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US Firms Eye Big Dollars from Normalized Trade With Russia

Louisiana Caviar Company's Ghost Pepper Caviar on Raw Louisiana Oysters
03:18 15/11/2012
Tags: trade, PNTR, World Trade Organization (WTO), United States, Russia

WASHINGTON, November 15 (By Maria Young for RIA Novosti) The Louisiana Caviar Company in the southern US coastal city of New Orleans produces a unique fish delicacy that is wildly popular in Russia.

But owner John Burke says his company could profit much more if US lawmakers would approve permanent normal trade relations (PNTR) with Russia—a move expected to be up for a vote in the US House of Representatives this week, albeit with a bill attached that has angered the Kremlin.

Farmed from bowfin fish found in the fresh waters of the nearby Atchafalaya Basin, Burke’s firm already sends half of its annual caviar export—about 4,000 pounds (1,813 kilograms)—to Russia, where he pays a hefty tariff of just under 30 percent.

He also suspects his buyers in Russia slip a bribe to customs officials to speed up the process—a cost that gets passed on to customers.

Normalizing trade relations with Russia would streamline the process and reduce the tariff for Burke’s caviar.

“I feel like if our trade with Russia were normalized, we could get our product to the customer at a better price, and so our sales would go up,” Burke said.

He estimates that by hiring more professional fishermen, he could meet Russian demand for up to 20,000 pounds (9,071 kilograms) of caviar every year.

“Russians call their best caviars, which have less than 5 percent salt, ‘malosol,’ and that’s what we’re making,” Burke said. “And I feel like if we could drop the price, we could sell even more over there. … So I’ve got my fingers crossed that this legislation goes through.”

He is not alone.

Hundreds of American firms and industries representing everything from soybeans and chickens to cars and diet drinks are eager to cash in on improved trade relations with Russia, something they have been pushing hard for ever since Russia joined the World Trade Organization (WTO) in August.

The other 155 countries of the WTO already have full access to the Russian market. But the United States has been stymied by a Cold War-era restriction known as the Jackson-Vanik amendment, a 1974 measure that punished the Soviet Union for noncompliance on human rights issues.

“In what should be an exciting time of Russia’s market-opening for US business, our executives have been relegated to an ‘observer’ status—watching as our competitors will snap up contracts that will lock in commercial relationships for years to come,” the Coalition for US-Russia Trade, which has more than 500 members, said in a letter this month urging Congress to normalize trade relations with Russia.

Russia is the world’s ninth largest economy and currently imports roughly $11 billion worth of goods from the United States every year—just 4.5 percent of the country’s total imports. China and Europe have a 16- and 40-percent share of Russian imports, respectively.

The White House Export Council estimates US exports of goods and services to Russia could double or triple if PNTR is enacted.

“US firms don't have the same rights as their competitors in the Russian market without PNTR—it’s that simple,” said Randi Levinas, executive vice president of the US-Russia Business Council.

“The PNTR bill before Congress provides protections and, importantly, enforcement provisions,” she added.

Russia has been in compliance with the Jackson-Vanik amendment for roughly 20 years, but US concerns about human rights there remain.

In a move that has angered the Kremlin, US lawmakers are planning to replace Jackson-Vanik with a measure aimed at punishing Russian officials suspected of human rights abuses.

The Obama administration has publicly opposed the measure, known as the Magnitsky Bill after a Russian tax lawyer who died in pretrial detention in a Moscow prison in 2009 after accusing senior Russian law enforcement and tax officials of corruption. Russian authorities have said Magnitsky himself was involved in white collar crimes.

The provision lets the United States deny visas and freeze US assets for Russian officials involved in the case, and provides authority for sanctions against human rights abusers in Russia. Obama’s ambassador to Russia, Michael McFaul, has said the US State Department already has adequate controls to punish these individuals.

The US House of Representatives is expected to vote Thursday on the legislation to merge the PNTR and Magnitsky bills and then vote on the package deal on Friday.

“The PNTR legislation is a clear winner for US companies and farmers. It will lock in Russia’s market opening commitments for American manufacturers and services providers,” said David Thomas, vice president for trade policy at Business Roundtable, an association of leaders of US companies.

“The legislation will also secure the right of the United States to challenge Russia in the WTO if Russia fails to fulfill its commitments,” he added.

John Burke, who owns the caviar company, starts a new harvest season on Dec. 1.

He doesn’t always keep a close eye on Washington politics. But with his export business projected to double based on the PNTR legislation, he’s making an exception.

“These other countries around Russia, like Uzbekistan and Ukraine, they kind of feed off of what Russia does, so this could really boost our business,” he said.

 

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RIA NovostiLouisiana Caviar Company's Ghost Pepper Caviar on Raw Louisiana OystersUS Firms Eye Big Dollars from Normalized Trade With Russia

03:18 15/11/2012 The Louisiana Caviar Company in the southern US coastal city of New Orleans produces a unique fish delicacy that is wildly popular in Russia.>>

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