framework for business. i also believe that the extension of pntr and repeal of jackson vannic is part of that rule of law framework. that also will assist. i think we should do both. >> mr. chairman, thank you. i want to thank you for your statement. i thought you hit the nail on the head. and i appreciate your leadership in this effort. as chairman of the foreign relations committee, i think we are all on our committee pretty sensitive to the complex tiff of our relations with the russian federation and we held hearings recently on the subject of human rights and democracy in russia and i suspect we'll continue to do that. but i'd say to senator kyle and others who are sort of questioning this thing, we're sort of talking past each other a little bit here. and i think missing the point. russia's going into the wto. this is not a negotiation like panama or one of the other trade treaties we had where we were

opening up and lowering tariffs and doing things. wehere. we don't do anything, russia's in the wto, and if we don't lift it, we're denying our own workers. that's all that happens here. what's interesting is that -- i hope senator kyl, you've seen the letter recently by russian opposition activists stating their strong view that the continued application of jackson vanic to russia is "not helpful for the promotion of human rights and democracy in russia." and in efforts to punish russia with restrictions only "darken russia's political future, hamper its economic development, and frustrate its democratic aspirations." i think we've got to listen to the folks in russia on the ground fighting for some of these things, number one. and russia's going to join the wto whether or not we grant pntr. and granting pntr is the only

way american workers and producers are going to see the benefits of russia's succession to the wto. if we want to cut off our nose despite our face, we can complain about what's happening there. it's a pretty simple equation. so let me ask you, who produces in our state, we're proud of what ge does up there. won't failing the past pntr put your workers in massachusetts at a disadvantage when we're trying to sell into the market without it? >> absolutely put aside a competitive disadvantage to our european and asian counterparts. >> so what are the risks of losing market share in russia if we don't pass pntr? >> to the tune of hundreds of millions of dollars, and probably several hundred u.s. jobs in the aviation industry. >> and i understand that the bilateral treaty we have on the

most favored nation status only applies to exports and goods, is that correct? >> correct. >> so even -- even with our bilateral agreement if we don't pass the pntr, that doesn't deal with it because the largest trade gains are probably going to be in services, isn't that correct? >> also correct. >> and the only way we open that is up to lift jackson vanic? >> correct. >> because which is incidentally, i'd say to my colleagues, we ought to do what we say we're going to do. about immigration. every president has signed off that, you know, since it went into effect in 1974 that they're dealing with immigration. we did it in order to allow the immigration of soviet jews. that happened and it's happening. we send a terrible message as we try to negotiate with people and pull things out and police apply them and counterimply them. we don't have any protection under the bilateral agreement, do we? on intellectual property rights,

i think mr. williams spoke to that and the dispute settlement process at wto at least gives us that kind of protection, doesn't it? mr. williams? >> well, in china, wto didn't exactly solve all of our problems. to give that specific example, in 2001, china was admitted to wto, in 2009 they established a rate for our music on radio and television. so -- and incidentally it was a tiny rate and paid us for that year and that year only. so as i listen to you talk about the human rights issues and all of these elements, i have -- and the problems everyone is facing. you make amazing sense. and i understand that. but from my organization, what we're looking at, at a situation where wto is simply -- without really aggressive action from our government to protect -- >> we need aggressive action. a lot of folks here, myself included and then arguing that we need to get tougher. >> yes. >> and we can do more within the

context of china and i think we're pushing to do that. but my time is running -- i don't mean to cut you off, but i want to ask one question here. the -- does the existence of jackson vanic today further the rights in any way that we can measure? >> excuse me. i have testified that i think that removal of jackson vanic and extension of pntr is an important step in establishing a rule of law basis for a relationship. i think there are a lot of other things that we should do and i'm urging that we go forward to those, as well. >> our ambassador to russia has called for $50 million of new money to be supportive of civil society, development efforts in russia. given your flaherty of russia, do you think we could -- should make that money to good effort? >> i think that would be a good step. we have to strengthen civil

society in russia. one of the things i advocate is we work with russia to establish freedom for organizations like transparency international to call out instances of suspected corruption and deal with them. i think strengthening non-governmental organizations such as those is a good thing. and as i understand this proposal, that would be one additional tool for doing so. >> but -- >> sorry, my time's up. >> just one second. since senator kerry might have been out of the room when i put the letters in the record. the piece in the "wall street journal" specifically referred to the letter that you quoted. and as they say, of course no one in russia's foolish enough to defend it, but it should be replaced with something else and we recommended as much as we recommended the passing of the act as has been done in europe. >> next, senator grassley?

