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06KYIV4183, UKRAINE MAKES PROGRESS ON WTO LEGISLATION

November 3, 2006

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Reference ID Created Released Classification Origin
06KYIV4183 2006-11-03 17:00 2011-08-30 01:44 UNCLASSIFIED Embassy Kyiv

VZCZCXYZ0022
PP RUEHWEB

DE RUEHKV #4183/01 3071700
ZNR UUUUU ZZH
P 031700Z NOV 06
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 0270
INFO RUCPDOC/USDOC WASHDC
RUEHGV/USMISSION GENEVA 0003

UNCLAS KYIV 004183 
 
SIPDIS 
 
SIPDIS 
 
GENEVA FOR USTR 
DEPT PLEASE PASS TO USTR FOR KLEIN/MOLNAR/SYDOW 
USDOC FOR 4201/DOC/ITA/MAC/BISNIS 
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYCK 
STATE FOR EUR/UMB (BWOLF) AND EB/TPP/BTA (KDILLON) 
 
E.O. 129588: N/A 
TAGS: ETRD WTRO ECON PGOV UP
SUBJECT: UKRAINE MAKES PROGRESS ON WTO LEGISLATION 
 
REF: A) YARNELL-WOLF EMAIL OF 11/2 
     B) KASPER-KLEIN EMAIL OF 10/27 
     C) KYIV 4104 
     D) KIEV 3670 
     E) KIEV 3569 
     F) KIEV 2587 
 
1.  Summary: Ukraine's Parliament adopted on November 2 two 
laws identified as required for WTO accession.  Parliament 
made further progress on legislation November 2-3, passing 
another eight WTO-related laws in the first reading, with 
significantly large majorities.  Parliamentary "hearings" 
on November 1 revealed a growing sense of inevitability 
among MPs regarding WTO accession.  This Parliamentary 
activity follows the October 27 informal meeting of 
Ukraine's WTO Working Party, which stressed the need for 
speedy progress on the legislative fron 
t.  Despite concerns 
in some quarters regarding the authenticity of the 
Yanukovych government's professed commitment to WTO 
accession, it delivered impressively in this first round of 
voting.  Difficult issues remain, however, and the next 
tests will be whether Parliament is as positive on the more 
controversial laws, and whether it can avoid the temptation 
to make WTO-inconsistent changes to the drafts between the 
first and second readings.  End Summary. 
 
Parliament Adopts Two WTO-required Laws 
--------------------------------------- 
 
2.  Parliament adopted two laws identified as required for 
WTO accession -- an amendment to the law "On Publishing" 
(to eliminate foreign capital restrictions, with a 5 year 
transition period) and an amendment to the law "On 
Protection of Rights for Indications of Origins of Goods" 
(to ensure national treatment and MFN for GIs) -- on 
November 2.  Parliament adopted these two laws under an 
accelerated procedure, allowed only if no MPs object, 
skipping the second reading usually required.  (Note: Ref A 
incorrectly reported that the two laws passed only in the 
first reading.  End Note.)  The voting proceeded as 
follows: 
 
Publishing law - 375 votes for, 0 against, 62 not voting; 
GIs law - 390 for, 0 against, 47 not voting. 
 
3.  These were the first WTO-related laws adopted by 
Parliament since the March general elections.  Ukraine's 
WTO Working Party will now have the opportunity to examine 
these laws to ensure that they properly address the 
concerns and requests of WTO members. 
 
Eight Laws Pass in First Reading 
------------------------------- 
 
4.  During November 2-3, Parliament also passed, in the 
first reading, eight other legislative amendments 
identified as required for WTO accession: 
-- to the law "On Advocacy" (to enable foreign attorneys to 
operate in Ukraine); 
-- to the law "On the Export Duty for Live Animals and 
Skins" (to reduce export duty rates); 
-- to the law "On Amending Some Legislative Acts" (to 
adjust the license fee for production of spirits, alcohol 
and tobacco products); 
-- to the Customs Code (to grant customs officials "Ex 
Officio" rights in the IPR field); 
-- to the law "On Banks and Banking Activity" (to allow 
foreign banks to open subsidiaries in Ukraine); 
-- to the law "On Foreign Economic Activity" (to amend non- 
tariff regulation of imports); 
-- to the law "On Insurance" (to eliminate restrictions on 
agreements with foreign insurers and to provide permit for 
re-insurance of risks); 
-- to the law "On Medicinal Drugs" (to protect undisclosed 
information in the registration of medicinal drugs). 
 
5.  These laws all passed by huge margins, generally with 
nearly 400 MPs voting for and around 20, primarily 
Communists, voting against, and a few more abstaining.  An 
amendment to the law "On Veterinary Medicine," passed the 
first reading on October 11 with similarly overwhelming 
support.  This draft, submitted by an MP rather than by the 
government, may fall short of WTO norms, however. 
 
