[Senate Report 112-226]
[From the U.S. Government Publishing Office]


                                                       Calendar No. 461
112th Congress                                                   Report
                                 SENATE
 2d Session                                                     112-226

======================================================================



 
   RUSSIA AND MOLDOVA JACKSON-VANIK REPEAL AND MAGNITSKY RULE OF LAW 
                           ACCOUNTABILITY ACT

                                _______
                                

               September 20, 2012.--Ordered to be printed

                                _______
                                

              Mr. Baucus, from the Committee on Finance, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 3406]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, having considered an original 
bill (S. 3406) to authorize the extension of nondiscriminatory 
treatment (normal trade relations treatment) to the products of 
the Russian Federation and Moldova, to require reports on the 
compliance of the Russian Federation with its obligations as a 
member of the World Trade Organization, and to impose sanctions 
on persons responsible for gross violations of human rights, 
and for other purposes, reports favorably thereon without 
amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Report and Other Materials of the Committee......................2
      A. Report of the Committee on Finance......................     2
      B. Summary of Committee Consideration of the Agreement.....     2
          1. Background..........................................     2
          2. Committee Consideration.............................     4
      C. Trade Relations with Russia.............................     5
          1. United States-Russia Economic Relations.............     5
          2. United States-Russia Trade Data.....................     6
      D. Trade Relations with Moldova............................     7
          1. United States-Moldova Economic Relations............     7
          2. United States-Moldova Trade Data....................     7
      E. General Description of the Bill.........................     9
          Title I--Permanent Normal Trade Relations for the 
              Russian Federation.................................     9
          Title II--Trade Enforcement Measures Relating to the 
              Russian Federation.................................     9
          Title III--Sanctions With Respect to Persons 
              Responsible for Gross Violations of Human Rights...    11
          Title IV--Permanent Normal Trade Relations for Moldova.    13
      F. Vote of the Committee in Reporting the Bill.............    13
 II. Budgetary Impact of the Bill....................................13
III. Regulatory Impact of the Bill and Other Matters.................15
 IV. Additional Views of Senator Debbie Stabenow.....................16
  V. Changes in Existing Law Made by the Bill, as Reported...........17

             I. REPORT AND OTHER MATERIALS OF THE COMMITTEE


                 A. Report of the Committee on Finance

    The Committee on Finance, having considered an original 
bill (S. 3406) to authorize the extension of nondiscriminatory 
treatment (normal trade relations treatment) to the products of 
Russia and Moldova, to require reports on the compliance of the 
Russian Federation with its obligations as a member of the 
World Trade Organization (WTO), and to impose sanctions on 
persons responsible for gross violations of human rights, and 
for other purposes, reports favorably thereon and recommends 
that the bill do pass.

         B. Summary of Committee Consideration of the Agreement


1. Background

                      THE JACKSON-VANIK AMENDMENT

    Section 401 of Title IV of the Trade Act of 1974 requires 
the President to continue to deny nondiscriminatory treatment 
(normal trade relations treatment) to any country not receiving 
such treatment at the time of the law's enactment on January 3, 
1975. Section 402 of Title IV, also referred to as the Jackson-
Vanik amendment, provides that the President may extend normal 
trade relations treatment on a conditional basis to a country 
that is in full compliance with certain specified freedom-of-
emigration conditions. Section 402 also authorizes the 
President to waive full compliance with the freedom-of-
emigration requirements if the President determines that such a 
waiver would encourage freedom of emigration. Before the 
President may extend conditional normal trade relations to a 
country subject to Title IV, that country must first conclude a 
bilateral commercial agreement with the United States pursuant 
to section 405 of Title IV. The Russian Federation received 
conditional normal trade relations status in 1992 under a 
presidential waiver after concluding a bilateral commercial 
agreement. In 1994, the President determined that Russia was in 
full compliance with Title IV. That determination has been 
continuously confirmed in semiannual reviews since 1994. 
Likewise, Moldova received conditional normal trade relations 
status in 1992 under a presidential waiver after concluding a 
bilateral commercial agreement. In 1997, the President 
determined that Moldova was in full compliance with Title IV. 
That determination has been continuously confirmed in 
semiannual reviews since 1997. Moldova acceded to the WTO on 
July 26, 2001.

                   THE WTO AND NORMAL TRADE RELATIONS

    WTO rules require that WTO member countries provide each 
other with unconditional or permanent normal trade relations. 
Because countries subject to the Jackson-Vanik provision are 
only provided annual normal trade relations, and only if they 
meet the conditions of Jackson-Vanik, the United States has had 
to pass legislation revoking the application of the Jackson-
Vanik amendment and providing permanent normal trade relations 
(PNTR) status to countries subject to Jackson-Vanik when those 
countries joined the WTO.
    The Russian Federation applied to join the WTO in June 
1993, and the WTO Working Party on Russia's accession was 
established on January 16-17, 1993. On May 31, 2006, U.S. and 
Russian negotiators signed a bilateral agreement on the 
conditions for Russia's accession into the WTO. The Working 
Party agreed to Russia's accession package on November 10, 
2011. The WTO Ministerial Conference invited Russia to join the 
WTO on December 16, 2011. Due to the application of Jackson-
Vanik, the United States was unable to grant unconditional 
normal trade relations status to Russia. As a result, the 
United States invoked the ``non-application'' provision of 
Article XIII of the WTO Agreement. This means that, absent the 
extension of PNTR, when Russia joins the WTO on August 22, 
2012, neither Russia nor the United States will be bound by the 
WTO Agreement with respect to each other. Therefore, Russia 
will not be required to extend to the United States the full 
benefits of its WTO accession commitments.
    Moldova joined the WTO on July 26, 2001. Due to the 
application of Jackson-Vanik, the United States was unable to 
grant unconditional normal trade relations status to Moldova. 
As a result, the United States invoked the ``non-application'' 
provision of Article XIII of the WTO Agreement, meaning that to 
date, neither Moldova nor the United States have been bound by 
the WTO Agreement with respect to each other. Therefore, 
Moldova has not been required to extend to the United States 
the full benefits of its WTO accession commitments.

