UPDATE: Obama's Push On Trade With Russia Raises Senate Concerns

Senators from both parties raised concerns Thursday about Moscow's record on human rights and foreign policy, highlighting the difficult task facing the Obama administration in its push to lift trade restrictions before Russia joins the World Trade Organization.

"It isn't a slam dunk," said Sen. Jon Kyl (R., Ariz.), questioning whether U.S. economic and foreign policy interests would benefit from permanently granting normal trade relations with Russia.

Senate Finance Chairman Max Baucus (D., Mont.), who backs lifting the restrictions, told reporters after the hearing that Congress is unlikely to act until the Duma, Russia's lower house of Parliament, ratifies the WTO entry. The Russian government has said it expects to formally accede to the organization within 30 days after that, by the end of summer.

"We will get this legislation passed this year, and signed by the president," said Baucus, who expects to start moving a bill within the next couple of months.

U.S. Trade Representative Ron Kirk has also set his sights on lifting the restrictions by summer's end, expressing confidence that lawmakers won't want to hurt U.S. exporters in order to send a message to Moscow.

At a separate event Thursday, Deputy USTR Miriam Sapiro, said, "We call on Congress to work with us now to avoid such an outcome."

But Kyl, along with several other members of the Finance Committee, cited concerns during the hearing ranging from corruption and intellectual property rights to Moscow's continued support for the Syrian government.

Several senators expressed support for legislation introduced by Sen. Ben Cardin (D., Md.) that would impose a travel ban and possible asset freeze against serious human rights violators, as part of any congressional action to lift decades-old trade restrictions. Russian officials have said the country won't honor WTO commitments with the U.S. if Congress doesn't repeal a 1974 measure known as Jackson-Vanik that prevents the U.S. from granting most-favored-nation status to countries that restrict emigration.

Sen. Robert Menendez (D., N.J.), called for such a "dual track" approach, "where we find a way forward on repealing Jackson-Vanik, but also find a way forward on trying to improve Russia's human rights records."

Sen. John Cornyn, (R., Texas), asked at what point "do we say that the cost is just too high in terms of sacrificing our human values" in order to boost trade.

However, several Democrats, as well as business executives testifying at the hearing, said the U.S. has little leverage on the issue and would only hurt its own companies by keeping the restrictions in place.

"It's a pretty simple equation," said Sen. John Kerry (D., Mass.), warning that the Congress would be putting jobs at risk by not getting the same benefits other countries will when Russia formally joins the WTO. Russia is set to join the global trade body by August, and will be required to lower its tariffs by as much as 50% for other countries in the trade organization.

Baucus said that not only does Jackson-Vanik provide little leverage, but that repealing the restrictions would weaken the hand of anti-American hardliners in Russia.

He told reporters that lifting Jackson-Vanik shouldn't be directly linked with legislation to protect human rights, but said senators are working on a way to ensure those concerns are addressed.

Samuel Allen, chairman and chief executive of Deere & Co. (DE), urged lawmakers to view establishing permanent trade ties with Russia as a benefit to the U.S. rather than an "accommodation" to Russia. While he agreed that there is a connection between promoting trade and human rights, he said the U.S. stands to lose both leverage and jobs if it doesn't act.

Business groups coordinated an outpouring of letters and statement in support of lifting the trade restrictions ahead of the hearing. The Coalition for U.S.-Russia Trade--whose members include major groups like the U.S. Chamber of Commerce and National Association of Manufacturers as well as multinationals like Boeing Co. (BA) and General Electric Co. (GE)--issued a letter Thursday signed by 173 companies and groups calling the issue the top trade priority in Congress this year.

Ronald Pollett, president and chief executive of GE Russia, said his company could triple its sales in Russia by 2020 if Congress passes the legislation. The chairman of business association AmCham Russia said during the hearing that while he understands that difficulties with Russia outside the trade arena complicate the situation, the vote shouldn't be viewed as a "gift" to Russia.

-By Tom Barkley, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com

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