```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
         TO EXPLORE PERMANENT NORMAL TRADE RELATIONS FOR RUSSIA
=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON TRADE

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION
                               __________

                             APRIL 11, 2002
                               __________

                           Serial No. 107-64
                               __________

         Printed for the use of the Committee on Ways and Means

                     U.S. GOVERNMENT PRINTING OFFICE
79-629                       WASHINGTON : 2002
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800  
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
AMO HOUGHTON, New York               WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California             SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana               BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan                  JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota               GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa                     JOHN LEWIS, Georgia
SAM JOHNSON, Texas                   RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington            MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia                 WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio                    JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania           XAVIER BECERRA, California
WES WATKINS, Oklahoma                KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona               LLOYD DOGGETT, Texas
JERRY WELLER, Illinois               EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin

                     Allison Giles, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                         Subcommittee on Trade

                  PHILIP M. CRANE, Illinois, Chairman

E. CLAY SHAW, Jr., Florida           SANDER M. LEVIN, Michigan
AMO HOUGHTON, New York               CHARLES B. RANGEL, New York
DAVE CAMP, Michigan                  RICHARD E. NEAL, Massachusetts
JIM RAMSTAD, Minnesota               WILLIAM J. JEFFERSON, Louisiana
JENNIFER DUNN, Washington            XAVIER BECERRA, California
WALLY HERGER, California             JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania
JIM NUSSLE, Iowa

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version.  Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               Page______
Advisory of March 21, 2002, announcing the hearing...............     2

                               WITNESSES

United States Trade Representative, Hon. Peter Allgeier, Deputy 
  United States Trade Representative.............................    26
U.S. Department of State, Hon. Alan P. Larson, Under Secretary 
  for Economic, Business, and Agricultural Affairs...............    30
                              ----------                              

Ad Hoc Committee of Domestic Nitrogen Producers, and CF 
  Industries, Robert Liuzzi......................................    50
American Farm Bureau Federation, and Michigan Farm Bureau, Wayne 
  Wood...........................................................    57
Cox, Hon. Christopher, a Representative in Congress from the 
  State of California............................................    18
Lantos, Hon. Tom, a Representative in Congress from the State of 
  California.....................................................    13
NCSJ: Advocates on behalf of Jews in Russia, Ukraine, the Baltic 
  States & Eurasia, Harold Paul Luks.............................    61
SPI Spirits, Ltd., and Greenberg Traurig, LLP, Richard A. Edlin..    70
U.S.-Russia Business Council, and Boeing Company, Hon. Thomas R. 
  Pickering......................................................    44

                       SUBMISSIONS FOR THE RECORD

Bethlehem Steel Corporation, Bethlehem, PA; National Steel 
  Corporation, Mishawaka, IN; and United States Steel 
  Corporation, Pittsburgh, PA, joint statement...................    85
International Paper, Lyn M. Withey, letter.......................    87
National Cattlemen's Beef Association, statement.................    87
Russian Federation to the United States of America, His 
  Excellency Yuri V. Ushakov, Ambassador, statement..............     5
U.S. Chamber of Commerce, R. Bruce Josten, letter................    89
UCSJ: Union of Councils for Jews in the Former Soviet Union, 
  Micah H. Naftalin, statement and attachment....................    90

         TO EXPLORE PERMANENT NORMAL TRADE RELATIONS FOR RUSSIA

                              ----------                              

                        THURSDAY, APRIL 11, 2002

                  House of Representatives,
                       Committee on Ways and Means,
                                     Subcommittee on Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:05 a.m., in 
room 1100 Longworth House Office Building, Hon. Philip M. Crane 
(Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
March 21, 2002
No. TR-8

              Crane Announces Hearing on Trade to Explore

              Permanent Normal Trade Relations for Russia

    Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade 
of the Committee on Ways and Means, today announced that the 
Subcommittee will hold a hearing to explore whether to graduate Russia 
from the Jackson-Vanik provisions, and extend Permanent Normal Trade 
Relations (PNTR), and to assess U.S.-Russian trade relations. The 
hearing will take place on Thursday, April 11, 2002, in the main 
Committee hearing room, 1100 Longworth House Office Building, beginning 
at 10:00 a.m.
      
    Oral testimony at this hearing will be from both invited and public 
witnesses. Invited witnesses will include representatives from the U.S. 
Department of State and the Office of the United States Trade 
Representative. Also, any individual or organization not scheduled for 
an oral appearance may submit a written statement for consideration by 
the Committee or for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    Russia's trade status remains subject to Title IV of the Trade Act 
of 1974, including the Jackson-Vanik freedom of emigration provisions. 
Russia was first extended normal trade relations in 1992 under a waiver 
from the Jackson-Vanik emigration requirements. Since 1994, the 
President has found Russia to be in full compliance with the emigration 
criteria; however, the country's trade status remains conditioned upon 
annual compliance determinations by the President. The compliance 
determinations are vulnerable to a resolution of disapproval by 
Congress. There has not been an annual vote in Congress on Russia's 
trade status because no Member of Congress has introduced a disapproval 
resolution. On December 20, 2001, Ways and Means Committee Chairman 
Bill Thomas, Subcommittee Chairman Phil Crane, and Rules Committee 
Chairman David Dreier introduced H.R. 3553 to terminate the application 
of Jackson-Vanik to Russia and thus grant PNTR to Russia.
      
    In announcing the hearing, Chairman Crane stated: ``The 
Administration has placed a priority on forging a new relationship with 
Russia. As part of that effort, President Bush has personally indicated 
his interest in seeing Congress end trade restrictions on Russia. At 
this hearing, the Subcommittee will examine the impact that such action 
would have on U.S. interests.''
      

FOCUS OF THE HEARING:

      
    The hearing will explore the prospects and implications of granting 
PNTR to Russia at this time, the status of U.S.-Russian trade 
relations, the status of Russia's World Trade Organization accession, 
and Russia's record in complying with the statutory requirements of the 
Jackson-Vanik provisions.

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:

      
    Requests to be heard at the hearing must be made by telephone to 
Traci Altman or Bill Covey at (202) 225-1721 no later than the close of 
business, Thursday, March 28, 2002 The telephone request should be 
followed by a formal written request faxed to Allison Giles, Chief of 
Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 
Longworth House Office Building, Washington, D.C. 20515, at (202) 225-
2610. The staff of the Subcommittee on Trade will notify by telephone 
those scheduled to appear as soon as possible after the filing 
deadline. Any questions concerning a scheduled appearance should be 
directed to the Subcommittee on Trade staff at (202) 225-6649.
      
    Witnesses scheduled to present oral testimony are required to 
summarize briefly their written statements in no more than five 
minutes. THE FIVE-MINUTE RULE WILL BE STRICTLY ENFORCED. The full 
written statement of each witness will be included in the printed 
record, in accordance with House Rules. 
      
    In view of the limited time available to hear witnesses, the 
Subcommittee may not be able to accommodate all requests to be heard.  
Those persons and organizations not scheduled for an oral appearance 
are encouraged to submit written statements for the record of the 
hearing. All persons requesting to be heard, whether they are scheduled 
for oral testimony or not, will be notified as soon as possible after 
the filing deadline.
      
    In order to assure the most productive use of the limited amount of 
time available to question witnesses, all witnesses scheduled to appear 
before the Committee are required to submit 200 copies, along with an 
IBM compatible 3.5-inch diskette in WordPerfect or MS Word format, of 
their prepared statement for review by Members prior to the hearing. 
Testimony should arrive at the Subcommittee on Trade office, room 1104 
Longworth House Office Building, no later than 12:00 p.m. on Monday, 
April 8, 2002, in an open and searchable package. The U.S. Capitol 
Police will refuse unopened and unsearchable deliveries to all House 
Office Buildings. Failure to do so may result in the witness being 
denied the opportunity to testify in person. 
      

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:

      
    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610 by the close of business, Wednesday, April 24, 2002. 
Those filing written statements who wish to have their statements 
distributed to the press and interested public at the hearing should 
deliver their 200 copies to the Subcommittee on Trade in room 1104 
Longworth House Office Building, in an open and searchable package 48 
hours before the hearing. The U.S. Capitol Police will refuse unopened 
and unsearchable deliveries to all House Office Buildings.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record, or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, in WordPerfect or MS Word format and MUST NOT exceed a 
total of 10 pages including attachments. Witnesses are advised that the 
Committee will rely on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, company, address, telephone and fax numbers where the witness or 
the designated representative may be reached. This supplemental sheet 
will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press, 
and the public during the course of a public hearing may be submitted 
in other forms.
      
    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans. house. gov/

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call (202) 225-1721 or (202) 226-3411 TTD/TTY in advance of the event 
(four business days notice is requested). Questions with regard to 
special accommodation needs in general (including availability of 
Committee materials in alternative formats) may be directed to the 
Committee as noted above.

                                

    Chairman Crane. Good morning. This is a hearing of the Ways 
and Means Trade Subcommittee to consider granting permanent 
normal trade relations, or PNTR, to Russia and to assess U.S.-
Russian trade relations. We are at a unique crossroad in the 
overall U.S.-Russian relationship, and I find this topic quite 
timely. As a Cold warrior, I supported President Reagan's 
policies toward the Soviet Union. Reagan led both of our 
countries down a path that altered the course of history, and 
freedom and democracy triumphed.
    As a result of those policies, today we face a very 
different Russia from the nation that existed when the Jackson-
Vanik provisions were passed in 1974. Since the fall of the 
Soviet Union over a decade ago, Russia has taken tremendous 
steps toward increased political and economic freedom. Today 
Russia has a maturing democracy. Russian citizens have 
successfully participated in three democratic elections for 
President and the Duma, and another Duma election will be held 
next year.
    Russia has also undertaken significant economic reforms. 
The process has had some problems along the way, but President 
Putin and his administration have made economic reform a 
priority. And I look forward to seeing private property rights 
and the rule of law firmly take roots in Russian society.
    I also expect our U.S. trade negotiators to bring back the 
best possible World Trade Organization (WTO) accession package 
with Russia that addresses Congress' concerns, particularly 
with respect to the U.S. agriculture and fertilizer industries. 
I intend to follow this issue closely and consult with the 
Administration on the terms of Russia's accession.
    In the meantime, I am extremely disappointed that Russia 
hasn't lifted its ban on U.S. poultry exports and has extended 
the ban at least an additional couple of days. I believe it 
will be very difficult for some Members to support PNTR for 
Russia unless this dispute is resolved in a way that is based 
on sound science. I note that in the written statement that 
Russian Ambassador Ushakov provided for the record of this 
hearing, he stated that we need to create--and, incidentally, 
the Ambassador, I understand, is here. Mr. Ambassador, would 
you stand for a second and just be recognized?
    [Applause.]
    [The statement follows:]

    [By permission of the Chairman.]
   Statement of His Excellency Yuri V. Ushakov, Ambassador, Russian 
               Federation to the United States of America
    Mr. Chairman and Members of the Subcommittee:
    With regard to the hearing on legislation making normal trade 
relations with Russia permanent, I would like to submit the following 
statement reflecting our position on this subject.
    We welcome the U.S. Administration decision to seek the full and 
final exemption of the Russian Federation from the Jackson-Vanik 
amendment to the Trade Act 1974. It will effectively remove one of the 
last vestiges of the Cold War in Russia-US relationship. It is our firm 
belief that the 28-year old amendment has outlived its purpose in view 
of changes of historic proportions that have taken place in Russia and 
in our bilateral ties. Moreover, at this critical juncture, when Russia 
and the United States stand together as allies in the fight against 
international terrorism, it would be more than natural to send just the 
right signal by removing Jackson-Vanik restrictions from the context of 
our bilateral relations. Our two countries are embarked on building a 
new quality of engagement and cooperation for the benefit of the world 
community. Symbols that link us to the past should no longer overshadow 
joint efforts to strengthen long-term stable relationship across the 
board--in the areas of strategic stability and international security, 
trade and economic interaction, people-to-people communications--based 
on the universal democratic and human values.
    By all objective criteria modern Russia is no longer the country 
that was targeted by the Title IV of the Trade Act, including the 
Jackson-Vanik freedom of emigration provisions. As Presidents George 
Bush and Vladimir Putin stressed in their joint statement at the 
Washington/Crawford summit last November, our countries are determined 
to promote better economic, trade and investment relations. The 
achievement of these goals requires the removal of legislative and 
administrative barriers, as well as creation of a transparent and 
predictable investment climate.
    Significant strides were made in building a free and democratic 
society based on the rule of law, pushing forward with far-reaching 
reform to radically transform Russia into a viable market-oriented 
globally integrated economy. As of today, only 12 percent of the 
enterprises are currently owned by the State, while the rest are 
privately owned. An open investment regime has been established based 
on the non-discriminatory treatment of foreign investors. They are 
enjoying the right to full ownership of Russian firms and investment 
guarantees, as well as a favorable tax regime under production-sharing 
agreements.
    Russia and the United States have expressed their commitment to 
advance common values by protecting and promoting human rights, 
tolerance, free speech and independent media, religious freedoms and 
the rule of law. The Russian Constitution and current laws guarantee 
personal freedoms, while outlawing intolerance and hate crimes, 
motivated by ethnicity or religion. Our emigration legislation is based 
on the principles of international law and is fully compliant with the 
international standards. There are no legal restrictions for anyone who 
is willing to leave the country or travel abroad.
    Historically, the Jackson-Vanik amendment originated from the 
concerns of the American Jewish community about human rights, 
restrictions and persecutions affecting Jews and other minorities in 
the former Soviet Union. Since then, the situation has changed 
dramatically. Nowadays the Jewish community in Russia experiences a 
renaissance, with cultural and community centers, new synagogues 
established and old ones being reopened. President Vladimir Putin is 
personally engaged in these efforts, and the policy of the Russian 
Government is to guarantee that all nationalities, religious and ethnic 
groups are not discriminated and live peacefully in their common home 
of Russia. Anti-Semitism is prosecuted to the full extent of the law.
    Regretfully, despite all positive changes in economic and 
humanitarian spheres, the overwhelming support in the Russian-American 
business community for the extension of non-discriminatory treatment, 
Russia still does not enjoy the NTR status on a permanent basis. Such a 
situation adds an element of instability to our trade relations. The 
permanent presence of the risk that temporary waiver of Jackson-Vanik 
amendment for Russia will not be granted and higher tariffs will return 
does not encourage the establishment of long-term trade and investment 
projects in our two countries. The capabilities imbedded in the 
bilateral economic relationship have not been fully implemented.
    One of the main priorities of our ongoing economic policy continues 
to be integration of the Russian Federation into the world economy and 
major international organizations dedicated to the promotion of free 
trade and competition. Currently we are actively involved in the 
negotiations on Russia's accession to the World Trade Organization. The 
Russian State Duma has recently passed a huge portion of laws and 
regulations reflecting WTO requirements and providing for the 
enforcement mechanisms of WTO rules. At the last meeting of the Working 
Party on the accession of the Russian Federation to the WTO held in 
January, 2002, the legislative progress has been characterized by its 
Chairman as ``very impressive and concrete''.
    In accordance with our strategy for WTO accession, the Russian 
Government will continue focusing on making its legislation compliant 
with WTO norms and rules and intends to draft approximately fifty more 
new laws and amendments to existing ones in order to attain such 
compliance. We are taking necessary measures to ensure access of 
foreign goods, services and investments to Russian markets and are 
eager to participate as a WTO member in the new round of multilateral 
trade negotiations.
    On the other hand, we do believe that the negotiating process on 
Russia's accession to the WTO should not be a one-way road. We consider 
Russian membership in this organization as a mutually beneficial factor 
for all parties involved and would like to see real steps from our 
major trade partners to promote economic cooperation with Russia.
    In conclusion, I would like to emphasize that after more than a 
decade of dramatic transformation in Russia and our bilateral relations 
it is imperative to get rid of the Cold War legacy. Normalization of 
trade is an important element in building a new framework of trust and 
partnership between our countries. That is why we believe the proposed 
legislation that would end the application of the Jackson-Vanik 
amendment to the Russian Federation merits support of the US Congress.

                                

    Chairman CRANE. Thank you.
    He stated that we need to create a transparent and 
predictable climate between our two countries. I agree, and 
this includes a commitment not to erect trade barriers in the 
name of sanitary concerns that are, in fact, based on politics. 
If there are legitimate concerns with some U.S. chicken 
processing facilities, then we should deal with this in a 
focused way. Instead, Russia has provided no good reason to 
continue a complete ban on all U.S. poultry. Russia's poultry 
ban has caused serious damage to our trade relationship, and I 
ask you, Mr. Ambassador, to send this message back home.
    The Jackson-Vanik is fundamentally about freedom of 
emigration, and it is widely recognized that Russia has done a 
tremendous job with regard to the free emigration of Jews. For 
8 years, Russia has been in full compliance with the freedom of 
emigration provisions in the law. I have a brother-in-law who 
is a Holocaust survivor, so this is something that is directly 
relevant to my family. The President says he wants PNTR for 
Russia to help further a new relationship with Russia. He wants 
it for geopolitical reasons. Well, I want it for economic 
reasons. This is good for Russia and for the United States.
    With PNTR, U.S. investors and entrepreneurs will have more 
confidence in doing business in Russia. This confidence will 
foster more trade and investment between our two countries. It 
is no surprise to me that the U.S.-Russia Business Council, 
whose members are the pioneers doing business in Russia, is 
strongly advocating PNTR for Russia. In a speech at the U.S. 
Department of State last week, President Bush said, and I 
wholeheartedly agree, that free trade creates the habits of 
freedom, generates expectations of democracy, and promotes 
universal values of human dignity and human rights.
    With this in mind, I believe it is appropriate and timely 
for the Congress to consider extending PNTR to Russia to remove 
one of the final vestiges of the Cold War. I look forward to 
hearing the testimony of our witnesses today, and I yield now 
to the Ranking Minority Member of the Subcommittee, Mr. Levin, 
for any remarks he would like to make. Mr. Levin.
    [The opening statement of Chairman Crane follows:]
  Opening Statement of the Hon. Philip M. Crane, a Representative in 
  Congress from the State of Illinois, and Chairman, Subcommittee on 
                                 Trade
    Good Morning. This is a hearing of the Ways and Means Trade 
Subcommittee to consider granting Permanent Normal Trade Relations, or 
PNTR, to Russia and to assess U.S.-Russia trade relations.
    We are at a unique crossroads in the overall U.S.-Russian 
relationship, and I find this topic quite timely. As a Cold Warrior, I 
supported President Reagan's policies toward the Soviet Union. Reagan 
led both of our countries down a path that altered the course of 
history, and freedom and democracy triumphed. As a result of those 
policies, today we face a very different Russia from the nation that 
existed when the Jackson-Vanik provisions were passed in 1974. Since 
the fall of the Soviet Union over a decade ago, Russia has taken 
tremendous steps toward increased political and economic freedom. Today 
Russia has a maturing democracy. Russian citizens have successfully 
participated in three democratic elections for President and the Duma, 
and another Duma election will be held next year.
    Russia has also undertaken significant economic reforms. The 
process has had some problems along the way but President Putin and his 
administration have made economic reform a priority, and I look forward 
to seeing private property rights and rule of law firmly take root in 
Russian governance.
    I also expect our U.S. trade negotiators to bring back the best 
possible WTO accession package with Russia that addresses Congress' 
concerns, particularly with respect to the U.S. agriculture and 
fertilizer industries. I intend to follow this issue closely and 
consult with the Administration on the terms of Russia's accession.
    In the meantime, I am extremely disappointed that Russia has not 
lifted its ban on U.S. poultry exports and has extended the ban at 
least an additional two days. I believe it will be very difficult for 
some Members to support PNTR for Russia unless this dispute is resolved 
in a way that is based on sound science. I note that in the written 
statement that Russian Ambassador Ushakov provided for the record of 
this hearing, he stated that we need to create a ``transparent and 
predictable'' climate between our two countries. I agree, and this 
includes a commitment not to erect trade barriers in the name of 
sanitary concerns that are in fact based on politics. If there are 
legitimate concerns with some U.S. chicken processing facilities, then 
we should deal with this in a focused way. Instead, Russia has provided 
no good reason to continue a complete ban on all U.S. poultry. Russia's 
poultry ban has caused serious damage to our trade relationship, and I 
ask the Ambassador to send this message back to Moscow.
    Jackson-Vanik is fundamentally about freedom of emigration, and it 
is widely recognized that Russia has done a tremendous job with regard 
to the free emigration of Jews. For eight years, Russia has been in 
full compliance with the freedom of emigration provisions in the law. 
My brother-in-law is the son of holocaust survivors, so this is 
something that is directly relevant to my family.
    The President says he wants PNTR for Russia to help further a new 
relationship with Russia. He wants it for geopolitical reasons. Well, I 
want it for economic reasons. This is good for Russia and for the 
United States. With PNTR, U.S. investors and entrepreneurs will have 
more confidence in doing business in Russia. This confidence will 
foster more trade and investment between our two countries. It's no 
surprise to me that the U.S.-Russia Business Council--whose members are 
the pioneers doing business in Russia--is strongly advocating PNTR for 
Russia.
    In a speech at the State Department last week, President Bush 
said--and I wholeheartedly agree--that free trade creates the habits of 
freedom, generates expectations of democracy, and promotes universal 
values of human dignity and human rights. With this in mind, I believe 
it is appropriate and timely for the Congress to consider extending 
PNTR to Russia to remove one of the final vestiges of the Cold War.
    I look forward to hearing the testimony of our witnesses today, and 
I yield to the Ranking Minority Member of the Subcommittee, Mr. Levin, 
for any remarks he would like to make.
    Today we will hear from a number of distinguished witnesses. In the 
interest of time, I ask that you keep your oral testimony to five 
minutes. We will include longer, written statements in the record. And 
now I welcome my colleagues Mr. Lantos and Mr. Cox to hear their 
testimony.

                                

    Mr. Levin. Thank you, Mr. Chairman. And welcome Mr. Lantos 
and to all those who are going to testify, the distinguished 
Secretary, Mr. Larson, the Ambassador, and everybody else.
    Today, as Mr. Crane has mentioned, the Subcommittee 
considers whether to, we use the term, ``graduate'' Russia from 
the Jackson-Vanik amendment and whether to grant permanent 
normal trade relations. The question arises as to what factors 
we should base those decisions on.
    Additionally, since both the Jackson-Vanik amendment and 
the conditional grants of normal trade relations (NTR) involve 
issues of leverage, we must determine whether and how to 
replace that leverage.
    There are indeed legitimate foreign policy reasons 
prompting the Administration's request, especially given that 
Russia has been an important ally in the war against terrorism, 
and other developments within Russia. That said, human rights, 
religious freedoms, and economic commercial concerns do remain.
    At the outset--and I think this needs to be kept in mind--
it is important to realize that Jackson-Vanik graduation and 
granting PNTR are really two different actions, each with 
different policy implications. Although we often speak of the 
Jackson-Vanik amendment in Title IV of the Trade Act 1974 as if 
they are one and the same, in fact, that is not correct. It is 
important as we embark on what may be the first of many 
Jackson-Vanik moves for former Soviet countries to understand 
this point, because it helps to identify all the issues that 
are at stake.
    So when we talk about granting PNTR and moving the country 
out of Jackson-Vanik, we should consider both the Jackson-Vanik 
issues and the trade policy issues.
    As to Jackson-Vanik issues, we must consider what we might 
call the traditional Jackson-Vanik issues. That amendment was a 
historic piece of legislation, and Mr. Lantos is going to 
speak, as he always does, eloquently on that subject. It set 
forth important criteria related to freedom of emigration 
necessary for certain countries to obtain normal trade 
relations.
    Even from its inception, however, the Jackson-Vanik 
amendment was not only concerned with freedom of emigration, 
but also reflected the American commitment to human rights and 
freedom of religion. This fact is evident not only in the 
Preamble but also in the conduct of U.S. relations with the 
former Soviet countries for over three decades.
    It is appropriate, then, as we consider whether a country 
should be graduated from the Jackson-Vanik amendment, that we 
place a strong emphasis on freedom of emigration, religious 
freedom, and human rights issues--issues that motivated so many 
of us to go to the Soviet Union over the years of the past. 
These were the issues at the core of the creation of the 
Jackson-Vanik amendment and should be at its core as we 
consider countries moving from out of it.
    So as I said, toward that end I very much look forward to 
hearing from my colleague and dear friend Tom Lantos on these 
issues as well as from other groups here today, including the 
NCSJ: Advocates on behalf of Jews in Russia, Ukraine, the 
Baltic States & Eurasia (NCSJ). I want to hear--and I think we 
all do--about Russia's progress to date on these issues, areas 
where Russia needs to do more, and Russia's commitment to 
continue that progress in the future.
    Separate from the Jackson-Vanik issues per se are what 
might be called the trade policy issues, and just a few moments 
on those. These are the issues that inevitably arise when 
deciding whether to bring about a change in the status of a 
trading relationship. For the most part, Congress has not 
agreed to accept a major change in trade status with another 
country without a mutual benefit and action on both sides. In 
the context of other countries covered by the Jackson-Vanik 
amendment, in recent years Congress has generally not granted 
PNTR until after the country has completed its accession to the 
WTO or at least completed its WTO accession negotiations with 
our country.
    The reason is obvious: The ultimate vote on PNTR 
legislation gives Congress an important lever to ensure that 
the trade negotiations with that country reflect fully our 
priorities, Congress' and the administration's.
    As in the recent case of China, we want to be sure of the 
outcome of these negotiations. Ensuring a strong role for 
Congress is appropriate given that Congress has a 
constitutional mandate to regulate trade, and we have to take 
that seriously. So we should not approach the granting of PNTR 
lightly. We should not grant it without strong assurances, and 
preferably something more than just assurances, that Congress 
will continue to have a strong influence in shaping trade 
relations.
    For a start, if a country has not yet acceded to the WTO, 
the findings and statements of policy in any PNTR bill should 
reflect congressional priorities on trade issues, from 
meaningful market access, to intellectual property protection, 
to labor market standards, to satisfactory resolutions of 
disputes. So I will be very interested in hearing from the 
witnesses what mechanisms and tools they believe will ensure 
continuing leverage for the United States and for Congress 
should we grant PNTR for the Russian Federation.
    Additionally, given that the countries falling under Title 
IV of the Trade Act 1974 are in many cases non-market economies 
or do not yet have well-established market systems, we need to 
seriously consider what types of structures we will need to 
ensure stable trade relations with those countries.
    When we enacted the Trade Act 1974--and this is often not 
recognized--we created a special safeguard for trade with non-
market economies. We did so out of the realization that a high 
level of government interference in an economy or a lack of 
market structures creates the real possibility of large and 
unpredictable import surges. We recently reaffirmed that basic 
logic when we established a special safeguard in the China PNTR 
legislation. We need to give serious consideration to keeping a 
special safeguard in place for many of these former Soviet 
countries until they make substantially more progress toward 
creating truly market economies.
    Thank you again, Mr. Chairman.
    [The opening statements of Mr. Levin and Mr. Cardin 
follow:]
  Opening Statement of the Hon. Sander M. Levin, a Representative in 
                  Congress from the State of Michigan
    Thank you, Chairman Crane. Today the Committee considers whether to 
``graduate'' Russia from the Jackson-Vanik amendment and whether to 
grant permanent normal trade relations (PNTR) to Russia. The question 
arises as to what factors we should base those decisions on. 
Additionally, since both the Jackson-Vanik amendment and conditional 
grants of NTR involve issues of leverage, we must determine whether and 
how to replace that leverage.
    There are legitimate foreign policy reasons prompting the 
Administration's request that Russia be graduated from Title IV, given 
that Russia has been an important ally in the war against terrorism. 
That said, human rights/religious freedoms, and economic/commercial 
concerns remain.
    At the outset, it is important to realize that Jackson-Vanik 
``graduation'' and ``granting PNTR'' are two different actions, each 
with different policy implications. Although we often speak of the 
Jackson-Vanik Amendment and Title IV of the Trade Act of 1974 as if 
they are one and the same. In fact, that is not correct. I think it is 
important as we embark on what may be the first of many Jackson-Vanik 
``graduations'' for former Soviet countries to understand this point, 
because it helps to identify all the issues that are at stake. So, when 
we talk about granting PNTR and ``graduating'' a country from Jackson-
Vanik, we should consider both the Jackson-Vanik issues and the ``trade 
policy'' issues that were the underpinning of the other Title IV 
provisions.
Issues to Consider
Jackson-Vanik issues
    First, we must consider what we might call the ``traditional 
Jackson-Vanik issues.'' The Jackson-Vanik amendment was an historic 
piece of legislation. It set forth important criteria related to 
freedom of emigration necessary for certain countries to obtain normal 
trade relations with the United States. Even from its inception, 
however, the Jackson-Vanik amendment was not only concerned with 
freedom of emigration, but also reflected the American commitment to 
human rights and freedom of religion. This fact is evident not only in 
the preamble of the Jackson-Vanik amendment, but also in the conduct of 
U.S. relations with the former Soviet countries for nearly thirty 
years.
    It is appropriate, then, that as we consider whether a country 
should be graduated from the Jackson-Vanik amendment, that we place a 
strong emphasis on freedom of emigration, religious freedom, and human 
rights issues. These were the issues at the core of the creation of the 
Jackson-Vanik amendment, and should be at the core of ``graduation'' 
from it.
    Towards that end, I very much look forward to hearing from my dear 
colleague and friend Tom Lantos on these issues, as well from the other 
groups here today, including the NCSJ. I want to hear about Russia's 
progress to date on these issues, areas where Russia needs to do more, 
and Russia's commitment to continue that progress in the future on 
these vital issues.
PNTR issues
    Separate from the Jackson-Vanik issues, are what might be called 
the trade policy issues. These are the issues that inevitably arise 
when deciding whether to bring about a change in the status of a 
trading relationship. For the most part, Congress has not agreed to 
accept a major change in trade status with another country without 
something in return.
    In the context of other countries covered by the Jackson-Vanik 
amendment, in recent years Congress has generally not granted PNTR 
until after the country had completed its accession to the WTO or at 
least completed its WTO accession negotiations with the United States. 
The reason is obvious--the ultimate vote on the PNTR legislation gives 
Congress an important lever to ensure that the trade negotiations with 
that country fully reflect U.S. priorities--Congress' and the 
Administration's. As in the recent case of China, we could be sure that 
Congress was satisfied with the outcome only when those negotiations 
were completed.
    Ensuring a strong role for Congress is appropriate given that 
Congress has a constitutional mandate to regulate trade with foreign 
nations. We must take that mandate seriously. In fact, we built a 
direct congressional role into our trade relations with countries 
subject to Title IV of the Trade Act of 1974--in section 405(b) 
Congress mandated that a number of provisions be included in bilateral 
trade agreements with such countries, and section 405(c) requires 
congressional approval for any such agreement.
    So, we should not approach the granting of PNTR lightly. We should 
not grant PNTR without very strong assurances, and preferably something 
more than just assurances, that Congress will continue to have a strong 
influence in shaping trade relations with a country. For a start, if a 
country has not yet acceded to the WTO, the findings and statements of 
policy in any PNTR bill should reflect congressional priorities on 
trade issues--from meaningful market access, to intellectual property 
protection, to labor market standards, to satisfactory resolution of 
disputes such as the Russian poultry ban. So, I will be very interested 
in hearing from the witnesses what mechanisms and tools they believe 
will ensure continuing leverage for the United States and for Congress 
should we grant PNTR for the Russian Federation.
    Additionally, given that the countries falling under Title IV of 
the Trade Act of 1974 are in many cases non-market economies or do not 
have well-established market systems, we need to seriously consider 
what types of structures we will need to ensure stable trade 
relationships with those countries. When we enacted the Trade Act of 
1974, we created a special safeguard for trade with non-market economy 
countries. We did so out of the realization that a high level of 
government interference in an economy, and/or a lack of market 
structures, creates the real possibility of large and unpredictable 
import surges. We recently re-affirmed that basic logic when we 
established a special safeguard in the China PNTR legislation. We need 
to give serious consideration to keeping the special safeguard in place 
for many of these former Soviet countries until they make substantially 
more progress toward creating market economies.
    Thank you again, Mr. Chairman.

                                

 Opening Statement of the Hon. Benjamin L. Cardin, a Representative in 
                  Congress from the State of Maryland
    Mr. Chairman, thank you for holding this hearing today on the 
Administration's proposal to graduate Russia from the provisions of 
Jackson-Vanik and to extend Permanent Normal Trade Relations (PNTR) to 
Russia. I hope the subcommittee will take this opportunity to carefully 
examine the human rights and religious freedom record of Russia.
    I am privileged to serve as a Commissioner on the Commission on 
Security and Cooperation in Europe, commonly known as the Helsinki 
Commission. The Commission is an independent U.S. Government agency 
created in 1976 to monitor and encourage compliance with the Helsinki 
Final Act and other Organization for Security and Cooperation in Europe 
(OSCE) commitments. The Helsinki Commission consists of both 
Representatives and Senators, as well as liaisons from the Departments 
of State, Defense, and Commerce.
    When the Helsinki Final Act (HFA) was signed in Helsinki, Finland 
in 1975, it enshrined among its ten Principles Guiding Relations 
between participating States (the decalogue), a commitment to ``respect 
human rights and fundamental freedoms, including the freedom of 
thought, conscience religion or belief, for all without distinction as 
to race, sex, language or religion'' (Principle VII). The former Soviet 
Union was a signatory to the Helsinki Final Act, and Russia acceded to 
the Soviet Union's obligations as an OSCE member under the Act upon the 
collapse of the U.S. S. R.
    In June 2001 the Helsinki Commission held a hearing on ongoing 
human rights concerns and religious freedom issues in Russia. Mr. 
Chairman, at the outset let me state that Russia has made significant 
progress over the last decade in terms of emigration of Soviet Jews, 
religious freedom, and human rights. I have also reviewed the reports 
issued by the United States Commission on International Religious 
Freedom, as well as the United States Department of State reports on 
both human rights and religious freedom in Russia. Mr. Chairman, I have 
grave concerns about the human rights and religious freedom record in 
Russia.
    Bearings these extensive hearings and reports in mind, I turn to 
the legislation introduced by the distinguished Chairman and 
subcommittee Chairman of the Committee, H.R. 3553. The bill states in 
part that Russia:
          (6) has committed itself, including through exchanges of 
        letters, to ensuring freedom of religion and preventing 
        intolerance;
          (7) has committed itself, including through exchanges of 
        letters, to continuing its efforts to return religious property 
        to religious organizations in accordance with existing Russian 
        laws.
    Mr. Chairman, in my view these letters are inadequate guarantees 
that purport to safeguard human rights and religious freedom in the 
future. I strongly encourage the Administration--at an absolute 
minimum--to engage in a specific dialogue with Russia on human rights 
and religious freedom. The Administration should also support an 
amendment to the pending legislation to include specific findings and 
sense of Congress provisions that would firmly and unequivocally commit 
the United States and Russia to continue to engage in dialogue on these 
critical issues.
    Let me raise a few examples of concerns that I have regarding 
Russia's graduation, and I hope that the members of the panels will 
address today.
    In 1997 Russia passed a comprehensive Religion Law which required, 
in part, the registration of religious organizations in Russia. The 
U.S. State Department has reported, along with religious groups and 
other nongovernmental organizations, that over 2,000 religious groups 
face liquidation for failure to re-register under the 1997 law. Dozens 
of groups have already been liquidated including several that 
apparently are actively functioning. The U.S. State Department has 
reported that the Religion Law ``seriously disadvantages religious 
groups that are new to the country,'' and also ``provide[s] regional 
officials with pretexts to restrict the activities of religious 
minorities.''
    The U.S. Commission on International Religious Freedom has 
expressed its concern about discriminatory laws, policies, and 
practices at the local and provincial level. In the Commission's view 
local officials have harassed and interfered with the activities of 
religious communities, preventing them from constructing, renovating, 
or renting suitable places for worship; distributing religious 
publications; and conducting religious education. Protestant, Catholic, 
and Muslim indigenous believers and foreign missionaries have been 
harassed by security officials, denied re-entry visas, and even 
expelled, for propagating their faith. One-third of Russia's 
constituent regions have enacted legal regulations on religious 
activities that are more restrictive than the 1997 Religion Law and 
that the Russian federal government believes may violate the 
Constitution.
    The U.S. State Department reported in 2001 that ``[a]lthough the 
Government respected the human rights of its citizens in some areas, 
serious problems remain in many areas.'' The report stated that:
          Its record was poor regarding the independence and freedom of 
        the media. Its record was poor in Chechnya, where the federal 
        security forces demonstrated little respect for basic human 
        rights and there were credible reports of serious violations, 
        including numerous reports of extrajudicial killings by both 
        the Government and Chechen fighters. Hazing in the armed forces 
        resulted in a number of deaths. There were reports of 
        government involvement in politically motivated disappearances 
        in Chechnya. There were credible reports that law enforcement 
        personnel regularly tortured, beat, and otherwise abuse 
        detainees and suspects. Arbitrary arrest and detention and 
        police corruption remained problems. The Government prosecuted 
        some perpetrators of abuses, but many officials were not held 
        accountable for their actions. . . . The Government made some 
        progress during the year with implementation of constitutional 
        provisions for due process and fair and timely trial; however, 
        the judiciary continued to lack resources, suffered from 
        corruption, and remained subject to some influence from other 
        branches of the Government.
    I would again ask our panel witnesses to address these issues 
specifically: the Religion Law and its implementation, press freedom, 
Chechnya, abuse of detainees and suspects, police corruption, and due 
process and rule of law provisions in Russia. On the issue of Chechnya, 
for example, the OSCE Parliamentary Assembly has regularly adopted 
resolutions that I have authored which have condemned the ongoing human 
rights violations in that region by the Russian Government.
    Mr. Chairman, I have other concerns about the graduation of Russia 
as it relates to the treatment of Jews in Russia. As we will hear from 
Jewish organizations today, there has been a marked increase in the 
severity and frequency of anti-Semitic incidents. We have witnessed 
arson attacks, synagogue and cemetery desecrations, and direct assaults 
into Jewish institutions. There is very spotty investigation and 
prosecution--at both the local and federal levels--of these hate crimes 
against Jews in Russia.
    We have also seen that the Russian Government may insert and 
involve itself in Jewish intra-communal affairs, such as efforts to 
dictate the leadership of particular Jewish organizations. In certain 
cases Jewish worshippers and organizations have been subject to illegal 
search and seizure and unreasonable and confiscatory taxes. I would 
again ask our panel witnesses today to address these concerns.
    Let me also briefly comment on the graduation of other former 
Soviet republics. I do sincerely hope that the Administration will seek 
future approvals from Congress on a country by country basis, so that 
Congress can exercise its constitutional authority over trade and 
carefully examine the human rights and religious freedom records of the 
former Soviet Republics.
    Thank you, Mr. Chairman.

                                

    Chairman Crane. Thank you.
    Today we will hear from a number of distinguished 
witnesses, and in the interest of time, I would ask that you 
keep your oral testimony to 5 minutes, and we will include 
longer written statements in the record.
    Now I welcome my colleague, Mr. Lantos. Mr. Lantos, will 
you proceed?

STATEMENT OF THE HON. TOM LANTOS, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Lantos. Thank you very much, Mr. Chairman, 
distinguished Members of the Subcommittee. I am honored to have 
this opportunity, Mr. Chairman, to testify today on graduating 
the Russian Federation from the provisions of the Jackson-Vanik 
amendment and granting it permanent normal trade relations.
    I request respectfully that my written statement be 
included in total in the record.
    Chairman Crane. Without objection, so ordered.
