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Pro: U.S. can’t afford to be left out when Russia joins WTO and expands trade this summer

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Doug Oberhelman
June 19, 2012
EDITOR’S NOTE: The writer is addressing the question, “Can the U.S. afford to do business with Russia?”

Russia, the world’s ninth-largest economy, will open its doors to greater trade when it joins the World Trade Organization this summer.


This could be a tremendous opportunity to sell more U.S. goods and services to Russia’s 142 million people. But, if Congress fails to act, the United States could be locked out of these new opportunities and the economic growth and jobs that would follow.


When Russia joins the WTO it promises to open its markets and to provide better protection of intellectual property rights. This will make it possible for all 155 WTO countries to expand sales in Russia. The WTO’s dispute resolution system will also help ensure Russia keeps its promises.


But U.S. companies won’t be able to take full advantage of Russia’s new open markets or the dispute resolution system unless Congress passes legislation establishing what’s known as Permanent Normal Trade Relations, or PNTR. This is the same status the United States routinely authorizes with other countries joining the WTO to ensure consistent and fair trade relations.


The problem is that some believe PNTR should be withheld to pressure Russia to address human rights and foreign policy issues. Unfortunately, this approach is based on the mistaken notion that Russia would somehow be penalized if Congress fails to approve the legislation needed to promote greater U.S. trade with Russia.


In reality, congressional inaction would only penalize U.S. companies and their employees by depriving them of improved access to Russia’s markets.


If Congress fails to act, the United States will repeat a costly mistake.


Protesting construction of a Soviet gas pipeline to Western Europe in the early 1980s, the United States imposed sanctions that virtually cut off bilateral trade.


The results were devastating. For example, Caterpillar was forced to cede its 85 percent market share in the then-Soviet Union to its Japanese competitors. This came at a huge cost to our company and American workers. In effect, 12,000 man-years of work were transferred from Illinois to Japan.


For Caterpillar, the lesson learned was: It can take decades to earn the business of your overseas customers, but only days for a rule or sanction to cede that business to competitors.


It’s not only heavy equipment companies that see significant potential in Russia. America’s farmers and manufacturers will benefit from lower tariffs on their products. U.S. information technology, communications, financial services and other services companies will gain greater market access as well.


Earlier this month, two Democratic and two Republican Senators introduced the needed legislation: Max Baucus, D-Mont., John Kerry, D-Mass., John Thune, R-S.D., and John McCain, R-Ariz., Business Roundtable and many other leading business groups have identified passage of such legislation as the top trade priority.


Let’s encourage swift action to make sure the United States can fully benefit from Russia’s pending WTO membership. If Congress delays action past this summer, our foreign competitors will have months to gain an advantage over our companies, farmers and workers.


Caterpillar and many others learned a hard lesson about the importance of open trade in the 1980s. This is no time to repeat history. Instead it’s a time for action, cooperation and opportunities.


Doug Oberhelman is chairman and CEO of Caterpillar Inc., and chair of Business Roundtable’s International Engagement Committee. Readers may write him Caterpillar. 100 North East Adams St., Peoria, Ill. 61629.

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