                           THE MAGNITSKY BILL

    Senator Cardin introduced S. 1039, ``The Sergei Magnitsky 
Rule of Law Accountability Act,'' on May 19, 2011. The purpose 
of the bill is to impose sanctions on persons that were 
responsible for or benefited financially from the detention, 
abuse, or death of Sergei Magnitsky, were involved in the 
criminal conspiracy uncovered by Sergei Magnitsky, or were 
responsible for extrajudicial killings, torture, or other gross 
violations of internationally recognized human rights committed 
against individuals seeking to expose illegal activity carried 
out by officials of the Government of the Russian Federation or 
to obtain, exercise, defend or promote internationally 
recognized human rights and freedoms anywhere in the world. The 
Senate Committee on Foreign Relations approved the bill by 
voice vote on June 26, 2012. For further information on this 
bill, see Senate Report 112-191 of July 23, 2012.

2. Committee Consideration

    Chairman Baucus convened two hearings of the Committee on 
Finance to consider PNTR with Russia. The first, with private 
sector and non-governmental organization representatives, was 
held on March 15, 2012. Testifying at the hearing were: Mr. 
Samuel Allen, Chairman and CEO of Deere & Company; Mr. Ronald 
Pollett, President and CEO of GE Russia; Mr. Watty Taylor, 
President of the Montana Stockgrowers Association; Mr. Paul 
Williams, President and Chairman of the Board of the American 
Society of Composers, Authors and Publishers; and Mr. Al 
Larson, Chairman of the Board of Transparency International 
USA.
    The second Committee on Finance hearing, on June 21, 2012, 
was with senior Administration officials. Testifying at the 
hearing were: Ambassador Ron Kirk, U.S. Trade Representative; 
Tom Vilsack, Secretary of Agriculture; and Ambassador William 
J. Burns, Deputy Secretary of State.
    The Finance Committee also received numerous statements for 
the record, all of which either supported PNTR with Russia or 
were neutral. For example, the Committee received statements of 
support for PNTR from Russian democracy activists such as the 
Moscow-based Helsinki Group, American and Russian Jewish groups 
such as NCSJ and the American Israel Public Affairs Group, six 
former U.S. Trade Representatives, the U.S. Chamber of 
Commerce, the National Association of Manufacturers, and the 
American Farm Bureau Federation.
    Senator Baucus, for himself and Senators Thune, Kerry, and 
McCain, introduced S. 3285 on June 12, 2012 to establish PNTR 
with the Russian Federation. Senator Lugar, for himself and 
Senators Kerry, McCain, Hagan, and Cardin, introduced S. 309 on 
February 8, 2011 to establish PNTR with Moldova. The Moldova 
bill was later cosponsored by Senators Burr, Crapo, Lieberman, 
and Shaheen.
    On July 13, 2012, following consultation with Ranking 
Member Hatch, Chairman Baucus announced his mark of an original 
bill to establish PNTR with Russia and Moldova that combined 
elements of S. 3285 and S. 309, as well as additional elements 
proposed by Senator Hatch, in particular the enforcement, anti-
corruption, rule of law, and investor protection requirements 
found in Title II of the bill. One such requirement is for USTR 
to report on Russia's implementation of its WTO commitments on 
sanitary and phytosanitary (SPS) issues. Members of the 
Committee understand that this report will, among other issues, 
cover Russia's treatment of the feed additive ractopamine.
    On July 16, 2012, Senators Cardin, Kyl, Schumer, Snowe, 
Cantwell, Coburn, Menendez, Thune, Burr, Cornyn, and Grassley 
proposed an amendment to add the Sergei Magnitsky Rule of Law 
Accountability Act of 2011, as reported out of the Senate 
Committee on Foreign Relations on June 26, 2012. On July 17, 
2012, following consultation with Ranking Member Hatch, 
Chairman Baucus announced a modification of his mark that added 
Senator Cardin's amendment. While numerous concerns were 
expressed regarding Russia's foreign policy, these were 
considered to fall outside of the scope of PNTR legislation, 
which has typically focused on trade and human rights concerns.
    The Committee on Finance met in open executive session on 
July 18, 2012 to consider favorably reporting the Chairman's 
mark of the bill on Russia and Moldova PNTR, as modified. Five 
amendments were offered. The first amendment, by Senator 
Cornyn, sought to add Magnitsky sanctions for enablers of mass 
atrocities. It was withdrawn. The second amendment, by Senator 
Cornyn, would have delayed the effective date of PNTR until 
Russia ceased arms transfers to Syria. The amendment failed by 
a roll call vote of 8 ayes, 16 nays. Ayes: Grassley (proxy), 
Snowe (proxy), Kyl, Crapo, Roberts, Enzi, Cornyn, Coburn. Nays: 
Baucus, Rockefeller, Conrad, Bingaman (proxy), Kerry, Wyden, 
Schumer, Stabenow, Cantwell, Nelson, Menendez, Carper, Cardin, 
Hatch, Thune, Burr.
    The third amendment, by Senator Schumer, was withdrawn. It 
would have required a new report on Russia's compliance with 
the WTO Information Technology Agreement. The fourth amendment, 
by Senator Menendez, to ensure effective enforcement of 
intellectual property rights in Russia, was withdrawn.
    The fifth amendment, by Senator Kyl, sought to clarify that 
a report by the Secretary of Commerce on a corruption hotline 
and website will include reporting on outreach by Commerce on 
the availability of these resources. The amendment passed by 
voice vote.
    The Committee then favorably reported the bill, as amended, 
by a roll call vote of 24 ayes and 0 nays. Ayes: Baucus, 
Rockefeller, Conrad, Bingaman (proxy), Kerry, Wyden, Schumer, 
Stabenow, Cantwell, Nelson, Menendez, Carper, Cardin, Hatch, 
Grassley (proxy), Snowe (proxy), Kyl, Crapo, Roberts (proxy), 
Enzi, Cornyn (proxy), Coburn (proxy), Thune, Burr. Chairman 
Baucus filed the reported bill, S. 3406, on behalf of the 
Finance Committee on July 19, 2012.