    Mr. Lantos. Mr. Chairman, let me put my testimony in 
perspective. When President Bush returned from his summit 
meeting in Shanghai, I was asked by the White House, as the 
only survivor of the Holocaust ever elected to Congress, and as 
the Democratic founding Chairman of the Congressional Human 
Rights Caucus, to lead the effort to repeal Jackson-Vanik. I 
agreed to do that because I felt the President needed all the 
support we could give him on a bipartisan basis in the post-
September 11 environment. And I very much hope that as we move 
along in perfecting this legislation, we will be able to 
achieve the President's goal prior to his meeting with Mr. 
Putin in Moscow in late May.
    Mr. Chairman, the tragic events of September 11 have 
presented the United States with a strategic opportunity to 
reassess our relations with Russia. We all know the history and 
the legacy of Jackson-Vanik. It succeeded in prying open the 
iron gates of the Soviet Union. Thousands of persecuted Soviet 
citizens were permitted to emigrate during the seventies and 
eighties under the pressure of this legislation. But, Mr. 
Chairman, Jackson-Vanik has taken on a much greater 
significance than simply encouraging free emigration.
    This legislation was the first case in which Congress 
imposed economic sanctions in order to achieve a human rights 
objective, and Jackson-Vanik has come to symbolize our Nation's 
commitment to ensuring that human rights in the broadest sense 
are a fundamental principle of our foreign policy.
    Since the end of the Cold War, the Russian Government has 
opened its borders, legal restrictions on emigration have been 
lifted, and Russian citizens now migrate and travel freely. 
Important progress has also been made in many other aspects of 
human rights. Although some human rights issues remain, the 
progress on human rights in Russia relative to the Soviet era 
has been enormous.
    As a result of these developments, the President since 1994 
has found Russia to be in compliance with the provisions of 
Jackson-Vanik, and waivers have been issued, as provided by 
law, so that these sanctions have not been applied to Russia 
for almost a decade.
    Now the world has been transformed again. President Putin 
joined the United States in the struggle against international 
terrorism, despite strong domestic opposition, and I want to 
pay tribute to the President for his courage. I believe that 
the permanent removal of Jackson-Vanik and its Cold War stigma, 
a symbolic gesture by the United States, would permit President 
Putin to reassure the Russian public, which is wary of his new 
pro-Western approach.
    At the same time, Mr. Chairman, we must reaffirm to the 
Russian Government and to the governments of all other 
countries to whom these restrictions still apply that 
observance of human rights is an essential element in their 
relationship with the United States of America. For this 
reason, it is essential that legislation to graduate Russia 
from Jackson-Vanik reaffirm our commitment to human rights.
    Mr. Chairman, in November 2001, Secretary Powell and 
Russian Foreign Minister Ivanov exchanged letters to address 
some of the concerns of Members of Congress, religious 
organizations, and human rights groups regarding human rights 
issues in Russia. In the exchange Foreign Minister Ivanov gave 
assurances that the Russian Federation will continue to permit 
unfettered emigration, safeguard religious liberties, and 
enforce Russian laws against religious intolerance. Although 
this exchange of letters is an important step forward, many of 
my colleagues, and I must see stronger and more precise 
language on restitution of communal property, which includes 
religious, cultural, and educational property, nationalized by 
the Soviet Union in the twenties and thirties. The Russian 
Federation must agree to rescind legislation and procedures for 
registering religious organizations or at least give assurances 
that it will not be used to obstruct the activities of 
internationally recognized religious organizations, including 
the Roman Catholic Church, Baptists, Mormons, and others.
    Mr. Chairman, I believe that the Russian Federation has 
passed good laws against hate crimes, but enforcement of these 
laws has been extremely uneven. I was very pleased to hear 
President Putin speak out against instances of anti-Semitism 
and hate crimes, but, clearly, more needs to be done.
    Regional and local officials in Russia must strengthen 
enforcement of existing laws and publicly condemn egregious 
abuses of human rights and anti-Semitic incidents. Similarly, 
local authorities have obstructed or prevented the return to 
religious and ethnic minorities of communal property, including 
houses of worship. The government in Moscow should indicate a 
willingness to help deal with these problems with local 
government officials.
    It is essential, Mr. Chairman, that the United States 
express its intention to pursue human rights issues as part of 
our ongoing foreign policy approach to Russia. As part of an 
effort to make this point, an informal U.S.-Russian forum to 
discuss these issues on a regular basis must be established. 
This forum may include, in addition to United States and 
Russian Government officials, representatives of private 
organizations in both countries with an interest in human 
rights and religious issues. This is an important way to 
involve American religious and human rights organizations such 
as the National Council for Soviet Jews or the U.S. Commission 
for International Religious Freedom in dealing with the end of 
Jackson-Vanik for Russia.
    Russia has experienced greater centralization of authority 
and strengthening of the state at the expense of civil society. 
This trend has extended to all facets of Russian society, 
including the rights of independent trade unions and labor. In 
fact, recent Russian legislation seriously diminished workers' 
rights. I urge the administration and the Congress to continue 
to raise these concerns. Conducting a consistent U.S. policy 
toward Russia includes all aspects of human rights, religious 
freedoms, and they would honor the legacy of Jackson-Vanik.
    I also urge our Administration, Mr. Chairman, to work with 
Members on this Subcommittee that have been in the vanguard in 
dealing with trade issues, including Mr. Rangel and Mr. Levin, 
to ensure that appropriate attention is paid to the economic 
aspects of graduation.
    Sunsetting Jackson-Vanik sanctions for Russia could be a 
rare win-win-win proposition. Russia would benefit from the 
lifting of a Cold War stigma. There is nothing Mr. Putin wants 
more earnestly than to leave behind this stigma of the Soviet 
era. The United States would benefit from closer relations with 
Russia as a crucial partner in our global war against 
terrorism. And religious and ethnic minority groups 
historically targeted for persecution in Russia would benefit 
from the reaffirming of a commitment to human rights, religious 
freedom, and labor rights.
    The Jackson-Vanik, Mr. Chairman, represented one of 
America's signal victories in the Cold War, and it marked the 
historic milestone in the field of human rights. With the end 
of the Cold War and with the prospect of a new strategic 
partnership between Russia and the West in our fight against 
terrorism, it is only appropriate for Jackson-Vanik 
restrictions on Russia to end as well.
    Mr. Chairman, I hope that we can work together to modify 
the text of H.R. 3553 or introduce new legislation that will 
include appropriate language regarding U.S. policy with respect 
to the matters I raise today, including an appropriate 
reporting requirement so that Congress can be kept abreast of 
developments regarding these matters.
    Unless we can develop legislation with language reflecting 
these human rights concerns, I cannot in good conscience 
support the graduation of the Russian Federation from Jackson-
Vanik. I have raised my concern with Dr. Rice, the President's 
National Security Adviser, and with Deputy Secretary of State 
Armitage. I believe that they understand and fully share my 
concerns, and I do believe we can find satisfactory legislative 
language. But I repeat, Mr. Chairman, that unless we can reach 
such an agreement, I will not support this legislation and will 
have to oppose it actively.
    Mr. Chairman, I believe this is the only approach to honor 
the legacy of our late colleague Senator Henry Jackson and our 
former colleague Congressman Charles Vanik and to ensure 
continuing progress in Russia on these most crucial matters.
    Thank you, Mr. Chairman, for the opportunity to present my 
views before your Subcommittee, and I am pleased to answer any 
questions you or your colleagues may have.
    [The prepared statement of Mr. Lantos follows:]
Statement of the Hon. Tom Lantos, a Representative in Congress from the 
                          State of California
    Mr. Chairman, I am deeply honored for the opportunity to testify 
today on graduating the Russia Federation from the provisions of the 
Jackson-Vanik Amendment and granting it Permanent Normal Trade 
Relations (PNTR).
    Since the Administration first approached me last fall about 
supporting this effort in Congress, I have consulted with my colleagues 
in the Congress and with leaders of a number of religious and human 
rights organizations about what is needed to move legislation that 
would permanently exempt Russia from the provision of the Jackson-Vanik 
Amendment. When the Chairman of the Ways and Means Committee, Mr. 
Thomas, together with Mr. Dreier and you, Mr. Chairman, introduced H.R. 
3553, a bill to extend PNTR to the Russian Federation, I instructed my 
staff to work with your staff to ensure that we could draft mutually 
acceptable legislation which could be approved by the Congress in time 
for the President's summit in Moscow with President Putin in May.
    This testimony outlines what I think has been accomplished so far, 
and what our next steps should be in order to successfully win 
congressional approval for this landmark legislation. I hope that we 
can work together to modify the text of H.R. 3553 or introduce new 
legislation that would include statements of U.S. policy with respect 
to the matters I will be raising today and that would add appropriate 
reporting requirements so that Congress can be kept abreast of 
developments regarding these matters. I believe this is the best 
approach to honor the legacy of Senator Henry Jackson and Congressman 
Charles Vanik and to help ensure continuing progress in Russia on these 
crucial questions.
    The tragic events of September 11th have presented the United 
States with a strategic opportunity to reassess our relations with many 
of our former adversaries, including Russia. President Putin wisely 
sided with the United States in our struggle against international 
terrorism, despite strong domestic opposition. The Congress should 
explore ways to bolster President Putin's position by revisiting the 
need to continue to apply the Jackson-Vanik Amendment to Russia.
    This landmark 1974 law was one of the first attempts to link human 
rights and trade. Title IV of the Trade Act of 1974 was initially 
conceived to establish a framework for U.S. trade relations with 
communist countries. However, a key amendment was included that 
fundamentally altered the thrust of Title IV from a purely trade focus, 
to include consideration of human rights and respect for religious 
freedoms. Designed to assist Soviet Jews and other minorities escape 
Communist persecution, Jackson-Vanik prohibited normal trade relations 
with the Soviet Union and other non-market economies unless they 
permitted free emigration.
    Jackson-Vanik succeeded in prying open the Soviet Union's iron 
gates. Thousands of persecuted Soviet citizens were permitted to 
emigrate during the 1970's and 1980's under the pressure of this 
legislation. The amendment, however, has taken on a much greater 
significance than simply encouraging free emigration. This was the 
first case in which the Congress imposed economic sanctions in order to 
achieve a human rights objective, and Jackson-Vanik has come to 
symbolize our nation's commitment to ensuring that human rights in its 
broadest understanding is a fundamental principle of our foreign 
policy.
    Since the end of the Cold War, however, Jackson-Vanik has lost its 
relevance in Russia. The Russian Government has opened its borders, 
legal restrictions on emigration have been lifted, and Russian citizens 
now migrate and travel freely. In that regard, Jackson-Vanik has been a 
resounding and an unqualified success. Important progress has also been 
made in many aspects of respect for human rights. Although many serious 
human rights issues remain, the progress on human rights relative to 
the Soviet era has been substantial.
    As a result of these developments, the President since 1994 has 
found Russia to be in compliance with the provisions of Jackson-Vanik 
and have issued waivers, as provided by law, so that these sanctions 
are not applied to Russia.
    Last year President Putin has indicated his desire to see Jackson-
Vanik lifted and its Cold War stigma removed. Such a symbolic gesture 
would permit President Putin to reassure a Russian public wary of his 
new pro-Western approach. In a recent poll, only 48% of Russians 
expressed sympathy with the United States and 50% said that the 
terrorist attacks ``served Americans right.'' To help Putin overcome 
this anti-American sentiment, the Congress should graduate Russia from 
Jackson-Vanik.
    At the same time, however, since Russia is the state for which 
Jackson-Vanik was originally enacted, it is important that as we 
graduate Russia from Jackson-Vanik, we reaffirm our commitment to the 
human rights provisions that are the foundation of this legislation. We 
should reaffirm to the Russian Government--and to the governments of 
all other countries to whom these restrictions still apply--that 
observance of human rights is an essential element in the relationship 
with the United States. For this reason, it is essential that 
legislation to graduate Russia from Jackson-Vanik reaffirm our 
commitment to human rights.
    In November of 2001, Secretary Powell and Foreign Minister Ivanov 
executed an exchange of letters to address some of the concerns of 
Members of Congress, Jewish organizations, religious organizations, and 
human rights groups regarding human rights issues in Russia. In the 
exchange Foreign Minister Ivanov gave assurances that the Russian 
Federation will continue to permit unfettered emigration, safeguard 
religious liberties and enforce Russian laws against religious 
intolerance. Although this exchange of letters is an important step 
forward, I and my colleagues would have liked to see stronger and more 
precise language on restitution of communal property, which includes 
religious, cultural, and educational property nationalized by the 
Soviet Union in the 1920's and 1930's. We also would have liked to have 
the Russian Federation agree to rescind the legislation and procedures 
for registering religious organizations or at least give assurances 
that it will not be used to prevent the activities of internationally 
recognized religious organizations.
    Mr. Chairman, I believe that the Russian Federation has passed good 
laws against hate crimes, but it has enforced these laws unevenly. I 
was very pleased to hear President Putin speak out against instances of 
anti-Semitism and hate crimes, but, clearly, more needs to be done. 
Regional and local officials in Russia must strengthen enforcement of 
existing laws and publicly condemn egregious abuses and anti-Semitic 
incidents. Similarly, religious and ethnic minorities have faced 
obstacles in reclaiming houses of worship from local authorities. The 
government in Moscow should indicate a willingness to help deal with 
these problems with local government officials. The U.S. government can 
also play a role in this effort. One of the most successful programs 
funded by the Freedom Support Act is the Climate of Trust program 
designed to enable Russian law enforcement to combat ethnic and 
religious intolerance and xenophobia in Russia by providing a sustained 
and supported relationship between U.S. and Russian communities, law 
enforcement professionals, city administrators, prosecutors, human 
rights activists, educators and local media representatives.
    It would also be helpful to have the United States express its 
intention to pursue human rights issues as part of our ongoing foreign 
policy approach to Russia. . As part of an effort to make this point, 
an informal U.S.-Russian forum to discuss these issues on a regular 
basis could be established. This forum may include, in addition to U.S. 
and Russian Government officials, representatives of private 
organizations in both countries with an interest in human rights and 
Jewish community issues. This is an important way to involve American 
religious and human rights organizations, such as the National Council 
for Soviet Jews (NCSJ) or U.S. Commission for International Religious 
Freedom in dealing with the end of Jackson-Vanik for Russia.
    As you may know, in the past two years Russia has experienced what 
some would describe as greater centralization of authority and 
strengthening of the state at the expense of the civil society. This 
trend has extended to all facets of the Russian society, including the 
rights of independent trade unions and labor. Recent legislation 
enacted by the Duma, at the urging of President Putin, seriously 
diminishes workers' rights. I understand that this new law places 
restrictions on the ability of independent unions to form and operate, 
management involvement in union activities, restrictions on the ability 
of unions to address nonpay issues, and complicated and onerous 
procedural requirements for strikes. The U.S. embassy in Moscow has 
raised concerns about the new law, as well as pre-existing legal and de 
facto restrictions on the operation of independent unions, with the 
Putin Administration. I urge the Bush Administration, and the Congress 
to continue to raise these concerns, including as part of reviews of 
Russia's GSP eligibility. Conducting a consistent U.S. policy towards 
Russia, that includes all aspects of human rights and religious 
freedoms, would honor the legacy of Jackson-Vanik.
    I am mindful of the President's proposed visit to Moscow in May, 
and I am prepared to do everything in my power to assure that 
satisfactory legislation is completed in time to meet the needs for 
that summit. I have focused my remarks on the human rights and 
religious freedoms issues raised by graduation of Russia from the 
Jackson-Vanik amendment. As I said at the outset, Title IV, which 
contains the Jackson-Vanik amendment, was of course established to 
govern our trade relations with non-market economy countries. I urge 
the Administration to work with Members on this Committee that have 
been in the vanguard in dealing with trade issues, including Mr. Rangel 
and Mr. Levin, to ensure that appropriate attention is paid to the 
economic aspects of graduation.
    I anticipate that agreement can be reached on these issues, and 
when it is, I believe it would be appropriate to celebrate the 
graduation of Russia from Jackson-Vanik provisions at a festive event 
in Moscow in connection with the summit. I would hope that the official 
delegation would include my dear friend and former colleague 
Congressman Charles Vanik and the widow of Senator Henry Jackson, who 
should be recognized for their outstanding contribution to human rights 
and religious freedom. Such an event would help demonstrate that the 
Jackson-Vanik legislation, one of the most important pieces of human 
rights legislation of the last century, has achieved its purpose.
    Sunsetting Jackson-Vanik sanctions for Russia would be a rare win-
win-win proposition. Russia would benefit from the lifting of a Cold 
War stigma. The United States would benefit from closer relations with 
Russia, a crucial partner in our war on terrorism. And religious and 
ethnic minority groups historically targeted for persecution in Russia 
would benefit from reaffirmation of human rights, including labor 
rights, safeguards.
    Jackson-Vanik represented one of America's signal victories in the 
Cold War and marked an historic milestone for the human rights 
movement. With the end of the Cold War, and with the prospect of a new 
strategic partnership between Russia and the West in our fight against 
terrorism, it is only appropriate for Jackson-Vanik restrictions on 
Russia to end as well.
    Thank you, Mr. Chairman, for the opportunity to present my views in 
front of your subcommittee today. I would be pleased to answer any 
questions from the Members.

                                

    Chairman Crane. Thank you, Mr. Lantos.
    Now we welcome to the Subcommittee our distinguished 
colleague from California, another colleague from California, 
Mr. Cox, and any written statements will be made a part of the 
permanent record.

  STATEMENT OF THE HON. CHRISTOPHER COX, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Cox. Thank you, Mr. Chairman. I thank the Chairman and 
the other Members of the Subcommittee for convening this 
hearing today.
    We are here this morning because, a decade after Russia's 
victory over the Soviet Union in the Cold War, Russia remains 
subject to Title IV of the Trade Act 1974, including the 
Jackson-Vanik freedom of emigration provisions. These 
provisions were focused very specifically on Communist systems, 
prototypically the Soviet Union itself. And their purpose was 
to deny normal trade relations and other economic incentives to 
countries that denied their citizens the right to emigrate. 
That purpose is today totally opposite from our policy toward 
Russia.
    Russia's continuing coverage under Jackson-Vanik requires 
an annual Presidential determination and a report to Congress 
that Russia is not violating freedom of emigration criteria. 
Since the collapse of the Soviet empire, these have become 
routine because, of course, today Russia's citizens enjoy 
complete freedom of emigration.
    In 1992, following the collapse of the Soviet Union, Russia 
was first for 2 years extended waivers under this law, and 
subsequently the President has found Russia repeatedly in full 
compliance with the Jackson-Vanik emigration criteria. In 
recent months, the Bush administration has repeatedly expressed 
its desire, therefore, to repeal this Soviet-era restriction on 
our relations with Russia.
    Today, Russia's long record of Jackson-Vanik compliance, 
the perfect string of Jackson-Vanik compliance findings and 
reports since 1994, indicates to me, and I think to the Members 
of this Subcommittee that it is high time that the application 
of Jackson-Vanik to Russia be terminated.
    As you know, Mr. Chairman, I chaired the Speaker's Advisory 
Group on Russia, which was tasked with focusing on Russia's 
development since the collapse of the Soviet empire, 
essentially the period of the Yeltsin administration. The 
Speaker formally tasked the leadership of six Committees of the 
House to assess the results of U.S. policy toward Russia during 
the Yeltsin years.
    Along with our colleagues, Representative Ben Gilman, then 
Chairman of the International Relations Committee, Porter Goss, 
then and now Chairman of the Intelligence Committee, Banking 
Chairman Jim Leach, the late Floyd Spence, Chairman of the 
Armed Services Committee, and Appropriations Committee Chairman 
Bill Young, as well as six other Subcommittee chairmen, we 
spent 6 months examining the past decade of U.S.-Russian 
relations. And in September of 2000, we released our findings 
and our recommendations.
    The Advisory Group recommended that the U.S. government 
repeal Cold War-era laws that impede relations with Russia. We 
recommended that the Committees of jurisdiction, specifically 
including the Ways and Means Committee, carefully examine all 
aspects of the current statutory framework governing U.S. 
relations with Russia, with the intention of removing Cold War-
era restrictions on full and normal U.S.-Russian relations. It 
was evident to us then in September of 2000, as it is now, that 
a great deal of work has already been accomplished, 
particularly with the 1993 Friendship Act, which sought to 
remove many of the legal impediments to normal relations 
between the United States and Russia. But we found that 
Congress had not completed the job. We had not completed the 
process of amending the remaining statutory leftovers of the 
Cold War.
    The Advisory Group also recommended the promotion of 
Russia's integration into the world economy. Even today, in 
2002, many Russian policies directly or indirectly discourage 
foreign investment and international trade. The United States 
should encourage Russia to adopt and enforce laws and policies 
that will allow her to enjoy the benefits of participation in 
the international marketplace. The United States should work 
with Russia for the adoption and enforcement of laws and 
policies that would enable Russia to accede to the World Trade 
Organization under appropriate commercial terms.
    The legislation that you are considering today, which will 
repeal Jackson-Vanik for Russia, is a direct response to these 
recommendations of the Speaker's Advisory Group on Russia.
    As you know, the Bush administration has strongly 
encouraged your action today. Since taking office, President 
Bush has made the improvement of bilateral economic relations 
with Russia an important tenet of his Administration's foreign 
policy. During last November's meeting with Russian Vladimir 
Putin, Bush stated that the United States is committed to 
``creating the conditions that will enhance our trade and 
investment relations and help Russia reach its economic 
potential.'' He added that ``we will work together to build 
confidence in the climate for trade and investment between our 
two countries, including working together in an effort to 
accelerate Russia's WTO accession negotiations.''
    To accomplish these goals, the President has asked for the 
immediate repeal of Jackson-Vanik for Russia. In November 2001, 
the White House released a fact sheet announcing that the 
administration had begun consultations with Congress and other 
interested groups on the possibility of graduating Russia from 
the Jackson-Vanik requirements. The result was the introduction 
by the Chairman of this full Committee of the legislation that 
we are considering today.
    In a House leadership meeting with President Bush 
yesterday, he repeated to me and to the others present his hope 
that Congress would now remove this Cold War vestige and allow 
U.S.-Russian relations to move forward on a new path, as well 
as reduce the barriers for Russia's inclusion in international 
organizations.
    I couldn't agree more with my colleague Mr. Lantos that 
during the past 28 years, the Jackson-Vanik has proven to be a 
valuable and successful tool in ensuring that human rights, 
specifically freedom of emigration but certainly not limited to 
freedom of emigration, have been respected. The law was an 
extraordinary success in this case in ensuring freedom of 
emigration in the former Soviet Union. Since 1975, 573,000 
refugees, many of them Jews, evangelical Christians, and 
Catholics, from areas of the former Soviet Union have been 
resettled in the United States alone. The Russian Jewish 
community in the United States today numbers between 750,000 
and 1 million, and some estimates run twice as high. An 
estimated 1 million more Jews emigrated to Israel during that 
time. In today's Russia, the complete freedom of emigration is 
unquestioned. For fiscal year 2001, 3,875 refugees from Russia 
were resettled.
    This legislation is important both for its impact on the 
future development of U.S.-Russian relations and on the 
development of democracy in Russia. If sanctions are 
appropriate when the right to emigrate freely is curtailed, 
then it is equally true that there should be recognition for 
the consistent respect of that right.
    As we have seen throughout Latin America, Eastern Europe, 
and Asia, a growing respect for human rights has empowered 
citizens to demand their governments be accountable to the rule 
of law. Repeal of Jackson-Vanik for Russia is a important step 
to signaling U.S. support for Russia's democratic and free 
market institutions.
    Thank you, Mr. Chairman, for the opportunity to express my 
views on this important issue. I understand that Ambassador 
Ushakov is also present today, and I join you in welcoming him.
    [The prepared statement of Mr. Cox follows:]
  Statement of the Hon. Christopher Cox, a Representative in Congress 
                      from the State of California

                              Introduction

    Thank you, Mr. Chairman. I am honored to testify before the 
Committee on improving relations between the United States and Russia.
    As the members of the Committee are aware, Russia remains subject 
to Title IV of the Trade Act of 1974, including the Jackson-Vanik 
freedom of emigration provisions. These provisions focused specifically 
on Communist systems, prototypically the Soviet Union, and their 
purpose was to deny normal trade relations and other economic 
incentives to countries that denied its citizens the right of 
emigration.
    Russia's continuing coverage under Jackson Vanik requires an annual 
presidential determination and report to Congress that Russia is not 
violating freedom of emigration criteria. Since the collapse of the 
Soviet Union, these have become routine, because Russia today enjoys 
freedom of emigration.
    In 1992, following the collapse of the Soviet Union, Russia was 
first extended normal trade relations under a waiver from the Jackson-
Vanik emigration requirements. A waiver was again extended to Russia in 
1993. Since 1994, the President has repeatedly found Russia in full 
compliance with the Jackson-Vanik emigration criteria. In recent 
months, the Bush Administration has repeatedly expressed its desire to 
repeal this Soviet-era restriction on our relations with Russia.
    Today, Russia's long record of compliance with the emigration 
provisions and perfect string of Jackson-Vanik waivers since the 
collapse of the Soviet Union indicates that it is time to terminate the 
application of Jackson-Vanik.

                 The Speaker's Advisory Group on Russia

    As you know, I had the honor of chairing the Speaker's Advisory 
Group on Russia. In March 2000, as Russia prepared for the presidential 
election that would formally establish the successor to the Yeltsin 
Administration, the Speaker of the House tasked the leadership of six 
committees of the House of Representatives to assess the results of 
U.S. policy toward Russia during the Yeltsin years.
    Along with my colleagues, International Relations Committee 
Chairman Ben Gilman, Intelligence Committee Chairman Porter Goss, 
Banking Committee Chairman Jim Leach, the late Armed Services Committee 
Chairman Floyd Spence, Appropriations Committee Chairman Bill Young, 
Conference Vice Chair Tillie Fowler, Joint Economic Committee Vice 
Chairman Jim Saxton, Monetary Policy Subcommittee Chairman Spencer 
Bachus, Foreign Operations Subcommittee Chairman Sonny Callahan, 
Military Research and Development Subcommittee Chairman Curt Weldon, 
and House Russian Leadership Program Co-Chairman Roger Wicker, we spent 
six months examining the past decade of U.S.-Russian relations. In 
September 2000, we released our findings and recommendations.
    The Advisory Group recommended that the U.S. government repeal Cold 
War-era laws that impede relations with Russia. We recommended that the 
committees of jurisdiction in the U.S. Congress carefully examine all 
aspects of the current statutory framework governing U.S. relations 
with Russia, with the intention of removing outdated Cold War-era 
restrictions on full and normal U.S.-Russian relations. Although work 
in this area has been accomplished by the 1993 Friendship Act, which 
sought to remove many of the legal impediments to normal relations with 
Russia, we found that Congress had not completed the process of 
amending the remaining statutory leftovers of the Cold War.
    The Advisory Group also recommended the promotion of Russia's 
integration into the world economy. Today, many Russian policies 
directly or indirectly discourage foreign investment and international 
trade. The United States should encourage Russia to adopt and enforce 
laws and policies that will allow her to enjoy the benefits of 
participation in the international marketplace. The United States 
should work with Russia for the adoption and enforcement of laws and 
policies that would enable Russia to accede to the World Trade 
Organization under appropriate commercial terms.
    The legislation before you today, which will repeal Jackson-Vanik 
for Russia, is a direct response to those recommendations of the 
Speaker's Advisory Group on Russia.

                      Bush Administration Support

    Since taking office, President Bush has made the improvement of 
bilateral economic relations with Russia an important tenet of his 
administration's foreign policy. During last November's meeting with 
Russian President Vladimir Putin, President Bush stated that the U.S. 
is committed to ``creating the conditions that will enhance our trade 
and investment relations and help Russia reach its economic 
potential.'' He added that ``we will work together to build confidence 
in the climate for trade and investment between our two countries,'' 
including ``working together in an effort to accelerate Russia's WTO 
accession negotiations.''
    To accomplish the President's goals, he has asked for the immediate 
repeal of Jackson-Vanik for Russia. In November 2001, the White House 
released a fact sheet announcing that the Administration had begun 
consultations with Congress and other interested groups on the 
possibility of graduating Russia from Jackson-Vanik. The result was 
your introduction, Mr. Chairman, of the legislation we are considering 
today.
    In a House Leadership meeting with the President yesterday, he 
repeated to me and to the others present his hope that Congress would 
now remove this Cold War era law, and allow U.S.-Russia relations to 
move forward on a new path as well as reduce the barriers for Russia's 
inclusion in international organizations.

                        Success of Jackson-Vanik

    During the past 28 years, Jackson-Vanik has proven to be a valuable 
and successful tool in ensuring that human rights, specifically freedom 
of emigration, has been respected. The law was an extraordinary success 
in securing freedom of emigration in the former Soviet Union. Since 
1975, 573,000 refugees--many of them Jews, evangelical Christians and 
Catholics--from areas of the former Soviet Union have been resettled in 
the United States alone. The Russian Jewish community in the United 
States today numbers between 750,000 and one million, and some 
estimates are twice as high. An estimated one million more Jews 
emigrated to Israel during that time. In today's Russia, the complete 
freedom of emigration is unquestioned. For fiscal year 2001, 3,875 
refugees from Russia were resettled.

                               Conclusion

    This legislation is important both for its impact on the future 
development of U.S.-Russian relations and on the development of 
democracy in Russia. If sanctions are appropriate when the right to 
emigrate freely is curtailed, then it is equally true that there should 
be recognition for the consistent respect of that right.
    As we have seen throughout Latin America, Eastern Europe, and Asia, 
a growing respect for human rights has empowered citizens to demand 
their governments be accountable to the rule of law. Repeal of Jackson-
Vanik for Russia is an important step to signaling U.S. support for 
Russia's democratic and free market institutions.
    Thank you, Mr. Chairman, for the opportunity to express my views on 
this important issue.

                                

    Chairman Crane. Thank you, Mr. Cox.
    Mr. Levin.
    Mr. Levin. Thank you both for excellent testimony. Let me 
just make a brief comment. I think the challenge is, in a 
sense, how to put the two of your testimonies together.
    Mr. Lantos. Could you speak into the mike?
    Mr. Levin. I think the challenge is how to put your two 
testimonies together that are similar but not identical. And in 
that regard, I very much agree with the need to continue to 
improve our relationship with Russia and to recognize the 
changes that have occurred there. I very much agree with that.
    I only suggest that we remember what the original purpose 
of the 1974 Act was, and that was to begin to ease trade 
relations between then the East and the West. And Jackson-Vanik 
was an amendment to that. So the 1974 Act was an effort to 
begin to develop economic relationships between these economies 
in these countries with very different structures. And, 
therefore, included within the 1974 Act as originally written 
were provisions like: How do you handle trade relations with a 
non-market economy (NME)? How do you handle issues like surges? 
And there was a specific provision on that.
    And so while Russia has moved away from the command economy 
market, and in some respects substantially, there remains the 
issue of how we are going to handle those trade relations with 
still two quite different structures; and also, as Mr. Lantos 
has pointed out so well, how we are going to keep very mindful 
the need for Russia to improve, to continue to improve its 
human rights approaches.
    So I think those are challenges that are not identical, and 
we need to find a way to address both sets of concerns. And I 
am hopeful we can do that. I don't think we will do it by 
ignoring either of them, but essentially by finding ways to 
meaningfully address them.
    So I don't think there is a difference of opinion about the 
need to respond to the changes that are going on in Russia and 
to encourage them and build stronger relationships. The 
question is the structures within which that occurs. And in 
doing so, I think we have to remember the original purposes of 
the 1974 Act as well as the thrust of Jackson-Vanik, which has 
had true success.
    Thank you.
    Chairman Crane. Thank you.
    Mr. Becerra.
    Mr. Becerra. Thank you, Mr. Chairman. Thank you to our two 
friends and colleagues for their testimony, and I think for the 
most part you are going to find that Members on this 
Subcommittee agree with the central focus of the two comments 
that Russia has certainly made some progress and certainly all 
of us would love to see it graduate from the Jackson-Vanik 
restrictions.
    I would like to ask a question--oh, before I say that, Mr. 
Lantos, you mentioned in your testimony, written, at least, 
that perhaps Mr. Vanik and the widow of Congressman Jackson 
should perhaps be invited to attend any ceremonies that might 
take place when President Bush visits Russia and President 
Putin. And I would also suggest that--perhaps you were a little 
too modest, and I would suggest that perhaps Congressman Lantos 
also be invited by President Bush to attend because, if there 
has been a champion since 1974 on some of these issues, 
especially for Soviet Jewry in Russia and the greater Soviet 
empire at the time, it was certainly Tom Lantos. So I would 
hope that you would not neglect to add the name Tom Lantos, if 
you should write any letter urging the President to invite some 
important Americans to visit the country with him.
    I would like to touch on one particular point. Recently, 
the Russian Duma passed some labor reform laws, and from what I 
can tell, it appears that those changes may have actually 
weakened the rights of individual workers and perhaps made it 
more difficult for collectively workers to enforce their rights 
and have a position, an equal bargaining or as close to an 
equal bargaining position vis-`-vis the employers. And I am 
wondering if either of you would like to comment on whether or 
not the administration should receive legislation from this 
Congress that would graduate Russia which includes some 
specific language that details what we would like to see Russia 
do with regard to human rights and, within that, labor rights.
    Mr. Lantos. Let me first commend you, Congressman Becerra, 
for raising this issue. I think the changes in what used to be 
the Soviet Union and is Russia today are nothing short of 
cataclysmic. And I certainly didn't expect in my lifetime to 
see the implosion of the Soviet Union and to see the initially 
embryonic but increasingly more and more robust development of 
democratic institutions in Russia, with perhaps the single 
exception of the media.
    I fully agree with you. I think it is remarkable what the 
Russians have done, but I think it is also important for us to 
realize that, given the czarist tradition of centuries and the 
Soviet tradition of 70 years, a democratic society is a long 
ways from functioning in the Soviet Union. Therefore, whatever 
we can do to specifically strengthen labor rights in addition 
to human rights and religious freedom in this legislation and 
to make it part and parcel of the monitoring process that I 
suggested to Dr. Condolezza Rice, the establishment of an 
informal forum on human rights should also include the 
observance of labor rights. I fully agree with your comments.
    Mr. Becerra. Thank you.
    Mr. Cox. If I might just add, I think the main point has 
been expressed by several here--Representative Levin, yourself, 
Mr. Lantos, perhaps others before I arrived. It is a very 
simple thing. Russia today is no longer a Communist country. It 
is not a police state. It is not the ``prison of nations,'' to 
use Lenin's words, that it once was. That is not, however, to 
say that it doesn't have all sorts of transitional issues as it 
seeks to accomplish what has never been accomplished before, 
transition from such a Communist police state, an empire, into 
a nation and indeed a neighborhood of nations that are free and 
democratic.
    The free press remains in question in Russia. Transparency 
in regulation hasn't yet been achieved. Private property rights 
remain in question. Labor rights remain in question and so on. 
And all of these things deserve the attention of Russia's 
leaders and our own.
    The framework within which those attentions are paid, 
however, should be a framework that is similar in every major 
respect to that applied to our other friends and allies around 
the world, many of whom have human rights issues. And it is 
this unique distinction that Russia still labors under, which 
was manufactured not for it but for the Soviet Union that we 
seek to repeal here today.
    Mr. Becerra. I thank you for your comments. Mr. Chairman, I 
thank you for the time. I just want to make sure I add this 
last caveat.
    When we talk about labor rights and what we would like to 
see done, certainly I think all of us recognize the progress 
that Russia has made and the Russian Federation has made, and I 
don't think any of us are wishing to impose upon Russia or 
anyone else our standards or what we believe. But certainly 
there are some core labor standards that exist internationally 
that we can all agree upon that we can all try to meet, and I 
think we speak in terms of what is internationally recognized 
as the rights of workers and certainly work with Russia in 
regards to that, and hopefully we do see something in the 
legislation itself, the language of the legislation to address 
those concerns.
    Thank you, Mr. Chairman.
    Chairman Crane. Thank you.
    Mr. Cardin.
    Mr. Cardin. Let me thank both of our colleagues for their 
excellent testimony.
    Mr. Lantos, I particularly want to thank you for bringing 
out the history of Jackson-Vanik, that it is more than just the 
emigration of Jews, that it is one of the finest hours in the 
history of our Nation as we led the world in saying that if you 
want to do normal business with the United States, there are 
certain minimum human rights standards that you must adhere to. 
And the United States has sometimes been alone in this battle. 
There are a thousand reasons you can come up with why you 
shouldn't use trade or economic issues when you are dealing 
with human rights issues. It seems like that for the rest of 
the world human rights has always been at the bottom on the 
list of those issues that are important. And you have stood for 
the importance of human rights in dealing with the United 
States, and I really applaud you throughout your entire career 
for making that the highest priority.
    We use other mechanisms. We used in South Africa direct 
sanctions, and it worked. And the rest of the world said it 
wouldn't, and it did. And they finally joined us.
    So I guess one issue that I want to ask you about is, as we 
start to graduate nations from Jackson-Vanik and grant 
permanent normal trade relations, I would hope that we would 
have an affirmative policy in this country to say that there 
will be other ways in which we will use U.S. economic presence 
to make sure that basic human rights standards are adhered to 
by nations that want to trade or do business with the United 
States. And I just really wanted you to comment on that. I hope 
that we don't mean by the graduation from Jackson-Vanik that 
that is the end of the U.S. interest on human rights records if 
you want to do normal business with the United States.
    Mr. Lantos. Well, first, let me thank you for your 
comments, Congressman Cardin.
    I fully agree with you. I think the proposal that I made to 
Dr. Rice is a modest, reasonable, and readily acceptable 
proposal. I do not believe that there is any objection on 
Russia's part to accepting this proposal. As a matter of fact, 
the democratic forces in Russia welcome informal monitoring and 
the establishment of binational commissions that deal with 
these issues.
    It is clearly in the best interests of the Russian people 
for us to continue to observe how human rights are respected in 
Russia. My feeling is that with very little good will on all 
sides, the criteria and the conditions that we outlined to the 
National Security Adviser can be incorporated in this 
legislation.
    I very much hope that President Bush and President Putin 
will have a festive meeting in Moscow when Jackson-Vanik is 
recognized as a great achievement which has succeeded in 
accomplishing its goals. But I think it would be a very serious 
oversight on our part if we would merely sweep under the rug 
the need for continuing monitoring and continuing discussion 
with our Russian friends on these issues.
    Mr. Cardin. Well, I certainly agree with your position, and 
I look forward to working with you and hopefully we can resolve 
this issue in an amicable way.
    Thank you, Mr. Chairman.
    Mr. Lantos. Thank you very much.
    Chairman Crane. I want to express appreciation to both of 
our distinguished colleagues from California for making their 
presentations today. And with that, you are relieved of further 
duties. We thank you.
    I would now like to invite our second panel: the Honorable 
Peter Allgeier, Deputy U.S. Trade Representative (USTR); and 
the Honorable Alan P. Larson, Under Secretary for Economic, 
Business, and Agricultural Affairs, U.S. Department of State.
    Gentlemen, if you will take your seats and proceed in the 
order I introduced you, and try and keep your oral testimony to 
5 minutes or less. Those little lights give you a green light, 
yellow light, and red light. All written statements, though, 
will be made a part of the permanent record.
    And with that, Ambassador Allgeier, you may proceed.

  STATEMENT OF THE HON. PETER ALLGEIER, DEPUTY UNITED STATES 
                      TRADE REPRESENTATIVE

    Mr. Allgeier. Thank you very much, Mr. Chairman, and thank 
you, Congressman Levin and the other Members of the 
Subcommittee, for inviting me to testify today on this 
important subject of termination the application of Jackson-
Vanik to Russia. I will summarize my testimony and ask that the 
full testimony be submitted for the record.
