August 12, 2009
THE U.S.-RUSSIA BUSINESS COUNCIL
USRBC Recommendations: U.S.-Russia Bilateral Presidential Commission Discussion and Action Items
USRBC Recommendations: U.S.-Russia Bilateral Presidential Commission Discussion and Action Items The U.S.-Russia Business Council (USRBC) provides its full support to the U.S.Russia Bilateral Presidential Commission and to its constituent Working Groups. The Council and its members are prepared to participate in the commission directly, as members of the Working Groups, or indirectly in an advisory capacity. As the Administration works with its Russian counterparts to give shape to a new bilateral dialogue, we present the following initial recommendations to the U.S. Administration in order to assist in framing the agendas of the relevant Working Groups and to offer suggestions for overarching themes, topics to be explored in greater detail, and specific action items. General Principles 9 To the extent possible, government actions that affect the private sector should be taken on the basis of transparency; 9 Consistent with the G-20 Heads of Government commitments of November 15, 2008, protectionism should be avoided as a policy response to the current global economic crisis; 9 Russia’s accession to the World Trade Organization (WTO) is a high priority of the U.S. business community and warrants unreserved support from the Commission. At the same time, issues pertaining directly to accession negotiations should be carefully managed to minimize the potential for overlapping jurisdictions between the Commission and the existing negotiating teams. The prospects of achieving a rapid and commercially meaningful conclusion of WTO negotiations will depend heavily on ensuring that complex technical issues are efficiently resolved by the relevant experts. Summary Concepts 9 Facilitate strengthened commercial ties through improved and streamlined visa and customs regimes, greater business-government engagement and support for judicial independence and integrity; 9 Encourage greater investment with rules that provide national treatment to all investors and streamline investment procedures, with safeguards as necessary with respect to national security; 9 Promote/protect innovation with technology-neutral policies that respect and implement the highest standards of intellectual property (IP) rights and enforce IP protection; 9 Implement financial regulatory reforms that will encourage investment in both countries; 9 Stimulate energy efficiency and cooperative investments in fossil fuels and renewable energy sources; 9 Address Russia’s demographic and health challenges, recognizing the important roles of pharmaceuticals, biotechnology and preventive epidemiological measures;
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9 Work with Russia to build an “innovation society” that includes the rule of law as well as workforce / education development aimed at further diversifying Russia’s economy. Business Facilitation Issues 9 Consular Issues o Streamline business travel visa requirements between U.S. and Russia (at a minimum, enable business travelers to obtain multi-year, multiple entry visas) o Facilitate issuance of work permits in Russia and increase the length of validity o Remove notification requirements to the Federal Migration Service for incountry travel o Facilitate provision of work visa invitations by established business organizations 9 Judicial Matters: Underscore the importance of continuing to enforce strict standards of judicial independence and integrity, including streamlining the appeals process for commercial disputes: o A perceived lack of judicial independence in high-profile corporate governance disputes negatively impacts Russia’s image among foreign investors; o This not only conflicts with Russia’s goal of economic diversification but also has a financial impact by contributing to higher risk premiums for Russian assets and effectively increasing borrowing costs for all Russian borrowers. 9 Customs Issues: Create efficiencies and standardize Customs procedures, thus lowering the final cost of goods to Russian consumers: o Risk management-based inspections o Fast-track / simplified procedures for approved importers, shippers with significant import volumes, and small shipments o Infrastructure improvements and training for Customs officials o Review of temporary storage costs in cases of technical problems with documentation 9 Building Better Business-Government Collaboration: Best practices and mechanisms for dissemination of information and guidance regarding legal and regulatory changes and their implementation 9 Import Licensing and Distribution: Improve legal clarity on import licensing and distribution requirements 9 SMEs: Fostering an enabling environment for small and medium-sized businesses 9 Export Controls: Revamping the current export control system to reflect current security realities and to promote greater commercial activity 9 Certification/Product Standards o Seek harmonization of product certification standards o Review certification requirements to ensure that the scope of products required for certification is appropriate o Stress important role of independent certification labs o Streamline testing procedures for product certification
