1. Romania’s ‘Other Guys’ FDI From Non-EU Countries International Investment Conference Chamber of Commerce & Industry Romania Bucharest Bucharest, Romania 14 October 2004 Barry Kolodkin, Advisor to the Prime Minister CHF-USAID/US Embassy/AmCham Romania

2. 14 Oct 2004US Embassy/USAID-CHF/AmCham Romania 2 Non-EU Investors Support EU Accession for Romania Better legal framework and business environment Better infrastructure Lower cost of entry Wealthier populace Buy more products US perspective Romania joins world’s largest channel for trade and investment – transatlantic channel between North America and the EU

3. 14 Oct 2004US Embassy/USAID-CHF/AmCham Romania 3 EU in a Dominant Position 62% of FDI from EU Austria, Netherlands, Germany, France are top EU investors US floats between 3 rd and 5 th Cyprus, new EU country (offshore investments) and Turkey, candidate country are important investors 68% of trade is with EU and growing; top trading partners are: Italy Germany France Other 38% EU 62% FDI Origin %

4. 14 Oct 2004US Embassy/USAID-CHF/AmCham Romania 4 Romania’s Natural Proclivity Toward EU Investment EU market advantages Proximity Overland transport logistics available Cultural kinship More cost-effective for EU countries e.g., Difficult for Eastern Europe to compete with China, SE Asia, or Mexico for US firms

5. 14 Oct 2004US Embassy/USAID-CHF/AmCham Romania 5 Rising EU Investment Is Good For Romania Infusion of needed capital Infrastructure development Economic integration with EU partners Job opportunities May help with migration issues

6. 14 Oct 2004US Embassy/USAID-CHF/AmCham Romania 6 Philosophical Reminders For Romania Global competitiveness is important to Romania’s success Europe slowest growing region in the world Diversity and balance are desirable Let market forces decide who invests Money is a coward Non-EU investors will not invest where they cannot compete

7. 14 Oct 2004US Embassy/USAID-CHF/AmCham Romania 7 Why Non-EU Investment is Important Distorted marketplace Higher costs to Romania Marginalization of greatest source of technology and productivity US Marginalization of most dynamic growth market China/Asia

8. 14 Oct 2004US Embassy/USAID-CHF/AmCham Romania 8 Important Non-EU Investors in Romania US (Colgate, GE, Citibank, Coca-Cola, etc.) Canada (Connex) Russia (Lukoil) Japan (Koyo Seiko, Sony) Korea (Daewoo) Switzerland (Holcim) Israel Much of South East Europe (ABC Project Krajina)

9. 14 Oct 2004US Embassy/USAID-CHF/AmCham Romania 9 Recommendations to Attract Non-EU Investment Ensure 2007 Accession Simplify overall tax system and reduce rates Lower MFN tariff rates to the lowest levels Negotiate tariff reductions with specific nations in specific sectors where appropriate Free trade agreements wherever possible Transfer pricing where appropriate Open privatizations and tenders for contracts from the state budget - no national preferences Targeted promotion