November 1, 2019
Good morning ladies and gentlemen, and fellow Ambassadors.
Before I get started, I would first like to thank KEF organizers IPM, BEROC, and CASE Belarus. I am very proud that USAID’s sustained support to IPM helps makes events like this – Belarus’s largest annual civil-society-organized economic forum – possible. It is my great honor to be part of this opening panel on the second day of KEF, very aptly titled “Reforms but no Consequences.”
Now, more than ever, Belarus is at a crossroads when it comes to charting its path of economic development. Everyone is focused on, and frankly apprehensive about Belarusian and Russian economic integration. What does it mean for both countries? What impact will it have on the Belarusian economy, and, more importantly, on Belarusian sovereignty and independence? These are all fears that are magnified in an atmosphere of high levels of disinformation, low transparency, and uncertainty about the future.
However, it is important that these ongoing negotiations between Belarus and Russia do not distract from the bigger picture. Belarus needs to find stronger internal sources of economic growth to shift away from an export-based economy towards a consumer-driven economy. Belarus needs to expand trade opportunities while at the same time making sure to level the playing field for both foreign and domestic investors and business. These are big challenges that require serious attention and effort, and a commitment to smart reforms.
To address the first challenge, Belarus should focus on building a strong and vibrant middle class, which will help boost domestic consumption, drive demand for high-quality goods and services and lead to greater private sector growth as new businesses and entrepreneurs appear to create the goods that will meet demand. The Digital Economy decree and legislation streamlining regulations on Belarus’s IT sector have resulted in an emerging middle class. These good ideas should extend to more areas of Belarus’s economy. However, achieving these results in other sectors and speeding up improvements in living standards across the country will require Belarus to undertake smart structural reforms. I know that my colleagues from the World Bank and IMF will say more about such reforms today.
To address the second challenge of attracting trade and investment, Belarus has embarked on the WTO accession process. WTO membership has many benefits. As a member, Belarusian exports will have greater access to international markets, commodities, and the global supply chain. Belarus will be able to purchase inputs at a lower price, enabling domestic industry to produce goods more competitively for domestic and foreign markets. Because of lower trade barriers, including tariffs, import quotas, and regulations among WTO members, Belarus will be able to buy finished products at a cheaper price, which means more choices for Belarusian consumers. Additionally, as a WTO member, Belarus will gain protection from unfair treatment by regional trading powers through the WTO’s powerful dispute settlement mechanism. In the past year in particular, Belarus has deepened its engagement, and so has the United States and a handful of other Members. The ball is now firmly in Belarus’s court, and the United States hopes that Belarus will soon undertake the market-oriented and trade liberalizing reforms needed to move its accession process forward.
Today I would like to provide some perspective on how the United States views the WTO, including how we approach the accession process. The WTO can be seen as an institution with a system or codification of beliefs and principles. An important aspect of the accession process is for existing WTO Members to evaluate whether an applicant shares key principles: a commitment to open, predictable, and transparent trade regimes; a commitment to non-discriminatory treatment; and a commitment to market-oriented policies. The accession process is rigorous, and it must be rigorous if we are to ensure that each new Member embraces these principles.
With its communist past, and a continued heavy state hand in the economy that favors domestic production, Belarus’ path to accession was never going to be simple. Belarus began the accession process in 1993, and there was little progress in the first decade. In 2006, Belarus took an extended break and did not reengage until late 2016. Belarus is now seriously engaged, and the United States welcome this.
We often say – and know from experience – that WTO accession is not a political process. It is substantive and technical. However, success does not solely depend on the skill and perseverance of the applicant’s technical experts. They are necessary, but not sufficient. The critical variable in any WTO accession is the commitment of the applicant’s political leadership to market-oriented and trade liberalizing reform. After several years of sustained engagement, WTO Members are waiting to see: is Belarus’ leadership committed to establishing a more market-oriented, liberal trade regime? Do Belarus’ leaders see WTO accession as a process they can harness to drive needed domestic reform at home? We hope the answer is yes, even if it takes time for Belarus to get there. Belarus can count on the United States to be patient, and to continue to help navigate the way forward.
We will help ensure that Belarus makes the necessary changes to its trade regime so that all enterprises and entrepreneurs – from the private sector or the public sector, foreign or domestic – can compete on a level playing field. That means, for example, withdrawing pervasive price regulation, eliminating exclusive licensing, and reducing the thicket of administrative measures that make it difficult for traders to participate in this market. With a level playing field, American enterprises and investors will find new opportunities to trade and invest in Belarus.
The American business community in Belarus has long been one of the key foundations of our bilateral relationship. I am optimistic that as the political bilateral relationship continues to improve, and the relationships between our people deepen, increased trade and investment will follow. American investment in Belarus benefits both the United States and Belarus because American companies make good neighbors! American companies create long-term employment that is a driver of economic growth, sustainable development, and a thriving middle class. American companies are force multipliers for private investment. Where they go, investment from other sources soon follows because American business is a sign of confidence to others, and shows a strengthening investment climate. American companies engage in business practices that protect the environment and are ecologically sound. They engage responsibly with local leaders and reinvest in local communities. American companies respect the contributions of labor; they break stereotypes and bring dignity to workers from all parts of Belarusian society; and promote the independence of vulnerable and marginalized groups. And like their counterparts in America, American companies in Belarus often shape the next generation of Belarusian entrepreneurs, leaders, and innovators! So, for a whole host of reasons, American companies make good neighbors for local communities and local enterprise.
We have seen signs that Belarusian officials are listening to private sector business leaders and are working to incorporate their suggestions and ideas, but more needs to be done, and sooner. Belarus is well positioned to unlock its potential through the WTO accession process, through smart reforms, and through private sector development. The United States stands ready to do its part to support Belarus as it takes these critical next steps to ensure a brighter future for all Belarusians. Thank you.