                     C. Trade Relations With Russia


1. United States-Russia Economic Relations

    Russia has the sixth largest gross domestic product (GDP) 
in the world at $2.2 trillion (compared to $14.6 trillion in 
the United States). Following the collapse of the Soviet Union, 
Russia implemented broad economic reforms in the 1990s that 
privatized most industry, with notable exceptions in the energy 
and defense-related sectors. Russia is the largest economy 
outside of the WTO.
    Russia's economy has relied heavily on oil and gas exports, 
and these account for nearly three quarters of the $33.6 
billion of Russia's exports to the United States in 2011. The 
2009 recession and the accompanying collapse in oil prices 
highlighted the problems with this approach, and Russian 
policy-makers have since been professing the importance of 
diversifying and creating an innovation-based economy.
    U.S.-Russia trade grew at an annual rate of 35 percent in 
2010 and 37.9 percent in 2011. Russia is currently our 20th 
largest goods trading partner with $42.9 billion in total (two-
way) goods trade during 2011. U.S. goods exports to Russia 
totaled $8.3 billion, and goods imports from Russia totaled 
$33.6 billion. The U.S. goods trade deficit with Russia was 
$26.3 billion in 2011. The top U.S. exports to Russia in 2011 
were machinery, vehicles, aircraft, meat (poultry and pork), 
and optic and medical instruments. The five largest imports 
from Russia in 2011 were mineral fuel (oil), iron and steel, 
precious stones (platinum), inorganic chemical (enriched 
uranium), and fertilizers.
    U.S. exports of agricultural products to Russia totaled 
$1.2 billion in 2011, making Russia the 19th largest U.S. 
agricultural export market. Leading categories of U.S. 
agricultural exports to Russia include fresh/chilled/frozen 
beef and pork, and poultry meat. U.S. imports of agricultural 
products from Russia totaled $34 million in 2011.

2. United States-Russia Trade Data

    The following tables summarize the top U.S. merchandise 
exports to Russia and the top U.S. merchandise imports from 
Russia from 2010 through 2012.

  TOP 10 U.S. DOMESTIC EXPORTS AT FAS VALUE TO RUSSIA--BY HARMONIZED TARIFF SCHEDULE (HTS) CHAPTERS, RANKED BY
                                 2011 EXPORTS, YTD = YEAR TO DATE (JAN. TO MAY)
----------------------------------------------------------------------------------------------------------------
                                                                                2011      2011 YTD     2012 YTD
                HTS Code--Product                    2010  ($     2011  ($    Percent        ($           ($
                                                    millions)    millions)    of total   millions)    millions)
----------------------------------------------------------------------------------------------------------------
ALL CATEGORIES...................................        5,968        8,285       100%        3,224        4,290
84.--NUCLEAR REACTORS, BOILERS, MACHINERY AND            1,651        2,168      26.17          904        1,040
 MECHANICAL APPLIANCES; PARTS THEREOF............
87.--VEHICLES, OTHER THAN RAILWAY OR TRAMWAY               484        1,111      13.41          476          709
 ROLLING STOCK, AND PARTS AND ACCESSORIES THEREOF
88.--AIRCRAFT, SPACECRAFT, AND PARTS THEREOF.....          276          741       8.94          265          609
2.--MEAT AND EDIBLE MEAT OFFAL...................          649          697       8.41          197          366
90.--OPTICAL, PHOTOGRAPHIC, CINEMATOGRAPHIC,               382          548       6.61          170          212
 MEASURING, CHECKING, PRECISION, MEDICAL OR
 SURGICAL INSTRUMENTS AND APPARATUS; PARTS AND
 ACCESSORIES THEREOF.............................
85.--ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS          395          546       6.59          206          284
 THEREOF; SOUND RECORDERS AND REPRODUCERS,
 TELEVISION RECORDERS AND REPRODUCERS, PARTS AND
 ACCESSORIES.....................................
39.--PLASTICS AND ARTICLES THEREOF...............          285          369       4.45          172          143
28.--INORGANIC CHEMICALS; ORGANIC OR INORGANIC             143          180       2.17           48           61
 COMPOUNDS OF PRECIOUS METALS, OF RARE-EARTH
 METALS, OF RADIOACTIVE ELEMENTS OR OF ISOTOPES..
38.--MISCELLANEOUS CHEMICAL PRODUCTS.............          120          136       1.64           39           56
8.--EDIBLE FRUIT AND NUTS; PEEL OF CITRUS FRUIT            120          132       1.59           58           60
 OR MELONS.......................................
ALL CATEGORIES...................................        5,968        8,285        100        3,224        4,290
----------------------------------------------------------------------------------------------------------------


