U.S.-Russian Trade Growth

[Deb Palmieri on Russia Table of Contents]

The following article was published in the Russian Commerce News, May-June 1995. The Russian Commerce News is the official publication of The Russian-American Chamber of Commerce®.

U.S.-Russian Trade Growth

Our theme this issue is the importance of nurturing and cultivating the burgeoning trade ties between the U.S. and Russia. While the U.S. is now exporting to Russia at record levels - 2.6bn in 1994 (but down from almost $3bn in 1993), in 1994 we began to run a trade deficit of about $656 million.

There is no reason our exports can't grow as fast as our imports, which have quadrupled since 1991. What is significant about our trade with Russia and the NIS is its historically low base because of the Cold War legacy. Last year, U.S. trade turnover with Russia was about $5 billion. This amounts to not even I% of total U.S. foreign trade. It is about the same amount of trade we conducted with Chile, the Dominican Republic, Ireland and Turkey. By contrast, we traded four times as much with Malaysia. Our trade with Germany and England equaled about $50bn each; our trade with Mexico totaled $80bn; and trade with Japan and Canada totaled over $200bn each.

Current low trading levels call for a dramatically revitalized strategy to boost exports and imports. This means concerted efforts to hold in check protectionist or commerce inhibiting impulses from both sides and to stand strongly behind principles of free trade. Not only should Russia heed this call, (the recent implementation of a new 10% VAT on import foodstuffs and 20% VAT on other goods and services is a step in the wrong direction), but so should our country. The U.S. embassy in Moscow, for example, frequently refuses to grant business travel visas to Russian applicants under the age of 35, for fear they will defect. But most of Russia's new entrepreneurs are young, often under the age of 35, and need to come here to conduct legitimate business. They want to return to their country. Our present visa-granting process to Russian business people is slow, outmoded and should be upgraded to reflect present realities.

New political tensions between the U.S. and Russia over Chechnya, nuclear technology sales to Iran and NATO's configuration are sparking cries from some voices in Washington which might adversely impact our aid and trade policies towards Russia. But it is essential that in the post-Cold War period we part with our earlier thinking whereby we rewarded desired Soviet political behavior with economic incentives and punished actions perceived as detrimental to our national interest with economic sanctions, trade discrimination and other barriers to normal business relations.

We must carefully nurture and encourage positive trade and investment policies towards Russia and provide sensible business incentives for both sides. Business relations between both countries cannot become fodder for politicians and be subject to whims of shifting political influences from either side. We cannot risk repeating the 4 i start-stop" pattern of the seventies, when our trade with the Soviet Union slowly began to increase only to be thwarted by sanctions as a result of the war in Afghanistan. Stability and freedom from politically inspired interruptions is the key to our future business relationship with Russia and we must preserve and safeguard these principles. Our economic policies and commitment to Russia should remain steadfast and continue to support marketization and democracy.

It is a given that friendly nations place a high priority on free flowing trading relationships and the one between America and Russia is no exception. Towards this end, let us continue to diminish or eliminate significant tariff and non-tariff barriers to trade from both sides and continue forward building a strong commercial partnership into the future.

Deborah Anne Palmieri
Russian Commerce News, May-June 1995