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Short Takes: News from the International Trade Administration

United States and Russia Sign Agreement on Uranium Sales

An agreement that will help ensure the availability of an affordable source of nuclear fuel for U.S. utilities was signed by Secretary of Commerce Carlos M. Gutierrez and Sergey Kiriyenko, director of Rosatom, the Russian Federal Atomic Energy Agency, on February 1, 2008.

In signing the amendment to a long-term suspension agreement governing trade in nuclear fuel, the two countries agreed to allow direct sales of commercial Russian uranium products to U.S. utilities, a capability Russian producers did not possess before the agreement. It will provide U.S. utilities with a reliable supply of nuclear fuel by allowing Russia to export to the United States while minimizing disruptions to the U.S. domestic enrichment industry.

A suspension agreement is essentially a settlement of an ongoing dumping investigation; it suspends applicable dumping tariffs. Currently, the only Russian uranium product allowed into the United States for consumption in nuclear reactors is low-enriched uranium that is down-blended from bomb-grade material. That uranium is sold indirectly to U.S. utilities through a U.S. government agent.

The amended agreement, which was under negotiation for two years, allows Russian uranium products to be sold directly to U.S. utility companies under a quota for Russian exports during 2014 through 2020. The Russian Federation will also be able to export smaller quantities of uranium products from 2011 through 2013.

Economic Benefits Seen in Production of Cellulosic Ethanol

If advances in technology allow cellulosic ethanol to become commercially viable, U.S. crude oil imports could be 4.1 percent lower than projected in 2020, with U.S. consumers realizing savings of $12.6 billion. Those projections come from a recently published report by the International Trade Administration’s Office of Competition and Economic Analysis, “ Energy in 2020: Assessing the Economic Effects of Commercialization of Cellulosic Ethanol.”

Cellulosic ethanol is ethanol that has been manufactured from cellulosic materials in biomass, such as crop and forestry residues, energy crops, and wood wastes. Currently, cellulosic ethanol is not commercially viable. The report states, “The magnitude of benefits gained will depend on the degree of cost reduction and the volume of cellulosic ethanol produced domestically.”

The report also gave the following findings:

  • The primary beneficiaries of commercially viable cellulosic ethanol production would be crop-producing U.S. industries and their suppliers.
  • Compared with current projections for 2020, U.S. crude oil imports would be 4.1 percent lower, which would amount to a difference of about 460,000 barrels per day.
  • The worldwide price of oil and the domestic U.S. fuel price would be 1.2 percent and 2.0 percent, respectively, lower than projected.
  • Lower prices for crude oil would hurt U.S. oil producers, although the motor-fuel producing industry would benefit.

The full report is available on the ITA Web site.

Support for Bilateral Investment Treaties Voiced by President’s Export Council

On December 4, 2007, the 48-member President’s Export Council (PEC) approved a draft letter of recommendation to President George W. Bush that expresses strong support for a fair and open global investment climate.

In the letter, the PEC expressed concern with new and persistent restrictions on investment in foreign markets and what it sees as growing antagonism to foreign investment abroad motivated by protectionism. It also expressed strong support for ongoing U.S. economic dialogues.

“[I]n parallel with these efforts,” noted the letter from the PEC, “we believe that substantial and measureable progress can be achieved through the negotiation of comprehensive and binding bilateral investment treaties (BITs) with each of the ‘BRIC’ nations (Brazil, Russia, India, and China).”

Those countries are critical to the U.S. strategy of expanding access to foreign markets, said the council in the letter. “Not only does each country have substantial, largely untapped domestic markets, but they are also markets where U.S. service suppliers have a significant comparative advantage.”

The PEC went on to note that U.S. companies cannot take advantage of any opportunities unless they can operate on an equal footing with domestic and foreign competitors and can operate in a stable, fair, and transparent regulatory environment.

The full text of the letter is available on the PEC’s Web site.