First a ‘diploma’ tax was introduced by the Soviet Bloc in 1972 to combat the ‘brain drain’ caused by the growing number of Soviet Jews and other members of the intelligentsia emigrating to the West.
Then as was typical during the height of the Cold War, the U.S retaliated and introduced the so-called Jackson-Vanik Amendment to the Trade Act which conditions ‘nonmarket economies’ eligibility for receiving “most favored nation” status (now known as “normal trade relations”) and accessing particular U.S. financial facilities on compliance with a set of free-emigration requirements.
To comply with the amendment the applicable countries, which included Russia, China and Vietnam, may not deny their citizens the right to emigrate, impose a significant tax on emigration or related documents, or otherwise monetarily punish any citizen for seeking to emigrate.
Even though the Soviet bloc abandoned the “education reimbursement fees” a few months after they were introduced, the Amendment was still included as a provision of Title IV of the 1974 Act.
Considered one of the last vestiges of the sustained state of political and military hostility between the powers of the Western world, led by the United States and the Communist world, led by the Soviet Union, President Obama is now expected to repeal Jackson-Vanik and establish permanent trade relations (PNTR) with Russia.
Certainly not a symbol of any particular largess by the US government considering the divide between the two countries over a number of matters, not least of which is the conflict in Syria, bipartisan support of the repeal is in anticipation of Russia’s accession to the World Trade Organisation.
Russia is the sixth-largest economy in the world and as part of the accession process it will lower tariffs and increase market access for foreign businesses from countries that have PNTR with it. It is understood by all that maintaining Jackson-Vanik will place US businesses at a clear competitive disadvantage.
To the point, in his introduction of the Bill to repeal the Amendment, Senator Max Baucus (D – Montana), Chairman of Senate Finance Committee said:
“This is an opportunity to double our exports to Russia and create thousands of jobs across every sector of the US economy, all at no cost to the US whatsoever. We give up nothing as part of this process – not one single tariff reduction – so it’s truly a one-sided benefit for the US,” Baucus said. “Jackson-Vanik served its purpose during the Cold War, but it’s a relic of another era that now stands in the way of our farmers, ranchers and businesses pursuing opportunities to grow and create jobs.”
As a result of Jackson-Vanik it has been estimated that since 1975 more than 500,000 refugees, many of whom were Jews, evangelical Christians, and Catholics from the former Soviet Union, have resettled in the United States. With 1,000,000 Soviet Jews immigrating to Israel during that time.