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Remarks by Ambassador Miriam Sapiro At The U.S.-Ukraine Business Forum

Opening Remarks by Ambassador Miriam Sapiro
Deputy U.S. Trade Representative

The U.S.-Ukraine Business Forum
Kyiv, Ukraine
Thursday, October 14, 2010

*As Prepared for Delivery*

"Good morning. I am pleased to be with you today, and would like to thank the Ministry of Economy and the many U.S. and Ukrainian business organizations here for bringing this event together. The opportunity for businesses and governments to sit down and talk is critical. Governments establish trade policy, but they cannot do so in a vacuum. At USTR, we are constantly reaching out to business groups to learn more about their priorities, their concerns and their ideas. That kind of input is invaluable as we seek to develop a trade policy that brings the greatest benefits.

"So I am grateful for the opportunity to discuss trade policy with you this morning. I thought I would start by providing an overview of the Obama Administration’s trade policy priorities. After that, I will speak for a few minutes about our important economic relationship with Ukraine, and the goals we and our colleagues in the Ukrainian government have set for increased cooperation on trade and investment.

"Let me begin by affirming the Obama Administration’s continued commitment to a trade policy that embraces open markets and seeks to leverage the power of trade to create greater economic prosperity and employment opportunities. History has demonstrated the great harm that protectionism can cause to the world’s economies.

"Trade agreements have been one of the principal U.S. tools for expanding trade with a wide range of countries. U.S. trade agreements – bilateral, regional and multilateral – provide stable frameworks of obligations that private enterprises in the United States and our trading partners can rely upon in their efforts to establish new commercial ties with each other.

"At the same time, the Administration supports a trade policy that is consistent with values that are widely shared internationally, including the rights of workers, environmental sustainability, and political accountability. It is in that spirit that we seek to intensify our economic engagement with the world and to implement a trade policy that benefits not only Americans, but all our trading partners.

"Those are the key premises of the Administration’s trade policy. Now let me highlight several specific priorities for our policy agenda.

"First, we are pursuing several initiatives to expand trade and investment among the United States and several of its Asia-Pacific trading partners. For example, we are working hard with like-minded countries to complete an ambitious and balanced Doha Round agreement, the success of which will depend upon improved market access offers from the major emerging market countries.

"Second, we are sharpening our focus on non-tariff barriers, seeking transparency and due process in our partners’ trading practices, from government procurement to market regulation. Last spring, Ambassador Kirk delivered to Congress two new reports focusing for the first time specifically on sanitary and phytosanitary barriers and technical barriers to trade that harm the ability of America’s agricultural producers and manufacturers to export around the world.

"Third, the President has asked us to strengthen our efforts to enforce U.S. rights in the rules-based trading system. We are doing that by improving our monitoring and trade enforcement efforts, including bringing new cases at the WTO as necessary.

"Fourth we continue to press for strong protections for intellectual property, a topic to which I’ll return in a moment. Notably, we have nearly concluded with the EU and several other partners an Anti-Counterfeiting Trade Agreement (ACTA) that will strengthen global enforcement of the trademarks and copyrights that are essential to the success of so many of our industries.

"Fifth, we are increasing our support for small and medium-sized enterprises in their efforts to participate in international commerce. We will strengthen our international trade promotion programs and increase the number of our foreign trade missions. We plan to intensify our commercial advocacy, and expand our export credit opportunities. And we will improve our cabinet-level coordination on policies affecting SME’s foreign trade and investment.

"Finally, we are using trade policy to promote progress on national energy and environmental goals. A centerpiece of this effort is our work with willing partners in the WTO to achieve faster progress on liberalizing trade in innovative, climate-friendly goods and services through tariff reductions and other initiatives.

"Of course, these continue to be challenging economic times for the United States, Ukraine, and many other countries. In response to the financial crisis, many governments are pursuing aggressive efforts to spur economic growth and put people back to work. To get our economies back on track, we must create new jobs. Increasing exports is one way to achieve greater job growth. And as long as we’re all growing, we can all increase job-creating exports at the same time: nobody’s exports need come at the expense of anybody else’s.

"We all know that many of the greatest growth opportunities lie with the world’s emerging and developing economies, which will offer significant commercial opportunities in the years to come. As Ukraine continues to undertake systemic economic and commercial reforms, I am certain that it too can benefit from increased export and trade opportunities commensurate with its great potential, particularly in the areas of agriculture, steel, chemicals and machinery. These reforms are essential to achieving that vision.

"Let me now turn to the some of the specific priorities in U.S.-Ukraine trade relations.

"As you know, in April Presidents Obama and Yanukovych reaffirmed the important strategic partnership between our countries. They also expressed their commitment to seeing the relationship realize its full potential. The economic dimension is a crucial piece of these discussions, and the United States is committed to an ongoing dialogue to make this venture an engine of mutual prosperity. These efforts include encouraging reforms in Ukraine that support the rule of law, advance predictability and enhance transparency – all with the goal of boosting trade and investment not just with the United States, but with all of Ukraine’s trading partners.

"I am thus pleased to report that we had a productive session yesterday in our third meeting of the U.S.-Ukraine Trade and Investment Council meeting. I want to thank the Minister and his delegation for the constructive dialogue we had and the practical progress we made. Our work under this framework is an important part of our overall strategic partnership, as it gives us an opportunity to introduce and develop policies to deepen our economic ties.

"In keeping with our overall U.S. trade policy, we want to expand our trade and investment with Ukraine. Bilateral trade grew from 2006-2008, exceeding $4 billion in 2008. With the global economic crisis in 2009, our bilateral trade declined to just over $1.3 billion. But our $4 billion in trade in 2008 demonstrates what our Presidents said when they met in April of this year – that there is clearly significant potential in our trading relationship we have not yet tapped.

