Matthew Hamilton U.S.

-Russia Trade is Doing Well | Affirmative

Eveready 10/21/10

U.S.-Russia Trade is Doing Well | Affirmative

Table of Contents
1. Trade is Doing Well................................................................................................................................1
1.1 The Russian Economy Holds Long-Term Opportunities for U.S. Companies...............................1
1.2 Trade Facts in 2008.........................................................................................................................1
1.3 U.S. Has Been Very Involved Trade-Wise With Russia and Eurasia..............................................2
1.4 Boost in Electronic Commerce in 2006..........................................................................................2
1.5 Trade Level Remains Low, But is Growing Fast............................................................................3
1.6 Inter-Industry Trade Made up a Large Part of Trade in 2008..........................................................3
2. Room For Improvement.........................................................................................................................4
2.1 Diversity Between Russian and US Companies is Needed.............................................................4
2.2 Quality Pharmaceuticals From the U.S. Are Lacking in Russia.....................................................5
2.3 Technical Issues, Product Testing, and Clarification Requirements Are a Barrier..........................5
3. The Beneficial Future.............................................................................................................................6
3.1 Trade Barriers Will Decrease With Russia's Accession to the WTO...............................................6
3.2 Tariffs Will Decrease With WTO Accession and PNTR Status......................................................6
4. Credentials/Info......................................................................................................................................6

1. Trade is Doing Well

1.1 The Russian Economy Holds Long-Term Opportunities for U.S. Companies
Coalition For U.S.-Russia Trade, footnote sources at end of brief,
http://www.usrussiatrade.org/facts.php?content=economic_relationship [Brackets added]

The Russian Economy Holds Long-Term Opportunities for U.S. Companies

• According to the [International Monetary Fund]IMF, Russia’s GDP stood at $1.2 trillion in
2009, making it the 12th largest economy in the world 5 - the largest economy not yet a part of
the WTO. Many U.S. companies are looking to the large Russian market for long-term
expansion opportunities.
• Russia’s recent history of impressive growth attracted U.S. companies even during the
economic crisis. Prior to the recession, Russia’s economy was booming, with GDP growing an
average of 7% annually between 1999 and 2008. 6 Measured in U.S. dollars, the Russian
economy grew nine times over that period. 7
• Although Russia’s economic growth slowed in 2009, the Russian economy is projected to grow
by at least 4% in 2010. 8

1.2 Trade Facts in 2008

Office of the United States Trade Representative[(USTR) is an agency of more than 200 committed
professionals with decades of specialized experience in trade issues and regions of the world.

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We negotiate directly with foreign governments to create trade agreements, to resolve disputes, and to
participate in global trade policy organizations. We also meet with governments, with business groups,
with legislators and with public interest groups to gather input on trade issues and to discuss the
President's trade policy positions. USTR was created in 1962 and has offices in Washington, Geneva,
and Brussels. - Take from the About us page], “Russia”, no date given, http://www.ustr.gov/countries-
regions/europe-middle-east/russia-and-eurasia/russia

Russia was the United States' 17th largest supplier of goods imports in 2008.

The five largest import categories in 2008 were: Mineral Fuel (oil) ($17.0 billion), Inorganic Chemical
($1.7 billion), Precious Stones (platinum and diamonds) ($1.6 billion), Iron and Steel ($1.6 billion),
and Fertilizers ($1.1 billion).

U.S. imports of agricultural products from Russia totaled $40 million in 2008.

1.3 U.S. Has Been Very Involved Trade-Wise With Russia and Eurasia
Office of the United States Trade Representative[(USTR) is an agency of more than 200 committed
professionals with decades of specialized experience in trade issues and regions of the world.
We negotiate directly with foreign governments to create trade agreements, to resolve disputes, and to
participate in global trade policy organizations. We also meet with governments, with business groups,
with legislators and with public interest groups to gather input on trade issues and to discuss the
President's trade policy positions. USTR was created in 1962 and has offices in Washington, Geneva,
and Brussels. - Take from the About us page], no date given, http://www.ustr.gov/countries-
regions/europe-middle-east/russia-and-eurasia

The United States has actively supported political and economic reforms and enhanced trade and
investment ties with Russia, Ukraine, Moldova, Belarus, and countries of the Caucasus region. The
U.S. Government has worked to construct a framework for trade and investment dialogues with
countries of this region, covering both bilateral and multilateral issues.
Bilaterally, the United States has negotiated trade agreements to extend Normal Trade Relations
(formerly referred to as most-favored nation" or MFN) tariff treatment to these countries, negotiated
bilateral investment treaties (BITs) to strengthen protections for U.S. investors, and worked with these
governments to enhance their protection of intellectual property rights (IPR). The United States also
extends Generalized System of Preferences (GSP) benefits to eligible developing countries in the
region

