Sprinting to the Finish Line

To use a Soviet propaganda cliche, 2005 may be rightly called a decisive year for Ukraine, which is on its way to the World Trade Organization. Ukraine may be admitted to this “international trade club” this coming December during the WTO ministerial conference to be held in Hong Kong. There is a severe time limit, though: in order for this conference to put the Ukrainian issue on the agenda, our side must complete all negotiations by the middle of the year and approve the report of the Working Group handling Ukraine’s entry into the WTO. “There are just months and weeks left,” says Valery Piatnytsky, First Deputy Minister for the Economy and European Integration, describing the intense working atmosphere.

Last year Ukraine made considerable progress towards the coveted goal. The Working Group has drafted a report, the last document in the WTO membership process. According to Mr. Piatnytsky, the report’s current version is very similar to the final one, while clarifications that may still be added to the document will not be conceptual in nature. Incidentally, the Working Group plans to hold its next session in the first quarter of 2005.

There are practically no problems at the negotiations concerning access to commodity and services markets, Mr. Piatnytsky claims. Even in the most controversial points relating to banking, insurance, and audiovisual services, “we found formulas” that suit everyone. The schedule of Ukraine’s specific obligations in respect of access to the market of services includes approximately 150 sub-sectors, i.e., 80% of the total number set by the WTO classifier. The first deputy minister foresees no special difficulties in the ongoing talks with Australia on raw sugar imports: that country has made no specific demands, while the points under discussion “are of a general and theoretical, rather than practical, nature.”

Signing a protocol with the US has only been delayed because of the Verkhovna Rada’s failure to pass a law on exporting and importing laser discs, which the American side considers a serious obstacle to solving the intellectual property protection problem. In spite of this, Mr. Piatnytsky says, “a very constructive dialogue” was recently held with the US, and the general feeling is that it is prepared to make a concerted effort to complete the talks as soon as possible.

More than 95% of tariff lines have been agreed upon in the course of bilateral talks. In Mr. Piatnytsky’s view, the most difficult negotiations are now underway with China, the only country with which we have not yet settled differences over tariffs. “We will still have to work hard to harmonize our current positions. We cannot unilaterally accept the issues that are outside the framework of traditional demands expected of WTO member states,” Mr. Piatnytsky said.

Much will have to be done in the remaining six months to bring state law in line with WTO standards and regulations. Still unresolved are such problems as harmonization of the technical regulation system, simplification of the commodity certification procedure, harmonization of standards and Ukraine’s current sanitary, phytosanitary, and veterinary measures, customs assessment, taxation on the automobile industry, export duties on certain products, setting sugar import quotas for Ukraine, implementation of a mechanism of payments, and scope of domestic support to the farming sector.

Commenting on Ukraine’s prospects for joining the WTO, Mr. Piatnytsky noted that, while this country has been conducting negotiations, it has essentially changed its trade status and has been fulfilling most of its commitments. In his opinion, we can expect “a long-term economic effect.” This will depend on whether Ukrainian foreign trade entities will manage to seize new trade opportunities and whether our business partners will be attracted by a liberal regime in the service industry to such an extent that they will be ready to invest in this sector. If Ukraine fails to be granted market economy status before joining the WTO, membership in this organization will speed up this recognition, Mr. Piatnytsky hopes. Yet, he sees the greatest advantage of being a WTO member in that we will be more predictable and transparent, and other countries will find it easier to establish trade links with Ukraine.