two countries and worsens the human rights situation in russia, end quote. repealing jackson-vannic weakens the hard-liners in russia to rally anti-american forces. the activists on the letter explain that jackson vannic is a very useful anti-american propaganda tool. as they stated, provides a tool that help, quote, to depict the united states as hostile to russia using outdated cold war tools to undermine russia's international competitiveness. end quote. repealing jackson vannic takes way this tool and opens russia to u.s. competition, to ideas and transparency. these activists have all raised serious questions about russia's human rights and democracy record. i share these questions. but like the activists, i believe that pntr should not be in question. we owe it to american businesses, ranchers, and farmers working to increase exports to the growing russian market.

we owe it to u.s. workers whose jobs depend on those exports and we owe it to the russian activists who are asking for our help in their fight for democracy. so let's embrace this opportunity for our economy and for american jobs. in the spirit of catherine the great, let us move forward with that which we can all agree. let's work together to pass russia pntr. >> senator kyl? >> thank you, mr. chairman. i think that i understand the message this hearing is intended to convey. american businesses want access to russian markets, we should repeal jackson-vannic and grant russia normal trade relations without delay and grant normal relations. it's a slam-dunk. but it isn't a slam-dunk. let's stipulate that american businesses and farmers and ranchers should be able to sell products to russia and that free trade is important and beneficial to the united states. we still need to determine

whether america is getting a good deal through russia's wto exception, whether more should be done to protect our interests. for example, russia has never ratified the bilateral investment treaty that the senate ratified years ago. that treaty would prevent russia from expropriating businesses, an admittedly big problem in russia. this is a very basic economic right that isn't being protected. in addition, one of our witnesses will discuss russia's failure to remit royalties, which is also not directly covered by the wto agreements. and i submit the administration is missing a point on the repeal of jackson-vannic, which ties most-favored nation status to freedom of immigration. while immigration may no longer be an issue, russia's blatant disregard for human rights is every bit as relevant today as it was decades ago. human rights cannot be divorced from the discussion of our economic relationship with

russia, particularly since some of the most egregious cases of abuse involve citizens exercising their economic and commercial rights. consider the case of sergei magninski, the young lawyer in prison who was tortured and died in prison because he sought to expose economic corruption at the highest levels of russian government. several of us have joined senator cardin in co-sponsoring legislation to send a clear message to those who commit gross violations of human rights, they will not have the privilege of visiting or accessing the financial network of the united states. and mr. chairman, i'd like to submit for the record at the conclusion of my statement, two letters, one letter to "the new york times," a letter to the editor and an op-ed in "the wall street journal" march 15th by gary kasparov and boris nensov on this. when michael mcfaul suggest there's is no association between a country's respect for individual liberties and its

business environment, he is simply denying reality. when two parties enter into a contract, it is essential that both parties operate in good faith. there is scant evidence that the russian government operates in good faith. it has a troubling pattern of intimidation, disregard for the rule of law, fraudulent elections, human rights abuses, and government sanctioned anti-americanism. contrary to the administration's assertion, russia the moving further away from international norms and values. in recent months, moscow has not only blocked u.n. security council action on syria, but has continued to sell arms to assad's regime, which is responsible for the slaughter of innocent citizens. this is not a government that can be trusted to uphold its international commitments or give a fair shake to american businesses. and looking only at the wto context, russia has not even lived up to all the commitments it has already made on intellectual property rights, for example, as a condition of

joining wto. russia remains on the u.s. trade representatives' special 301 priority watch list for ip violations. what makes us think it will live up to its commitments after being allowed to join wto? yes, we should have access to a wto dispute settlement process. if we grant russia pntr. but what has that gotten news our trade relationship with china? 12 years ago, congress repealed jackson vannic and authorized npntr for china, and how did that work out? the u.s. reports to china annually on compliance with wto commitments. the most recent report is 127 pages long. filled with problems. the u.s. has used the formal dispute settlement process to address these issues only in a handful of cases. one case has remained open since 2007. even in the rare cases that we get justice, it's not speedy justice. despite all the structures of

the wto, china cheats and continues to get away with it. if this is what we get from china which ranks 75th on the the countries on transparency international corruption perceptions index, what can we expect from russia, which ranks a dismal 143rd on the same list. china was not granted pntr without condition and without delay. it takes only a couple pages of legislative text to repeal jackson vannic, but the bill congress passed hat six separate subtitles dealing with the u.s.-china relationship. given the current problems with our trade relationship with china, it probably wasn't enough. it is simply unreasonable to believe that pntr can be extended to russia without a more thorough examination. yes, russia should become part of the law abiding nations. the question is whether the proposed agreement and repeal of jackson vannic got us there.