    The United States certainly has begun a new era in its 
relations with Russia. Whether in the realms of security or 
foreign policy or economics, President Bush has emphasized the 
need to move beyond Cold War strictures and stereotypes. As he 
said in November during his meeting with President Putin, 
``we're working together.  .  .  . to establish a new spirit of 
cooperation and trust'' and working together ``to make the 
world more peaceful.''
    As a concrete manifestation of this new relationship and 
moving beyond the outdated stereotypes, the President has urged 
the Congress to end Jackson-Vanik's application to Russia. In 
the first instance, the amendment has served its purpose. 
Russia has been in full compliance with Jackson-Vanik's 
emigration provisions since 1994. Second, continued application 
of Jackson-Vanik will impede our efforts to work together 
because it will be an indication to Russia that they continue 
to be suspect and viewed almost as a Cold War adversary.
    I will focus, Mr. Chairman, on the economic front. There 
the Russians have made great strides in reforming their 
economy. A key part of Russia's broader economic reform program 
is achieving the standards that are necessary for membership in 
the World Trade Organization, and I would like to emphasize it 
is not just Membership; it is achieving the standards, the 
requirements, and adhering to the obligations that are 
necessary for Membership.
    President Putin has made WTO Membership and integration 
into the global trading system a top priority. We, of course, 
support Russia's efforts to promote economic reforms, to 
establish the rule of law in commerce, and to adopt and enforce 
the WTO commitments for a more open economy.
    Let me add quickly that as we intensify our efforts to work 
with Russia on WTO accession, this does not mean that we will 
welcome Russia's entry into the WTO on just any terms. We are 
negotiating intensively and aggressively with Russia to 
increase market access for U.S. exports--manufactured goods, 
agricultural products, and services--and we will work with the 
other Members of the WTO and, of course, with Congress to 
ensure that the Russian Government implements the many rules of 
the WTO.
    Recently, the WTO produced the initial text of a draft 
Working Party report on Russia's accession. This is an 
important step forward in Russia's WTO accession process, and 
it provides the framework for recording Russia's progress in 
adopting the WTO provisions and making the changes in its 
domestic laws and regulations that are required to adhere to 
those provisions, and for identifying the areas in which 
additional work is needed, and for resolving those issues. So 
this is the framework in which the countries proceed with the 
accession process in the WTO.
    This report was circulated April 2nd. We are reviewing it 
carefully, and all the Members of the Working Party will 
convene in late April to have an initial reading, a first 
reading of this, and to provide an assessment, an initial 
assessment of what more Russia needs to do with its laws and 
its other measures to come into compliance with the WTO.
    We have been consulting regularly with Congress throughout 
Russia's WTO accession. This is a formula that has proven 
successful in the past in other accession negotiations. We look 
forward to continuing to consult closely with the Congress and, 
in particular, with this Subcommittee as we go through the 
accession negotiations and the process of drafting Russia's WTO 
protocol and its other commitments.
    Obviously there has been growing attention by the Congress 
and by domestic interests, economic interests in the United 
States with the accession process, particularly, I would say, 
by the agricultural community, but not exclusively. As we have 
conducted our consultations with the Congress and with the 
domestic economic interests, we believe even more strongly that 
we have a common view of the objectives for our accession 
negotiations.
    In agriculture, let me say that these objectives are shared 
not just by the Congress but also by many of our trading 
partners who are active in the accession process: Australia, 
Canada, Argentina, Brazil, and New Zealand, for example.
    In agriculture, we are pursuing commitments on market 
access, on sanitary and phytosanitary (SPS) procedures, on 
limiting agricultural support, and also ultimately eliminating 
export subsidies.
    Let me mention the area of food safety and SPS. It is 
extremely important that these measures not be used for 
protectionist purposes. We attach great importance to resolving 
these issues in the course of accession and issues that we 
encounter in the meantime. We have a real-life example of the 
importance we attach to this. Unfortunately, Russia has failed 
to date to eliminate the ban on poultry and poultry products. 
We believe very strongly that we are in compliance with the 
standards of food safety. We have worked very hard at extremely 
high levels, at the Cabinet level, and the President has 
emphasized the importance of resolving this immediately. Our 
team is in Russia even today working to resolve that as quickly 
as possible.
    Additional negotiations in the WTO obviously involve access 
for manufactured goods. Among the areas that we are working on 
particularly are civil aircraft, fertilizer that you mentioned, 
Mr. Chairman, in your statement, construction equipment, and 
also in services, important services such as financial 
services, telecommunications, and distribution. I should also 
mention intellectual property is an important objective.
    So we intend to obtain the highest level of commitments 
from Russia with respect to the adoption of WTO rules, 
guarantees of meaningful market access in goods and services, 
and enforcement of the rule of law in trade.
    I want to mention that the rule within the WTO is 
consensus, and the Russians will need to obtain the consensus 
of all the Members, including the United States, in order to 
have a successful protocol of accession. That ensures that our 
concerns not only will be heard, but that we have sufficient 
leverage to resolve the full range of issues presented by 
Russia's trade regime.
    We look forward to working, as I said, with the Congress as 
we move to complete this process, and we believe that ending 
the application of Jackson-Vanik will provide increased 
momentum to Russia's broad economic reform program and will 
encourage Russia to make the changes necessary to join the 
international trading community.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Allgeier follows:]
   Statement of the Hon. Peter Allgeier, Deputy United States Trade 
                             Representative
    Ambassador Robert Zoellick has said in previous testimony before 
this Committee, and as my colleague Under Secretary of State Alan 
Larson emphasized this morning, the United States has begun a new era 
in its relations with Russia. Whether in the realms of security, 
foreign policy, or economics, President Bush has emphasized the need to 
move beyond Cold War strictures and stereotypes. As the President said 
in November during his meeting with President Putin, ``we're working 
together to break the old ties, to establish a new spirit of 
cooperation and trust so that we can work together to make the world 
more peaceful.''
    To close out the history books of the Cold War, the President has 
urged the Congress to finally end Jackson-Vanik's application to 
Russia. The Jackson-Vanik Amendment was drafted twenty-eight years ago 
to bring about free emigration. We believe that the Amendment has 
served this purpose in Russia--Russia has been in full compliance with 
Jackson-Vanik's emigration provisions since 1994. Continued application 
of Jackson-Vanik, however, is an indication to Russia that they 
continue to be suspect and viewed as a Cold War adversary.
    On the economic front, the Russians have made great strides, as 
they work to significantly reform their economy. A key part of Russia's 
broader economic reform program is achieving membership in the World 
Trade Organization (WTO). President Putin has made WTO membership and 
integration into the global trading system a top priority, seeing this 
as part of Russia's economic reform program that is aimed at achieving 
sustainable growth, promoting high-tech industry, attracting 
international investment, and raising living standards for the Russian 
people. These efforts need to include action by the Russian Duma to 
establish an effective legal infrastructure for their economy as well 
as commitments that establish the parameters of liberalized market 
access in Russia for imported goods and services. USTR has been 
actively engaged in Russia's negotiations to join the WTO. We will 
continue to support Russia's efforts to promote economic reforms, 
establish the rule of law, and adopt WTO commitments for a more open 
economy.
    Of course, intensifying our efforts to work with Russia on WTO 
accession does not mean that we will welcome Russia's entry into the 
WTO on any terms. We are negotiating with Russia to increase market 
access for U.S. exports--in goods, services and agriculture--and we 
will work with other WTO members and the Congress to ensure that the 
Russian Government implements the many rules of the WTO. Russia must 
follow through with its stated plans to make comprehensive changes to 
its legal and regulatory system in a number of areas--standards, 
customs practices, sanitary and phytosanitary measures, and protection 
of intellectual property. Some of these changes are already underway, 
but it is up to the Russian Government to pass new laws and ensure that 
the laws in place are fully enforced in a manner consistent with the 
international trading system.
    Last fall, responding to Russia's efforts to adopt the rules of the 
WTO and liberalize its trade regime, WTO members decided to produce an 
initial text of a draft Working Party report on Russia's accession. 
This is an important step forward in Russia's WTO accession process and 
will provide a framework for recording Russia's progress in adopting 
WTO provisions and for identifying areas in which further work is 
needed. This draft report was circulated to WTO members on April 2, and 
we are in the process of reviewing it very carefully. Later this month, 
we and other members of the Working Party will meet at the WTO for a 
``first reading'' of this draft and for an initial assessment of what 
more needs to be done to bring Russia's laws and other measures into 
compliance with the rules of the WTO. Over the upcoming months, we will 
be working with the Russian Government--in cooperation with the EU and 
our other WTO counterparts--to establish and record the areas in which 
Russia has implemented WTO rules and to identify and address the 
remaining outstanding issues in Russia's draft Working Party report. We 
have been consulting regularly with Congress throughout Russia's WTO 
accession, and we look forward to continuing to consult closely with 
the Congress and this Committee in particular throughout the accession 
negotiations and the process of drafting Russia's Working Party report.
    Since we began work on Russia's accession, we have maintained open 
communication with you and with the full range of U.S. interests. I 
believe that we have a good track record in working with you in the 
development of our negotiating positions on all WTO accessions. Our 
experience with Russia is no exception.
    Over the past few months there has been increased attention by the 
Congress and certain domestic economic interests, in particular the 
agricultural community, regarding Russia's WTO accession negotiations. 
We have met with the agricultural community on several occasions over 
the past few months to discuss the various agricultural issues involved 
in these negotiations. These meetings have left us with an even 
stronger conviction that we share a common view of the objectives for 
agriculture in these negotiations. It is worth noting that many of the 
issues of interest to our agricultural community are shared, not only 
by the broader U.S. trade community, but by a number of Russia's other 
trading partners as well, e.g., Australia, Canada, Argentina, Brazil 
and New Zealand.
    As with other WTO accession negotiations, in Russia's case we are 
seeking commitments that will provide meaningful market access 
improvements for U.S. agricultural and food products and that will 
address the unjustified use of food safety or other non-tariff measures 
as barriers to trade. These efforts support Russia's broad internal 
program to reform its agricultural sector along market principles.
    We have also been engaged in intensive negotiations with Russia on 
tariff and non-tariff market access for industrial goods and services. 
While we have made some progress in these negotiations, we continue to 
consult closely with our industry advisors and Congressional staff on a 
full range of issues, including in areas such as civil aircraft, 
fertilizer and construction equipment. In the services area, we are 
continuing to push hard for increased access in telecommunications, 
distribution and financial services.
    Every Administration since the inception of the WTO has had a good 
track record of setting the highest standards for new entrants to the 
WTO. We intend to continue to seek the highest level of commitments 
from Russia with respect to the adoption of WTO rules in its trade 
regime, the provision of guarantees of meaningful market access in 
goods and services, the establishment of limits on agricultural 
supports, and the enforcement of the rule of law in trade. The 
requirement that we and other WTO members reach a consensus on the 
terms for Russia's WTO accession guarantees that our concerns will be 
heard.
    We would like to work with you to continue to move our relationship 
with Russia into a new and more cooperative era. Ending application of 
Jackson-Vanik will provide increased momentum to Russia's broad 
economic reform program. It will send a positive message at a moment 
when Russia is poised to make changes necessary to join the 
international trading community.

                                

    Chairman Crane. Thank you, Mr. Allgeier.
    Mr. Larson.

   STATEMENT OF THE HON. ALAN P. LARSON, UNDER SECRETARY FOR 
 ECONOMIC, BUSINESS, AND AGRICULTURAL AFFAIRS, U.S. DEPARTMENT 
                            OF STATE

    Mr. Larson. Mr. Chairman, Mr. Levin, and respected Members 
of the Subcommittee, it is a great honor to be here. The reason 
I am here today is because President Bush and Secretary Powell 
strongly support ending the application of Jackson-Vanik to 
Russia.
    Our relations with Russia no longer can be seen as a legacy 
of the Soviet Union. President Bush and President Putin are 
building a new relationship based on cooperation and shared 
interests. Breaking with the patterns of the past, President 
Putin has taken steps that have enhanced our own security, 
moved Russia closer to a market economy, and reaffirmed 
Russia's commitment to respect human rights and basic freedoms.
    We also need to break with the patterns of the past. We 
need to demonstrate that we are ready to work with Russia as an 
equal partner, and the time has come to end Jackson-Vanik's 
application to Russia.
    The Jackson-Vanik's original goal focused on promoting free 
emigration from the Soviet Union, and Jackson-Vanik achieved 
that goal, in large part because of the moral authority of our 
position. Since 1973, more than half a million refugees, many 
of them Jews, evangelical Christians, and Catholics, have 
emigrated to the United States, and in that same period, more 
than 1 million Jews have emigrated to Israel.
    In the strategic and foreign policy arena, we are on the 
threshold of a new relationship. For example, President Putin 
has offered broad, strong, and tangible support for the war on 
terrorism. President Putin has accepted our offer to reduce 
operationally deployed nuclear weapons to between 1,700 and 
2,200. He has opened the way to a closer, North Atlantic Treaty 
Organization, NATO-Russia relationship. He has closed the 
intelligence facility at Lourdes, Cuba, and the military base 
at Cam Ranh Bay, Vietnam. He has been working with us to try to 
quell tension in the Middle East and create lasting peace in 
the Balkans. Just yesterday, the Foreign Minister of Russia 
joined the Secretary-General of the United Nations and the 
leaders of the European Union (EU) in expressing support for 
Secretary Powell's mission in the Middle East.
    President Putin has also been carrying out a series of 
economic reforms, and we are actively working with the Russian 
Government to accelerate and deepen them in order to bring 
greater prosperity to the Russian people, open new 
opportunities for American traders and investors.
    Russia is committed to fulfilling the accession 
requirements of the WTO, and we are committed to ensuring that 
Russia does not enter the WTO until it has met these admission 
requirements.
    In watching Russia move away from the Soviet era, we have 
witnessed a revival of religious life, marked by the 
restoration of synagogues, churches, and religious schools. 
President Putin has stated that Russia is a multi-ethnic state 
in which the right of all must be protected, and he has 
declared that while anti-Semitism may still exist, there is no 
justification for it, nor can there be.
    As Mr. Lantos indicated, over the last 13 years very, very 
significant progress has been made on human rights. Ending 
Jackson-Vanik's application to Russia will not end our ongoing 
dialog on human rights. As President Bush stated, ``My 
Administration is fully committed to work with Russia to bring 
about progress in human rights, including safeguarding of 
religious liberty, enforcement of hate crime laws, and the 
restitution of religious community property.'' And I can report 
that progress is being made on the return of religious and 
communal property.
    Among the areas where more work needs to be done is on 
Russia's new labor code. While it has some positive elements, 
we are pushing for further revisions that would increase the 
democracy, transparency, and accountability of labor relations 
in Russia.
    Mr. Chairman, the Soviet era has ended. Russia has been in 
compliance with Jackson-Vanik since 1994. Ending Jackson-
Vanik's application to Russia is the right thing to do, and now 
is the right time to do it.
    Thank you.
    [The prepared statement of Mr. Larson follows:]
  Statement of the Hon. Alan P. Larson, Under Secretary for Economic, 
      Business, and Agricultural Affairs, U.S. Department of State
    Mr. Chairman, Congressman Levin, respected Committee members, I am 
delighted to be here today with my colleague Peter Allgeier from USTR. 
The President and Secretary Powell urge and deeply appreciate your 
support for terminating the application of Jackson-Vanik amendment of 
the 1974 Trade Act to Russia.
    After the end of the Soviet Union, much of our relationship with 
Russia was colored by the Soviet legacy. Gradually that legacy has 
passed and today only a bits and pieces of it remain. This 
Administration recognizes that a new relationship is taking shape: a 
relationship that is expanding cooperation between our two countries, 
enhancing our national security, supporting further development of the 
market economy in Russia, and strengthening democracy and human rights 
protection.
    As Secretary Powell has said, the Administration has made 
remarkable progress in developing a new relationship with Russia. 
Russia has taken significant steps before and since September 11 to 
strengthen ties with the West and assist the U.S. in many critical 
areas. We need to affirm that President Putin has made the right 
decisions in pursuing a partnership with us.
    Russia has come very far forward since the fall of the Soviet 
Union. It is no longer the enemy, the President reminds us. As we put 
the relics of the Cold War behind us, the President strongly urges 
Congress to graduate Russia now from Jackson-Vanik.
    This amendment was created to bring about free emigration in the 
Soviet Union and foster broader human rights reforms with Russia. That 
objective has been accomplished. Jackson-Vanik also began a process 
which elevated human rights to an integrated element of our foreign 
policy. Graduating Russia from Jackson-Vanik now is the right thing to 
do.
    Terminating Jackson-Vanik's application to Russia will bolster a 
new political, strategic and economic bilateral relationship.
    President Bush wants to send President Putin a signal is that the 
United States is a reliable partner. In Washington last fall, the 
President expressed to President Putin his commitment to work with the 
Congress in seeking Russia's graduation from Jackson-Vanik. We believe 
now is the appropriate time to take this step, and we ask for your full 
support.
Emigration
    The principal goal of the Jackson-Vanik legislation in 1974 was to 
promote free emigration from the Soviet Union, particularly for Soviet 
Jews.
    We do not forget the oppression of Soviet citizens-including 
religious minorities. In the spring of 1972, the Soviet government 
imposed an ``education tax'' on would-be emigrants. This tax was so 
steep that few could afford to depart the Soviet Union. It was against 
this background that Senator ``Scoop'' Jackson teamed up with 
Congressman Charles Vanik to attach their historic amendment to the 
1974 Trade Act. Jackson-Vanik has been a tremendous success. 
Restrictions on emigration from Russia have ended. Today, the Russian 
Constitution grants the right to Russian citizens to emigrate. This 
right is readily exercised.
    Since Jackson-Vanik came into effect in 1975, 573,000 refugees--
many of these Jews, evangelical Christians and Catholics--have 
resettled from the Soviet Union to the United States. Since the passage 
in 1989 of the Lautenberg Act, almost 235,000 Jews from the Soviet 
Union and its successorstates have resettled in the United States. 
Today, the Russian Jewish community in the United States numbers 
between 750,000 and 1 million, though some estimates are twice as high. 
Since 1975, another one million Russian Jews have immigrated to Israel.
    In perhaps one of the most telling reversals of political fortune, 
Natan Sharansky--once a ``refusenik'' imprisoned by Soviet 
authorities--has, as one of Israel's Cabinet Ministers, met with 
President Putin in Moscow. Sharansky himself now favors terminating the 
application of Jackson-Vanik to Russia.
    The only emigration restrictions that remain today in Russia relate 
to those who have had access to state secrets. Russian legislation 
permits delays of up to five years, with the possibility of a five-year 
extension, on those with access to classified material. This law, 
however, has been applied only in a small number of cases. Moreover, 
Russian legislation provides for an appellate process; that process has 
found in favor of the emigre in the large majority of cases.
    Let me turn to the broader context of U.S.-Russian relations.
Strategic and Foreign Policy
    We are building a new bilateral relationship with Russia. President 
Putin has willingly reversed former Soviet (and early post-Soviet) 
positions. He has chosen a course designed to make Russia a leading and 
responsible part of the international community. The active nature of 
U.S.-Russian cooperation over the past few months would have been 
unthinkable at the time of the 1974 passageof the Jackson-Vanik 
Amendment.
    Under President Putin, Russia has:
           Offered extensive support in the global campaign 
        against terrorism: information-sharing, overflight clearance 
        for U.S. aircraft, and search and rescue assistance. Contrary 
        to what many Western analysts would have predicted, President 
        Putin has posed no objections to the stationing of U.S. forces 
        in Central Asia or a U.S. ``Train and Equip'' program for 
        Georgia to fight terrorism.
           Accepted our offer of parallel reductions in 
        operationally-deployed nuclear warheads to the lowest levels in 
        decades: down to between 1,700 and 2,200.
           Accepted our decision to move beyond the ABM Treaty 
        and demonstrated more openness to our arguments on missile 
        defense.
           Opened the way to a closer NATO-Russia working 
        relationship, and dropped past strident Russian objections to 
        NATO enlargement.
           Coordinated with us and closely supported the U.S. 
        position on the Middle East.
           Announced the closing of Russia's massive 
        intelligence facility at Lourdes, Cuba and withdrawal from the 
        Cam Ranh naval base in Vietnam.
           Cooperated with us in the Balkans as we continue 
        efforts to promote a lasting settlement and stable, democratic 
        development.
           Maintained dialogue with us on Iraq, opening the way 
        for UN Security Council agreement on a Goods Review List to 
        streamline and make more effective the sanctions regime.
           Sustained oil production despite pressure from OPEC 
        to make cuts and boost prices, thus helping to sustain a 
        moderate global price.
Economy
    In the economic sphere, we also enjoy a dynamic, productive 
relationship with Russia. The relationship stands in stark contrast to 
what existed during the Soviet period. But key economic reformers are 
under fire from some in Russia who do not understand the wisdom of 
integrating into the global economy; these reformers look for our 
support.
    We believe President Putin is committed to meaningful economic 
reform, and we are engaged actively to help Russia to accelerate and 
deepen its reforms. Those reforms will promote stability and prosperity 
for the Russian people--objectives very much in the U.S. national 
interest--as well as open new markets for U.S. business and create a 
more attractive climate for U.S. investors.
    Let me illustrate some of the changes in the economic situation in 
the past decade.
    President Putin has recognized that small and medium size 
enterprises (SMEs) are a key source of growth and employment, and has 
publicly committed to create conditions that allow SMEs to flourish, 
many spurred by American training or American partners.
    Russia welcomes joint ventures and other investments by non-Russian 
firms. Although foreign direct investment (FDI) in Russia is 
proportionately low compared to many other countries, it is beginning 
to grow and American firms account for the leading share, 35 percent, 
of total cumulative FDI.
    Americans have invested in Russia in a range of economic sectors 
throughout the regions of Russia. For example, Ford Motor Company is 
investing $150 million to produce the Focus car chassis in Leningrad 
oblast.
    General Motors is investing $330 million dollar to build the Niva 
sport utility vehicle under the Chevrolet name.
    Lockheed Martin, Boeing, and United Technologies are among those 
expanding cooperation and coproduction with Russia's aerospace 
industry.
    The Caspian Pipeline Consortium, led by Chevron Texaco and Exxon 
Mobil, has built the one thousand mile-long Tengiz-Novorossiysk 
pipeline investing some $2.2 billion in Russia.
    Exxon Mobil has announced a $4.7 billion commitment to Phase-I 
development of the Sakhalin-I offshore project which could total $12 
billion.
    The U.S.-Russia Business Dialogue initiated at the June 2001 Summit 
and the Banking Dialogue have brought together leading American and 
Russian private-sector managers to make recommendations on how to 
changes laws and regulations which hamper trade and investment, and 
ways to strengthen the rule of law. The recommendations developed by 
these business leaders will be presented to President Bush and 
President Putin for consideration and action.
WTO Accession
    I defer to Ambassador Allgeier to discuss Russia's efforts and 
progress on WTO accession. It is clear that Russia still has a great 
deal of work to do and will not accede precipitously to the WTO. 
Nevertheless, I believe that we have the ability--given Russia's 
commitment to reform, our new partnership with Russia and the personal 
relationship established between Presidents Bush and Putin--to work 
through WTO accession issues and resolve other trade problems 
effectively with Russia, to the benefit of American farmers, workers, 
consumers, and investors.
    Trade issues arise, as they do with all countries. With Russia, our 
much stronger political relationship now strengthens our ability to 
resolve them in a constructive, cooperative and businesslike fashion. 
This has been the case in addressing our concerns on steel and those of 
Russia on poultry.
Human Rights/Religious Minorities
    Since the end of the Soviet Union, we have sought a relationship 
with Russia based on shared values. Among these is a fundamental 
respect for human rights. We still have significant concerns about 
human rights issues in Russia, but clearly, Russia has shed the worst 
features of the Soviet past.
    Personal freedoms, such as freedom of religion, assembly and 
speech, have expanded greatly. And reforms continue. Recently enacted 
Russian legislation will--when implemented--limit the power of 
prosecutors, mandate jury trials throughout the country and create a 
more adversarial judicial process, as well as strengthen the 
independence of the judiciary. We will remain watchful that these gains 
are not rolled back. We will work with Russia--its government and its 
people--so that the expansion of personal freedoms continues and the 
legal mechanisms meant to protect human rights are strengthened.
    While further progress is necessary, much already has been 
achieved:
    We have witnessed a revival of religious life and traditions 
throughout Russia. Even with current problems, Russia is freer than at 
any time in history.
    There is a renaissance of synagogues and religious schools, whether 
Hasidic, traditional Orthodox or Reform. President Putin has reached 
out to the Jewish Community and spoken out against anti-Semitism, 
declaring that Russia is a multiethnic state where the rights of all 
must be protected. Across all faiths in Russia, there has been 
progress, which we are working to expand further, in the return of 
religious and communal property.
    President Putin and others in his government have reaffirmed their 
commitment to uphold legal and regulatory provisions throughout Russia 
to safeguard religious freedoms. In his recent Rosh Hoshannah message 
to the Jewish Community, President Putin wrote ``Unfortunately, we 
still encounter some manifestations of anti-Semitism. There is no 
justification for them, nor can there be.''
    And, as Foreign Minister Ivanov wrote in his November 13th letter 
last year to Secretary Powell, ``The fundamental objectives of our 
policies are to ensure personal freedom, prevent intolerance based on 
race, religion and ethnicity.'' Foreign Minister Ivanov reaffirmed 
Russia's commitment to continuing its efforts to transfer religious 
property in accordance with existing Russian laws.
Conclusion
    There is no doubt that Jackson-Vanik has been a successful tool to 
help Soviet citizens win the opportunity to escape from Soviet 
repression.
    But that Soviet era, marked by repression and denial of basic 
freedoms, is over. Russia has been in compliance with the statutory 
Jackson-Vanik emigration provision for almost ten years. Graduating 
Russia now is the correct and logical step to take.
    The communities that long sought these changes in Russia and had 
previously opposed action on Jackson-Vanik now agree that it is time to 
acknowledge Russia's efforts and end the application of this statute.
    In 1974, Jackson-Vanik was aimed in part at pressing the Executive 
Branch to address emigration and other human rights issues. Successive 
U.S. Administrations have integrated human rights issues into every 
aspect of our foreign policy dialogue with Russia and with other 
nations. Ending Jackson-Vanik's application to Russia does not end our 
dialogue on human rights issues or weaken our determination to express 
our concerns about any problems. But doing so will mark the success in 
reinforcing that freedom of movement, including emigration, is a 
fundamental right.
    President Bush has reaffirmed this Administration's commitment to 
broad human rights and religious freedom principles on numerous 
occasions. He has pledged that the Administration will continue to work 
with Russia to help freedom and tolerance become fully protected in law 
and to safeguard religious liberty.
    We will continue to engage in an active dialogue with Russia on 
civil liberties and religious freedom issues and we will report 
regularly to the Congress on these issues. Our bilateral assistance 
effort in Russia includes programs that promote democracy and promoting 
civil liberties. Through the Department and our Embassy and consulates 
in Russia, we are in touch with human rights advocates across Russia 
and the United States to stay informed of the states of human rights in 
Russia.
    It is strongly in our interest to buttress the effort of reformers 
in Russia and to give encouragement to President Putin as he continues 
in pursuit of difficult reforms, often against domestic opposition. We 
all want Russia to maintain its forward momentum.
    Graduation from Jackson-Vanik offers us an opportunity to commend 
the deep changes taken by Russia and to demonstrate our ongoing support 
to President Putin and his reform team. We ask that you join the 
President in acknowledging this new bilateral relationship we enjoy and 
graduate Russia from Jackson-Vanik now.
    Thank you for your attention.

                                

    Chairman Crane. Thank you, Mr. Larson.
    Ambassador Larson, I would like to ask you a question about 
the political motivations that are prompting the push for PNTR 
for Russia now. Will that not possibly give some pressure for a 
quick completion of Russia's WTO accession?
    Mr. Larson. Mr. Chairman, I don't think it does create that 
pressure. As Ambassador Allgeier indicated, there is a process 
in the WTO that is, first of all, based on consensus.
    Second, we are committed to making sure that the WTO 
standards and the interests of our constituencies are upheld as 
the accession process proceeds.
    Third, we do believe that the Russian Government itself 
understands that accepting the disciplines of the WTO will 
further the reform efforts that they are trying to promote.
    So I think on all three counts, there is every reason to 
expect that we can be absolutely diligent in making sure that 
there is not undue haste or undue pressure to do this on any 
terms other than commercially appropriate terms.
    Chairman Crane. Mr. Allgeier, on poultry, I want to make 
clear that it will be hard to find support in Congress to 
repeal Jackson-Vanik if Russia continues to play politics on 
that issue. And what is the status of the poultry ban?
    Mr. Allgeier. Well, Mr. Chairman, we certainly understand 
very clearly the first point that you just made, and we have 
conveyed that to the Russians.
    We reached an agreement with Russia at the end of March on 
a memorandum of understanding (MOU) that delineated what would 
constitute compliance with the food safety standards of Russia. 
We invited a Russian team of veterinarians here, took them 
around the country to show them our plants to provide the 
documentation. We believe we have complied with all elements of 
that MOU, and as I mentioned, our team is in Russia now, our 
embassy there, working through those documents with the Russian 
authorities, and we are committed to having that ban lifted 
immediately.
    Chairman Crane. A second question for Ambassador Allgeier. 
We will hear testimony later this morning from one of my 
constituents, Bob Liuzzi. He is with CF Industries based in my 
district in Palatine, Illinois. And Mr. Liuzzi is representing 
the U.S. nitrogen fertilizer industry, and he will focus on 
that industry's concerns with respect to U.S. imports of 
nitrogen fertilizer from Russia.
    Russian nitrogen fertilizer producers benefit from 
government-set, low-priced natural gas that allows them to 
undersell producers from other countries. Mr. Liuzzi says the 
U.S. industry may go bankrupt if it has to wait until Russia's 
WTO accession for the issue to be resolved.
    How is the administration addressing today the legitimate 
economic and trade concerns of this strategic industry?
    Mr. Allgeier. Yes, we met yesterday actually with Mr. 
Liuzzi. That was not the first time that we have met with the 
fertilizer industry of the United States. It is a significant 
and legitimate problem that they face due to the dual pricing 
of energy, specifically natural gas, in Russia. And in terms of 
the short term, we are working with them. There are a number of 
remedies possible under either U.S. law, for example, 
antidumping, but we also have a provision in our trade 
agreement to deal with selective safeguards if there is market 
disruption or a threat of market disruption.
    We are prepared to work with the industry conscientiously 
to find the most appropriate solution to the problem.
    Chairman Crane. Thank you. Mr. Cardin--or, Mr. Levin, I am 
sorry.
    Mr. Levin. Let me yield to Mr. Cardin. He has to go on the 
floor.
    Mr. Cardin. Thank you, Mr. Chairman, and thank you, Mr. 
Levin. I appreciate that.
    Mr. Secretary, I particularly want to compliment the part 
of your testimony where you indicate that, ``President Bush has 
reaffirmed this administration's commitment to broad human 
rights and religious freedom principles on numerous occasions. 
He has pledged that the administration will continue to work 
with Russia to help freedom and tolerance become fully 
protected in law and to safeguard religious liberty.''
    ``We will continue to engage in an active dialog with 
Russia on civil liberties and religious freedom issues and we 
will report regularly to the Congress on these issues.''
    I thank you for those statements. I think they are very 
important.
    Mr. Ambassador, as I was listening to you talk about 
accession to WTO and the fact that it is consensus and the fact 
the United States plays a critical role, and as you ticked off 
all the economic issues that are going to be of concern to our 
country, I didn't hear you mention human rights issues. And I 
think this is an opportunity that we have with WTO accession by 
Russia, not just what we do with Jackson-Vanik but how we 
handle the accession issues.
    There are serious problems that remain in Russia. As you 
have pointed out, as the Administration has pointed out, as Mr. 
Lantos has pointed out, yes, there has been tremendous progress 
made. We understand that. But there is still more progress that 
needs to be made. And Mr. Lantos has made certain suggestions 
as to how we can achieve that in the context of the legislation 
we have before us. But I would hope as we negotiate on the WTO 
agenda that we would be bringing these issues up and asking our 
friends in Russia to resolve these issues to make it easier for 
us to support the accession to the WTO. And I appreciate your 
comments on that.
    Mr. Allgeier. Yes. Well, obviously, the WTO accession 
negotiations and even our other trade negotiations with Russia 
are only one part of our dialog with them, and we work very 
closely with the State Department and the other departments to 
ensure that we are reinforcing the broad message to Russia that 
it is not just economic reform, but it is also continuing 
attention to human rights and other values that we hold high 
that is part of moving forward together.
    Mr. Cardin. Just be a little bit bolder about that. That is 
one of the things that I think Jackson-Vanik speaks to, the 
fact that Congress intended us to link economic issues with 
human rights issues, and use this opportunity to show that the 
United States maintains the highest priorities on human rights 
achievements. I just think that--I understand that sometimes 
these are quiet discussions, but I think some of us would feel 
a little more comfortable if you would highlight these issues 
as we go through some of the economic changes that are 
occurring in Russia.
    Mr. Allgeier. OK. I understand. Thank you.
    Mr. Cardin. Thank you, and I yield back to Mr. Levin, and I 
thank him for yielding to me.
    Chairman Crane. Mr. English.
    Mr. English. Thank you, Mr. Chairman.
    Secretary Larson, this is obviously a very difficult issue 
and one that I think goes to the core of the administration's 
trade policy in the region, which I am interested in, among 
other things, as Chairman of the Congressional Steel Caucus. 
And as part of the broader picture, I would like to ask you a 
question having to do with our recent situation in Europe.
    There have been reports regarding EU threats to retaliate 
against U.S. products in response to the administration's 
recent actions on behalf of the steel industry, in part 
precipitated by conditions in Russia. I find these reports to 
be particularly ironic, given that any retaliation at this 
juncture would clearly violate the rules of the WTO by 
bypassing the dispute mechanism entirely--a strange approach 
coming from some of the strongest apostles of multilateral 
trade policy.
    It is also my understanding that the EU has drawn up a list 
of very sensitive items for possible retaliation. I have 
reviewed that list, and I am very concerned about the rhetoric 
coming out of Europe. Frankly, I think if we are going to have 
a strong trade policy, we need to have a very strong response 
to this situation.
    Mr. Secretary, I want to know what you are telling the 
Europeans on this subject, and what we plan to do should they 
retaliate against us.
    Mr. Larson. First of all, Congressman, we have been working 
very closely with the U.S. Trade Representative's Office to 
explain the reasons for the President's decision. We recognize 
that it is a decision that many in Europe did not want. But we 
have pointed out that it is a decision that was taken after a 
great deal of pressure on and injury to our own industry, after 
following a deliberative process that is in compliance with WTO 
rules, and after looking to make sure that, to the maximum 
extent possible, we were not harming the interests of our 
trading partners.
    We have also pointed out, as you just did, that there is a 
place to talk about differences of opinion of this type, and 
that is in the WTO.
    We agree that in the cases where we have had problems with 
European actions, we have waited until the end of the WTO 
process to impose any sanctions, and we have only done that 
retaliation or the withdrawal of concessions at the time when 
the WTO process was over and Europe had failed to comply with 
any WTO decision. So we agree that if there were a move toward 
retaliation, that that would be not in compliance with WTO 
rules. It would be a strange, unilateral measure for Europe to 
take. And we are working very hard to encourage the Europeans 
to really see this in a more reasonable way and to realize that 
this is an issue that, if they have concerns about it, there is 
a place in which they can bring those up and a process in the--
--
    Mr. English. I am gratified to hear that. I must say I have 
carried the same message to Mr. Lamy when he has visited with 
me. I have carried the same message to some of my counterparts 
in the European Parliament. But having done all of that, there 
seems to be still an extraordinary rhetoric on their part.
    What I am seeking from you is a specific assurance--my 
having worked with USTR, I know they are on the same song 
sheet, that they are putting forward a very strong message. I 
would like the same assurance that the State Department is 
working with USTR and carrying the same strong message that we 
are not going to tolerate the retaliation in this case. Can I 
have that assurance, Mr. Secretary?
    Mr. Larson. Congressman, you definitely do. We are on the 
same sheet of music. I think Ambassador Allgeier and I talk 
about three or four times in an average day about how to make 
sure that our respective activities dovetail so that we are 
sending the same strong message on this issue, as well as on 
others.
    Mr. English. Thank you, and I want to thank both of you for 
the strong position that the administration has taken on steel. 
And, Mr. Chairman, I thank you for the opportunity to have 
posed this question.
    Chairman Crane. Thank you. Mr. Levin.
    Mr. Levin. Thank you. Thank you very much.
    I wanted to start off by indicating, Mr. Larson, Secretary 
Larson, I fully agree with what you have laid out under 
strategic and foreign policy considerations beginning on page 
three. And I hope we keep all of these in mind, including the 
progress in our relations with Russia.
    I do want to talk a bit about the economic issue because 
you also mentioned, Mr. Secretary, that the principal goal of 
the Jackson-Vanik legislation in 1974 was to promote free 
emigration from the Soviet Union, particularly for Soviet Jews. 
That became the main focus of the 1974 Act, though it wasn't 
its original. It related to trade policy, and without in any 
way diminishing the importance--I want to elevate the 
importance of the Jackson-Vanik amendment--I want to go back to 
some of the economic issues and ask the Ambassador, you 
mentioned that there was a Working Group report that has just 
been issued in draft form. Has that been discussed? Has that 
been made available to Members of Congress?
    Mr. Allgeier. I believe it has. If it hasn't, it should be, 
and it will be. Yes, it has been. I am assured that it has 
been.
    Mr. Levin. The full text of it?
    Mr. Allgeier. Yes, the 123 pages of it.
    Mr. Levin. OK. And is there a clear delineation of the 
administration's objectives in the WTO Russian negotiations, 
accession negotiations? Is there an outline of what are 
considered the prerequisites?
    Mr. Allgeier. Yes. We have our objectives that we have 
discussed, of course, with Congress and would be happy to lay 
out for you in writing, if that is something that you would 
like.
    Mr. Levin. I am not sure they have been laid out in writing 
to us, and I would appreciate it if you would do that, because 
let me just say it as clearly as I can what the question in 
this regard is. The way the legislation is now written, 
essentially it would take out any formal role of Congress 
relating to the WTO accession of Russia. That is the effect of 
it. We will be consulted, but there will not be a required vote 
of any kind, because we don't vote on the accession itself. 
Right?
    [The information is being retained in the Committee files.]
    Mr. Allgeier. Right.
    Mr. Levin. And when it came to the important negotiations 
with China, it was the vote on PNTR that became the formal way 
for Congress to be involved.
    Now, one of the issues, for example, relates to section 
406, the surge provision, and when that was waived under the 
so-called Jackson-Vanik PNTR vote, we inserted into the 
legislation, as you know, a replacement for it. So the reason 
for the concern--and it has been more actively expressed on the 
Senate side, but it exists here--is the role of Congress and 
the impact of the elimination of an opportunity for Congress to 
vote.
    So let me ask you this: As you have begun to think of 
Russia's accession--I will use this as just one example, 
because poultry is important and fertilizer is important, but 
we need to look at the overall framework of our economic 
relations. So I am picking out section 406, the surge 
provision, as just one example.
    What would you propose to replace it?
    Mr. Allgeier. OK. First of all, in terms of the role of 
Congress, of course, we take very seriously the necessity, the 
desirability of consulting with you, and, in fact, I believe 
that in the Uruguay round implementing legislation, we are 
required to consult with Congress in the course of WTO 
accession. So there is in that sense----
    Mr. Levin. That is to consult, but while we vote on the 
ultimate agreement in a round, like Uruguay, we have to 
implement it. That isn't true of a WTO accession. So I know 
there is a requirement of consultation, but that has its 
limits. It is different than our having the leverage of a 
formal vote.
    So I am asking you, regarding section 406 specifically, 
what are you suggesting be its replacement with Russia still 
being other than a market economy?
