A forum organized by the Ministry of the Economy and European Integration to expand foreign trade and intended as a low-key event (the press was not in attendance) was held November 2 6. Onthe last day of the forum, government members met with the heads of Ukrainian trade missions abroad. This time following a minor procedural delay the press was invited and present.
The Ukrainian trade mission representatives were addressed by Prime Minister Anatoly Kinakh, just back from his trip to Washington where he failed to attain for Ukraine the status of a market economy country but succeeded in rescheduling Washington’s trade sanctions pending the enactment by Verkhovna Rada of the bill protecting intellectual property. The premier emphasized the positive dynamics of foreign trade as shown by its 13.2% growth in the first eight months of 2001. But the threat of sanctions still hangs over restructure the Ukrainian economy in the face of a slowdown on world markets, spurred Mr. Kinakh to stress yet again the need to radically change the structure of Ukrainian exports by selling more high-tech goods. According to the premier, improving the structure of Ukrainian exports amid worsening world market conditions must be at the top of the government agenda since positive growth indicators in the country’s economy can be brought to naught by inadequate export volume.
The tasks set by the premier for foreign trade mission heads are far from easy, considering that he himself failed to attain them during his visit to the United States. In fact, the assurances to postpone trade sanctions Kinakh received in Washington might well be short-lived, as the anti- dumping investigation by the US Commission on Foreign Trade is not carried out against Ukraine. As Mahistr i Partnery (Master and Partners) law firm executive partner Oleh Riabokon told The Day, the commission is slated to look into the presence or absence of losses inflicted on the US steel industry by imported steel goods. Says he, “The investigation started by the Office of the US Trade Representative did not focus on any specific country; it has a global character.” For 12 of the 33 kinds of imported steel goods the commission has found damage done to the US economy. The United States could still impose trade sanctions against several large Ukrainian steel plants early next year, Mr. Riabokon predicts. Even enactment of the law protecting intellectual property cannot save Ukraine from sanctions, as these are two different investigations, he says.
Ukraine simultaneously insists on a greater liberalization of its trade trade agreement due to replace the one signed in 1993. Quoted by Interfax-Ukraine, First Deputy State Secretary of the Economy Ministry Andriy Honcharuk said that Ukraine opts for rejecting any protectionist measures in the new agreement, despite the existing nine restrictions and six trade exemptions imposed by Russia. The Russians, however, consider such proposals premature at the present stage, while Ukraine wants to accelerate the process.
In view of this, the proposal to form a new customs union, the Organization for Cross-Border Cooperation between Ukraine, Russia, and Belarus, which sounded at the meeting might not have been merely a coincidence.
The proposal, however, did not put our partners in competition off their guard, as Friday before last Moscow and Kyiv failed to reach a consensus on the volume of Ukrainian pipe exports. Russia believes that even the existing agreement concluded by Russia and Ukraine on May 1, 2001, undermines its market.
Unfortunately, it is difficult for Ukraine to solve the Gordian knot of its foreign trade and domestic tax policy issues because its government, created within the framework of a political coalition, is not united, while the interests of financial industrial groups often predominate over national ones. For example, while the premier has repeatedly supported the continuation of the economic experiment in the coal and mining industry, Vice Premier Rohovy got the governmental Committee for Economy and European Integration to approve a decision rejecting the experiment’s continuation. Apparently, the battles over this issue, as well as the Tax Code, are still ahead. Meanwhile, adopting become Ukraine’s key to a larger share of international markets, The Day’s experts believe.
But the immediate foreign trade watershed that Ukraine will have to cross is the adoption (due to insistent demands by the United States) of the law protecting intellectual property. To know the chances this law has, The Day approached its author, deputy head of parliament’s Committee for Economic Policy Serhiy Chukmasov. He began in a roundabout fashion, saying, “The prospects for domestic market growth are rather hazy, especially the prospects for increased consumption of steel by domestic engineering plants. Consequently, the loss of markets due to anti-dumping sanctions could cause major losses to the budget and the state, leading to unemployment. About the law itself, as its author I have been labeled an agent of imperialism, with the demand for my extradition from Ukraine likely to be made by the Communists, just as they did with the US ambassador. On the other hand, if the law is approved, we will not be able to avoid hysteria and the blockade of the parliamentary dais. The law can be approved only if lawmakers vote with their ballots, just as they did voting for the Land Code. It is best to consider my bill in an item-by-item procedure, for there is no other way out.
Still, the decisions we make are not always the best. Who, for example, proposed to the government, on the pretext of combating the use of unlicensed software, that closing Internet-clubs and cafes should be timed to coincide with school vacations? Why not then, using the same pretext and abiding by someone’s wishes, close the Cabinet of Ministers?
