tractors for which russia is a leading export market. we're also exporting deere portions. our interests reflect an enormous potential. russia can become -- fast growing demand for food and forestry products as the global population grows more affluent. our experience overall has been positive, yes, with frustrations from time to time. we understand the challenges of doing business in russia, but we recognize the enormous opportunities as well.

pntr with russia is simply put a benefit to the united states rather than an accommodation to russia. there is a strong business case for congressional approval of pntr, i urge the congress to quickly -- u.s. companies their workers and shareholders receive the benefits from the outset of russia's long-awaited wto membership. i'll be pleased to respond to any questions that the committee may have. >> thank you. >> chairman baucus, senator kyle and distinguished members of the committee, thank you for the opportunity to testify today on a subject that i feel is of critical importance, the opportunity to grow the u.s. economy and u.s. jobs by establishing u.s. trade relations with russia. i'm a u.s. citizen born and raised in new york, i joined ge

in 1991 and for the past 13 years have been living and working in russia. for the peace six years, i have served as chairman of the chairman of commerce in russia. so i've been in a unique position to witness firsthand the dramatic changes russia has undergone in such a short period of time almost 1.2 million in

u.s. origin ofrds in russia, up from 410 million in 2010. it's suppliers in the united states and we believe that our sales with pntr could triple by 20 to.

russia is looking to -- ge health care will see tariffs fall from 15% to 4.3%. some 10,000 locomotives will need upgrades to the tune of $200 million. ge is also the chargest supplier today of foreign aircraft engines to russia and the largest aircraft lesson. ge aviation with 20,000 work orders stand to benefit as russia reduces its tariffs on aircraft engines. these ge products were made in ohio, kentucky and north carolina.

and it's not simply to lower tax. implement a high standard of ipr protection are critical for u.s. companies. without pntr the u.s. would have no recourse should disputes arise. if the u.s. does not grand pntr to russia, american companies and their workers will be at a significant disadvantage relative to our global competit competitors. at a time when export growth is key to the u.s. committee, we would be injecting an important opportunity while competitors -- russia will join the wto whether or not the nptr is -- about the eight of american companies to compete on a level playing field according to the same set of rules with foreign companies, all eager to do business in a

fast growing economy. i urge this committee and the full congress to allow the american economy and american workers to be able to reap the benefits of these opportunities. thank you. >> thank you very much. mr. taylor? >> good morning, chairman backus. >> good morning. >> senator kyle, distinguished members of the committee, thank you for the opportunity to speak to you on behalf of the montana stock growers association. my name is watsi wattie taylor,- oldest and most historically significant cattle ranching establishment established in 1884. we have 30,000 acres in southeastern montana. ranching has been a vital part of my family heritage for many years.

96% of the world population lives outside the borders of the united states. we must have access to the additional demand for beef from consumers that live outside the u.s. if we hope to remain successful. russia was the u.s.'s fifth export market for beef in 2011. we can now achieve a significant increase in our exports to russia thanks to the provisions of russia's wto agreement. these provisions include a large country specific beef coquota a higher tariffs for high quality beef. i am confident that we can provide a significant amount of high quality beef as is defined by the agreement. montana is leading the way to produce large volumes of usda quality choice and prime beef.

perform in different kinds of harsh environments. our hearty northern tier -- it is also exciting that montana is current exporting 30,000 head of our superior cattle to russia to help establish a more vibrant domestic beef industry. montana ranches are currently working and living in russia to establish western style cattle and ranching enterprises. while russia is an sper enterprising opportunities for our beef. montana ranchers have always appreciated the efforts by chairman baucus that are based on sound science and international standards. in particular, ensuring that russia lives up to its wto commitments in sanitary standards and other technical issues for beef is crucial. without the npr we would not be

able to enforce these commitments. recognizing the international science based standards is very important. it encourages the safest most prudent production practices. issues that are most important for our ranchers with regard to russia include tetracycline. risks assessments conducted according to internationally recognized methods. bacterial parameters. we encourage science-based standards for the contamination stan zards. sanctions policy, once russia has adopted a science-based standards, we uncourage them to implement a sanctioned policy --

veterinarian equivalence, we encourage the use of planned 2012 meat plant audits by russian veterinarian service to make the determination of the equivalents of the u.s. meat inspection system. usda food safety inspection service as the competent authority. this includes recognizing the fsi has authority to improve and suspend u.s. beef establishments for export to russia. in addition, we need to ensure that russia fully implements the tariffs and quota concessions they have agreed to make on beef. extending permanent trade relations will give us the means to enforce to ez concessions and give montana ranchers the -- exports create jobs, our competitiveness depends on profitability and attracting the next generation of ranchers back into the business.

