *       *       *       *


                         VII. ADDITIONAL VIEWS 

    H.R. 6156, the ``Russia and Moldova Jackson-Vanik Repeal 
Act of 2012,'' recognizes the importance of ensuring that 
Russia implements its existing WTO commitments and directs USTR 
to take further action to secure WTO-plus commitments to 
address several significant and longstanding trade issues.
    Specifically, on enforcement, the bill requires the U.S. 
Trade Representative (USTR): (1) to report on Russia's 
implementation of all of its WTO commitments; (2) to describe 
the Administration's plan to address any deficiencies; (3) to 
seek public input in the assessment of Russia's compliance; and 
(4) to submit a separate report on enforcement actions that the 
USTR has taken to ensure that Russia has fully complied with 
its WTO obligations. It also includes special reporting 
requirements regarding Russia's progress in acceding to and in 
implementing two additional WTO plurilateral agreements: the 
WTO Information Technology Agreement and the WTO Agreement on 
Government Procurement.
    The bill also calls for the negotiation of new agreements 
that exceed WTO rules to further address longstanding issues 
with Russia's enforcement of intellectual property rights and 
barriers to U.S. agricultural exporters.
    Finally, the bill includes provisions to promote openness 
and rule of law in Russia. These provisions include: (1) 
requiring USTR to identify and address barriers to internet 
access affecting U.S. digital trade; (2) requiring USTR and the 
Department of State to submit an annual report on measures 
taken to promote the rule of law in Russia, including by 
promoting the claims of U.S. investors; and (3) requiring the 
Department of Commerce to gather and report information on 
bribery and corruption in Russia, and report on U.S. government 
actions taken to assist U.S. entities affected by such bribery 
and corruption.
    Some have proposed that the enforcement of Russia's WTO 
commitments could be further strengthened by providing the 
Committee with the ability to request that the Administration 
take ``appropriate action'' to address any deficiency. We favor 
such a mechanism, but note that existing law (Section 301 of 
the Trade Act of 1974) already provides ``any interested 
person'' the right to petition for such an enforcement action. 
There are no limitations on the definition of ``any interested 
person'' in the statute, and this week we exchanged letters 
with USTR confirming that Section 301 already enables the 
Committee to request action, and requires USTR to respond 
within a fixed timeline. Those letters are attached.
    We also believe the Committee, as part of its 
responsibility to provide oversight, should schedule regular 
hearings with USTR and others to assess Russia's compliance in 
the initial stages of its WTO Membership. USTR should be 
notified well in advance that it will be called upon to do so, 
and public comments on Russia's compliance should be submitted 
in advance of the hearing to help inform the Committee of 
outstanding issues.
    Finally, we note the language in the Committee Report 
regarding the Russian government's lack of respect for human 
rights and Russia's continued support for the Syrian government 
was developed on a bipartisan basis and has our full support.
    There are serious outstanding trade issues we have with 
Russia, ranging from the enforcement of intellectual property 
rights to the rule of law. Russia's WTO membership will help us 
to make progress on some of these issues. At the same time, 
Russia's accession will not, by itself, fully resolve any of 
these issues. We will need to continue to work actively to 
address these issues at every opportunity. H.R. 6156 provides 
us with additional tools for doing so.
                                   Sander M. Levin.
                                   Jim McDermott.

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