1.4 Boost in Electronic Commerce in 2006

Office of the United States Trade Representative[(USTR) is an agency of more than 200 committed
professionals with decades of specialized experience in trade issues and regions of the world.
We negotiate directly with foreign governments to create trade agreements, to resolve disputes, and to
participate in global trade policy organizations. We also meet with governments, with business groups,
with legislators and with public interest groups to gather input on trade issues and to discuss the

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President's trade policy positions. USTR was created in 1962 and has offices in Washington, Geneva,
and Brussels. - Take from the About us page], “Russia”, 2007,
http://www.ustr.gov/sites/default/files/uploads/reports/2007/NTE/asset_upload_file455_10977.pdf

Electronic commerce exceeded forecasted growth in 2006, increasing from approximately $1 billion in
2005 to over $1.2 billion in the first six months of 2006. The volume is growing at a brisk pace and is
expected to continue, though in comparison to many other countries, electronic commerce remains an
embryonic market in Russia. The number of stores on the Russian Internet is estimated at only 2,000 to
4,000, and many do not accept on-line payments, merely using their websites for cash on delivery
requests. Although Internet access in Russia is growing steadily, penetration is less than 20 percent of
them population, with over 30 percent of these users located in the Moscow and St. Petersburg regions.

1.5 Trade Level Remains Low, But is Growing Fast

By Thorsten Nestmann, Deutsche Bank, Frankfurt, Consensus Economics[Established in London in
1989, Consensus Economics prepares monthly compilations of country economic forecasts and topical
analyses covering the G-7 industrialised nations, Asia Pacific,Eastern Europe, Latin America, as well
as specialised publications on Foreign Exchange Forecastsand Energy and Metal price forecasts. Over
the past two decades Consensus Economics has cultivated a growing network of economists, drawing
upon the expertise of well-established local consultancies and large teams of professionals in the banks
who are dedicated to particular countries and regions.
Consensus Economics is often seen as the macroeconomic forecast benchmark by investment and
planning managers, as well as government and public sector institutions, who find our data effective,
timely and accurate. Each publication produced by Consensus Economics shows consensus forecasts,
as well as individual forecaster predictions, and is distributed in hard-copy format and via email
as PDF files and Excel spreadsheets. - Taken from the “About Consensus Economics” page], “US-
Russia Economic Relations”, July 7, 2009,
http://www.consensuseconomics.com/News_and_Articles/US_Russia_Economic_Relations411.htm

In recent years, trade between Russia and the US has grown fast but it is still at a low level. Since 2000,
US exports to Russia have increased 22% per year on average while US imports from Russia have risen
19% annually. Still, Russia accounted for only 0.7% of US exports and 1.3% of US imports in 2008.
Vice versa, the shares are slightly higher with the US accounting for 3.3% of Russia's exports and 4.4%
of Russia's imports.

1.6 Inter-Industry Trade Made up a Large Part of Trade in 2008

By Thorsten Nestmann, Deutsche Bank, Frankfurt, Consensus Economics[Established in London in
1989, Consensus Economics prepares monthly compilations of country economic forecasts and topical
analyses covering the G-7 industrialised nations, Asia Pacific,Eastern Europe, Latin America, as well
as specialised publications on Foreign Exchange Forecastsand Energy and Metal price forecasts. Over
the past two decades Consensus Economics has cultivated a growing network of economists, drawing
upon the expertise of well-established local consultancies and large teams of professionals in the banks
who are dedicated to particular countries and regions.

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Consensus Economics is often seen as the macroeconomic forecast benchmark by investment and
planning managers, as well as government and public sector institutions, who find our data effective,
timely and accurate. Each publication produced by Consensus Economics shows consensus forecasts,
as well as individual forecaster predictions, and is distributed in hard-copy format and via email
as PDF files and Excel spreadsheets. - Taken from the “About Consensus Economics” page], “US-
Russia Economic Relations”, July 7, 2009,
http://www.consensuseconomics.com/News_and_Articles/US_Russia_Economic_Relations411.htm

To analyse trade in more detail, we broadly distinguish between inter-industry trade, where exported
and imported goods differ, and intra-industry trade, where exported and imported goods are of the same
kind. Given the largely differing industrial structure and resource endowments of Russia and the US, it
is not surprising that US-Russia trade is dominated by inter-industry trade. In fact, the 15 largest trade
items, which accounted for 90% of total US-Russia trade in 2008, can all be considered as inter-
industry trade. Taking an even closer look with regard to the dominant export and import items from a
US perspective, the data reveal that the top three exports from the US to Russia were nuclear
equipment, meat products and vehicles, while the three largest imports to the US from Russia were
mineral fuels, aluminium, and inorganic chemicals and radioactive components (see charts, below).

