Assistant Secretary of Commerce Michael C. CamuÑez
Market Access and Compliance
Investor Lunch at Spaso House
Tuesday, November 13, 2012
As prepared for delivery
Good afternoon ladies and gentlemen. Thank you, Andy, and Ambassador McFaul. It is a true pleasure to be in Moscow and to have the privilege of addressing such a distinguished group of Russian business leaders today.
Let me begin by expressing my appreciation to the AmCham for the vital role it plays in fostering strong commercial ties between the United States and Russia. I’d also like to acknowledge and thank Ernst & Young and Citi, two leading AmCham members, for sponsoring today’s lunch.
I also want to acknowledge and thank Alexander Shokin for your leadership of the Russian Union of Industrialists and Entrepreneurs (RSPP) and for being with us and for convening this gathering.
As you have surmised, our purpose in gathering today is to discuss the United States as a strategic investment market. But before I turn to that topic, I’d like to frame the issue in the context of the broader relationship between the United States and Russia and how the Obama Administration has approached this important foreign policy issue.
Framing the Larger Commercial Relationship
From the time he took office, President Obama has recognized the importance of pursuing a strategic and balanced relationship with Russia. And he has made deepening our trade and economic partnership, in particular, a major priority. This was a significant focus of the President’s first term in office, and with his re-election, it will continue to be a priority in his second term.
Evidence of our shared commitment to deepening our economic ties with Russia can be seen in the establishment of the Bilateral Presidential Commission, with its various working groups devoted to deepening collaboration across numerous areas. In particular, the Business Development and Economic Relations Working Group (BDERWG), which is chaired on the U.S. side by the Secretary of Commerce, and for which I now serve as the U.S. Coordinator, has been an important vehicle for bilateral cooperation.
Under the BDERWG, we’ve seen a deepening of cooperation in trade promotion, including two significant trade missions in the autoparts and energy sectors alone this year. We’ve seen significant business exchanges and collaboration on efforts that ultimately culminated in the adoption of an important bilateral visa agreement this September, which dramatically improves the ability of Russian and American business travelers to visit each country. And perhaps most significantly, we saw unprecedented collaboration that led—finally—to achieving a nearly two decades old effort to see Russia accede to the World Trade Organization. And I am confident that the United States Congress will imminently take the necessary steps to establish permanent normalized trade relations with Russia.
This emphasis on heightened commercial engagement has yielded very positive results to date. For example, American exports to Russia in 2011 were $8.3 billion, an almost 40% increase from 2010, and double the growth rate of our global exports. In the first 9 months of this year, exports are up almost 30%. So the positive trend is continuing.
Of course, this is not a one-sided affair: last year, Russia also sold about $35 billion of products in America, also a record level. The Russian economy is growing, outpacing the growth not only of the United States but of Europe. Today, it is the sixth largest economy in the world, and its accession to the WTO holds the promise of even greater and more dynamic growth.
Yet for all this success, Russia remains, as you know, only our 20th largest trading partner. And U.S. exports make up less than 5% of Russia’s total imports. There is, accordingly, much room for improvement.
This fact was recognized by both Presidents Obama and Putin in their last meeting together at the G20 in Los Cabos, when economic issues were put definitively at the top of the agenda. And both leaders committed to exploring new ways to take further steps to deepen our growing trade and commercial ties.
At the Department of Commerce, our overriding goal is to build on the success we’ve achieved to date, and to work constructively and practically with Russia to take full advantage of the new market-opening opportunities that will arise not only from Russsia’s accession to the WTO, but also from the important reforms the Russian government is pursuing—whether in privatizing key sectors, promoting greater transparency, or fostering innovative industries.
Of course, we have a complex relationship with Russia, and I suspect there will always be strains and disagreements, including over bona fide and important differences.
But I firmly believe that strengthening our economic engagement can and will diversify our relationship and create ballast to deal with the difficult challenges that will undoubtedly arise, and it will yield genuinely beneficial results as we strive to attain, in the words of President Obama, mutual prosperity.
Deepening U.S.-Russia Trade and Investment Through and “Enhanced” BDERWG
As both governments contemplate how best to take our burgeoning economic relationship to the next level, we share a commitment to broaden and deepen our collaboration through an enhanced Business Development and Economic Relations Working Group. In fact, one of the main purposes of my visit to Moscow has been to work with my counterparts in the Ministry of Economic Development to begin charting a course for this reinvigorated engagement in 2013 and beyond. We had very productive discussions yesterday with the Ministry on this very topic.
