On the threshold of the world’s markets

Ukraine is reckoning that it will join the WTO by the end of this year. This new deadline was announced recently by Deputy Minister of Economics Valeriy Pyatnytsky. Commenting on what this country has already achieved on its way to the WTO, the expert noted the positive changes that have occurred lately in the economy and the regulatory field, as well as the increased competitiveness of many Ukrainian businesses. However, things are not so rosy with production, which often fails to meet high international standards. Accession to the WTO will open new markets to Ukrainian businesses, Pyatnytsky said, but the state must shoulder part of the expenses aimed at adapting small and medium business to working in the conditions of WTO membership.

There is now a new reason why Ukraine should join this organization: the Ukrainian-Russian talks on the ban on the importation of Ukrainian animal products would proceed in an entirely different way if Ukraine were a WTO member. In Pyatnytsky’s view, these kinds of restrictive measures are not applied to WTO members and disputes are settled within the framework of this organization.

Meanwhile, there are still many outstanding problems in the Ukraine-WTO negotiations. According to Prime Minister Yuriy Yekhanurov’s statement made in late 2005, Ukraine has signed bilateral protocols on mutual access to commodity and services markets with almost all the WTO members except for the US, Australia, and China. In addition, work still has to be done to bring the national law in line with WTO regulations. The Verkhovna Rada must still pass bills, including those “On Introducing Changes to the Law of Ukraine ‘On Banks and Banking’” (as applied to foreign bank subsidiaries), “On Canceling the Ban on Exporting Scrap High-Carbon Ferrous Metals, Scrap Non-Ferrous Metals, and Ready-to-Use Semi- Finished Products,” “On Introducing Changes to Article 1 of the Law of Ukraine ‘On the Export Duty on Scrap and Waste Ferrous Metals’,” and “On Introducing Changes to the Law of Ukraine ‘On the Export Duty on Livestock and Raw Hides’.”

Another problem still being negotiated is the extent to which the government will subsidize the agricultural sector after Ukraine joins the WTO. The stumbling block here is the base period. While Ukraine favors $1.140 billion a year as the level of state support for the farming sector for the 1994-1996 base period, WTO members suggest 2000-2002, which will lead to a reduction in subsidies. The government has instructed the Ministry of Agrarian Policies, the Ministry of Economics, and the Ministry of Finance to complete within the first quarter of this year the current negotiations with the working group member states on establishing the level of state subsidies for the farming sector, corresponding to 1994-1996. So far no agreement is in sight.

Everyone has long treated the government’s statements about the dates of Ukraine’s entry into the WTO as lip service. The current deferment until the end of this year is also raising doubts in the minds of many. Among those who are skeptical about the recent promise made by Minister of Economics Arseniy Yatseniuk that Ukraine will join the WTO in 2006 is Viktor Medvedchuk, leader of the Social Democratic Party of Ukraine (United) which is part of the NE TAK opposition bloc. According to the Ukrainian network Business Information League ( www.liga.net ), Medvedchuk has reproached the government for “reckless conduct,” which is especially demonstrated in the WTO question. “Statements about Ukraine’s speedy entry into this organization have already taken on the character of a chronic disease,” he said. “It is no secret that Ukraine can only be admitted to the WTO at the nearest ministerial conference of this organization’s member states, which has been scheduled for early 2007 or even late 2008.”