2. Room For Improvement

2.1 Diversity Between Russian and US Companies is Needed

Svetlana Minjack[Director of Communications and External Affairs], The U.S.-Russia Business
Council (USRBC)[represents the interests of its U.S. and Russian member companies, providing
business development and government relations support in both Moscow and Washington. The USRBC
contributes to the stability and development of a free market in Russia and supports Russia’s
integration into the global economy. It also serves as the Secretariat for the Coalition for U.S.-Russia
Trade (www.usrussiatrade.org). For more information, visit the USRBC online at: www.usrbc.org.],
February 10, 2009, http://www.usrussiatrade.org/documents/USRBC%20Press%20Release_Alaska_2-
10-09.pdf [Brackets added]

[U.S.-Russia Business Council President]Mr. Verona[to a gathering of the Anchorage World

Affairs Council] also shared an update on commercial developments with Russia. Despite present
weaknesses in the global economy - including in Russia - and the challenges of doing business in
Russia, he stressed the importance for U.S. companies to focus on the long term in the Russian
market. Many U.S. companies consider Russia a key growth market, he said, and the market's
demographics and need to diversify from a resource-based economy presents opportunities for
U.S. Firms.

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2.2 Quality Pharmaceuticals From the U.S. Are Lacking in Russia

Office of the United States Trade Representative[(USTR) is an agency of more than 200 committed
professionals with decades of specialized experience in trade issues and regions of the world.
We negotiate directly with foreign governments to create trade agreements, to resolve disputes, and to
participate in global trade policy organizations. We also meet with governments, with business groups,
with legislators and with public interest groups to gather input on trade issues and to discuss the
President's trade policy positions. USTR was created in 1962 and has offices in Washington, Geneva,
and Brussels. - Take from the About us page], “Russia”, 2007,
http://www.ustr.gov/sites/default/files/uploads/reports/2007/NTE/asset_upload_file455_10977.pdf

Decisions by the Russian government regarding which pharmaceutical products to place on

reimbursement lists for state-provided healthcare are having an adverse impact on U.S. exports to
Russia. U.S. industry reports that higher-priced imports, which are often safer and of a higher quality
than locally produced pharmaceuticals, are often absent from reimbursement lists and state purchases
because the government focuses more on price concerns than on the quality and safety of the products.

2.3 Technical Issues, Product Testing, and Clarification Requirements Are a Barrier
Office of the United States Trade Representative[(USTR) is an agency of more than 200 committed
professionals with decades of specialized experience in trade issues and regions of the world.
We negotiate directly with foreign governments to create trade agreements, to resolve disputes, and to
participate in global trade policy organizations. We also meet with governments, with business groups,
with legislators and with public interest groups to gather input on trade issues and to discuss the
President's trade policy positions. USTR was created in 1962 and has offices in Washington, Geneva,
and Brussels. - Take from the About us page], “Russia”, 2007,
http://www.ustr.gov/sites/default/files/uploads/reports/2007/NTE/asset_upload_file455_10977.pdf

U.S. companies cite technical regulations and related product testing and certification requirements as
major obstacles to U.S. exports of industrial goods to Russia. Russian authorities require product
testing and certification as a key element of the product approval process. Opportunities for testing and
certification performed by competent bodies outside Russia to be recognized by Russian authorities for
purposes of demonstrating compliance to their regulations are limited, and some view procedures
associated with Russia’s approach to “supplier’s declaration of conformity” as unnecessarily
burdensome. Manufacturers of telecommunications equipment, oil and gas equipment, and construction
materials and equipment, in particular, have reported serious difficulties in obtaining product approvals
within Russia. The current classification and approval system for food supplement and dietetic products
is costly and lengthy. Food and dietetic products that are legally sold in the United States and the
European Union are subject to an expensive and lengthy certification process in Russia that takes
between three and five months. Products are also subject to redundant technical reviews conducted by
both the Nutrition Institute and Ministry of Health, which take between six and twelve months.