mr. chairman, i hope this is not our last hearing on this subject. >> thank you, senator, very much. i'll turn to our witnesses. first we have mr. samuel allen. who is chairman and ceo of deere & company. i must tell you, mr. allen, as you already know, when i was in russia not long ago, i visited within of your plants there, assembly operations just outside of moscow. and was very impressed with the people and the products that you're selling to russians and helping russian agriculture. i very much appreciate that opportunity. next we have mr. ron pollett. good to see you again, ron. we talked with you over there in russia, moscow not long ago. mr. pollett is president and ceo of ge russia. thanks very much again, mr. pollett. next mr. watty taylor. watty is one of our guys. he is from montana. he is president of the mountain

stock grow association, second generation family rancher from kirby, montana. thank you, watty, very much for coming to join us. next we have mr. paul williams, president, chairman of the board, american society of composers, authors, and publishers. thank you very much, mr. williams. senator hatch sends his special regards to you. he could not be here today. but he wanted me to tell you how much he appreciates working with you in various matters. it's meant a lot to him. he deeply regrets he cannot be here. >> i appreciate it. he has been very kind. >> and finally, mr. al larson, chairman of the board of transparency international usa. i must tell you mr. larson i enjoyed meeting with the president of transparency international russia in moscow last month. i think her name is elena. very, very impressive, sharp, intelligent lady. >> she is. >> and very compelling story to tell. that's why she is back in russia and didn't stay over in brussels.

but thank you, all five of you very much for coming today. the usual practice, i'm sure you're aware, is just to you'll submit your statements for the record and then speak about five minutes. and i urge you to be very direct, forthcoming, candid. tell it like it is. okay? mr. allen, you're first. >> thank you, chairman baucus. senator kyl, distinguished members of the committee, my name is sam allen, chairman and ceo of deere company. on behalf of john deere and the business roundtable, thank you for the opportunity to provide testimony today on the importance of establishing permanent normal trade relations with russian to john deere and the u.s. business community. granting pntr is crucial for u.s. manufacturers, service providers, and agricultural producers to receive the full benefits of russia's wto accession. it is essential to enable to compete on a level playing field for russian customers. the reasons are clear. first, pntr will ensure equal

treatment for u.s. companies doing business in russia. here is a concrete example. russia has committed upon ascension to significantly reduce its tariffs on imported agricultural equipment from 15% to 5%. however, it is likely that russia would not extend the lower tariff rates to u.s.-made products until it's granted pntr. u.s. companies like john deere thus would be at a competitive disadvantage relative to our foreign competitors, and we would have no recourse to the wto should disputes arise. this would negatively affect our u.s. operations because many of the products we sell in russia utilize components closely connected to jobs at our facilities in the american midwest. second, pntr will strengthen commercial ties between the two countries. pntr will subject u.s.-russia trade to the wto-based adjudication process for trade disputes and also will promote

transparency and certainty through wto rules ranging from service regulations to agricultural standards to intellectual property rights. third, granting pntr will directly benefit u.s. service providers and agricultural producers helping to maintain and create good jobs here in the united states. russia's large and growing economy coupled with pntr presents significant opportunities for u.s. companies to serve customers across many sectors. russia is already one of the world's largest markets with nearly $2 trillion economy and a rapidly growing, well-educated middle class. john deere has had a presence in russia for over 100 years. this has greatly expanded in recent years with investments in two factories, including our newest facility just outside moscow, which chairman baucus did recently visit. these facilities use components produced and exported from john deere facilities in iowa, illinois, north dakota, and other states to produce