>> i was in and out because of other committee meetings. i think that looking over your testimony and hearing what i heard, i don't have any disagreement with the point you made, but i'd like to make this point and maybe it refers more to agriculture than it does other aspects of our economy. but russia was invited in the wto, and if they change their laws by a certain date in june that they have to change them. and then it's our responsibility to deal with it and in various times in the past i found reason to vote to change jackson vanic for particular countries that we've had to do that. the thing that bothers me is that once a country's in the wto, i know we have the

processes of wto to resolve differences. it's kind of a very rigorous process, and one that's not very easy to predict what might happen. you hope the rule of law is going to govern in the final analysis. but between now and whenever we have to deal with jackson vanic, it seems to me that the white house is not doing what they ought to be doing to use the pressures that we have yet to make sure that particularly in agriculture and particularly with pork that russia lives up to the spirit as well as the responsibilities of wto, and that's what i would call upon the white house to do if they want to have smooth sailing on the proposition.

i'llremainder of my time. >> i thank you for holding this hearing. it's particularly important. i chair the trade subcommittee here at the senate finance committee. and to me, really the threshold question on this whole issue is respect for rules. and the question about how permanent normal trade relations for russia would in effect bring about of trade rules as a trade supporter, i've consistently supported these trade agreements. what i've tried to say is free trade does not mean trade free from rules. and i have real questions with respect to the united states using its wto rights to insist that russia comport with global trade rules and i think what you've said in particular, today mr. williams, raises some of those concerns. that's what i want to explore for a minute. that you all have talked about

the challenges in terms of doing business in russia, we're talking about discrimination, we're corruption, expropriation, failure to enforce intellectual property rights. a host of issues that relate to this question about a rule of compliance. and for me, an indicator of the administration's appetite to enforce russia's wto commitments might be found in looking to the degree of interest we've seen in enforcing the eligibility criteria for the generalized system of preferences, what's known as gsp. and i want to just spend a quick minute looking at how gsp has applied to russia. now, gsp is a preferential program, we looked at it on the trade subcommittee, that provides duty-free treatment of imports from russia so long as russia complies with the

eligibility criteria that congress established in the program. and the criteria includes effective protection of intellectual property, equitable access to russian markets, and a requirement that russia not expropriate property. i want to ask a question of you, mr. williams, and you, mr. larsen because you've touched on it. so you've had some experience, mr. williams. this is not an abstract kind of question. you've had experience with respect to the intellectual property question and i just like to ask you about what happened when you brought your concerns about russia's lax enforcement of intellectual property to the u.s. trade representative. what did they do about it? >> you know, this is the greatest country in the world to be a song writer in. i had complete access to state, to commerce, i could sit down before the i.p. enforcement office and i got an immediate

response. we've used the 301 and other areas in china and in the caribbean. what we're dealing with in russia that is unique, i think, is that it's -- the organization that we're dealing with is pretty straight ahead. this is not a fly by night organization. but they are constantly, you know, the russian government is completely unwilling to really accept the fact that they represent us and we can do business back and forth. so my problems are not with the way we're being handled in the united states. i've had wonderful access and what you've given us today, the opportunity to really -- as you look at pntr, you give us the unique position of being able to walk into this room and state our position. we've had wonderful response from our own government. but we need more aggressive -- if we're going to move forward with or without the pntr, we really need more aggressive

response for our action from our government to the russian government in protecting our rights. this value-added taxes is a horrific potential. has a potential for affecting our livelihood in the future. >> my concern, mr. williams is if we're not seeing gsp criteria used to try to get you and others a fair shake, and it goes to a point mr. larsen made, as well, why would we expect it be used on wto rights? >> i don't know. you know. the quick honest answer is i don't know. all i know is that we have tools that can be used within the government and my request is that you will honor us with that. >> my -- my time is up, mr. chairman. can mr. larsen just respond? >> go ahead. do you have another question? >> no, mr. chairman.