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3. The Beneficial Future

3.1 Trade Barriers Will Decrease With Russia's Accession to the WTO
Office of the United States Trade Representative[(USTR) is an agency of more than 200 committed
professionals with decades of specialized experience in trade issues and regions of the world.
We negotiate directly with foreign governments to create trade agreements, to resolve disputes, and to
participate in global trade policy organizations. We also meet with governments, with business groups,
with legislators and with public interest groups to gather input on trade issues and to discuss the
President's trade policy positions. USTR was created in 1962 and has offices in Washington, Geneva,
and Brussels. - Take from the About us page], “Russia”, 2007,
http://www.ustr.gov/sites/default/files/uploads/reports/2007/NTE/asset_upload_file455_10977.pdf

Russia continues to maintain a number of barriers with respect to imports, including tariffs and tariff-
rate quotas, charges and fees, and licensing, registration and certification regimes. Discussions continue
within the context of Russia’s WTO accession to eliminate these measures or modify them so that they
are consistent with internationally accepted practices.

3.2 Tariffs Will Decrease With WTO Accession and PNTR Status
Office of the United States Trade Representative[(USTR) is an agency of more than 200 committed
professionals with decades of specialized experience in trade issues and regions of the world.
We negotiate directly with foreign governments to create trade agreements, to resolve disputes, and to
participate in global trade policy organizations. We also meet with governments, with business groups,
with legislators and with public interest groups to gather input on trade issues and to discuss the
President's trade policy positions. USTR was created in 1962 and has offices in Washington, Geneva,
and Brussels. - Take from the About us page], “Russia”, 2007,
http://www.ustr.gov/sites/default/files/uploads/reports/2007/NTE/asset_upload_file455_10977.pdf

As part of the bilateral market access agreement, tariffs on other key U.S. industrial exports will be cut
substantially as well. Once Russia joins the WTO and the U.S. Congress grants Permanent Normal
Trade Relations (PNTR) status to Russia, Russian tariffs on industrial products will be bound at an
average of 8 percent, a reduction of approximately 36 percent from the rates applied in 2000.

4. Credentials/Info

-Coalition For U.S.-Russia Trade

Who We Are
The Coalition for U.S.-Russia Trade is a diverse group of U.S. companies and trade associations
committed to strengthening U.S.-Russian commercial ties and preserving the competitiveness of U.S.

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firms, farmers and workers in the Russian market. Its members span the varied sectors of U.S.
industries engaged in trade with Russia. The Coalition’s Secretariat, which is housed at the U.S.-Russia
Business Council in Washington, DC, is led by veterans of trade policy campaigns. For a full list of
Coalition Members, please click here.
What We Are Doing
The Coalition regularly meets with Executive Branch officials to review Russia’s accession to the WTO
– the chief international body regulating trade. The Coalition initially worked with U.S. trade
negotiators to ensure that the concerns of U.S. companies were addressed in bilateral negotiations that
resulted in a commercially meaningful U.S.-Russia WTO accession agreement in November 2006.
The Coalition has continued to engage the U.S. and Russian governments on the implementation of
outstanding commercial measures outlined in bilateral agreements and on matters that need to be
addressed in ongoing multilateral discussions in Geneva. Additionally, in a number of areas Russia
must pass legislation to make its regulatory framework WTO-compliant.
We also continue to be engaged in educating Members of Congress and their staffs regarding the
significance of the U.S.-Russia economic relationship. In an effort to move Congress up the learning
curve on U.S.-Russia commercial relations, we seek to highlight the economic opportunities and
market potential that have positioned Russia in the long-term global competitiveness strategies of U.S.
manufacturing, services and farm interests. As part of this education campaign, the Coalition maintains
this website as a resource for policymakers and members of the public.
At the appropriate time, we will work to ensure that Congress moves swiftly to graduate Russia from
the Cold War-era restrictions of the Jackson-Vanik amendment and extend Permanent Normal Trade
Relations (PNTR) to Russia. This will permit U.S. companies to take advantage of the tremendous
benefits that will come as a result of Russia’s WTO membership.
[Taken from the About Coalition page: http://www.usrussiatrade.org/about.php]

-Footnotes For: The Russian Economy Holds Long-Term Opportunities for U.S. Companies

5. World Economic Outlook Database, International Monetary Fund, April 2010,

http://www.imf.org/external/pubs/ft/weo/2010/01/weodata/weoselgr.aspx, (accessed April 22, 2010).
6. Keith Bush, “Russian Economic Survey, April 2009,” U.S.-Russia Business Council,
https://www.usrbc.org/pics/File/EconSurvey/2009/SurveyApril2009.pdf (accessed July 8, 2009).
7. Anders Aslund and Andrew Kuchins, The Russia Balance Sheet, (Washington, DC: Peter G. Peterson
Institute for International Economics and Center for Strategic and International Studies, 2009).
8. “PM: Russia’s Grow Domestic Product to Grow 4%-4.4% in 2010,” Prime-Tass, September 17,
2010.

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