US Russia Relations On Display At G-20 Summit

President Barack Obama traveled to St. Petersburg, Russia for the G-20 summit yesterday where he was greeted by Russian President Vladimir Putin. Although the summit is designed to discuss global economic matters, the focus of the media has been on the political tensions between the two leaders.

In the last two months, Obama and Putin’s relationship has been tense over Russia’s decision to grant temporary asylum to Edward Snowden. Snowden is the U.S. contractor accused of spying amid leaking sensitive information from the National Security Agency. Additionally, the two leaders have not been able to see eye-to-eye on the question of a military strike in Syria. President Obama supports military action, whereas Putin does not.

Since the G-20 summit’s focus is the economy, it is also worth pointing out the trade relationship between the United States and Russia. As with the political tensions, U.S.-Russian economic relations have also been challenged within the last year. Here is an earlier post describing that relationship.

The unfolding politics of U.S.-Russia trade relations

President Barack Obama just signed into law today [Dec. 14, 2012] a bill that would promote trade with Russia while also addressing the country’s human rights record. This comes amid Russian President Vladimir Putin’s criticism of the United States on Thursday for passing such a bill.

The U.S. bill, known as the Magnitsky Bill in reference to Russian lawyer Sergie Magnitsky who died while in custody in November 2009 after accusing Russian police officials of tax fraud, passed in the House on Nov. 16, 2012 and in the Senate on Dec. 6, 2012.

The Magnitsky Bill normalizes trade relations with Russia as well as the East European country of Moldova. The same bill goes further to allow the U.S. President to publish a list of those officials that he deems involved Magnitsky’s arrest and death, present a list of those Russian officials who commit human rights violations, and deny entry into the United States and revoke the visas of those on the list. The Treasury Secretary also has the authority to “freeze and prohibit U.S. property transactions of an individual who is on the list if such property and property interests are in the United States.”

Considering the bill a form of U.S. intervention in Russia’s domestic affairs, the Russian parliament responded by putting forth a bill that will investigate the violation of human rights by U.S. citizens. (As I write this post, reports indicate that Russia will vote on its retaliatory bill today and, if approved, will be signed by Putin before the end of the year.)

Russia will also require that U.S. beef and pork exports be tested for and certified free of ractopamine, a drug added to animal feed for leaner meat. Since the United States does not test for ractopamine and considers the feed additive safe, its beef and pork exports will fail to meet Russian standards resulting in the loss of U.S. access to the Russian market. The United States argues that this trade barrier violates World Trade Organization rules. (Russia formally joined the WTO in August 2012. It first applied for membership in 1993.)

This case merely reflects many of the challenges that are faced when trade is used for political purposes. The Magnitsky Bill does not sanction a whole country, rather select individuals from Russia whose names appear on a U.S.-designed list as having been involved in the detention and death of a specific citizen or human rights violations generally. The question is raised as to what this means for national sovereignty.

Furthermore, this case can have a negative impact on U.S.-Russian trade relations. Russia’s barriers to beef and pork imports from the United States will only lead to disputes within the WTO.

Also, this may have the potential to harm U.S. beef and pork exporters. Beef and beef variant exports to Russia increased by 8 percent in volume and 31 percent in value by August 2012 compared to the year prior, according to the U.S. Meat Export Federation (USMEF). Pork and pork variety meat exports jumped up 30 percent in volume and 22 percent in value, as reported by the USMEF. By October 2012, Russia had become the sixth largest importer of U.S. pork and beef, according to reports by Coalition for U.S.-Russia Trade and Agrimoney.com. Russian restrictions on U.S. beef and pork will result in a significant decline in exports to that market and income for these specific U.S. industries.

Whereas global power has become more economic rather than militarily based, so has global conflict.

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About Dr. Sarita D. Jackson

is the President and CEO of the Global Research Institute of International Trade, a think-tank/consulting firm that examines trade policies and their impact on domestic businesses. Prior to heading GRIIT, Dr. Jackson was a tenured associate professor of political science in North Carolina and worked as a trade policy consultant for an Arlington-based consulting firm. She has participated in trade policy projects and conducted research on free trade negotiations in Botswana, Antigua and Barbuda, Dominica, Dominican Republic, Mexico and Panama. Dr. Jackson has also traveled to Chile and Argentina to study their political systems and economic integration policies.
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