 TOP 10 U.S. DOMESTIC IMPORTS AT FAS VALUE FROM RUSSIA--BY HARMONIZED TARIFF SCHEDULE (HTS) CHAPTERS, RANKED BY
                                 2011 IMPORTS, YTD = YEAR TO DATE (JAN. TO MAY)
----------------------------------------------------------------------------------------------------------------
                                                                                2011      2011 YTD     2012 YTD
                HTS Code--Product                    2010  ($     2011  ($    Percent        ($           ($
                                                    millions)    millions)    of total   millions)    millions)
----------------------------------------------------------------------------------------------------------------
ALL CATEGORIES...................................       25,199       33,610       100%       13,017       11,921
 27: MINERAL FUELS, MINERAL OILS AND PRODUCTS OF        17,319       23,869      71.02        9,223        8,284
 THEIR DISTILLATION; BITUMINOUS SUBSTANCES;
 MINERAL WAXES...................................
72: IRON AND STEEL...............................        1,369        1,675       4.98          683        1,189
71: NATURAL OR CULTURED PEARLS, PRECIOUS OR                710        1,404       4.18          509          303
 SEMIPRECIOUS STONES, PRECIOUS METALS; PRECIOUS
 METAL CLAD METALS, ARTICLES THEREOF; IMITATION
 JEWELRY; COIN...................................
28: INORGANIC CHEMICALS; ORGANIC OR INORGANIC            1,279        1,380       4.11          285          225
 COMPOUNDS OF PRECIOUS METALS, OF RARE-EARTH
 METALS, OF RADIOACTIVE ELEMENTS OR OF ISOTOPES..
31: FERTILIZERS..................................          641        1,127       3.35          665          294
76: ALUMINUM AND ARTICLES THEREOF................          523          636       1.89          273          381
29: ORGANIC CHEMICALS............................          609          584       1.74          284          170
75: NICKEL AND ARTICLES THEREOF..................          731          565       1.68          314          158
81: BASE METALS NESOI; CERMETS; ARTICLES THEREOF.          336          275       0.82          124          130
3: FISH AND CRUSTACEANS, MOLLUSCS AND OTHER                267          268       0.80          124          100
 AQUATIC INVERTEBRATES...........................
ALL CATEGORIES...................................       25,199       33,610        100       13,017      11,921
----------------------------------------------------------------------------------------------------------------
Sources: Data has been compiled from tariff and trade data from the U.S. Department of Commerce and the U.S.
  International Trade Commission.

                    D. Trade Relations With Moldova


1. United States-Moldova Economic Relations

    Moldova is Europe's poorest country, according to the World 
Bank. Living standards are low for many Moldovans, particularly 
in rural areas. Remittances from Moldovans working abroad 
amounted to 22 percent of the country's GDP in 2010.
    Moldova is currently negotiating an Association Agreement 
with the European Union, which provides for cooperation in a 
wide variety of spheres and holds out the possibility of an 
eventual free trade agreement and visa-free travel.
    In 2011, services comprised most of Moldova's GDP, at 63.5 
percent, while industry comprised 20.3 percent and agriculture 
comprised 16.2 percent. Major industries include sugar, 
vegetable oil, food processing, agricultural machinery, foundry 
equipment, refrigerators and freezers, washing machines, 
hosiery, shoes, and textiles.
    Bilateral (two-way) goods trade with Moldova totaled $46.5 
million during 2011. U.S. goods exports to Moldova totaled 
$31.4 million, and goods imports from Moldova totaled $16.1 
million. The U.S. goods trade surplus with Moldova was $15.3 
million in 2011. The top U.S. exports to Moldova in 2011 were 
meat and edible meat offal, machinery, electrical machinery and 
equipment, optic and medical instruments, and vehicles. The 
five largest imports from Moldova in 2011 were beverages and 
spirits, apparel, and footwear.

2. United States-Moldova Trade Data

    The following tables summarize the top U.S. merchandise 
exports to Moldova and the top U.S. merchandise imports from 
Moldova from 2010 through 2012.

