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06KYIV4304, 11/17 WTO UPDATE: UKRAINE MAKES GREAT STRIDES ON

November 17, 2006

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06KYIV4304 2006-11-17 16:24 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

VZCZCXRO2494
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHKV #4304/01 3211624
ZNY CCCCC ZZH
P 171624Z NOV 06
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 0419
INFO RUCNCIS/CIS COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHGV/USMISSION GENEVA 0011

C O N F I D E N T I A L SECTION 01 OF 03 KYIV 004304 
 
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: 11/16/2016 
TAGS: ETRD WTRO ECON PGOV UP
SUBJECT: 11/17 WTO UPDATE: UKRAINE MAKES GREAT STRIDES ON 
OUTSTANDING LEGISLATION 
 
REF: A. KYIV 4237 
     B. KYIV 4183 
     C. KYIV 4104 
     D. KIEV 3670 
     E. KIEV 3569 
     F. KIEV 2587 
 
Classified By: ECONOMIC COUNSELOR DOUGLAS KRAMER 
FOR REASONS 1.4 (B) AND (D) 
 
 1. (SBU) Summary: Parliament made remarkable progress on 
outstanding legislation for WTO accession during this week, 
and has now adopted 12 out of 21 required laws.  GOU leaders 
clearly had given orders to move forward on the legislation, 
likely in order to help smooth the way for PM Yanukovych's 
upcoming visit to Washington.  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.  End Summary. 
 
2. (U) This is the latest edition in a series of regular 
update cables regarding the status of Ukraine's WTO 
accession. 
 
Outstanding WTO-related Legislation 
----------------------------------- 
 
3. (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.  Voting on 
several of these laws took place during the week of November 
13.  Parliament adopted (in final reading) ten of the laws: 
-- "On Pesticides and Agrochemicals" (to maintain a ten-year 
period for protecting undisclosed information); 
-- "On Export Duty on Live Animals and Skins" (to reduce 
export duty rates); 
-- "On Banks and Banking Activity" (to allow foreign banks to 
open branches in Ukraine); 
-- "On Advocacy" (to enable foreign attorneys to operate in 
Ukraine); 
-- "On Insurance" (to eliminate restrictions on agreements 
with foreign insurers and to provide permit for re-insurance 
of risks); 
-- "On Foreign Economic Activity" (to amend non-tariff 
regulation of imports); 
-- "On Medicinal Drugs" (to protect undisclosed information 
in the registration of medicinal drugs); 
-- "On Veterinary Medicine" (to ensure compliance with SPS 
agreements); 
-- Amendment to the Customs Code (to grant customs officials 
"Ex Officio" rights in the IPR field); 
-- Amendment to some legislative acts, on the license fee for 
production of spirits, alcohol and tobacco products. 
 
4. (U) During the week, Parliament passed five additional 
laws in the first reading: 
-- "On the Export Duty on Waste of Ferrous Metals" (to reduce 
export duty rates); 
-- "On State Support of Agriculture" (to regulate 
import-export transactions and clarify terminology); 
-- "On Milk and Dairy Products" (to eliminate export 
subsidies for milk and dairy products); 
-- "On State Regulation of the Production and Sale of Sugar" 
(to eliminate export quotas type B and C from regulation 
mechanisms); 
-- "On Tariff Rate Quota for Raw Cane Sugar Imports" (to 
introduce an annual tariff quota in the amount of 260,000 
tons for raw cane sugar). 
 
5. (U) The parliament's rapid work was a follow-up to initial 
steps taken during the week of October 30, when Parliament 
passed most of the same laws in the first reading (ref B). 
All of the laws passed by large margins, but Parliament did 
choose to make amendments to some.  (Note: Post is reviewing 
available texts to determine what changes have been made.) 
To date, Ukraine's parliament has adopted 12 of the 21 
WTO-related laws.  Parliament has passed another five in the 
first reading.  An additional three draft laws have been 
submitted to the parliament but not yet gone to the first 
reading.  One WTO-related law, to create a framework for the 
use of biotechnology products, has not yet been submitted -- 
 
KYIV 00004304  002 OF 003 
 
 
the Cabinet of Ministers has tasked the Ministries of 
Agriculture and Health to draft.  Post will send an updated 
legislation tracker to EUR/UMB via email.  Parliament is 
scheduled to meet again in plenary session during the week of 
November 27. 
 
6. (C) Econoff discussed WTO accession on November 13 with 
Oleksiy Plotnikov, Party of Regions MP and deputy chairman of 
Parliament's Economic Policy Committee, which was responsible 
for several of the adopted laws.  While Plotnikov had spoken 
cautiously of WTO accession during November 1 parliamentary 
hearings, his tone was now much more positive.  Plotnikov 
emphasized that he fully supports WTO accession "as a member 
of the Party of Regions," and said that he did not expect 

major opposition to the outstanding legislation.  Plotnikov 
noted, however, that the agriculture-related bills might be 
more difficult than others, as MPs believe Ukraine's 
agricultural sector is particularly vulnerable. 
 
