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Business

Not A Miracle Cure
Russia's entry into the World Trade Organization was signed in the middle of November, 2006. William J. Burns, U.S. Ambassador to Russia, gave a speech in Moscow, on November 28, 2006, to the American Chamber of Commerce, titled WTO and U.S.-Russian Relations. Below, we print extracts of the speech, which looks at the impact of this historic agreement.

the focus of my remarks today will be on the bilateral agreement on Russia's entry into the World Trade Organization that we signed a week ago. That agreement is the single biggest achievement in economic relations between our two countries in over a decade which is about how long it took to negotiate. While not a miracle cure for either of us, it is deeply in the interest of both our countries.

I hardly need to tell any of you that the last few years have been a period of considerable frustration and disappointment about our relationship in both Moscow and Washington. For Americans, there is concern about overcentralization of power in Russia, and how that power is used in dealing with some of its neighbors. For Russians, there is a growing conviction that Americans really don't understand how difficult the last fifteen years have been for Russia; that Americans are too quick to criticize and lecture; and that Americans like to say that they welcome Russia's reemergence as a Great Power, but don't really mean it.

There is a growing risk, it seems to me, that in our current fashion of mutual dissatisfaction we may lose sight of what we have to gain by working together. That risk is not likely to recede in the next couple years. This is a moment for both of us to take a step back, and take a careful and honest look at what's at stake.

In two meetings over the past two weeks, our two Presidents have demonstrated a clear appreciation of this fact. It was no accident that President Bush chose to stop in Moscow en route to Southeast Asia; there are lots of more natural places to refuel on the way from Washington to Singapore. Both President Bush and President Putin made clear in their recent meetings that the United States and Russia matter to one another, and that a healthy relationship between us matters to the rest of the world.

As all of you know better than I do, our bilateral WTO agreement comes at a moment of remarkable vitality in the Russian economy, and in American business growth in Russia. Fueled by soaring energy prices, but also benefiting from budget discipline that Americans can only envy these days, economic growth in Russia has averaged nearly 7% over the last seven years. Foreign direct investment has tripled in the last three years. And Russia has dramatically transformed itself from debtor nation to creditor. With one of the fastest growing retail markets in the world, the Russian economy will reach the $1 trillion mark this year, and some think it could hit $2 trillion as early as 2010.

Unlike the Soviet Union, Russia is connected to the world in powerful ways today. Young Russians wake up every day with choices their parents could only dream of. Russia is among the top ten countries in the world today in total number of internet users, ahead of India and Brazil. It is in the top five in number of books published every year. Mobile phone ownership has gone from 3 million in 2000 to 80 million today, and laptop sales have gone from 40,000 six years ago to over 600,000 today.

While the gap between rich and poor is still much too big, the number of people beneath the poverty line in Russia has been cut in half since the end of the 1990s. Most boats are rising economically across Russia, and a middle class of Russian consumers is beginning to emerge, perhaps as much as a quarter of the population. It's not yet the tax-paying, politically-engaged, self-aware middle class that has developed over time in other countries. But it's the beginning of the core constituency for modern economic and political institutions, a growing group of people with clear economic interests and a real stake in how decisions are made, how their money is used, and how rule of law can protect their equities and those of their children.

Meanwhile, American business is expanding rapidly across Russia, helping to create jobs and opportunities for both our countries. American investment in Russia rose by nearly 50% last year, much of it outside Moscow. In my own frequent travels around Russia, I've seen first hand the success of Alcoa in Samara; of International Paper in Svetegorsk; of Coca Cola in its expanded plant in Krasnoyarsk; and of General Motors as it builds a new plant in St. Petersburg. Proctor and Gamble already employs more than 20,000 Russians, and its Russian business is now four-fifths the size of its China operations. Much more is possible in the years ahead.

WTO membership will provide a strong impulse toward diversification of the Russian economy beyond oil and gas. Russian consumers will see a broader range of goods at cheaper prices in stores and groceries. Russian food processors will have better access to import ingredients due to lower tariffs and fewer import restrictions. WTO membership will also allow Russian agricultural producers to better defend and promote their export interests.

Our bilateral agreement struck a mutually- beneficial compromise on financial services. On protection of intellectual property rights, as Microsoft Chairman Bill Gates said in Moscow earlier this month, Russia's sustained anti-piracy efforts will open up new opportunities for both of us. Fighting piracy is not a favor to the U.S. or the WTO or anyone else. It is deeply in the self-interest of Russia, its reemerging music and film industries, and its own technology sector.

The relationship between the United States and Russia will mark its 200th anniversary next year. I am certain that Russia and America are going to need each other and matter to each other for many decades to come.

The complete speech is available at: http://moscow.usembassy.gov







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