The Jackson-Vanik Amendment and Permanent Normal Trade Relations

The Jackson-Vanik Amendment and Permanent Normal Trade Relations

December 20, 2023
The Jackson-Vanik Amendment and Permanent Normal
Trade Relations
Overview
• conclusion of a bilateral trade agreement with the
Section 402 of the Trade Act of 1974 (“the Act,” 19 U.S.C.
United States that contains a reciprocal grant of the
§ 2432), commonly known as the Jackson-Vanik
MFN status and additional provisions required by law
amendment, denies normal trade relations (NTR) status to
(19 U.S.C. §2435), and is approved by the enactment of
some current and former nonmarket economies (NMEs),
a joint resolution (19 U.S.C. §2191); and
unless they adhere to certain freedom-of-emigration
• the NME country’s compliance with the Act’s freedom-
requirements. Congress passed this legislation in response
of-emigration requirements, as determined by the U.S.
to restrictions on emigration from the Soviet Union that
President.
disproportionately affected Jews. A provision of the
The President may temporarily waive the requirement for
amendment allows the President to extend conditional NTR
full compliance with the emigration provisions upon
status to countries subject to the law by either waiving the
amendment’s freedom
determining that a waiver would substantially promote
-of-emigration requirements or
freedom of emigration. Both certification and waiver
determining that the country in question is not in violation
require regular reporting to Congress and an annual renewal
of those requirements, subject to annual review. A complete
process subject to a congressional joint resolution of
lifting of Jackson-Vanik applicability requires Congress to
disapproval.
pass legislation authorizing the President to extend
permanent NTR (PNTR) status to a given country. Such
Current Status
legislation is sometimes prompted by a trading partner’s
Since 1991, Congress has passed legislation authorizing the
accession to the World Trade Organization (WTO).
President to determine that Jackson-Vanik should no longer
Congress has passed legislation exempting most countries
apply to Albania, Armenia, Bulgaria, China,
once affected by the Jackson-Vanik amendment, but it
Czechoslovakia, Georgia, Hungary, the Kyrgyz Republic,
continues to apply to Azerbaijan, Kazakhstan, Tajikistan,
Moldova, Mongolia, Romania, Russia, Ukraine, and
Turkmenistan, and Uzbekistan, which receive temporary
Vietnam; those countries (and, in the case of
NTR status, and to Belarus, Cuba, and North Korea, which
Czechoslovakia, its successor states) all have received
do not. Of those countries, Kazakhstan and Uzbekistan
PNTR status. Jackson-Vanik applied de facto to Estonia,
actively engage Congress requesting repeal of their
Latvia, and Lithuania as constituent republics of the Soviet
Jackson-Vanik applicability. The Biden Administration
Union. Because the United States did not recognize their
supports repeal for Kazakhstan, Tajikistan, and Uzbekistan.
forcible incorporation into the USSR during World War II,
Background
Congress terminated the applicability of Jackson-Vanik to
these three countries after the restoration of their
In 1951, the United States suspended most-favored nation
independence in 1991. Russia’s PNTR status was
(MFN, also known as normal trade relations in U.S. law)
suspended in response to its 2022 invasion of Ukraine.
status to the Soviet Union and all other communist
Azerbaijan, Kazakhstan, Tajikistan, and Uzbekistan are
countries and areas, except Yugoslavia. In international
certified as compliant and receive conditional NTR status,
trade rules, the MFN principle means equal (i.e.,
subject to annual review. Turkmenistan receives temporary
nondiscriminatory) treatment of goods and services from all
NTR status via a presidential waiver. Belarus previously
countries granted that status. In 1974, the Jackson-Vanik
received temporary NTR status under the waiver provision,
amendment prohibited the restoration of certain commercial
but it was suspended in response to Belarus’s involvement
relations with any such NME that prohibited or severely
in Russia’s 2022 invasion of Ukraine. Cuba and North
restricted free emigration of its citizens.
Korea currently do not receive NTR status.
Section 402 of the Act identifies such practices as (1)
PNTR and the WTO
denying citizens the right or opportunity to emigrate, (2)
Two recent instances in which Congress passed legislation
imposing more than a nominal tax on emigration or
authorizing the President to extend PNTR to a country
documents required for emigration, and (3) imposing more
formerly subject to Jackson-Vanik were in response to
than a nominal tax or other charge on citizens because of
Vietnam’s and Russia’s respective accessions to the WTO.
their desire to emigrate to the country of their choice.
Joining the WTO involves taking on the commitments and
obligations of all of its multilateral agreements, including
Section 402 and subsequent sections in the Act established
the requirement that all members extend nondiscriminatory,
a process for the restoration of NTR status for NME
MFN tariff treatment “immediately and unconditionally” to
countries on a temporary basis. Key conditions for
other WTO members. Governments can be motivated to
extension of this conditional NTR status are
join not just to expand access to foreign markets but also to
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spur domestic economic reforms, help transition to market
Latest available data from the U.S. Bureau of Economic
economies, and promote the rule of law. WTO accession
Analysis and the State Department give the stock of U.S.
involves a process of market access negotiations and
direct investment in Kazakhstan, Tajikistan, and Uzbekistan
documentation of a country’s trade regime. The length of
as $44 billion, $122 million, and $40 million, respectively.
the process can depend on several factors, including the
scope of reforms to be undertaken, the domestic political
Potential Repeal of Jackson-Vanik for
situation, the priority given to the accession protocol
Kazakhstan, Tajikistan, and Uzbekistan
package by the government of the prospective member, and
H.R. 1755 and H.R. 3611, introduced in the 118th Congress,
the member’s technical capacity.
would authorize the President to determine that Jackson-
Vanik should no longer apply to Uzbekistan and
Tajikistan and Kazakhstan acceded to the WTO in 2013 and
Kazakhstan, respectively, and to extend PNTR; S. 2748
2015, respectively. Uzbekistan applied to join the WTO in
would do the same for Kazakhstan, Tajikistan, and
1994; the process stalled in 2005 and resumed in 2020.
Uzbekistan. Legislation that would have exempted these
Azerbaijan applied for WTO membership in 1997, and in
three countries was introduced in previous Congresses since
2023 accession procedures resumed after a six-year gap. In
the 107th session, but did not emerge from committee. Since
2022, Turkmenistan began WTO accession procedures.
1997, successive U.S. administrations have certified these
countries as compliant with the Act’s freedom-of-
If it desired, Congress would need to enact legislation
emigration requirements.
authorizing the President to extend PNTR status to
Kazakhstan and Tajikistan, and potentially to Azerbaijan,
In stating its support for repealing Jackson-Vanik for
Turkmenistan, and Uzbekistan depending on their
Kazakhstan, Tajikistan, and Uzbekistan, the Biden
prospective accession, for the United States to benefit fully
Administration has argued that doing so would signal U.S.
from the terms of these countries’ WTO membership. Such
commitment to economic engagement at a time when the
benefits include access to tariff concessions and WTO
United States is seeking to help these countries diversify
dispute settlement procedures. If a WTO member
away from Russia, and that it would boost trade and
determines that it cannot comply with the application of
investment opportunities for U.S. businesses. Certain U.S.
MFN, or any other WTO rule toward a newly acceded
business associations advocate exempting Kazakhstan
WTO member, it can “opt out” of its obligations toward
and/or Uzbekistan. Given that much of the Jewish
that member by invoking the nonapplication provision
population of these three countries has emigrated to the
(Article XIII, WTO Agreement). A WTO member that opts
United States or Israel since 1991, some proponents of
out of its obligations is excluded from the trade concessions
repeal argue that Jackson-Vanik, which initially addressed
granted by the new member. The United States currently
Soviet restrictions on Jewish emigration, is outdated. Others
invokes nonapplication with regard to Tajikistan; to date, it
posit that it is inconsistent with U.S. policy toward Central
has not officially invoked nonapplication for Kazakhstan.
Asia, arguing that it views these countries through the lens
of the Soviet Union rather than as independent states. One
Table 1. Selected U.S.-Central Asia goods trade (US$
Senator has described the continued application of Jackson-
millions)
Vanik as a “bilateral irritant” for U.S. relations.
2022

