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Remarks by AUSTR Chris Wilson at the U.S.-Russia Business Council Annual Meeting

Assistant U.S. Trade Representative for WTO And Multilateral Affairs Christopher Wilson

Remarks at the U.S.-Russia Business Council Annual Meeting
Chicago, Illinois
October 4, 2011

*As Prepared for Delivery*

"Many thanks to the entire USRBC team for a allowing me to be with you today to share some perspectives on U.S.-Russia trade relations, and the U.S. Government’s work with Russia in the context of Russia’s accession to the WTO.

"On behalf of Ambassador Kirk, who is sorry not to be able to join you today, I want to stress how much USTR values the relationship and interaction we have with USRBC and its members. It’s a partnership we very much value, and I know Ambassador Miriam Sapiro emphasized this when she saw many of you in St. Petersburg in June. Your perspectives and insights on U.S.-Russia relations, including especially in the trade and investment sphere, inform and enrich the work that we do in policy and diplomatic channels. As everyone in this room is aware, there’s a lot of work that still lies in front of us as we seek to build a progressively more mature, constructive, and rules-based trade relationship between the United States and the Russian Federation. And so we look forward to sustaining this strong partnership with USRBC.

"I’ll try briefly this afternoon to provide you with a perspective on Russia’s bid to become a WTO Member – a bid that is clearly now in its final stages, and closer to completion than at any time in the past two decades. We’re at an exciting and optimistic moment in this process – though one that is not without remaining challenges that will need to be met in the coming months.

"I want to provide a sort of framing context for the U.S. Government’s approach to WTO accession for Russia, and to the very much related effort to work with the U.S. Congress to terminate application of the Jackson-Vanik Amendment to Russia and enable extension of permanent normal trade relations.

"That context, I would argue, is about a quest for greater predictability in this trade relationship.

"The U.S.-Russia trade and investment relationship has grown and deepened a great deal since the end of the Soviet Union. The flow of goods and services between our two countries – as well as the flow of investment – is undeniably benefiting companies and workers in both countries. Russia’s growing affluence, and the increasing appetite of its consumers for American-produced goods and services, is a boon for companies represented in this room, and more broadly in the American economy. Two-way investment is likewise producing great benefits for both countries.

"And yet I think there’s an understanding, in both government and private sector circles, that this a trade and investment relationship that is still less than fully developed, and that is, in many respects, falling short of its potential.

"Despite the size and growing prosperity of the Russian economy, Russia still ranks only number 23 among U.S. goods trading partners, with $31.7 billion in total two-way goods trade during 2010. And Russia is even further down the rankings – at number 37 – among U.S. export markets for goods.

"Beyond statistics, though, both Russians and Americans understand that we need to be striving for greater maturity in the way that we go about managing our trade relationship, and resolving the disagreements and disputes that inevitably arise in any such relationship. It is certainly not normal, for example, that heads of state should need to engage in resolving quite specific trade disputes, as has happened too often between the White House and the Kremlin. But this is a tangible indicator of the limited range of policy tools available to trade policy officials in both countries when it comes to managing the “blips” in the relationship. And, of course, this is precisely why it’s so important that Russia cross the threshold of WTO Membership – a step that will immediately provide both sides with an established framework for managing trade relations more effectively, and with greater predictability.

"The recognition that our trade and investment relationship should be taken to the next level has emerged as a major priority of President Obama this year. Building on successes elsewhere in the U.S.-Russia relationship, the President has made clear that it is time to focus – really focus – on making sure the economic dimension of the bilateral relationship keeps pace.

"WTO membership for Russia is at the very heart of that emphasis, and is one of the Administration’s top priorities this year for the U.S.-Russia relationship.

"Russia has made tremendous progress since mid-2010 in putting WTO accession on a fast track, and working with the United States and other WTO Members to explain a trade regime that has changed in important aspects by virtue of Russia’s customs union with Kazakhstan and Belarus. The United States, working closely with the European Union, has offered our technical support and advice to Russia as it has extensively revised the documentation underlying its WTO accession to reflect the new realities of the Customs Union. We also worked aggressively, and successfully, in the summer of 2010 to resolve a number of key bilateral issues related to the accession process, a number of which had been outstanding for a long time.

"The progress has continued throughout this year, and Russia is now clearly in the home stretch. Working with the Chairman and members of its accession working party, Russia has established an ambitious course to the finish line – the finish line being the Ministerial Conference of the WTO to be held in mid-December. The schedule for achieving this is holding. The Russian accession team is working with extraordinary dedication. I want to underscore the Administration’s deep appreciation for the efforts and dedication of First Deputy Prime Minister Shuvalov, Minister of Economic Development Nabiullina, and many others. My negotiating counterpart, Maxim Medvedkov, and his team have shown tremendous skill and have been putting in remarkably long hours to cross the finish line.

"As we have seen in Geneva in recent weeks, the remaining obstacles are steadily falling away. Russia’s Working Party Report – which, at about 800 pages, will set new records for word-count and sheer weight – is nearly complete. The market access schedules are in the process of being verified. And tough issues like farm subsidies and meat quotas are being resolved.

