Earlier this week, Deputy Secretary of Commerce Bruce Andrews delivered remarks at the closing of the first-ever U.S.-Ukraine Business Forum. At the event, Secretary Penny Pritzker, Ukrainian Prime Minister Arseniy Yatsenyuk, Deputy Secretary Andrews, and other government officials met with U.S. business leaders to discuss the future of the economic partnership between the United States and Ukraine.
During his remarks, Deputy Secretary Andrews applauded Ukraine’s pro-business reforms over the past year and highlighted the outcomes of the day’s discussions. He noted that business leaders repeatedly emphasized the importance of a more transparent and efficient Ukrainian government. Deputy Secretary Andrews pointed to prominent sectors that could benefit from increased transparency, including agribusiness, energy, and intellectual property.
Following the day’s events, Deputy Secretary Andrews stressed the importance of sustained conversations between the U.S. and Ukraine moving forward. The strong economic partnership between the private and public sectors of the two countries is critical to fostering a pro-business climate in Ukraine.
Remarks as Prepared for Delivery Thank you, Myron, for the kind introduction and for hosting today’s events. I am very pleased to report that the first-ever U.S-Ukraine Business Forum was a resounding success. Our goals today were simple. We aimed to: highlight Ukraine’s recent progress in developing and implementing pro-business reform measures; provide the opportunity for the business community to make recommendations that will make Ukraine a more attractive location for American companies to do business; and demonstrate this Administration’s commitment to helping grow the Ukrainian economy. On all fronts, we have made significant progress.
It is clear from today’s sessions that the American business community has an invaluable role to play in helping Ukraine to build a more independent, stable, and prosperous country. To that end, the U.S. Chamber of Commerce, the AmCham in Ukraine, and the U.S-Ukraine Business Council are critical partners in bringing together public and private sector leaders from both of our countries. At the Department of Commerce, we have worked with these organizations – along with our colleagues at the U.S. Embassy in Kyiv – to host ongoing, sector-focused dialogues. These conversations were created as a venue for the business community to offer its know-how and expertise to the Ukrainian government as it advances its reform agenda.
Today’s Forum builds on the success of those dialogues and provided an opportunity for more of these critical interactions to occur – both broadly, as outlined by Prime Minister Yatsenyuk this morning, and by diving into specific sector-focused recommendations and developing a clear path forward for the Ukrainian government and private sector to follow. Over and over today, we have heard from business leaders that they need the Ukrainian government to be more transparent and more efficient if it is going to successfully grow its economy and attract more foreign investment. And it is clear that President Poroshenko, Prime Minister Yatsenyuk, and the entire Ukrainian cabinet are committed to these goals. During four roundtable-style discussions focused on different areas of the economy, the CEOs and other executives came up with a solid list of recommendations for steps the Ukrainian government can take to further improve its business climate.
As we heard during a discussion on agribusiness, the lack of transparency and predictability in this critical segment of Ukraine’s economy could deter much needed private sector investment and growth. For example, it is difficult for many small farmers to secure financing, because they often do not own their farms and therefore cannot use them as collateral. Investors urge the Government of Ukraine to lift restrictions on agricultural land sales and to develop a transparent privatization process for the roughly 500 state-owned agricultural enterprises. Participants stressed the importance of reducing costs and barriers to moving products from farm to export markets through infrastructure improvements.
As we heard today, 91 percent of Ukraine’s grain cargo goes through its seaport, and 61 percent gets to its destination by rail. That is why companies repeatedly emphasized their support for the reforms underway that will deregulate the port and improve efficiency. They also suggested that Ukraine implement a timely, evenhanded, and transparent reimbursement of the Value-Added Tax refunds owed to many of the companies that have already taken risks and made significant investments in Ukraine’s farming sector. This would also benefit companies seeking to do business in Ukraine. U.S. companies also spoke about how critical it is to implement regulations that harmonize with European standards. These steps will help garner investment from new players in one of Ukraine’s most competitive sectors, as well as encourage more investments by companies already in Ukraine and well-positioned to expand rapidly.
During the session on energy and energy efficiency, we discussed the work Ukraine must do to restore the trust of energy companies considering doing business there. The Ukrainian Government has already taken steps to address these concerns. Earlier today, Minister Jaresko announced that they will ask the Rada to decrease royalty rates for gas exploration, which will provide economic incentives to expand private gas production. In addition, it is clear that, as Ukraine begins the process of privatizing its energy companies, it must do so in a way that is both timely and transparent, with unambiguous and attractive terms for bidders. This will quickly boost investment and efficiency in this key sector.
The knowledge economy session reinforced one of the major concerns of U.S. companies across a variety of sector: greater protection of intellectual property. In order to reduce the risks of operating in the Ukrainian market, participants in that session urged the government to adopt new internet piracy legislation and improve copyright and royalty distribution. This wouldn’t just impact the knowledge economy. In the agribusiness session, for example, participants discussed how high tech solutions could help Ukraine export more food products, but many American companies are worried their innovations are not protected under the current system.
Many other issues discussed today similarly affect multiple sectors of the economy, including: reducing corruption and increasing transparency through open, unrestricted privatization of selected state-owned enterprises; and moving to a flexible exchange rate.
In these areas and more, Ukraine has already made progress in implementing pro-business reform measures. For example, the newly-created national Anticorruption Bureau sends an important signal to companies considering investing in the Ukrainian market. And the presence of so many senior government officials at this Forum is indicative of how seriously they take improving their country’s investment climate even further. Today’s event was an important step toward building on those reforms and developing trust between government officials and the business community. But if we are going to foster long-term confidence, these kinds of discussions need to happen on an ongoing basis.
We will advance the progress made today through continuation of the industry-driven sector dialogues that the Department of Commerce has convened and facilitated. Secretary Pritzker and I will continue building on these relationships. We will push for the progress that American businesses want to see – the progress that will boost confidence about investing in Ukraine’s market. To the business leaders in the audience: you have two terrific advocates in Ambassador Geoff Pyatt and Jim Lindley, our Foreign Commercial Service officer in Kyiv – both of whom are here with us today. Please keep them updated on the progress you are seeing and reach out whenever they might be of assistance to your companies. In turn, they will let you know about upcoming opportunities to contribute to this dialogue.
It is clear to all of us today that the Government of Ukraine is committed to rebuilding the bonds of trust between the government and private sector that were strained in recent years – when reforms were delayed, governments changed, and the economic promise of our commercial relationship went unfulfilled. Together, across the public and private sectors, we are taking steps towards realizing the full potential of our relationship. By addressing challenges related to transparency and efficiency and focusing on clear reforms like those outlined today, the Ukrainian economy will become even more attractive to foreign investment. Your recommendations are an important part a “road map” for economic reform. You will hear more about this in a little bit from Secretary Pritzker.
The United States believes in Ukraine’s future as a new pro-business, transparent and dynamic economy in the heart of Europe. We stand ready to be a strong partner to President Poroshenko, Prime Minister Yatsensuk, and their entire administration as they implement this “road map.” To that end, we are eager to hear from our Ukrainian colleagues. When we created this Forum, we envisioned it as a venue to not only hear directly from companies about their experiences doing business in Ukraine – but also as an opportunity for the Ukrainian Government to present their vision and progress to date in implementing their reform agenda. Thank you.
Source: U.S. Department of Commerce