if i could, if mr. larsen could just respond to the question? great, thank you, mr. chairman. >> senator, my point of view is that we do need to make a concerted push as a country on a range of rule of law issues in russia. i advocate the extension of pntr and the repeal of jackson vanic. but i think at the same time, it would be important for the administration to come forward to the congress with a plan for addressing some of the issues you just raised, some of the issues i raised and my testimony about the investment relationship. and some of the issues that we all have with the corruption environment. and to present to the congress and to the congress to have a process for holding accountable the administration and making progress to address these issues. this would be a path going forward that would have us

working together between the congress and the administration and russia to strengthen the rule of law. it wouldn't interfere. i'm not talking, mr. chairman, about a conditional extension of pntr. i'm saying let's tackle off of these problems right now. as we tackle immediately the pntr issue. >> glad you made that very clear it would not be conditional. i think that's a very important point you just made to not be conditional. you'd like the united states as we all would to negotiate a bilateral investment treaty with russia. you'd like us to -- ordinarily all negotiations with countries and businesses what not you sequence your goals and you try to leverage one against the other to get a mutual agreement. you'd agree, wouldn't you, this

is not that case. there there's no leverage here. i believe that countries generally do not grant concessions out of the goodness of their heart. they don't do that. they only do it if there's leverage. and you have to leverage a country to give into something to do something it knows it should do but otherwise get away with not doing. you need leverage. now, in this case, pntr is not leverage. there's no leverage here. the united states -- well, if the united states does not grant pntr, that does not hurt russia, it hurts the united states dramatically. if we do grant pntr, it helps americans, doesn't help russia. it helps us. this is has been discussed earlier, it's not a free trade agreement negotiation. there's no negotiation. either we grant pntr as ourselves pntr, or we don't.

and if we don't, we deprive americans access to russian markets, deprive americans access to the wto procedures. just hurting ourselves, we're not hurting russians. i agree we should talk to russia about the investment treaty. we can't sequence these things because there's no leverage. there's no leverage here. the united states has no leverage over russia on pntr. only -- we only hurt ourselves, we don't hurt them. but it's true at the same time, my judgment. we should start talking aggressively and seriously to russia and china and to every other country that's not "following the rules here." larsen. >> i agree with that. but i do think we have leverage with russia, not in pntr. >> and all i'm saying is i think that in the context of

considering pntr, it is the time to have a plan for tackling these other issues and to make sure that we are aligned between the congress and the administration. >> right, and i think russia why did russia join the wto? well, they want to join the wto. because it wants tocommity and russia's economy if it's part of wto. but russia's already going to be part of wto, irrespective of what the united states does here. irrespective of what the united states does here. the question is once united states joined wto, do we grant pntr? or hurt ourselves? at the same time, i believe russia very much, many in russia, not all. many in russia do want to address all the concerns we've been talking about. for example, more independent --

for a more independent judiciary, several ways. one is to have a transcript, have a transcript of proceedings, judicial proceedings. there are no transcripts these days. second, to default trial by jury, not by the judge. third, transparency, open judicial proceedings. not closed judicial proceedings. i asked president medvedev about those three points, and he -- i won't say he disagreed. i said do you agree with the premise of my question, that these changes are critically necessary for russia to dance? and he said, yes, he agrees with the premise of my question. and to add to that too all the points the human rights groups have said in russia namely, repeal of jackson vanic helps us

address our human rights causes, doesn't hurt us, it helps us. because otherwise sometimes others will grant pntr as leverage, as a foil, attack the united states, to help themselves, you know, politically. we've got to work very hard to address the issues. on any of those issues with respect to pntr. we have to find other ways to use leverage. senator? >> well, mr. chairman, let me ask a question of mr. larsen. if we pass legislation for pntr and nothing else, in other words we don't deal with jackson vanic, have we accomplished anything?

