Business | Economy
US, Russia pledge closer commercial relations
Obama, Medvedev talk trade and seek to resolve WTO issues
- Bloomberg
- Published: 00:00 June 26, 2010
New York: President Barack Obama said the US and Russia are committed to expanding commercial ties, and Russian President Dmitry Medvedev said he wants to remove all obstacles to trade and investment in his country.
Obama, calling Medvedev a "solid and reliable partner," said the US will work to advance plans for Russia's entry into the World Trade Organisation. In a joint declaration, the two governments pledged to settle all outstanding issues on Russia's WTO ascension by the end of September.
"Twenty years after the end of the Cold War, the US-Russian relationship has to be about more than just security and arms control," Obama said at a joint White House news conference with Medvedev. "It has to be about our shared prosperity and what we can build together."
Medvedev is seeking to expand and modernise Russia's economy to lessen its dependence on oil, gas and metals. Obama wants to build a relationship with Russia that can withstand strains over security disputes and broaden the markets for US companies.
In conjunction with Medvedev's visit, Boeing signed an agreement to sell 50 of its 737 airliners to Russia. The order from state holding company Russian Technologies, which controls six airlines, is valued at about $3.6 billion, based on catalogue prices for the 737-800. Russia separately agreed to lift a five-month-old ban on US chicken. The country spent about $752 million (Dh2.8 billion) on US poultry last year.
Looking to technology
Medvedev, who visited California's Silicon Valley before arriving in Washington, said he hopes that US companies will "actively partake" in an effort to establish a high-technology centre outside Moscow.
"We're interested in removing all the obstacles" blocking trade with Russia, Medvedev said through a translator.
While in California, Medvedev toured companies such as Cisco Systems in San Jose and Apple in Cupertino. Medvedev also visited Twitter, the microblogging service with about 190 million visitors per month, and opened his own account.
Obama pledged that the US will act as a "partner" with Russia to create a high-technology hub, as Russia simultaneously promotes "transparency, accountability and rule of law" as it applies to investments there.
At a US-Russia Business Summit at the US Chamber of Commerce after the news conference, Obama and Medvedev reinforced their commitment to expanding commercial ties.
Obama, calling the Russian president "my friend and partner," said "there is more work to do" to increase trade with Russia. He repeated that he believes "Russia belongs in the WTO" and that its membership in that group would benefit the US and other economies as well as that of Russia.
Investment
Medvedev said he made business contacts in Silicon Valley that will help Russia progress in areas such as energy development and computers. He told the business leaders that the Russian government will create "the most favourable, most protective conditions" for US investment and cooperation.
US trade in goods with Russia through the first four months of this year rose 27.4 per cent compared with the year-earlier period, to $8.48 billion, according to the Commerce Department.
"We are going to do everything that we can to get this done as quickly as possible," Obama said of the WTO negotiations.
No government curbs with stronger rouble
A stronger rouble is inevitable and won't prompt the government to impose capital controls, Deputy Finance Minister Dmitry Pankin said.
The currency's appreciation is "a real problem" for Russia's economy because it cuts budget revenue, particularly from oil and gas sales priced in dollars, and makes it harder for Russian manufacturers to sell their goods abroad, Pankin said in an interview in London on Thursday.
"I can't say we support rouble appreciation, it's a real problem for the Russian economy, but still it's inevitable," Pankin said. "Up to now we have a more liberal capital control approach and we have no immediate plan to introduce any kind of capital restrictions."
The rouble is benefiting from oil prices above $70 (Dh257) a barrel and growth prospects in Russia, which together with China, Brazil and India, the so-called Bric nations, are seen propelling the global recovery after the credit crisis. The currency also may attract capital as investors look for alternatives to Europe's crisis-ridden debt markets.
The rouble may gain an inflation-adjusted 20 per cent in the next three years against the currencies of Russia's major trading partners, a government report said this month. It traded little changed at 31.1055 per dollar as of 10.12am in Moscow, and weakened 0.3 per cent to 38.3400 to the euro yesterday. Bank Rossii keeps the currency within a trading band of 26 to 41 against a basket made up dollars and euros.
When oil prices rise, the rouble strengthens and the central bank needs currency flexibility to fight inflation, Pankin said. The central bank plans to gradually allow it to trade freely.
Russia wants the rouble to be one of the world's reserve currencies as the country seeks to reassert its economic influence after last year's recession. The rouble should gain reserve status as Brazil, China and India also seek increased roles for their currencies, Pankin said. "It's inevitable and it's necessary to raise the number of reserve currencies," Pankin said. "It's a market requirement that it's not only a dollar/euro basket."
More from Economy
More from Business
Business Editor's choice
-
China breaks West's solar monopoly
Some countries in the world, especially Germany and the United States, have made considerable efforts to invest in developing solar energy cells
-
Burberry store spree will cut profit
Trenchcoat maker forges ahead with investment strategy targeting emerging markets
-
Laws needed to spur region bond markets
UAE Central Bank calls for creation of a centralised Sharia board to facilitate the sale of sukuk
