Thank you, Neville Isdell, for that kind introduction. And thank you, Ambassador Ushakov, for sharing your insights.
Progress In Russia This is an important time in U.S.-Russia relations. It has now been 20 years since glasnost and perestroika--20 years since the light of freedom and openness began to shine on the people of Russia.
An entire generation of Russians has come of age at a time of greater freedom and opportunity. They do not know firsthand of the repression of communism. With a freer Russia, the world is indeed a better place. Yet there is still progress to make.
Although these two decades have been difficult for many, most Russians see a hopeful future and millions have prospered. Prosperity is now being expanded beyond the major cities. Extending this growth throughout Russia will bolster economic stability and Russian popular support for pro-market policies.
Foreign companies--American companies--can play an important role in making this a reality. Russia produces some of the most brilliant inventions, has some of the world’s most important natural resources, and has the ability to transform the life of its citizens in a positive way.
Russia and the U.S. benefit from an enhanced trading relationship: We all agree that Russia is a great country, rich in opportunity. Foreign companies have accelerated their commitment of resources in Russia, with $16 billion in new investments in the first half of this year alone. This is much higher than at any time in modern history.
However, for this trend to continue, open, stable and transparent markets will have to exist--markets that are receptive to real competition, both foreign and domestic.
Global capital investment is made in places and in projects with low perception of risk, and high rates of return. Further reducing risk for potential investors will help Russia keep more capital at home and attract more from abroad.
Challenges To Progress And Russia must address the challenges to progress. Last month the deputy chairman of Russia's Central Bank was murdered. Andrei Kozlov was a friend of this organization. He was a patriot of Russia, and he was a reliable, respected and honest public servant. He should have been with us today.
Russia cannot afford the kind of lawlessness that threatens violence against public officials and private businesses. Because of the hard work of people like Andrei Kozlov, Russia’s banking system has been revitalized and strengthened, and the country’s overall financial system is much improved. The reforms, the integrity and the confidence he put in place must be built upon.
American companies are anxious to invest in Russia, but many remain hesitant to do so. Some have invested tens of millions in a production facility only to be faced with a competitor backed with preferences in the form of government ownership or capital. These kinds of “statist” actions stifle competition and hurt Russia’s reputation just when it is being rehabilitated in capital markets and with businesses.
American companies can compete anywhere with other private businesses. They just ask for a level playing field.
We in the United States have found that open, competitive markets are the best approach to create dynamic economies. Industries that are open to competition grow and innovate more than those that don’t. Russia has come a long way, but it still has far to travel.
Next Steps For Russia Some of you may wonder, as I do, whether Russia’s model of creating state-favored "national champion" companies will foster competitive Russian industry, or stifle competition and innovation. It is a question that must be studied, and we encourage careful debate on the economic pros and cons.
Russia's energy resources make it a critical force for stability and efficiency in the global energy equation. We plainly acknowledge Russia's sovereign right to develop and regulate its own resources.
Yet, with its unique resource endowment and consequent influence on energy markets, Russia should provide clear signals on how these resources will be developed and supplied to the market.
We welcome efforts by Russia to work with international partners in promoting stable markets with adequate investment to support Russia's supply commitments and ensure its own economic growth.
Transparent rules and regulations provide the best environment for businesses to be launched, grow and thrive. Transparency is a longstanding goal we seek in all our economic relationships, not only with Russia.
A crucial basis for transparency is a free media, through which both government and business can be scrutinized. A free media helps provide shareholders and the public with access to the greatest possible range of information.
Without freedom of the press, there can be no transparency. This is why the killings of journalists such as Anna Politkovskaya, just a few days ago, causes such great concern. It should concern not only those of us in the business community, who depend on transparency and a vibrant, free press to make informed investment decisions, but also those in the Russian government who recognize the value of transparency for Russia's economic future.
WTO Membership Joining the WTO will bring many benefits to Russia. The obligations of a WTO member are based on many of the economic principles of openness, transparency and competitiveness I have mentioned to you today. Our government has a continuing dialogue on this issue with Russian officials, and as our Trade Representative, Susan Schwab, has noted, both sides are working hard toward this goal.
A strong accession package will benefit the global market, but most important for Russians, it will do much to secure and extend the country’s impressive economic achievements.
We are seeking a bilateral agreement that is sound on commercial terms. As we have stated before, this is a commercial decision, not a political decision. Agriculture safety and the protection of intellectual property rights are two areas we are working hardest to resolve. For example, there should be no reason why the world's highest-volume online seller of pirated music (the Web site, allofmp3.com) continues to operate from Russia.
Although not all of the other issues are completely resolved, our negotiators continue to work out the details. The bilateral agreement is only part of the negotiation. We are working with other trading partners on the multilateral requirements to complete the negotiation. We can’t do this alone, and others, like the EU, are playing an important role. At the end of the day, the pace of progress is up to Russia.
There is a great deal at stake economically, for both Russia and the WTO, in having this significant economy enshrined as part of the global trade framework and committed to the rules and standards of the WTO. Russia has a bright future and a leading role to play among nations. The United States wishes to see Russia fully integrated into world markets.
There is no advantage for the United States in having a Russia that is economically weak and thus politically unstable, unpredictable or undependable in helping to confront the global challenges that both of our nations must confront and solve together.
We believe in the future of Russia and her people. A free society with open markets, open press and a strong and stable economy can only bring increased growth and prosperity to Russians.
As President Bush has indicated many times, it's vitally important that our two nations continue to engage one another. Our relationship with Russia is one of the most important bilateral relationships we have. We have many shared interests and increased collaboration will benefit us all. The U.S.-Russia Business Council has been at the vanguard of this work for 14 years. Thank you for your ongoing commitment.
Source: U.S. Department of Commerce