  TOP 10 U.S. DOMESTIC EXPORTS AT FAS VALUE TO MOLDOVA--BY HARMONIZED TARIFF SCHEDULE (HTS) CHAPTERS, RANKED BY
                                 2011 EXPORTS, YTD = YEAR TO DATE (JAN. TO MAY)
----------------------------------------------------------------------------------------------------------------
                                                                                2011      2011 YTD     2012 YTD
                HTS Code--Product                    2010  ($     2011  ($    Percent        ($           ($
                                                    millions)    millions)    of total   millions)    millions)
----------------------------------------------------------------------------------------------------------------
ALL CATEGORIES...................................         34.5         31.4       100%         10.5         12.3
02.--MEAT AND EDIBLE MEAT OFFAL..................         13.3         13.1      41.72          4.3          6.1
84.--NUCLEAR REACTORS, BOILERS, MACHINERY AND                2          4.2      13.38          0.8          1.2
 MECHANICAL APPLIANCES; PARTS THEREOF............
98.--SPECIAL CLASSIFICATION PROVISIONS, NESOI....          5.4            4      12.74          1.1          0.8
85.--ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS          0.8          2.8       8.92          0.7          0.6
 THEREOF; SOUND RECORDERS AND REPRODUCERS,
 TELEVISION RECORDERS AND REPRODUCERS, PARTS AND
 ACCESSORIES.....................................
90.--OPTICAL, PHOTOGRAPHIC, CINEMATOGRAPHIC,               0.9          1.3       4.14          0.3          0.8
 MEASURING, CHECKING, PRECISION, MEDICAL OR
 SURGICAL INSTRUMENTS AND APPARATUS; PARTS AND
 ACCESSORIES THEREOF.............................
87.--VEHICLES, OTHER THAN RAILWAY OR TRAMWAY               1.6          0.9       2.87          0.4          1.5
 ROLLING STOCK, AND PARTS AND ACCESSORIES THEREOF
38.--MISCELLANEOUS CHEMICAL PRODUCTS.............          0.1          0.9       2.87          0.5          0.1
28.--INORGANIC CHEMICALS; ORGANIC OR INORGANIC               0          0.7       2.23          0.7            0
 COMPOUNDS OF PRECIOUS METALS, OF RARE-EARTH
 METALS, OF RADIOACTIVE ELEMENTS OR OF ISOTOPES..
88.--AIRCRAFT, SPACECRAFT, AND PARTS THEREOF.....          0.4          0.7       2.23          0.4          0.2
73.--ARTICLES OF IRON OR STEEL...................            0          0.7       2.23          0.6          0.2
ALL CATEGORIES...................................         34.5         31.4        100         10.5         12.3
----------------------------------------------------------------------------------------------------------------


TOP 10 U.S. IMPORTS FOR CONSUMPTION AT CUSTOMS VALUE FROM MOLDOVA--BY HARMONIZED TARIFF SCHEDULE (HTS) CHAPTERS,
                            RANKED BY 2011 IMPORTS, YTD = YEAR TO DATE (JAN. TO MAY)
----------------------------------------------------------------------------------------------------------------
                                                                                2011      2011 YTD     2012 YTD
                HTS Code--Product                    2010  ($     2011  ($    Percent        ($           ($
                                                    millions)    millions)    of total   millions)    millions)
----------------------------------------------------------------------------------------------------------------
ALL CATEGORIES...................................         12.3         16.1       100%          4.1          7.6
22.--BEVERAGES, SPIRITS AND VINEGAR..............          2.7          5.1      31.68          1.7          3.2
62.--ARTICLES OF APPAREL AND CLOTHING                      3.2          4.3      26.71          0.6          1.1
 ACCESSORIES, NOT KNITTED OR CROCHETED...........
63.--MADE-UP TEXTILE ARTICLES NESOI; NEEDLECRAFT           1.3          1.2       7.45          0.3          0.5
 SETS; WORN CLOTHING AND WORN TEXTILE ARTICLES;
 RAGS............................................
61.--ARTICLES OF APPAREL AND CLOTHING                      1.3          1.1       6.83          0.3          0.4
 ACCESSORIES, KNITTED OR CROCHETED...............
64.--FOOTWEAR, GAITERS AND THE LIKE; PARTS OF              0.6          0.8       4.97          0.3          0.3
 SUCH ARTICLES...................................
42.--ARTICLES OF LEATHER; SADDLERY AND HARNESS;            1.3          0.7       4.35          0.3          0.2
 TRAVEL GOODS, HANDBAGS AND SIMILAR CONTAINERS;
 ARTICLES OF GUT (OTHER THAN SILKWORM GUT).......
19.--PREPARATIONS OF CEREALS, FLOUR, STARCH OR             0.4          0.6       3.73          0.1          0.3
 MILK; BAKERS' WARES.............................
95.--TOYS, GAMES AND SPORTS EQUIPMENT; PARTS AND           0.4          0.5       3.11            0          0.1
 ACCESSORIES THEREOF.............................
39.--PLASTICS AND ARTICLES THEREOF...............          0.1          0.5       3.11            0          0.8
84.--NUCLEAR REACTORS, BOILERS, MACHINERY AND              0.1          0.4       2.48          0.1            0
 MECHANICAL APPLIANCES; PARTS THEREOF............
ALL CATEGORIES...................................         12.3         16.1        100          4.1          7.6
----------------------------------------------------------------------------------------------------------------

                   E. General Description of the Bill


Section 1. Short title; table of contents

    This section provides that the short title of the act is 
the ``Russia and Moldova Jackson-Vanik Repeal and Magnitsky 
Rule of Law Accountability Act of 2012'' (the Act). Section 1 
also provides the table of contents for the Act.

  TITLE I--PERMANENT NORMAL TRADE RELATIONS FOR THE RUSSIAN FEDERATION


Section 101. Findings

    Section 101 sets forth Congressional findings relating to 
the Russian Federation's record in meeting the requirements of 
Title IV of the Trade Act of 1974 (Title IV) and to the Russian 
Federation's imminent accession to the WTO.

Section 102. Termination of application of Title IV of the Trade Act of 
        1974 to products of the Russian Federation

    Section 102 authorizes the President to determine that 
Title IV should no longer apply to the Russian Federation, and 
to proclaim the extension of normal trade relations treatment 
to the products of the Russian Federation. Section 102 
terminates the application of Title IV to Russia on the 
effective date of the President's proclamation, which shall be 
no sooner than the date the Russian Federation accedes to the 
WTO.

