With Bridgestone, Continental and Michelin all building new tire plants in the state, South Carolina will soon become the tire capital of North America. Meanwhile, Russia is set to become the world’s sixth largest market for automobiles.
At first blush, this sounds like a perfect match. Already, South Carolina is exporting nearly $40 million worth of cars and auto parts to Russia each year. With so many new tire plants under construction, that number should rise. Now more than ever, trade with Russia is vital to the economy of South Carolina.
Yet the mutual benefits of trade are at risk unless Congress quickly passes a bill granting permanent normal trade relations (PNTR) status with Russia.
Russia is about to become a member of the World Trade Organization, the international body designed to grease the wheels of commerce among nations. In joining, Russia has agreed to implement a host of economic reforms that will open its market to foreign goods and services.
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These reforms include lower tariffs, better intellectual property protection, and safeguards for foreign investors. Russia, the world’s ninth largest economy with 142 million consumers, is the last major world economy to join the WTO – making this a historic economic opportunity.
But if we fail to extend PNTR status to Russia, then under the rules of the WTO, Russia can withhold the benefits of its reforms from us, denying our businesses, farmers and workers their chance to sell more to the growing Russian market.
Instead, European and Asian countries, many of which already enjoy a considerable head start in Russia, will be at the forefront, selling high-end goods and services that we could be providing instead.
Trade with Russia is already an important element of the South Carolina economy. In addition to car and auto supply exports, South Carolina is the No. 1 supplier of chemical wood pulp to Russia, sending nearly $14 million worth to Russia in 2011. Our state also exported almost $10 million in aircrafts and related parts to Russia last year.
Overall exports to Russia stood at $104 million in 2011, directly supporting approximately 300 jobs at local employers. Chomarat North America, located in Andersen, exports cotton fabrics to Russia; Atlas Copco in Rock Hill exports electric lamps and light fittings.
The benefits of trade work both ways. In Goose Creek, Alumax imports cathode blocks from Russia, and Michelin’s plant in Greenville relies on Russia for many of its imported chemicals.
This mutually beneficial trade relationship is poised to grow richer with Russia in the WTO. Standing in the way, however, is a Cold War-era trade restriction that has long outlived its usefulness.
Passed in 1974, the Jackson-Vanik amendment imposes restrictions on trade with any country that doesn’t allow the free emigration of all its citizens. The idea behind the measure was to pressure the Soviet Union into allowing its citizens who were victims of religious and political persecution to flee the country.
With the Soviet Union a distant memory and free emigration a fact of life in modern Russia, the Jackson-Vanik amendment is now little more than a Cold War relic. Indeed, it’s so outdated that American presidents of both parties have certified Russia’s full compliance every year since 1992, allowing trade to continue as if the amendment didn’t exist.
But Jackson-Vanik must be permanently repealed before Congress can grant PNTR to Russia. Once Russia joins, the United States will be in violation of its obligations toward other members of the WTO unless Jackson-Vanik is off the books.
There are those who say the clause must stand as a symbol of America’s opposition to religious oppression. Such symbolic politics exact a real cost on the American economy and only play into the hands of those in Russia seeking opportunities to indulge in anti-American propaganda. Even advocates of democracy in Russia are pressing for repeal of Jackson-Vanik as a step that will aid their cause.
The last thing South Carolina workers and those throughout the United States want is a new Cold War getting in the way of economic recovery. Congress must repeal Jackson-Vanik and move forward with permanent normal trade relations now.
Barry D. Wynn is president of Colonial Trust.