Montana cattlemen hope to lasso Russian trade

Congress leery of easing trade with Moscow without human rights safeguards

John Dyer By John Dyer

Russian Prime Minister Dmitry Medvedev speaks to an American cowboy in May during a visit to a cattle farm in the Bryansk Region of western Russia. The American is part of an industry effort to bring U.S.-style cattle breeding to Russia. (Reuters)

Despite the thousands of miles separating the Montana plains and the steppes of Russia, the two landscapes could become intimately linked when Russia joins the World Trade Organization (WTO) this month, as expected.

Russia’s upcoming WTO accession would likely be a boon to numerous American exports. Here’s Caterpillar Chairman and CEO Douglas Oberhelman laying out why.

But Montana cattlemen could especially benefit from fewer restrictions to selling steaks, tenderloins and, additionally, offal in Moscow, St. Petersburg and Vladivostok. Russia, after all, is already the fifth largest market for Montana beef. The vice-president of the Montana Stockgrowers Association, Errol Rice, says Russian beef imports could grow significantly once Russian trade barriers fall when the country joins the WTO.

Rice: “There’s a lot of added value to those cuts of beef that Americans don’t indulge in…

Concerns over human rights in Russia have thrown up roadblocks to that growth, however. Lawmakers in Congress have yet to repeal 1974 legislation — called the Jackson-Vanik amendment— that was designed to give Cold War-era American presidents a tool to limit trade with the Soviet Union in retaliation against Moscow’s human rights abuses.

Even though U.S. presidents in recent years have waived the amendment’s restrictions, under WTO rules President Barack Obama and Congress need to repeal the amendment and establish so-called “permanent normal trade relations” with Russia before Moscow drops its trade barriers to beef and other American products. The website of Senator Max Baucus, a Montana Democrat, describes out the necessary legislative steps.

Rice: “We’re shipping live cattle from Montana to Russia…”

The beef over Magnitsky

Now new legislation in Congress threatens to stop the trade barriers from falling. Named after a Russian lawyer and human rights activist who died while in pretrial detention in 2009, the “Sergei Magnitsky Rule of Law Accountability Act” would bar those involved in Magnitsky’s death from entering the U.S. and freeze their assets in American banks.

Haven’t heard of Magnitsky? He was a lawyer at Hermitage Capital Management who died while imprisoned in Russia on charges of tax evasion. We’ll probably never know if the charges were warranted, but even Russia’s human rights panel has said prison guards likely beat Magnitsky to death.

Members of Congress and others are leery about repealing Jackson-Vanik and granting Russia normalized trade relations without also enacting the Magnitsky bill, if only to give Washington leverage with Moscow over human rights. Facing a reelection contest where unemployment is a key issue, President Obama would prefer to repeal the amendment, let the trade barriers fall and deal with the Magnitsky bill separately. Rice makes a similar argument, saying now is not the time to hold back Montana ranchers.

Rice: “Global population is going to exceed nine billion people…”

Evoking Cold War tensions, Russia has interpreted lawmakers’ concerns as American meddling in the country’s internal affairs. President Vladimir Putin has vowed to retaliate against American officials if Magnitsky passes. In fact, the tit-for-tat has already begun, perhaps in part because the Magnitsky bill has legs internationally, too. German legislators are also reportedly considering similar legislation.

Nervous in Montana

What’s at stake in Montana? Already, Montana ranchers are investing in Russia, where the vast, grassy expanses of land are ideal for cattle herding, says Rice. In the short-term, keeping up the trade barriers would undercut that investment as foreign competitors gain advantages from Russia’s open market that U.S. ranchers wouldn’t enjoy.

Rice: “We’re pouring resources into research and development…”

American ranchers are among the most competitive in the world, says Rice, but they won’t stay that way if politicians fail to level the playing field for them abroad. He added that free trade is probably the best way to improve relations between the U.S. and Russia, giving Americans a better chance of strengthening human rights.

Developments in Washington and the Kremlin are moving fast. The U.S. Senate’s Foreign Relations Committee approved the Magnitsky bill on June 26, paving the way for the rest of Congress to vote. The Russian Duma is expected to vote on WTO accession on July 10th. Thirty days later, unless Washington acts, Russians might start to develop a taste for hamburgers from Argentina or Brazil.