ECONOMIC DESK

In accordance with the International and Russian laws diplomatic and consular missions of the Russian Federation are entitled to promote trade and economic relations with Russia in their host countries. In that capacity they seek and provide information needed to foster business contacts and form databases of companies interested in bilateral interaction.

The Consulate General of the Russian Federation in Houston within its consular district accepts business-related inquiries, which can be forwarded to our attention:

For additional information you may contact the Economic Desk also by telephone – (713) 337-3300, ext. 309.

Following are some of the aspects of the respective activities of the Economic Desk:

Overview of the Russian-American business cooperation

The legal basis of the Russian-U.S. economic relations is the 1990 Trade Agreement and the Agreement on the Prevention of Double Taxation of Profits and Capital (which came into force in 1993). The Agreement on the Promotion and Mutual Protection of Investments, signed in 1992 and approved by the U.S. Congress, was not ratified by the Russian side. In June 2002 the United States granted Russia the market economy status.

After the Act on Friendly Relations with Russia and Other New Independent States was passed in 1993, the United States has revised more than 70 discriminative laws. Russia was included into the U.S. Generalized System of Preferences, which allowed for a duty free export of certain Russian goods to the U.S. market.

In 1994 Russia was accorded a waiver from the Jackson-Vanik Amendment to the 1974 Trade Act that blocked the rendering of the Most Favored Nation Treatment to Russia on a permanent and unconditional basis. In the beginning of 2002 a legislative process of complete and final graduation of Russia from its action was launched, however, it is halted now.

The promotion of Russian-U.S. economic cooperation is in line with the national interests of the two countries and always appears on the agenda of the Summits between Presidents of Russia and the United States, who regularly adopt joint statements in this regard.

2005 has seen a significant progress in cooperation on ministerial level in financial and economic spheres. In June 2005 U.S. Secretary of Commerce C.Gutierrez and U.S. Secretary of Energy S.Bodman visited Russia. Twice, in April and September the meetings of Minister of Finance of the Russian Federation L.Kudrin and U.S. Secretary of the Treasure J.Snow took place in Washington, D.C. In September Minister of Economic Development and Trade of the Russian Federation G.Gref held bilateral negotiations on Russia succession to the WTO in Washington, D.C. Official visit of the Minister of Industry and Energy of the Russian Federation V.Khristenko, accompanied by a group of leading Russian businessmen, to Washington, D.C., Houston, Detroit and Seattle in October 2005 was of great importance for the diversification of economic cooperation.

The United States is traditionally one of the 5 major trade partners of Russia. At the same time, Russia currently ranks only in the second dozen on the list of the U.S. trade partners. The imports from Russia do not exceed 1 percent and the U.S. exports to Russia – 0.5 percent of the U.S. foreign trade. Raw materials constitute more than 80% of the Russian export volumes to the United States. Meat products, machinery and equipment, non-organic chemicals, electronics and tobacco dominate the mix of U.S. products imported into Russia.

There is a strong acceleration of growth of bilateral trade during the recent years, with the first quarter of 2006 showing continuing positive dynamics. The main reasons for that are high prices on energy resources and some other important Russian export goods. In 2005 bilateral trade totaled 19.22 bln. USD (imports from Russia – 15.28 bln. USD, exports to Russia – 3.94 bln. USD), which constitutes a growth of 30 percent compared to 2004.

The United States continuously ranks among the leaders in the volume of accumulated foreign direct investments into the Russian economy. More than half of U.S. investment goes into the Russian fuel and energy sector. Among the major investors into the Russian economy are such industrial giants as ExxonMobil, Alcoa, General Motors, Ford, ConocoPhillips, Gillette, PepsiCo, Coca-Cola, Philip Morris, Proctor and Gamble, Mars, Wrigley’s, etc. American federal institutions such as Overseas Private Investment Corporation, U.S. Trade and Development Agency and U.S. Eximbank are intensifying their activities by increase project financing on the Russian market.

Recently investment cooperation has assumed a bilateral character. In 2000 LUKOil purchased the Getty gas station network (1300 stations). Later in 2004 this Russian company acquired 800 more stations from ConocoPhillips. In 2003 the Norilsk Nickel company bought 56% of stocks (for 373.6 mln. USD) of Steelwater Mining company, producer and seller of palladium and other platinum metals. In 2004 Severstal Company purchased Rouge Industries – the fifth largest steel producer in the U.S.

Starting in January 1, 2001 the quotas were abolished for commercial launches of American satellites by Russian carrier rockets (with the U.S. licensing of each launch still in practice). In November 2004 the Russian Ministry of industry and energy and Boeing signed a Memorandum of Understanding in order to further strengthen industrial and scientific cooperation in airspace, including that in the framework of the project of creation of the new Boeing “787” aircraft. Simultaneously, the American company signed and agreement with “Verkhnesaldinskoye Metallurgical Industrial Association” in order to increase shipments of its processed titanium components for Boeing’s civil aircraft. “Volga-Dnepr” company signed a contract for transportation of extra large-size components for the “Boeing-787” from Europe and Asia to the assembly plant in Seattle, WA. Within the next years Boeing is planning to invest about $2 bln. in the Russian aerospace industry.

During the Summit in Genoa (July 22, 2001) Presidents Vladimir V. Putin and George W. Bush expressed their support of the initiative by the Russian and the U.S. business communities to launch the Russian-American Business Dialogue as a permanent communication channel between the business circles and the government agencies of the two countries involved. The High-Tech Round Table is functioning within the RABD framework: in February and November 2005 two bilateral conferences on IT and biotechnology were organized at Stanford University. The Russian-American Banking Dialogue continues to move forward: in 2005 two representative Russian-American banking conferences took place in New York (March) and Washington, D.C. (April).

The meetings of President Vladimir V. Putin with the representatives of major U.S. companies in Saint-Petersburg (June 2005) and Washington, D.C. (September 2005) as well as the meeting of President G.Bush with the group of leading Russian businessmen in Washington, D.C. (October 2005) made an important contribution to the considerable intensification of the RABD and its upgrade to the qualitatively new level, especially in the energy field.

The Russian-American Energy Dialogue is one of the most promising trends in our bilateral relationship. As part of this Dialogue, the regular meeting of the Bilateral Interagency Working Group was held in Washington in June 2005. The main objective of the discussions was to look at the results of realization of previous accords between the two Presidents and to work out further directions of interaction. Cooperation experience accumulated during the last years (incl. the Russian-American Business Energy Summits in Houston, TX in 2002 and Saint-Petersburg, Russia in 2003) encouraged the launch of such large-scale projects as the plans of joint development of Shtokman gas-condensate field and the beginning of the swap-based delivery of Russian LNG to U.S. market in September 2005.

Russia and the U.S. actively conduct negotiations on the issue of Russia’s accession to the WTO and continuously maintain dialogue on the matters of intellectual property protection. A special working group on the latter met twice in 2005 to determine necessary steps for joint counteraction to the breaking of the law in this area.

Key indicators of the Russian Economy

(as % of the corresponding period of the previous year)

* - Calculated on the basis of data on changes in output volumes in agriculture, mining, manufacturing, the production and distribution of electricity, gas and water, construction, transport, retail and wholesale trade.

** - Calculated by ILO methodology.

*** - Estimate.

**** - Calculated on Reuters data, averages for a period.

***** - Based on the balance of payments methodology (as of May 10, 2007).

Source: Federal State Statistics Service, Bank of Russia.

Last updated: May 15, 2007.
 

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