[Congressional Record (Bound Edition), Volume 153 (2007), Part 7]
[Senate]
[Pages 9328-9329]
[From the U.S. 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 
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 
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

[[Page 9329]]

     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 nations, and I thank AmCham 
     Russia for your leadership and commitment to that future.

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