Thank you for the kind introduction. And thanks to all of you for coming this afternoon.
I'm honored and delighted to be here. The American business community is a key partner for our embassy and for the Commerce Department as we work to promote economic reforms and improve the business climate.
I have a special fondness for the American Chambers of Commerce and their members, and what they stand for. I was the CEO for the Arlington, Texas Chamber of Commerce.
I've come to Kiev for a very specific reason: to announce on behalf of President Bush a major change in how America looks at the Ukrainian economy. Earlier today, I met with top officials in the national government to tell them that we now consider Ukraine to be a market economy.
This is a significant change. It is a clear statement that Ukraine is successfully transitioning from the dark days of state control, to an economy where the free will of the people determines what they want to buy, and at what price. And it is a vote of confidence in the success of the broad-based economic and political reforms that Ukraine has been putting in place over the past few years.
President Yushchenko made market economy status one of his goals when he met with President Bush last April. It was included in their joint statement that set out an ambitious agenda for strengthening our relations. After the meeting, the Ukrainian government formally asked the Department of Commerce to open a review.
We've been studying the situation ever since. As is our practice, we heard from many interested parties over the course of the review, including U.S. industries both for, and against Ukraine's request. I especially want to thank the valuable comments conveyed by the AmCham in Ukraine. All of you had a part in bringing about this decision today.
We also consulted a number of third-party experts, including the European Bank for Reconstruction and Development, the International Monetary Fund, and the World Bank. Their input was also very helpful in arriving at our decision.
As we looked over the record, we saw substantial reform. Ukraine's currency is convertible. Wages are freely negotiated. The banking sector is largely privately-owned. Ukraine is attracting an increasing amount of foreign investment, and foreign investors are not discriminated against-both signs of healthy and open markets.
The pace of privatization is also picking up. The private sector now accounts for some two-thirds of the economy. And the Ukraine government is working hard to open up the process, making it more transparent, as we saw recently in the steel industry.
Still, as you all know very well, problems remain.
For example, diversification of the production base is weak. Corruption remains a stubborn problem. And there are various transitional issues, such as the need for greater political and business transparency, and stronger commercial laws and remedies.
Nevertheless, markets allocate resources in Ukraine. Prices are determined by supply and demand, probably the most important test of all for a market economy.
The bottom line is this. We believe Ukraine has met the very strict rules and obligations to gain market status in the eyes of U.S. trade law. This is an important step forward that will help the Ukrainian economy succeed, which we want very much to see.
So, congratulations to President Yushchenko, Prime Minister Yekhanuerov and the entire Ukrainian government. The U.S. strongly supports the democratic course and reform objectives that Ukraine has chosen, and the progress you have made so far.
This is quite an achievement. And the citizens of Ukraine should be very proud of what they have accomplished, and in a relatively short period of time.
Ukrainians are preparing for critical parliamentary elections next month (March 26). This will be an opportunity to assess where the nation is heading. We hope that Ukrainians will decide to continue on the path of reform and consolidate their gains.
One thing I can say is that history is on your side, the side of democratic government and open markets. Certainly that is the case for the United States during our 225 years as a nation. And in the last 60 years, since the end of World War II and the era of colonialism, you see countless examples, from the rebuilding of Western Europe and Japan, to what we're seeing today across Latin America and in countries like India.
Let me say that today's announcement also underscores our commitment to expanding the bilateral economic relationship.
That was a key theme during the recent visit here by Secretary of State Rice. It was the agenda when my boss, Secretary Gutierrez, met with Ukrainian counterparts in Washington last year.
And we're making steady progress on a common agenda. This includes improving the business climate, expanding market access and strengthening protection of intellectual property rights.
We strongly support Ukrainian membership in the WTO. Our trade negotiators are making good progress on a bilateral WTO agreement. We hope to conclude an agreement soon, which would be another big step forward.
As a member of WTO, Ukraine would become a full partner in an ever-expanding group of nations that favor democratic and free-market economic values. This would open up potentially vast opportunities for local businesses, and would attract major industrial players from the U.S. and elsewhere.
We believe that the possibilities are virtually limitless, given Ukraine's strong resource base, its well-educated and talented workforce, and its strategic location at the crossroads of Central Europe, Russia, and the Middle East.
We're seeing progress on a related front. In late January, U.S. Trade Representative Rob Portman restored duty-free treatment for a number of Ukraine's exports to the U.S. under our Generalized System of Preferences.
This was the direct result of excellent progress by Ukraine on enforcing its intellectual property rights laws. We look forward to continued progress in this global fight against the theft of patents, movies, CDs, brands, trade secrets and other intellectual property. U.S. companies alone suffer $250 billion per year in lost sales because of it.
Fighting this crime is also in Ukraine's best interests. IPR protections attract foreign investment. And they boost the number of domestic companies willing to innovate and create new products because they'll know that their efforts won't be undercut by theft.
Why is this important? Industrial economies thrive on innovation, and use it to build wealth. In the U.S., for example, three-quarters of the value of publicly-traded U.S. companies-some $5 trillion-is derived from "intangible" assets, namely ideas and innovation. And that's up from 40 percent in the 1980s.
In closing, let me stress that we see real progress in our economic relationship with Ukraine, as confirmed by today's market status decision. This progress, while important, is part of a much greater cause. As Secretary Rice said a few weeks ago, the U.S. sees Ukraine as an anchor of democratic stability throughout the region as it strives to implement political and economic reforms.
And we see Ukraine as a true partner in working to solve world problems, whether combating the proliferation of dangerous weapons and the war on terrorism or helping Pakistan's earthquake victims.
The spirit of our new partnership is captured by a statue of the great Ukrainian artist and literary figure Taras Shevchenko. That statue stands in a small square just a few city blocks north of the White House. Chiseled into the stone monument are these words: "Dedicated to the liberation, freedom and independence of all captive nations." Together we can work to help Ukraine improve its own political and economic structures, and together we can work as partners to help others build free societies.
Thank you very much.
Source: U.S. Department of Commerce
