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Senate passes Russia trade and rights bill, angering Moscow

By Doug Palmer and Rachelle Younglai

WASHINGTON (Reuters) - The U.S. Senate on Thursday approved legislation to punish Russian human rights violators as part of a broader bill to expand U.S. trade with Washington's former Cold War enemy.

Passage of the bill, by a 92-4 vote, drew an immediate angry response from Moscow, which had been warning that the human rights provisions would damage relations.

"The decision of the U.S. Senate ... is a performance in the theater of the absurd," Russia's foreign ministry said in a statement. A senior Russian lawmaker said Moscow could retaliate with a similar law.

The bill, which President Barack Obama said he would sign into law, grants "permanent normal trade relations," or PNTR, to Russia by lifting a Cold War-era restriction on trade.

"The legislation will ensure that American businesses and workers are able to take full advantage of the WTO rules and market access commitments that the United States worked so hard to negotiate," Obama said in a statement.

The bill also grants PNTR to Moldova.

Business groups have been pushing Congress for months to approve the bill, which would ensure that U.S. companies get all the market-opening benefits of Russia's entry into the World Trade Organization. Russia joined the WTO on August 22.

Without it, U.S. firms such as Caterpillar, Ford, JP Morgan Chase and others feared they would be left at a disadvantage, compared to competitors in other countries that already have full WTO relations with Russia.

The United States cannot use the WTO dispute-settlement system to challenge any Russian actions that unfairly restrict U.S. imports until PNTR is signed into law.

Russia is the United States' 20th largest trading partner, with two-way trade totaling about $43 billion. As part of its WTO accession process, Russia agreed to cut tariffs, open its services market and make other trade reforms.

U.S. exports to Russia totaled about $8.3 billion last year, and the PNTR vote raises hopes those sales could double or triple over the next five years.

Many U.S. lawmakers refused to approve PNTR, which required lifting a 1974 human rights measure known as the Jackson-Vanik amendment, without new human rights legislation.

Jackson-Vanik tied the most favorable U.S. tariff rates to the rights of Jews in the former Soviet Union to emigrate freely. While it is broadly considered a success, it is a relic of the Cold War and at odds with WTO rules.

DEATH OF ANTI-CORRUPTION LAWYER

The bill approved on Thursday directs Obama to publish the names of Russians allegedly involved in the abuse and death of Sergei Magnitsky, a Russian anti-corruption lawyer who died in a Russian jail in 2009.

It also would require the United States to deny visas and freeze the assets of any individual on the list, as well as other human rights violators in Russia on an ongoing basis.

It directs the administration to publish the names, but allows exceptions if it decides that it is in the national security interest of the United States.

"My administration will continue to work with Congress and our partners to support those seeking a democratic future for Russia and promote the rule of law and respect for human rights around the world," Obama said.

The Russian Foreign Ministry statement accused U.S. lawmakers of acting as if the Cold War was still on.

"It is worth noting that the law approved by the Senate will have a highly negative impact on the prospects of our bilateral cooperation. Responsibility, of course, lies entirely with the United States," the ministry said.

Senator Ben Cardin, a Maryland Democrat who helped author the Magnitsky provision, said he would push to make it universal in scope so it could be used to punish other human rights violators around the world.

"With this vote, we are setting a precedent for future trade agreements that tells the world that gross violators of human rights cannot escape the consequences of their actions even when their home country fails to act. Human rights cannot and should not be open to compromise," Cardin said.

The PNTR bill also contains measures that pressure the White House to make sure that Russia abides by WTO rules.

"If there are areas where Russia is not in compliance with its obligations, the administration is required to develop an action plan to address them," said Senator Orrin Hatch, the top Republican on the Senate Finance Committee.

(Additional reporting by Rachelle Younglai in Washington and Thomas Grove in Moscow:; Editing by Stacey Joyce)

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