U.S. Senior Commercial Officer: "There is great potential for continued bilateral trade growth"
Exclusive interview with Martin Claessens, U.S. Senior Commercial Officer, the U.S. Embassy in Ukraine, for Interfax-Ukraine
Although exports from Ukraine to the United States last year rose by 34.2% and imports by 17.3%, the negative trade balance for Ukraine deteriorated again from $1.7 billion to $1.85 billion (according to the Ukrainian State Statistics Service.) How, in your opinion, can Ukraine break this trend? Which sectors have more potential for further development of trade between our countries? What is the forecast for trade turnover between our countries for the coming couple of years?
The growth in bilateral U.S. – Ukraine trade is a real success story. Trade has been growing by double digits, and companies in both countries are selling more and creating jobs. There is great potential for continued bilateral trade growth given Ukraine’s potential as both an exporter and a market. Ukraine’s exports of services, such as IT services, are adding to its traditional strengths in agriculture and industrial goods.
Foreign direct investment from the United States to Ukraine, according to the Ukrainian State Statistics Service, keeps shrinking, at least since 2010 (in 2013 there was a slight increase of $10 million). During this time they fell 2.6 times - to $489 million. What is the cause? What constrains US investment?
The constraints on U.S. investment in Ukraine are the same as for other foreign and Ukrainian investors. The difficulties in the business environment deter investment, especially problems with corruption and the weak judicial system. Ukraine’s infrastructure challenges also constrain investment.
When can this year’s meeting of the Ukrainian-American Trade and Investment Council take place? What are the issues on the agenda?
The bilateral Trade and Investment Council’s annual meeting is scheduled to take place in the fall this year. The council is a useful forum to gather all the relevant ministries and agencies from our two governments to discuss ways to increase bilateral trade and investment. During last year’s meeting the council discussed issues such as technical barriers to trade, intellectual property rights enforcement, and the importance of a transparent and predictable legal and regulatory environment. The agenda for this year’s meeting has not yet been set, but will probably include similar issues.
How do you assess Ukraine’s progress in improving its performance in the Special 301 report, including the chances of leaving the Priority Watch List, and the likelihood of US trade sanctions being imposed for violating intellectual property rights? How do you rate intellectual property reform and the implementation of the new legislation passed last year? Do you still see the possibility of renewal for Ukraine of its stance in the US Generalized System of Preferences?
The United States has long-standing concerns with intellectual property rights enforcement in Ukraine. The Office of the U.S. Trade Representative issues an annual report on IPR enforcement, the Special 301 report, which includes updates on the status of IPR enforcement for a number of countries including Ukraine. The latest Special 301 report noted areas in which Ukraine has made some progress on intellectual property rights enforcement. The United States, however, still has concerns with the widespread pirating of intellectual property such as movies and music, the government’s continued use of unlicensed software, and Ukraine’s collective management regime. The Rada passed a new collective management organizations (CMO) law in 2018 that, while not perfect, created a framework in which right holders can receive proper and adequate compensation for their creative works. We are monitoring the implementation of this legislation and its effectiveness in reducing the number of rogue CMOs in Ukraine and thus ensuring proper distribution of royalties.
What advice or warning does official Washington offer to investors and businessmen in connection with the military conflict in the East and the annexation of Crimea?
Those of us who live here in Ukraine know that the conflict in the East is localized and does not have a major impact on travel or business in most of Ukraine. The State Department travel advisories provide Americans, including investors, with information on the risks of traveling in the conflict area. In addition, U.S. government sanctions place prohibitions on Americans doing business with companies in Crimea and with some companies and individuals in the conflict area.
How adequate, in your opinion, are the imposed Ukrainian and American sanctions against Russia? What additional restrictions can be introduced?
The United States has made it very clear that there will be no relief of eastern Ukraine-related sanctions until Russia meets its commitments under the Minsk agreements, and no relief from Crimea-related sanctions until Russia returns control of the Crimean peninsula to Ukraine. We have also been clear that the door to dialogue is open, should Russia choose to take credible steps toward a constructive path. To date we have seen no change in behavior from the Russian government, and we will continue impose costs on Russia until it ceases its reckless behavior. It is important that we have imposed sanctions in partnership with Ukraine, the European Union and other like-minded partners.