Remarks of Franklin L. Lavin
Under Secretary of Commerce for International Trade
Business Opportunities in Afghanistan & Central Asia Conference
The Ronald Reagan Building
April 4, 2006
Good morning, and thank you Tom Moore for that warm introduction. It is a pleasure to be here at this conference. It's an honor to be opening this event with the distinguished ambassadors from across the region.
We are here to discuss opportunities in a region that is undergoing hopeful change and that increasingly offers real opportunities for trade and investment. Indeed, it is in the context of the six countries of "Greater Central Asia", with intra-regional trade and infrastructure development, that opportunities for significantly expanded commerce truly emerge.
This morning, I'll discuss those opportunities and our growing commercial relationship and I'll also address some of the challenges that we face for continuing progress. I'll address challenges that confront the countries of the region if they are to make themselves competitive for increased trade and investment by U.S. companies. I'll also pose some challenges to the U.S. businesses here today about how to approach opportunities in Afghanistan and Central Asia.
First, let me turn to the good news in the economic relationship. In the last decade, U.S. exports to the six countries in the region grew by 312% and are now approaching $1 billion. This is not a large figure, but it does represent a very healthy rate of growth. The United States expects trade to expand with the region as further progress is made in infrastructure, transportation access, and the business environment.
So my starting point is one of optimism. The relationship is an important one. We have a lot going for us, but we face challenges as well.
For example, there can be a communication challenge given the asymmetry in size and economy between the United States and some of the nations of the region. Although the aggregate numbers of the region are impressive, when you start breaking it down by particular country, each economy carries less weight. It is sometimes difficult for the U.S. and the region to connect, when there is such a disparity in size between the two ends of the relationship.
We deal with communications challenges daily. Language and cultural difference, time zones, and the lack of direct international flights make contact inconvenient and inefficient.
ther challenges exist and they vary by region and by country - how we deal with transparency and the rule of law in commercial disputes. How we address intellectual property rights. How we create and administer commercial standards. And how we manage customs procedures.
Transparent legal systems, government accountability, and companies that play by the rules are important for translating the opportunity of markets into benefits for the region's residents.
Let me issue a challenge to the countries in the room today. How can you make your country as attractive an economic locale as possible? How can your border crossings and customs be more efficient? How can your phone service be better and cheaper? Does your tax code impede economic growth? Can international businesses rely on the contracts they sign with your governments? Will your courts enforce judgments by international arbitration tribunals against your governments? Those are certainly major elements in a business friendly environment.
In a booming world economy, it is sometimes difficult to get U.S. companies to focus on what to them might be smaller markets. A U.S. company might be willing to struggle for several years in China to come to terms with a major project, because it views China as a strategic market. But the Central Asian states do not at present offer the same scale of market opportunity as China. If companies find impediments to doing business there, they will simply go elsewhere.
And I issue a challenge to the U.S. companies here today. I challenge you to think creatively about how to calibrate your activities in these countries proportional to return. Given the ranges in size and economic development, there is going to be a range of economic activity as well. A U.S. company cannot simply transplant its domestic operations, or its European operations, or even its Turkish operations, and make it work across Central Asia. Its activities have to be specifically tailored to the market. The product slate, financing, marketing, assembly, and logistics will all have country-specific attributes.
Some might say that these markets are too small or too distant or lack the consumer economy to merit much attention. But successful U.S. companies do not abandon markets because they are smaller or less standardized than the strategic markets. The companies adjust accordingly.
So we each have our responsibilities. The countries need to make their markets as friendly as possible, and the companies need to develop architecture and an approach that allows them to enjoy success even with small volumes and limited financial exposure.
There is no magic wand we can wave. The path to a better society is taken step by step, improving the economy, attracting investment, helping business expand, making sure that workers can receive a better education, creating a better life for all.
I saw this dynamic first hand in February when I traveled with Secretary Gutierrez to Kabul. We met with President Karzai and the U.S. and Afghan business communities. We all know how much that country has suffered in recent years, so it was encouraging to see in our discussions the plans that businesses were putting forward to help Afghanistan move ahead. Although the region has many challenges ahead, there is a commercial vitality that holds out the prospect for a better life for its people.
Allow me to close my remarks with a theme on which I opened. I began by noting that the relationship was in many respects asymmetrical. Although there may be an asymmetry of condition, that misses the point. The point is not equivalence of condition or of economic weight. The point is that countries of different sizes and levels of development can still work together in an atmosphere of respect and friendship.
We have a symmetry of values. A symmetry of purpose. A symmetry of dignity and of ultimate goals. And in that journey toward our goals of peace and prosperity, ladies and gentlemen, it is my great honor to work with you.