Under Secretary of Commerce For International Trade Francisco SÁnchez
"Meeting the Promise of Permanent Normal Trade Relations with Russia"
U.S. Chamber of Commerce
Thursday, September 6, 2012
As prepared for delivery.
Thank you, Richard, for that generous introduction.
I also want to thank the U.S. Chamber of Commerce and the Coalition for U.S.-Russia Trade for inviting me to participate.
It’s an honor to follow Deputy Secretary Burns, who has demonstrated wise and steady leadership on these important issues.
And I appreciate this opportunity to share some additional thoughts and perspectives with all of you.
As Under Secretary for International Trade, I have the privilege of working every day helping U.S. businesses compete and succeed in the global marketplace.
In my view this work is more important than ever before.
In our increasingly connected world it is imperative that U.S. businesses are able to reach the 95 percent of global consumers who live outside our borders.
And as our nation continues to emerge out of the Great Recession, American businesses and workers deserve every opportunity to sell their innovative products, services, and ideas.
And again, many of these opportunities are overseas.
That's why we've got to support:
- American businesses in exporting;
- more of their products and services;
- which creates and supports more jobs for the American people;
- and strengthens our economy and position in the world.
August 22nd should have been an important milestone towards these goals.
Russia's accession to the World Trade Organization was an achievement 18 years in the making.
It was an effort that required American leadership, and historically drew support from both Democratic and Republican presidents – and both sides of the aisle in Congress.
That's because if Russia must play by the same international trade rules as the U.S. and our major trading partners, American companies stand to benefit with unprecedented access to:
- the world's 7th largest economy;
- with a current growth rate of 3 to 4 percent a year;
- with 140 million consumers;
- a booming middle-class;
- with considerable spending power, and a higher per-capita income than China or Brazil.
American businesses would also benefit from the increasingly transparent, open and stable business environment that Russia's accession to the WTO creates.
So August 22nd should have gone down as a day that ushered in new opportunities for U.S. businesses and a new chapter in formation of a U.S.-Russia economic partnership.
That didn't happen.
That's because, as the Deputy Secretary highlighted, the application of the Jackson-Vanik Amendment to Russia stands in the way.
As you know, it was originally created in 1974 to place economic pressure on the Soviet Union, in an effort to stop unjust emigration policies.
By the time the Soviet Union was dismantled in 1991, Russia began to allow free emigration.
Nevertheless, the Jackson-Vanik Amendment has remained applicable to Russia.
As a result, since 1994, the President has had to certify each year that Russia complies with the amendment.
In the meantime, the U.S. and Russia have steadily expanded channels of trade.
Just last year, U.S. exports to Russia rose nearly 40 percent - more than twice as fast as our overall exports growth.
Now that Russia has joined the WTO, we should be in the best position since the end of the Cold War to prosper from trade with this growing market.
But we're not because – as you are all aware – as a WTO member – we can't place special conditions on Russia as a fellow member and still trade under all the WTO’s favorable rules.
With the Jackson-Vanik Amendment still applicable to Russia, we cannot establish PNTR and the WTO cannot work for U.S. companies.
So Jackson-Vanik’s application to Russia must go.
It must go for the sake of American goods and services exports and the jobs those exports support.
It must go for the sake of American businesses.
And it must go to ensure we keep our competitive-edge in the global marketplace.
If it doesn't, we risk falling behind other countries in the Russian market and this application of a law created in the seventies to be an agent of change abroad would end up being an obstacle to opportunity, today.
So the stakes are high.
And they are as clear as can be.
Some have argued that the economic impact of Russia being in the WTO is small - that only 1 percent of U.S. exports go to Russia - so this historic achievement doesn't matter.
To those, I say:
Tell that to the rancher in Montana, the manufacturer in California, the aerospace firm in Colorado, or the services provider in Texas or Massachusetts.
Tell them it doesn't matter. I know they think it matters.
I know they think that new opportunities to sell their products are:
- good for their businesses;
- good for workers;
- and good for their communities.
In fact, I recently met with leaders from the aerospace industry in Colorado and Arizona.
This industry exports hundreds of millions of dollars in aircraft and parts to Russia each year.
But if Jackson-Vanik isn’t terminated, these businesses will be forced to compete at a distinct disadvantage to other foreign companies in Russia.
This is a no-brainer. The global economy moves quickly. And we can't afford to leave any opportunities on the table.
The potential of trade with Russia on the basis of PNTR is great, impacting a wide-range of sectors and companies.
General Electric is the largest foreign industrial company operating in Russia - work that's supporting more than 3,000 jobs.
With PNTR the company says their sales in Russia could triple by 2020.
Caterpillar tells me it has exported $2 billion in products to Russia over the last five years and that PNTR provides an opportunity for even more growth.
This means more workers from California, to Indiana, to North Carolina will be building more products here at home to sell overseas.
On the other hand, the company says that continued delay could negatively impact hiring decisions in U.S. factories, where they employ roughly 55,000 workers.
In another case representatives of John Deere have said that - and I quote - "PNTR with Russia is a benefit to the United States rather than an accommodation to Russia" and that without PNTR, the company would be at "a competitive disadvantage relative to foreign competitors … negatively impacting their U.S. operation because the products they sell in Russia are closely connected to jobs in their facilities in the American Midwest."
I could list many more examples from manufacturers to service providers, not to mention our agriculture exporters.
In fact, I'm sure many of you here have your own stories.
That's why businesses must tell their stories to the public, sending a loud and clear message: ending Jackson-Vanik’s application to Russia is a jobs issue – plain and simple.
The Obama Administration has recognized the benefits out there for U.S. companies, and this is why the president himself was out in front in calling – over seven months ago, in his State of the Union address – for Congress to authorize the President to establish PNTR to Russia in 2012.
Leaders in Congress who have paid the most attention to the issue have recognized what’s at stake, which is why as Ambassador Burns noted strong, bipartisan support for PNTR bills exists in each house of Congress.
PNTR with Russia can’t be a partisan issue, because the interest at stake is not a partisan interest.
It’s a pocketbook interest, and it’s a national interest in defending America’s economic standing in the world economy.
I've visited Russia twice in the past three months.
I've seen with my own eyes the incredible interest and enthusiasm among its businesses to expand our cooperation.
They are eager to learn from U.S. companies that operate according to global best practices of business.
They are ready to increase engagement.
Businesses here are ready to do the same.
Some have argued that keeping Jackson-Vanik in place for Russia is about holding on to our leverage with Russia.
The opposite is true. When American businesses are being held back – that's not leverage.
When good American jobs are being threatened – that's not leverage.
When economic growth is being stifled – that's not leverage.
That's why I stand with you today.
Together we can bring this debate back to where it should be – about creating and protecting American jobs.
Together we can put the focus back to where it should be – not on the past, but on the future.
In this next chapter, the U.S. and Russia could strengthen our economic partnership.
In this next chapter, there will be new bridges that link our world-class products with their consumers and our cutting-edge industries with their great resources.
And in this next chapter – through this partnership – we will create a stronger and healthier American economy.
This chapter can only be written if Permanent Normal Trade Relations are established with Russia.
I know you will help author this chapter.
You are leaders in America's business community. Tell your stories. Make your voices heard, and our entire nation will benefit.
Once again, my thanks to the U.S. Chamber of Commerce and the Coalition for U.S.-Russia Trade for organizing this important event.
I'd be happy to answer any questions you may have.
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