    Mr. Allgeier. Two comments. First of all, specifically with 
respect to the selective safeguard provision that section 406 
provides in our domestic law, we, of course, have the trade 
agreement which would be in place until we have WTO accession. 
At that point we still--we will have to explore with Russia and 
our other trading partners who have the similar concerns to the 
ones you have raised whether it would be appropriate to have 
some sort of safeguard provision as part of their accession.
    Mr. Levin. You haven't explored that yet?
    Mr. Allgeier. Oh, yes, we have.
    Mr. Levin. And where are those explorations?
    Mr. Allgeier. Well, we are still looking at what would be 
most appropriate. We are in a fairly initial stage of the 
negotiations with Russia in the sense that we have this first 
Working Party report, and that will inform both us and the 
Russians, and our trading partners, of what needs to be done 
before they join the WTO. So that is one area that we and our 
trading partners are concerned about and will be looking to 
address appropriately in the accession.
    Mr. Levin. Remember, these are bilateral agreements. Do you 
expect there will be a replacement for section 406 in our 
bilateral agreement with Russia?
    Mr. Allgeier. Actually, section 406 is not the only basis 
for dealing with the selective safeguard provision in our 
bilateral agreement. section 125 of the Trade Act actually 
provides that and would not require us to link it to emigration 
or anything like that.
    Mr. Levin. OK. Well, there is clearly a set of issues here, 
and we need to move ahead with these, I think, if you expect 
there to be the kind of action I think all of us would 
ultimately like. And there is a lot of territory to be covered, 
clearly I think in the House and, as you know, in the Senate, 
you aren't going to move--you eliminate the role of Congress in 
terms of a vote, that is an important change. And we need to 
take that into account.
    Thank you.
    Chairman Crane. Thank you. Ms. Dunn.
    Ms. Dunn. Thank you, Mr. Chairman.
    I know that steel has been addressed, and also poultry has 
been addressed. I want to ask you about a couple of industries 
that are very important in my corner of the world, which is the 
Puget Sound area.
    I know Ambassador Pickering will be before us later on. In 
his new position, I am sure he is watching very carefully over 
one of my favorite companies, the Boeing Company.
    But let me ask you first, on the level of trade relations 
with Russia, I am concerned about the level of intellectual 
privacy piracy, and I would like to have you talk to me a 
little bit about the position of the USTR and the State 
Department and what kind of pressure you are exerting on Russia 
to enact and enforce intellectual property rights (IPR) laws to 
protect piracy of American products. According to my read, the 
numbers that come out of Russia are about $5 billion of company 
profits over the last 5 years.
    Could you tell me what is going on in that area, please?
    Mr. Allgeier. Yes. Protection of intellectual property has 
been a longstanding objective of the administration in its 
relations with Russia, even outside of the WTO accession, first 
to obtain better laws--and there still needs to be work on 
that, and particularly on enforcement. We have a bilateral 
intellectual property group that addresses these issues, that 
takes on information and help from our private sector. We have 
made it very clear in the WTO accessions that scrupulous 
adherence to the obligations of the WTO, the so-called TRIPs, 
Trade-Related Aspects of Intellectual Property Rights, will be 
an essential part of our willingness to accept Russia's 
accession. We use our domestic law, the special 301 law. Russia 
is a priority watch list country. So I don't think there is any 
doubt in Russia's mind that this is a very high priority for 
us, and it is extremely important from an economic standpoint. 
So we will continue to press that.
    Ms. Dunn. And, second, let me ask you about aircraft being 
sold in Russia. Washington State is the home of--we consider 
still Washington State the home of the airplane manufacturing 
industry. We actually do have 55 percent of that company still, 
the commercial line, in Seattle.
    Chairman Crane. Chicago's Boeing?
    [Laughter.]
    Ms. Dunn. Well, I hope you treat them as well as we treat 
them, Mr. Chairman.
    But we have all kinds of industry in our Northwest, and so 
you have got the aircraft industry, you have got the medical 
device companies. What is the position of the negotiations on 
reducing and eliminating the tariffs that cost us so much as we 
try to export our top-level products?
    Mr. Allgeier. Well, part of any country's accession package 
has to be a schedule of commitments on reducing their tariffs 
and getting rid of other non-tariff barriers. That will have to 
be an important part of the Russian package, and the two 
industries that you mentioned--medical equipment and civil 
aircraft--are two that we have been highlighting with them in 
our negotiations and will continue to. And we are pressing the 
Russians to join the civil aircraft code of the WTO as part of 
their accession package.
    Mr. Larson. If I could just add two quick points. One of 
the things that we are doing in this relationship that we are 
strengthening the business-to-business aspect of it. There is a 
business dialog which I think provides a very good environment 
in which to both push our IPR concerns, because they do affect 
investment into Russia, something they want, but it also 
provides an avenue to pursue cooperation in sectors like the 
aircraft sector.
    I do want to add that when large sales become a matter of 
political jockeying, the U.S. government in the form of the 
U.S. Trade Representative, the Secretary of State, and others 
in the administration have always been pushing to make sure 
that our suppliers get a fair opportunity to compete on the 
commercial merits and that politics from other quarters doesn't 
enter in.
    Ms. Dunn. Good. And, you know, all of that has to do as 
much with jobs in my neck of the woods where we have lost 
30,000 jobs because the Boeing Co. has laid off workers. We 
have had to spend a lot of time this year making sure that 
those folks were well treated through Trade Adjustment 
Assistance Program for Workers, TAA, and through the 
unemployment pockets of money that we could bring home. So we 
also think highly of the product that is made in our neck of 
the woods. So we will be watching what you do with great 
interest, and I am happy to hear your reply.
    Thank you.
    Chairman Crane. Thank you. Mr. Camp.
    Mr. Camp. Thank you, Mr. Chairman.
    Ambassador Allgeier, I apologize for being called out of 
the room for part of your testimony, and I realize that you 
have addressed the poultry issue to some extent. But I just am 
very concerned that the ban isn't lifted. As you know, this is 
the largest foreign destination for poultry. It is unacceptable 
to me that this ban hasn't been addressed on March 31st when 
the protocols were signed. And from what I understand your 
testimony to be, we don't really know when the ban is going to 
be lifted. This has a tremendous ripple effect throughout the 
agricultural community and for support for trade in general in 
this country, because I don't really see any justification.
    Can you tell me specifically when you think this ban will 
be lifted and exactly what steps will be taken? I realize there 
are ongoing discussions, but it is critical that this be 
addressed and be addressed in as expeditious a manner as 
possible.
    Mr. Allgeier. Yes, we certainly agree with the importance 
of this issue and its ramifications for many, many States in 
the country. We were told by the Russians that the ban would be 
lifted by the 10th of April, and we are beyond the 10th of 
April. We are determined that this ban will be lifted in the 
next few days. That will obviously be for the Russians to 
decide, but that is our objective. We think it should be lifted 
now. We believe that we have demonstrated compliance with their 
standards, compliance with our standards, and that there is not 
a scientific basis for denying entry for our poultry products.
    Mr. Camp. Would you agree that we complied with all issues 
when we signed the protocol on March 31st?
    Mr. Allgeier. Excuse me?
    Mr. Camp. Would you agree that the United States provided 
the Russian Government with all information and complied with 
all issues necessary to resolve the ban when the protocol was 
signed on March 31st?
    Mr. Allgeier. Yes. Well, we felt that it was fair for them 
to conduct the inspections, but the inspections are over now, 
and we believe that both the inspections and the documentation 
that we have provided is adequate, is more than adequate to 
demonstrate that the ban should be lifted now.
    Mr. Camp. So the United States has met the obligations or 
conditions to lift the ban?
    Mr. Allgeier. Yes, we believe we have.
    Mr. Camp. All right. Thank you.
    Mr. Allgeier. We believe that quite strongly.
    Mr. Camp. Thank you, Mr. Chairman.
    Chairman Crane. Mr. Becerra.
    Mr. Becerra. Thank you, Mr. Chairman. And I thank the two 
of you for being here again.
    A quick question for Secretary Larson, if I may. We 
recently granted Russia Generalized System of Preferences (GSP) 
status, and within GSP there is a requirement that the country 
observe and implement internationally recognized core labor 
standards. A question to you, because I know that the State 
Department and our embassy raised concerns before the Duma with 
regard to their new labor law. What do you plan to do, does the 
administration plan to do, to try to ensure that those GSP 
requirements with regard to the internationally recognized core 
labor standards are adhered to?
    Mr. Larson. We will be having a very, very active process 
of diplomacy and advocacy on the labor issue, as we have 
continued to do on human rights and religious freedom issues. 
Our embassy and our consulates have been extraordinarily active 
on those issues.
    Now, under the GSP program, though this isn't a direct 
quote, there is a standard that you referred to of taking steps 
toward the recognition of internationally recognized workers' 
rights. And there is set up under law a process for reviewing 
where GSP beneficiaries stand. It is a process that the U.S. 
Trade Representative's Office operates, but that the other 
agencies that have an interest and concern in this participate. 
And my expectation would be that with Russia, as with other 
countries, one would keep under review under that framework 
whether the country is taking steps and whether they are moving 
in the right direction.
    I think there are many aspects of what Russia has done in 
this and other human rights-related areas that have been 
positive, but we have been very outspoken about some of the 
deficiencies that we do see in this draft legislation.
    Mr. Becerra. Would the administration be supportive of 
including language in the legislation with regard to graduating 
Russia from Jackson-Vanik that would specifically incorporate 
those issues of seeing Russia taking steps toward addressing 
those core labor standards?
    Mr. Larson. Well, we do have a legislative framework that 
the Congress has set out that I think addresses that. So, I 
mean, without being definitive, my feeling is that we have a 
framework that the Congress and the executive branch have 
agreed on, and it is just a question of having that framework 
operate in the normal way.
    Mr. Becerra. One last question, Ambassador. You mentioned 
in your testimony that you think the Cold War issues are 
outdated, that Russia certainly is one of those former 
adversaries that now has become an ally and friend. You 
mentioned continued application of Jackson-Vanik, however, as 
an indication to Russia that they continue to be suspect and 
viewed as a Cold War adversary. We granted China permanent 
normal trade relations recently. In the spirit of Charlie 
Rangel, who is not here in this room at this moment, I would 
like to ask: Can you tell us why we don't address these same 
issues with Cuba?
    Mr. Larson. I think that there is a world of difference 
between where Russia is and where Cuba is. We have tried to 
summarize in my statement all of the extraordinary steps that 
Russia has taken over the last 13 years, and some of the 
particularly remarkable steps they have taken over the last 
year in working with us on the war on terrorism, moving forward 
on religious freedom, and things of that sort.
    I cannot report that there has been progress on human 
rights--or labor rights, for that matter--in Cuba. There is 
oppression of any effort to organize political parties or 
dissident groups. People that try to express their opinion get 
jailed. Workers are taken advantage of when they go to work in 
some of these foreign investments that our European friends 
make in Cuba.
    So for me, the difference between those two situations is a 
difference of night and day.
    Chairman Crane. Right. Thank you, Ambassador Larson, 
Ambassador Allgeier. I hate to interrupt but we are down to 
less than 2 minutes to make this vote.
    Mr. Allgeier. Thank you, Mr. Chairman.
    Chairman Crane. We have three votes in succession, and so 
we are going to stand in recess subject to the call of the 
Chair for our next panel, but I want to express profound 
appreciation to Ambassador Larson and Ambassador Allgeier for 
your testimony.
    With that, we stand in recess.
    [Recess.]
    Chairman Crane. I apologize to you for the disruption here, 
and I can't control the voting over on the floor. But we had 
three recorded votes in a row, and we have other commitments. 
But I want to try and complete our hearing this morning with 
your testimony, and we will have Members filtering back here. 
But in the interim, I think we ought to get started.
    And so I will start with the Honorable Thomas Pickering and 
then Bob Liuzzi, and then Dave Camp is going to get back here--
he hopes to get back here--to formally introduce Mr. Wood. And 
then Harold Luks and Richard Edlin.
    So we will start, and try and keep your oral remarks to 5 
minutes or less, and any written statements will be made a part 
of the permanent record. So we will proceed with you, 
Ambassador Pickering.

    STATEMENT OF THE HON. THOMAS R. PICKERING, SENIOR VICE 
PRESIDENT, INTERNATIONAL AFFAIRS, BOEING COMPANY, ON BEHALF OF 
 THE U.S.-RUSSIA BUSINESS COUNCIL; FORMER UNDER SECRETARY FOR 
POLITICAL AFFAIRS, U.S. DEPARTMENT OF STATE; AND FORMER UNITED 
           STATES AMBASSADOR TO THE RUSSIA FEDERATION

    Mr. Pickering. Thank you, Mr. Chairman. Good afternoon to 
you. Thank you for the opportunity to testify on such an 
important subject. It is an honor to be with you and a 
privilege and a pleasure to give this testimony.
    My name is Thomas R. Pickering. I am Senior Vice President, 
International Relations, at the Boeing Company. I am testifying 
today on behalf of the U.S.-Russia Business Council. I was 
Ambassador to the Russian Federation from 1993 to 1996 and 
followed Russian events as Under Secretary of State in 1997 
through 2000.
    I will focus my remarks this morning on terminating the 
application of the Jackson-Vanik amendment to Russia, extending 
permanent normal trade relations, and Russia's accession to the 
WTO. I will outline for the Subcommittee why each of these 
issues is important to the Business Council and Boeing, and why 
we believe that WTO accession and Jackson-Vanik are separate 
issues and should be treated as such.
    Boeing and the Business Council, Mr. Chairman, support 
terminating the application of the Jackson-Vanik amendment to 
Russia, thereby discarding a remnant of the Cold War that is of 
no practical consequence. Russia has been in full compliance 
with the legislation, as we have heard this morning, since 
1994, and its intent should not be altered ex post facto to 
deal with other unrelated objectives. If the requirements have 
been satisfied and the reason for them is obsolete, it should 
be terminated.
    The changing nature of our strategic relationship with 
Russia has been startling and far-reaching. Russia's reaction 
to the September 11th attacks more than any other event best 
illustrates how the relationship has fundamentally shifted. 
President Putin was the first foreign leader to contact 
President Bush, offering condolences to the American people and 
his clear support for a strong response. That contact was 
followed by a series of concrete actions and policy decisions, 
many of which were contrary to previously held public positions 
of many senior Russian officials, some of whom currently serve 
as senior advisers to President Putin.
    As our relationship continues to unfold in previously 
unimaginable ways and our security relationship is transformed, 
it is important that the trade and investment aspect of that 
relationship keep pace with the times. Removing Russia from 
annual Jackson-Vanik consideration is an important part of this 
evolution. Jews in Russia and others today are free to 
emigrate, and Russia is no longer a controlled economy. 
Terminating the amendment's application to Russia would help 
foster more normal trade relations between our two countries 
and demonstrate to countries that continue to restrict 
emigration that graduation is possible with the right sort of 
reforms.
    Permanent normal trade relations for Russia is a logical 
event, even outside the Jackson-Vanik context. Russian exports 
to the United States include titanium and other materials that 
are important components in the aviation manufacturing 
industry. Continued access to these products contributes to the 
competitive position of Boeing and other U.S. manufacturers in 
global markets. We, therefore, encourage continued development 
of free, fair, and reciprocal trade with Russia. PNTR and 
eventual Russian Membership in the World Trade Organization are 
important steps in this direction. Boeing and the Business 
Council support Russia's aspirations to join the WTO. Much is 
at stake in terms of market access and uniform acceptance of 
agreed rules of the game, including the elimination of tariffs 
on imported aircraft. However, it is our belief that WTO 
accession and the termination of the Jackson-Vanik amendment 
are separate issues, and they should be treated accordingly.
    At no time since Russia applied for WTO Membership has any 
U.S. official linked Jackson-Vanik to Russia's accession to the 
WTO. To do so now would be perceived as moving the goalpost on 
WTO accession and would treat Russia differently from all other 
former Soviet countries in the accession process.
    The United States maintains the leverage necessary to 
address trade concerns with Russia as obviously Russia cannot 
accede to the WTO without our consent. The United States, 
regardless of the administration in power, has an excellent 
track record in setting the highest bar for new entrants to the 
WTO. We are confident that the USTR, under the leadership of 
Ambassador Robert Zoellick, will continue to seek strong 
commitments from Russia.
    Russia has been a good place for the Boeing Co. to build 
industrial cooperation to grow our business. Our commitment to 
the market is strategic and long-term. There are currently 25 
of our airplanes operating in Russia and 45 in the remaining 
former Soviet countries. The demand for modern aircraft exists, 
and we aim to increase our sales there significantly. This 
opportunity hinges on a commitment by the governments of both 
countries to facilitate and expand free and open trade between 
the United States and Russia. Graduating Russia from annual 
Jackson-Vanik review and extending PNTR are consistent with 
this principle and are steps supportive of America's industrial 
aspirations in the Russian market.
    Further, failure to terminate Russia risks encouraging 
those in Russia who oppose free trade and more open relations 
with the United States. Failure to act risks a more closed and 
protectionist Russia.
    In conclusion, while this decision involves the principle 
of free trade, it also involves the principles of good faith, 
upholding one's commitments, and standing by our friends and 
partners.
    President Putin's policies of closer alignment with the 
West and his support for American positions come at some 
domestic political cost. Since Russian support in the war on 
terrorism is important to its success, it is obviously of 
continuing importance for the U.S. government to keep faith 
with the Putin Government. In this context, it is, therefore, 
important we deliver on our word. The U.S. government can and 
should take this step. It will yield benefits in the strategic 
bilateral relationship, but, most importantly, it is sound 
trade policy for the United States.
    Thus, Boeing and the U.S.-Russia Business Council encourage 
you to terminate application of the Jackson-Vanik amendment to 
Russia.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Pickering follows:]
   Statement of the Hon. Thomas R. Pickering, Senior Vice President, 
 International Relations, Boeing Company, on behalf of the U.S.-Russia 
 Business Council; Former Under Secretary for Political Affairs, U.S. 
Department of State; and Former United States Ambassador to the Russian 
                               Federation
Opening Remarks
    Good Morning Mr. Chairman and Members of the Committee. Thank you 
for the opportunity to testify on what is certainly an important and 
very timely subject. My name is Thomas R. Pickering, and I am Senior 
Vice President, International Relations at The Boeing Company. Prior to 
joining Boeing, I held a number of senior positions in the U.S. 
Department of State, including Undersecretary for Political Affairs for 
the years 1997-2000 and Ambassador to the Russian Federation from 1993-
1996. I retired from government with the rank of Career Ambassador at 
the end of 2000.
    I am testifying today on behalf of the U.S.-Russia Business 
Council, a Washington-based nonprofit trade association whose mission 
is to expand and enhance the U.S.-Russian commercial relationship on 
behalf of more than 260 American firms active in U.S.-Russian trade and 
investment. Guided by member interests, the Council promotes an 
economic environment in which U.S. business can succeed in a 
challenging Russian marketplace. To achieve its mission, the Council 
conducts activities and provides services that fall into the following 
categories: company-specific assistance and problem-solving; Russian 
and U.S. government policy work; information products; Russian business 
relationships; and formal and informal briefing and networking 
opportunities.
    I will focus my remarks this morning on Russia's accession to the 
WTO, terminating the application of the Jackson-Vanik amendment to 
Russia, and extending Permanent Normal Trade Relations. I will outline 
for the committee why each of these issues is important to the USRBC 
and Boeing and why we believe that WTO accession and Jackson-Vanik are 
separate issues and should be treated as such.
Jackson Vanik
    Mr. Chairman, the USRBC and Boeing support terminating the 
application of the Jackson-Vanik amendment to Russia, thereby 
discarding a remnant of the Cold War that is of no practical 
consequence. As we all know Russia has been in full compliance with the 
legislation since 1994 and its intent should not be altered ex-post 
facto to suit unrelated objectives. If the requirements have been 
satisfied and its raison d'etre is obsolete, it should be terminated.
    Just as Jackson-Vanik has been successful in its pressure for 
important changes within the new post-Soviet Russia, so has the 
changing nature of our strategic relationship with Russia been 
startling and far-reaching. The tension that defined our relationship 
in the early days of the Soviet collapse has been replaced with new 
opportunities and cooperation. Compare Russia's reaction to the latest 
round of NATO expansion with their reaction to the first round. Rather 
than objecting to an enlargement of the alliance, Russia has instead 
begun negotiating to establish formal cooperation with NATO and to meet 
regularly in a new council ``to pursue opportunities for joint 
action.''
    There are other examples. Earlier this year, President Putin 
announced the closing of the Lourdes listening facility in Cuba, and 
both Presidents have agreed to reduce the level of deployed nuclear 
warheads by one-third. Russia's reaction to the September 11 terrorist 
attacks, more than any other event, best illustrates how the 
relationship has fundamentally changed. President Putin was the first 
foreign leader to contact President Bush following the attack. 
President Putin offered his condolences to the American people and his 
clear support for a strong response. That contact was followed by a 
series of concrete actions and policy decisions, some of which were 
done in clear contradiction to the public positions of the national 
security and intelligence officials who form his inner circle and from 
which he came.
    As our relationship unfolds in previously unimaginable ways, and 
our security relationship is transformed, it is important that the 
trade and investment aspect of our relationship keep pace with the 
times. Removing Russia from annual Jackson-Vanik consideration is an 
important part of this evolution. Jews in Russia today are free to 
emigrate, and Russia is no longer a controlled economy. Terminating the 
amendment's application to Russia would help foster a sense of normal 
trade relations between the U.S. and Russia and demonstrate to 
countries that continue to restrict emigration that graduation is 
possible with the right reforms.
    Mr. Chairman, I also believe that PNTR for Russia is logical 
outside the Jackson-Vanik context. Russian imports to the United States 
increased significantly in both 1999 and 2000, reaching an all-time 
high of $7.8 billion in 2000 (U.S. Department of Commerce). Russian 
titanium and other materials included in these figures are an important 
component in aircraft manufacturing. Continued access to these products 
contributes to the competitive position of Boeing and other US 
manufacturers in world markets. We therefore encourage continued 
development of free, fair, and reciprocal trade with Russia. PNTR and 
eventual Russian membership in the World Trade Organization are 
important steps in this direction.
    Although Russia has been found in compliance with Jackson Vanik for 
the past several years, its continued existence perpetuates a feeling 
of discrimination among Russians and allows a feeling of uncertainty to 
cloud a markedly improved trade and investment climate. Stability and 
predictability are important to exporters and importers alike.
WTO and Jackson-Vanik
    The USRBC and Boeing support Russia's aspirations to join the WTO, 
primarily because much is at stake in terms of market access and 
uniform acceptance of agreed rules of the game. However, we also 
believe that WTO accession and the termination of the Jackson-Vanik 
amendment are separate issues and should be treated accordingly.
    At no time since Russia applied for WTO membership has any U.S. 
official linked Jackson-Vanik to Russia's WTO accession. To do so now 
would be perceived as moving the goalpost on WTO accession and would 
treat Russia differently from other former Soviet countries in the 
accession process.
    It's also important to emphasize that the United States, regardless 
of the administration in power, has an excellent track record in 
setting the highest bar for new entrants to the WTO. We are confident 
that the USTR, under the leadership of Ambassador Robert Zoellick, will 
continue to seek strong commitments from Russia pertaining to the 
adoption of WTO rules governing its trade regime, the provision of 
market access in goods and services, the establishment of limits on 
agricultural supports, and the enforcement of the rule of law in 
commerce.
    Absent Jackson-Vanik, the United States maintains the leverage it 
needs to address trade concerns with Russia, as obviously Russia cannot 
accede to the WTO without U.S. consent. As in all WTO accessions, 
leverage to secure commitments is based on the requirement for 
consensus in the Working Party--i.e., acceptance without objection by 
all Working Party members, including the United States, of the 
accession package. While there remains much to be done, we are 
confident that the U.S. government will remain engaged on Russia's 
accession process and, likewise, Russia will continue to make great 
progress.
WTO Accession as a Policy Framework
    In addition to the increase in Working Party meetings, USRBC, its 
member companies, and the U.S. business community in general, is seeing 
a new momentum within the Putin Administration, which represents an 
internal recognition of the need for and benefits of WTO accession (as 
compared to external pressure from the international community). We are 
not only seeing WTO accession as a mandate from Putin himself and the 
Executive Branch, but the Duma has created an Experts Council on 
Foreign Trade and Investment, whose main task is to review current 
legislation in terms of its WTO compliance and recommend required 
changes. The Duma is currently considering amendments to 55 Russian 
laws related to WTO norms.
Priority Areas
    In order to facilitate Russia's accession to the WTO, several 
priority areas need to be addressed.
    Civil Aerospace: Russia maintains high tariffs on imported 
aircraft. Import duties, when added together with the domestic VAT, 
equal 40 percent of the purchase price. In a 1996 bilateral MOU on 
``Market Access for Civil Aircraft,'' the Russian Government confirmed 
it will join the WTO Agreement on Trade in Civil Aircraft, which 
together with other WTO agreements, establishes the basic international 
rules governing trade in the aircraft sector.
    In the interim, the Russian Government committed to providing 
market access by taking trade-liberalizing steps such as tariff 
reductions and tariff waivers. These steps are designed to enable 
Russian airlines to meet their needs for importing American and other 
non-Russian civil aircraft on a nondiscriminatory basis. Since the 
signing of the MOU, the Russian Government has lowered its tariffs on 
imports of aircraft from 50 percent to 20 percent currently, and 
permitted 16 US-built airplanes to enter Russia on limited tariff 
waivers. These are steps in the right direction, but to serve Russia's 
airlines' need for equipment, more needs to be done.
    The Russian Government is under pressure from domestic aircraft 
makers to protect its market from competitive imports. The USRBC argues 
that by granting PNTR and shoring up domestic support for Russia's 
entry into the WTO, today's market barriers will be eliminated. In turn 
it will give Russia's domestic industry its best opportunity to bring 
value to world production markets by attracting investment to those 
areas of comparative advantage.
    Telecommunications: The creation of an investor-friendly 
infrastructure and legislative environment (e.g., reducing existing 
tariff and non-tariff barriers that limit foreign participation in this 
sector) is critical to the development of the telecommunications sector 
in Russia. Russia presented a new goods and services offer in March 
2001, which included its agreement to accept a WTO accord that commits 
to binding, pro-competition regulatory disciplines. The new offer also 
included an initial offer of 25 percent foreign equity in the mobile 
telephone sector. This goods and services offer continues to be revised 
based on continual bilateral and multilateral negotiations.
    Financial Services: The strengthening of Russia's financial 
services sector is crucial to the country's economic development. Some 
important steps include a reduction in the number of state-owned banks; 
increased liberalization to allow mergers and acquisitions; greater 
access for foreign banks; openness to international participation in 
the Russian insurance industry (which remains poorly developed and 
whose members have promoted exclusionary legislation to date); 
development of a legislative framework governing the leasing industry; 
and improvement in access to capital and credit relationships. Another 
important issue is Russia's adoption of International Accounting 
Standards (IAS).
    Intellectual Property Rights: Protection of intellectual property 
rights is a key factor influencing Russia's WTO accession and its 
ability to attract foreign investment. IPR violations--including 
trademark and patent infringement, counterfeiting, copyright 
violations, and piracy--remain epidemic. Incomplete anti-counterfeit 
legislation, lack of enforcement, weak penalties, corruption, and lack 
of education and training of law enforcement and judicial officials in 
this area are key impediments to better IPR protection and enforcement 
in Russia. Specifically, significant shortcomings remain in the 
country's trademark and patent laws, especially provisions dealing with 
famous trademarks and geographical indications, as well as confiscation 
and destruction of counterfeit goods.
    The WTO Agreement on Trade-Related Aspects of Intellectual Property 
Rights (TRIPS) covers seven types of IPR: patents, copyright, 
trademarks, geographical indications, industrial designs, layout-
designs of integrated circuits, and undisclosed information. Each WTO 
member is obligated to implement the TRIPS agreement through their 
respective domestic legislation, to incorporate the rights and 
obligations of an IPR-holder and the manner in which these will be 
enforced.
    Legislative progress is being made in Russia. The government 
submitted a legislative package to the State Duma in July 2001. The 
package includes amendments to the Law on Trademarks, Service Marks and 
Appellations of Origin of Goods; Patent Law; Copyright Law; and the Law 
on Legal Protection of Computer Programs and Databases; among others. 
The amendments to the Trademark Law and the Patent Law have passed the 
first reading in the Duma, but the amendments to the Copyright Law have 
not. In most respects, the proposed amendments will bring Russia's 
legislation into TRIPS compliance.
    Bilaterally, the U.S. government has not hesitated to criticize the 
Russian Government on its failure to protect intellectual property 
rights: in May 2001, the USTR placed Russia on the Special 301 Priority 
Watch List. The USTR also began a review last year of Russia's 
eligibility under the Generalized System of Preferences (GSP) program, 
based on issues raised by the U.S. copyright industry concerning 
Russia's intellectual property regime. (The GSP program is currently 
expired; however, pending its reauthorization, the review of Russia's 
GSP eligibility would continue.)
    Agriculture: Russia's domestic support for its agricultural sector 
is a major impediment to accession. It is important to recognize that 
the WTO does not prohibit domestic support (a popular misperception in 
Russia); rather, it limits certain types of support (for example, 
export subsidies). In WTO terminology, subsidies in general are 
identified by ``boxes'' that are given the colors of traffic lights: 
green (permitted), amber (slow down or reduce), and red (forbidden). 
The WTO Agriculture Agreement has no red box; therefore WTO members 
with trade-distorting domestic supports in the amber box must make 
commitments to reduce these measures.
    Over the past 10 years, Russia's subsidies have primarily been 
amber-box measures. The government's main task in current WTO 
agricultural negotiations is to reduce these measures and focus on 
green-box measures. Examples of green-box measures include programs 
that are not directed at particular products such as environmental 
protection, rural infrastructure and regional development programs.
    In terms of annual support levels, Russia has offered a $16 billion 
ceiling on its subsidies, and this issue continues to be negotiated 
(WTO members prefer a figure closer to $2-3 billion). Due to the 
sensitive role agriculture continues to play in the economy, Russian 
Government officials consider agriculture one of the most politically 
sensitive issues of its accession.
Boeing and Russia
    Russia has been a good place for Boeing to build industrial 
cooperation. Boeing's commitment to and investment in Russia are 
strategic and long-term. Boeing has invested $1.3 billion in Russia 
over the last 10 years. In the civil space sector, the Company has 
invested in projects such as the International Space Station and the 
Sea Launch satellite-launching venture. In aviation, Boeing's Moscow 
Design Center contracts with Russian manufacturers to employ more than 
350 Russian aerospace engineers who supply unique design capabilities 
while learning market--and rules-based management practices. The 
company also cooperates with 350 scientists in 6 Russian research 
institutes to explore civil aerospace technologies and ideas, and has 
begun work with Russian partners to explore the development of a 
Russian regional-size commercial jetliner.
    There are currently 25 Boeing airplanes operating in Russia, and 
another 45 in the remaining former-Soviet countries. The demand for 
modern aircraft exists, and Boeing aims to grow those numbers 
significantly.
    Further access to the Russian market is vital. Aeroflot's plans to 
grow and modernize its fleet presents a great opportunity. In addition, 
opportunities exist in aircraft and parts sales to the many smaller 
Russian operators, air traffic control infrastructure, airport 
development and operation, airline engineering and training, and 
management training across the entire civil aviation sector.
    This potential, however, hinges on a commitment by the governments 
of both countries to facilitate and expand free and open trade between 
the United States and Russia. Graduating Russia from annual Jackson-
Vanik review and extending PNTR are consistent with this principle and 
are indirectly linked to America's industrial aspirations in the 
Russian market.
Russian Expectations and American Commitments
    Not only does this decision involve the principle of free trade, it 
also involves the principle of good-faith, upholding one's commitments, 
and standing by your allies.
    President Putin is out in front in Russia in his policies of 
alignment with the West and his perceived pro-American positions. In 
the hours after September 11, Russian Defense Minister Sergei Ivanov 
reversed his position on U.S. troops in Central Asia. After first 
saying there was not ``any basis for even the hypothetical 
possibility'' of a NATO presence in Central Asia, Ivanov backtracked 
and pledged his support to the president. There are number of officials 
in the national security and intelligence apparatus, however, who 
continue to question the alliance with the West.
    These voices of discontent are no longer confined to national 
security and intelligence circles. Some who originally praised 
President Putin's westward turn are beginning to question how it 
benefits Russia. Just last week one of the Duma's most influential 
foreign policy and defense experts, Alexei Arbatov, was quoted in an AP 
story as saying, ``The majority, who did not support the President's 
plans from the beginning, now are washing their hands of them, and 
saying `we warned you, you won't get anything from the Americans!''
    Also last week, Lenoid Ivashov, a former high-ranking Defense 
Ministry official, likened Russia's moves after September 11 to ``an 
attempt at geostrategic suicide.'' Former Foreign Minister Andrei 
Kozyrev commented to the American Chamber of Commerce in Moscow that, 
``even state media portray all these cooperative moves by him (Putin) 
almost as treason.''
    These comments suggest the growth of real opposition to the Putin 
government--opposition rooted in contempt for pro-American policy. 
Since Russian support in the war on terrorism is important to its 
success, it should be important for the US Government to support the 
Putin government. In this context, it is even more important that we 
deliver on our word. The US government can and should take this step. 
It will yield benefits in the strategic bilateral relationship, but, 
most importantly, it is sound trade policy for the United States.
Conclusion
    In conclusion, the US Russia Business Council and its member 
companies urge the Congress to repeal the outdated Jackson-Vanik 
amendment. It is clearly the right time and the right measure. Removing 
the restrictions will put healthy political and economic relations 
between the US and Russia on a faster track.
    The USRBC also urges the Congress to work separately to bring 
Russia into the WTO as quickly as possible. In doing so, lawmakers will 
help ensure healthy US-Russia trade relations. Accession will codify 
and strengthen the obligations Russia has undertaken already to align 
themselves with the global rules-based trading system and provide a 
firm foundation for progress.
    Thank you.

                                

    Chairman Crane. Thank you, Mr. Ambassador. Mr. Liuzzi.

   STATEMENT OF ROBERT LIUZZI, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, CF INDUSTRIES, LONG GROVE, ILLINOIS, AND CHAIRMAN, AD 
          HOC COMMITTEE OF DOMESTIC NITROGEN PRODUCERS

    Mr. Liuzzi. Thank you, Mr. Chairman, for the opportunity to 
be here. My name is Robert Liuzzi. I am President and chief 
executive officer of CF Industries, a major farm cooperative 
and a major producer of nitrogen and phosphate fertilizer. I am 
testifying today in my capacity as Chairman of the Ad Hoc 
Committee of Domestic Nitrogen Producers, a group of U.S. 
companies that accounts for about 75 percent of total U.S. 
nitrogen production.
    The U.S. nitrogen fertilizer industry is a major strategic 
industry for U.S. agriculture. Without our products, U.S. 
farmers cannot efficiently produce food or fiber. U.S. farmers 
consume approximately $9 to $10 billion worth of fertilizer 
yearly, the majority of which is nitrogen fertilizer.
    Russia is the world's largest exporter of nitrogen 
fertilizer and a major competitor of ours. Accordingly, how the 
United States structures its trading relationships with Russia 
in legal terms has major implications for the economic well-
being of U.S. nitrogen producers.
    The major threat posed to the U.S. industry by Russian 
nitrogen producers derives from the fact that Russian energy 
policies provide an artificial advantage to Russian nitrogen 
fertilizer producers. Nitrogen is produced from natural gas 
feedstock, which accounts for 50 to 80 percent of the cost of 
producing such fertilizer. In the United States, we pay market 
prices for our natural gas. In Russia, the government sets the 
price of natural gas, the price at which it is supplied to 
industrial users, including nitrogen manufacturers. That price 
is, at best, 20 to 25 percent of the price of that same gas 
which is sold for export into Europe. Moreover, one Russian 
company, Gazprom, which produces and sells 94 percent of all 
the natural gas in Russia, is 40 percent owned by the Russian 
Government.
    Given this artificially low price for natural gas, Russian 
nitrogen producers can place tremendous volumes of nitrogen 
product on the world market at prices far below what their 
competitors from market economy countries such as ours must 
charge to recover our costs. Unfair trade in Russian nitrogen 
products has repeatedly done severe harm to U.S. producers. 
Fortunately, however, we have been able to obtain antidumping 
relief from massive surges of Russian nitrogen imports in the 
past, as we did in 1987 against urea and in the year 2000 
against ammonium nitrate.
    Currently, there are several important administrative, 
legislative, and negotiating processes underway that could 
dramatically alter the legal structure governing U.S.-Russian 
trade. The outcomes of these processes will determine how 
Russian nitrogen will be sold in the United States and whether 
Russian nitrogen will be sold at a fair price or dumped.
    First, the U.S. Department of Commerce will soon decide 
whether or not to revoke non-market economy status for Russia 
under the antidumping law. Revocation of Russia's NME status 
will have serious negative implications for domestic nitrogen 
producers because we believe the antidumping law could not then 
be meaningfully applied to imports of nitrogen from Russia. We 
have urged the Commerce Department not to revoke Russia's NME 
status as long as the energy sector in Russia continues to 
operate on non-market principles. At a minimum, the Commerce 
Department should retain NME status for the nitrogen fertilizer 
sector and other energy-related sectors so long as Russia 
continues to price energy and petrochemical feedstock at non-
market levels.
    Second, at the administration's request, Congress may soon 
decide to provide the President with the authority to terminate 
the applicability to Russia of Title IV of the Trade Act 1974 
and to proclaim permanent normal trade relation status for 
Russia. Unfortunately, termination of Title IV will leave the 
nitrogen industry without recourse to section 406, the market 
disruption provision, for countries operating as non-market 
economies. We urge Congress to retain section 406 for Russia, 
at least until Russia joins the WTO or operates its natural gas 
sector on a market basis. Alternatively, if Title IV is revoked 
in its entirety, we urge the Congress to pass a similar 
provision for Russia like the one in effect for China based on 
section 406 that was passed as part of the China PNTR 
legislation.
    Finally, we have been working with USTR on Russia's 
accession to the WTO. We believe that this negotiation affords 
an opportunity to get Russia to reform its energy and natural 
gas sector so that market forces and not the government 
determine pricing. As long as Russia refuses to allow market 
forces to determine the economics of nitrogen production in 
Russia, their exports, and the prices of those exports, the NME 
provisions of the dumping law and section 406 or some like 
substitute must continue to apply to imports into the United 
States of nitrogen from Russia.
    In conclusion, Mr. Chairman, I ask that you and the 
Subcommittee help us to address these issues regarding U.S.-
Russian trade so that the impact on our industry will not be so 
negative. The legal structure of U.S.-Russian trade is our 
number one public policy issue, and the decisions that the 
government makes in this area will determine whether our 
industry will survive or not. The stakes for us are high, and 
we urgently request your assistance.
    Thank you again, Mr. Chairman.
    [The prepared statement of Mr. Liuzzi follows:]
 Statement of Robert Liuzzi, President and Chief Executive Officer, CF 
  Industries, Long Grove, Illinois, and Chairman, Ad Hoc Committee of 
                      Domestic Nitrogen Producers
    Mr. Chairman and Members of the Subcommittee----
    My name is Robert Liuzzi and I am the President and CEO of CF 
Industries, a major U.S. farmer cooperative and producer of nitrogen 
and phosphate fertilizers headquartered in Long Grove, Illinois. CF 
supplies over 1 million farmers in 46 states with their fertilizer 
needs. I appear before you today in my capacity as Chairman of the Ad 
Hoc Committee of Domestic Nitrogen Producers, a group of U.S. producers 
of nitrogen fertilizers. The other members on the Committee are El Paso 
Corporation, Mississippi Chemical Corporation, PCS Nitrogen, Inc., and 
Terra Industries, Inc. This group of companies accounts for 
approximately 75 percent of total U.S. nitrogen fertilizer production.