agriculture, forestry, and construction equipment for the russian market. this activity directly affects jobs at eight deere factories that are supported by almost 2800 suppliers located in 45 states. in fact, we recently announced a $70 million investment in our waterloo, iowa facility to expand our production capabilities for large tractors for which russia is a leading export market. we are also exporting deere business values and standards. our russian operations apply the same high standards for compliance, integrity, safety for our workers and customers, product quality and environmental stewardship that we have in our facilities here in the united states and around the world. our interests in investments reflect the enormous potential for the russian economy in the segments which are especially significant for our business. russia can become a major contribution to meeting the world's fast-growing demand for food and forestry products as the global population expands and becomes more affluent. let me close with a few word

about deere's business experience in russia. our experience overall has been positive. yes, with frustrations from time to time, but little different than in any other emerging market. we understand the challenges of doing business in russia, but we recognize the enormous opportunity as well. enhancing trade relations and strengthening business connection also improve the overall business climate to the benefit of both the american and russian people. pntr with russia is simply put a benefit to the united states rather than an accommodation to russia. there is a strong business case for congressional approval of pntr. i urge the congress to carefully consider the matter, but then to act quickly to ensure that u.s. companies, their workers and shareholders receive the benefits from the outset of russia's long-awaited wto membership. thank you again for the opportunity to testify, and i'll be pleased to respond to any questions the committee may have. >> thank you, allen, very much.

mr. po you're next. >> thank you for the opportunity to testify today on a subject i feel is critical importance. the opportunity to grow the u.s. economy and u.s. jobs by establishing permanent normal trade relations with russia. just a moment of background about me. i'm a u.s. citizen born and raised in new york. for the past 13 years i've been living and working in russia. for the past six years i've serve adds chairman of the board of commerce, with the largest and most influential business association in the country. so i've been in a unique position to witness firsthand the dramatic changes russia has undergone in such a short period of time. and i truly believe that russia is poised to become an even more active and significant player on the global economy. but i've also been in a position to observe how u.s. businesses are underrepresented in the russian market. russia presents extremely good

opportunities for u.s. companies provided, and that is an important proviso, we're able to have a level playing field. such a level playing field is essential for u.s. companies to take advantage of these opportunities. russia is a big, fast-growing economy, but the u.s. has a relatively small presence in the russian market, accounting for just 4% of russian imports. by contrast, east asia and the european union accounted for 29% and 43% respectively. you know, when i arrived in russia in 1998, the ge had $110 million in sales. last year we had more than $1.6 billion in sales, and our industrial business as i lone saw almost $1.2 billion in u.s. origin orders from russia, up from $410 million in 2010. these orders support more than 3,000 jobs for ge and its suppliers in the united states, and we believe that our sales with pntr could triple, could triple by 2020. for u.s. companies to take full advantage of russia's growing market, however, congress must repeal the jackson-vannic

amendment and establish pntr with russia. let me offer a few examples of what pntr will mean for ge. russia is the fourth largest electricity market in the world. ge energy, 38,000 u.s. employees from 12 to 5% on gas turbines. these turbines are principally produced in south carolina and texas. russia is looking to double its spending on health care, with more than 22,000 u.s. employees principally in wisconsin, texas, and new jersey, ge health care will see tariffs on medical equipment fall from 15 to 4.3%. russia has the world's second largest railway system. some 10,000 locomotives will need upgrades to the tune of $10 billion. this is an enormous opportunity for ge's transportation business based in pennsylvania, which employees over 8,300 u.s. workers. ge is also the largest supplier today of foreign aircraft engines to russia, and the

largest aircraft lessor. ge aviation, with 25,000 u.s. workers in ourp g-cass leasing business stands to benefit as russia reduces tariffs on aircraft engineses from 20 to 5%. these products are made in ohio, vermont, kentucky, and north carolina, not to mention hundreds of suppliers in 34 states. and it's not simply to lower tariffs. wto commitments to eliminate nontariff barriers implement a standard of protection and improvement infrastructure critical for u.s. companies. without pntr, the u.s. would have no recourse to wto dispute settlement should disputes arise. if the u.s. does not grant pntr to russia, american companies and their workers will be at a significant disadvantage relative to our global competitors. equally concerning is the signal that would be sent to russia. at a time when export growth is key to the u.s. economy, we would be rejecting an important opportunity while competitors

