Senator warns White House on Russia trade bill

Senator Jon Kyl (R-AZ) departs a ''super committee'' meeting in the Capitol in Washington November 18, 2011.

WASHINGTON (Reuters) - A senior U.S. senator warned the White House on Thursday to expect a tough battle over legislation to boost trade ties with Russia because of Moscow's human rights record and foreign policy, especially its support for rebellion-torn Syria.

"This is not a government that can be trusted to uphold its international commitments or give a fair shake to American businesses," Senator Jon Kyl, the No. 2 Republican in the Senate, said at a hearing on the Russia trade bill.

With Russia on the verge of joining the World Trade Organization, the United States is under pressure to repeal a largely symbolic Cold War-era provision known as the Jackson-Vanik amendment that is at odds with WTO rules.

The measure tied U.S. trade relations with the former Soviet Union to the rights of Jews and other religious minorities to emigrate freely. The Soviet Union collapsed two decades ago, and Russia has been judged to be in compliance with the Jackson-Vanik provision since the 1990s.

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said failure to repeal that measure and approve "permanent normal trade relations," or PNTR, would deny American companies the market-opening benefits of Russia joining the WTO.

"If the United States does not grant PNTR, that does not hurt Russia one whit. It hurts the United States, dramatically," Baucus said. "If we do grant PNTR, it helps Americans, it doesn't help Russia. It helps us."

Underscoring that point, a coalition of 173 U.S. companies and business groups released a letter on Thursday urging lawmakers to support the measure. "Without PNTR, U.S. companies and their employees will be left behind our competitors in this growing and profitable market," the coalition said.

WTO members approved Russia's entry in December, and it is expected to join formally by the end of July, 30 days after the Russia Duma passes legislation to implement remaining commitments under its WTO accession agreement.

WAITING FOR RUSSIAN ACTION

Baucus told reporters after the hearing with U.S. industry groups he intended to move PNTR legislation in the Democrat-controlled Senate in the coming months, but probably would wait for the Duma to act first.

"Then we know that Russia is in the WTO," Baucus said.

The Republican-controlled House of Representatives also has to approve PNTR, but has not scheduled any action on it yet.

Kyl and other lawmakers on both sides of the aisle raised concerns at the hearing about Moscow's commitment to human rights, respect for the rule of law and its blocking of steps to try to end Syrian President Bashar al-Assad's bloody crackdown on a year-long rebellion.

"It isn't a slam dunk," Kyl said. "Yes, Russia should become part of the community of law-abiding commercial nations. The question is whether the proposed agreement and repeal of Jackson-Vanik gets us there."

In another sign of the tough political environment for PNTR, two U.S. senators denounced Russia on the Senate floor for selling arms to Syria. They are part of a bipartisan group of 17 senators who are urging the U.S. government to stop buying helicopters for the Afghan military from a Russian company, Rosoboronexport, that also exports weapons to Syria.

"Russia is the top supplier of weapons to Syria, reportedly selling up to $1 billion or more worth of arms just last year," said Senator John Cornyn, a Republican. "You can imagine my shock and dismay when I found out that our own Department of Defense has a contract, a no-bid contract, with this same Russian arms merchant that is helping arm the Assad regime."

Said Senator Richard Durbin, the Senate's number two Democrat: "It is time for us to step back and say to the … Russians, we can no longer continue this relationship. You are going to subsidize the killing of innocent people, we cannot afford to do business with you."

A number of lawmakers want to attach legislation to the PNTR bill to pressure Russian to improve human rights.

Baucus said he wanted to keep the two efforts separate, but was prepared to work with other senators on rights concerns.

(Additional reporting by Susan Cornwell; Editing by Philip Barbara)