Kyiv has declared the term for entering WTO

Ukraine is planning to enter the WTO in 2004. This is the first time the Minister for Economy, Valery Khoroshkovsky, has spoken so clearly about the government’s plans. This ambitious statement was made at a meeting in Geneva of the task force on Ukraine’s accession to the WTO. The task force includes over 40 countries, and as long as even one of them has any economic claims against Kyiv, the international civilized trade club will be closed for our country.

The minister has in fact been a leader in all negotiations on entering this organization, giving this process wide publicity six weeks ago. Note that Ukraine’s major partner and competitor in its way to the WTO, Russia, has not yet named a planned date for obtaining WTO membership. Yet, Minister Khoroshkovsky said that Kyiv is going to enter WTO simultaneously with Moscow.

Obviously, Russia is currently facing serious problems in its relations with the WTO. The US and Europe demand that Moscow raise domestic prices for energy carriers and, primarily, for natural gas. First Secretary of the EU Representation at the WTO, Fabian Delcros, believes that understated prices for fuel create a starting advantage for Russian producers, thus one cannot speak about equal competition on international markets. Simultaneously, the Russian government’s main expert regarding its path to the WTO, Yury Afanasyev, believes that prices for gas are Russia’s natural advantage, just as high technologies are natural advantages of the West. In general, there is a long way to go to achieve compromise in this argument. Everything points to the obvious political grounds for statements that Ukraine has to enter the WTO “hand in hand” with Russia. Even more significant is the fact of creating the single economic space in CIS, initiated by Moscow.

Minister Valery Khoroshkovsky informed the representatives of the member countries on the task force that our country is already prepared to start working on the final report. If this document is approved by all countries interested in the “Ukrainian question,” the path to the WTO will be open for Kyiv. Twenty-one of the twenty-three countries represented at the Geneva meeting voted for presenting a draft final report to the task force. At present there is no information as to which countries believe such acceleration premature.

Traditionally, a key issue in admitting a new member into the WTO is obtaining consent from the US, European Union, and Japan. We have never experienced trade problems with Japan since there exists virtually no trade between our countries. The US has claims against Ukraine on two issues. First, pirates keep selling CDs with stolen software freely in our country, which strongly offends Microsoft’s feelings. Second, chicken legs from the US are banned on Ukraine’s territory because of dubious feeding procedures, which involve insufficiently examined components. In course of their recent negotiations with Minister Khoroshkovsky, Washington representatives made it clear that there is no sense to proceed with the talks until the issue is settled.

The situation with the European Union looks more optimistic. During the recent talks in Brussels, Kyiv made concessions on the issue of the access of foreign companies to the energy, mailing service, and sea shipping markets. Earlier, the EU agreed to separate part of the problems — including canceling excessive privileges in the Ukrainian automobile industry-from WTO negotiations. There are no claims against us on gas prices, since Russia sells it to us at world prices.

It is obvious that there is an increase in information regarding Ukraine’s accession to the WTO. However, it is hard to say now whether this comes from achieving real results through bilateral negotiations or from a well-organized PR campaign. Andriy Honcharuk, former state secretary at the Ministry for Economy, who was responsible for guiding Ukraine’s accession to the WTO in the government for a number of years, speaks about the dangers of excessive clamor around the date scheduled for entering this organization. This could cause an aggressive attitude by the member countries of the Ukrainian task force. For instance, Turkey probably will insist on lifting the restrictions for exporting scrap metal from Ukraine, because its metallurgic factories need raw materials.

Taking into consideration the fact that the preliminary schedule for adjusting Ukraine’s legislation to WTO standards was in fact hampered, the government’s pompous statements look absolutely premature. Besides, it is hard to say if the banking lobby in the Verkhovna Rada will allow foreign banks to compete unrestrained with Ukrainian ones on the domestic market. In addition to this, today there are restrictions for foreigners in the audit, juridical, and the mass media markets. People’s deputies also have to lift the demands on compulsory items, including Ukrainian tobacco in domestically produced cigarettes. Besides, Viktor Yanukovych’s government will hardly be excited to hear the WTO demands on changing the principles for the existence of free trade zones.

It is not ruled out that the efforts of the Ministry for the Economy achieve real results in terms of improving our country’s image in the eyes of WTO leaders. This is really very important. However, now the effect from these efforts is far from obvious. Our country still has much work to do on the path to the World Trade Organization. Last Wednesday, the president appointed First Vice Premier Mykola Azarov head of the Committee on Ukraine’s entering the WTO. First Vice Premier, known for his solid approach to solving complicated problems, might play the role of a realist in preparing a new schedule for our country’s accession to the WTO.