    I appreciate the opportunity to testify before the Subcommittee on 
the subject of U.S.-Russian trade relations. Russia is the world's 
largest exporter of nitrogen fertilizers and a major competitor of the 
U.S. industry, particularly in the U.S. market. How the United States 
structures its trading relationship with Russia in legal terms, both 
domestically and internationally, has major implications for the 
economic well-being of U.S. nitrogen producers.
    There are several important administrative, legislative, and 
negotiating processes underway that could dramatically alter the legal 
structure governing U.S.-Russian trade. Indeed, the outcomes of these 
processes will determine how Russian nitrogen fertilizers will be sold 
in the U.S. market in the future. These outcomes could have an 
extremely negative impact on U.S. producers. As a result, the U.S. 
nitrogen industry is following developments closely and is making its 
views and concerns known to U.S. officials in both the legislative and 
executive branches of the U.S. government.
    In my testimony today, I will first provide you with a brief 
background on nitrogen fertilizer and its importance to U.S. 
agriculture. Then I will describe the current situation with respect to 
U.S.-Russian trade in nitrogen fertilizers and how current energy 
policies in Russia provide massive unfair advantages to Russian 
producers of nitrogen fertilizers. I will then briefly describe the 
administrative, legislative, and negotiating processes underway that 
will shape the future legal structure of U.S.-Russian trade, and our 
positions on each of these processes. I will conclude with several 
recommendations on the role the Subcommittee and the Congress could 
play to ensure that these processes do not lead to outcomes that will 
do grave damage to the domestic nitrogen industry.
Nitrogen Fertilizer and its Importance to U.S. Agriculture
    Plants need adequate nutrients to germinate, grow and produce fruit 
and seed. Although all of these nutrients can be found in the soil, 
there are three primary nutrients--nitrogen (N), phosphate (P) and 
potash (K)--that are not supplied naturally in sufficient quantity to 
meet the needs of today's high-yielding production agriculture. As a 
result, U.S. farmers spend $9-10 billion annually on commercial 
fertilizers.
    Of the three primary nutrients, nitrogen is generally considered to 
be the most important. Commercial nitrogen fertilizers are produced 
through a catalytic reaction between elemental nitrogen derived from 
the air and hydrogen derived from natural gas. The primary product from 
this reaction is anhydrous ammonia (NH3). Anhydrous ammonia 
can be used directly as a commercial fertilizer or can be used as the 
building block for producing other forms of nitrogen fertilizer such as 
urea, ammonium nitrate, or nitrogen solutions. For a typical U.S. 
producer, natural gas accounts for as much as 50-80 percent of the 
total cash cost of production for a ton of nitrogen fertilizer, 
depending on the product.
    Historically, the domestic industry has supplied approximately 70-
75 percent of the nitrogen fertilizers used by U.S. farmers with 
another 15 percent being supplied from nearby Canadian plants. The 
domestic industry and a large portion of the Canadian industry were 
constructed primarily to meet U.S. demand. Further, an extensive 
distribution and storage infrastructure has been developed over the 
years to ensure that American farmers would have adequate supplies at 
the right time. This system was specifically designed to move and 
handle large volumes of product from domestic production sites to the 
major consuming areas, particularly ammonia moving through pipelines. 
Consequently, without a strong domestic industry, there is no assurance 
that U.S. farmers would be able to secure adequate volumes of nitrogen 
fertilizer when they need it.
    The importance of nitrogen fertilizers to today's high yielding 
agriculture is evidenced by the fact that it is applied on 98 percent 
of the corn, 88 percent of the wheat and 86 percent of the cotton 
acreage planted in the United States. Recent data from the University 
of Illinois indicates that, without nitrogen fertilizers, corn yields 
would drop by as much as 30-50 percent. It is clear that without 
nitrogen fertilizers and a strong domestic nitrogen industry, the U.S. 
would not be able to maintain its position as a reliable, low cost 
supplier of food and fiber products to the world market. In addition, 
nitrogen fertilizer's contribution to low cost, efficient feed 
production has allowed the U.S. to also become a major exporter of meat 
products such as beef, pork and poultry. Similarly, without adequate 
nitrogen supplies these exports would also likely decline.
Russian Trade in Nitrogen Fertilizer
    Russia is the world's largest exporter of nitrogen fertilizers. The 
Russian industry is heavily export-oriented and accounts for over 20 
percent of global exports in this sector. With the collapse of the 
Russian agricultural sector and the resultant drop in Russian 
consumption of nitrogen fertilizers, Russian producers have looked to 
overseas markets in recent years. In 2000, Russia accounted for about 
20 percent of world anhydrous ammonia exports, 15 percent of world urea 
exports, 24 percent of world nitrogen solution exports, and 40 percent 
of world ammonium nitrate exports. Moreover, again in 2000, Russia 
exported 92 percent of its end-product ammonia, 96 percent of its urea, 
86 percent of its nitrogen solutions, and 41 percent of its ammonium 
nitrate production.

Russian Energy Policies Provide An Artificial Advantage to Russian 
Nitrogen Fertilizer Producers

    The major reason for Russia's growing success as a nitrogen 
exporter is the artificially low price of natural gas feedstock 
provided to Russian producers. As previously noted, about 50-80 percent 
of the cost of producing nitrogen fertilizer (depending on the type) is 
the cost of the natural gas. In Russia, the government sets the price 
at which natural gas is supplied to industrial users. The price of the 
natural gas supplied to Russian nitrogen producers is best 20-25 
percent of the price of that same gas sold for export from Russia, a 
price determined by market forces.
    The artificially low, government set price at which natural gas is 
provided to Russian nitrogen fertilizer producers allows Russian 
nitrogen fertilizer to be the lowest priced product on the world 
market. Moreover, the setting of gas prices to Russian industry is not 
simply the type of ``cost plus'' rate regulation that is common in 
market economies. Indeed, according to the U.S. Department of Energy, 
the government established price for natural gas in Russia is below the 
cost of production. Given this low price for natural gas and extensive 
nitrogen capacity built up during the Soviet era, Russian nitrogen 
fertilizers are always priced well below nitrogen products from other 
countries.
    It is also important to realize that the Russian Government's 
establishment of domestic natural gas prices that reflect neither 
production costs nor supply and demand has other effects.
    These low, non-market prices mean that inefficient Russian nitrogen 
plants continue to operate and to export. They also mean that Gazprom, 
which does not make a profit on its domestic gas sales, often barters 
its gas for fertilizer and then exports it for hard currency. In the 
absence of profitable domestic natural gas prices, and given the 
availability of export markets for nitrogen fertilizer (the cost of 
which is comprised 50-80 percent of natural gas), Gazprom has taken, 
directly or indirectly, an interest in a substantial portion of the 
Russian nitrogen fertilizer industry. The result is that artificially 
low Russian gas prices have created a situation in which exporting 
large volumes of nitrogen fertilizer has become an imperative. The U.S. 
market is an obvious and repeated target for these exports.
    While the U.S. nitrogen industry is modern, efficient, and well 
situated to serve U.S. agricultural customers, unfair trade in Russian 
nitrogen products has repeatedly done severe harm to U.S. producers. As 
a result, the U.S. industry has had no choice in the past but to seek 
and obtain antidumping relief from massive surges of Russian imports of 
urea and ammonium nitrate. In 1987 it obtained an antidumping order 
against Russian urea and in 2000 it obtained an antidumping suspension 
agreement against ammonium nitrate. The U.S. industry is now preparing 
to file an antidumping petition against Russian imports of urea-
ammonium nitrate solutions (UAN), another form of nitrogen fertilizer.

Commerce Department Will Soon Decide Whether To Revoke Non-Market 
Economy (NME) Status for Russia Under the Antidumping Law--Revocation 
Would Have Serious Negative Implications for Domestic Nitrogen 
Producers

    The U.S. industry has been able to obtain antidumping relief 
against Russian imports of nitrogen fertilizers in the past primarily 
because the Department of Commerce has, correctly, applied non-market 
economy (``NME'') methodologies to determine if Russian imports have 
been sold in the United States at dumped prices. NME treatment of 
Russia has been critical because it means that the government-set 
natural gas price is not used to determine fair pricing for the Russian 
imports. Rather, the Department uses costs and prices from third 
countries that operate as market economies and are at a similar stage 
of economic development as Russia (such as Poland).
    In an administrative proceeding currently underway, the Department 
of Commerce will soon decide whether to revoke Russia's status as an 
NME country under U.S. antidumping law. This is a decision to be made 
solely by the Department based on its evaluation of six criteria set 
forth in U.S. antidumping law, namely: 1) the degree of currency 
convertibility; 2) free wage rate determination; 3) foreign investment; 
4) government ownership or control of production; 5) government control 
over the allocation of resources and prices; and 6) other appropriate 
factors. While there is no statutory deadline for Commerce to make this 
decision, it is widely expected that the decision will be made before 
the next Bush-Putin summit in late May.
    Revocation of Russia's NME status would have serious negative 
consequences for the U.S. nitrogen industry, which has relied on U.S. 
antidumping law to address unfairly priced Russian nitrogen imports 
that have been dumped on the U.S. market. If NME status for Russia were 
revoked, Commerce in the future would determine whether Russian export 
prices are ``fair'' by examining the actual prices in Russia for 
natural gas (and the derived prices for nitrogen fertilizer) despite 
the fact that these are state-determined costs that are not market-
driven prices. If the government-determined natural gas prices are 
used, or the resulting domestic prices are referenced, we believe that 
there will not be a meaningful dumping analysis.
    Revocation of Russia's NME status under the antidumping law will, 
in effect, allow Russia to dump nitrogen fertilizers into the United 
States with impunity. Russia has huge excess nitrogen capacity and, as 
it has already proven, will be able to flood the U.S. market with 
nitrogen imports, causing further harm to a U.S. nitrogen industry that 
is currently struggling financially and has faced repeated waves of 
Russian imports.
    Given Russia's continuing central control over its key energy 
sectors, we do not believe that Russia has transitioned sufficiently to 
be considered a market economy country. It is clear, in any event, that 
the energy and natural gas sectors do not operate as a market economy 
in Russia. The Commerce Department has the authority to provide market 
economy status individually to ``market-oriented industries (MOIs)'' 
within a non-market economy country, even if the rest of that country's 
economy operates as a non-market economy. This would suggest that the 
converse would also be true, namely, that a country's NME status could 
be revoked (i.e., most industries declared to be MOIs), with exceptions 
being made for non-market oriented industries. We have urged the 
Commerce Department, if it intends to graduate Russia to market economy 
status, to use this approach with respect to Russia. Specifically, we 
have advocated to Commerce that, if it decides (incorrectly in our 
view) to revoke NME status for Russia, it should nonetheless retain NME 
status for the nitrogen fertilizer industry and other industries that 
still do not operate on a market economy basis in Russia.

 Congress May Soon Decide To Provide the President with Authority to 
Terminate Applicability to Russia of Title IV of the Trade Act of 1974 
(``Jackson-Vanik'')--Possible Adverse Consequences for Domestic 
Nitrogen Producers

    Last year, the Bush Administration requested that Congress pass 
legislation that would terminate the applicability of Title IV of the 
Trade Act of 1974 to Russia. In popular terms, this is referred to as 
granting Permanent Normal Trade Relations status (``PNTR'') to Russia. 
Supporters of such legislation argue that Title IV (also known as 
``Jackson-Vanik'' in honor of its lead sponsors) is a relic of the Cold 
War and should no longer be applicable to Russia since Russia now 
accords its citizens the right to emigrate, travel freely, and return 
to Russia without restriction; has committed itself to ensuring freedom 
of religion; has made progress toward democratic reforms and creating a 
free market system; and has generally taken positive steps to correct 
the abuses against which the original passage of Title IV was intended 
to provide leverage.
    In response to the Bush Administration's request, Chairman Thomas 
and Chairman Crane introduced H.R. 3553 on December 20, 2001. H.R. 3553 
would authorize the President to determine that Title IV should no 
longer apply to Russia and then to proclaim normal trade relations 
treatment to the products of Russia. On the date of such proclamation, 
Title IV would cease to apply to Russia.
    We take no position at this time on whether the President should be 
authorized to grant PNTR to Russia. We understand that there is a 
debate on this point among those who believe such authorization should 
be granted at once to the President and others who have suggested that 
such authority be contingent upon Russia's accession to the World Trade 
Organization (WTO).
    On the other hand, if this Committee and the Congress do go forward 
with legislation granting PNTR to Russia, we strongly urge that the 
legislation provide that Section 406 of Title IV, or some similar 
provision, would remain in effect with respect to Russia at least until 
such time as Russia accedes to the WTO. Section 406 provides for a 
remedy under U.S. law against imports from a non-market economy country 
that cause market disruption.
    It is interesting to note that legislation granting PNTR for China 
contains a market disruption provision applicable to Chinese imports 
that is patterned after Section 406. This market disruption provision 
for China (Chapter 2 of Title IV of the Trade Act of 1974, as amended) 
is to remain in effect for twelve years from the date that China 
entered into the WTO.
    From the standpoint of the U.S. nitrogen industry, retention in 
U.S. law of Section 406, or a similar provision like the one in effect 
for China, is absolutely essential for Russia at least until Russia 
accedes to the WTO or operates its natural gas sector on a market 
basis. This is particularly the case if the Commerce Department revokes 
Russia's NME status under the antidumping law and leaves the U.S. 
nitrogen industry no effective remedy under that statute. Retention of 
Section 406 or a similar provision is also entirely appropriate to 
continue to give effect to Article XI (``Market Disruption 
Safeguards'') of the Agreement on Trade Relations Between the United 
States and Russia of June 17, 1992. Revocation of Section 406, without 
the passage of a similar replacement provision, would mean that there 
would no longer exist under U.S. law any statutory provision to give 
domestic legal effect to Article XI of the bilateral trade agreement.

Negotiations on Russian Accession to the WTO--Possibilities and 
Prospects for Moving Russia to A Market Economy in the Natural Gas (and 
Nitrogen Fertilizer) Sectors

    In the last year, Russia has intensified its negotiations with 
other WTO members, including the United States, on its terms of 
accession to the WTO. The Russian Government under President Putin has 
decided that Russian accession to the WTO will help to extend and 
solidify Russia's economic reforms in the direction of a more market-
oriented economy with a more open and liberal trading regime. With the 
accelerated pace of negotiations, many believe that it will be possible 
to conclude Russian accession negotiations as early as the beginning of 
2004.
    Last year, the Ad Hoc Committee of Domestic Nitrogen Producers 
began working with USTR to develop an appropriate approach for 
addressing Russia's gas pricing policy as part of Russia's accession to 
the WTO. In the view of the Ad Hoc Committee, these negotiations 
represent the most favorable opportunity for the international 
community to obtain Russian agreement to eliminate state control of 
domestic industrial gas pricing and to subject such pricing to market 
forces. Unless this is accomplished, either as part of Russia's 
accession to the WTO or autonomously, the specter of massive, unfairly 
priced Russian imports of nitrogen fertilizers will continue to hang 
over the U.S. domestic nitrogen industry for the indefinite future.
    It is too early to tell whether USTR will be able to negotiate a 
market-oriented outcome on Russian industrial gas pricing as part of 
the Russian WTO accession talks. However, they have continued to raise 
the issue with the Russians and have pledged to continue to work with 
the U.S. industry to find a long-term solution to this problem.
    In the meantime, however, it is imperative that the U.S. nitrogen 
fertilizer industry be able to address effectively under U.S. trade 
remedy laws (especially the antidumping and market disruption laws) the 
recurring problems caused by state-controlled natural gas pricing in 
Russia. As long as Russia refuses to allow market forces to determine 
the economics of Russian nitrogen fertilizer production, exports and 
pricing, the NME provisions of U.S. antidumping law and Section 406 of 
Title IV (or some appropriate variation thereof) must continue to apply 
to Russian imports into the United States of nitrogen fertilizers.
Conclusion
    The manner in which the United States structures its trading 
relationship with Russia from a legal standpoint, both domestically and 
internationally, has huge consequences for the economic well being of 
the U.S. nitrogen fertilizer industry. This in turn has important 
consequences for the well-being of U.S. agriculture. For that reason, 
there is no more important public policy issue facing our industry 
today than the legal structure of our trading relationship with Russia.
    In my testimony, I have discussed three interrelated and 
overlapping administrative, legislative, and negotiating developments 
that will likely have a profound impact on this legal structure. From 
the standpoint of the domestic nitrogen industry, decisions made in 
these areas will determine whether we keep plants open or close them, 
whether we continue to employ people or lay them off, and whether we 
continue to supply nitrogen fertilizers to the U.S. agricultural 
community or totally cede that business to offshore suppliers.
    In light of my testimony, I would ask the Trade Subcommittee to 
assist us with respect to the following:
          (1) Congress should encourage Commerce not to revoke NME 
        status under the antidumping law for countries where important 
        sectors of the economy have not yet transitioned to market 
        economy status and where production economics for major 
        exported products remains distorted. Certainly, those sectors 
        that remain subject to significant state control should not be 
        graduated. This is clearly the case with respect to the Russian 
        nitrogen industry.
          (2) Legislation granting the President authority to terminate 
        Section 406 of Title IV with respect to Russia should not be 
        passed at least until such time as Russia joins the WTO or the 
        bilateral trade agreement with Russia terminates, whichever is 
        later. If such authority is granted, the Congress should at the 
        same time enact legislation providing for a market disruption 
        safeguard against Russian imports similar to that which it 
        enacted with respect to China.
          (3) USTR should be directed by Congress not to agree to terms 
        of accession to the WTO for Russia unless they include a 
        requirement that Russia reform its natural gas sector, 
        permitting industrial pricing for natural gas to be determined 
        according to market principles. If USTR cannot achieve this, 
        Russia's terms of accession should include appropriate 
        safeguards to allow appropriate defenses by other countries 
        against Russia's unfairly priced energy-derivative products, 
        particularly nitrogen fertilizers.
    I again thank the Trade Subcommittee for allowing me to testify and 
look forward to working with the Subcommittee on these important 
matters.

                                

    Chairman Crane. Thank you, Mr. Liuzzi.
    And now I would like to yield to our distinguished 
colleague, Mr. Camp, to introduce his constituent, Mr. Wood.
    Mr. Camp. Well, thank you, Mr. Chairman. Mr. Wood is the 
16th President of the Michigan Farm Bureau, elected in December 
2000, and is a fourth-generation Sanilac County dairy farmer. 
For more than a decade, he served as Vice President of the 17-
member State Board of Directors and served on the Policy and 
Development Committee which recommended State and national 
policies for delegates, and has been very active certainly in 
his farm organization, which is a family farm partnership, and 
also very active in trying to recommend good legislation to 
Congress.
    Wayne, it is a pleasure to have you here. Welcome to the 
Subcommittee.

   STATEMENT OF WAYNE WOOD, PRESIDENT, MICHIGAN FARM BUREAU, 
   LANSING, MICHIGAN, ON BEHALF OF THE AMERICAN FARM BUREAU 
                           FEDERATION

    Mr. Wood. Thank you. Mr. Chairman, Ranking Member, and 
distinguished Members of the Subcommittee, the American Farm 
Bureau Federation, AFBF, appreciates the opportunity to testify 
on the important issue of granting permanent normal trade 
relation status to the Russian Federation.
    I am Wayne Wood and, Mr. Chairman, I will make every 
attempt to live up to any preconceived expectations that the 
distinguished Mr. Camp has created for me.
    The AFBF is the largest agricultural organization in the 
Nation with over 5.1 million member families. Our producer 
members cultivate every commodity grown in the United States 
and Puerto Rico and rely on trade for more than 30 percent of 
their farm income.
    The ability to access Russia's market, on terms favorable 
to our farmers and provide a level of certainty and 
transparency, is critically important. That is why we welcome 
the eventual membership of Russia into the World Trade 
Organization to provide rules-based commitments for our 
bilateral trade relationship. However, there are a number of 
important issues outstanding in the agricultural concessions of 
Russia's accession agreement that must be satisfactorily 
addressed.
    The Russian market remains largely untapped for our exports 
for a number of reasons, not the least of which are 
inconsistent regulations, arbitrary bans, and discriminatory 
preferences for other countries. These practices are not in 
accordance with international rules.
    Chief among our concerns with Russia is the arbitrary, 
unjustified ban that Russian authorities placed on our poultry 
exports to its market last month. The ban lacked scientific 
merit and immediately shut the door on our largest poultry 
export market valued annually in excess of $660 million. The 
U.S. poultry exports to that market represent nearly 40 percent 
of our total foreign poultry shipments and constitute over 24 
percent of the overall U.S.-Russian trade.
    Russia has already established WTO-illegal minimum import 
prices for meat and poultry, and recently the Duma passed 
legislation authorizing the implementation of tariff rate 
quotas, TRQs, for meat and poultry imports. We strongly oppose 
the implementation of quantitative restrictions on Russian meat 
and poultry imports.
    The agricultural concessions offered by Russia to date for 
its accession to the WTO are unacceptable. The Doha Declaration 
calls for countries to eliminate export subsidies, yet Russia 
has requested authorization to use $726 million in export 
subsidies.
    On domestic supports, Russia's accession offer calls for an 
eightfold increase in its trade-distorting domestic supports 
from $2 billion to $16 billion, which indicates that Russia 
would like to further insulate its domestic producers from the 
global market forces.
    Farm Bureau supports Russia's accession into the WTO once 
the following terms are met: One, elimination of agricultural 
export subsidies, consistent with the WTO accession agreement 
reached with China; two, Russian food and agricultural tariffs 
should be reduced sharply. Under no circumstances should Russia 
be permitted to establish new tariff rate quotas; three, trade-
distorting domestic support should be limited to a level equal 
to or lower than historical levels of Russian support payments 
to its agricultural sector; four, Russia should not be 
permitted to nullify or impair its market access commitments 
through the use of sanitary or phytosanitary barriers; and, 
five, measures should be implemented to improve and standardize 
Russia's customs procedures consistent with acceptable 
international commercial practices.
    The Farm Bureau seeks assurances regarding commitments to 
seek the objectives outlined above for Russia's WTO accession. 
We are working with the Administration closely on this matter 
and appreciate the efforts of the Office of the U.S. Trade 
Representative in attempting to build our sector's confidence 
that a meaningful accession package will be achieved. We 
encourage congressional endorsement of a strong WTO accession 
package from Russia.
    In closing, the overall U.S.-Russian trade relationship 
strongly favors Russia with its exports to our markets reaching 
$6.5 billion, compared to $2.5 billion in U.S. exports. Every 
effort must be taken to ensure the arbitrary and unjustifiable 
poultry ban is resolved in a manner that rapidly restores our 
access to that market and ensures that actions of this nature 
are not allowed to disrupt the important relationship in the 
future. We recognize the significance of granting permanent 
normal trade relation status to Russia, but regret that we 
cannot endorse PNTR until this important issue is fully 
resolved.
    Mr. Chairman, I thank you very much for the opportunity to 
present this position today, and I thank the distinguished 
Congressman Camp for the very eloquent introduction.
    [The prepared statement of Mr. Wood follows:]
  Statement of Wayne Wood, President, Michigan Farm Bureau, Lansing, 
       Michigan, on behalf of the American Farm Bureau Federation
    Mr. Chairman, Ranking Member and members of the Committee, the 
American Farm Bureau Federation (AFBF) appreciates the opportunity to 
testify on the important issue of granting Permanent Normal Trade 
Relations status to the Russian Federation.
    AFBF is the largest agricultural organization in the nation with 
over 5. 1 million member families. Our producer members cultivate every 
commodity grown in the United States and Puerto Rico and rely on trade 
for more than 30 percent of their farm income.
    The ability to access Russia's market, on terms that are favorable 
to our farmers and provide a level of certainty and transparency, is 
critically important. That is why we welcome the eventual membership of 
Russia into the World Trade Organization to provide rules-based 
commitments for our bilateral trade relationship. However, there are a 
number of important issues outstanding in the agricultural concessions 
of Russia's accession agreement that must be satisfactorily addressed.
    The Russian market offers an important opportunity for the U.S. 
food and agricultural sector. However, it remains a largely untapped 
market for our exports for a number of reasons, not the least of which 
are inconsistent regulations, arbitrary bans and discriminatory 
preferences for other countries. These practices are not in accordance 
with international rules. We must bring Russia into the global trading 
body to ensure that it begins to play by the rules.
    Chief among our concerns with Russia is the arbitrary, unjustified 
ban that Russian authorities placed on our poultry exports to its 
market last month. The ban lacked scientific merit and immediately shut 
the door on our largest poultry export market valued annually in excess 
of $660 million. U.S. poultry exports to that market represent nearly 
40 percent of our total foreign poultry shipments and constitute over 
24 percent of the overall U.S.-Russian trade.
    This is the second ban that Russia has suddenly and arbitrarily 
placed on our poultry exports. In 1996, the Russians imposed a poultry 
ban on U.S. imports that was strikingly similar to the current ban. 
Ultimately, a bilateral agreement was reached that resolved the issue. 
Russian authorities are now alleging that the 1996 agreement is no 
longer valid. The Russian market has been a top destination for our 
poultry exports for nearly 10 years, mostly without incident. U.S. 
poultry exports to Russia have steadily climbed, with significant 
increases experienced immediately proceeding both poultry bans. This is 
not without coincidence.
    We also understand that Russian authorities, at the request of 
their domestic poultry industry, are considering implementing new 
quotas on imported poultry as early as this year. This would be a very 
troubling development in advance of their accession to the WTO, which 
is intended to further liberalize--not restrict--the Russian market.
    Russia already has established WTO-illegal minimum import prices 
for meat and poultry and recently the Duma passed legislation 
authorizing the implementation of tariff-rate quotas (TRQ's) for meat 
and poultry imports. Notwithstanding the minimum import price rules, 
Russia has been the top U.S. poultry export market and one of the 
largest markets for U.S. beef and pork exports. Implementation of the 
TRQ's would be a severe blow to U.S. meat and poultry producers. We 
strongly oppose the implementation of quantitative restrictions on 
Russian meat and poultry imports.
    The agricultural concessions offered by Russia to date for its 
accession to the WTO are unacceptable. The Doha Declaration calls for 
countries to eliminate export subsidies, yet Russia has requested 
authorization to use $726 million in export subsidies. The trend is for 
WTO accession countries to eliminate export subsidies, as China agreed 
to do.
    On domestic supports, Russia's accession offer calls for an eight-
fold increase in its trade distorting domestic supports from $2 billion 
to $16 billion, which indicates that Russia would like to further 
insulate its domestic producers from global market forces.
    Farm Bureau supports Russia's accession into the WTO once the 
following terms are met:
Export Subsidies
    Elimination of agricultural export subsidies, consistent with the 
WTO accession agreement reached with China.
Market Access
    Russian food and agricultural tariffs should be reduced sharply. 
Tariff reductions should be as comprehensive as possible and 
implemented on an accelerated schedule.
    Under no circumstances should Russia be permitted to establish 
tariff rate quotas for products for which there is no recent history of 
a TRQ.
    Products that currently are subjected to a low tariff should be 
bound at that rate, or lower.
Product Specific Market Access Issues
    Equitable treatment should be accorded to all countries that export 
product to Russia. Currently, wheat imports are assessed a twelve 
percent tariff, except those originating from Commonwealth of 
Independent States (CIS) countries (zero tariffs). Certain 
discriminatory tariff discounts for soy oil imports that are extended 
to other countries must be provided on a most favored nation basis.
    The United States should seek to achieve final bound tariff levels 
of no more than 10 percent for all cheese items and butter products. 
Likewise, tariffs on skim milk powder and ice cream should also be 
maintained at a level no higher than 10 percent.
    Russia maintains a minimum price invoicing system on imported meat. 
Establishing minimum or target prices for imported products is contrary 
to WTO rules. This system should be abolished.
    Feed grains currently enjoy access into Russia's market with a 
five-percent tariff and are not subject to a TRQ. However, since 
imports from CIS countries and some developing countries receive duty 
free status, feed grain tariffs should be reduced from the five-percent 
tariff.
    There is a 10 percent value added tax (VAT) on all products 
domestically produced or imported into Russia. This tax is not assessed 
on Russian exports, and, given the inability of the Russian tax 
collection system to accurately account for all the domestic production 
or cross border trade, it is likely that a significant amount of 
domestic production and imports from CIS countries escape the 10 
percent VAT assessment, further disadvantaging U.S. exports.
Domestic Support Payments
    The bar should not be lowered for Russia. Trade-distorting domestic 
support should be limited to a level equal to, or lower than, 
historical levels of Russian support payments to its agricultural 
sector or that amount which other countries entering the WTO have been 
held to as a percentage of their total value of agricultural 
production. Amber box qualifying de minimis product specific and non-
product specific payments should not exceed 8. 5 percent, consistent 
with the WTO accession agreement reached with China.
SPS Measures
    Russia should meet all obligations specified under the WTO 
Agreement on Sanitary and Phytosanitary Measures.
    The administration should ensure that Russian sanitary and 
phytosanitary measures that are not based on science, and/or represent 
arbitrary and unjustifiable health and safety regulations, are removed 
prior to Russia's accession to the WTO.
    Russia should not be permitted to nullify or impair its market 
access commitments through the use of sanitary barriers.
    As part of its accession agreement, Russia should agree to 
terminate sanitary measures that impede imports of U.S. agricultural 
products and have no scientific basis.
Specific SPS issues to be addressed
    Russia should agree to accept meats from all U.S. federally 
inspected plants. Current Russian requirements for U.S. meats related 
to trichinae and vesicular stomatitis that have no scientific basis, 
and that impede market access, should be eliminated.
    A bilateral agreement on pest/weed levels & quarantine issues 
should be achieved. Russian restrictions on pests/weeds, that are not 
necessary for quarantine purposes and lack scientific merit, should be 
eliminated.
    The U.S. government needs to ensure that products of biotechnology 
do not become an impediment to trade. Prior to WTO accession, the 
administration should get an official commitment from the Russian 
Government to let trade of biotech products already in the marketplace 
continue uninterrupted, and that any implementation of rules governing 
biotechnology be transparent, timely, and scientifically based.
    We oppose mandatory labeling requirements for genetically modified 
foods or agricultural commodities, including any requirement that meats 
be labeled to indicate that the animal had consumed genetically 
modified feed.
Other Non-Tariff Barriers
    Russia should agree to adopt internationally accepted standards/
specifications, including those pertaining to soybean and soybean 
products. Current differences in the Russian GOST Standards (Russian 
State Standards) and the FGIS and NOPA standards, as well as 
differences in the method of analysis and terminology for the 
standards, impede timely market access.
Trade Facilitation
    Measures should be implemented to improve and standardize Russia's 
customs procedures consistent with acceptable international commercial 
practices.
    Coordination of all the Russian governmental bodies and 
documentation requirements necessary to import commodities and clear 
cargo should be achieved. Currently there are numerous documents 
required by various Russian governmental bodies with each promulgating 
their own rules, absent central control. Approximately 80 percent of 
goods imported into Russia require certificates, compared with only 16 
percent in the EU.
Permanent Normal Trade Relations Status
    Farm Bureau cannot support granting Permanent Normal Trade 
Relations status to Russia until its ban on our poultry exports is 
fully lifted and resumption of our poultry exports to the Russian 
market approximates previous levels. We note that the de-listing of 
certain poultry plants for export to Russia could be used to curtail 
future imports, a development that we would strongly oppose.
    In addition, the Farm Bureau seeks assurances regarding commitments 
to seek Farm Bureau's objectives outlined above for Russia's WTO 
accession. We are working with the administration closely on this 
matter and appreciate the efforts of the Office of the United States 
Trade Representative in attempting to build our sector's confidence 
that a meaningful accession package that accommodates our concerns will 
be achieved. We look forward to a firm commitment in this regard.
    In closing, the overall U.S.-Russia trade relationship strongly 
favors Russia with its exports to our market reaching $6.5 billion, 
compared to $2.5 billion in U.S. exports. Unfortunately, our 
agricultural trade relationship with Russia has been severely damaged 
by its arbitrary and unjustifiable ban on our largest export to its 
market, poultry. Every effort must be taken to ensure that this issue 
is resolved in a manner that rapidly restores our access to that market 
and ensures that actions of this nature are not allowed to disrupt the 
important relationship that our country is trying to build with that 
nation. We recognize the significance of granting Permanent Normal 
Trade Relations status to Russia, but regret that we cannot endorse 
PNTR until this important issue is fully resolved.

                                

    Chairman Crane. Thank you, Mr. Wood. Mr. Luks.

  STATEMENT OF HAROLD PAUL LUKS, CHAIRMAN, NCSJ: ADVOCATES ON 
 BEHALF OF JEWS IN RUSSIA, UKRAINE, THE BALTIC STATES & EURASIA

    Mr. Luks. Thank you, Mr. Chairman. My name is Harold Luks. 
I am the Chairman of NCSJ. We are now known as the Advocates on 
behalf of Jews in Russia, Ukraine, the Baltic States and 
Eurasia. With me today is Mark Levin, our Executive Director, 
who has been with us for more than 20 years.
    As a former congressional staffer in the House and Senate, 
I first worked on the waivers from Jackson-Vanik for Eastern 
European countries in 1978. And today is a historic hearing. We 
represent nearly 50 national Jewish organizations, including 
the Anti-Defamation League and B'nai B'rith (which have asked 
to be associated with this testimony), 300 local community 
councils and federations across the country. Mr. Chairman, I 
would like to take this opportunity to summarize our basic 
points.
    First, we support the graduation of Russia from the 
Jackson-Vanik amendment, and we believe the Subcommittee should 
focus on the concept of graduation because it represents a 
turning point and an important step forward. We base our 
position first on the fact that there is free emigration, but, 
also that those individuals who are citizens of the Russian 
Federation have the opportunity now to choose the religion, 
culture, language, and faith of their forefathers, something 
that was denied to them during 70 years of Soviet rule.
    Second, there are problems in the Russian Federation 
confronting the Jewish community. There are anti-Semitic 
incidents, some in more places than in others. Two, the Russian 
Government has interfered directly in Jewish communal affairs, 
such as by unilaterally choosing who should be viewed as the 
chief rabbi. And, police have broken into the central synagogue 
in Moscow and conducted a search. There have been confiscatory 
taxes imposed on Jewish organizations engaged in religious and 
humanitarian affairs. Finally, the 1997 law on religion which 
requires registration continues to be a problem.
    Let me make one thing clear: We support graduation. We have 
addressed these issues with someone whom we have come to regard 
as a colleague and a voice of reason, and that is Ambassador 
Ushakov. But we look to the future with some trepidation given 
the uncertainties in the Russian Federation.
    The focus of my remarks today is with respect to certain 
deficiencies which we see, Mr. Crane, in the bill which you 
have cosponsored, H.R. 3553.
    I would like to take a moment to just step back in history. 
In his State of the Union message to Congress in 1904, Teddy 
Roosevelt condemned anti-Semitism in the Russian Empire. In 
1911, the United States critiqued the U.S.-Russian trade treaty 
that dated from 1832. And, in 1912, Mr. Crane, the United 
States abrogated this treaty because of czarist policies 
against their Jewish minority.
    The Jackson-Vanik was not the beginning of the U.S. 
commitment, and the Jackson-Vanik is not the end of this 
commitment. It is something that preceded us and we hope will 
live on after us, because it reflects the very best in American 
values and commitments to human rights and religious freedom.
    Therefore, we are asking the Subcommittee for three very 
specific things, and they are set forth in our testimony: 
Number one, expand the findings section; number two, include a 
policy section within the bill that builds on the legacy left 
to us by Teddy Roosevelt so there is no ambiguity as to what 
the United States stands for; and, number three, in the 
Committee report, to address some of the bilateral mechanisms 
which were referenced by Mr. Lantos to continue the focus of 
the Congress and the President on human rights and religious 
freedom.
    I would like to close by noting that, after the Holocaust, 
Jews who survived still had a memory of Jewish religion and 
faith because they were able to maintain it even in the camps. 
After 73 years of Soviet rule, that memory became barely 
recognizable. Jewish life in an organized way had all but 
ceased. The Jackson-Vanik was an instrument, Mr. Crane, that 
created an opportunity for Jews in the Soviet Union and now in 
Russia to rediscover their past. That is a Jewish issue.
    But let me say, the treatment of Jews in the Russian 
Federation is a reflection of civil society, and when the 
Jewish minority is treated well, there is a much greater 
indication that Russia will become a Member of the community of 
nations, engage in trade, welcome foreign investment, buy 
planes from Boeing, buy American agriculture, and export to us. 
We believe the two were never separated, and we believe they 
continue to work together.
    The substantial progress that has been achieved by Jackson-
Vanik and by many Members of this Subcommittee, in revitalizing 
Jewish life, has been a success. But it still reaches a small 
portion of the population. We want to make sure that our 
message, that NCSJ's message and the message of other Jewish 
organizations, can continue to be made inside Russia.
    Congress can help to secure their future by articulating a 
clear U.S. policy: that they should have the freedom to choose 
their faith and their culture.
    Mr. Crane, Mr. Levin, this is a noble cause, and we commend 
the good work of this Subcommittee and look forward to your 
good work to perfect the legislation before you.
    Thank you very much.
    [The prepared statement of Mr. Luks follows:]
 Statement of Harold Paul Luks, Chairman, NCSJ: Advocates on behalf of 
          Jews in Russia, Ukraine, the Baltic States & Eurasia
    Good morning, Mr. Chairman, Representative Levin, and Members of 
the Subcommittee. My name is Harold Paul Luks. I am the Chairman of 
NCSJ: Advocates on behalf of Jews in Russia, Ukraine, the Baltic States 
& Eurasia, i.e., the Former Soviet Union (``FSU''). With me today is 
Mark Levin, NCSJ's Executive Director, who has been with our 
organization for more than 20 years.
    As a former Congressional staffer, I first worked on extending 
Jackson-Vanik waivers for Eastern European countries in 1978 and have 
been deeply involved in international trade matters since that time. As 
member of NCSJ, and Chair of its Jackson-Vanik Committee for many 
years, I have had the privilege of working on the linkage among 
international trade, emigration, and religious freedom.
    NCSJ, representing nearly 50 national organizations and more than 
300 local community-based federations, community councils, and 
committees on Jews in the FSU, speaks for the organized American Jewish 
community on issues affecting the Jewish minority in the FSU. My 
organization, formerly known as the National Conference on Soviet 
Jewry, changed its name several years ago to reflect the emergence of 
independent successor states. We evaluate graduation for each successor 
state based on a set of country-specific issues, achievements, and 
challenges.\1\
---------------------------------------------------------------------------
    \1\ For an assessment of these issues, a copy of JCSJ's 2000/01 
Country Reports is available upon request by contacting our office in 
Washington or online at www.ncsj.org.
---------------------------------------------------------------------------
    For three decades, NCSJ has mobilized public opinion to oppose 
human rights violations in the FSU and the successor states, including 
such efforts as the 1987 March on Washington--``Freedom Sunday for 
Soviet Jews''--which drew an estimated 250,000. As evidence of our 
community's continuing consensus, several major American Jewish 
organizations have asked to be associated with our testimony today.
    Members of this Subcommittee and the full Committee have earned a 
place of merit in the struggle to save the Jewish people in the Soviet 
Union from the concerted policy of the Communist Party to extinguish 
their religion, culture, and language. Those who met with refuseniks 
under the eyes of the KGB, delivered Hebrew texts when they were banned 
and stood for the linkage between human rights and trade policy gave 
courage to those who struggled for freedom. Jackson-Vanik is a 
bipartisan issue. Just as former Chairman Archer was an original 
cosponsor of the Amendment, we wish to acknowledge the work of 
Representative Tom Lantos who has devoted many hours to advancing the 
cause of human rights and developing a new Congressional-Executive 
Branch framework following the graduation of the Russian Federation.