TITLE II--TRADE ENFORCEMENT MEASURES RELATING TO THE RUSSIAN FEDERATION


Section 201. Reports on implementation by the Russian Federation of 
        obligations as a member of the World Trade Organization and 
        enforcement actions by the United States Trade Representative

    Section 201(a) requires the United States Trade 
Representative (USTR) to report annually to the Senate Finance 
Committee and the House Ways and Means Committee on the Russian 
Federation's implementation of its obligations as a member of 
the WTO, in particular with respect to obligations relating to 
sanitary and phytosanitary (SPS) issues and intellectual 
property protection. The USTR's report would also cover the 
Russian Federation's progress on acceding to and implementing 
the WTO Information Technology Agreement and the WTO Agreement 
on Government Procurement. To the extent the USTR believes that 
the Russian Federation is not fully implementing a WTO 
agreement or making adequate progress in acceding to the above 
agreements, the USTR would be required to include in the report 
its plans for addressing those situations. In preparing the 
report, the USTR must provide an opportunity for public 
comment, including by holding a public hearing.
    Section 201(b) requires the USTR to report within 180 days, 
and annually thereafter, to the Senate Finance Committee and 
the House Ways and Means Committee on enforcement actions taken 
by the USTR to ensure full compliance by the Russian Federation 
with its WTO obligations.

Section 202. Promotion of the rule of law in the Russian Federation to 
        support United States trade and investment

    Section 202(a) requires the USTR and the Secretary of State 
to report annually on measures they have taken and results 
achieved to promote the rule of law in the Russian Federation 
and to support U.S. trade and investment by strengthening 
investor protections in Russia, including the negotiation of a 
new bilateral investment treaty; advocating for U.S. investors 
in Russia, including by promoting the claims of U.S. investors 
in the Yukos Oil Company; encouraging all parties to the 
Organisation for Economic Co-operation and Development Anti-
Bribery Convention, including the Russian Federation, to fully 
implement their commitments; promoting corruption-free customs, 
tax, and judicial authorities in the Russian Federation; and 
increasing cooperation between the United States and the 
Russian Federation to expand the capacity for civil society 
organizations to monitor, investigate, and report on suspected 
incidents of corruption.
    Section 202(b) requires the Secretary of Commerce to 
establish and maintain a hotline and secure website to allow 
U.S. entities to report instances of bribery, attempted 
bribery, and other forms of corruption in the Russian 
Federation that could affect them and to request U.S. 
assistance relating to these issues in the Russian Federation. 
Section 202(b) also requires the Secretary of Commerce to 
report annually to the Senate Finance Committee and the House 
Ways and Means Committee on the instances of bribery, attempted 
bribery, and other forms of corruption reported through the 
hotline and website, a description of the regions where those 
instances are alleged to have occurred, and a summary of U.S. 
actions taken in response to requests. The identities of those 
reporting will not be included in the report. The report will 
also describe the efforts undertaken by the Secretary of 
Commerce to inform U.S. entities doing business in Russia of 
the availability of assistance with corruption problems through 
the hotline and website.

Section 203. Reports on laws, policies, and practices of the Russian 
        Federation that discriminate against United States digital 
        trade

    Section 203 amends section 181 of the Trade Act of 1974 by 
requiring that the report under section 181 include a 
description of laws, policies, or practices of the Russian 
Federation that deny fair and equitable treatment to U.S. 
digital trade.

Section 204. Efforts to reduce barriers to trade imposed by the Russian 
        Federation

    Section 204 requires the USTR to pursue the reduction of 
Russian barriers to U.S. exports through efforts to negotiate a 
bilateral agreement with the Russian Federation that would 
recognize U.S. SPS measures as equivalent to Russian SPS 
measures, and through efforts to obtain the Russian 
Federation's acceptance of an action plan to provide greater 
protections for intellectual property rights than those 
provided under the WTO Agreement on Trade-Related Aspects of 
Intellectual Property Rights.

  TITLE III--SANCTIONS WITH RESPECT TO PERSONS RESPONSIBLE FOR GROSS 
                       VIOLATIONS OF HUMAN RIGHTS


Section 301. Short title

    Section 301 provides that this title may be cited as the 
``Sergei Magnitsky Rule of Law Accountability Act of 2012.''

Section 302. Findings

    Section 302 sets forth Congressional findings relating to 
the death of Sergei Magnitsky, as well as human rights and 
corruption issues in Russia more generally.

Section 303. Definitions

    Section 303 defines the terms ``admitted,'' ``alien,'' 
``appropriate congressional committees,'' ``financial 
institution,'' and ``United States Person.''

Section 304. Identification of persons responsible for the detention, 
        abuse and death of Sergei Magnitsky and other gross violations 
        of human rights

