Finance Leadership Calls for Russia Trade Action, But Mechanisms Unclear

“Russia’s failure to protect and enforce intellectual property rights, and its use of sanitary and phytosanitary measures, import licenses, and automobile investment restrictions to discriminate against U.S. imports are further evidence of Russia’s disregard for international norms and the rule of law,” said Hatch in a March 4 letter (here) to Treasury Secretary Jack Lew and U.S. Trade Representative Michael Froman. “As but one example, in February 2013 -- barely two months after the United States granted Russia PNTR -- Russia effectively halted imports of U.S. meat products, destroying what had been a $600 million per year market for U.S. exporters.” The U.S. granted Russia permanent normal trade relations (PNTR) status in 2012 (here).

However, any legislation against Russia is largely outside of the Finance committee's jurisdiction, said National Foreign Trade Council President Bill Reinsch in an interview. "The actions will likely come from the Banking and Foreign Relations committees, which have historically moved sanctions. Iran sanctions have consistently come from the Banking committee,” said Reinsch. “If you want to tell Americans they can’t export to Russia, that’s the Banking committee. Finance deals with imports into the U.S. If you want to ban Russian import, you can’t do that without repercussions from the WTO because Russia is a WTO member. If Finance committee officials thought Russia was violating WTO commitments, they may write to the USTR to pressure USTR officials to take action.”

The Obama Administration issued an executive order on March 6 to block the assets and dealings with Russian officials involved in destabilizing Ukraine, a decision that generated support among lawmakers (here). "I welcome the Administration’s expeditious response to the situation in Ukraine -- the pledge of assistance in the form of loan guarantees -- which this Committee intends to endorse in legislation next week -- and today’s Executive Order restricting visas, freezing assets, blocking property under U.S. jurisdiction, and preventing American companies from doing business with any individual or entity identified by the administration that threatens the peace, security, stability, sovereignty, or territorial integrity of Ukraine or contributes to the misappropriation of state assets of Ukraine," said Foreign Relations committee Chairman Robert Menendez, D-N.J., at March 6 hearing on the crisis (here).

Several lawmakers have called for the U.S. to increase natural gas exports to Europe in order to counteract Russian natural gas exports. "Russia has repeatedly used its supply of natural gas to pressure Ukraine economically and politically, and has announced that it will significantly increase its cost in a deliberate effort to squeeze Ukraine," said House Foreign Affairs committee Chairman Ed Royce, R-Calif. at a March 6 hearing (here). "Fortunately, we have an option to help counter this threat, namely reducing the current impediments to exports of American natural gas to Ukraine. The Administration has it within its power to do this by removing the current bureaucratic obstacles that only empower Putin. They should do so rapidly."

The USTR suspended upcoming bilateral trade and investment meetings with Russia, according to recent press reports (here). The Finance and Banking committees did not immediately respond for comment. -- Brian Dabbs