The Position of NCSJ on Graduation
    Mr. Chairman, NCSJ supports the graduation of the Russian 
Federation from Title IV of the Trade Act of 1974--the Jackson, Vanik, 
Archer, Mills Amendment (``Jackson-Vanik''). Our position on the 
graduation of the Russian Federation does not imply that we are 
prepared, at this time, to support the graduation of the other FSU 
successor states to which Jackson-Vanik still applies. It is not the 
position of NCSJ that the terms of Jackson-Vanik should apply in 
perpetuity to the former republics of the Soviet Union. However, 
graduation for any successor state must be conditioned upon the 
development of a legal structure that guarantees internationally 
recognized human rights for its Jewish citizens, and other religious 
and national/ethnic minorities. In the absence of such conditions, 
there is in our opinion no possibility of establishing democratic 
institutions applicable to all citizens.
    However, the struggle for the freedom of Soviet Jewry contributed 
to the transformation of the Soviet Union into the Newly Independent 
States (``NIS''), a process that is not complete. The American 
diplomatic commitment to secure freedom for Russian Jewry (that first 
found expression before World War One) has not diminished, and the task 
before this Committee requires a new legislative formulation, which 
NCSJ will advocate this morning. The opening of the doors to emigration 
is not the exclusive factor on which we base our support for 
graduation. NCSJ's position on graduation is based on substantial 
progress toward two factors. These are:
        First, freedom of emigration for all Jews in accordance with 
        the Helsinki Accords and established principles of 
        international law, and
        Second, for those who choose remain in Russia, freedom to 
        practice the religion of their forbears, to participate in the 
        unique aspects of Jewish culture and language, unfettered by 
        governmental interference.
    Our support for graduation is not without a reasoned measure of 
apprehension.
           Across the Russian Federation, the severity and 
        frequency of anti-Semitic incidents have been increasing. These 
        have included arson attacks, synagogue and cemetery 
        desecrations, and direct assaults into Jewish institutions.
           The extent to which anti-Semitic acts are 
        investigated, and perpetrators are prosecuted, requires greater 
        attention from Moscow and local governmental authorities.
           Kremlin officials have either tolerated or actively 
        promoted government interference in Jewish intra-communal 
        affairs. This has manifested itself in (1) pressuring 
        individuals to decline leadership positions in specific Jewish 
        organizations, (2) threats to withhold entry visas to guests of 
        the community, (3) unilaterally replacing the Chief Rabbi of 
        Russia in official fora, refusing to re-register the Moscow 
        Jewish Community, and (4) interference in intra-communal 
        disputes as a means to solidify Kremlin influence and control.
           At times, governmental interference has become 
        outright intimidation, such as the illegal search of the Choral 
        Synagogue, the main synagogue in Moscow.
           Unreasonable, and at times confiscatory taxes have 
        been imposed on the donations provided to organizations 
        dedicated to performing humanitarian tasks.
    In prior position papers, NCSJ has drawn attention to the 
dichotomies inherent in Russian President Vladimir Putin's rise to 
power. He has clearly demonstrated his support for the revival of 
Jewish life. He has visited the Jewish Community Center in Moscow, 
participated in lighting the Chanukah menorah, issued statements 
condemning anti-Semitism, spoken positively about supporting Jewish 
renewal, and developed warm relations with successive Israeli 
governments. But seemingly contradicting these actions are the past use 
of anti-Semitism in promoting Mr. Putin's candidacy for President, the 
election rhetoric of his political allies in elections for the Duma, 
and the difficulties posed by Russia's restrictive Law on Religion.
    In our meeting with President Putin on November 13th in Washington, 
he spoke very personally and firmly about his government's, and his own 
personal, commitment to promoting Jewish communal life and to combating 
popular anti-Semitism and xenophobia. As impressed as my fellow 
community leaders and I were with Mr. Putin's remarks, it is Russia's 
formal statements and assurances, and the legislative context in which 
Russia may be graduated, that best assure ``the continued dedication of 
the United States to fundamental human rights,'' which are the opening 
words of the Jackson-Vanik Amendment (22 U.S.C. 2431).
The Position of NCSJ on H.R. 3553
    With respect to the present legislation before the Subcommittee, 
NCSJ wishes to express its appreciation to Members and their personal 
and Committee staffs, both majority and minority, who have consulted 
with us on the graduation of Russia and the future status of the other 
FSU states under Jackson-Vanik.
    Mr. Chairman, as noted above, we believe that the Committee on Ways 
and Means has a historic opportunity to restate the American commitment 
to securing the future for Jews in the Russian Federation and the NIS. 
Before and after the President's announcement on the graduation of 
Russia, we have heard that Jackson-Vanik is: a relic of the Cold War; 
an impediment to normalizing U.S.-Russia trade relations; a mechanism 
that never achieved its objectives; and a statute that speaks only of 
emigration. These are the statements of those who are not familiar with 
or choose to ignore American diplomatic history, the Amendment's 
legislative history, and most importantly, the profound effect it has 
had on those who struggled to reassert their Jewish identity either by 
emigration or the restoration of organized Jewish communal life.
A. Additional ``Findings'' Should be Included in H.R. 3553
    H.R. 3553, as introduced, contains a number of positive 
``Findings'' that reflect the language adopted by the Committee and 
Congress in graduating Georgia. However, there are certain additional 
provisions that should be incorporated into H.R. 3553. Before reviewing 
these, Mr. Chairman, permit me to summarize the basis for our request.
    In his Annual Message to Congress of 1904, President Theodore 
Roosevelt denounced Czarist persecution of the Jews. Moreover, in 1912, 
the United States cancelled the 1832 U.S.-Russia trade treaty because 
of American displeasure with the Russian Government's treatment of its 
Jewish minority. Thus, the enactment of Title IV in the Trade Act of 
1974 was not a departure for Congress and American diplomacy, but a 
continuation of a longstanding commitment. The voluminous record of 
resolutions, letters, appeals and meetings by Members of this Committee 
relating to this struggle will continue to have meaning if H.R. 3553 is 
expanded to include the following points:
          Russia has continued to return religious and communal 
        properties confiscated from national and religious minorities 
        during the Soviet period, facilitating the reemergence of these 
        communities in the national life of the Russian Federation; and 
        has committed, including through an exchange of letters, to 
        continue its efforts toward the restitution of such properties 
        in accordance with existing Russian laws.\2\
---------------------------------------------------------------------------
    \2\ This would replace Section 1, paragraph 7, in H.R. 3553.
---------------------------------------------------------------------------
          Russia is committed to addressing issues related to its 
        national and religious minorities as a member of the 
        Organization for Security and Cooperation in Europe (OSCE), and 
        to adopt measures for ensuring that persons belonging to 
        national minorities have full equality individually, as well as 
        in community with other members of their group.
          Russia is committed to the 1990 Copenhagen Document of the 
        OSCE affirming the right of national minorities to establish 
        and maintain their own educational, cultural and religious 
        institutions, organizations or associations and to establish 
        and maintain unimpeded contacts among themselves within their 
        country as well as contacts across frontiers.
          Russia has enacted statutory provisions to provide protection 
        against incitement to violence against persons or groups based 
        on national, racial, ethnic or religious discrimination, 
        hostility or hatred, including anti-Semitism, and has adopted a 
        four-year national program for preventing extremism and 
        promoting tolerance in Russian society.
          Recognition that the exchange of letters between the 
        Governments of Russia and the United States, and related 
        assurances, are viewed by Congress as binding obligations by 
        the Russian Federation.
    NCSJ believes that any legislation to graduate successor states 
from the Jackson-Vanik Amendment should acknowledge assurances from the 
respective governments regarding freedom of emigration and other human 
rights. In other words, there should be an assurance provided to the 
United States regarding these matters. I would also suggest that this 
Subcommittee, in consultation with other appropriate bodies within the 
United States Congress, use the opportunity of graduating Russia to 
review an inventory of remaining bilateral and unilateral mechanisms 
and commitments available to our Legislative and Executive Branches for 
addressing and resolving concerns relating to human rights and 
religious freedom in Russia.
    The trade aspects of Jackson-Vanik, intended to advance a decidedly 
non-trade agenda, have tied human rights criteria to bilateral 
commercial trade relations. This has now afforded the Subcommittee on 
Trade a historic opportunity to formulate and adopt a new framework 
that acknowledges Russia's considerable progress, and creates a new 
paradigm for continuing America's century-long commitment to religious 
freedom in Russia.
    For over two decades, our advocacy of Jackson-Vanik has led some in 
the business community to express the view that we were concerned with 
a religious issue that should be divorced from the business of 
international trade. To be sure, for NCSJ and its constituent 
organizations, Jackson-Vanik is a religious issue--a Jewish issue. 
Despite the collapse of the Soviet Union and substantial emigration, 
Russia remains home for the world's third-largest Jewish population. 
These people now have the potential to reenter the Jewish world.
    We have always regarded Russia's treatment of its Jewish minority 
as a barometer of its potential to reenter the community of nations and 
to become integrated into the economic lifeline of world trade. Without 
question, a vibrant, revitalized Jewish community is a reflection of an 
emerging civil society. Such a society, based on laws and implementing 
regulations, is a prerequisite for long-term, sustained economic 
growth, trade, and foreign investment.
B. H.R. 3553 Should Include a New Section on U.S. Policy Objectives
    The current bill acknowledges some of Russia's commitments which 
formed the basis for NCSJ's support of graduation from Jackson-Vanik. 
However, the current bill does not set forth U.S. policy objectives 
post graduation. For this reason, we urge that the Committee adopt a 
``Policy'' subsection reflecting Administration assurances and based on 
the following:
            (1) Urging the Russian Federation to
            (A) continue its current policy regarding the free 
        emigration of its citizens;
            (B) safeguard religious liberty throughout the Russian 
        Federation;
            (C) prevent the requirement that religious organizations be 
        registered from being abused to curtail activities of religious 
        organizations;
            (D) enforce existing Russian laws at the national and local 
        level to combat ethnic, religious, and racial discrimination 
        and violence; and
            (E) expand the restitution of religious and communal 
        properties, including establishing a legal framework for 
        completion of restitution in the future; and
          (2) Continuing rigorous U.S. monitoring of human rights 
        issues in the Russian Federation, including the issues 
        described in paragraph (1), providing assistance to 
        nongovernmental organizations and human rights groups involved 
        in human rights activities in the Russian Federation, and 
        establishing ongoing discussions with the Russian Federation 
        regarding such issues, including the participation of U.S. and 
        Russian non-governmental organizations in such discussions.
    Incorporation of such language will provide a firm basis for 
continuing the longstanding commitment of successive administrations 
and Congress to securing religious freedom in Russia, which is a multi-
ethnic and multi-religious state.
    The Ways and Means Committee made clear its policy when Jackson-
Vanik was adopted. As noted above, former Representative Archer was an 
original sponsor of the ``Freedom of Emigration Act,'' the initiative 
which became the Jackson-Vanik Amendment. In his floor statement of 
February 7, 1973, he said, in part:
    ``By taking this action we call upon the Government of the Union of 
Soviet Socialist Republics to cease persecution of these people on the 
basis of religious belief.
    ``We also call upon the Soviet Union to release all prisoners, 
those already sentenced and those due to stand trial, arrested as a 
result of their attempt to exercise their religious beliefs and to 
study their religious heritage and culture.''
    Representative Archer concluded his statement with the following 
credo: ``We do not need foreign trade enough to do business with 
countries that practice religious discrimination and this form of 
bondage.'' The Report of the Committee on Finance for the Trade Reform 
Act of 1974 (H.R. 10710) emphasized that Jackson-Vanik extended beyond 
emigration policy. The Report states an ultimate motivation beyond that 
of emigration: ``The Committee believes that it is equally reasonable 
to establish conditions on all basic human rights, including the right 
to emigrate as well as basic property rights, before extending broad 
concessions to communist countries.'' Writing in 1980, the late Senator 
Henry M. ``Scoop'' Jackson reiterated that this law ``has long been the 
principal hope of thousands of Soviet Jews and others who have 
struggled to obtain visas so that they might emigrate to Israel, the 
United States, or other countries where they are free to live and 
worship according to their faith--a freedom denied them in the Soviet 
Union.'' Now, the time has come to develop a new formulation that will 
continue to focus the attention of Congress and the Executive Branch on 
the issues that led to the enactment of the Jackson-Vanik Amendment.
Background to Jackson-Vanik
    The Jackson-Vanik Amendment in Title IV of the Trade Act of 1974 
(P.L. 93-618, 19 U.S.C. 2432) was enacted to ``assure the continued 
dedication of the United States to fundamental human rights,'' and in 
so doing sought to eliminate barriers to emigration, an internationally 
recognized human right. Congress has recognized that Jackson-Vanik has 
become an instrument of U.S. policy for assessing certain countries' 
observance of basic human rights and the protection of minorities. 
These principles were reflected in the graduation of Georgia from 
Jackson-Vanik in 2000, as well as previous examples (e.g., the Kyrgyz 
Republic).
    Since before the enactment of the Trade Act of 1974, NCSJ has 
worked for free emigration from the Soviet Union and now from the 
successor states of the FSU. Numerous Congressional resolutions and 
Presidential statements confirm that Jackson-Vanik encouraged the 
Soviet Union and its successor states to liberalize emigration policy 
and, ultimately, to permit a mass emigration to Israel and other 
countries. Today, many take for granted free emigration from the FSU. 
For NCSJ and the Jewish community, of course, free emigration can never 
be taken for granted. For us, it is celebrated. The Passover festival, 
which we concluded last week, reenacts the Biblical exodus of the 
Jewish people from Egyptian bondage. The Passover observances hosted at 
the United States Embassy in Moscow in the 1980s provided moral support 
to thousands of refuseniks and Prisoners of Zion, such as Natan 
(Anatoly) Sharansky. It is for these reasons, and the unprecedented 
mobilization by American Jews and other human rights advocates, that we 
do not take unrestricted emigration for granted. Unfortunately, we must 
acknowledge that there remains an undercurrent of anti-Semitic violence 
within the Russian Federation. For that reason, the United States needs 
to be on record, in legislation approved by Congress and signed into 
law by the President, that the United States will not stand aside if 
political circumstances should turn against the Russian Jewish 
community.
    NCSJ believes that economic growth in Russia is in the strategic 
interest of the United States. We devoted considerable resources to 
support enactment of the 1992 Freedom Support Act, and continue to 
support the current assistance package as we have advised every Member 
of Congress. NCSJ is an active participant in a broad-based coalition 
of business, public interest and ethnic organizations that supports 
full funding for U.S. foreign assistance through the Function 150 
account. As with freedom of emigration, building democratic societies 
in the wake of Soviet tyranny is hardly something we can afford to take 
for granted.
    Beginning in 1989, the NCSJ Board of Governors endorsed annual 
waivers of the Jackson-Vanik Amendment for the Soviet Union and its 
successor states. This support was contingent on (1) the President's 
affirmation that waivers would encourage emigration and progress on 
other humanitarian issues; and (2) assurances concerning a commitment 
of further progress in connection with these concerns. Since 1994, NCSJ 
has supported semi-annual findings by the President that Russia, and 
most of the successor states, are in compliance with Jackson-Vanik's 
emigration provisions and have demonstrated progress on protection of 
minority rights.
    We have never lost sight of the original motivation for Jackson-
Vanik. Representative Archer's words, like those of so many of his 
colleagues, underscore the emphasis on religious freedom. In 1974, 
emigration constituted the only vehicle for ensuring that Soviet Jews 
could live freely as Jews. Dr. William Korey, a leading scholar on 
human rights, has noted that the late Andrei Sakharov endorsed Jackson-
Vanik not only as an emigration tool. Dr. Sakharov foresaw that freer 
emigration would compel the Soviet regime to observe human rights 
generally or risk losing valuable citizens to other countries.
    Graduation from Jackson-Vanik was never restricted to narrow 
questions of emigration. Terminating application of the Amendment to a 
successor state necessarily takes into account a set of broad human 
rights considerations that evolved since implementation of the Trade 
Act. Especially in the post-Soviet landscape, emigration, the ability 
of Jews and other minorities to identify with their cultural heritage, 
restitution of communal property, governmental responses to anti-
Semitism and xenophobia as well as commitments on implementation of 
laws and practices ensuring minority protection have become part of the 
test for graduation. These are reasonable standards and, in effect, 
confirm the transition from the legacy of communism to the development 
of a civil society.
    In our consultations with the Government of the Russian Federation, 
discussions with Executive Branch officials and contacts with so many 
Members of the House and Senate, we have communicated our support for 
Russia's graduation. We know that President Putin, his government, 
members of the Duma and members of the Russian intelligentsia will 
carefully review the legislation approved by this Committee and 
ultimately passed by the United States Congress. In simple terms, Mr. 
Chairman, you have the ability to send an important message that will 
be reviewed by multiple audiences in the United States, Russia, and the 
FSU.
Support for Permanent Normal Trade Relations
    Graduation of any successor state from the terms of Jackson-Vanik 
must be based upon an assessment of emigration policies as reflected in 
law and fact, and, no less importantly, other national policies that 
affect the status of ethnic and religious minorities, such as the 
Jewish community. Virtually every Member of Congress has subscribed to 
this formulation. Therefore, graduation should be conditioned upon 
Congressional consideration of the following standards and conditions 
that provide the basis for the language we propose be incorporated into 
H.R. 3553.
          An unrestricted right of emigration, protection of minority 
        rights, including legislation to provide protection against 
        incitement to violence against persons or groups based on 
        various criteria, including religion (e.g., anti-Semitism), and 
        the exercise of freedom of religion;
          The incorporation of human rights standards (including 
        freedom of emigration and religion) into the country's 
        constitutional and legal structure, their protection by the 
        judiciary, and the implementation of administrative practices 
        that do not detract from such rights; and
          Participation in bilateral and multilateral mechanisms 
        related to the observance of religious freedom and basic human 
        rights, demonstrating a commitment to these freedoms and 
        rights.
    Mr. Chairman, Russian Jewish life has increasingly flourished since 
the Soviet collapse. Thousands of students--young and old--across the 
country now study their Jewish heritage. Welfare activities proceed 
generally uninhibited by official interference. Jews everywhere are 
forming congregations and cultural groups. Jewish communities are 
forming in places where we believed Jewish life had been crushed by the 
Soviets in the 1920s, as a consequence of the Holocaust, or through 
Stalinist persecutions. Russia's friendship with Israel is largely a 
testament to over one million Soviet emigres who have become Israeli 
citizens since Jackson-Vanik was enacted. Russia's evolving 
relationship with the United States offers potential for progress in 
ways we did not imagine just over a decade ago. Although it is 
unrelated to Jackson-Vanik, I must also recognize the critical support 
and cooperation that Russia provides to the ongoing campaign in support 
of our collective struggle against international terror.
Additional Protections for Religious Freedom
    Mr. Chairman and Members of the Subcommittee, we encourage the 
Congress to approve Russia's graduation from Jackson-Vanik, and to do 
so through legislation that reflects and acknowledges the 
accomplishments of Title IV with respect to the Russian Federation. As 
we have reiterated throughout our testimony, we believe that Congress 
and the President must continue to focus attention on Jackson-Vanik-
related issues. Paraphrasing Jackson-Vanik, to assure the continued 
dedication of the United States to human rights in Russia, Congress 
should consider the following measures so as to make certain that there 
is an unambiguous record documenting the objectives of U.S. policy and 
the standards to which the United States expects the Russian 
Federation's adherence. The Committee's report should reference the 
following items:
          Executive Branch prerogatives such as the International 
        Emergency Economic Powers Act (``IEEPA'') and the resources at 
        the disposal of the Ambassador at Large for International 
        Religious Freedom;
          Legislative oversight of human rights and matters involving 
        linking of religious freedom to U.S. assistance to Russia. This 
        can be accomplished through Legislative-Executive Branch 
        partnerships, such as Congressional participation in 
        multilateral fora including the OSCE Parliamentary Assembly;
          The Department of State's Annual Report on Human Rights 
        Practices and the Report on International Religious Freedom, 
        which include sections that address specifically matters 
        affecting the Jewish community;
          Official bodies such as the U.S. Commission for International 
        Religious Freedom and the U.S. Commission for the Preservation 
        of America's Heritage Abroad, which have opened new avenues for 
        communication with FSU successor governments and local 
        administrators on minority rights issues and the preservation 
        of communal properties (e.g., synagogues, schools, cemeteries 
        and mass-murder sites dating from the Holocaust).
          U.S. Government initiatives to convene meetings of 
        Congressional, Administration and non-governmental 
        organizations (``NGOs''), both American and Russian, including 
        the Roundtable on Religious Freedom in Russia;
          The exchange of letters on religious freedom between the 
        Russian and U.S. governments, related assurances, 
        communications between the Administration and Congress, and the 
        multilateral treaties and agreements to which Russia is a 
        party, including the Helsinki Final Act and subsequent OSCE 
        documents.
The Legacy of the Jackson-Vanik Amendment
    In the quarter-century since the adoption of Jackson-Vanik, its 
boldness has contributed to a sea change in U.S. and Russian policies, 
and in some measure to the roadmap for the 21st century. In announcing 
his intent to graduate Russia, President George W. Bush underscored the 
importance of Russian assurances on religious freedom. The President 
recently wrote to American Jewish organizations about Jackson-Vanik: 
``The Jewish community has helped write a proud chapter in the history 
of American foreign policy, but the work is not complete. We need your 
continued advocacy and support . . .'' (I ask, Mr. Chairman, that the 
President's letter to NCSJ of November 19, 2001, be entered into the 
record of this hearing.) Today, the U.S. Government expects, 
appreciates and invites public interest in the internal human rights 
policies of other countries, just as we do at home.
    The continuing force and effect of Jackson-Vanik are reflected in 
the correspondence between Secretary of State Colin Powell and Russian 
Foreign Minister Igor Ivanov. Foreign Minister Ivanov's November 13 
letter to Secretary Powell welcomes the Bush administration's decision 
to graduate Russia, stresses his country's commitment to religious 
freedom and minority rights, and applauds the ``genuine renaissance'' 
of Russian Jewish life. As a testament to the reordering of post-Soviet 
priorities, Mr. Ivanov concludes his historic letter by reaffirming 
``our commitment to these principles [of religious freedom], which we 
consider an indispensable condition for Russia's development as a 
multiethnic country based on the principles of civil society.''
    The purpose of Jackson-Vanik was never to promote trade, but rather 
to ensure that free trade would never be confused for the ultimate goal 
of U.S. foreign policy. Thomas Jefferson wrote of America in 1824 that 
``even should the cloud of barbarism and despotism again obscure the 
science and liberties of Europe, this country remains to preserve and 
restore light and liberty to them.'' As a result of Jackson-Vanik, 
never again can critics in either country credibly claim that religious 
freedom has no substantive place in U.S.-Russian relations or that 
internal government practices are a solely domestic concern.
    To conclude, let me emphasize what graduation of Russia does not 
mean for the Jewish community. It does not mean Russian anti-Semitism 
has disappeared, or that the Russian authorities are doing all they 
could to eradicate racism, xenophobia, and intolerance. Nor does it 
mean that the gains for Jewish life in Russia are irreversible; this 
progress remains vulnerable to the voices of darker days, voices that 
can be heard still in Russian political life and in the Duma.
    When World War Two ended, there remained tens of thousands of Jews 
in Europe who lost everything--their families, homes, communities, and 
personal possessions. What remained was an indomitable spirit to 
survive and to preserve their Jewish heritage. In the FSU, there still 
are hundreds of thousands of persons who would be welcome members of 
the Jewish community. However, 73 years of communist rule eviscerated 
virtually all aspects of Jewish life in the Soviet Union. Rabbis and 
religious leaders were either expelled or disappeared. Religious and 
Jewish cultural institutions were closed, their assets seized and 
properties confiscated. With the passage of generations, memory of 
Judaism dissipated and became barely recognizable. Although Soviet 
support was a critical factor in the creation of Israel, expressing 
Jewish identity in the 1950s was, at times, life-threatening. Through 
the balance of the 20th century, Soviet policy achieved one of its main 
objectives regarding its Jewish citizens: a population largely devoid 
of Jewish identity or fearful of expressing it. Completion of this goal 
was thwarted because the dissidents, refuseniks and Hebrew teachers 
could no longer just disappear. This was, in part, due to the spotlight 
Jackson-Vanik shined on human rights.
    Jackson-Vanik was instrumental in creating the opportunity for 
Soviet Jewry, now Russian Jewry, to find new ways to express their 
identity. The story of those who will remain in Russia is yet to be 
written. The substantial progress in revitalizing Jewish life has 
reached a small percentage of this population. Their future as part of 
the Jewish People remains tentative. NCSJ and our member organizations 
are working to inspire a Jewish revival. Congress can help to secure 
their future by articulating a clear United States policy that they 
should have the freedom to choose their faith and culture. This is a 
noble cause and we look forward to the continued good work of this 
Committee.
    Thank you, Mr. Chairman, for this opportunity to share the views of 
NCSJ and the organized American Jewish community on an issue which has 
been and continues to be of utmost importance to us, to Jewish 
communities everywhere, and to our brethren in the FSU.
                                 ______
                                 
Attachment: Letter from President Bush to Harold Paul Luks

November 19, 2001
Mr. Harold P. Luks
Chairman
NCSJ
1640 Rhode Island Avenue, N.W.
Suite 501
Washington, D.C. 20036-3278
    Dear Mr. Luks:
    In my meeting last week with President Putin of Russia, we 
discussed a matter of particular interest to the American Jewish 
community: the graduation of Russia from the provisions of the 1974 
Jackson-Vanik Amendment that linked emigration rights from the Soviet 
Union to American trade policy. Mr. Putin and I agreed that on the 
basis of the Russian Government's consistent, nearly decade-long 
allowance of unfettered emigration, Russia merits permanent normal 
trade relations status. To this end, I intend to work with the 107th 
Congress to pass the necessary legislation for removing Jackson-Vanik 
requirements for Russia.
    I know the American Jewish community maintains a great and 
continuing interest in the human rights situation in Russia, 
particularly as it affects Russian Jews. So does my Administration. Mr. 
Putin provided clear assurances that his government would take concrete 
actions to promote our common interest in core human rights and basic 
freedoms. He stated that anti-Semitism has no place in a modern Russia. 
My Administration is fully committed to work with Russia to bring about 
progress in human rights, including safeguarding of religious liberty, 
enforcement of hate crimes laws, and restitution of religious community 
property.
    Please accept my deep appreciation for the American Jewish 
community's steadfast commitment to defend the basic rights of Soviet 
Jewry. Through the darkest days of the Cold War and the tumult of the 
post-Soviet era, American Jews never wavered in this cause. Your 
decades-long struggle has won a once unthinkable victory. Russian Jews 
are now free to emigrate freely from Russia.
    The Jewish community has helped write a proud chapter in the 
history of American foreign relations, but the work is not complete. We 
need your continued advocacy and support, and my Administration looks 
forward to working closely with you on these challenges.
            Sincerely,
    /s./
    George W. Bush

                                

    Chairman Crane. Thank you, Mr. Luks.
    Mr. Edlin.

STATEMENT OF RICHARD A. EDLIN, PARTNER, GREENBERG TRAURIG LLP, 
         AND U.S. COUNSEL, SPI SPIRITS LTD, NETHERLANDS

    Mr. Edlin. Mr. Chairman, honorable Members of the 
Subcommittee, thank you very much for the opportunity to come 
and speak before you today. As it is late and I am last, I will 
take that opportunity to try to be brief as well. I am here 
representing the interests of Stolichnaya Vodka and its 
business partners throughout the United States and, indeed, the 
rest of the world.
    Mr. Chairman, vodka is the second largest industry in 
Russia. Prior to the fall of the Soviet Union, trademarks to 
vodka were state-owned. They were owned by a company called 
SPI. Following the fall of the Soviet Union and the reforms of 
perestroika, those rights to those trademarks were passed from 
the state-owned company to a privately owned company of the 
same name, SPI. And since that time, in 1991, when 
privatization occurred, our client has invested tens of 
millions of dollars rebuilding the brand of Stolichnaya so that 
it is now, I believe, the largest selling distilled spirit in 
the world.
    In that time, we have required our trade partners to 
similarly invest millions of dollars in building the brand 
Stolichnaya for sale throughout the world. Now, some 10 or 11 
years after privatization has occurred, the Russian Government 
has determined to take back the trademarks and nationalize and 
monopolize the vodka industry.
    Now, in testimony before the Commerce Department, Deputy 
Minister Sharonov clearly stated--and I was there in the room--
clearly stated that the government of Russia has no interest in 
owning the means of production of industries other than those 
required for the national defense or those that are typically 
owned by a government, such as printing currency. I believe 
that the Ambassador for the Russian Federation in his testimony 
before this Subcommittee also echoes the same government 
policy.
    This, unfortunately, is not what is occurring within Russia 
today, and it is extremely important, as we take up the issue 
of normalizing trade relations with Russia, that we understand 
that we need to match what they say they intend to do with what 
they are doing today on the ground.
    We are interested in only the most simple and basic form of 
international trade. All our clients has done since it has 
obtained the right to do so in privatization in Russia is buy 
vodka from Russian distilleries and export it throughout the 
world for sale.
    What the Russian Government is now doing is blocking the 
export of vodka out of the country. There are 150,000 cases of 
vodka sitting in the Russian port of Kaliningrad which the 
government refuses to let out of the country. But it refuses to 
let it out of the country despite its own court orders 
requiring it to do so. It is attempting to usurp the same 
trademark rights that were given to SPI during privatization 
and usurp them for their own use. And it is doing so, again, 
despite court orders from Russian courts saying it has no right 
to do so.
    As I listened to Ambassador Allgeier testify earlier today 
on issues of normalization of trade and Russian accession to 
the WTO, two issues come out very clearly from that testimony: 
the need for Russia to respect private property rights and the 
need for Russia to respect the rule of law. On both counts, Mr. 
Chairman, Russia is falling tragically short of its stated 
goals. Mr. Putin has expressed strongly on a number of 
occasions in a variety of fora that he intends to respect the 
privatization process and that is the government policy. 
However, Agricultural Minister Leganov, the same person who is 
charged with taking back these trademarks, has set up a 
privately owned enterprise to usurp those trademarks, and has 
monopolized the vodka industry within Russia. This is not 
something that American trading partners can tolerate. It is 
not a system that is reliable enough for companies throughout 
the world to engage in trade with Russia on.
    If Boeing's 25 planes, as I understood Ambassador Pickering 
earlier today, if those 25 planes on the ground in Russia were 
nationalized by the government, it would be exactly the same 
thing as what Russia is presently doing to our client in the 
vodka industry. And everyone is at risk when one person is at 
risk. Until we have uniform rules that the Russian Government 
is willing to live up to, I respectfully suggest to this 
Subcommittee that the normalization of trade relations cannot 
be entered into and Russia cannot be permitted to ascend to 
membership in the WTO.
    My final point, Mr. Chairman, is that Russia has been a 
very willing and very active participant in the war against 
terror. That is a noble effort from which Russia itself 
benefits. We should not link positive and progressive acts in 
the area of anti-terrorism to allow someone to fall short of 
positive and progressive policy in the area of international 
trade.
    Thank you very much.
    [The prepared statement of Mr. Edlin follows:]
  Statement of Richard A. Edlin, Partner, Greenberg Traurig, LLP, and 
              U.S. Counsel, SPI Spirits, Ltd., Netherlands
    Mr. Chairman and Honorable Members of the Committee, my name is 
Richard Edlin and I am a partner in the law firm of Greenberg Traurig. 
Thank you for your invitation to appear before this distinguished 
Committee. I am counsel to SPI Spirits, which is the maker of 
Stolichnaya Vodka, the principal brand of Russian Vodka and one of the 
best selling brands of Vodka in the United States and the World. I come 
before this Committee in order to bring to your collective attention 
certain facts and conduct by the Russian Government which brings into 
serious question Russia's ability to act as a reliable trade partner, 
to respect the rule of law, and to conduct itself in accordance with 
the practices we associate with free market economies and reliable 
trade partners. Rather, recent events highlight a troubling pattern of 
regression by the Russian Government to the tactics and policies of the 
Soviet era.

 Background to Russian Regression on International Trade and Russia's 
         Attempt To Reverse the Privatization of Russian Vodka

    Vodka is the second largest industry in Russia. Prior to the 
collapse of the Soviet Union, trademarks to Russian vodka products were 
state-owned. Beginning in 1991 or thereabouts, many Russian industries, 
including the Vodka industry, were privatized. SPI International NV 
(``SPI'') and its predecessor entities became the legal owner directly 
of, or of reversionary interests in, Stolichnaya, one of the most 
popular brands of Vodka in the world and the principal brand of Russian 
Vodka sold throughout the United States and the world. Now, utilizing 
many of the presumably discarded methods of Soviet-era intimidation, 
disrespect for international legal principles, and raw police power, 
the government of Russia is attempting to nationalize again the Vodka 
industry. In effect, this will reverse Russia's progressive 
privatization practices of the past and casts significant doubt on 
Russia's ability to become a reliable member of the international 
economic community.
    Many of the facts below were recited and recognized as accurate in 
a lawsuit which took place in 1992 over rights to the Stolichnaya 
trademark, Financial Matters, Inc. v. PepsiCo, Inc. and Monsieur Henri 
Wines, Ltd., 806 F. Supp 480 (S.D.N.Y. 1992)(Owen, J.), in which 
representatives of SPI participated as fact witnesses.
    SPI received trademark registration for the Stolichnaya mark in the 
United States in 1967. In 1969, SPI assigned all its rights in the mark 
to Kraus Bros. & Co.; SPI designated MHW, Kraus' subsidiary, as SPI's 
representative in its trademark application. In 1973 PepsiCo entered 
into an agreement with Sojuzplodoimport (the predecessor to SPI), the 
Soviet state-controlled bureaucracy that controlled all agricultural 
exports from the U.S.S.R., to export Pepsi-Cola syrup to the Soviet 
Union, and to receive in return the exclusive right to import 
Stolichnaya Vodka into the United States. PepsiCo acquired Kraus and 
MHW in order to secure its right to import the Stolichnaya Vodka. The 
mark became incontestable in the United States in 1974 on the filing of 
the requisite affidavit of continuous use. PepsiCo also owned the mark 
``Stoli.''
    Upon its acquisition of the Stolichnaya import rights, PepsiCo set 
up a system for approving potential suppliers, establishing quality 
specifications, assisting distilleries in improving their product, 
testing the final product, and rejecting unsuitable shipments. PepsiCo 
was thus instrumental, following its trademark assignment from SPI's 
predecessor, in creating a domestic American product of consistently 
high quality and uniform characteristics. Upon acquiring the right to 
distribute Stolichnaya in the U.S., PepsiCo and MHW spent over $100 
million to popularize Stolichnaya vodka in the U.S.\1\ PepsiCo approved 
only seven distilleries in the USSR to produce and export Stolichnaya 
vodka to the U.S., and imported Stolichnaya vodka had come from those 
same seven distilleries over the more than twenty years of PepsiCo's 
control.
---------------------------------------------------------------------------
    \1\ In 1977, PepsiCo acquired the Pizza Hut restaurant chain. Since 
Pizza Hut restaurants served liquor, and since various states forbid a 
manufacturer, importer or wholesaler of liquor products from retaining 
any interest in premises where alcoholic beverages are sold (``Tied 
House'' laws), PepsiCo divested itself of the ownership of MHW when it 
acquired Pizza Hut. However, PepsiCo retained ownership of the 
Stolichnaya mark, and entered into an agreement with MHW under which 
MHW agreed to continue importing the vodka made by the same 
distilleries. PepsiCo, as the trademark owner, continued to monitor the 
nature and quality of the vodka as it had done before, and it continued 
to receive a royalty based on sales from MHW.
    It is irrelevant that the consuming public does not know that it 
was actually PepsiCo who owns the mark. Under well-established law it 
is clear that the public need not know the name of the trademark owner 
for their to be goodwill in a mark, nor does the name of the owner have 
to appear on the product itself.
---------------------------------------------------------------------------
    In 1983, PepsiCo assigned to SPI the Stolichnaya trademark 
registration, as well as its pending application to register Stoli. In 
June, 1991, SPI reassigned to PepsiCo all of its right, title and 
interest in and to the said marks. That agreement was amended on 
February 6, 1992, after the dissolution of the USSR, by deleting 
paragraph 8, which had conferred a right upon the now-defunct Soviet 
Government to request the reassignment of the marks back to SPI at 
will.
    In August, 1991, the USSR patent office cancelled SPI's 
registration in Russia for Stolichnaya on the ground that Stolichnaya 
had come to identify a type rather than a brand of vodka in the USSR. 
However, an opinion by the patent office clarifying that decision notes 
that under Russian law, the ownership and validity of rights in marks 
outside Russia is independent of such rights in Russia, and that the 
cancellation of the mark in Russia should not affect rights outside 
Russia. Furthermore, pursuant to Article 6(3) of the International 
Convention for the Protection of Industrial Property, the ``Paris 
Convention,'' to which Russia is a signatory, a mark duly registered in 
one country is independent of marks registered in other countries, even 
including the country of origin.
    When the USSR collapsed in December 1991, SPI became a private 
joint stock company which succeeded to the same rights as its 
governmental predecessor; these rights were confirmed by the statements 
of various Russian Government officials and trade representatives of 
the Russian Federation in the United States. PepsiCo, MHW and SPI then 
continued their business relationship virtually unchanged.\2\
---------------------------------------------------------------------------
    \2\ In Financial Matters, Judge Owen accepted PepsiCo's testimony 
that PepsiCo continued to do business with the same SPI staff in the 
same manner as it had done when the USSR was extant, and that the new 
SPI operated out of the same physical facilities as the old state-run 
SPI. With respect to the position that SPI did not undertake the 
requisite privatization procedures authorized by the Russian 
Government, Judge Owen noted that the situation in Russia was 
volatile--a statement that could be made with equal relevance today. As 
Judge Owen concluded: ``Nobody knows precisely what procedures were 
undertaken by SPI to privatize, but all the evidence seems to indicate 
that this new private joint-stock company is indeed carrying on the 
functions of the old SPI.''
---------------------------------------------------------------------------
    As the official documents of the Ministry of Foreign Economic 
Relations of the Russian Federation, attached as EXHIBIT A, stated in 
October 1992, SPI ``is a legal entity in the Russian Federation and the 
successor of its Soviet predecessor VVO `Sojuzplodoimport'. [SPI] has 
the right to export Russian vodka to the USA under the following 
trademarks: Stolichnaya, Stolichnaya Christall, Pertsovka, Limonnaya, 
Prievet, Prievet Orange (Apelsinovaya), Russian, Okhotnichya.'' It 
could not be stated any more clearly and legally. And there are 
numerous such documents. Russia now, acting solely out of its own 
desire to take back property it has already privatized, has ignored its 
own official actions during the privatization process. We ask: ``By 
what right?''
Since privatization in Russia took place a decade ago, SPI has sold 
        Stolichnaya vodka to the American and European markets without 
        any claim by the Russian Government in any country that SPI did 
        not have the right to do so. After the legally privatized 
        company was sold to its present owners, tens of millions of 
        dollars were invested to successfully rebuild the nearly 
        bankrupt company into one of the world's leading vodka 
        producers. SPI also requires its distributors in various 
        countries, including the United States, to make significant 
        investments in marketing and advertising the Stolichnaya brand.
    All of SPI's actions were taken with the knowledge of the Russian 
Government and without any suggestion at all that when SPI and its 
trade partners around the world were spending tens of millions of 
dollars to build and support the Stolichnaya brand, that the Russian 
Government has any reservations regarding SPI's right to do so. AND NOW 
RUSSIA WANTS TO TAKE STOLICHNAYA BACK. Again we ask: ``By what right?''

