Influence of Russia and China in Central Asia
For a long period, the U.S. has been on the sidelines while neighbouring Russia and China exert enormous influence over countries like Kazakhstan, Uzbekistan, and Tajikistan, as per the Diplomat. However, Central Asian governments are becoming wary of their dependence on China, whose large economic investments often come at a huge cost to their sovereignty. Similarly, they are cautious of their reliance on Russia, whose international standing is in freefall.
Jackson-Vanik Amendment: Cold War Relic
In 1974, the United States passed the Jackson-Vanik amendment, which denied full U.S. trade relations to countries that restricted emigration rights for Soviet Jews and other minority groups. This Cold War-era relic continues to limit U.S. relationships with Kazakhstan, Uzbekistan, and Tajikistan.
Need for Permanent Normal Trade Relations (PNTR) status
Since the dissolution of the USSR, U.S. presidents have repeatedly certified that Kazakhstan, Uzbekistan, and Tajikistan comply with the emigration provisions in Jackson-Vanik. All three enjoy positive diplomatic relations with Israel, none engage in state-sanctioned antisemitism, and Jewish citizens are free to emigrate. This is why the National Coalition Supporting Eurasian Jewry, which led the efforts to champion the original Jackson-Vanik bill, agrees that Kazakhstan, Uzbekistan, and Tajikistan should be granted permanent normal trade relations (PNTR) status.
Central Asia: rich in critical resources
Beyond its strategic location, Central Asia is rich in critical resources like hydrocarbons and rare earth minerals. The United States was late to the race for critical minerals, but the Biden administration has made serious efforts to secure and expand supply chains. Granting PNTR to these countries – which have a combined annual GDP of $280 bn – will allow U.S. businesses better access to their markets, promote trade and investment, and create growth opportunities.
Extending PNTR to Central Asian countries
The Biden Administration’s support for extending Permanent Normal Trade Relations (PNTR) to Kazakhstan, Tajikistan, and Uzbekistan could have a limited short-term impact on bilateral trade flows. This is because U.S. imports from these countries already receive the Most Favored Nation (MFN) rate as they have temporary Normal Trade Relations (NTR) status.
U.S. Direct Investment in Central Asia
As per the latest available data from the U.S. Bureau of Economic Analysis and the State Department, the stock of U.S. direct investment in Kazakhstan, Tajikistan, and Uzbekistan stands at $44bn, $122mn, and $40mn, respectively.
Potential repeal of Jackson-Vanik: new era for Kazakhstan, Tajikistan, and Uzbekistan
The Biden Administration has expressed support for repealing Jackson-Vanik for Kazakhstan, Tajikistan, and Uzbekistan, as per the Congressional Research Service. The administration argues that doing so would signal U.S. commitment to economic engagement at a time when the United States is seeking to help these countries diversify away from Russia. This move is also expected to boost trade and investment opportunities for U.S. businesses.
“Outdated relics like the Jackson-Vanik Amendment are interfering with the United States’ efforts to grow our trade and diplomatic relationships with countries that surround Russia,” said Rep. Panetta.
“Through the repeal of this amendment, we’ll strengthen our bilateral relationship with Kazakhstan, open a new trading partner for critical minerals and other resources, and foster greater investment and diplomatic ties between our two nations. This legislation is a common-sense, forward-looking step to improving the United States’ competitive edge in Central Asia and beyond.”
U.S. Business Associations’ advocacy
Certain U.S. business associations advocate for exempting Kazakhstan and/or Uzbekistan. They argue that much of the Jewish population of these three countries has emigrated to the United States or Israel since 1991, making Jackson-Vanik, which initially addressed Soviet restrictions on Jewish emigration, outdated. Critics of the amendment posit that it is inconsistent with U.S. policy toward Central Asia, arguing that it views these countries through the lens of the Soviet Union rather than as independent states.
Need for new perspective
Maintaining the Cold War-era status quo suggests the United States (U.S.) still views Central Asia through a Soviet prism, not as a collection of sovereign and independent states. Removing this bilateral irritant would send a clear signal that the United States is committed to deepening our partnerships in the region.
Waning influence of Russia and China
As Russia’s influence wanes due to its invasion of Ukraine, and countries grow increasingly wary of China, the United States finds itself with a unique opportunity to redefine its relationship with Central Asia. The war in Ukraine has created geopolitical turbulence and a host of problems in the global economy. Since the war began, prices for energy and agricultural products have started to rise. This instability in the global economy has different effects on different regions, and one of the most important regions affected by the Russia-Ukraine war is Central Asia.
“As Russia and China’s influence on Central Asia begins to wane, a Cold War-era relic could cost the United States an important opportunity to redefine our relationship with the region. Once a useful tool to coerce the Soviet Union into improving its treatment of Soviet Jews and minority groups, today the Jackson-Vanik amendment is an outdated trade policy that is holding back our partnerships with Kazakhstan, Uzbekistan, and Tajikistan. This bipartisan legislation would advance our economic interests while sending a clear message that the United States is committed to bringing our relationship with Central Asia into the 21stcentury,” said Senator Murphy.
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