6 Jun 2012

U.S. Under Secretary of Commerce for International Trade Francisco Sanchez: Trajectory of U.S.-Russian commercial relations is in right direction

U.S. Under Secretary of Commerce for International Trade Francisco Sanchez has given an interview to Interfax during his visit Moscow in which he speaks about U.S.-Russian commercial relations, the repealing of the Jackson-Vanik amendment, as well as the protection of intellectual property rights in Russia.

Q.: Mr. Sanchez, my first question is what is the goal of your visit to Moscow?

A.: I have two primary goals. The first is I‘m leading a delegation of American companies that are focused on energy efficiency. With Russia having an increasing strong interest in improving energy-efficiency as evidenced by laws that have been passed recently, by government programs to support energy-efficiency, we believe there is a great opportunity to match American know-how, American technology with Russia‘s long-term goals to improve its energy-efficiency. So, I have 12 U.S. companies with me. They are currently, as you and I speak, those companies are meeting with Russian businesses, and those Russian businesses include customers, potential representatives, potential agents. So, that‘s my first responsibility as the head of that delegation.
My second is to strengthen commercial relationship between our two countries. And this is an ongoing effort. Earlier this year my college, the deputy under secretary for international trade, led a trade mission in the auto sector, the later this month my boss, the secretary of commerce, will participate in the Intentional Economic Forum in St. Petersburg. And all of theses visits, as well as the trade missions that we have done this year and will do, underscore the importance of building this relationship.

Q.: When the Jackson-Vanik amendment will be repealed? If this does not happen before the full accession of Russia to the WTO, its rules will not be applied in Russian-U.S. relations. Who will loose from this, the Americans or Russians?

A.: I have long given up trying to predict when Congress will act on anything. But I will say this that the Obama administration, as well as the American business community, has been working very hard to communicate the importance of repealing Jackson-Vanik and making sure that American businesses have the opportunities that will come as a result of Russia‘s accession to the WTO, and we will continue to work hard in communicating the importance of moving forward on this issue to our Congress, as well as to the American public.
As it relates to who is hurt, if we are no able to move forward in a timely manner, I think there is no question that at least initially American businesses will not have benefits of Russia‘s accession to the WTO. However, I think that in the long term Russian may loose out on opportunities to engage with American companies that have state-of-the-art technologies and know-how. So, it‘s all in our interest to move forward on this issue, and the Obama administration is going to continue to work very hard on moving forward with this.

Q.: Is it possible that after the repealing of the amendment the U.S. side could adopt the so-called Magnitsky bill that would impose new sanctions on Russia, including visa restrictions and the freezing of the assets of Russian officials?

A.: I would just say that Senator Cardin, who is the U.S. senator that has expressed a lot on concern on this issue. The Obama administration shares Senator Cardin‘s concern about this case. It‘s the case that we regularly raise with the Russian government, whenever any U.S. government officials meet with their counterparts. And we are going to continue to do that, we are also going to continue to working with Senator Cardin on the most the most effective way to deal with our concerns. So, I‘m again keeping with my previous answer, I‘m not going to engage in hypotheticals or try to predict what Congress will do, but I would just say that we have to deal with this as with all cases in what is the most effective, and we will continue to do that.

Q.: What is your general view on trade and investment relations between our two countries? The figures, statistics of import and export operations are relatively low.

A.: Well, I think that the trajectory is in the right direction. Exports from the United States to Russia have increased 40% since 2009. Exports from Russia to the United States have increased nearly 30% during the same time period. The numbers are moving in the rights direction. With Russian accession to the WTO, I think those number will increase. And President Putin has indicated that he is committed to improving the businesses climate in Russia. I think he‘s specifically mentioned using the World Bank ease of doing business index as a measures of how well Russia does an improving of its business climate. As Russia does that, as it ascends to the WTO, all of the things [bond] well for stronger more robust U.S.-Russia commercial relationships. I‘m very optimistic.

Q.: Let‘s speak about the influence of international events on our bilateral trade relations, and in this respect I would like to ask you about U.S. sanctions on Iran and their possible negative influence on Russian companies and banks. What are you going to do to minimize the negative effect?

A.: I would say that in general as it relates to foreign policy I tend to defer to my friends at the State Department. So, I won‘t not really comment a lot. Only to this that countries that have relatively goods relations will disagree on issues, and clearly this is an issue wh ere the United States and Russia are not in agreement. But I think that both countries recognize that it‘s our long-term interests to not let one issue define this relationship, and certainly that‘s true for the commercial relationship. So, I think that we will continue to move forward on building a commercial relationship, and my colleagues at the State Department, as well as other relevant agencies, will work very diligently to work through those issues.

Q.: Washington has been criticizing Russia for years for weak intellectual property rights. What is your view for today?

A.: We have applaud the efforts that Russia has taken to date particularly in strengthening its laws for intellectual property rights protection. Clearly there have been great [] nevertheless we and our companies remain concerned in terms of enforcement and application of the IPR laws, particularly in internet piracy for example. So, we will continue to work with Russia to deal with this very important issue. It is certainly a concern for U.S. companies, but it will also be concern for Russian companies, as Russia continues to invest in innovation and diversify its economy. It too can suffer greatly from weak enforcement. We are pleased with steps and measures that have been taken. We would like to see more efforts on the enforcement side, and we will continue to work with our counterparts to assist in any way that we can on this effort.

Q.: My next question is about Russian enriched uranium. There is a re-export quota for this Russian product in the U.S. Is the U.S. going to extend this quota or cancel it? If cancel, then when?

A.: The two governments are currently under negotiations on this issue. And until such time as there is a new agreement or subsequent agreement on this issue, the current agreement will remain in effect. The negotiations are under their course, but if for some reason there is an agreement, I do not anticipate a change. The existing agreement is what will dictate how we manage this matter.
I should actually be specific that it‘s the U.S. Department of Commerce, my department, and TENEX that are engaged in negotiations on this matter.

Q.: Not long ago BP stated that it may sell its stake in TNK-BP. Is this stake interesting for American companies?

A.: It certainly could be, but I would say that this is a decision for American companies and their shareholders, and the U.S. government on matters like this tends not to get engage. So, I will only be speculating, I have to defer to the American companies, whether or not they will be interested.

Q.: The U.S. government is not going to get engaged, but will it support the deal?

A.: As I mentioned at the beginning of our interview I‘m very supportive of anything that strengthens commercial relations between the United States and Russia. We‘ll certainly be supportive of U.S. companies that look at being involved in the energy sector here.

Q.: My next question is about shale gas. The U.S. stopped publishing information on shale gas production in 2009. What is the reason for this? Besides, U.S. reserves of shale gas have been revised recently and showed a triple decline. Have the expenditures of shale gas producers grown given this fact?

A.: Let me just say my understanding is that the estimates of proven reserves did not go down. The estimates to which you make reference are technical reserve. As to whether we stopped publishing information, the information you are referring to is released by the Department of Energy, the Energy Information Administration. Due to cost-saving measures I have heard they have reduced some survey operation, but they currently provide dry shale gas production estimates in the Natural Gas Weekly Update. This information is free and public.

Q.: Is there any cooperation between the U.S. and Russia on shale gas?

A.: The U.S. and Russian governments do not currently cooperate on shale gas technology. However, the U.S. would be receptive to requests for cooperation from the Russian side. U.S. companies possess extensive know-how in the area of unconventional resource extraction, and utilize leading-edge technologies. The U.S. would welcome the opportunity to export these technologies to the Russian market.