U.S. Chamber of Commerce - June 7 - Chamber Supports Russia as a Market Economy

Friday, June 7, 2002

Chamber Supports Russia as a Market Economy: Commerce Department Decision Reflects Real Change

WASHINGTON, D.C. -- The United States Chamber of Commerce welcomed the announcement by the Department of Commerce that Russia will be designated a market economy, following economic developments since the breakup of the former Soviet Union.

“Recognizing the steps Russia has taken to reform its economy will encourage them to stay the course,” said Thomas Donohue, U.S. Chamber president and CEO. “The private sector is playing an increasingly dominant role in the economy and entrepreneurs enjoy a great measure of economic freedom.”

Over 70% of Russian gross domestic product (GDP) was accounted for by the private sector in the year 2000, up from less than 10 percent only eight years earlier, according to the American Chamber of Commerce in Russia. U.S. trade with Russia in 2001 was about $9 billion, although U.S. investment in Russia lags far behind that of Western Europe.

The decision, retroactive to April 1, is based on a number of factors, including: the extent to which the currency is convertible, whether free-bargaining for wages is allowed, the amount of foreign investment permitted, and the extent of government control of resources and production.

With the new classification, Russia will also no longer be exempt from U.S. laws on countervailing duties. As a non-market economy, Russia had been exempt from retaliation for subsidizing its industries.

Donohue had urged Commerce Secretary Evans to reconsider Russia’s classification, and is recently returned from meetings in Russia and Turkey. During his trip, Donohue addressed a number of business groups and met with senior government leaders in both countries.

“Russia is too important to ignore,” said Donohue. “Good intentions must be followed by concrete action to strengthen our commercial relationship.”

The U.S. Chamber of Commerce is the world’s largest business federation representing more than three million businesses and organizations of every size, sector and region.