6.  From this summer's list of 21 laws needed for 
accession, Parliament has now successfully adopted two, and 
passed nine in the first reading. (Note: This includes the 
Veterinary Medicine law passed on October 11.  End note.) 
 
Parliamentary Hearings Clear the Air 
------------------------------------ 
 
7.  Parliament held public hearings on WTO accession on 
November 1.  These "hearings," attended by observers and 
diplomats, including Ambassador, consisted essentially of a 
series of general speeches on the topic of Ukraine's 
accession, with little substantive discussion of specific 
legislation.  Minister of Economy Volodymyr Makukha briefed 
MPs on accession progress and made a plea for speedy 
passage of outstanding legislation.  Makukha was backed up 
by several prominent Our Ukraine MPs, including Foreign 
Minister Borys Tarasyuk, as well as deputy head of the 
Presidential Secretariat Arseniy Yatsenyuk. 
 
8.  A few MPs from the governing coaliti
on raised concerns 
about how accession would affect certain industries, and 
urged more extensive deliberations on how to help these 
industries.  Of most concern appeared to be the 
agricultural sector, highlighted by Minister of Agriculture 
Yuriy Melnyk's warnings that accession would lead to "mass 
closures" of smaller producers and dramatic increases in 
rural unemployment.  Overall, a growing sense of 
inevitability regarding WTO accession seemed to emerge from 
the hearings.  One speaker from a local university tried to 
capture this sentiment, arguing that the question was no 
longer "whether" Ukraine will join the WTO, but rather 
"when and how." 
 
Non-WTO Law Slips Through 
------------------------- 
 
9.  Parliament on November 2 also adopted an amendment to 
the law "On Protection of Rights on Plant Varieties." 
(Note: Ref A also incorrectly reported this law as being 
passed only in the first reading, whereas it too was 
adopted under the accelerated procedure.  End Note.)  This 
plant varieties law was not among the 21 laws identified as 
required for WTO accession, although there appeared to be 
some confusion among MPs on this issue.  The law, now 
passed by Parliament, in fact contains a problematic 
provision which authorizes the government to use 
discriminatory measures that would be inconsistent with WTO 
rules.  A draft Cabinet of Ministers Resolution, one of six 
identified by the GOU as necessary for accession but not 
yet issued, will essentially have the opposite effect by 
preventing the government from using such discriminatory 
measures. 
 
Ukraine's Working Party Urges Legislative Action 
--------------------------------------------- --- 
 
10.  Action in Parliament came on the heels of an October 
27 informal meeting of Ukraine's WTO Working Party in 
Geneva (ref B), where Ukraine's lead WTO negotiator Valeriy 
Pyatnitskiy reviewed the outstanding legislation. 
Pyatnitskiy told Working Party members that he was 
confident Parliament would adopt much of the legislation 
within three weeks.  Members expressed concern that some of 
the draft laws under consideration may differ from what was 
previously agreed.  The U.S. delegation and others also 
noted a lack a progress on several problem areas, such as 
SPS measures, discriminatory tax treatment for agricultural 
products, restrictions on grain exports, and agricultural 
support. 
 
11.  The Chairman suggested a tentative date of mid- 
December for the next Working Party meeting, although 
members stressed that substantive progress on the report 
would only be possible following Parliament's adoption of 
legislation.  The Chairman also called for Ukraine and its 
partners to conclude negotiations on bilateral Market 
Access Agreements as soon as possible.  (Note: Bilateral 
agreements with Taiwan and Kyrgyzstan remain to be signed. 
End Note.)  Likely in response to Ukrainian complaints 
about the Kyrgyz negotiating position (Ref F), the Chairman 
cautioned that "any demands on Ukraine should be in line 
with the WTO framework." 
 
Comment: Yanukovych Government Steps Up to the Plate 
--------------------------------------------- ------- 
 
12.  Much has been made of the Yanukoych's government early 
dithering on WTO accession and of possible back-room deals 
to synchronize e Ukraine's accession with that of Russia 
(Refs C-E).  Although none of the laws voted on so far in 
Parliament were among the most controversial (e.g. laws 
affecting the agricultural sector or scrap metal export 
restrictions), the government has come through impressively 
in its first chance at bat, garnering a huge majority of 
coalition and opposition MPs in support.  These first 
rounds of voting are a positive signal for the prospects of 
significant, speedy progress on the WTO-related 
legislation.  The next tests will be whether the Rada is as 
positive on the more controversial laws, and whether it can 
avoid the temptation to make WTO-inconsistent changes to 
the drafts between the first and second readings. 
 
TAYLOR

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