J. Daniel O’Flaherty became Vice President of the National Foreign Trade Council in Washington in 1987.  He has worked on a range of trade policy issues with NFTC member companies, especially unilateral economic sanctions issues on which he helps to manage the NFTC-sponsored USA*ENGAGE coalition. His work also includes US-China trade relations, Vietnam normalization, and commercial relations with the former Soviet Union countries. 

The principal goal of NFTC is to promote a rules-based world economy. How does the council view the current economic situation in Russia? How are American businesses in Russia right now?

I do not think it is a rules-based economy in Russia yet. There are a number of improvements that can be done. Of course, there were no U.S. businesses present in Russia before the 1990’s. There was a lot of interest after the fall of the Soviet Union in terms of finding markets. It has not turned out as good as it was promising to be. First of all, there is the oil & gas business along with other natural resources. As far as the development of that industrial sector, American companies did not get as big a piece of the pie as they originally thought they would. The Russians naturally took it all themselves. Secondly, there has not developed as big of a consumer market. Finally, the legal system appears difficult. The YUKOS case is a deterrent to foreign business. 

NFTC as well as USA*ENGAGE group that you lead always strive to lobby against unilateral sanctions and to offer other more constructive measures. Have there been cases when you were successful in preventing U.S. sanctions against Russia? What is NFTC’s view on the Jackson-Vanick trade barrier?

Most of the sanctions and prohibitions against Russia were enacted during the time of the Cold War. It was now the matter of getting rid of all these barriers. The Jackson-Vanick, of course, is the major concern. It is strange how such a thing even started. The trade restriction was passed to promote Jewish emigration from the Soviet Union. Once that was no longer a problem, a number of other issues arose that prevented the elevation of Russia out of Jackson-Vanick. Today, it is simply an anachronism.  

What industry areas still have unexplored potential for U.S.-Russia collaboration?

Apart from the natural resource business – which is a big deal – Russia offers a very large market. The country has a high population, to which American companies can sell their products. It is a matter of getting access to those markets – dealing with the bureaucracy, and overcoming the corruption. All these are problems.  

In general terms, how developed is the U.S. economic relationship with the Russian market – compared to other countries?

Surprisingly, Russia is now in the lower end of the U.S. international trade scale. U.S. investment in Russia is very low. As I said, there was a great amount of interest initially, but now businesses have become somewhat disillusioned. Personally, I do not think many U.S. businesses truly recognize the full potential of Russia. But, at the same time, their reservation is understandable. They look at what is going to happen next with the political climate.