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06KYIV4237, UKRAINE’S WTO ACCESSION: 11/9 UPDATE

November 13, 2006

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Reference ID Created Released Classification Origin
06KYIV4237 2006-11-13 05:30 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

VZCZCXRO5800
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHKV #4237/01 3170530
ZNY CCCCC ZZH
P 130530Z NOV 06
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 0349
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHGV/USMISSION GENEVA 0009

C O N F I D E N T I A L SECTION 01 OF 02 KYIV 004237 
 
SIPDIS 
 
SIPDIS 
 
GENEVA FOR USTR 
STATE PLEASE PASS TO USTR FOR KLEIN/MOLNAR 
USDOC FOR 4201/DOC/ITA/MAC/BISNIS 
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYCK 
STATE FOR EUR/UMB, EB/TPP/BTA, EB/TPP/MTA 
 
E.O. 12958: DECL: 11/09/2016 
TAGS: ETRD WTRO ECON PGOV UP
SUBJECT: UKRAINE'S WTO ACCESSION: 11/9 UPDATE 
 
REF: A. KYIV 4216 
 
     B. KYIV 4183 
     C. KYIV 4104 
     D. KIEV 3670 
     E. KIEV 3569 
     F. KIEV 2587 
 
Classified By: AMBASSADOR, REASONS 1.4 (B) AND (D) 
 
 1. (SBU) Summary: The key outstanding tasks for Ukraine to 
accede to the WTO remain concluding its two remaining 
bilateral Market Access Agreements, passing WTO-related 
legislation, and reaching agreement in multilateral 
negotiations on agricultural support levels.  The GOU has 
made no substantial progress on the bilateral agreements in 
recent weeks.  Parliament has begun to pass some of the 
required legislation, and appears poised to continue this 
work next week.  Some MPs remain concerned about the negative 
consequences of accession on the agricultural sector, 
however, and the GOU will have to work hard to ensure that no 
provisions of the laws are non-WTO compliant.  Ukraine's 
negotiators will face substantial concerns from Parliament on 
agricultural supports.  End Summary. 
 
2. (U) This is the first in a series of regular update cables 
regarding the status of Ukraine's WTO accession efforts. 
 
Concluding Bilateral Agreements 
------------------------------- 
 
3. (C) Ukraine has yet to sign bilateral Market Access 
Agreements with Kyrgyzstan and Taiwan.  There has been no 
progress on the Kyrgyz bilateral in recent weeks.  Privately, 
Ukraine's negotiating team appears frustrated, complaining 
that Kyrgyzstan is making unreasonable demands that fall 
outside of WTO parameters (ref F).  The Ukrainians have said 
they hope the Working Party will "resolve" this issue and 
help them to "bypass" the Kyrgyz bilateral.  During an 
informal October 27 meeting of Ukraine's Working Party, the 
Working Party Chairman urged both sides to conclude 
negotiations as soon as possible (ref B).  Post has advised 
Ukrainian officials that such a "bypass" is unlikely and has 
urged the Ukrainians to continue negotiating in good faith. 
 
4. (SBU) For the Taiwan bilateral, Ukrainian negotiators 
claim that only "protocol" issues, such as the location of a 
signing ceremony, remain unresolved.  The bilateral has been 
stalled at this stage for several months and post is not 
aware of any recent progress to resolve these issues. 
 
Passing WTO-related Legislation 
------------------------------- 
 
5. (U) During the summer, Ukraine had identified 21 pieces of 
legislation and 6 Cabinet resolutions that they believe are 
necessary to meet outstanding commitments to WTO members and 
to bring the country fully in line with WTO rules.  To date, 
Ukraine's parliament has adopted two of the 21 -- amendments 
to the laws "On Publishing" and "On Protection of Rights for 
Indications of Origins of Goods" (ref B).  Parliament has 
passed another nine in the first reading.  An additional nine 
draft laws have been submitted to Parliament but not yet gone 
to the first reading.  Post expects parliamentary voting on 
draft laws to continue during its next plenary session the 
week of November 13. 
 
