Ukraine must join the World Trade Organization, as this will benefit our country, argue veteran WTO members, citizens of Germany, who took part in a Ukrainian-German forum of entrepreneurs. German Ambassador Ditmar Studemann says that the Ukrainian government’s desire to join the WTO will spur Ukrainian-German business relations, which will lead to an influx of German investments.
Aware of Ukraine’s internal differences over membership, the German diplomat agreed that it will be a painful experience for many industries, but he emphasized that “breaking the shackles” of various preferences is what the Ukrainian economy really needs, especially in the eastern part of the country. He said that Ukraine’s WTO membership will mark a breakthrough, since Ukrainian entrepreneurs will have to compete with cheap, quality goods from abroad by raising the quality of their own products and lowering net prices. As a result, the economy and industry will be raised to a new level, and life in Ukraine will be much better. We are being advised to achieve this breakthrough now, before the end of the year: it will be cheaper this way because later, after other countries join this organization, there will be more requirements, and they will be tougher. The German diplomats “worked” the Ukrainian side in keeping with all the rules of psychology. Promising advantages and frightening their listeners with consequences, they then proceeded to praise Ukrainians’ sense of dignity and importance.
Oliver Wick, director general of the Eastern Committee of the German Economy, lavished compliments on Ukrainian market prospects and the convenience of Ukraine’s geographic position. He made it clear, however, that this is not enough. We have to assert our position by obtaining market economy status.
The official section of the Ukrainian delegation responded adequately to compliments and warnings.
Tetiana Stepankova, vice president of the Ukrainian Association of Industrialists and Entrepreneurs, once again listed WTO membership advantages, such as the cancellation of antidumping, easier transfers and international trade relations, and then noted that the biggest obstacle on the road to Ukraine’s membership in the WTO is the lack of bilateral agreements with Australia and the United States. Yet just several weeks ago Ms. Stepankova was resolutely opposed to the WTO. In a word, the process is underway.
Viacheslav Tsymbal, head of the economy ministry’s department in charge of cooperation with the WTO, described how the GDP will rise and the living standard will increase, owing to various preferences that will appear after Ukraine’s admission to the WTO. He said that real GDP may increase by 2-4 billion. He corrected various expert forecasts that the GDP will go down in the first couple of years after Ukraine joins the WTO. In his opinion, practice often shows a reverse picture. He also refused to confirm prognoses about a sharp increase in imports that will allegedly cause Ukrainian industries to collapse. He cited statistics proving that, after decreasing customs duties, domestic light industry exports rose twofold. When all commodity rates go down, sales abroad will increase.
Not all the forum participants were as optimistic. Tariel Vasadze, general director of AvtoZAZ, pointed out that people have to reconcile themselves to the fact of WTO membership, but there must be a clear understanding of the terms and conditions of this membership. He added that Ukrainian business requires a period of adjustment, when Ukraine, after joining WTO, will not be lowering import duties quickly and sharply, having given businesspeople enough time to get acclimatized. Vasadze cited the experience of China and several Latin American countries that kept the car import duty at over 35 percent after entering the WTO, compared to the 10 percent accepted in EU countries. In general, this requirement is appropriate, as every country must first take care of its domestic production and business climate, all the more so as favorable conditions for domestic business will attract transnational companies that create additional jobs, while favorable conditions for business abroad will only attract commodities that the populace may find unaffordable.
Declaring that German business favors Ukraine, Wick emphasized that it requires a climate of trust and clear-cut market rules. He was echoed by Siemens-Ukraine’s general director Martin Grunert, who urged the Ukrainian government not to regard WTO membership as an end in itself but as part of economic policy. Competition is certainly good, but the question is, will Ukrainian businesses be able to compete with foreign ones? Grunert is confident that if they try, they will measure up.
Vasadze thinks the opposite: they will not be able to under the present conditions. However, both businessmen agree that the state should help business through the adaptation period. But it looks as though the state is wrapped up in the upcoming parliamentary campaign.