>> senator, i think the way that we can accomplish something -- and what i -- >> this is real simple. to get the benefit of russia joining the wto. >> exactly. and that's why there is leverage. nobody here can say that the russians don't want repeal of jackson vanic, they do. this something the russian government wants desperately, it's something mr. putin talks about, and your comments reflect that. to there is leverage. there is leverage with regard to jackson vanic. >> that's not what i said. i want to make clear what i said. i said that putin and others'

failure to repeal it as leverage. so if we repeal it, there's no longer leverage. >> the point is in deciding whether or not to repeal -- >> you want leverage to help -- >> mr. chairman, if you want to argue with me, they need jackson vanic repealed. they want it repealed desperately. that's beyond any argument. >> i disagree with that. >> all right. well, then we have a disagreement here on the -- >> that's not what i found. >> and i believe that the united states has leverage with russia that good russian commercial business folks would like to see the united states have an opportunity to do better business with russia. they would like to see these rule of law changes. that all of you have identified here. they understand that corruption and the lack of an investment treaty is hurting investment in russia. they understand that. and they would like to see jackson vanic repealed so that

the pntr would be effective. and that would help us, as well. but i think it's absolutely erroneous to say there's no leverage for the united states with respect to jackson vanic. the question is, will it go beyond the human rights abuses like the act, which i presume will be a part of this? or will it involve other changes, as well? and i'm simply suggesting that we have an ability here to get russians more engaged than they have been. and that rather than doing this without any other conditions as you say like the magninski act, i think we ought to consider that. and this is not a question, but i think mr. larsen, your comment is, yes, it would be ineffective without the repeal of jackson vanic. just passing pntr. >> and also, your point which is that there is some between the

two branches of government here that congress has an ability to engage the administration perhaps more than the administration has been engaged. >> i -- i just want to state the way i see it and try not to step in between the chairman and senator kyl. this last issue. but here's what i'm advocating -- >> you can step in wherever you want to step in. >> here's what i'm advocating. i think that it is the right time for the administration to work with a congress to establish a plan for moving forward on all of these aspects of rule of law. they all relate to the business environment, investment, corruption, and pntr. i think as i've said before that we should move forward, you know, as part of that consideration, we should move forward with the extension of pntr. i think you said, mr. chairman, that russia has to take its

actions. i understand that intelligent observers believe that is likely to happen some time june or july. so i think we should be thinking about what needs to be done in the united states in that same time frame. one on pntr. but two, on cooperation between the congress and administration on how we're going to tackle the other rule of law issues that we see. >> thank you. >> thank you. i just want to file a point for mr. taylor. i tell you that there is few people in our state who are following this and want us to grant the pntr. last weekend i was home, i got my haircut in the barbershop by larissa. she's a russian, and she told me she's been following this and she -- that she had written to

her relatives in russia telling them they could expect to get more american beef, especially montana beef. i was pleased to hear that. can you tell us a little bit about how we can improve our export markets on this proposal? >> senator baucus, pntr is going to give us a country specific tariff rate quotas that we don't currently have under the bilateral agreement. the other thing this does, this opens us up to high-quality beef, which is what we're very good at producing in this country. and that will go in under 5%, i believe a 5% tariff with no quota. and i think we can take full advantage of this. to address some of these other

issues, i guess what i've got to say is this. if we don't do it, if we're not trading with russia, someone else is. and i think we want our influence in russia. i think we want them to go to a democratic style of government. and our people that are sending cattle over there and are in those enterprises over there i think are perfect example and they can show these people what democracy's all about. and i think that's something that agriculture -- i think displays very well. >> i -- thank you so much for saying that. one thing that struck me. i mentioned this already, mr. allen, it stuns me. how big agriculture is in russia. and the manager there, mr. allen told me about in russia and

first of all i was very impressed with the equipment over there. and he was very, very careful when i asked, you know, what's your russian competition? >> he did not want to be too critical, but he was very appropriate in describing just high quality. but main point i'm making, the operator, i mean the manager over there told me that when a manager of a russian farm tells his operator where to combine where to drive his tractor, the manager tells the operator,

well, you get up first thing in the morning and you just go straight as far as you can and don't turn, you just go straight then midday you stop. and you turn around and come back. that's how big some of those, you know, fields, pastures are over there. and he told me also about the acreage in russia. he told me about the water the irrigations can soon be available, how much water there is in russia per person or per he h hector basis. we think we have big our states, some of the places over there are pretty big. thank you for your testimony. senator? >> thank you, mr. chairman. thanks for holding the hearing, i want to thank our panelists for coming and providing your testimony and responding to questions. this hearing is somewhat unique in that we are actually talking about whether or not to repeal a law. the jackson vanic amendment as it applies to russia and i think a lot of people have believed it has lived out its