  Russia's Testimony Before the United States Department of Commerce 
    Misstates Material Facts Regarding the Government's Actions to 
             Nationalize and Monopolize the Vodka Industry

    In testimony before the United States Department of Commerce, the 
Russian Government expressly represented that it would respect its 
former privatization of industry and that it did not wish to own the 
means of production of industries other than those typically associated 
with national security or the fundamental acts of governments, such as 
printing currency. I do not believe the vodka industry would fall into 
this category.
    Nonetheless, The Moscow Times reported on April 4, 2002 that the 
Russian Government has set up a federal enterprise through which it 
intends to nationalize and monopolize the Vodka industry. Deputy 
Agriculture Minister Loginov, the same individual who has been active 
in attempting to deny SPI export permits for SPI's vodka and illegally 
take back numerous vodka trademarks, is the same person who has been 
designated to run the new state-controlled vodka company. Obviously 
this is no accident. These acts with respect to the Russian 
Government's continuing and aggressive efforts to nationalize the vodka 
industry flatly contradicts the Russian Government's testimony to the 
Commerce Department. We leave the Committee to reach its own 
conclusions as to the continuing reliability of the Russian 
Government's representations regarding the actual facts of what is 
taking place in Russia today.

    Russia's Refusal to Respect the Rule of Law And its Efforts to 
                Politically Manipulate its Court System

    We believe that the Committee will also find relevant the rash of 
litigation within Russia between the Government and SPI. Acting in a 
manner contrary to its own laws, Russia has attempted to and is in the 
process of nakedly usurping SPI's trademarks to Stolichnaya and other 
brands within Russia itself. Russia is also presently violating Russian 
court orders requiring the government to allow SPI and its U.S. 
distributor, Allied Domecq, to ship some 120,000 cases of vodka out of 
the Russian port of Kaliningrad. Attached as EXHIBIT B is the 
translation of the February 22, 2002 decision of the Leningrad District 
Court for the City of Kaliningrad which orders the Russian Government 
to ``cease prohibiting the exiting of the alcoholic products of'' SPI 
that bear, among others, the trademark of Stolichnaya. Again, what 
could be clearer?
    Most disturbingly, there are credible reports that the Russian 
Government has threatened baseless criminal prosecutions and engaged in 
physical threats against SPI employees.
    From the legal point of view, Russia's ``strategy'' is doomed to 
failure. As alluded to above, Russia cannot sell Stolichnaya in the 
United States, only the registered trademark holder can do that, in 
this case Allied Domecq. Allied Domecq is obligated to return the U.S. 
trademark to SPI in 2010 and until that time SPI is Allied Domecq's 
exclusive supplier of Stolichnaya in the United States. This analysis 
is applicable in every country in which SPI or its partners holds the 
Stolichnaya trademark.
    However, from the point of view of fair international trade 
practices, Russia has run amok. Russia's efforts to re-nationalize and 
monopolize its vodka industry--when it has in the past said that it 
would respect privatization--and its reversion to the tactics of 
Soviet-era thuggery to do so, sends an ominous message and poses 
fundamental questions regarding Russia's fitness to enter the WTO and 
to receive normalization of trade relations with our government. It is 
critical that commercial issues be resolved by the rule of law and that 
those laws be consistently applied in Russia as they are in 
international markets.

 Russia's Former Deputy Prime Minister Criticizes the Present Russian 
  Economic and Political Climate As Providing Inadequate Respect for 
                        Private Property Rights

    The problems facing SPI are hardly unique. The unfortunate fact is 
that SPI's problems are simply one part of a larger problem. In an 
April 5, 2002 article in The Wall Street Journal Europe, which is 
attached as EXHIBIT C, Boris Nemtsov, former Deputy Prime Minister for 
the Russian Federation and presently a member of the Russian Duma, 
calls for President Putin to ``Stop the Rot.'' Mr. Nemtsov identifies 
``dangerous trends that threaten to undermine the twin pillars of true 
progress for Russia--democracy and property rights.'' Mr. Nemtsov asks 
a question that this Committee should be equally concerned with: ``Why 
are property rights in Russia so weak?'' And the answer which Mr. 
Nemtsov gives goes directly to the heart of SPI's present problem with 
the Russian Government. As Mr. Nemtsov says: ``The short, and long, 
answer is bureaucratic corruption.''
    In connection with Russia's court system, which supposedly provides 
private parties aggrieved by the Russian Government's illegal 
interference with private property rights, Mr. Nemtsov describes 
decisions issued by Russia's courts as ``shocking'' and ``Kafkaesque.'' 
A recent decision by Russia's courts concerning the securities industry 
was criticized by the prominent English firm Freshfields in this way: 
``[T]his decision threatens the very idea of securities and the 
securities markets in Russia. To say nothing of the violations of 
constitutional principles of private property, freedom to contract and 
principles of trade.''
    Russia's court system has met with similar disapproval last summer 
in a decision reached in the United States District Court for the 
Eastern District of New York. The overall dispute involved efforts by a 
state-sponsored company to rescind copyrights previously issued to an 
American company and bears all of the hallmarks of the Russian 
Government's tactics to illegally rescind SPI's property rights to 
Stolichnaya.
    United States District Court Judge Trager conducted an exhaustive 
review of Russian law and the facts behind the issuance of copyrights 
to the American company, Films By Jove. Judge Trager upheld Films By 
Jove's copyrights and, significantly for the purposes of this testimony 
and these hearings, described a decision from the Russian Arbitrazh 
Court, rendered under pressure from the Government, as ``incoherent,'' 
``irrelevant,'' and ``shocking.'' \3\
---------------------------------------------------------------------------
    \3\ We refer the Committee to Films By Jove, Inc. v. Berov, et al., 
2001 WL 967781, August 27, 2001 (E.D.N.Y.)(Trager, J.).
---------------------------------------------------------------------------
    I respectfully submit that SPI's present problems with the Russian 
Government, and those of a great many other companies, demonstrate that 
Russia has not developed a market economy that is reliable in any 
reasonable manner with respect to protection of property rights, the 
rule of law, or due process. Rather, old-fashioned, Soviet-era 
corruption and the tactics of intimidation and threats are all too 
often the governing principles of the Russian economy.

                              Conclusion:

     Before the United States Rewards Russia With Normalized Trade 
Relations, Russia Must First Put its House in Order and Make Amends to 
             Those Who Have Been Hurt by its Recent Actions

    Until Russia demonstrates that it is willing to be a reliable 
member of the world economic community, and that it is willing to 
respect internationally accepted principles of free trade, free 
markets, and private enterprise free from government persecution, it 
should be denied normalization of trade relations and admission to the 
WTO.
                                 ______
                                 
[EXHIBIT A IS BEING RETAINED IN THE COMMITTEE FILES]
                                 ______
                                 
EXHIBIT B
                                                       [Document 1]

                                 RULING

    On February 22, 2002 the Leningrad District Court of the city of 
Kaliningrad represented by:
    the Chief Judge L.G. Kilienko
    has considered a petition with respect to the complaint entered by 
Rinat Akbarovitch Zuparov as to the illegal actions of the Kaliningrad 
Customs Office, and

                            HAS DETERMINED:

    The petitioner in the case has submitted a complaint to the court 
as to the illegal actions of the Kaliningrad Customs Office and has 
requested that the actions of the Kaliningrad Customs Office, which 
manifested themselves in a prohibition against the exiting of the 
export products applied for by OAO SPI-RVVK in accordance with the 
State Customs Declaration Nos. 10205030/040202/0003034, 10205030/
140202/0004179, 10205030/140202/0004180, and 10205030/140202/0004181 
(four documents, in total), on the basis of the absence and non-
submittal of the licensing agreement with the Ministry of Agricultural 
Products of Russia, be deemed to be illegal.
    The court has received a petition that requests that, for the 
purposes of the securing of the submitted demands pending the 
conclusion of the legal proceedings in the case, the Kaliningrad 
Customs Office is to be ordered to cease prohibiting the exiting of the 
alcoholic products of OAO SPI-RVVK, which bear the trademarks in 
accordance with the state customs declarations mentioned above, from 
the customs territory of the Russian Federation.
    The court deems it feasible, for the purposes of the securing of 
the demands submitted in the petition, to order the Kaliningrad Customs 
Office to cease prohibiting the exiting of the alcoholic products of 
OAO SPI-RVVK that bear the trademarks SOVIET, SPARKLING, STARKA, 
YUBILEYNAYA, KUBANSKAYA, SUBROVKA [sic], STOLICHNAYA, RUSSKAYA [in the 
Cyrillic alphabet], OKHOTNICHYA/PERTSOVKA, MOSKOVSKAYA, LIMONNAYA [in 
the Cyrillic alphabet], KREPKAYA, STOLOVAYA, SIBIRSKAYA, BALTIYSKAYA, 
KRISTAL, and SPI in accordance with State Customs Declaration Nos. 
10205030/040202/0003034, 10205030/140202/0004179, 10205030/140202/
0004180, and 10205030/140202/0004181 (four documents, in total) from 
the customs territory of the Russian Federation on the basis of the 
absence and non-submittal of the licensing agreement with the Ministry 
of Agricultural Products of Russia.
    In accordance with Articles 133 and 134 of the Code of Civil 
Procedure of the Russian Soviet Federated Socialist Republic, the court

                               HAS RULED:

    To order the Kaliningrad Customs Office to cease prohibiting the 
exiting of the alcoholic products of OAO SPI-RVVK that bear the 
trademarks SOVIET, SPARKLING, STARKA, YUBILEYNAYA, KUBANSKAYA, SUBROVKA 
[sic], STOLICHNAYA, RUSSKAYA [in the Cyrillic alphabet], OKHOTNICHYA/
PERTSOVKA, MOSKOVSKAYA, LIMONNAYA [in the Cyrillic alphabet], KREPKAYA, 
STOLOVAYA, SIBIRSKAYA, BALTIYSKAYA, KRISTAL, and SPI in accordance with 
State Customs Declaration Nos. 10205030/040202/0003034, 10205030/
140202/0004179, 10205030/140202/0004180, and 10205030/140202/0004181 
(four documents, in total) from the customs territory of the Russian 
Federation on the basis of the absence and non-submittal of the 
licensing agreement with the Ministry of Agricultural Products of 
Russia.
    The present ruling may be appealed within the term of 10 days to 
the Kaliningrad Regional Court through the Leningrad District Court of 
the City of Kaliningrad.
    s/
    [rubber-stamped seal with emblem of the Russian Federation:]
    Leningrad District Court of the City of Kaliningrad
                                 ______
                                 
                                                       [Document 5]

                          [script in English]

                                       [rubber stamp:] COPY

                                 RULING

    March 21, 2002
    The Leninsk-Kuznetsk City Court represented by:
    the Chief Judge E. Yu. Erokhina,
    and the Court Clerk Naydenova,
    has considered, for the purposes of pre-trial preparation, a 
petition from Galina Leonidovna Naumova as to the implementation of 
measures for the securing of the claims submitted in the complaint, and

                            HAS DETERMINED:

    That Galina Leonidovna Naumova, a shareholder of the joint stock 
company of the closed type ZAO Sojuzplodimport, requests that the 
actions of the Patents and Trademarks Agency of Russia in the process 
of the re-registration of the rights to seventeen trademarks from ZAO 
Sojuzplodimport to the Russian Federation, represented by the Ministry 
of Agriculture of the Russian Federation, are to be deemed by the court 
to be illegal, and that the Patents and Trademarks Agency of Russia is 
to be obligated to reinstate ZAO Sojuzplodimport as the owner of the 
disputed trademarks, on the grounds of the violation of its rights and 
legal interests as a shareholder due to the actions of the Patents and 
Trademarks Agency of Russia that led to the change in the name of the 
owner of the trademarks in the register, as a result of which ZAO 
Sojuzplodimport and, therefore, the shareholders, suffered financial 
losses.
    The court is of the opinion that the petition is to be granted due 
to the fact that a lack of implementation of measures for the securing 
of the demands would make it difficult or impossible to implement a 
decision by the court due to the following circumstances.
    A failure to implement measures for the securing of the demands 
would enable the Ministry of Agriculture of the Russian Federation to 
exercise ownership rights and enable Rospatent to carry out 
registration activities with respect to the disputed trademarks. All of 
this may lead to future multiple changes of owners of the trademarks as 
a result of their alienation and to burdening them with the making of 
the licensing agreements and carrying out of other activities.
    In accordance with Articles 133, 134, and 136 of the Code of Civil 
Procedure of the Russian Soviet Federated Socialist Republic, the court

                               HAS RULED:

    I. To prohibit the Ministry of Agriculture of the Russian 
Federation from exercising the rights of an owner, that is, the rights 
to own, use, and dispose, with respect to the following trademarks:
    1. Starka (label), Registration Certificate No. 38384 of 10/10/69, 
with a priority date of 3/12/69.
    2. Yubileynaya [in the Latin alphabet] (label), Registration 
Certificate No. 38385 of 10/10/69, with a priority date of 3/12/69.
    3. Kubanskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38386 of 10/10/69, with a priority date of 3/12/69.
    4. Zubrovka [in the Latin alphabet] (label), Registration 
Certificate No. 38387 of 10/10/69, with a priority date of 3/12/69.
    5. Stolichnaya [in the Latin alphabet] (label), Registration 
Certificate No. 38388 of 10/10/69, with a priority date of 3/12/69.
    6. Russkaya (label), Registration Certificate No. 38389 of 10/10/
69, with a priority date of 3/12/69.
    7. Okhotnichya [in the Latin alphabet] (label), Registration 
Certificate No. 38391 of 10/10/69, with a priority date of 3/12/69.
    8. Pertsovka [in the Latin alphabet] (label), Registration 
Certificate No. 39231 of 2/12/70, with a priority date of 3/12/69.
    9. Moskovskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38237 of 9/9/69, with a priority date of 3/12/69.
    10. Limonnaya (label), Registration Certificate No. 39232 of 2/12/
70, with a priority date of 3/12/69.
    11. Krepkaya (label), Registration Certificate No. 40207 of 8/15/
70, with a priority date of 9/23/69.
    12. Stolovaya [in the Latin alphabet] (label), Registration 
Certificate No. 40208 of 8/15/70, with a priority date of 9/23/69.
    13. Sibirskaya [in the Latin alphabet] (label), Registration 
Certificate No. 68655 of 7/29/81, with a priority date of 3/4/81.
    14. Baltiyskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38390 of 10/10/69, with a priority date of 3/12/69.
    15. Kristal [in the Latin alphabet] (word), Registration 
Certificate No. 49140 of 3/13/74, with a priority date of 9/3/73.
    16. Soviet Sparkling [in the Latin alphabet] (label), Registration 
Certificate No. 38383 of 10/10/69, with a priority date of 3/12/69.
    17. SPI (graphic), Registration Certificate No. 34475 of 12/23/67, 
with a priority date of 2/17/67.
    II. To prohibit the Ministry of Agriculture of the Russian 
Federation from preventing the exercise by ZAO Sojuzplodoimport of the 
rights of an owner, that is, the rights to own, use, and dispose, with 
respect to the following trademarks, until the termination of the 
proceedings in the case:
    1. Starka [in the Latin alphabet] (label), Registration Certificate 
No. 38384 of 10/10/69, with a priority date of 3/12/69.
    2. Yubileynaya [in the Latin alphabet] (label), Registration 
Certificate No. 38385 of 10/10/69, with a priority date of 3/12/69.
    3. Kubanskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38386 of 10/10/69, with a priority date of 3/12/69.
    4. Zubrovka [in the Latin alphabet] (label), Registration 
Certificate No. 38387 of 10/10/69, with a priority date of 3/12/69.
    5. Stolichnaya [in the Latin alphabet] (label), Registration 
Certificate No. 38388 of 10/10/69, with a priority date of 3/12/69.
    6. Russkaya (label), Registration Certificate No. 38389 of 10/10/
69, with a priority date of 3/12/69.
    7. Okhotnichya [in the Latin alphabet] (label), Registration 
Certificate No. 38391 of 10/10/69, with a priority date of 3/12/69.
    8. Pertsovka [in the Latin alphabet] (label), Registration 
Certificate No. 39231 of 2/12/70, with a priority date of 3/12/69.
    9. Moskovskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38237 of 9/9/69, with a priority date of 3/12/69.
    10. Limonnaya (label), Registration Certificate No. 39232 of 2/12/
70, with a priority date of 3/12/69.
    11. Krepkaya (label), Registration Certificate No. 40207 of 8/15/
70, with a priority date of 9/23/69.
    12. Stolovaya [in the Latin alphabet] (label), Registration 
Certificate No. 40208 of 8/15/70, with a priority date of 9/23/69.
    13. Sibirskaya [in the Latin alphabet] (label), Registration 
Certificate No. 68655 of 7/29/81, with a priority date of 3/4/81.
    14. Baltiyskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38390 of 10/10/69, with a priority date of 3/12/69.
    15. Kristal [in the Latin alphabet] (word), Registration 
Certificate No. 49140 of 3/13/74, with a priority date of 9/3/73.
    16. Soviet Sparkling [in the Latin alphabet] (label), Registration 
Certificate No. 38383 of 10/10/69, with a priority date of 3/12/69.
    17. SPI (graphic), Registration Certificate No. 34475 of 12/23/67, 
with a priority date of 2/17/67.
    III. To prohibit the Ministry of Agriculture of the Russian 
Federation from disseminating, in any manner, information concerning 
registration activities with respect to the following trademarks, until 
the termination of the proceedings in the case:
    1. Starka [in the Latin alphabet] (label), Registration Certificate 
No. 38384 of 10/10/69, with a priority date of 3/12/69.
    2. Yubileynaya [in the Latin alphabet] (label), Registration 
Certificate No. 38385 of 10/10/69, with a priority date of 3/12/69.
    3. Kubanskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38386 of 10/10/69, with a priority date of 3/12/69.
    4. Zubrovka [in the Latin alphabet] (label), Registration 
Certificate No. 38387 of 10/10/69, with a priority date of 3/12/69.
    5. Stolichnaya [in the Latin alphabet] (label), Registration 
Certificate No. 38388 of 10/10/69, with a priority date of 3/12/69.
    6. Russkaya (label), Registration Certificate No. 38389 of 10/10/
69, with a priority date of 3/12/69.
    7. Okhotnichya [in the Latin alphabet] (label), Registration 
Certificate No. 38391 of 10/10/69, with a priority date of 3/12/69.
    8. Pertsovka [in the Latin alphabet] (label), Registration 
Certificate No. 39231 of 2/12/70, with a priority date of 3/12/69.
    9. Moskovskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38237 of 9/9/69, with a priority date of 3/12/69.
    10. Limonnaya (label), Registration Certificate No. 39232 of 2/12/
70, with a priority date of 3/12/69.
    11. Krepkaya (label), Registration Certificate No. 40207 of 8/15/
70, with a priority date of 9/23/69.
    12. Stolovaya [in the Latin alphabet] (label), Registration 
Certificate No. 40208 of 8/15/70, with a priority date of 9/23/69.
    13. Sibirskaya [in the Latin alphabet] (label), Registration 
Certificate No. 68655 of 7/29/81, with a priority date of 3/4/81.
    14. Baltiyskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38390 of 10/10/69, with a priority date of 3/12/69.
    15. Kristal [in the Latin alphabet] (word), Registration 
Certificate No. 49140 of 3/13/74, with a priority date of 9/3/73.
    16. Soviet Sparkling [in the Latin alphabet] (label), Registration 
Certificate No. 38383 of 10/10/69, with a priority date of 3/12/69.
    17. SPI (graphic), Registration Certificate No. 34475 of 12/23/67, 
with a priority date of 2/17/67.
    IV. To prohibit the Patents and Trademarks Agency of Russia from 
issuing copies of the Registration Certificates for the following 
trademarks to any legal or physical entities, until the termination of 
the proceedings in the case:
    1. Starka [in the Latin alphabet] (label), Registration Certificate 
No. 38384 of 10/10/69, with a priority date of 3/12/69.
    2. Yubileynaya [in the Latin alphabet] (label), Registration 
Certificate No. 38385 of 10/10/69, with a priority date of 3/12/69.
    3. Kubanskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38386 of 10/10/69, with a priority date of 3/12/69.
    4. Zubrovka [in the Latin alphabet] (label), Registration 
Certificate No. 38387 of 10/10/69, with a priority date of 3/12/69.
    5. Stolichnaya [in the Latin alphabet] (label), Registration 
Certificate No. 38388 of 10/10/69, with a priority date of 3/12/69.
    6. Russkaya (label), Registration Certificate No. 38389 of 10/10/
69, with a priority date of 3/12/69.
    7. Okhotnichya [in the Latin alphabet] (label), Registration 
Certificate No. 38391 of 10/10/69, with a priority date of 3/12/69.
    8. Pertsovka [in the Latin alphabet] (label), Registration 
Certificate No. 39231 of 2/12/70, with a priority date of 3/12/69.
    9. Moskovskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38237 of 9/9/69, with a priority date of 3/12/69.
    10. Limonnaya (label), Registration Certificate No. 39232 of 2/12/
70, with a priority date of 3/12/69.
    11. Krepkaya (label), Registration Certificate No. 40207 of 8/15/
70, with a priority date of 9/23/69.
    12. Stolovaya [in the Latin alphabet] (label), Registration 
Certificate No. 40208 of 8/15/70, with a priority date of 9/23/69.
    13. Sibirskaya [in the Latin alphabet] (label), Registration 
Certificate No. 68655 of 7/29/81, with a priority date of 3/4/81.
    14. Baltiyskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38390 of 10/10/69, with a priority date of 3/12/69.
    15. Kristal [in the Latin alphabet] (word), Registration 
Certificate No. 49140 of 3/13/74, with a priority date of 9/3/73.
    16. Soviet Sparkling [in the Latin alphabet] (label), Registration 
Certificate No. 38383 of 10/10/69, with a priority date of 3/12/69.
    17. SPI (graphic), Registration Certificate No. 34475 of 12/23/67, 
with a priority date of 2/17/67.
    V. To prohibit the Patents and Trademarks Agency of Russia from 
publishing in the official Bulletin of the State Patent Agency of the 
Russian Federation, or disseminating, in any manner, information 
concerning registration activities with respect to the following 
trademarks:
    1. Starka [in the Latin alphabet] (label), Registration Certificate 
No. 38384 of 10/10/69, with a priority date of 3/12/69.
    2. Yubileynaya [in the Latin alphabet] (label), Registration 
Certificate No. 38385 of 10/10/69, with a priority date of 3/12/69.
    3. Kubanskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38386 of 10/10/69, with a priority date of 3/12/69.
    4. Zubrovka [in the Latin alphabet] (label), Registration 
Certificate No. 38387 of 10/10/69, with a priority date of 3/12/69.
    5. Stolichnaya [in the Latin alphabet] (label), Registration 
Certificate No. 38388 of 10/10/69, with a priority date of 3/12/69.
    6. Russkaya (label), Registration Certificate No. 38389 of 10/10/
69, with a priority date of 3/12/69.
    7. Okhotnichya [in the Latin alphabet] (label), Registration 
Certificate No. 38391 of 10/10/69, with a priority date of 3/12/69.
    8. Pertsovka [in the Latin alphabet] (label), Registration 
Certificate No. 39231 of 2/12/70, with a priority date of 3/12/69.
    9. Moskovskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38237 of 9/9/69, with a priority date of 3/12/69.
    10. Limonnaya (label), Registration Certificate No. 39232 of 2/12/
70, with a priority date of 3/12/69.
    11. Krepkaya (label), Registration Certificate No. 40207 of 8/15/
70, with a priority date of 9/23/69.
    12. Stolovaya [in the Latin alphabet] (label), Registration 
Certificate No. 40208 of 8/15/70, with a priority date of 9/23/69.
    13. Sibirskaya [in the Latin alphabet] (label), Registration 
Certificate No. 68655 of 7/29/81, with a priority date of 3/4/81.
    14. Baltiyskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38390 of 10/10/69, with a priority date of 3/12/69.
    15. Kristal [in the Latin alphabet] (word), Registration 
Certificate No. 49140 of 3/13/74, with a priority date of 9/3/73.
    16. Soviet Sparkling [in the Latin alphabet] (label), Registration 
Certificate No. 38383 of 10/10/69, with a priority date of 3/12/69.
    17. SPI (graphic), Registration Certificate No. 34475 of 12/23/67, 
with a priority date of 2/17/67.
    VI. To prohibit the Patents and Trademarks Agency of Russia from 
inhibiting the exercise by ZAO Sojuzplodoimport of the rights of an 
owner, that is, of the rights to use and dispose, with respect to the 
following trademarks, until the termination of the proceedings in the 
case:
    1. Starka [in the Latin alphabet] (label), Registration Certificate 
No. 38384 of 10/10/69, with a priority date of 3/12/69.
    2. Yubileynaya [in the Latin alphabet] (label), Registration 
Certificate No. 38385 of 10/10/69, with a priority date of 3/12/69.
    3. Kubanskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38386 of 10/10/69, with a priority date of 3/12/69.
    4. Zubrovka [in the Latin alphabet] (label), Registration 
Certificate No. 38387 of 10/10/69, with a priority date of 3/12/69.
    5. Stolichnaya [in the Latin alphabet] (label), Registration 
Certificate No. 38388 of 10/10/69, with a priority date of 3/12/69.
    6. Russkaya (label), Registration Certificate No. 38389 of 10/10/
69, with a priority date of 3/12/69.
    7. Okhotnichya [in the Latin alphabet] (label), Registration 
Certificate No. 38391 of 10/10/69, with a priority date of 3/12/69.
    8. Pertsovka [in the Latin alphabet] (label), Registration 
Certificate No. 39231 of 2/12/70, with a priority date of 3/12/69.
    9. Moskovskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38237 of 9/9/69, with a priority date of 3/12/69.
    10. Limonnaya (label), Registration Certificate No. 39232 of 2/12/
70, with a priority date of 3/12/69.
    11. Krepkaya (label), Registration Certificate No. 40207 of 8/15/
70, with a priority date of 9/23/69.
    12. Stolovaya [in the Latin alphabet] (label), Registration 
Certificate No. 40208 of 8/15/70, with a priority date of 9/23/69.
    13. Sibirskaya [in the Latin alphabet] (label), Registration 
Certificate No. 68655 of 7/29/81, with a priority date of 3/4/81.
    14. Baltiyskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38390 of 10/10/69, with a priority date of 3/12/69.
    15. Kristal [in the Latin alphabet] (word), Registration 
Certificate No. 49140 of 3/13/74, with a priority date of 9/3/73.
    16. Soviet Sparkling [in the Latin alphabet] (label), Registration 
Certificate No. 38383 of 10/10/69, with a priority date of 3/12/69.
    17. SPI (graphic), Registration Certificate No. 34475 of 12/23/67, 
with a priority date of 2/17/67.
    VII. To prohibit the Appellate Chamber of the Patents and 
Trademarks Agency of Russia from accepting, scheduling hearings and 
considering oppositions to the registrations with respect to the 
following trademarks, until the termination of the proceedings in the 
case:
    1. Stolichnaya (label), Registration Certificate No. 134843 of 11/
24/95, with a priority date of 9/21/94.
    2. Kubanskaya (label), Registration Certificate No. 134844 of 11/
24/95, with a priority date of 9/21/94.
    3. Pertsovka (label), Registration Certificate No. 134841 of 11/24/
95, with a priority date of 9/21/94.
    4. Yubileynaya (label), Registration Certificate No. 134840 of 11/
24/95, with a priority date of 9/21/94.
    5. Moskovskaya (label), Registration Certificate No. 134836 of 11/
24/95, with a priority date of 9/21/94.
    6. Starka (label), Registration Certificate No. 134839 of 11/24/95, 
with a priority date of 9/21/94.
    7. Zubrovka (label), Registration Certificate No. 134837 of 11/24/
95, with a priority date of 9/21/94.
    8. Okhotnichya (label), Registration Certificate No. 134838 of 11/
24/95, with a priority date of 9/21/94.
    9. Stolovaya (label), Registration Certificate No. 134842 of 11/24/
95, with a priority date of 9/21/94.
    10. Limonnaya [in the Latin alphabet] (label), Registration 
Certificate No. 135314 of 12/15/95, with a priority date of 9/21/94.
    11. Stolichnaya-Ohranj [in the Latin alphabet] (label), 
Registration Certificate No. 142892 of 6/17/96, with a priority date of 
2/3/95.
    12. Stolichnaya Limon [in the Latin alphabet] (label), Registration 
Certificate No. 147472 of 6/17/96, with a priority date of 2/3/95.
    13. Moskovskaya Limon [in the Latin alphabet] (label), Registration 
Certificate No. 147471 of 6/17/96, with a priority date of 2/3/95.
    14. Moskovskaya [in the Latin alphabet] (word), Registration 
Certificate No. 155062 of 7/31/97, with a priority date of 9/25/95.
    15. Moskovskaya (word), Registration Certificate No. 155063 of 7/
31/97, with a priority date of 9/25/95.
    16. Stolichnaya [in the Latin alphabet] (word), Registration 
Certificate No. 155061 of 7/31/97, with a priority date of 9/25/95.
    17. Stolichnaya (word), Registration Certificate No. 155064 of 7/
31/97, with a priority date of 9/25/95.
    18. Stoli Kafya [in the Latin alphabet] (label), Registration 
Certificate No. 156044 of 8/31/97, with a priority date of 5/8/96.
    19. Stoli Peshka [in the Latin alphabet] (label), Registration 
Certificate No. 156047 of 8/31/97, with a priority date of 5/8/96.
    20. Stoli Strasberi [in the Latin alphabet] (label), Registration 
Certificate No. 156046 of 8/31/97, with a priority date of 5/8/96.
    21. Stoli Razberi [in the Latin alphabet] (label), Registration 
Certificate No. 156045 of 8/31/97, with a priority date of 5/8/96.
    22. Stoli Vanil [in the Latin alphabet] (label), Registration 
Certificate No. 156048 of 8/31/97, with a priority date of 5/8/96.
    23. Stoli [in the Latin alphabet] (label), Registration Certificate 
No. 155939 of 8/27/97, with a priority date of 7/19/96.
    24. Stoli (word), Registration Certificate No. 155940 of 8/27/97, 
with a priority date of 7/19/96.
    25. Stolichnaya Kristal [in the Latin alphabet] (word), 
Registration Certificate No. 156960 of 10/13/97, with a priority date 
of 7/11/96.
    26. Ruby of Russia [in the Latin alphabet] (label), Registration 
Certificate No. 156961 of 10/13/97, with a priority date of 9/12/95.
    27. Pristyn Stolichnaya [in the Latin alphabet] (label), 
Registration Certificate No. 162956 of 4/9/98.
    28. Pristin Stolichnaya [in the Latin alphabet] (label), 
Registration Certificate No. 166301 of 7/31/98.
    29. Starka [in the Latin alphabet] (word), Registration Certificate 
No. 175041 of 5/18/99.
    30. Stoli Zinamon [in the Latin alphabet] (label), Registration 
Certificate No. 162957 of 4/9/98.
    31. Stoli [in the Latin alphabet] (word), Registration Certificate 
No. 155939 of 8/27/97.
    32. Stoli (word), Registration Certificate No. 155940 of 8/27/97.
    33. Na Zdorovye (word), Registration Certificate No. 55807 of 6/14/
76.
    34. Na Zdorovye [in the Latin alphabet] (word), Registration 
Certificate No. 55806 of 6/14/76.
    35. Ruby of Russia [in the Latin alphabet] (label), Registration 
Certificate No. 156961 of 10/13/97.
    VIII. To prohibit any legal or physical entities, the agencies of 
executive power and management, from inhibiting the exercise by ZAO 
Sojuzplodoimport of the rights of the owner, that is, the rights to 
own, use, and dispose, with respect to the following trademarks, until 
the termination of the proceedings in the case:
    1. Starka [in the Latin alphabet] (label), Registration Certificate 
No. 38384 of 10/10/69, with a priority date of 3/12/69.
    2. Yubileynaya [in the Latin alphabet] (label), Registration 
Certificate No. 38385 of 10/10/69, with a priority date of 3/12/69.
    3. Kubanskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38386 of 10/10/69, with a priority date of 3/12/69.
    4. Zubrovka [in the Latin alphabet] (label), Registration 
Certificate No. 38387 of 10/10/69, with a priority date of 3/12/69.
    5. Stolichnaya [in the Latin alphabet] (label), Registration 
Certificate No. 38388 of 10/10/69, with a priority date of 3/12/69.
    6. Russkaya (label), Registration Certificate No. 38389 of 10/10/
69, with a priority date of 3/12/69.
    7. Okhotnichya [in the Latin alphabet] (label), Registration 
Certificate No. 38391 of 10/10/69, with a priority date of 3/12/69.
    8. Pertsovka [in the Latin alphabet] (label), Registration 
Certificate No. 39231 of 2/12/70, with a priority date of 3/12/69.
    9. Moskovskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38237 of 9/9/69, with a priority date of 3/12/69.
    10. Limonnaya (label), Registration Certificate No. 39232 of 2/12/
70, with a priority date of 3/12/69.
    11. Krepkaya (label), Registration Certificate No. 40207 of 8/15/
70, with a priority date of 9/23/69.
    12. Stolovaya [in the Latin alphabet] (label), Registration 
Certificate No. 40208 of 8/15/70, with a priority date of 9/23/69.
    13. Sibirskaya [in the Latin alphabet] (label), Registration 
Certificate No. 68655 of 7/29/81, with a priority date of 3/4/81.
    14. Baltiyskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38390 of 10/10/69, with a priority date of 3/12/69.
    15. Kristal [in the Latin alphabet] (word), Registration 
Certificate No. 49140 of 3/13/74, with a priority date of 9/3/73.
    16. Soviet Sparkling [in the Latin alphabet] (label), Registration 
Certificate No. 38383 of 10/10/69, with a priority date of 3/12/69.
    17. SPI (graphic), Registration Certificate No. 34475 of 12/23/67, 
with a priority date of 2/17/67.
    IX. To order the Kaliningrad Customs Office to cease prohibiting 
the carrying out of the customs exportation procedures and the 
exportation exiting of the alcoholic products of OAO SPI-RVVK that bear 
the following trademarks:
    1. Starka (label), Registration Certificate No. 38384 of 10/10/69, 
with a priority date of 3/12/69.
    2. Yubileynaya [in the Latin alphabet] (label), Registration 
Certificate No. 38385 of 10/10/69, with a priority date of 3/12/69.
    3. Kubanskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38386 of 10/10/69, with a priority date of 3/12/69.
    4. Zubrovka [in the Latin alphabet] (label), Registration 
Certificate No. 38387 of 10/10/69, with a priority date of 3/12/69.
    5. Stolichnaya [in the Latin alphabet] (label), Registration 
Certificate No. 38388 of 10/10/69, with a priority date of 3/12/69.
    6. Russkaya (label), Registration Certificate No. 38389 of 10/10/
69, with a priority date of 3/12/69.
    7. Okhotnichya [in the Latin alphabet] (label), Registration 
Certificate No. 38391 of 10/10/69, with a priority date of 3/12/69.
    8. Pertsovka [in the Latin alphabet] (label), Registration 
Certificate No. 39231 of 2/12/70, with a priority date of 3/12/69.
    9. Moskovskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38237 of 9/9/69, with a priority date of 3/12/69.
    10. Limonnaya (label), Registration Certificate No. 39232 of 2/12/
70, with a priority date of 3/12/69.
    11. Krepkaya (label), Registration Certificate No. 40207 of 8/15/
70, with a priority date of 9/23/69.
    12. Stolovaya [in the Latin alphabet] (label), Registration 
Certificate No. 40208 of 8/15/70, with a priority date of 9/23/69.
    13. Sibirskaya [in the Latin alphabet] (label), Registration 
Certificate No. 68655 of 7/29/81, with a priority date of 3/4/81.
    14. Baltiyskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38390 of 10/10/69, with a priority date of 3/12/69.
    15. Kristal [in the Latin alphabet] (word), Registration 
Certificate No. 49140 of 3/13/74, with a priority date of 9/3/73.
    16. Soviet Sparkling [in the Latin alphabet] (label), Registration 
Certificate No. 38383 of 10/10/69, with a priority date of 3/12/69.
    17. SPI (graphic), Registration Certificate No. 34475 of 12/23/67, 
with a priority date of 2/17/67, on the basis of the absence and non-
submittal of the licensing agreement with the Ministry of Agriculture 
of the Russian Federation.
    X. To prohibit the Kaliningrad Customs Office from carrying out of 
the customs exportation procedures and the exportation exiting of the 
alcoholic products that bear the following trademarks:
    1. Starka [in the Latin alphabet] (label), Registration Certificate 
No. 38384 of 10/10/69, with a priority date of 3/12/69.
    2. Yubileynaya [in the Latin alphabet] (label), Registration 
Certificate No. 38385 of 10/10/69, with a priority date of 3/12/69.
    3. Kubanskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38386 of 10/10/69, with a priority date of 3/12/69.
    4. Zubrovka [in the Latin alphabet] (label), Registration 
Certificate No. 38387 of 10/10/69, with a priority date of 3/12/69.
    5. Stolichnaya [in the Latin alphabet] (label), Registration 
Certificate No. 38388 of 10/10/69, with a priority date of 3/12/69.
    6. Russkaya (label), Registration Certificate No. 38389 of 10/10/
69, with a priority date of 3/12/69.
    7. Okhotnichya [in the Latin alphabet] (label), Registration 
Certificate No. 38391 of 10/10/69, with a priority date of 3/12/69.
    8. Pertsovka [in the Latin alphabet] (label), Registration 
Certificate No. 39231 of 2/12/70, with a priority date of 3/12/69.
    9. Moskovskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38237 of 9/9/69, with a priority date of 3/12/69.
    10. Limonnaya (label), Registration Certificate No. 39232 of 2/12/
70, with a priority date of 3/12/69.
    11. Krepkaya (label), Registration Certificate No. 40207 of 8/15/
70, with a priority date of 9/23/69.
    12. Stolovaya [in the Latin alphabet] (label), Registration 
Certificate No. 40208 of 8/15/70, with a priority date of 9/23/69.
    13. Sibirskaya [in the Latin alphabet] (label), Registration 
Certificate No. 68655 of 7/29/81, with a priority date of 3/4/81.
    14. Baltiyskaya [in the Latin alphabet] (label), Registration 
Certificate No. 38390 of 10/10/69, with a priority date of 3/12/69.
    15. Kristal [in the Latin alphabet] (word), Registration 
Certificate No. 49140 of 3/13/74, with a priority date of 9/3/73.
    16. Soviet Sparkling [in the Latin alphabet] (label), Registration 
Certificate No. 38383 of 10/10/69, with a priority date of 3/12/69.
    17. SPI (graphic), Registration Certificate No. 34475 of 12/23/67, 
with a priority date of 2/17/67, without the licensing agreement with 
ZAO Sojuzplodimport which permits the export of alcoholic products 
bearing the mentioned trademarks.
    The ruling with respect to the implementation of the measures for 
the securing of the claim shall enter into force immediately and in the 
manner provided for the execution of the decisions of the court.
    The present ruling may be appealed, within the term of 10 days, to 
the Kemerovo Regional Court.
    Judge s/
    [rubber-stamped seal with emblem of the Russian Federation:]
    Leninsk-Kuznetsk City Court of the Kemerovo Region of the Russian 
Federation
                                 ______
                                 
EXHIBIT C
Russia House: Mr. Putin: Stop the Rot
By Boris Nemtsov
04/05/2002
The Wall Street Journal Europe
    President Vladimir Putin has made some real and positive changes in 
his first year as Russian head of state. He has made Russia politically 
stable in the short-run. This has allowed him to push through radical 
economic reforms such as a new income tax and a land code, and lay the 
groundwork for legal and military reform. Post-September 11, he has 
changed Russia's geopolitical view. However, these accomplishments will 
be of little long-term significance if Mr. Putin cannot reverse 
dangerous trends that threaten to undermine the twin pillars of true 
progress for Russia--democracy and property rights.
