U.S. Secretary of Commerce Carlos M. Gutierrez
American Chamber of Commerce in Russia
Tuesday, May 31, 2005
Moscow , Russia

When President Putin and President Bush met in Slovakia last February, they agreed that our governments should do all that we can to create the right conditions for a broader and stronger economic partnership.

President Bush asked me to meet with my Russian counterparts early-on and the main purpose of my trip is to develop those commitments from Bratislava . I’m also here to listen to those of you doing business in Russia.

I’m hearing encouraging things about Russia ’s strong economic performance. Many U.S. companies are reporting consistent growth, often in the double digits. American businesses are entering regional markets across Russia.

In consumer products,
In manufactured components for industry,
In franchising,
In high-tech.

U.S. exports to Russia rose more than 20 percent last year. Major American companies increasingly target Russia as one of their top strategic markets.

And in a new development, we are seeing Russian companies establishing global presence with direct investments abroad. Free trade is strengthening the ties between our countries and benefiting all of our people.

Presidents Bush and Putin restated the importance of Russia joining the World Trade Organization. They instructed their negotiators to develop a bilateral agreement on the terms of Russia ’s accession.

Our governments are discussing a basket of outstanding questions. The U.S. position reflects our trade policy principles and input from groups like the Amcham and the U.S.-Russia Business Council.

These questions include tariff issues, market access in financial and energy services, and some licensing practices.

We are also seeking assurances that performance and safety standards will be consistently applied.

Russia also needs to follow through on legislative and regulatory changes to address issues raised by WTO members. These include such areas as trade remedies, customs rules, and food safety procedures.

It will raise Russia ’s global competitiveness.
It will grant Russia ’s trade partners greater access to this market.
It will produce greater access for Russian companies around the world.
And it will expand opportunity for the Russian people. Investment is a critical resource for any growing economy.

U.S. companies want to see Russia ’s laws and regulations on investment provide the transparency and predictability that foreign investors find in the U.S. market.

The Putin Administration has taken important steps. Russia ’s commercial laws have already been greatly improved in areas like customs and taxation.

Russia needs to build on this momentum. A reputation as an economy based upon the rule of law is critical to Russia ’s future. Regulations need to be consistently interpreted. And they need to be uniformly applied from year-to-year, and company-to-company.

When investors know what to expect, they are willing to take risks, and to think big.

Russia has made amazing progress developing a market economy over the last 15 years. I want to work with my Russian colleagues to further develop our partnership. America has learned some hard economic lessons over the years and we want our partner, Russia , to benefit from that experience.

Russia has a major role to play in the global energy markets by adding stability. This means ensuring that Russia ’s energy industry has access to the capital needed to develop new resources.

The rules governing foreign investments in the energy sector must be clearly-defined, and welcoming. Otherwise, capital investment simply won’t be worth the risk.

One of the keys to economic diversification is ensuring that entrepreneurs have the incentives to create. The protection of intellectual property rights is central to a diversified economy.

As a center of scientific talent, Russia has enormous potential to innovate. But there’s a problem: piracy. For example, 87 percent of all the business software in Russia is pirated, according to recent estimates released by the U.S. copyright industry.

We all share an interest in fighting piracy together. Russia ’s current government has made efforts to come to grips with copyright and trademark violators. However, there is still a troubling consequences gap within Russian IPR enforcement.

Large-scale offenders who make careers out of stealing intellectual property should face stiff penalties.

Russia needs to close the consequences gap. Violators need to face prohibitive financial penalties and real jail time. It’s time to do away with slap-on-the-wrist suspended sentences that allow IPR violators to go back into business.

I hope my Russian colleagues consider the need to adopt a more aggressive posture against IPR theft in its proper light: As an opportunity for real advancement in our trade relations.

Progress on IPR would be welcomed by American companies, by our Congress and by the Administration. We appreciate the progress Russia has made and we will continue our cooperation with the Russian government.

I believe Russia can tackle this challenge. The United States is happy to share our experience.

In all these areas I mentioned, we depend on input from our business community. By working to advance American business interests, I believe we are also promoting policies that are strongly in the interests of Russia ’s business community and its economy.

We are cooperating with Russia in a wide range of other areas, from space exploration to the global war against terror. While we will have our disagreements, we are always able to sit down and discuss our differences.

We have made exceptional progress over the last five years and we look forward to even better things in the second half of this decade.