Speech by Minister of Economic Development of the Russian Federation Elvira Nabiullina at the round table "Russia-USA Business Dialogue”, St. Petersburg, June 17, 2010
17.06.10We commend the United States of America as a special partner in the sphere of foreign economic relations. This has been determined both by the role this country plays in the global economy and its scientific, technological and investment potentiality. Certainly, our companies are both interested in the U.S. market and joint investment projects. However at present the trade and economic relations do not entirely match the scale of two economies. U.S. ranks only eighth in the ranking of the largest trading partners of the Russian Federation. Our trade turnover last year was, according to Russian estimates, only USD 18.4 billion. It declined due to the impact of the crisis and in 2009 it reduced by a third.
These figures are definitely less than they should be in order to reflect the scale of our economy. At present there is some revival of trade, and during the first four months, we see positive trends, the increase in Russian exports is by 17% and also imports are being resumed - the growth is of about 3%. And definitely not all of the opportunities for investment cooperation have been used. Total volume of accumulated U.S. investment in Russia amounted in 2009 to USD 7 billion and what is interesting that before the crisis began, it had been around 9.4 billion. Russian investments in the U.S. actually increased and are 6.5 billion U.S. dollars for 2009 which means that we enjoy practically investment parity now. We are interested in building up investment cooperation and in attracting direct U.S. investments for modernization and diversification of our economy.
To this end, the Government conducts systematic work to improve the investment climate and we selected several key areas in order to obtain that goal. These areas relate primarily to the improvement of the migration regime. We have concrete plans for 2010 in order to achieve significant results in the coming months. As you know, the law, which simplifies the migration procedures for attracting highly qualified professionals has already been adopted and signed by the President. It will be put into operation on July 1, and we expect that for many companies that attract foreign experts it will make easier to work with.
The second direction is reducing the time of approvals and permits at the beginning of investment projects. This concerns the allocation of land and connections to different services like energy, transportation, utilities, which means that altogether this concerns obtaining all permits and approvals. And in this area we will accept a set of measures to reduce such procedures. In addition, much attention is given to simplifying the tax and customs administration. In this area we work jointly with businesses, including the Russian Union of Industrialists and Entrepreneurs.
Our legislative initiatives are prepared with the participation of not only Russian business, but also with the advisory council for foreign investments and the American Russian Chamber of Commerce in order to reflect the actual needs of investors. Advisory Council on Foreign Investments has been working already for 15 years, and our American colleagues and partners are widely represented in it. We reoriented the work of the Council in 2009 in two directions. First is on taking prompt solutions to specific problems of specific companies. We solve them together, with the help of involving all departments of the Government. And to the second area belong those priorities that we would like to have in order to create the investment environment and attract foreign investment in Russia. We are talking about energy efficiency and administrative barriers, tax and customs legislation.
Of course, it is necessary to identify the projects of mutual interest in our US-Russian relations, and those about which we could say that they really contribute to innovation and modernization. There is a special commission working on it, the work on specific projects goes on and we suggest this mechanism having implemented to the full. We have fairly close contacts at the intergovernmental level and a working group to develop business ties and trade and economic relations within the Russian-American presidential commission was formed. We want this working group to become a generator of new ideas and approaches, and to fully reflect the interests of business. We have established good contact with Gary Locke, the U.S. Commerce Secretary and with his colleagues. In the year that passed after the last forum, in my opinion, we succeeded in the dialogue improvement. During the last forum the idea that the intensity of a formal dialogue on trade and economic issues legs far behind the business dialogue sounded as a main motto of the forum at the roundtable. Today, I think we have largely overcome this lagging behind. We have a work plan of the group, which includes almost all the recommendations of the two countries' business, and recommendations on priority areas and projects. The main thing now is to translate it into practical job and to promote these projects.
I would also like to note that contacts and channels of communication in small and medium-sized businesses is the direction of great potential for development, for antitrust cooperation and investment promotion. By the way, an agreement has been achieved that the Economic Development of Russia and the U.S. Department of Commerce will act in the same way as regular contact people and they will be replaced on a changeable basis for existing and potential investors from both countries. Therefore, in case U.S. companies-investors are having problems they will be able to contact the Ministry of Economic Development and respectively, if Russian investors are having trouble entering the U.S. markets it will be possible to addrress the U.S. Commerce Department. Such a mechanism, we believe, will be useful for potential investors. Of course, urgent issues of market access and issues of restrictive and discriminatory measures might be discussed in the framework of the working group. These are the regular issues that we face. From our side, we hope that such restrictions will be removed for Russian companies. Of course, we take into consideration the concerns of American companies such as the level of tariffs among them.
One of the areas of our activities is to create a legal framework for our cooperation. We hear from representatives of the business that there is a need to improve such a framework, because in many respects our contractual relationship was formed several years ago, and even a decade ago. I would like here to focus on the interests of business and it could be on ensuring basic standards of protection of capital investments and taking additional measures for the company’s stay in the country and free exercise of professional activities and law enforcement practices. Of course, it is not quite correct that there is not enough legal framework for regulation of investment protection that are common for both countries. We do not enjoy the same standard models of investment agreements, but in our view, this should not become an excuse to the fact that this issue is not solved in a pragmatic manner. For our part we are ready to create a database to a mechanism for mutual protection of investments. Of course, we are cooperating in multilateral economic format, within the Group of Eight, in the framework of the "group of twenty". We will work with the United States with the view to ensure the continuity of the agenda in APEC. Business involvement would also be desirable in this area.
I can not leave out the topic about the WTO - it is our traditional theme. Once again I am ready to repeat that entry into the WTO is the priority of our foreign policy. For some time we have had delays in the negotiation process due to inability to find a new negotiating format because of the establishment of the Customs Union. As a result of the work done by all of the parties we have found such a format, and talks resumed in the full mode. At the same time I would like to acknowledge and ensure you that the establishment of the Customs Union should not be considered either as an obstacle, or as an alternative to Russia's integration into the global trading system. In our opinion, the Customs Union creates additional advantages for foreign participants and U.S. companies and it means the availability of access to more receptive markets in a more liberal environment. There should be no fear, and we should use the advantages given by the expansion of this market.