    Section 304(a) requires the Secretary of State, in 
consultation with the Secretary of the Treasury, to submit to 
the appropriate congressional committees a list of each person 
the Secretary of State determines meets one of the following 
categories of criteria:
          (1) Persons responsible for the detention, abuse, or 
        death of Mr. Magnitsky; persons who participated in 
        efforts to conceal the legal liability for the 
        detention, abuse, or death of Mr. Magnitsky; persons 
        who benefitted financially from the detention, abuse, 
        or death of Mr. Magnitsky; or persons involved in the 
        criminal conspiracy uncovered by Mr. Magnitsky; or
          (2) Persons responsible for extrajudicial killings, 
        torture, or other gross violations of internationally 
        recognized human rights committed against individuals 
        seeking: (A) to expose illegal activity carried out by 
        officials of the Russian Government; or (B) to obtain, 
        exercise, defend, or promote internationally recognized 
        human rights and freedoms, such as the freedoms of 
        religion, expression, association, and assembly, and 
        the rights to a fair trial and democratic elections, 
        anywhere in the world; or
          (3) Persons who acted as an agent of or on behalf of 
        a person in a matter relating to an activity described 
        in paragraphs (1) or (2).
    Section 304(b) requires the Secretary of State to update 
the list required by subsection 304(a) as more information 
becomes available.
    Section 304(c) states that a person shall be removed from 
the list required by section 304(a) if the Secretary of State 
determines that the person did not engage in the activity for 
which the person was added to the list.
    Section 304(d) describes the form the list will take and 
the extent of its public availability. It requires that, except 
as permitted by subsections 304(d)(2)-(3), the list shall be 
submitted in unclassified form and published in the Federal 
Register. Section 304(d)(2) permits information to be submitted 
in a classified annex if the Secretary of State determines that 
it is necessary for the national security interests of the 
United States to do so, and, prior to submitting a list 
including a classified annex, provides the appropriate 
congressional committees notice of and a justification for 
including each person in the classified annex. Section 
304(d)(3) requires that, not later than 300 days after the date 
of enactment and annually thereafter, the Secretary review the 
classified annex and provide to the appropriate congressional 
committees a justification for continuing to include each 
person in such an annex.
    Section 304(e) requires the Secretary of State to provide a 
response not later than 120 days after receiving a written 
request from the chairperson and ranking member of one of the 
appropriate congressional committees concerning whether a 
specific person meets the criteria for being added to the list 
requires by subsection 4(a). The response may be submitted in 
classified form if the Secretary determines that it is 
necessary for the national security interests of the United 
States to do so.
    Section 304(f) clarifies that the Secretary of State shall 
publish the list required by subsection 304(a) without regard 
to the requirements of section 222(f) of the Immigration and 
Nationality Act (8 U.S.C. 1202(f)) with respect to 
confidentiality of records pertaining to the issuance or 
refusal of visas or permits to enter the United States.

Section 305. Inadmissibility of Certain Aliens

    This section provides that an alien is ineligible to 
receive a visa to enter the United States and ineligible to be 
admitted to the United States if the alien is on the list 
required by section 304(a), and that the Secretary of State 
shall revoke, in accordance with section 221(i) of the 
Immigration and Nationality Act (8 U.S.C. 1201(i)), the visa or 
other documentation of any alien who would be ineligible to 
receive such a visa or documentation under this title. The 
application of this section may be waived by the Secretary of 
State if the Secretary determines that such a waiver is 
necessary to permit the United States to comply with the 
Agreement between the United Nations and the United States of 
America regarding the Headquarters of the United Nations, 
signed June 26, 1947, and entered into force November 21, 1947, 
or if the Secretary determines that a waiver is in the national 
security interests of the United States and provides, prior to 
granting such a waiver, notice of and a justification for the 
waiver to the appropriate congressional committees.

Section 306. Financial measures

    This section requires the Secretary of the Treasury to 
freeze and prohibit all transactions in property and interests 
in property of a person that the Secretary, in consultation 
with the Secretary of State, determines has engaged in an 
activity described in paragraph (1), (2), or (3) of section 
304(a) if such property and interests in property are in the 
United States, come within the United States, or come within 
the possession or control of a United States person. The 
Secretary of the Treasury may waive the application of this 
section if the Secretary determines that such a waiver is in 
the national security interests of the United States and, prior 
to granting such a waiver, provides notice of and justification 
for the waiver to the appropriate congressional committees.

Section 307. Report to Congress

    This section requires the Secretary of State and Secretary 
of Treasury to submit a report one year after the date of 
enactment (and annually thereafter) to the appropriate 
congressional committees. The report must describe the actions 
taken to carry out this title, including the number of times 
and circumstances in which persons described in section 304(a) 
have been added to the list during the year preceding the 
report and if few or no such persons have been added during 
that year, the reasons for not adding more persons to the list. 
The report must also describe efforts to encourage the 
governments of other countries to impose sanctions that are 
similar to the sanctions imposed under this title.

         TITLE IV--PERMANENT NORMAL TRADE RELATIONS FOR MOLDOVA


Section 401. Findings

    Section 401 sets forth Congressional findings relating to 
Moldova's record in meeting the requirements of Title IV and to 
Moldova's accession to the WTO.

Section 402. Termination of application of Title IV of the Trade Act of 
        1974 to products of Moldova

    Section 402 authorizes the President to determine that 
Title IV should no longer apply to Moldova, and to proclaim the 
extension of normal trade relations treatment to the products 
of Moldova. Section 402 terminates the application of Title IV 
to Moldova on the date of the President's proclamation.

             F. Vote of the Committee in Reporting the Bill

    In compliance with section 133 of the Legislative 
Reorganization Act of 1946, the Committee states that on July 
18, 2012, S. 3046 was ordered favorably reported by a roll call 
vote of 24 ayes and 0 nays. Ayes: Baucus, Rockefeller, Conrad, 
Bingaman (proxy), Kerry, Wyden, Schumer, Stabenow, Cantwell, 
Nelson, Menendez, Carper, Cardin, Hatch, Grassley (proxy), 
Snowe (proxy), Kyl, Crapo, Roberts (proxy), Enzi, Cornyn 
(proxy), Coburn (proxy), Thune, Burr.

                    II. BUDGETARY IMPACT OF THE BILL

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 24, 2012.
Hon. Max Baucus,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 3406, the Russia and 
Moldova Jackson-Vanik Repeal and Magnitsky Rule of Law 
Accountability Act of 2012.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
    Enclosure.