7. (C) Ivan Bokiy, Socialist MP and chairman of Parliament's 
European Integration Committee, also stressed concerns for 
the agricultural sector in a November 17 meeting with Econ 
Counselor.  Studies had shown, according to Bokiy, that full 
implementation of WTO requirements would force two million 
Ukrainian agricultural workers out of their jobs.  He said 
that Ukraine would need five-year transition periods to 
implement some WTO requirements, especially new rules on 
agricultural support.  Econ Counselor encouraged Bokiy to 
look to different methods of agricultural support, those that 
would not distort trade or violate WTO rules, but which would 
still provide the necessary flexibility to help the rural 
sector.  Bokiy made it clear that, agricultural issues aside, 
his party wants to see Ukraine in the WTO as soon as 
possible.  He expressed concern that Russia might leapfrog 
Ukraine on the way to accession, and said he hoped recent 
progress on legislation would be appreciated in Washington 
and help Ukraine to join the WTO before, or at least with, 
Russia.  He predicted the remaining laws would be passed 
within two weeks. 
 
Success With Medicines, Data Exclusivity 
---------------------------------------- 
 
8. (SBU) Successful passage of the law "On Medicinal Drugs," 
which contains important commitments from the U.S.-Ukraine 
bilateral agreement, was a particularly positive step due to 
the substantial number of special interests that tried to 
attach problematic amendments to the bill.  Representatives 
of U.S.-based companies expressed concern to Econ Counselor 
about two proposed amendments, one to introduce a five-year 
transition period, and another to redefine the term 
"innovative drug" in a way inconsistent with international 
norms.  Economic Counselor met with Tatiana Bakhteeva, 
chairwoman of the Parliamentary Healthcare Committee, on 
November 15 to reinforce the USG position that Parliament 
should adopt the law as agreed during bilateral negotiations 
and submitted by the President.  Bakhteeva said she strongly 
supported the bill as submitted, without amendments, 
believing it would help improve the quality of medicines on 
the Ukrainian market, and her Committee recommended that 
Parliament pass the law without 
amendment.  In voting on the bill November 16, MPs indeed 
left out the troublesome amendments, although they did modify 
one word of the President's draft. 
 
Comment: Full Steam Ahead 
------------------------- 
 
9. (C) The ruling coalition's leadership clearly has given 
orders to MPs to make quick work on the outstanding 
legislation, as demonstrated by the surprising, absolute 
support expressed to us by several Party of Regions MPs. 
(Note:  The Communists remain opposed to virtually all WTO 
legislation, but they are more than counterbalanced by 
support for WTO from many deputies from Yushchenko's "Our 
Ukraine" and the Tymoshenko bloc.)  Post suspects the push on 
legislation was due in large part to Prime Minister Viktor 
Yanukovych's visit to Washington in early December.  MP Bokiy 
noted to Econ Counselor that the coalition government, 
including the Socialists, felt responsible for providing 
deliverables prior to Yanukovych's trip.  We suspect the new 
energy on passing legislation is designed to allow Yanukovych 
to dispel worries that he is going slow on WTO or trying to 
 
KYIV 00004304  003 OF 003 
 
 
synchronize accession with Russia (ref C).  Post has also 
heard speculation, including from Regions MP Dmytro Sviatash, 
that progress on legislation might reflect a deal between 
Yanukovych and President Viktor Yushchenko, whereby 
Yanukovych would agree to push ahead with WTO accession in 
exchange for Yushchenko's support of the government's 
proposed budget.  In addition, Ukrainian negotiators have 
used the tentative date of mid-December for the next WTO 
Working Party meeting to pressure MPs to make immediate 
progress. 
 
10. (SBU) Comment continued: This latest round of voting was 
also significant in that it was the first time MPs voted on 
agriculture-related bills, which Post expected to be the most 
hotly contested.  The laws nonetheless passed by wide 
margins, very similar to the last round of voting (ref B). 
During the parliamentary debate, however, several MPs, most 
notably from Bloc Yulia Tymoshenko and the Socialist Party, 
voted in favor of agriculture-related legislation, but 
expressed reservations.  The draft laws, they said, would 
require amendment before the final vote in order to better 
protect the domestic agricultural industry.  While the 
government has succeeded in pushing through a substantial 
portion of the legislative agenda during the month of 
November, the most difficult work may lie in fighting off 
non-WTO compliant amendments to the next round of bills in 
Committee. 
Taylor

Wikileaks

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