The task force in Geneva gathered for the tenth meeting yesterday to study Ukraine’s membership of the World Trade Organization. Economy and European Integration Minister Valery Khoroshkovsky, head of the Ukrainian delegation, met with the task force leader Sergio Marci. Among other things, they discussed the cabinet’s plans to secure Ukraine’s membership. A source close to the cabinet claims the talks will be anything but simple, because there is no understanding on what happened in Moscow on Sunday. Members of the task force are bound to ask the same question: how all this agrees with what we are discussing now, Ukraine’s WTO membership?
On Sunday, the presidents of Belarus, Kazakhstan, Russia, and Ukraine agreed to prepare an agreement, by September 2003, forming a “single economic space” and setting up a joint independent intergovernmental regulatory commission on trade and tariffs. The presidents’ statement points out that the ultimate objective is the formation of a Regional Trade Organization. Agreements on that single economic space, coordinated economic policy (in various respects), and harmonization of legislation are expected to be signed by September 2003. A joint top-level task force is being established, to act under the presidents’ authority. Vladimir Putin said it will be quartered in Kyiv and headed by Kazakhstan’s “ranking representative.”
Russia, being actually the chief CIS coordinator, obviously tries to keep in the shade to avoid accusations of attempting to build a new version of the Soviet Union. Apparently it persists in getting Ukraine increasingly involved with the CIS (after electing President Kuchma head of this organization).
Ukraine appears to take a consistent stand, requiring closer cooperation from CIS countries and implementation of the 1994 free trade zone agreement. President Leonid Kuchma unequivocally stated (courtesy of the Russian president’s web site www.president.kremlin.ru): “Our goal is making a decision in September on the formation of a free trade zone, because we cannot jump stages. It is through a free trade zone to a single economic space.” Belarusian leader Alyaksandr Lukashenka does not seem to mind a free trade zone. In fact, he expects to “give our commodities a complete freedom of movement” next year. A similar approach is demonstrated by Kazakh President Nursultan Nazarbayev: “In the final count we realized that to form a single economic zone, preceded by a free trade zone, it is necessary to resolve the issue of tariffs. These decisions must not depend on the governments.” He did point out, however, that the task force to deal with the tariffs regardless of the four governments (meaning that it will stand above them) must be cleared by both presidents and parliaments. It won’t be much of a problem for Putin, Lukashenka, or Nazarbayev, but the situation with their Ukrainian counterpart is different.
At the moment, experts are cautious about the Moscow accords. Yaroslav Zhalylo, president of the Anticrisis Study Center (Kyiv), believes that raising CIS enterprises’ competitiveness to the civilized level will be more effective in phase one if the task is coped with first within the CIS.
Ukrainian experts may find ample food for thought in Russian Economic Development and Trade Minister German Gref’s commentaries on the accords of the Russian, Belarusian, Kazakh, and Ukrainian presidents. Among other things, Mr. Gref feels good about the accords envisaging the creation of a “supranational” body to handle foreign trade, thus making every party concerned abide by a harmonized customs policy. He explained, however, that the statement on a single economic space, signed by the Russian, Ukrainian, Belarusian, and Kazakh heads of state, does not stipulate the institution of a single currency. “It’s too early to discuss. There are four kinds of integration into a currency union, and this one is the superior kind. We began with a customs union providing for a free commodity movement. The next stage is integration in the freedom of movement of goods and services. This, too, will require a very serious economic readjustment in all the [member] countries,” he stressed, adding that the four countries will have to completely synchronize their economic policy, meaning a revision of national laws and principles of the budgetary policy. Point investments, targeted on national enterprises, must be completely discarded, so everyone concerned can operate on an equal footing.
Ukrainian economists are rather skeptical about the above instruction. Oleksandr Paskhaver, president of the Economic Development Center, told that getting united with economically weak countries, rather than integrating with stronger ones, cannot be reasonably explained from the economic point of view: “We seem to build a customs barrier between ourselves and those [stronger] countries for the sake of weaker economies.” Mr. Paskhaver added that such economic models should be at the top of an overall economic integration trend. Meanwhile, the four republics have tended to disintegrate ever since the USSR collapsed, as clearly evidenced by the Ukrainian-Russian trade status, its turnover being on a steady downward curve. Does this mean that we want to revive the integration process administratively? Mr. Paskhaver believes that it would stand to logic to begin by ascertaining the reasons for such disintegration, rather than try to keep the shaky structure from falling apart with administrative supports. Most importantly, the question is, how does that “free economic space” within the CIS agree with Ukraine’s stated aspiration for the European economy?
