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06KYIV4648, 12/22 UKRAINE WTO UPDATE

December 22, 2006

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Reference ID Created Released Classification Origin
06KYIV4648 2006-12-22 11:00 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Kyiv

VZCZCXRO2474
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHKV #4648/01 3561100
ZNR UUUUU ZZH
P 221100Z DEC 06
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 0756
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHGV/USMISSION GENEVA 0031

UNCLAS SECTION 01 OF 02 KYIV 004648 
 
SIPDIS 
 
SENSITIVE 
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: N/A 
TAGS: ETRD WTRO ECON PGOV UP
SUBJECT: 12/22 UKRAINE WTO UPDATE 
 
REF: A. YARNELL-KLEIN EMAIL OF 12/20 
     B. KASPER-KLEIN EMAIL OF 12/19 
     C. KYIV 4576 
     D. KYIV 4531 
     E. KYIV 4415 
 
1. (SBU) Summary: Ukrainian WTO negotiators held 
consultations with Working Party members in Geneva on 
December 18.  The GOU is anxious for feedback on its recently 
passed legislation, although anticipates having to make some 
additional legislative fixes to ensure WTO conformity.  A law 
on biotechnology products is the only outstanding law not 
passed in any form, although Ministry of Economy officials 
say that the drafting process is now underway.  Ukrainian and 
Kyrgyz negotiators may have made a breakthrough on a 
bilateral Market Access Agreement, the last remaining for 
Ukraine's accession, but political turmoil in Kyrgyzstan 
could complicate the deal.  Ministry of Agriculture officials 
offered a "compromise" on beef and pork but still link 
resumption of trade to conducting an audit of the U.S. 
veterinary inspection system.  End Summary. 
 
2. (U) This latest edition in a series of regular update 
cables regarding the status of Ukraine's WTO accession (refs 
C-E) covers the period December 18-22. 
 
Consultations on WTO Legislation 
-------------------------------- 
 
3. (U) Deputy Minister of Economy Valeriy Pyatnytskiy and his 
team of WTO negotiators met with Working Party members on 
December 18 in Geneva to review accession progress (ref B). 
Ukrainian negotiators told Econoff on December 20 that they 
were reasonably satisfied with the consultations, and are 
anxious to receive comments from Working Party members on the 
recently passed WTO legislation. 
 
4. (SBU) As described in ref D, one of the laws on the GOU's 
list -- "On Value Added Tax (regarding taxation of 
agricultural enterprises)" -- was supposed to cancel the 
discriminatory VAT regime on agricultural enterprises.  The 
Rada had in October passed a routine, annual measure (Law 
273-V) that partially extended the existing VAT regime for 
one year, and on November 3 decided not to consider the new 
draft on the subject (Draft Law 2389).  However, the GOU has 
decided to forward the passed VAT law for review by Working 
Party members along with the rest of the WTO-required laws, 
while admitting to us and the WTO that this law is flawed. 
Vyacheslav Tsymbal, Director of the Ministry of Economy's WTO 
Division, reiterated on December 20 that he anticipates 
having to introduce new legislation after the New Year.  To 
avoid confusion, Post will include this VAT law on our list 
of passed laws, which now number 20, with the caveats listed 
above. 
 
5. (SBU) From our summer list of 21 laws thought needed for 
accession, only the law on biotechnology products has not 
passed in any form.  Pyatnytskiy had previously told Econ 
Counselor that the GOU does not formally link this law to 
accession, since it is a bilateral commitment to the USG and 
not part of WTO conformity (ref C).  The Cabinet of Ministers 
has tasked the Ministries of Agriculture and Health to draft 
the law, and Tsymbal told Econoff on December 20 that the 
Ministry of Economy is also actively involved in the drafting 
process.  Tsymbal said that the GOU is using the previous, 
failed version of the biotech law (which Post passed to 
Washington in ref A) as the starting point for the new law. 
Ministry of Health official Mykola Prodanchuk told Econoff 
that the GOU's health-related concerns do not involve U.S. 
biotechnology products, but rather those from countries with 
lower safety standards, such as China. 
 
