WorldCity Business Magazine

Courting the capitalist club

by Jeffrey Sparshott

Vietnam and three other countries wait for U.S. clearance to join the World Trade Organization. Congress seems in no hurry to comply.

The Soviet Union in 1972 began imposing heavy taxes on citizens, especially university-educated Jewish citizens who wanted to emigrate to the West. The rules, as practiced, clearly violated religious freedom.

Two U.S. lawmakers Cold Warrior Senator Henry “Scoop” Jackson, a Washington Democrat, and Representative Charles Vanik, an Ohio Democrat responded with an amendment to the Trade Act of 1974. That amendment explicitly linked trade benefits, officially called “normal trade relations,” to emigration and human rights policies in countries with non-market economies. It directly targeted the U.S.S.R. and its communist allies. It was unique. And it was effective.

“For the first time in history, the Jackson-Vanik Amendment created the direct linkage between international relations and human rights; the issue of human rights was no longer an issue only of internal affairs,” Natan Sharansky, once a prominent Soviet dissident and now an Israeli politician, wrote in 2002.

The world has since changed the Cold War is, after all, over but Jackson-Vanik has not. Twelve countries still fall under the amendment’s rules. All but North Korea and Cuba receive presidential waivers certifying that they are complying with emigration requirements. But so-called normal trade relations, which entail preferential tariff rates for exports to the United States, must be made permanent before a country can join the World Trade Organization.

The requirement gives Congress tremendous leverage as the Bush administration works to strike WTO accession agreements with Russia, Ukraine, Vietnam and Kazakhstan.

“We are hoping even in the short legislative time available during an election year to move those agreements through the process. These will be bilateral agreements that are necessary for these countries to accede to the WTO to a rules-based system which is definitely in our interest, and the next step toward freer and more open trade,” U.S. Trade Representative Rob Portman has said.

It is not clear if Congress will be amenable. Lawmakers in recent years restored permanent normal trade relations (PNTR) to Afghanistan, Armenia, Laos, and Serbia and Montenegro. But the case with Serbia is a cautionary tale. The legislation was delayed and nearly derailed by Senator Richard Shelby’s objection to a measure that allowed socks to be partially sewn in the Caribbean. The Alabama Republican, whose state is home to the self-proclaimed sock capital of the world, held Serbia hostage in an effort to protect his constituents from sock sewing in the Dominican Republic.

Such is the world of Congress.

This legislative season, Vietnam may have the best chance of winning permanent normal trade relations and joining the WTO. It is the furthest along in its WTO negotiations with the United States. The one-time foe fought a hot war against the United States from the mid-1960s until 1973 but, since the late 1980s, it has slowly repaired relations with the West, culminating with a U.S.-Vietnam trade agreement signed in 2000.

That deal, though, only went so far. Vietnam still requires graduation from Jackson-Vanik before it can become a WTO member. The country desperately wants to seal its membership ahead of an Asia-Pacific Economic Cooperation conference it is hosting this summer. It already has deals with the European Union, China and other major economies.

But while the U.S. Trade Representative’s office may be satisfied with Vietnam’s economic commitments, it is not clear that Congress will be satisfied with the country’s record on human rights, religious freedom and democracy. “Vietnam is riddled with human rights abuses,” Representative Christopher Smith, a New Jersey Republican, told The Washington Times.

Of the remaining countries, Ukraine should be a shoe-in for PNTR, if not full accession this year to the WTO. The Bush administration has hailed the Ukraine’s “Orange Revolution,” which brought Viktor Yuschenko to the presidential palace in January 2005, as an important part of a democratic wave sweeping the region. Congress already is considering legislation.

Kazakhstan, led by an authoritarian president, is not a top legislative priority. It is not clear when it might receive Congress’ attention.

Russia faces the most complicated road to the WTO. It is the world’s biggest economy still outside the global club. But members of Congress believe its government is backtracking on commitments to human rights and democracy, while it also has engaged in some nasty disputes with its neighbors.

The Bush administration since 2001 has promoted Russia’s “early accession” to the WTO. But Russia has since fallen behind Vietnam, its one-time Cold War client, on the road to WTO membership. 

Jackson and Vanik might not in 1974 have imagined a world in which Russia and Vietnam along with two countries once subsumed inside the Soviet empire negotiated with the United States to join the globe’s pre-eminent capitalist club. But their law governs those countries’ road to the WTO.