S. 3406--Russia and Moldova Jackson-Vanik Repeal and Magnitsky Rule of 
        Law Accountability Act of 2012

    CBO estimates that implementing S. 3406 would cost $7 
million over the 2013-2017 period, assuming appropriation of 
the necessary amounts. The bill would affect direct spending 
and revenues; therefore, pay-as-you-go procedures apply, but 
CBO estimates that any such effects would not be significant in 
any year. S. 3406 contains no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
and would not affect the budgets of state, local, or tribal 
governments.
    S. 3406 would remove Moldova and the Russian Federation 
from the list of countries specified under title IV of the 
Trade Act of 1974 (the Jackson-Vanik amendment), thereby 
granting them permanent normal trade relations (NTR) with the 
United States.
    Those countries have had NTR status with the United States 
for about 20 years, and CBO's baseline reflects the expectation 
that they will maintain that status. Establishing permanent NTR 
with Moldova and the Russian Federation could potentially 
increase tariff collections by lifting quotas on certain 
imported goods. CBO estimates, however, that any such effects 
would be insignificant over the 2013-2022 period.
    Title III of S. 3406 would require the Departments of State 
and Treasury to compile, publish, and annually report on a list 
of persons responsible for the death of Sergei Magnitsky or 
human rights violations in foreign countries. Listed persons 
would be ineligible for entry into the United States, have any 
existing visas revoked, and have their assets frozen.
    Based on information from the Departments of State, 
Treasury, and Commerce, as well as the U.S. Trade 
Representative (USTR), CBO estimates that implementing title 
III of S. 3406 would cost a total of $7 million over the 2013-
2017, assuming appropriation of the necessary amounts. That 
amount includes affected agencies' costs to hire additional 
staff, complete required reports, hold public hearings, and 
establish and maintain a secure phone line and Web site related 
to activities under the bill. CBO also expects that enacting S. 
3406 would decrease revenues from visa fees and increase 
revenues from civil and criminal penalties imposed on those who 
violate the regulations. CBO estimates that the provisions 
would affect few people and that revenues deposited in the 
Treasury would not be significant in any year. The legislation 
also would increase direct spending from criminal penalties, 
which are deposited in the Crime Victims Fund and spent in 
subsequent years. However, CBO expects that any net effects 
associated with collecting and spending such penalties would 
not be significant in any year.
    Title III of S. 3406 is similar to two other bills for 
which CBO has prepared cost estimates. On July 5, 2012, CBO 
transmitted a cost estimate for S. 1039, the Sergei Magnitsky 
Rule of Law Accountability Act of 2012, as reported by the 
Senate Committee on Foreign Relations on June 26, 2012. That 
bill is identical to title III of S. 3406, and our cost 
estimates are the same. On June 29, 2012, CBO transmitted a 
cost estimate for H.R. 4405, the Sergei Magnitsky Rule of Law 
Accountability Act of 2012, as ordered reported by the House 
Committee on Foreign Affairs on June 7, 2012. Because the 
provisions of H.R. 4405 would apply only to human rights 
violations in the Russian Federation, our estimate of costs 
under that bill is lower.
    The CBO staff contacts for this estimate are Sunita 
D'Monte, Matthew Pickford, and Susan Willie. This estimate was 
approved by Theresa Gullo, Deputy Assistant Director for Budget 
Analysis.

          III. REGULATORY IMPACT OF THE BILL AND OTHER MATTERS

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee states 
that S. 3406 will not significantly regulate any individuals or 
businesses, will not affect the personal privacy of 
individuals, and will result in no significant additional 
paperwork.
    The following information is provided in accordance with 
section 423 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
(Pub. L. No. 104-04). The Committee has reviewed the provisions 
of S. 3406 as approved by the Committee on July 18, 2012. In 
accordance with the requirements of UMRA, the Committee has 
determined that the provisions of S. 3406 contain no 
intergovernmental mandates as defined in UMRA, and impose no 
costs on state, local, or tribal governments.

                        IV. ADDITIONAL VIEWS OF 
                        SENATOR DEBBIE STABENOW

    Granting Russia PNTR status without strong oversight and 
accountability would be another failed trade deal for American 
manufacturers and farmers. While I am pleased with the 
accountability measures added to the bill in Committee, I will 
continue working with my colleagues to further strengthen these 
provisions as this bill is considered on the Senate floor.
    We must be willing to hold Russia, and all of our trade 
partners, accountable to the commitments they made to join the 
World Trade Organization. That includes commitments related to 
improving labor standards, protecting intellectual property 
rights, and enforcing against human rights violations. We need 
to stand up for American businesses and workers so they have 
the opportunity 
to compete and win globally on a level playing field. To do 
this, we must be tough with other countries that are violating 
international trade law to give their own companies an anti-
competitive advantage.
             V. CHANGES IN EXISTING LAW MADE BY THE BILL, 
                              AS REPORTED

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

TRADE ACT OF 1974

           *       *       *       *       *       *       *


                TITLE I--NEGOTIATING AND OTHER AUTHORITY

 CHAPTER 8--IDENTIFICATION OF MARKET BARRIERS AND CERTAIN UNFAIR TRADE 
ACTIONS

           *       *       *       *       *       *       *



SEC. 181. ESTIMATES OF BARRIERS TO MARKET ACCESS.

    (a) National Trade Estimates.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Inclusion of certain discriminatory laws, 
        policies, and practices of the Russian Federation.--For 
        calendar year 2012 and each succeeding calendar year, 
        the Trade Representative shall include in the analyses 
        and estimates under paragraph (1) an identification and 
        analysis of any laws, policies, or practices of the 
        Russian Federation that deny fair and equitable market 
        access to United States digital trade.
          [(3)] (4) Annual revisions and updates * * *

           *       *       *       *       *       *       *