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Spurring Innovation and Investment Investment 9 Exchange ideas on promoting infrastructure and other investment on a level playing field during the crisis, avoiding “buy national” provisions 9 Streamline investment procedures: o One-stop shop for foreign investors o Review and expedite permitting procedures for new factories / facilities 9 Share experience / best practices / principles on security concerns: Review of CFIUS and Strategic Sectors Laws 9 Provide overall support for a Bilateral Investment Treaty (BIT) to be negotiated in accordance with established procedures and with the aim of achieving an early, mutually acceptable conclusion of negotiations Innovation 9 Adoption of technologically neutral policies to promote national interests 9 Budget prioritization encouraging investment in innovative goods and services 9 Support for intellectual property rights protection recognizing mutual interests in this area 9 Sharing of best practices for encouraging “innovation cultures” and developing a 21st Century workforce Financial Sector 9 Enhance local market liquidity and increase Russia’s access to global portfolio capital through alignment of Russia’s shares settlement cycle with internationally standard T + norms. 9 Unify Russia’s share depositary and registry system to lower costs and raise security for local participants, while strengthening Russia's attractiveness as a destination for international portfolio investors. 9 SEC recognition of Russia’s major depositaries as eligible foreign depositaries under SEC Rule 17f-7; this would help US investors to operate in Russian markets in a more efficient and cost-effective way. 9 Develop laws and regulations that will promote securities lending, repos, and short-selling (with emphasis on enhancing risk management capabilities of Russian market participants). In particular, market participants should be encouraged / required to use standard documentation (i.e., ISDA, CSAs) for financing and derivatives transactions in order to (a) lower transaction costs, (b) provide enforceable collateral security and (c) ultimately lower the cost of borrowing for Russian banks and corporations. 9 Meet international standards, especially with respect to o Bank account closure / opening refusal o Suspicious transactions suspension o Collateral legislation and registration o National payments system 9 Improve integrity of pension funds by (a) strictly limiting company pension funds from investment in related securities; (b) requiring periodic, audited public disclosure of investment activity and holdings of all pension funds, including the State fund; (c) disclosing quarterly, marked-to-market results of private managers of State pension funds; and (d) forbidding the practice of guaranteeing returns.
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9 Harmonize the Law on Joint-Stock Companies and FSFM regulations with global market practices. For example, the definition of "nominee" shareholder needs to be extended to depositary banks issuing ADRs/GDRs which, under current law, are treated as beneficial shareholders for purposes of the JSC Law. 9 Harmonize bankruptcy and restructuring procedures with global market practice to provide both Russian and foreign lenders clarity and security around seniority and priority of indebtedness. Strengthening the enforcement powers of specialized bankruptcy courts with independent special masters will lessen collateral confidence concerns on the part of lenders, allowing capital to flow more freely from the financial sector to the real economy. 9 Development of a cashless system –- important for APEC, Sochi Games 9 Continued efforts at increasing financial literacy 9 Ensure adequate funding of U.S. export financing / guarantee agencies such as OPIC, Ex-Im and TDA, where financing programs support broader goals of transparency and good corporate governance, and undertake efforts to promote their usage 9 Prudential regulation and transparency, including review of commercial bank relationships and the ability of banks to operate in both countries Energy 9 Studies of potential Upstream / Downstream oil and gas integration projects in the form of complementary infrastructure, such as LNG and re-gasification plants and fixed pipelines 9 Policies for increasing the value-added component of natural resources production 9 Energy Efficiency, including technologies for enhancing the capture and usage of associated gas 9 Principles and best practices for more efficient building codes 9 Utilization of U.S. and Russian research and development capabilities to identify viable alternative energy sources Agriculture/Forestry 9 Food security issues, such as sanitary-phytosanitary standards and agricultural product inspection procedures 9 Use of internationally accepted science-based methodologies for determining restrictions on imports of meat products 9 Development of coordinated policies and regulations related to harvesting and wood-handling equipment, wood product processing, and export of forest products Health 9 Recognize the role innovative drugs and biotechnology can play in the proper regulatory environment to combat early mortality and chronic and infectious diseases 9 Review basic conditions for success in biotechnology: (i) sound science; (ii) fast regulatory approval; (iii) strong intellectual property protection; (iv) effective academic-industry partnerships; and (v) market access via pricing and
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reimbursement systems that value innovation in the modernization of health regulatory regimes Emphasize preventive measures and pursue commitments to raise public awareness with private sector involvement Adopt internationally-recognized transparency standards for approving the sale of pharmaceutical and biotechnology products, particularly with respect to timelines for responding to applications; provide objective criteria for decisionmaking; and create mechanisms for meaningful appeal Address importance of level playing field for intellectual property protection in the context of Pharma 2020 Share best practices regarding development of health care / life sciences sector in terms of venture capital attraction and regulatory regimes Integrate former biodefense facilities into the civilian research and production infrastructure of Russia
Exchanges 9 Legal: Promote discussions to analyze court decisions with commercial law implications to review general legal principles. Participants could include Russian and U.S. judges and staff, private sector legal associations, law faculties, and business and other professional associations. 9 Cultural: Support for collaborative US-Russian film projects, productions and distribution could be another commercial area that builds greater understanding in the broader population. 9 Health: In the area of biological medicines, establish a training program for Russian FDA officials and a speaker series.
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