The European Commission promises to decide on Ukraine’s application in half a year

European Commission Chairman Romano Prodi promised Ukrainian President Leonid Kuchma that the question of providing the status of a market economy country to Ukraine would be submitted for consideration of the Commission. The meeting took place in Johannesburg, in the course of the Earth Summit. Leonid Kuchma asked the head of the European Commission that the status of a market economy country be provided to Ukraine as soon as possible. Mr. Prodi promised that the Commission will begin working on the question immediately, with the conclusions to be submitted within six months.

Ukraine is known to be demanding currently that the USA agree to grant it the status of a market economy country. To Kyiv that would mean certain advantages during antidumping examinations concerning Ukrainian products. Moreover, it would positively influence the volume of currency injections into the nation’s economy and contribute to stabilizing the hryvnia. Consideration of Ukraine’s application, previously slated to be taken up on August 23, has been deferred by the US Department of Commerce.

Ukrainian experts do not presume to make a forecast on how the request of Ukraine will be considered in the European Commission. They only note that Romano Prodi’s claim, multiplied by Washington’s silence, exposed a situation, such that the viewpoint of the USA might be somewhat at odds with that of the European Commission.

Ihor BURAKOVSKY, Ph.D. in economics and director of the Institute of Economic Research and Political Consultation , told The Day about the European technology of providing market economy status to a country: “Theoretically, the EU’s decision on providing market status depends on the following criteria:

“First, the nation’s companies make production and commercial decisions according to the market situation, with state intervention being minimized;

“Secondly, a public audit in accordance with international standards is to be conducted on companies’ accounting;

“Thirdly, distortions, inherited from the planned economy, as well as barter and debt cancellation must not affect production costs and financial performance of enterprises;

“Fourthly, the country has an effective functioning bankruptcy procedure and a property protection system;

“Fifth, currency transactions are to be carried out on the basis of an exchange rate determined by market factors.

“The strengthening of the domestic producers’ position during antidumping examinations is the main advantage given by the status of being a market economy country. In other words, in case specific accusations of dumping are brought, they will take into consideration the current production circumstances in Ukraine, rather than situation in other countries chosen for comparison. That is, if a country has no market status, its export prices are compared to the so-called normal price. For calculation of the latter the data of the third analogous country companies is used. This approach is certain to reduce the chances of those accused of dumping in protecting themselves.

“Such a decision is to be accompanied by changes to EU legislation regulating the trade concerns of the union. In terms of politics the status of market economy country means recognition of the success of economic reforms. As for Ukraine, that would certainly stimulate negotiations on joining the World Trade Organization, with the EU being one of its most key figures.”