It will be known in a month’s time approximately when Ukraine can join the World Trade Organization. On October 27 Geneva is slated to host a session of the Ukraine WTO membership task force. Representatives of 43 countries will scrutinize Ukraine’s first draft report on its trade regime. First Deputy Minister of the Economy, Valery Pyatnytsky, in charge of drafting the report, said this session was particularly important in speeding up our entry. “This will be the first draft of the final document, and if all things go well, we will be able to become a WTO member even earlier than we expected,” he believes. In his view, it is quite realistic for Ukraine to join the World Trade Organization in early 2004 on favorable conditions.
Interestingly, the deputy minister is convinced that the Yalta agreement on the formation of the Single Economic Space (SES) of Ukraine, Russia, Belarus, and Kazakhstan will in no way impede Kyiv’s plans to integrate into the World Trade Organization. He believes Ukraine will join the WTO long before the SES countries take any concrete steps to establish a free trade zone. If we take into account that the four are today on absolutely different levels of economic development and take entirely different approaches to governmental intervention in the economy, it may take the economies more than one year to integrate, Mr. Pyatnytsky thinks. It also interesting that, according to Anatoly Kinakh, chairman of the Ukrainian League of Industrialists and Entrepreneurs, Russia refused to sign in Yalta the agreement that if one of the SES countries first joins the WTO, it will not set any unacceptable conditions to its SES partners.
Meanwhile, Ukraine’s actual pace of moving toward the WTO today does not look very impressive. Verkhovna Rada has put on hold the seventeen bills that govern Ukraine’s trade regime, and no one knows if these will be passed in the immediate future. Bankers are taking quite a dim view of the amendments to the law On Banks and Banking that allow foreign banks free access to the Ukrainian financial market. They fear competition. The influential agrarian lobby categorically opposes reducing customs duties on food imports. Representatives of the furniture-making industry and insurance companies are in sheer terror about Ukraine’s WTO membership, for they think they could be simply ousted from the domestic market by large multinational companies. These economic sectors continue to complain that the government never consults them before making any agreements with the WTO. The Ministry of the Economy seems to have devised a tactic of first conducting international negotiations and only then concentrating on coaxing domestic opponents. It is obvious, taking into account the Ukrainian practice of politico-economic compromises, that if the two processes progressed simultaneously, this country would not join the WTO in this century.
It is easy to spot the most difficult points in Ukraine’s talks with WTO members by the statements of foreign governments. For instance, Poland and Australia have already demanded officially that Kyiv liberalize the customs regime in respect to sugar imports. The Economy Ministry is to give an answer to these demands as soon as late October in Geneva. Actually, Mr. Pyatnytsky reassured us that Ukraine would make no concessions about the import duty rate even though the latter is now the highest in the entire range of foodstuffs. Yet, he added that, under WTO standards, if the import of a commodity is strictly limited, the country must offer importers the so-called minimal level of access. As a rule, this minimum takes on the shape of a quota. In all probability, Geneva will see a heated debate precisely on a privileged import of crude cane sugar. The Ukrainian government offers Poland and Australia a handsome quota of 240-260,000 tons a year. The Economy Ministry estimates that these quantities will be sufficient to keep Ukrainian sugar refineries working even in a lean season, for Ukraine exports approximately the same amount of sugar. Australia demanded increasing the quota to 300,000 tons and was suddenly supported by our own Verkhovna Rada.
This year the people’s deputies who represent the importing companies have successfully lobbied two bills on a privileged import of first 260,000 and then another 200,000 tons of crude sugar. The paradox is that the parliament granted the Australians more than they demanded from the government. “Since parliament allowed a privileged import of 560,000 tons of sugar, we may face serious problems in the WTO talks. Our partners will ask us to explain what caused so large quantities. Even if we do not use such a large quota this year, we have already stated our requirement,” Mr. Pyatnytsky says: it will be very difficult now to persuade the Australians that the import of sugar should not exceed 260,000 tons after we join the World Trade Organization.
It is the way the current parliament works that provokes pessimism about WTO membership even in those who favor this idea. With the presidential elections approaching, Verkhovna Rada will naturally find it difficult to concentrate on passing the seventeen laws that reform the system of allowing foreign companies access to our domestic market. It looks still more unlikely that this task can be fulfilled without active involvement of the executive branch.