"An important element of increasing trade between our countries is to improve the logistics of trading. Yesterday we discussed the importance of customs facilitation. One key benefit will be to make it easier for Ukrainian companies to import the equipment that you use to increase productivity, employ Ukrainians citizens, and boost exports. We agreed to establish a working group to focus just on this issue.

"We also talked about reducing trade barriers on exports. The agriculture industry is a bright spot in Ukraine’s economy. But the introduction of export restrictions and export quotas on grain in the absence of a grain shortage not only harms the agriculture industry, but the reputation of Ukraine as a reliable supplier on a broader scale. According to the Global Competitiveness Index, for Ukraine, the number one problem cited was “policy instability.” Mother Nature can introduce enough instability; the government should not.

"In addition, we discussed ways to facilitate foreign investment, a priority for President Yanukovych. The United States currently accounts for only 3 percent of all foreign direct investment in Ukraine. We would like to see this figure increase.

"But increasing investment is not just a matter of the U.S. government telling U.S. businesses that they should invest in Ukraine. There are many markets around the world where businesses can invest. It is imperative for the Ukrainian government, and Ukrainian businesses, to convince investors that they should invest here. I can’t emphasize enough the important role Ukrainian companies will play in this regard. You know what is good for your businesses - what works and what does not.

"To that end, a major focus of our discussions yesterday was on ways to improve the business and investment climate in Ukraine. The President’s Program of Economic Reforms, 2010-2014, calls for strategic transformations in a number of key areas. It is essential for these to be matched by concrete actions.

"Improving the Tax Code will be one important step forward to enhancing the business environment. Some specific items we discussed yesterday were reforms to broaden the tax base, correct the non-deductibility of royalties and not increase the tax liability for certain entrepreneurs involved in direct sales.

"Another important step will be the payment of VAT arrears, and the introduction of a transparent system for future VAT refunds. The government has pledged to establish, by January 2011, a system for the automatic refunds of VAT. Our Department of Treasury has offered assistance on this issue and I encourage the Ukrainian government to work with them.

"Finally, I want to return to a topic I mentioned earlier, which also greatly affects the business and investment climate – intellectual property rights (IPR) protection.

"Earlier this year, President Obama said something about America that I’m certain holds true for Ukraine and, indeed, all countries: “Our single greatest asset,” the President said, “is the innovation and the ingenuity and creativity of [ the American ] people. It is essential to our prosperity and it will only become more so in this century.”

"Innovative industries are being harmed everywhere by piracy, counterfeiting, and other kinds of intellectual property theft. This issue takes on larger significance when we think of the consequences for our economies, and for our workers and their families, if people start to feel that the risks of investing in innovation and creativity outweigh the benefits.

"Put simply, protecting intellectual property rights is essential to our ability to harness the creativity and ingenuity of our researchers, scientists, engineers, and manufacturing workers, who are at the forefront of technological developments and innovative solutions.

"We are therefore working cooperatively with foreign governments, our colleagues across the U.S. government, and the private sector to identify situations of inadequate protection of intellectual property and effective remedies.

"The protection of intellectual property rights protection continues to be an important component of the U.S.-Ukrainian trade relationship. Visible progress will be a tangible step towards improving the business climate here. This is not about just the U.S. economy. The adequate and effective protection of intellectual property rights is critically important for the competitiveness of the Ukrainian economy in a more integrated world because of the link to innovation – the engine of future economic growth and another key priority identified by President Yanukovych.

"Over the past five years, the Government of Ukraine has made substantial progress in improving its IPR regime, in part to meet the requirements for accession to the WTO. However, significant problems persist: enforcement efforts remain weak and piracy and counterfeiting are widespread. As a result, Ukraine remained on the annual Special 301 Watch List this year.

"But that can change. I am particularly pleased to report that yesterday the Minister and I announced the adoption of an Action Plan to improve Ukraine’s protection of intellectual property rights. The Action Plan sets out policies and goals that merge squarely with President Yanukovych’s focus on innovation in the Program of Economic Reforms.

"Some of the goals include increased public awareness of the importance of intellectual property rights; improved enforcement; and a commitment by the Government to allocate the necessary funds to transition its ministries to licensed software. The Plan further envisions the allocation of additional resources to the IPR units of the Economic Police Departments and the State Department of Intellectual Property, and addressing irregularities in the registration and permit-issuance process for pharmaceutical products entering Ukraine.

"Let me also mention one additional possibility for the future. I recently returned from a week of negotiations in Tokyo on the Anti-counterfeiting Trade Agreement – or “ACTA”, where the United States, EU, Japan, and other countries concluded 3 years of substantive work on IPR enforcement. ACTA includes state-of-the-art enforcement provisions, including civil, criminal, and border measures, robust cooperation mechanisms, and establishment of best practices. As Ukraine improves its intellectual property protection regime, I look forward to the day when we can welcome your Government into this agreement.

"Let me finish with a promise. I came not simply to discuss problems, but to find solutions. And I firmly believe in the notion that a rising tide raises all boats. We stand ready to work with Ukraine to achieve the goals we discussed yesterday in order to deepen and improve our bilateral trading relationship to the benefit of both our countries. We look forward to continued collaboration as we seek to advance our work on the basis of our common economic interests and shared values.

"I apologize that I am not able to remain throughout your entire Forum, which I am certain will be interesting and informative. However, I must leave to catch my plane in order to return to Washington for a meeting on Friday.

"Thank you again for having me here today. I wish you a stimulating and successful Business Forum."