While our work plan is still in formation, I expect we will find common ground in joint efforts to deepen and enhance two-way trade, especially in key growth sectors and in key regions. My goal, as the U.S. Coordinator, is to develop a road map that is concrete, not abstract, and that will result in tangible and visible benefits resulting from enhanced bilateral cooperation and private sector engagement.
We want to help Russia—and the American companies doing business here—take maximum advantage of the benefits of WTO accession to drive greater market liberalization, enhance transparency, and improve the business climate.
Russian leaders, including your President, have articulated ambitious goals regarding increasing transparency, streamlining regulations, combating corruption, encouraging foreign investment, and investing in infrastructure. These are plans that both Russian and U.S. businesses support, and the U.S. government stands ready to assist in any way that we can.
One important aim of the enhanced working group will be to strengthen two-way foreign direct investment, which is what I’d like to turn to now.
The United States Values and Encourages Russian Foreign Direct Investment
I want to note at the outset that it is now, and always has been, the policy of the United States to welcome foreign direct investment. Since the earliest days of our own quest for independence, through the foreign capital that helped finance the railroads, shipyards, and factories of the industrial revolution, to the foreign capital that today supports significant investment in the most innovative sectors of our economy, the United States has always recognized the extraordinary benefits of FDI and has welcomed it. That policy remains as true today under the Obama Administration as it ever was, and that applies to foreign direct investment from all nations, including Russia.
I’m proud to say that the United States has worked hard to build one of the most open business climates in the world, as measured by all leading measures and indices. With a large internal market of over 310 million people and a per capita income approaching $50,000, the U.S. boasts one of the most skilled and diverse work forces on the planet. We have a world class system of higher education, which is a major driver of research and development, that has fueled unprecedented levels of innovation and productivity.
In an environment that values and protects intellectual property rights, the United States spends fully 34% of global R&D. We are a nation of laws, with a strong commitment to the rule of law, a well functioning and independent judiciary, and a transparent regulatory regime. We have developed open capital markets that finance a wide range of entrepreneurial activity, and a strong orientation toward international trade. In fact, along with our NAFTA trading partners Canada and Mexico, the United States is part of one of the most integrated and competitive economic platforms in the world—with access to another 400+ million consumers through our existing 19 free trade partners.
On top of these significant advantages, the United States has also recently discovered abundant oil and energy resources that will soon make it one of the leading net exporters of oil and gas in the world. Shale gas discovery and exploration, which, I should add, has been facilitated through the use of certain Russian technologies like those of TMK IPSCO, who you’ll hear from shortly, have dramatically lowered energy costs in America, resulting in a significant renaissance in our manufacturing base, where we’ve seen net job growth for the first time in over a decade. Foreign investors are now taking a serious look at the U.S. as both a destination for portfolio investment and as a competitive manufacturing hub well poised for global distribution.
In short, the United States is a market that is open to foreign investment, and that offers very real and significant advantages to those who accept that invitation.
And notwithstanding many unfounded misperceptions, there are actually very few restrictions on FDI in our country. And none for greenfield investments across the board.
The openness of the United States to foreign investment is ultimately reflected in the numbers themselves. The U.S. has a total stock of FDI of nearly $2.5 trillion, accounting for almost 16% of our GDP, and supporting over 5.3 million jobs and more than $410 billion in annual wages and salaries. Last year, in 2011 alone, the United States received nearly $227 billion in foreign investment—more than any other country in the world. So global investors are voting with their feet, and we welcome that investment.
So let me be absolutely clear: the United States is open for business. We welcome foreign investment, especially from Russia, and we’d like to see more of it. As leaders of the most successful companies in one of the fastest-growing economies in the world, we want you to know that we welcome your investments, your know-how, your ingenuity, and your capital.
Notwithstanding our success to date in making our country the top destination for foreign direct investment, we recognize that the changing global landscape means that we cannot take continued investment for granted. The United States must compete, as must all nations, for ongoing investment. International investors have numerous, extraordinary growth markets available to them, many offering significant rates of return year over year.
President Obama has recognized that it is in our long-term competitive interest to undertake a range of efforts to make the United States an even more attractive investment destination.
That’s why we’ve undertaken a comprehensive review of our own federal regulatory climate, working to streamline federal rule making, and in some cases, altogether eliminating antequated regulations that hurt our competitiveness. It’s why we have committed ourselves to pursuing regulatory cooperation efforts with key trading partners, to facilitate both the free flow of trade and capital in and out of the U.S. And finally, it’s why the President is actively promoting greater transparency in our own government, as well as globally, through initiatives like the Open Government Partnership.
Most importantly, the President has also launched a new initiative known as “SelectUSA.”