6. (C) Privately, Ministry of Economy officials have admitted 
that several bills, already submitted, have been altered in 
the Cabinet of Ministers review process, and may need 
tweaking in order to bring them into full conformity with WTO 
provisions and commitments to WTO members.  The officials 
said that work on fixing the drafts was underway.  Lead WTO 
negotiator and Deputy Economy Minister Valeriy Pyatnytsky 
told us he is fully committed to pushing through a 
significant portion of the legislation by early December in 
order to allow for a fruitful meeting of Ukraine's Working 
Party in mid-December (ref A). 
 
7. (SBU) Farhat Farhat, a USAID-funded technical advisor to 
the GOU, told Econoff November 8 that the draft law on VAT 
(regarding taxation of agricultural enterprises) was 
receiving considerable opposition from MPs.  Farhat also 
commented that he felt Economy Ministry officials working on 
the legislation had not fully appreciated some discrepancies 
in the drafts, and that Pyatnytsky had only recently become 
 
KYIV 00004237  002 OF 002 
 
 
aware of the urgent need to make minor revisions in the draft 
before the parliament.  Farhat noted that Pyatnytsky is 
particularly focused on the draft law "On Medicinal Drugs," 
as special interests have been lobbying hard for amendments 
to this draft. 
 
8. (C) Dmytro Sviatash, Party of Regions MP and deputy 
chairman of the Parliamentary Banking and Finance Committee, 
which is responsible for seven of the outstandi
ng draft laws, 
confirmed to Econoffs on November 8 that MPs intend to 
approve most of the bills in the first or final reading 
before December 1.  However, Sviatash, who describes himself 
as a WTO skeptic and who has close ties to the domestic auto 
industry, said he expects there will be a "pause" after the 
first reading of some of the more controversial draft laws as 
MPs will attempt to submit their own amendments and expressed 
doubt all of the legislation would be adopted before 
mid-December, when Ukraine hopes to have a Working Party 
meeting.  (Note: Parliamentary procedure requires a minimum 
of two weeks between the first and second reading of a law.) 
Sviatash noted that his Committee had requested copies of 
Ukraine's bilateral agreements with major trading partners, 
and said he would push for as lengthy transition periods in 
the legislation as possible.  Econoffs informed him that the 
transition periods in the draft legislation should reflect 
the commitments of the GOU's negotiators.  The mood in 
Parliament regarding WTO is now quite positive, according to 
Sviatish, except, he admitted, for some efforts to find a way 
to help certain industries such as agriculture, motor vehicle 
production, and banking. 
 
Concluding Negotiations on Agricultural Support 
--------------------------------------------- -- 
 
9. (U) Ukraine still needs to reach agreement with the 
Working Party on agricultural support levels.  Discussions 
took place in Geneva on October 26 (ref B), but Ukrainian 
negotiators continue to insist on using a 1994-1996 base 
period for calculations, which the Working Party believes is 
not the most representative period and would unfairly inflate 
the level of support. 
 
10. (C) Socialist and Regions MPs from the governing 
coalition highlighted their concern for Ukraine's 
agricultural sector during November 1 Parliamentary hearings. 
 Minister of Agrarian Policy Yuriy Melnyk continues to play 
the role of WTO opponent within the Cabinet and spoke 
critically of WTO at the hearing.  In a November 8 meeting 
with Ambassador, Parliamentary Speaker Oleksandr Moroz echoed 
the sentiments of many of the WTO-skeptics, describing 
agricultural support levels as a critical issue.  He 
criticized previous governments for signing onto agreements 
that are not in Ukraine's national interest.  (Note: Moroz 
seemed to believe, incorrectly, that Ukraine had already 
reached agreement on agricultural support.  End note.) 
Taylor

Wikileaks

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