our ranch family's livelihoods depends on exports which are our most vibrant -- granted to present my testimony today, and i look forward to working with you throughout the course of this process so secure permanent normal trade relations with russia. i'm happy to answer any questions you may have, thank you. >> chairman backus, senator kyle and members of the committee, my name is paul williams, i'm an american songwriter. on behalf of our 427,000 american songwriter composer and music publisher members. i'm not here to address rampant copyright prak tuss--face in

securing fair compensation for public performance of our music through quote, unquote, normal channels in the russia. public performance royalties increasingly determine whether a talented muse create tore can remain a professional is forced to take a day job to support a music hoppy. you don't want us taking day jobs because you're liable to end up with ozzie osborne as your plumber, you're in a lot of trouble. such a transition would be a huge loss, not only for american culture but also for our economy. ascap members are overwhelmingly the owners of small innovative members. i am a small businessman, mr. chairman. music createors and owners depend on the efficiencies of performing rights organizes,

pros like ascap. i love ascap. we rely on a network of reciprocal relationships an ever increasing portion of american music creators income, it's over one-third and makes a positive contribution to our balance and trade. i am sad to report that we are grossly underpaid for public performances for our works in russia. for french and italian economies, our performance royalties in france are 11 times greater, viva la france.

and an economy one-tenth the size of russia collects twice as much as public performances in russia. we believe the russian legal system handy caps the efforts of row in collecting public performance royalties. russian courts don't follow the law. russian courts have row's right to russian ascap members and sometimes they -- it makes no sense. further ascap composures are supposed to receive royalties for the public performance of movies exhibited in russian theaters. in fact row has sent us

royalties in the past. but there is no doubt that the royal fis could be increasingly significant as american movies are widely distributed in russia, everybody loves american movies. in january, three of the top five -- hugo, the score was written by ans a cap writer, howard shore. however, meritless legal challenges now threaten row's authority to collect for this critically important source of america's music, which translates food on the table, gas in your car and taking your kids to school. finally russian fiscal authorities require us to collect a value added tax at a statutory rate of 18% from our royalty distribution. no other pro in the world although russia grants the vat

exemptions for other intel lek shul property. it adds insult to injury given the apparent underdirection of royalties. we're realists, we know there's no magic wand that -- however regardless of what happens with pntr, we ask that the u.s. government will help us achieve the following goals, three things we ask. russian judges and lawyers must receive better edge caucation i handing of u.s. copyrights. based on our ongoing problems with china, we are under no illusions that russia's entry into the wto by itself will a -- if congress decides to grant npr

entitle russia universal integrity. in 2009, i served as co-chair of a private sector advisory committee that provided the administration with recommendations on a new

bilateral investment treaty. my written statement describes three sets of disciplines. you could think of them as a triangle that form. >> there's only one or two of noes things are in place, the rule of law frame work for business is not as strong nor as stable as it is when all three sides of the rule of law triangle are in place. i believe congress and the administration should be partners should be all three sides of the rule of law triangle become firmly established. in my system, in my written testimony, i urged that six actions be taken. one relating to trade, two recommendations relating to investment and three recommendations relating to institutional integrity and

controlling corruption. i believe congress should be engaged in and exercised continuing oversight on these actions which will strengthen the rule of law for business. first, congress should extend permanent normal trade relations to russia. doing so is in our foreign policy interests and it is in our economic interests. second, the administration in russia should initiate and vigorously pursue negotiations for a bilateral investment treaty which both countries legislators then should ratify. russia failed to ratify an investment treaty negotiated in 1992, and as a result, u.s. investors in russia lack important rule of law protect n protections. third, the administration should advocate for u.s. investors in russia and vigorously espouse the claims of u.s. investors

whose investments were appropriated in 2004 through 2007. in the absence of an investment treaty, these investors do not have the opportunity to pursue dispute settlement through investment treaty arbitration mechanisms. fourth the administration should vigorously work to ensure that all parties to the oecd anti-bribely convention including russia fully carry out their -- business bribery by their nationals. fifth, russia and the united states should intensify work to ensure that russia's customs, tax administration and judiciary are freer of corruption. sixth, russia and the united states should correspondent to expand the scope for civil society organizations such as transparency international to monitor, investigate and report on suspected corruption. i believe the executive branch

