[Congressional Record Volume 153, Number 63 (Thursday, April 19, 2007)]
[Senate]
[Pages S4746-S4748]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
U.S.-RUSSIAN ECONOMIC RELATIONSHIP
Mr. LUGAR. Madam President, I wish to congratulate Secretary of
Commerce Carlos M. Gutierrez on his recent trip to Moscow, Russia. The
Secretary delivered an important message to the Russian Government and
Russian people: ``While political issues between our nations tend to
garner the most headlines, economic interests should not be ignored.
U.S.-Russia commercial ties are stronger and more dynamic than ever
before, providing stability to our overall relationship.'' I couldn't
agree more with this assessment.
The United States and Russia business relationship is expanding
significantly. Last year, U.S. exports to Russia increased by 20
percent to $4.7 billion in a broad range of merchandise and service
markets. The American Chamber of Commerce in Russia recently conducted
a survey of American business in Russia. They made some interesting
findings:
Half of the American companies surveyed report sales increases of 200
percent in Russia from 2001 to 2005.
Ninety-seven percent of U.S. companies in Russia project continued
growth in sales during the next three years.
Ninety-two percent of U.S. companies in Russia believe that continued
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commercial engagement with Russia is positive for American business,
and 86 percent believe that Russia's membership in the WTO will bring
new opportunities for them.
Profitability of two-thirds of American companies in Russia is on or
above target.
Seventy-five percent of Russian employees of American companies in
Russia view the United States positively, compared to 47 percent of
employees in Russian-owned companies.
The people of Russia and the United States stand to benefit a great
deal from this expanded relationship. The Secretary also focused on
those areas where improvement is needed, including, stronger
accountability, enforcement of intellectual property rights and and
anticorruption efforts.
The U.S.-Russia relationship is critical to the security and
prosperity of both countries and the international community. In recent
months the bilateral relationship has been dominated by disagreements
and confrontation on a number of important issues. American and Russian
leaders must reverse this trend. I congratulate Secretary Gutierrez in
making a strong step forward in the right direction.
I ask unanimous consent that the text of a speech he delivered at the
American Chamber of Commerce's Annual Investment Conference in Moscow
on April 4, be printed in the Record at this point.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Thank you for inviting me to this Conference.
Minister Gref, Ambassador Burns, it is an honor to join you
in opening this conference. This is my second trip to Moscow
as Secretary of Commerce. It has been nearly two years since
my first visit and I'm pleased to be here today to discuss
economic growth and opportunity between Russia and the United
States.
As you know, this year marks the 200th anniversary of
diplomatic relations between the U.S. and Russia. Though
there have been times of great challenge during that history,
we are now poised to enter a new era of commercial engagement
which will strengthen our ties, grow our economies and create
prosperity for our citizens.
My visit this week reflects the considerable and growing
value the U.S. places on our business ties with Russia, and
our desire to find new ways to bring greater economic
opportunity to the people of our countries.
While political issues between our nations tend to garner
the most headlines, the economic relationship is a great
untold story.
U.S.-Russia commercial ties are stronger and more dynamic
than ever before. This creates great opportunity for our
future.
In the past two decades, Russia has begun to reap the
benefits of engagement in the global economy and take a place
as one of the world's great economic powers.
Today, Russia's nearly $1 trillion economy is in its 9th
straight year of growth, and the Economic Development
Ministry reported 8.4 percent growth in the first two months
of this year. That is impressive.
With inflation below 10 percent, an 11 percent increase in
real disposable income within the past year, early debt
repayments and budget surpluses, Russia's economy is indeed
on the rise.
As the economy continues to grow, so does U.S. business. I
know later today you will hear from executives of companies
such as Alcoa, Boeing, Coca-Cola and Motorola. Their presence
at this conference speaks to the growing environment for
business and investment here.
According to some recent surveys, 84 percent of foreign
companies active in Russia report being successful in meeting
their goals; 95 percent plan to expand.
Consistent with these figures, current bilateral trade and
future prospects for U.S. businesses in Russia are expanding
significantly.
In 2006, U.S. exports to Russia grew 20 percent to $4.7
billion. This growth is occurring in a wide range of
merchandise and service categories, suggesting that Russia's
growth is having a positive impact in purchasing power.
Importantly, the growth in our trade is a two-way street:
In 2006, Russian exports to the U.S. were more than $19
billion, 30 percent more than in 2005.