2012
Conversely, some stakeholders argue that maintaining
Trade
U.S.
U.S.

U.S.
U.S.
Jackson-Vanik applicability grants the United States
partner
exports imports
exports imports
leverage when engaging with Central Asian countries on
Kazakhstan
1,081
2,705
884
1,565
human rights issues. In 2020, two U.S.-based
nongovernmental organizations urged the Senate Foreign
Uzbekistan
273
59
285
26
Relations Committee to take action on the deteriorating
Tajikistan
124
1
54
27
human rights situation in Tajikistan, including by
encouraging the State Department to end certification of
Source: U.S. Census Bureau.
Tajikistan as compliant with Jackson-Vanik. Other potential
Bilateral Trade and U.S. Investment
arguments against taking action to exempt Kazakhstan,
Uzbekistan, and Tajikistan from Jackson-Vanik include
Extending PNTR to Kazakhstan, Tajikistan, and
what some might argue is the limited practical impact of
Uzbekistan, for which the Biden Administration has stated
Jackson-Vanik on economic relations with these countries,
support, may have limited short-term impact on bilateral
given that all three currently receive conditional NTR
trade flows, given that U.S. imports from these countries
status. Additionally, the fact that Uzbekistan has not yet
already receive the MFN rate because they receive
acceded to the WTO might be advanced as an argument
temporary NTR status. Of the three countries, U.S. bilateral
against terminating the applicability of Jackson-Vanik to
trade in goods with Kazakhstan is largest by value (see
that country.
Table 1). Additionally, certain U.S. imports from
Kazakhstan and Uzbekistan have been eligible to receive
Maria A. Blackwood, Analyst in Asian Policy
duty-free treatment under the U.S. Generalized System of
Cathleen D. Cimino-Isaacs, Specialist in International
Preferences (GSP), a trade preference program that expands
Trade and Finance
market access for eligible developing countries. GSP
Liana Wong, Analyst in International Trade and Finance
authorization lapsed at the end of 2020, but there has been
bipartisan interest in reauthorization of the program.
IF12556
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The Jackson-Vanik Amendment and Permanent Normal Trade Relations

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