take advantage of our absence. you know, one thing is clear. russia will join the wto whether or not the u.s. grants pntr status. the vote to accord ntr to russia is about one thing and one thing only. it's about the ability of american companies to compete on a level playing field according to the same set of rules with foreign companies, all eager to do business in a fast-growing economy. i urge this committee and the full congress to allow the american economy and american workers to be able to reap the benefits of these opportunities. thank you. >> thank you, mr. pollett, very much. mr. taylor? >> good morning, chairman baucus. >> good morning. >> senator kyl, distinguished members of the committee. thank you for the opportunity to speak to you on behalf of the montana stock growers association regarding our point of view on russia's accession to the world trade organization. my name is watty taylor, and i'm a rancher from kirby, montana. i currently serve as the president of the montana stock growers, one of the nation's

oldest and most historically significant cattle ranching organization established in 1884. i along with my wife lila and three sons operate a commercial hereford and angus cattle operation on 34,000 acres in eastern montana. ranching has been a part of my family heritage for many years. 96% of the world population lives outside the borders of the united states. we must have access to the additional demand for beef from consumers that live outside the u.s. if we hope to remain successful. russia was the u.s.'s fifth largest export market for beef in 2011. we can now achieve a significant increase in our exports to russia, thanks to the provisions of the russia's wto accession agreement. these provisions include a large country-specific beef quota and lower tariffs for high quality beef. this will be greatly beneficial to my family's ranch. if congress passes pntr

legislation. i am confident we can provide a significant amount of high quality beef as that defined by the agreement. montana is leading the way to produce large volumes of usda quality grade choice and prime cuts of beef. we have a reputation for raising superior cattle genetics that perform in many different kinds of harsh environments. our hardy northern tier ranch levels certified cavs will meet the demand for high quality. it's also exciting that montana is currently exporting several thousand head of our superior cattle to russia to help establish a more vibrant domestic beef industry. the possibilities are endless. in fact, montana ranchers are currently living and working in russia to establish western style cattle ranching enterprises. while russia is a tremendous opportunity for our beef, we need to ensure that we don't run the risk of facing unscientific restrictions. montana ranchers have always appreciated the efforts by chairman baucus to move us

toward trade agreements that are based on sound science and international standards. in particular, ensuring that russia lives up to its wto commitments on sanitary standards along with other technical issues for beef is crucial. without pntr, we will not be able to enforce these commitments. recognizing the international science-based standards is very important. it not only creates less market volatility, but it also encourages the safest, most prudent production practices. issues that are most important to ranchers with regard to russia include tetracycline. we encourage the adoption of the code desk standard for tetracycline residues in beef. beta agonists. we encourage the adoption for beta agonists that are based on scientific risk, assessments according to internationally recognized methods. bacterial parameters. we encourage the adoption of science-based standards for bacterial contamination in the

unfortunate event that beef becomes contaminated with bacteria such as salmonella or listeria. sanctions policy. once russia has adopted science-based standards, we encourage them to implement a risk-based sanction policy for u.s. beef shipments that do not comply with those standards. veterinary equivalents. we encourage the use of planned 2012 meat plant audits by russian veterinary service to make determination of the equivalents of u.s. meat inspection system. usda food safety inspection service as the competent authority. we encourage the recognition of the competent veterinary authority of the united states. this includes recognizing fis authority to approve and approve for export to russia. in addition we need to ensure that russia fully meets the quota they have agreed to meet

on beef. extending normal trade relations to russia will give us the means to enforce those concessions and give montana family ranchers the momentum we need to benefit our ranching economies at home. exports create jobs. our competitiveness depends on profitability and attracting the next generation of ranchers back into the business. our ranch family's livelihood depends on exports, which are our most vibrant and economic opportunity for long-term sustainability. i appreciate the opportunity that i've been granted to present my testimony today. i look forward to working with you throughout the course of this process to secure permanent normal trade regulations with russia. i'm happy to answer any questions that you might have. thank you. >> thank you, mr. taylor, very, very much. mr. williams? >> thank you, chairman baucus, senator kyl and members of they. my name is paul williams. i'm an american songwriter. it's an honor and a privilege to appear as chairman and president of ascap, the american society of composers, authors and

