Statement for the Record of Daniel Cruise Vice President for Global Public and Government Affairs Alcoa,

Inc., and Chairman, Russia Trade Relations Task Force National Association of Manufacturers For the Senate Committee on Financial Services Hearing on Russias WTO Accession-Implications for the United States Thursday, March 15, 2012

The National Association of Manufacturers (NAM) welcomes this hearing on Russias accession to the World Trade Organization (WTO). As Chairman of the NAM Russia Trade Relations Task Force, I appreciate the opportunity to highlight the importance of broadening opportunities for U.S. manufacturers overseas by granting Permanent Normal Trade Relations (PNTR) status to Russia. The NAM is the nations largest industrial trade association, representing small and large manufacturers in every industrial sector and in all 50 states. Its membership includes both large multinational corporations with operations in many foreign countries, and small and mediumsized manufacturers that engage in international trade. The manufacturing sector employs nearly 12 million Americans, and is the engine that drives the U.S. economy by creating jobs, opportunity and prosperity. Exports are vital to the success of American manufacturing, as they constitute 20 percent of U.S. manufacturing production and have increased at a rapid clip in recent years. In fact, over the past decade, exports grew more than five times as fast as shipments to the domestic marketwith exports growing by 48 percent while domestic shipments grew by only 9 percent. Russia is the 11th largest market in the world, with a $1.9 trillion economy and a growing middle class that values high-quality goods. Russia imported $310 billion in goods in 2011, yet the United States accounted for only 4 percent of those imports. About 60 percent of U.S. exports to Russia fall into three main categories: aircraft; machinery (mostly parts for oil and gas production equipment); and meat. Russias demand for heavy equipment and other capital goods, like construction equipment and aircraft, is strong. Russia and other former Soviet states will require 1,080 new planes valued at approximately $110 billion over the next two decades. Russia also has the worlds second-longest railway network, which moves 85 percent of the countrys freight. A significant amount of Russias railcars and locomotives are aging and will require replacement in the next few years. The United States exported approximately $275 million of oil and gas equipment to Russia in 2010, and opportunities will grow as Russia seeks modern technologies and introduces greater efficiencies in its extraction techniques.

Russia offers an excellent opportunity for U.S. manufacturers, and the Presidents Export Council has estimated that U.S. exports to the country could double over the next five years to $12 billion. This will create manufacturing jobs in a wide variety of industries and boost economic growth, if Congress establishes PNTR with Russia. Russia was officially invited to join the WTO on December 16, 2011, and will formally accede to the WTO upon action by the Russian Duma to ratify the agreement. The NAM strongly supports PNTR with Russia because it will give manufacturers better access to the Russian market and commit Russia to an enforceable set of international standards. Manufacturers in the United States will benefit from tariff reductions, Russias commitment to join the Information Technology Agreement, non-tariff barrier reductions, enhanced intellectual property rights protection and enforcement, and loosened restrictions on services trade. Each of these additional protections will help American manufacturers sell more goods in Russia. The United States must establish PNTR with Russia before American companies can receive the full benefits of Russias WTO membership. To establish PNTR, Congress must graduate Russia from the Jackson-Vanik amendment. The Jackson-Vanik amendment to the Trade Act of 1974 was enacted to help facilitate Jewish emigration from the then-Soviet Union, and it has outlived its purpose. Russia terminated its exit fees and restrictions on Jewish emigrants in 1991, and Russian Jews can now freely emigrate. Since 1992, U.S. Presidents of both political parties have certified annually that Russia complies with the Jackson-Vanik amendment provisions. The United States maintains Normal Trade Relations (NTR) status with Russia, though it is not the unconditional PNTR required by the WTO. Congress must enact PNTR with Russia so the U.S. can fully enforce Russias WTO obligations. If Congress fails to act on PNTR, Americas foreign competitors will have an advantage in accessing the $200 billion Russian import market. Since Russia already has open access to the U.S. market, and is coming into the WTO with us or without us, the only companies hurt by failure to provide Russia PNTR would be NAM members and other U.S. companies. On behalf of the NAM, and the Russia Trade Relations Task Force, I strongly urge the Senate Finance Committee to support legislation that will graduate Russia from the JacksonVanik amendment and establish PNTR for Russia. The Russian market presents an enormous opportunity for American exports, and the protections that would be gained under Russias WTO accession are significant. Since no other WTO member has a law similar to Jackson-Vanik, the United States is the only country that will not immediately benefit when Russia joins the WTO. Russia is an important part of U.S. manufacturers strategy to create and sustain jobs here in the United States by enhancing our competitiveness abroad, and American manufacturers cant afford to be left behind. I appreciate the opportunity to submit this statement on behalf of the NAM. Manufacturers eagerly await further Congressional action on the establishment of PNTR with Russia and will continue to work toward creating future export opportunities within the rulesbased global trade system.