“SelectUSA” is an inter-agency initiative, established by Executive Order of the President and housed within the U.S. Department of Commerce. It represents the first-ever, government-wide effort to facilitate business investment as an engine for jobs growth and sustainable economic development in the United States.
SelectUSA’s primary objective is to promote the United States as a destination for foreign direct investment through a variety of approaches.
Specifically, SelectUSA can help investors by establishing a centralized point of contact—an ombudsman—in the federal government with responsibility for:
- Serving as a bridge to help foreign investors learn about and understand how best to access investment opportunities in the United States;
- Connecting invesotrs to specific opportunities in states and localities by fostering linkages to state and local economic development agencies;
- Responding to questions about the procedural process of making an investment in the United States and helping investors navigate the federal regulatory process, where it applies;
- And importantly, by providing a range of “after care” support for companies once they have made an investment into the U.S.
In short, our goal is to do all we can to facilitate the investment process from start to finish, to support investors, including Russian investors, as they look to grow their international business profile through investing in the United States.
Our Washington headquarters staff work together with our Commercial attachés in more than 70 countries around the world, including Russia, to offer SelectUSA services to companies. Here in Moscow, our Senior Commercial Officer, John McCaslin, is available to help you learn more about the program.
Russian Foreign Direct Investment into the United States
I must tell you, I am quite optimistic about what this new initiative might mean for improved Russian investment into the United States. And that’s because we are building on a solid initial foundation.
Over the years, numerous Russian companies have successfully invested in the United States, and we look forward to continuing to work with current and potential investors to identify appropriate investment opportunities. The total stock of Russian FDI in the United States now equals almost $8 billion, supporting an estimated 13,000 U.S. jobs. This is far more than existed just a decade ago, but it is a figure that has significant room for growth.
I know that Russian companies are actively investing in a broad range of industries and sectors, from leading software and IT services, to industrial goods and in the all important energy sector.
I want you to know that we view Russian FDI as a source of strength for the U.S. economy. Your investment not only creates jobs, but it enhances our global competitiveness as many Russian investors are world-class leaders in their respective sectors.
For example, Halopolymer Holdings – the world’s fourth largest producer of inorganic chemistry materials and polymers – has its U.S. headquarters (Halopolymer Trading, Inc.) in Houston and warehouses in both Houston and New York City. Recently, Halopolymer became the first Russian company to join the American Society of Plastics Industry, and the company is positioning itself to meet the growing demands of American businesses and their high level of industrial development in this field.
In the IT sector, of course, you are familiar with the success of Kapersky Lab, one of the fastest growing IT security companies in the world, and one of the top four leading vendors of endpoint security software. Kapersky has had a U.S. presence since 2005 and recently announced a strategic partnership with Facebook, aiming to enhance the security of online and offline social networking.
Lukoil’s acquisition of the U.S. retail gasoline chain Getty Petroleum Marketing for $71 million was the first purchase of a publicly traded U.S. concern by a Russian company and is building an important brand in a highly competitive sector in the United States.
And finally, as I mentioned earlier, TMK, one of the world’s leading producers of steel pipes for the oil and gas sector, has made extraordinary contributions to the shale gas industry, which is revolutionizing the energy sector in the United States. Through its North American subsidiary, TMK IPSCO, it is an important part of the U.S. energy supply chain, providing critical technology that has facilitated shale gas exploration and extraction.
These are but a few examples of how Russian companies have successfully entered the U.S. market and have made meaningful, profitable, and important contributions to our economy, and have created wealth, employment, and prosperity here in Russia as well.
I am certain there are many more, as yet untapped opportunities to pursue. And this is the unrealized potential that the SelectUSA program is seeking to exploit. This is why Russia has been designated as a priority market as we launch this exciting new initiative. And it’s what motivates our gathering today.
Let me just conclude by again affirming that the United Staets welcomes your investment, and we appreciate the promise that your interest in our country represents.
As President Obama has stated before, and I would like to reiterate now, we are “committed to ensuring that the United States continues to be the most attractive place for businesses to locate, invest, grow, and create jobs. We encourage and support business investment from sources both at home and abroad.” And that includes here in Russia.
As we work together to deepen the basis and the foundation of the U.S.-Russian bilateral relationship, I have no doubt that by expanding our economic ties through business and investment, we will strengthen and improve the arc of our strategic relationship. We will facilitate not just business, but the all-important human connections that create important bonds and build shared values that ensure long–term peace, prosperity and benefit.
These ties create and help facilitate a new paradigm in U.S.-Russian relations, and make possible a “win-win” dynamic that benefits both Russians and Americans.
We welcome your interest in investing in the United States, and we stand ready to work with you for the benefit of both of our nations.
Thank you very much for your attention and consideration.
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