Integration issues dominated a recent two-day seminar on Ukraine’s WTO accession in Pushcha-Ozerna outside Kyiv. This time, however, no dates for Ukraine’s joining the WTO were discussed, and every seminar participant could only use indirect signs to make his own judgments about the country’s actual progress toward desired membership.
First Deputy Minister for the Economy and European Integration Valery Pyatnytsky promised that a definitive date for Ukraine’s WTO accession will be made known toward the end of the year, but only on condition that Ukraine succeeds in convincing the toughest WTO negotiators and that parliament “works constructively” toward this end. The latter is unlikely, given the upcoming recess and the decline in legislative activity expected in connection with the presidential elections. Still, there is reason to believe that 2005 could see the end of WTO membership negotiations that are now in their tenth year.
Be that as it may, the negotiations that involve forty-eight nations interested in Ukrainian markets are in fact headed into the homestretch. Ukraine has already signed twenty-four bilateral agreements on access to markets of goods and services, including those of the EU, which is especially important. Over 95% of customs rates have been agreed upon as part of the bilateral talks. The lion’s share of customs rates yet to be agreed upon is in agriculture, which is the most problem-ridden sphere in international trade. The twelfth official meeting of the task force considering Ukraine’s application for WTO membership, held on April 26-27 in Geneva, was dominated by a discussion of a draft task force report, a conclusive document that sets forth all Ukraine’s commitments before the WTO. To quote Pyatnytsky, the fact that such a document exists and the “rather positive” attitude toward it are evidence that Ukraine has entered the final stage of its WTO accession. At the same time, the US, Australia, Japan, and several other countries insisted during the Geneva meeting that their rigid requirements be included in the protocol.
American claims mostly involve the protection of intellectual property. Even though Ukraine has almost passed all the relevant laws in keeping with WTO requirements (parliament is yet to pass the bill on the production, export, and import of compact disks), the US is in no hurry to strike this issue from the agenda and is demanding proof that these laws are in fact being enforced and that the fight against piracy is bringing tangible results. The US is also demanding that Ukraine lift restrictions on the presence of foreign insurance companies in Ukraine. Meanwhile, according to Lidiya Melnyk, deputy director of the Finance Ministry Department for Cooperation with the WTO, the State Committee for Securities and the Stock Market believes that liberalization of Ukraine’s market of financial services may be possible no sooner than ten years from now.
Japan has contested the validity of sanitary and epidemiological inspections of imported audio and video products imposed by Ukraine. By way of compromise, Ukraine offered to extend the duration of prepaid permits from one to ten years, but this proposal was turned down. According to Melnyk, this issue will be raised again during the visit by a Ukrainian government delegation to Japan slated for late May.
Australia wants Ukraine to raise the tariff quota on the importation of raw sugar cane. Whereas initially a quota of 260,000 tons per year was discussed, now the Australians want the quota raised to 408,000 tons, citing the fact that nearly 700,000 tons of raw sugar cane were imported into Ukraine in 2003. Commenting on these figures Ms. Melnyk said, “We set negative precedents for ourselves during the negotiations.”
Turkey has pressed for lower export duties on ferrous scrap metal and insisted that Ukraine lift the ban on the export of nonferrous scrap metal, which is in place until 2010. Turkey insists that the current export duties be gradually lowered from thirty euros per ton until they are eliminated altogether.
How long will it take Ukraine to solve these contentious issues? People’s Deputy Serhiy Kasyanov, who chairs the joint parliamentary- government commission on Ukraine’s WTO accession, has his own opinion on this question. He believes that WTO members must decide in principle whether they want Ukraine in the WTO and make a political decision to this effect. “If such a decision is made, many issues that are standing in the way today could be resolved by Ukraine’s assuming certain commitments,” he said.
Aside from the negotiations, work is underway to bring national laws into compliance with the norms and regulations of WTO agreements. In this respect, most problems stem from the agriculture, automobile, and shipbuilding industries, which enjoy significant state support in Ukraine. Pyatnytsky attributed the difficulties posed by the reform of the nation’s legislation primarily to clashing interests of various lobby groups both in the parliament and government. His argument was supported by a telling example from Deputy Justice Minister Vasyl Marmazov. In a striking case, the government drafted a bill in line with WTO norms, which would allow nonresidents to practice law in Ukraine, and submitted it to parliament for consideration in 2002, which has yet to amend the relevant law on the legal profession.
“Sometimes it is extremely difficult to find the golden mean between WTO requirements and our vision of how the industry in question should develop,” Pyatnytsky said, adding that it is crucial for the government to find a balance of interests that would enable the economy to develop successfully as part of the WTO. Proposals were voiced during the seminar to increase the effectiveness of the legislative process. To this end, the parliament must employ a special accelerated procedure common in international practice, under which the parliament would only have to vote for or against the country’s WTO accession, which would automatically mean approval or rejection of the whole package of trade-related bills. Where there is a parliamentary majority, one could expect such a vote to come through, according to Viktor Dovhan, an expert with the Ukrainian- European Policy and Legal Advice Center. However, according to the parliamentary European Integration Committee, currently there are forty bills in the parliament that run counter to WTO requirements, thirty of which have been submitted by majority representatives. This circumstance calls into question the unanimity of lawmakers.
