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07KYIV2392, UKRAINE’S WTO NEGOTIATOR WANTS TO WRAP UP

September 18, 2007

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Reference ID Created Released Classification Origin
07KYIV2392 2007-09-18 04:38 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

VZCZCXRO0025
PP RUEHDBU
DE RUEHKV #2392/01 2610438
ZNY CCCCC ZZH
P 180438Z SEP 07
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 3756
INFO RUCNCIS/CIS COLLECTIVE
RUEHEK/AMEMBASSY BISHKEK 0007
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEHGV/USMISSION GENEVA 0088
RUCPDOC/DEPT OF COMMERCE WASHDC

C O N F I D E N T I A L SECTION 01 OF 02 KYIV 002392 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/UMB, EB/TPP/BTA, EB/TPP/MTA 
STATE PLEASE PASS TO USTR FOR CKLEIN/PBURKHEAD 
USDOC FOR 4201/DOC/ITA/MAC/BISNIS 
 
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYCK 
GENEVA FOR USTR 
 
E.O. 12958: DECL: 09/17/2017 
TAGS: ETRD WTRO KG UP
SUBJECT: UKRAINE'S WTO NEGOTIATOR WANTS TO WRAP UP 
ACCESSION BUT IS WORRIED ABOUT KYRGYZSTAN BILAT 
 
REF: A. KLEIN-YARNELL EMAIL OF 9/17 
 
     B. KYIV 331 
     C. 2006 BISHKEK 956 
     D. 2006 STATE 106703 
 
Classified By: ECONOMIC COUNSELOR DOUGLAS KRAMER, REASONS 1.4 B) AND D) 
 
 1. (C) Summary:  During a September 17 meeting, Ukraine's 
lead WTO negotiator Valeriy Pyatnytskiy complained that talks 
with Kyrgyzstan on a WTO bilateral agreement had stalled. 
Kyrgyzstan had rejected Ukraine's most recent proposal, and 
Pyatnytskiy believed that "one or more third parties" were 
behind the Kyrgyz position.  Pyanytskiy was more positive on 
resolving outstanding U.S. issues; Econ Counselor highlighted 
SPS and TBT as areas of particular concern and noted 
continued resistance from a few sub-Cabinet GOU bodies. 
Pyatnytskiy said he wanted to coordinate closely with the EU 
and USG on outstanding issues in the hopes of having a final, 
complete package of legislative changes ready for the new 
parliament.  End Summary. 
 
2. (U) Econ Counselor and Econoff met on September 17 with 
Valeriy Pyatnytskiy, Deputy Minister of Economy and Ukraine's 
lead WTO negotiator, to review outstanding accession issues. 
 
Kyrgyz Reject Ukrainian Proposal 
-------------------------------- 
 
3. (C) Pyatnytskiy expressed concern that negotiations for a 
Market Access Agreement with Kyrgyzstan, the only WTO 
bilateral agreement still unsigned, had all but collapsed. 
In late August the Kyrgyz Ministry of Finance formally 
rejected the Ukrainian proposal for an agreement -- which 
called for repaying most of the debt claimed by the GOK under 
the guise of in-kind technical assistance to Kyrgyzstan -- 
and canceled a Memorandum of Understanding on the way forward 
for negotiations, which had been initialed by both sides back 
in May.  (Note: Kyrgyzstan has demanded repayment from 
Ukraine of some $27 million of Soviet-area debt (ref B); the 
Ukrainians are unwilling to recognize this debt as state 
debt, as doing so could have implications for similar 
disputes with other countries.  End Note.)  Pyatnytskiy said 
the Kyrgyz rejected the proposal on the grounds that it did 
not include the full $27 million, and that it failed to 
ensure payment to the GOK by the end of 2007, although they 
did not object in principle to using in-kind assistance as a 
means to resolve the dispute.  Pyatnytskiy noted that it 
would be impossible for the GOU to repay using technical 
assistance in so short a time period given budgetary (there 
is no budget allocation in their 2007 budget) and legal 
constraints. 
 