publishers. and behalf of our 427,000 american songwriter, composer and publisher members. senators, i'm not hered to too address rampant copyright, rather i'm here to bear witness to the challenges u.s. music creators face in securing fair compensation for public performance of our music through, quote/unquote, normal channels in russia. with reproduction royalties declining globally, public performance royalties increasingly determine whether a talented music creator can remain a professional or is forced to take a day job to subsidize a music hobby. bill withers one time said to his senator, you don't want us taking day jobs, senator, because you're liable to wind up with ozzy osbourne as your plumber. you're in a lot of trouble. such a transition would be a huge loss, not only for american culture, but also for our economy.

ascap members are the owners of small businesses. i've always said i'm the perfect president for ascp. i'm a small businessman, mr. chairman. music creators and owners depend on the efficiencies of performing rights organizations, pros like ascap to license their public performance rights and collect and distribute royalties. for example, i've been blessed to make a living writing songs. but i live in california. how am i a songwriter living in california expected to collect royalties for performances of my songs throughout the world? ascap does this for me. i love ascap. we rely on a network of reciprocal relationships with foreign pros in countries all over the world. these foreign royalties can cute an ever increasing portion of american music creators' income. it's over 1/3. and it makes a positive contribution to our balance of trade. i am sad to report that we are grossly underpaid for public performances of our works in russia.

a few comparisons compare my point. with the french and italian economies roughly the same size, our performance royalties collected in 2009 in france are 11 times better. viva la france. in italy almost nine times greater. denmark, denmark, with only 4% of russia's population, denmark and an economy 1/10 the size of russia collects nearly twice as much for public performances as russia. it is clear that american music creators are not reaping the benefits from russia's passion for american music and movies. why is this? we believe the russian legal system handicaps the effort of rau, ascap's partner. it's not allowed to act as a collecting society for american music creators, yet russian courts don't follow the law. russian courts demand extraordinarily costly documentation of rau's right to

represent ascap members, and sometimes they simply refuse to recognize the standing of rau to do so. it makes no sense. further ascap composers are supposed to receive royalties for the public performance of music in movies exhibited in russian theaters. in fact, rau has sent us royalties through the years in the past. but there is no doubt that such royalties could be an increasingly significant -- could be increasingly significant as american movies are enormously popular and widely distributed in russia. everybody loves american movies. in january three of the top five grossing films in russia were american, including "hugo" who was written by an ascap writer howard shore. however, however, meritless legal challenges threaten rau's ability to collect from this critically important source of royalties for u.s. music, which translates to food on the table, gas in the car, and taking your kids to school. finally, russian physical authorities require rau to

collect a value -- this is the icing on the cake -- a value added tax, or a vat as a statutory rate of 18% from our royalty distribution. 18% from our royalty distribution. no other pro in the world deducts this vat from our members' royalties. although russia grants a vat exemption for other intellectual properties, this is not extended to copyrights. this is plain unfair and adds insult to injury, given the apparent undercollection of royalties. we're realists. we know there is no magic wand that our government can wave to ensure american music creators and copyright owners are fairly compensated in russia. however, regardless of what happens with pntr, we ask that the u.s. government will help us achieve the following goals. three simple things. simple things. three things we ask. russian judges and lawyers must receive better training and education in the handling of foreign copyrights. russia must stop its

discriminatory treatment of u.s. songwriters and clarify that the law provides a performance right for music incorporated in audio visual works in movies. based on our ongoing problems with china, we are under no illusions that russia's entry into the wto by itself will improve the predicament of ascap members. if congress decides to grant pntr, the u.s. government must aggressively use all available enforcement tools to protect american songwriters, composers, and publishers. agreements without enforcement may be worse than no agreement at all. it's a great honor, senators, to sit down in front of you and share my thoughts with you. it's a privilege to be here, and i thank you for that. >> thank you, mr. williams. as i said, senator hatch wished he were here to participate with you. thank you. >> he is a damn good songwriter. did you know that? and a member of ascap. >> i know that too. i've heard some of his songs. they're pretty good. >> they are good. >> very good. >> exactly. they get even better when i'm in his office.