Outstanding Government Resolutions 
---------------------------------- 
 
6. (U) In addition to the list of 21 laws, the GOU identified 
approximately eight resolutions that it believed were 
necessary to bring Ukrainian regulations in line with WTO 
standards and commitments made to trading partners.  The 
Ministry of Economy issued one of these resolutions, 
involving import licensing, on November 10.  The Cabinet of 
Ministers will need to issue most of the outstanding 
resolutions.  Tsymbal told Econoff that he did not expect any 
difficulties with the resolutions, which the Ministry of 
 
KYIV 00004648  002 OF 002 
 
 
Economy had already drafted, and thought they would be issued 
within a matter of weeks. 
 
Concluding Bilateral Agreements: Kyrgyz Progress 
--------------------------------------------- --- 
 
7. (U) Ukraine signed a bilateral Market Access Agreement 
with Taiwan on December 14 (ref C).  Kyrgyzstan is now the 
sole remaining ho
ldout who has not signed an agreement with 
Ukraine.  Ukrainian negotiators met with members of the 
Kyrgyz delegation in Geneva on December 18.  Citing an 
unnamed source "who participated in the negotiations" -- 
likely a member of the Ukrainian side, Ukrainian daily 
Kommersant Ukraina reported December 19 that the Kyrgyz made 
significant concessions at this meeting.  According to the 
Kommersant source, the Kyrgyz agreed to sign a bilateral 
agreement in exchange for Ukraine dropping its safeguard 
measures against Kyrgyz light bulbs, which have cut Kygyz 
producers such as OJSC Mailuu-Suu out of the Ukrainian 
market. 
 
8. (SBU) Pyatnytskiy confirmed to Econoff on December 20 that 
the discussions focused on current safeguard measures against 
Kyrgyz producers.  (Note: GOU officials had previously 
complained that the Kyrgyz were making demands for repayment 
of Soviet-era debt and regarding sensitive agricultural 
issues.  End Note.)  Pyatnytskiy downplayed the progress, 
however, noting that he still had not held direct talks with 
Bishkek, and that the recent resignation of the Kyrgyz 
cabinet could complicate the negotiations. 
 
Imports of U.S. Beef and Pork 
----------------------------- 
 
9. (SBU) Ministry of Agriculture officials told Acting Econ 
Counselor on December 22 that they were willing to 
"compromise" on U.S. beef and pork imports, but outlined a 
proposal that continued to link the resumption of trade to 
conducting an audit of the U.S. veterinary inspection system. 
 Deputy Minister Petro Verbitsky initially said that Ukraine 
would begin permitting imports of U.S. beef and pork as soon 
as Ukraine was invited to begin its audit.  Verbitsky 
however, backed away from even that proposal after chief 
veterinarian Ivan Byesiuk stated categorically that Ukraine 
would not permit the imports until the audit was in fact 
complete.  In the end, the Ministry of Agriculture proposal 
was to conduct the audit quickly in January, so that trade 
could begin to flow soon.  Acting Econ Counselor said that 
the March bilateral agreement did not link resumption of 
trade to the audit, and that U.S. agencies would be glad to 
discuss audits once trade had resumed.  He promised to relay 
the Ministry's proposal to Washington. 
 
10. (SBU) The Ministry of Agriculture officials were aware of 
the shipment of beef livers that was originally refused entry 
at Odessa port, and was now again en route to Odessa for 
another attempt to bring the product in.  Verbitsky said that 
if the U.S. agreed to invite Ukrainian inspectors to conduct 
an audit in early January, the cargo would be admitted to 
port when it arrives (planned for Dec. 26), assuming the 
product passed laboratory testing. 
 
11. (SBU) The Ministry officials were unable to produce a 
copy of the document promised in Washington showing that the 
Ministry had instructed port officials to honor the U.S. 
veterinary certificates negotiated and agreed to in March. 
Instead, said Deputy Chief Veterinarian Horsheyev, all the 
Ministry had done was to pass to port officials a copy of the 
U.S. certificates for their information.  Acting Econ 
Counselor asked whether that meant there had been no "green 
light" from the Ministry to accept the certificates.  Chief 
vet Bisyuk responded, "That's exactly right, no products can 
enter Ukraine without the express permission of the 
Veterinary Service." 
Taylor

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