Helping U.S. businesses by
Browse by organization

Remarks by Franklin L. Lavin

Under Secretary of Commerce for International Trade

American Kuwaiti Alliance
Kuwait City, Kuwait
March 14, 2007
As Prepared


Thank you Mr. Al-Ghanim (Chairman of Kuwait Chamber of Commerce) for that kind introduction. I am grateful for your leadership of the Kuwait Chamber of Commerce and Industry, and I appreciate the American-Kuwaiti Alliance’s sponsorship today.

We have a very simple mission at the U.S. Department of Commerce: to help American businesses become successful. In that spirit, I always look forward to discussions with the business community that can advance that mission. In my view, when we help businesses grow we are helping our country grow. And when we help cross border business activity, we are building both businesses and better relations, and that helps everyone.

I am spending a few days here in the gulf region, where I will be taking part in government meetings and holding discussions with local business leaders. I am listening to them and sharing my thoughts. So I’m delighted to be here today to be able to speak to you, to discuss our bilateral relationship, both political and economic. I’ll also mention some of the challenges we face, and let you know about a specific initiative we have launched.

The U.S.- Kuwait Relationship - Political

On the political side, there’s a lot of good news in our relationship. We have strong and growing ties with Kuwait, I want to thank you for your continued, stalwart support of that friendship. We are all better off because of the broad political and security connection between our two countries.

We are both working hard to bring stability to Iraq. Kuwait is playing a leadership role in that effort, and we remain committed to helping Kuwait remain free and secure. Kuwait has historically had strong commercial ties to Iraq, and as those ties are re-established. In doing so you are supporting not only a more stable Iraq, but a more secure Kuwait as well.

The U.S. – Kuwait Relationship – Economic

Our economic relationship is another dimension of our friendship, and there is much good news to discuss. The United States is one of Kuwait's largest bilateral trading partners, with trade totaling over $6.1 billion in 2006, with export growth of more than 8 percent last year.

Our two nations have recently established an Open Skies Agreement that allows direct flights from the U.S., and this should result in an increase in flights and passengers. This is a good step that will help Kuwait realize its current goal to more than double passenger capacity at Kuwait International Airport by 2011.

One often-overlooked economic tie between the U.S. and Kuwait is the investment our two countries have with one another. A great example of this cooperation is Dow Chemical’s investment in the Equate joint venture with the government-owned Petrochemical Industries Company (PIC). This is a very successful example of mutually beneficial cooperation.

We would like to encourage more of these kinds of investments and I’ll come back to that in a moment.


Of course, with all of this good news, there are still some challenges in front of us and we need to be working together to resolve them.

One challenge we are concerned about is our ongoing issue over the taxation of U.S. companies operating in Kuwait, including the 55 percent retroactive tax rate applied to foreign companies. It does not appear to be in Kuwait’s best interest to have a tax code that might serve as a business disincentive. Passing legislation that lowers these tax rates and is OECD compliant will send the right signal to foreign companies and investors who want to do business here.  

Protecting the intellectual property of our businesses is another vitally important issue. It is a positive development that Kuwait has made significant efforts to enforce its intellectual property rules, but more can be done. By passing legislation that strengthens enforcement and penalties for IPR violators Kuwait will strengthen our relationship and encourages foreign participation in your economy.  

Inward Investment – Invest in America Initiative

On the U.S. side we have some challenges as well. One area is in regard to inward investment. Perhaps alone among the major economies, the United States has not had a federal government program to attract or retain inward foreign investment. All other major world economies have mechanisms such as investment boards and investment promotion activities to encourage FDI.

To remedy this problem, I am pleased to inform you that the U.S. Government last week launched the Invest in America initiative to facilitate foreign direct investment into the United States.

There are several reasons why such an initiative is warranted: the increased flow of global investment activity, greater competition from new markets, and perhaps most importantly, the desire to avoid politicization of the investment process. Given the sizeable nature of FDI in the United States, there will occasionally be a controversial case that finds its way into the media, so we need to show our investment partners that the U.S. is open for investment, and we need to educate Americans as to the important role inward investment plays in our economy.

We were reminded of the need for this kind of outreach last year during the controversy over Dubai Ports World. We don’t want investment decisions decided on politics, but rather on a straightforward commercial basis. This means the U.S. Federal Government has to play a role in this process.

The U.S. has many attractive aspects for investment:

•Open, secure markets - Easy to buy and sell assets and acquire inputs;

  • Size and strength of the economy – Entrepreneurship is rewarded;
  • Low taxes that encourage innovation and investment;
  • Flexible and productive workforce;
  • Open society- Easy to attract and retain top talent irrespective of background;
  • High degree of transparency;
  • Effective legal system from setting up a business to intellectual property protection; and
  • Outstanding infrastructure and communications, both physical and economic.

All of this really doesn’t matter, however if we aren’t perceived as welcoming investors to our country.

The Invest in America Initiative was launched with this thought in mind. It will be led by the U.S. Department of Commerce and engage in three primary activities:

1) Reaching out to the international investment community. We will make use of our commercial attaches around the world to engage potential investors directly.

2) Serving as ombudsman in Washington for the international investment community. We will work across the Federal Government to cut through red tape and address impediments to investment;

3) Supporting state and local governments engaged in foreign investment promotion. We will make sure the inquiries and leads we develop overseas get transmitted to the state capitols and city halls for follow up.

The United States is open for business. We know you have choices as to where to invest, and with FDI those decisions are often strategic and long term. The United States has proven to be an outstanding, low risk environment for international investors. Kuwaiti and U.S. investors have benefited from this cooperative environment. We want to do more to make America attractive, and we acknowledge our appreciation for your trust, which has helped build our relationship.


Through good times and bad the United States and Kuwait have built a relationship that has benefited both our countries. This FDI initiative is one more important way by which we can strengthen our ties. FDI is a sign of strength, a strength that leaves both the investor and those invested in better off. The more we can do to encourage those who want to participate in building our bilateral relationship through trade and investment the better off both our countries and our citizens will be.

It was just a few weeks ago that Kuwait celebrated both its National Day and its Liberation Day. Those two holidays stand as a vivid reminder for all Americans of the importance of the relationship. We are proud to be your friends and we are proud to stand by you.

Thank you.