Russia is, for the first time, beginning to take on a
notable direct investment profile in the United States, with
investments in mining, steel-manufacturing, and retail-
petroleum, helping support American jobs and supply American
consumers. Russia's direct investment in the U.S. is $3
billion. The U.S. has $11 billion invested in Russia.
As big as these numbers sound, they are actually quite
small for two countries our size. Indeed, we are just getting
started.
The next step for Russia is World Trade Organization
accession. Russia is the world's largest economy not yet in
the WTO.
The United States has been working side-by-side with Russia
to achieve WTO membership. Last November, Minister Gref and
U.S. Trade Representative Susan Schwab signed a bilateral
market access agreement.
Now Russia, working multilaterally with the U.S. and other
WTO members, has the opportunity to take the necessary steps
to bring this process to a close, and enable its economy,
companies and people to fully participate in the world
market.
Many U.S. multinationals regard Russia as a strategic
market.
At the same time, their perception is colored by what they
hear about political issues such as energy security and a
challenging business climate.
Expansion of Russian commercial engagement with America and
globally requires transparent markets that embrace foreign
and domestic competition.
As the Organization for Economic Cooperation and
Development noted in its 2006 economic survey of Russia,
``Greater openness is essential to monitoring, accountability
and anti-corruption efforts.''
The U.S. and other economies have greatly benefited from
openness, transparency, competition and adherence to the rule
of law. Democratic institutions fostering economic freedom
and rule of law offer the best mix of economic and social
justice.
We believe that companies and economies benefit from the
accountability provided by a vibrant media and independent
courts. They serve to ensure government agencies responsible
for upholding the rules of commerce carry out their duties
properly and evenhandedly.
As Russia becomes more prominent on the global stage,
creating and maintaining a level playing field that
encourages competition will attract more investment and
ensure that Russian companies can successfully thrive at home
and abroad.
It is crucial for Russia, just as it is for the United
States, to maintain an open business climate for capital,
goods and services moving back and forth with its trade and
investment partners.
Transparency and predictability in regulations and laws
governing investment would send positive signals to potential
partners in both our countries. Capital allocators look for
secure, predictable markets, and they watch with concern
where uncertainty exists.
In every country with an aspiration of attracting capital,
business law should be applied consistently across companies
and never selectively.
Building in predictability, transparency and reliability
for investors will give Russia a competitive advantage.
While we are mindful of countries' interests in protecting
so-called ``strategic'' aspects of their economies, policies
which seek to cordon off broad segments of an economy are
policies that carry risks of their own to a nation's economic
strength. Russia's challenge will be to pursue ``strategic
sectors'' while welcoming and encouraging foreign capital and
avoiding protectionist policies.
Protectionism often has the unintended consequence of
limiting access to capital, technology and know-how, and
sheltering companies and entire industries from competition
that sparks innovation and drives efficiency.
Protectionism doesn't protect jobs--the only thing that
does is to compete, innovate and grow.
The United States and Russia should have a stronger
partnership in areas such as energy, aerospace,
transportation infrastructure, and high technology, to name
some examples.
There have been tremendous technological advancements from
which Russian companies could greatly benefit.
Russians and Americans, like the rest of the world's
people, stand to benefit from stronger enforcement of
intellectual property.
Around the globe we have seen that stolen intellectual
property is not only an economic hazard, stifling innovation
technological innovation, and discouraging works of culture
in music and the arts, but also a health hazard.
The World Health Organization estimates that 10 percent of
global medicine is counterfeit. Tough IP enforcement will
protect Russian businesses and their ideas, like this
country's resurgent film industry, and it will also protect
Russian people.
Russia is doing better from an economic standpoint than it
has ever done before. However, from my discussions with
American business leaders, it is clear to me that there
remains much unrealized opportunity.
This foregone potential is an opportunity cost upon
Russia's consumers, entrepreneurs, producers and workers,
even as it also represents unmet potential for Russia's
suppliers, clients and customers.
With the maturity of our bilateral relations, we can afford
to be frank and honest with one another about issues on which
we disagree, in the economic realm as well as other areas.
It is important that we speak up when we find ways to
unlock untapped potential for expanding and building upon our
commercial and political relationships in ways that would
serve the mutual interests of our two nations.
We have come too far in building a new foundation based on
cooperation and mutual interests to turn back the clock.
There is much work to be done, but the foundation has been
laid for the future of U.S.-Russia relations to include
economic growth, prosperity and opportunity for both our
peoples.
I believe we are entering a new era of collaboration and
prosperity for our two great
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nations, and I thank AmCham Russia for your leadership and
commitment to that future.
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