and the congress can be and should be partners in this work. i would urge the executive branch of the congress a plan to implement all of measures to strengthen the rule of law. i would urge the congress to exert active and continuing oversight to ensure that the executive branch presents a plan, implements that plan vigorously and presents a problem for business and puts into place all three sides of the rule of law triangle. the trade side, the investment side and the institutional thank you. >> thank you very much mr. larsen. some american businessmen tell me they don't want to do business in russia. don't even try because of corruption. it's just not worth it. in fact i think i saw a study somewhere where an international organization ranked countries

according to political corruption, not at the bottom, but way down near the bottom. so i would like to ask any of you who wish to respond, what should be done about that from the u.s. perspective and as granted pntr help or hurt in that effort. mr. allen? >> from our perspective we have had a -- there's no doubt it exists but there's corruption in a number of countries and it's the company and its business conduct that is the important part of this. and when we go to these countries, countries like russia, we establish strong

conduct guidelines and we assure that our operations run themselves that way and we think that ends up being a promoter of improved conduct in the entire business community. i can tell you that when you establish a reputation there that way, you can be affected. the plant that you visited was built in nine months. nine months. that's hard to do anywhere in the world. people say it can't be done in russia because of all the corruption, quote, unquote, it was all done ethically, in a nine-month period of time work directly with russian government officials. it is something we have to deal with. we take it very seriously, we enforce it very seriously with our people. but there's no doubt that permanent normal trade relations will improve the climate. you won't solve it overnight.

but it will improve the climate. >> there's a lot of american companies that say we're not going to go over there, it's too corrupt. >> when you work outside the united states, you need to be prepared to be working in different environments including addressing corruption. ge of course, we work according to the rules, every country where we are. it does make it more challenging, probably more expensive, you have to have a lot more lawyers in rushing tsi >> what do you tell a mid size company not as big as ge. >> we have a large profile in the government. they know who we are, it's easy for us to push back, to be honest with you. but i have been there for 10 years and i have seen a dramatic improvement since the late 1990s. >> how will our failure to grant nptr help or hamper american companies from doing business in

russia. >> i think it's something that's very important that will help off american companies, not just the large multinationals. >> it will help russia or encourage russia to join the -- >> they do want to start doing some soft right things, they need foreign investment, they need companies to come in and they need to be getting improving their operating environment. they recognize that as something they need to work on. >> okay, let me ask you, mr. larsen about corruption and how to deal with. it, you mingentioned a bilatera agreement. will we likely to get that agreement without pntr with russia? >> thank you, first of all i would like to say that i do think that the two corporate leaders who just spoke had organizations that have shown themselves to be very serious about overseas corruption. and they have very fine track records. we're privileged to be able to

work with them on some of these issues, secondly, senator kyle mentioned in his remarks that russia, as you did too, chairman baucus, ranks very, very low on some of these corruption perceptions index and that reflects the fact that there is a widespread view among international business leaders and others that this is a serious problem in russia. third, i think it's a very good thing that russia has decided to become a member of the oecd anti-bribery convention. they won't implement that instantly, a lot of western european countries were slow to start. many, many observers say there's a very serious problem in russia, especially in the cus m

customs tax administration and the judiciary and i think the administration needs to continue to work with russia on that. i noticed that vladimir putin said that there's a problem of systemic corruption and he wants to, he said in this op-ed, tackle it. well, we ought to take him up on it. and the administration in my opinion ought to propose to congress a plan for how they can follow up and work with the russian government to tackle this problem to the benefit of our u.s. businesses. i do think that civil society organizations like transparency international have a role to play. i think there should be scope for them to report on suspected instances of corruption, be able to do that, and finally, chairman, you asked about pntr

and it's impact on all this. i think pntr is definitely a plus, not just for u.s. trade relations, but it does impose a degree of trade relations that is a positive step. it's not all we need to do, but it's very, very important. >> mr. kyle? >> thank you mr. chairman, i think we're getting right to the nub of the problem here, and that is that you talk about the three legs of the stool. when is it time to negotiate over the two legs of the stool. you've got a little bit stronger hand to play if we explain that on, for example, the bits, we want the duma to ratify the agreement that the united states has rafi