    The threats to democracy have been much discussed in the West--
beginning with the president's expressed desire to ``trash the Chechen 
fighters in the toilet'' rather than seek a peaceful solution of the 
conflict in Chechnya. More recently, the West has correctly criticized 
the Putin administration for its support for the systematic destruction 
of the independent television stations NTV and TV6. Many Western 
friends of democracy are suspicious of oligarchs such as Boris 
Berezovsky and Vladimir Gusinsky (the owners of TV6 and NTV 
respectively) but they are rightly more suspicious of the methods used 
to destroy them.
    And yet the same Western observers have been less quick to notice 
an equally worrying trend which directly affects Western investors: 
President Putin's failure to support property rights in Russia by 
addressing the abuse of office that so systematically undermines them. 
Property rights and minority shareholder rights are keys to healthy 
economic growth and investment. While reforms such as the land code, 
pension reform and indeed tax reform all help, these will be for naught 
if the fundamental weaknesses of the Russian state that undermine 
property and minority shareholder rights are not addressed.
    Why are property rights in Russia so weak? The short, and long, 
answer is bureaucratic corruption. Secure property rights are as strong 
as the government officials who enforce the rules. In Russia today, 
when ordinary citizens and business people turn to the government to 
protect their rights, they too often encounter civil servants and 
government appointees who use their positions of power to tilt the 
playing field to a favored team. One agency that Mr. Putin needs to 
examine is the Federal Commission for the Securities Market of the 
Russian Federation. This is the Russian equivalent of the U.S. 
Securities and Exchange Commission and the body responsible for 
defending property rights in the securities market--a cornerstone of 
any modern economy.
    The Commission's Chairman Igor Kostikov has been dogged by 
persistent allegations in the Russian press that the FCSM gives special 
treatment to brokerage and asset management firm AVK, which Mr. 
Kostikov founded (the K stands for Kostikov). Mr. Kostikov says that 
his shares in the company were sold in December 1998. Last year, AVK 
brought a lawsuit against a St. Petersburg newspaper which alleged that 
the Commission gives unfair advantage to AVK. AVK, however, never 
showed up for the court date, giving the paper a victory by default.
    There is nothing particularly unusual in Russia about a minister 
regulating the very sector in which he has had a commercial interest. 
To cite another example, Press Czar Mikhail Lesin founded Video 
International, which captures the bulk of the Russian advertising 
market on state television (which Mr. Lesin oversees). Russia's nuclear 
power minister was sacked last year following allegations (which the 
minister denied) that he retained an ownership stake in a small 
Pennsylvania consulting firm that had been hired to advise a U.S. 
company responsible for a nuclear security pact between the U.S. and 
Russia.
    But if allegations of conflict-of-interest and charges of kickbacks 
aren't unique to the Commission, Mr. Kostikov's ability to impact 
property rights makes his job particularly crucial for Russia's economy 
and investment climate. This is in part why the Commission's tussles 
with Pallada Asset Management, Russia's top performing fund in 2001, 
have received so much attention from market participants in Russia.
    Pallada is the Moscow subsidiary of State Street Global Advisors--a 
large asset manager affiliated with State Street Corporation, a leading 
global custodian. In other words, this is the kind of company Russia 
ought to be welcoming with open arms. Yet, Pallada's activities have 
been the subject of the most extraordinary attention by the Commission 
as well as numerous government investigations on grounds of ``tax 
irregularities,'' non-compliance with FCSM regulations or ``serious 
economic crimes.'' None of the investigations have produced evidence of 
negligence or wrong-doing.
    Pallada claims that changes to its fund prospectus were not 
registered by the Commission because Pallada refused the Commission's 
demand that it drop its St. Petersburg broker. Pallada claims Mr. 
Kostikov was also unhappy that Pallada wasn't buying its St. Petersburg 
bonds through AVK. For seven months, the Commission refused to register 
amendments to a different Pallada fund while a new fund prospectus for 
AVK, with similar provisions, was registered. After a widely publicized 
lawsuit filed by Pallada (and settled out of court), the Commission, a 
few days before the scheduled court hearing, quietly registered 
Pallada's amendments. But in what Pallada calls an act of revenge, the 
Commission forced Pallada to change the name of its fund that competed 
with AVK (two years after its creation).
    Recent events have been even more interesting. Last October, a 
Russian individual filed a mysterious lawsuit against the Federal 
Commission for registering a private share issuance by Pallada to State 
Street in 1998. The individual, Alexei Drobysh, has no known 
relationship to any of the private parties involved and certainly 
didn't plead any in his suit.
    The Federal Commission did not object to this suit, nor did it 
inform any of the private parties of the existence of the lawsuit. 
Neither State Street nor Pallada were allowed to participate in 
judicial hearings regarding Pallada's share issue to State Street.
    Shockingly, the court decided that the share issue was illegal 
because the Russian plaintiff had not been provided with adequate 
information about the share issue. On its face, the decision means that 
every private share issue in Russia may be invalidated unless the 
parties have taken pains to ensure that each of Russia's 144 million 
citizens have received information about the transaction. Rather than 
protest this Kafkaesque result, the Federal Commission simply informed 
the press that State Street's property rights to the shares issued in 
1998 had been cancelled. While surprising court decisions are hardly 
unusual in Russia and a single decision can be dismissed as politically 
motivated and thus not a broader threat, it's hard to see how such an 
environment can be conducive to legal reform or the protection of 
property rights. As a lawyer at the prominent English law firm of 
Freshfields wrote in a letter to the newspaper Vremya Novosti, ``this 
decision threatens the very idea of securities and the securities 
markets in Russia. To say nothing of the violations of constitutional 
principals of private property, freedom to contract and principals of 
trade.'' These actions of the FCSM must be investigated and the 
widespread concerns of abuse of office either proved or refuted.
    Loyalty means a lot in politics, especially in Russia. President 
Putin understands this better than anyone. To that end, he should adopt 
a Presidential Code of Ethics for government officials already 
submitted to the Duma by the Union of Right Forces. The Code of Ethics 
should equate loyalty with honesty in government service. While a 
conflict-of-interest law exists, government officials should have to go 
further and sign an oath that they have no commercial interests and 
will implement the law and policies of the government of Russia. 
Equally crucially, corporate governance rules ought to be strengthened 
to provide more transparency. When officials are shown to have violated 
their oaths, they should be publicly disgraced and dismissed. Only 
President Putin can tackle this difficult problem, and he needs to do 
it soon if he wants a place in Russian history.
    Each time the market is not regulated fairly, or public office used 
impartially, signals are sent and messages learned by the marketplace. 
Until bureaucratic corruption and the improper use of office is 
addressed, President Putin's other reforms to revive the Russian 
economy and nation will be useless.
    Mr. Nemtsov is leader of the Union of Right Forces and a member of 
the Russian Duma.
    Reached for comment by the editors, Mr. Kostikov's office issued 
the following statement:
    The Federal Commission for the Securities Market, which I chair, 
never favors one market participant over another. There has never been 
any suggestion by any authority or market participant that it has, 
except in the matter of Pallada Asset Management, which over the past 
year has lost a series of court actions it initiated against the 
Commission that were unrelated to this claim, and which concocted the 
notion as a public relations maneuver. The specific accusation that the 
Commission has shown favor, to the detriment of Pallada, toward a 
financial-sector firm which I had founded before entering public 
service in 2000, was apparently thought up by Pallada to conveniently 
exploit negative perceptions by foreign audiences of Russian commercial 
practices. To be responsive to Russian media inquires caused by 
Pallada's loud complaints, the Commission invited well-established 
foreign auditors and attorneys to examine the claim. It was found to be 
baseless. Russian law-enforcement authorities examined the claim and 
also found it baseless. Nonetheless, Russian politicians sometimes pick 
up on Pallada's complaint when it suits their own goals with respect to 
the Federal Commission, or when they possess a link with Pallada, the 
origination of which has been an object of investigation by U.S. legal 
officials examining the use of U.S. government technical assistance 
funds to Russia in the 1990s.
Igor V. Kostikov
Chairman
Russian Federal Commission for the Securities Market

                                

    Chairman Crane. Thank you, Mr. Edlin. And let me, to all of 
our witnesses who testified today, express our apologies for 
the disruptions. This place doesn't run smoothly. But we 
appreciate your participation, and we will accept any written 
testimony or information that you have in addition to your oral 
testimony, which will be made a part of the permanent record. 
And that will be open until Wednesday, April 24th.
    With that, that concludes our hearing, and I thank you 
again, all of you, for being here, and we stand adjourned.
    [Whereupon, at 12:41 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]
  Statement of Bethlehem Steel Corporation, Bethlehem, Pennsylvania; 
National Steel Corporation, Mishawaka, Indiana; and United States Steel 
                 Corporation, Pittsburgh, Pennsylvania
    These comments are submitted pursuant to the Advisory from the 
Committee on Ways and Means, Subcommittee on Trade No. TR-8, inviting 
written comments with respect to the possible establishment of 
permanent normal trade relations with Russia. Bethlehem Steel 
Corporation, National Steel Corporation, and the United States Steel 
Corporation are U.S. producers of flat-rolled steel products.
    President Bush has requested that Congress pass legislation 
authorizing the President to terminate the application of Title IV of 
the Trade Act of 1974 to Russian Federation, including the so-called 
Jackson-Vanik freedom of emigration provision. Responding to the 
administration's request, Congressman Thomas (R-CA) introduced H.R. 
3553, with Congressmen Crane and Dreier co-sponsoring, on December 20, 
2001. The bill authorizes the President to graduate Russia from 
Jackson-Vanik and establish Permanent Normal Trade Relations status 
(PNTR). The move to repeal Jackson-Vanik in relation to Russia reflects 
the fact that it now accords its citizens freedom of emigration and 
travel as well general human rights progress.
    We take no position on the question of whether Russia should be 
granted PNTR status. However, if Congress decides to approve H.R. 3553, 
a provision similar to Section 406 of Title IV, which provides an anti-
import surge mechanism in the case of market disruption, should be 
included in the final version. Such a market disruption mechanism was 
included in legislation providing PNTR for China (19 U.S.C. Sec. 2451), 
reflecting the fact that the U.S. and China had agreed to maintain that 
provision in force for twelve years following the latter's accession to 
WTO.
    There is no question that since the breakup of the Soviet Union and 
the fall of communism, Russia has made significant progress in moving 
toward a market economy. However recent surveys of the economic 
situation reveal that significant distortions persist, reflecting 
elements of the old command-style economy which remain in place:
           Government ownership and control of the means of 
        production is widespread and actually increasing, reflecting 
        deeply imbedded vestiges of the Soviet era centrally planned 
        economy.
           The government-controlled structure of the largest 
        companies in Russia, most notably Gazprom and UES, results in 
        pervasive price distortions and government direction of the 
        allocation of resources and determination of prices. The prices 
        of nearly all goods and services in the energy, transportation 
        and communications field are set by the government, and the 
        government sets prices for hundreds of other enterprises 
        identified as ``natural monopolies.''
           Low wage rates, late or nonpayment of wages, 
        inadequate protection of workers' rights, and restrictions on 
        labor mobility reflect the continuing lack of free bargaining 
        between labor and management. The actual situation of workers 
        relations in Russia has yet to evidence positive changes due to 
        the three-month old, new Labor Code.
           Capital allocation is badly distorted, with the 
        government controlling the only major banks in the country. The 
        allocation of capital and interest rates are commonly 
        determined by political considerations rather than market-based 
        factors.
           While the use of barter in lieu of money 
        transactions has declined, the persistence of a significant 
        degree of barter is indicative that a true money economy is not 
        fully established.
           Reflecting the absence of a properly functioning 
        system of bankruptcy, insolvent enterprises which should shut 
        down instead continue to produce and export goods, often under 
        the control or direction of local or regional government 
        authorities.
    Such distortions were important factors contributing to the massive 
Russian export surge of 1998, as the Commerce Department found in a 
comprehensive July 2000 study. That surge disrupted markets around the 
world and had a devastating impact on the American steel industry, 
particularly with respect to hot-rolled flat products. The 1998 surge 
was brought under control by the application of antidumping measures on 
hot-rolled steel products, using existing rules governing dumping by 
nonmarket economies, and through the conclusion of a comprehensive 
bilateral trade agreement limiting the quantities of a range of Russian 
steel products exported to the U.S. At present, however, it appears 
that the Commerce Department is on the verge of extending ``market 
economy'' status to Russia under the antidumping law, and the Russian 
Government has reportedly renounced the comprehensive agreement. While 
normal antidumping and countervailing duty remedies remain available to 
U.S. producers, there are significant reasons to believe that they 
cannot be utilized effectively with respect to an economy which remains 
as grossly distorted as that of Russia.
    Recent changes with respect to the comprehensive agreement and 
Russia's nonmarket economy raise the very real prospect that another 
devastating surge of Russian steel exports into the U.S. market could 
occur. The addition to this legislation of a safeguard-like feature, 
comparable to that in the China PNTR bill, is important to provide a 
fair and adequate protection to threatened U.S. industries for a 
transition period. The duration of this period should be decided on by 
Congress based on the time it takes Russia to complete its transition 
to a real market economy.
    In the past, legislation granting PNTR status has been enacted 
after the conclusion of bilateral negotiations between the United 
States and the country in question over the latter's WTO accession, as 
was the case with respect to China. In this case, the administration 
has asked Congress to grant PNTR status to Russia, while Russia's WTO 
accession negotiations are nowhere near completion. Granting 
unconditional PNTR status prior to the parties' agreement on a protocol 
of accession risks dissipation of leverage this country might otherwise 
enjoy to negotiate conditions necessary to provide safeguards, after 
Russian accession, with respect to potentially problematic Russian 
policies, practices, and economic structures. Accordingly, if Congress 
sees fit to enact PNTR legislation in advance of an agreement, it 
should include the requirement of an anti-surge safeguard in order to 
preserve U.S. leverage and to ensure that U.S. industries and workers 
are not injured by another Russian export surge after PNTR status is 
granted.

                                

                                                International Paper
                                               Washington, DC 20003
The Honorable Philip Crane
Chairman, Subcommittee on Trade
Committee on Ways and Means
1102 Longworth House Office Building
Washington, DC 20515-6348
    Dear Mr. Chairman:
    On behalf of International Paper I am writing in support of 
Congressional action to graduate Russia from Jackson-Vanik 
consideration. International Paper is a member of the US-Russia 
Business Council and endorses the testimony they have provided 
supporting this action.
    With the end of the Cold War, and the transformations that have 
taken place in the Russian political and economic systems, it is 
appropriate for Congress to remove Russia from Jackson-Vanik annual 
review. Continued Jackson-Vanik review does nothing to improve the 
trade relationship with Russia. Terminating its application to Russia 
would help further normal trade relations between the U.S. and Russia. 
In our view, Jackson-Vanik review should not be linked to Russia's WTO 
accession. We believe the Administration is well positioned to 
negotiate strong commitments from Russia in terms of market access and 
other market opening measures in the accession negotiations. We would 
view linking Jackson-Vanik to Russia's WTO membership application as 
counterproductive since it could be perceived as the U.S. raising the 
bar on Russia vis-a-vis other countries seeking WTO accession.
    International Paper has a significant investment in Russia in the 
Svetogorsk paper mill, which is producing positive returns for the 
company and the community. The mill has seen steady improvement in 
productivity, profitability, and employee wages. The mill has become 
the market leader in office papers in Russia and is now also supplying 
export markets in Europe.
    International Paper managers have worked effectively with 
government officials at all levels in Russia, and have seen many 
positive changes in the economic and legal framework allowing private 
enterprise to operate successfully in Russia. These changes have been 
noted in the submissions of the US-Russia Business Council, which 
International Paper supports. We also recognize that there is room for 
further improvement, particularly with respect to tax policy, currency 
controls, law enforcement, and import/export duties.
    We believe it important to continue to encourage progress on the 
market reforms the Russian Government has begun, and a positive step in 
this direction would be graduating Russia from annual Jackson-Vanik 
review.
            Sincerely,
                                                      Lyn M. Withey
                                      Vice President Public Affairs

                                

         Statement of the National Cattlemen's Beef Association
    Producer-directed and consumer-focused, the National Cattlemen's 
Beef Association (NCBA) is the trade association of America's cattle 
farmers and ranchers, and the marketing organization for largest 
segment of the nation's food and fiber industry.
    NCBA has been and continues to be a strong believer in 
international trade. We support aggressive negotiating positions to 
open markets and to remove unfair trade barriers to US beef products. 
Livestock producers are becoming increasingly dependent on the rest of 
the world to buy our products. Exports of meat and grains make sense 
for the US, a country that has only 4 percent of the world's 
population, but a large share of the world's production agriculture.
    Exports of beef have helped to increase overall beef demand and 
have complemented improving beef demand in the domestic US market. We, 
as an industry, have worked hard to promote beef exports that currently 
account for over 12 percent of the value of wholesale beef sales. On a 
tonnage basis, we export approximately 10 percent of what we produce.
    NCBA supports terminating application of Jackson-Vanik to Russia 
and extending Permanent Normal Trading Relations (PNTR) for Russia. We 
also strongly support Russia's WTO accession and look forward to 
incorporating Russia into a rules-based system of trade. To be 
perfectly honest, however, these positions were much easier to support 
before Russia imposed the ban on imports of US chicken on March 10.
    Severe price declines in cattle and hog futures markets, price 
volatility and losses throughout the cattle feeding and cow-calf 
sectors have been accentuated because of Russia's unjustified trade 
action. The domestic US meat market perceives that it will have to 
absorb an additional 45 million pounds of protein per week for every 
week that Russia does not resume importing US poultry products. 
Uncertainty about the outcome of this trade dispute has weighed on the 
markets for beef and pork and losses have accumulated at increasing 
rates. Russian leadership must resolve meat access issues and maintain 
uninterrupted access for US meat if it is serious about generating and 
maintaining political support for graduating from Jackson-Vanik and 
negotiating for WTO accession.
    During the last few years the US successfully negotiated China PNTR 
and WTO accession on nearly concurrent timelines. Because that strategy 
was successful with China, NCBA had concerns when it was first proposed 
to grant PNTR to Russia before the WTO accession package is negotiated 
and finalized. However, we also realize that the circumstances in China 
and Russia are very different and the strategy that successfully 
concluded with China's WTO accession will not necessarily apply to 
Russia. If firm assurances are received from U.S. negotiators that 
issues specific to beef will be resolved in the Russian WTO accession 
package, the U.S. beef industry could support PNTR for Russia prior to 
and independent of WTO accession negotiations.
    We realize that the situations in China and Russia are very 
different, with respect to the commercial interests involved, each 
country's trade regime, the level of economic reform, and their 
respective human rights situations. In contrast to the situation with 
Russia, China's MFN (NTR) treatment was subject to an annual waiver and 
spirited annual debate until Congress approved PNTR for China.
    Russia has met its human rights obligations and qualifies for PNTR 
under the Jackson-Vanik legislation. During the past eight years, 
Russia has not been subject to an annual review of Normal Trading 
Relations (NTR) or a Congressional vote on the waiver process because 
it has met its human rights obligations. There has been little question 
about whether to continue providing NTR to Russia so the vote for PNTR 
provides little leverage in the negotiation process for Russia's WTO 
accession. To reiterate, the US beef industry will not oppose PNTR for 
Russia as long as firm assurances are received from U.S. negotiators 
that issues specific to beef will be resolved in the Russian WTO 
accession package.
The following beef--specific issues that must be resolved before NCBA 
        will support a WTO accession package for Russia:
        Minimum Invoice Prices: U.S. beef is subject to minimum 
        invoice pricing requirements. Any Russian agreement must 
        eliminate this WTO-illegal practice.
        Export Subsidies: Any U.S./Russian bilateral 
        negotiations or WTO accession package must include provisions 
        to eliminate export subsidies comparable to agreements reached 
        with China and other countries.
        Zero for Zero Production Subsidies: Any U.S./Russian 
        bilateral negotiations or Russian WTO accession package should 
        explore a zero for zero option with respect to production 
        subsidies specific to meat production (possibly on a species by 
        species basis) to set the stage for Russian/EU bilateral 
        negotiations.
        Tariffs and Tariff Rate Quotas: In recent months, 
        certain actions in Russia appear to be at odds with the WTO 
        accession process. Beef imports now may be subject to tariff 
        rate quotas as a result of new legislation passed by the Duma. 
        Implementation of TRQs--a proposal supported not only by the 
        Russian meat producers but also apparently by the European 
        Union--would be counter to the interests of U.S. beef 
        producers. NCBA opposes implementation of TRQs by Russia and 
        beef tariffs should be bound at low levels consistent with the 
        levels in the China WTO accession package and with target 
        levels in the WTO multi-lateral agricultural negotiations.
        SPS/TBT/Inspection Equivalency: Russia currently 
        requires individual plant-by-plant-level approval for beef 
        processing plants. The U.S. should insist that Russia, like 
        China and most other U.S. trading partners, accept beef from 
        all USDA-inspected plants. There should be an elimination of 
        all unjustifiable technical and sanitary barriers to trade 
        including the following:
           Beef products originating from beef animals raised 
        in the states with counties that have had confirmed bovine 
        cases of vesicular stomatitis (VS) within the last 12 months 
        are not eligible for shipment to Russia.
           Importation of ground beef, packaged in bulk form or 
        in the form of meat patties, is prohibited.
           The Russians periodically raise the issue of `GMO 
        statements' on meat certificates. Thus far, USDA has rebutted 
        this issue. Requirement by any country for certification that 
        meat originates from animals that have not consumed GMO feeds 
        is not based on science and will be absolutely opposed by NCBA.
           Thank you for the opportunity to submit these 
        comments. We look forward to working with you as this issue 
        moves through the legislative process.

                                

                                           U.S. Chamber of Commerce
                                          Washington, DC 20062-2000
                                                     April 24, 2002
The Honorable Philip Crane
United States House of Representatives
Washington, DC 20515
    Dear Representative Crane:
    I am writing to you on behalf of the U.S. Chamber of Commerce, the 
world's largest business federation, representing more than three 
million businesses and organizations of every size, sector and region, 
to urge you and your colleagues to support graduating Russia from the 
Jackson-Vanik provisions under Title IV of the Trade Act of 1974, and 
extending Permanent Normal Trade Relations (PNTR) status to Russia.
    The U.S. Chamber of Commerce and its affiliated American Chamber of 
Commerce in Russia have been closely following the economic and 
political developments in Russia. As a matter of fact, Tom Donohue, the 
U.S. Chamber's President and CEO, is currently in Russia continuing our 
frequent dialogues with Russian and American companies who are engaged 
in business in the Russian Federation, NGOs, Russian officials, and 
business association executives.
    The U.S. Chamber strongly supports the graduation of Russia from 
Jackson-Vanik, a remnant of U.S. trade law that has been superceded by 
the end of the Cold War. Based on our experience and analysis of the 
developments in Russia, we believe that it meets the statutory 
requirements for unconditional NTR treatment and that the extension of 
such treatment is in the economic interests of both Russia and the 
United States.
    Since 1994, the President has found Russia to be in full compliance 
with the Jackson-Vanik emigration criteria. However, the country's 
trade status remains conditional upon annual compliance determinations 
by the President. This, understandably, continues to be an irritant 
between our two countries. The time has come to put U.S.-Russian 
commercial relations on a solid foundation, unencumbered by legacies of 
policy differences with a government that no longer exists.
    American companies are keenly interested in the growth of the 
Russian market for U.S. goods and services. With a trade turnover of 
only about $9 billion per year, our economic ties with Russia have 
still not matched the breadth of our political relationship. The 
extension of permanent NTR status to Russian goods and services is one 
crucial step in sustaining the transformation of the Russian economy 
and ensuring its balanced orientation in the global marketplace.
    The U.S.-Russian commercial relationship would also benefit from 
increased efforts to acquaint Russian firms with the U.S. market and 
business practices, resulting in opportunities for Russian firms to 
become integral players in the global economy. Through their operations 
in Russia, U.S. companies establish benchmarks for corporate practice 
in areas such as corporate governance, minority shareholder rights, 
sanctity of contracts, respect for private property, and other aspects 
of the rule of law. U.S. companies have been and will continue to be a 
powerful force for positive change in Russia.
    Extending PNTR status to Russia would send a clear signal of our 
commitment to help fully integrate Russia into the global economy. It 
would allow American business to constructively engage Russia's private 
sector, which is the driving force of reform. It is Russia's private 
sector that will ultimately benefit from--and solidify--the country's 
integration into global markets through eventual accession to the World 
Trade Organization (WTO). The U.S. Chamber of Commerce looks forward to 
working with you, as well as other Members of Congress, to ensure the 
extension of PNTR treatment to Russian goods and services.
            Sincerely,
                                                    R. Bruce Josten
                                           Executive Vice President
                                                 Government Affairs

                                

   Statement of Micah H. Naftalin, National Director, UCSJ: Union of 
              Councils for Jews in the Former Soviet Union
    Mr. Chairman:
    On behalf of our president, Yosef I. Abramowitz and the entire UCSJ 
Board of Directors, I thank you for this opportunity to comment on the 
issue of graduating the Russian Federation from the strictures of the 
Jackson-Vanik Amendment. In the early 1970s, UCSJ was the first NGO to 
recommend to Scoop Jackson the need to link America's trade benefits to 
freedom of emigration--perhaps the most effective piece of human rights 
legislation ever enacted.
    I am providing here for your record an extended discussion of the 
situation that provides the context for our views and concerns. So let 
me begin with the bottom line: UCSJ can support graduating Russia from 
Jackson-Vanik, but only if a bilateral institutionalized mechanism is 
established to assure periodic review of Russia's status and efforts to 
reform its human rights and civil society, including concrete steps to 
combat antisemitism, xenophobia and manifestations of terrorism. 
Overall, President Putin is solidly on record as pledging such reforms. 
What remain to be accomplished are concrete actions that implement 
those pledges. We seek bilateral mechanisms that, in the words that 
Ronald Reagan borrowed from Lenin, enable the United States and the 
human rights community to ``trust but verify.''
    We have just concluded the observance of the Passover holy days, 
the Jewish celebration of freedom. At every seder table, worldwide, the 
participants sing the song ``Dayeinu,'' which means ``it would have 
been enough.'' It is a way of thanking God for each of the step-by-step 
miracles that led to the Exodus from slavery in Egypt. Thus had God 
taken us out of Egypt and punished our oppressors, Dayeinu, it would 
have been enough. Had God parted the Red Sea permitting our escape, 
Dayeinu. Had God supplied our needs for forty years in the desert, 
Dayeinu, and so forth.
    But, Mr. Chairman, here on the ground, human rights activists can 
never say Dayeinu. When the U.N. enacted the Universal Declaration of 
Human Rights, it was not enough. We could not say Dayeinu. When the 
Congress enacted the Jackson-Vanik Amendment, we could not say Dayeinu. 
When Sakharov, Orlov, Sharansky and all the other Prisoners were 
released, when the Soviet Jews were released from quarantine, even when 
President Putin declares war on terrorism and antisemitism, and even if 
the time to release Russia from Jackson-Vanik has arrived, we must not 
say Dayeinu. It is not nearly enough.
    In partnership with the Moscow Helsinki Group, UCSJ monitors 
grassroots human rights, antisemitism and xenophobia in each of 
Russia's 89 regions. The genius of Jackson-Vanik was to link trade and 
human rights and that linkage remains. The shortcomings of civil 
society remain a barrier to economic development and the confidence of 
foreign investors as long as there is government control of media, 
severe harassment of Muslims and non-Orthodox Christians, widespread 
corruption of the civil and criminal justice system. And then, even in 
the relative absence of Soviet-style official antisemitism, this 
historic scourge, which is rising across Europe and throughout the 
Middle East to levels not seen since the defeat of Hitler, is not being 
effectively combated in Russia's regions.
    One way of explaining this is to say that President Putin and his 
government must go beyond decrying antisemitism and systematically 
punish antisemites as well. As fully documented by UCSJ, despite his 
unprecedented and appreciated strong pledges to combat them, large-
scale antisemitic, xenophobic and anti-American incidents and 
propaganda are nonetheless perpetrated, largely unchallenged, by 
dedicated Communists, neo-Nazis, Islamic extremists and elements within 
the Russian Orthodox Church, often in league with local officials and 
police. Human rights-based civil society reforms must be 
institutionalized for Russia's benefit and as a guarantor of a 
constructive and reliable bilateral relationship. How Russia handles 
the challenge of grassroots antisemitism is a reasonable indicator of 
its human rights progress overall.
    Mr. Chairman, it is always difficult to keep human rights goals on 
the regular agenda of bilateral diplomacy. While we view it as integral 
to America's national security, it almost invariably is overshadowed by 
more quantifiable indices like trade or oil or weapons. In the Clinton 
years, we were critical of the Gore-Chernomyrdin semi-annual meetings 
because of all the original ten issue categories, only human rights 
failed to be included for automatic, regular review on each agenda. 
Indeed, and this is our central concern: it has been only Jackson-Vanik 
that has compelled Russia and the United States to come together to 
discuss and negotiate Russia's human rights progress at least once a 
year in the context of considering the annual waiver. Accordingly, we 
are asking the Administration and the Congress--and Russia as well--to 
replace Jackson-Vanik with an effective venue, a mechanism for 
continuing, regularly scheduled bilateral oversight for human rights 
and civil society reform and progress.
    Examples of such mechanisms could include, inter alia, scheduled 
annual reviews by the Congressional Helsinki Commission and the foreign 
relations committees of the House and Senate; a bilateral commitment to 
include human rights review on the agenda of summit meetings and annual 
joint review sessions convened by the Department of State and Ministry 
of Foreign Affairs which would include full participation by Russia's 
Human Rights Ombudsman and by all interested human rights NGOs from 
both countries. The Congress might also consider extra appropriations 
for USAID or the National Endowment for Democracy to support US-Russian 
cooperative human rights and religious freedom monitoring efforts by 
NGOs and to encourage continuing dialogue among US and Russian business 
organizations, economic development and trade officials and human 
rights and environmental NGOs to explore the mutual benefits of 
improving Russia's human rights and economic goals.
    Concrete steps that President Putin and his government could and 
should take, consistent with his publicly declared goals, which would 
provide confidence beyond the generalities already expressed, include 
the following:
           Through the Ministry of Internal Affairs and the 
        Federal Security Service (FSB), vigorously investigate and 
        prosecute antisemitic and extremist organizations and 
        individuals, and incidents of hate crimes, under the currently 
        existing law prohibiting the incitement of ethnic or religious 
        hatred (Article 282 of the Criminal Code). Redirect FSB 
        resources currently being used to investigate and prosecute 
        religious minorities, environmental scientists, and human 
        rights NGOs to the crucial task of fighting extremism.
           Continue to encourage the Duma to enact the draft 
        law ``On Political Extremism'' to bolster the Article 282-based 
        efforts to confront antisemitic extremism.
           Provide effective police protection to endangered 
        Jewish, Muslim and other especially non-Orthodox Christian 
        minority religious and community sites.
           Repudiate the 1997 law on religion and introduce 
        legislation in the Duma to restore full freedom of religion in 
        Russia.
           Dismiss Russian federal officials in regional and/or 
        municipal offices who collaborate with, or are tolerant of, 
        extremist groups and individuals. At minimum, President Putin 
        should not hesitate to signal these officials out for public 
        criticism--rather than just condemning antisemitism, he should 
        condemn antisemites, such as Kursk governor Aleksandr Mikhaylov 
        and Krasnodar Kray's representative to the Federation Council 
        Nikolai Kondratenko, by name.
    Thank you, Mr. Chairman. What follows is the policy statement 
issued by UCSJ in the Fall of 2001.
                                 ______
                                 

          ``Civil Society Reforms Can Replace Jackson-Vanik''

          Antisemitism in the Russian provinces is gradually becoming 
        as customary and trivial as foreign made cars on the roads and 
        computers in people's apartments. Not only Stavropol and 
        Krasnodar Kray, but several other regions are becoming totally 
        pro-fascist given the authorities' lax attitude or even direct 
        involvement. Izvestiya, May 12, 2000
          In sharp contrast to the statements intended to minimize the 
        scope and danger of antisemitism by some Jewish leaders in 
        Russia, President Putin himself has candidly noted the problem 
        and vowed to combat it. If he can make concrete progress here, 
        it will be an indication that civil society, upon which 
        America's security and Russia's business environment depend, 
        can be reformed. UCSJ, November 2001
    As presidents Bush and Putin prepare for their Texas Summit 
rendezvous, the headlines will deal with the state of their bilateral 
coalition for security against terrorism, with America's hopes for 
renegotiating the ABM treaty to accommodate domestic missile defense, 
the possibility of accessing Russia's vast oil and gas reserves as a 
counter to our dependence on the Gulf states, and generally with the 
warming temperature of the relationship itself in what has been called 
the post-post-Cold War era of post-September 11. Only slightly below 
these headlines will be a sub-headline dealing with the long-held hope 
of Russia and the American business community that President Bush will 
move to ``graduate'' Russia, that is, exempt it permanently, from the 
strictures of the 1974 Jackson-Vanik Amendment to American trade law, 
which conditions Russia's access to competitive tariff treatment to its 
de jure free emigration and de facto human rights behavior. For a 
decade, Russia has received an annual waiver; the proposed action 
therefore is symbolic but, as Russia sees it, negative symbolism has no 
place between friends. Subject to concrete assurances that would 
confirm promises already made by President Putin, UCSJ: Union of 
Councils for Jews in the Former Soviet Union, the initial and strongest 
supporter of Jackson-Vanik, agrees.
    How presidents Bush and Putin resolve the Jackson-Vanik issue will 
offer an important window for measuring the relative merits of 
political form and national security substance. Virtually all the 
political and diplomatic pressures argue for the graduation, seen as a 
thorn in the relationship at a time when both parties are seeking 
diplomatic harmony and economic benefits. But not so fast if one 
believes, as do we, that reliability and shared human and democratic 
values in a coalition partner are in the best long range interest of 
promoting America's national security. A country that lacks the 
elemental infrastructure of a civil society--e.g., multiple political 
parties, minimal corruption, independent media, religious freedom, 
civil and criminal codes and practices that meet reasonable 
international standards of rule of law--cannot be a secure and reliable 
partner. One leading indicator of all these issues, including not only 
the original goals of Jackson-Vanik but also the presence of global 
terrorism and anti-Americanism, is the rate of antisemitism and the 
effectiveness of state and local authorities in combating it.
    Linking U.S. trade benefits to Soviet antisemitism, emigration 
policy and thus human rights was the brainchild of Refusenik leaders in 
Leningrad and Moscow, and brought to the attention of Senator Henry M. 
``Scoop'' Jackson (D-WA) by UCSJ in the early 1970s. Enacted in 1974 
over the strong objection of President Nixon and his national security 
adviser, Henry Kissinger, the Amendment was one of America's finest 
hours in the international battle for human rights. The Cold War 
demanded a stick; today's increasingly warm bilateral relationship with 
Russia calls for carrots from the West but also reciprocal concrete 
accomplishment with respect to reforms in Russia's civil society. 
Actions, in other words, must follow the promising rhetoric.
    UCSJ favors graduation but pursuant to the Bush Administration 
obtaining some concrete actions indicative of a commitment to actual 
reform. These include: (1) Breaking up alliances between local 
officials and antisemitic groups, and directing regional prosecutors to 
prosecute perpetrators of criminal incitement to antisemitic hate 
crimes, physical or through publishing, under Article 282. Virtually no 
cases have been brought in the past five years. (2) Giving rhetorical 
support to independent human rights NGOs such as MHG and Memorial. (3) 
Providing explicit endorsement of the work of the Human Rights 
Ombudsman, Oleg Mironov, and support for the appointment of regional HR 
ombudsmen.
    UCSJ's chief adversary in the decades-long controversy over 
Jackson-Vanik has been the U.S.-Russia Business Council. Today, the 
policy differences are slight. They, and their Moscow-based counterpart 
American Chamber of Commerce in Russia, like UCSJ, seek ``to develop a 
market environment in Russia attractive to investment and long-term 
business operations.'' Among their policy recommendations to the Bush 
Administration last March was the following, with which UCSJ agrees: 
``A bilateral agenda exclusively focused on security issues [to the 
detriment of our economic and commercial relations] is not in our 
national interest, as it does not accurately reflect the challenges and 
opportunities associated with engaging Russia.'' UCSJ has similarly 
recommended that the bilateral agenda should go beyond traditional 
national security concerns to embrace human rights and civil society 
reforms that both make Russia a more reliable security partner and 
improve its attractiveness to foreign investment.
    Accordingly, we are urging the Bush Administration to recognize 
that reform of the civil society, including fighting antisemitism, 
human rights, corruption, the justice system, civil and contract law, 
etc, is an important strategy for making Russia a more attractive venue 
for foreign business and investment that will make positive 
contributions to the Russian economy. We want our Commerce Department, 
the American business community and appropriate Russian economic 
planners and ministries, to work with the human rights NGO community in 
a strategic alliance to improve civil society and Russia's economy 
together.
    Antisemitism is by no means the most important failure of Russia's 
civil society; but it is a leading indicator. And how Jews are treated, 
in politics, in the media, and in the courts is a leading indicator of 
how Russian authorities respond to messengers of problems generally, 
including barriers to commerce. So far, the record is not good. 
Alexander Nikitin was tried for treason simply for working for a 
Norwegian foundation in documenting the public record of dangerous 
nuclear contamination of the seas from submerged mothballed nuclear 
submarines. Putin called him a spy; to its credit, after five years of 
imprisonment, house arrest and several trials, the Supreme Court 
finally approved his acquittal. The justice system, like the economy, 
is corrupt; bribes are the best defense in a country where the accused, 
who can be held without bail and tortured into confession, is presumed 
guilty until proven innocent. The resulting catastrophically 
overcrowded prisons are breeding grounds for epidemics of tuberculosis 
and AIDS, at monumental cost to public health as well as budgets. Legal 
codes and procedures still mostly date to the Soviet era. Business 
contracts--civil and governmental--are corrupt and disputes are often 
resolved by mafia, not law. These conditions not only contribute to the 
discontent of a poverty-stricken provincial public, and drain public 
resources, they contribute to a decidedly negative environment for 
attracting foreign investment. These are but some of the human rights 
violations well documented, region by region, by a nationwide network 
of local human rights NGO monitors coordinated, under a USAID grant, by 
the prestigious Moscow Helsinki Group, assisted by UCSJ. Now for the 
good news.
    From the inception of his tenure Putin, to his credit, has 
displayed candor and accuracy in publicly describing the elements of 
Russia's problems. He has made genuine efforts to attack the 
unmanageable drift of authority towards provinces and away from Federal 
and Constitutional authority. He has addressed problems of taxation and 
of corruption. He has targeted judicial reform. All, in the early days, 
with a disconcerting affinity for the methods and colleagues of his 
basic training, the KGB. Most well known are the mass human rights 
violations incident to the war in Chechnya and his determination to 
repress the independent media which, in the absence of true political 
parties other than the Communists, represented his only serious 
adversary.
    The spotlight of systematic human rights and antisemitism 
monitoring by experienced and independent NGOs plays two important 
roles: the inherent protection of the individual that the spotlight 
provides, and the ability of the public and governments alike to 
measure abuses and progress both subjectively and objectively.
    Our belief and hope for the future is that Jewish and other human 
rights monitors and activists will work constructively with officials 
and the business community on reforms that would protect Jews and other 
minorities, improve the rule of law-based civil society and lead to a 
market economy and attractiveness to foreign investors as well.

                                
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