"There are still big issues out there – perhaps most notably the effort to ensure that all working party members, including the Republic of Georgia, are in a position to join a consensus on the final terms of Russia’s accession package. On this issue, creativity and flexibility from both Russia and Georgia will be critical. We are urging both parties to continue a constructive dialogue on relevant trade issues, and we are confident that an acceptable resolution will be found.

"It is clear to all of us in the Administration that the government of the Russian Federation remains extremely determined to finish the job this year. Yes, there’s a political season on in Russia. But what I observe is a deep continuing commitment to completing the process. Both the President and the Prime Minister are focused on diversification and modernization of the Russian economy, and I am confident that they, and the Russian Government more broadly, appreciate the role that WTO membership can play in advancing that objective

"So Russia remains committed. But why has this become such an important priority for the United States?

"Here I return to the point of trying to create a more robust, well-functioning, predictable and bigger trade and investment relationship, to the benefit of businesses, workers, and farmers in both countries.

"Ultimately the WTO is the heart of the international trading system. And it’s simply very hard to manage a successful trade relationship, or to help a trade relationship grow sensibly, without reference to that system. This is why it is so important that Russia cross the finish line to WTO membership.

"For nearly two decades, with some stops and starts along the way, the trade policy dialogue between the United States and Russia has been almost exclusively dominated by the WTO accession process. It has been a complex, and occasionally very difficult, negotiation. Both sides, recognizing the stakes, have negotiated hard.

"All of this has been absolutely necessary. But in a sense, the overwhelming focus on the multilateral process of accession has sort of crowded out the ability to really focus on building a mature, constructive, and flourishing bilateral trade relationship.

"From my perspective, this will be one of the biggest benefits of Russia completing the accession process. It will effectively free us up, in Moscow and Washington, to turn our attention to the construction of a fully-developed bilateral trade partnership that will benefit both economies and support job creation in both our countries.

"I’ve seen a similar positive shift in focus in another context.

"In my previous position at USTR, I was responsible for U.S. trade relations with the Middle East, and the U.S. relationship with the Kingdom of Saudi Arabia was a fairly prominent account. The U.S. and Saudi Arabia had been through a very long WTO accession process – although not quite as long as what we’ve experienced with Russia!

"What I observed in my interactions with the Saudis was that, once the Kingdom had entered the WTO, there was a nearly immediate interest in turning the page to building a strong relationship in bilateral channels to manage trade and investment relations. Having established themselves as a member of the WTO community, and subject to its framework of rules, our Saudi counterparts were freer to turn their attention to meaningful bilateral dialogue on trade issues. And, fairly quickly, we were able to construct a flourishing framework for that dialogue, and to begin tackling some long-standing trade problems, and to do so successfully.

"This is exactly what we’re striving for in the Russia context as well. And I would encourage all of you involved in U.S.-Russia trade relations to start thinking now about what you’d like to see reflected as we move into a “post-accession” phase in our commercial relationship. My colleagues at USTR and in other agencies will be giving this a lot of thought – both in terms of the structures that will make sense, but also in terms of policy priorities to pursue. Your input in this area will be extremely valuable.

"Before closing, let me offer a word with respect to the Administration’s commitment to working with Congress on Jackson-Vanik/PNTR.

"First, and above all – that commitment is solid. The President has made clear that the Jackson-Vanik Amendment has long since served its stated purpose, and has had no practical impact on U.S.-Russia trade relations for many years.

"The Administration is also clear on the following reality – terminating application of the Amendment to Russia is manifestly in U.S. national economic interests. This is critical to enabling U.S. manufacturers, service providers, farmers and ranchers to enjoy the full benefits of Russia’s membership in the WTO. Without this, we would lose, at least temporarily, the ability to have access to a much-needed tool-kit for managing problems that arise in our trade relationship.

"So, the Administration will continue to emphasize the importance of the Congress taking this action. The challenge is a large one. We are listening with great care to the particular concerns Members of Congress raise with us with regard to Russia. And we will continue to work vigorously to address those concerns effectively in the interest of building the strongest possible base of support for positive Congressional action on this critical issue. And with Congressional action on pending free trade agreements and other trade legislative priorities now moving forward, we are committed to working as rapidly as possible with Congress to address Jackson-Vanik. Our efforts are ramping up – and in fact I and other colleagues from the Administration will be on Capitol Hill every day in the remainder of this week, making our case that Congress’ action on this question is, above all, something that will measurably advance our own economic interests.

"As this effort goes forward, USTR and the Administration as a whole are determined to stay closely in touch with USRBC and the broader coalition of stakeholders who share an interest in this issue.

"Again, many thanks to the USRBC for the invitation to speak today. I’ll look forward to engaging with many of you in the remainder of the day. And all of us in the Administration look forward to sustaining the great partnership with USRBC as we seek to build a mature U.S.-Russia trade relationship."