4. (SBU) Pyatnytskiy confirmed that the Kyrgyz had at times 
raised other demands, such as lowered tariffs on various 
products.  Pyatnytskiy complained that these demands made no 
sense, since Ukraine already maintained zero duties for all 
Kyrgyz products, with no products exempted, as stipulated by 
their Free Trade Agreement.  The only exception to this rule 
was Kyrgyz light bulbs, against which Ukraine currently 
employed safeguard measures in line with its domestic trade 
remedy laws.  Pyatnytskiy said the GOU was willing to 
consider lifting of these safeguards, and probably would do 
so by the end of 2007.  However, he noted the Kyrgyz had not 
shown enough interest to even apply for a review of the 
safeguards.  Even so, the GOU had begun a review of the 
safeguards on its own. 
 
Third Party Behind Kyrgyz Stalling? 
----------------------------------- 
 
5. (C) Pyatnytskiy commented that he believed the Kyrgyz were 
simply trying to stall Ukraine's accession, likely at the 
behest of "one or more third parties."  As evidence, he noted 
that the Kyrgyz Ministry of Finance had officially authorized 
a Kazakh national to negotiate the debt issue on Kyrgyzstan's 
behalf.  His personal hunch was the Kyrgyz would not settle 
the bilateral, even if the GOU were to pay the entire $27 
million claim in cash right now.  Pyatnytskiy opined that 
continuing bilateral negotiations did not make sense, and 
said he may request that the WTO Secretariat organize some 
kind of plurilateral mediation to involve interested third 
parties.  He also said that the GOU was considering sending 
 
KYIV 00002392  002 OF 002 
 
 
an official request for assistance to USTR Schwab, along with 
the complete "dossier" on the Kyrgyz negotiations, and asked 
for USG advice on how to proceed. 
 
Outstanding USG Issues 
---------------------- 
 
6. (SBU) Drawing on Ref A points, Econ Counselor expressed 
USG commitment to resolve outstanding bilateral issues 
quickly, highlighting Sanitary and Phytosanitary (SPS) 
measures and Technical Barriers to Trade (TBT) as areas of 
greatest co
ncern.  Pyatnytskiy characterized Ukraine's SPS 
and TBT legislation as "generally compatible with WTO norms" 
and said that enforcement, which could not be fixed 
overnight, was the real challenge.  He also reconfirmed 
Ukraine's commitment to repeal Cabinet of Ministers 
Resolution No. 985 on labeling of biotechnology products, to 
be replaced by a new regulation that the GOU would develop in 
consultation with trading partners. 
 
7. (C) Econ Counselor expressed concern at comments made by 
Oleksandr Shnypko, head of the State Standards Committee, 
during a September 11 meeting with the American Chamber of 
Commerce.  Shnypko had argued that some WTO requirements, 
such as the elimination of mandatory certification for 
imported food products, would endanger Ukrainian consumers. 
Pyatnytskiy recognized that Shnypko's comments were not in 
line with GOU policy and suggested the transgression was a 
result of Shnypko's limited time on the job.  Pyatnytskiy 
also suggested that members of the Veterinary Service 
participate in consultations with USTR and USDA officials 
when they are in the United States for upcoming sanitary 
inspections. 
 
EU Issues - Ukraine Gives up on Energy Transit Issue 
--------------------------------------------- ------- 
 
8. (C) Pyatnytskiy briefed us on outstanding issues in 
Ukraine's negotiations with the EU.  The EU was focused on 
SPS, TBT, and Geographical Indications (GIs), and Ukraine 
wanted to work with the EU and USG simultaneously on these 
issues.  An agreement on GIs was particularly pressing, so 
that the GOU could finalize its draft legislative amendment. 
The GOU was willing to lift its opposition to a reference to 
energy in the Working Party Report's commitment language for 
Trade in Transit, he said.  The EU's request for a commitment 
to bind reductions in export duties remained unresolved, 
however. 
 
Timeline 
-------- 
 
9. (SBU) Pyatnytskiy expressed a strong commitment to wrap up 
the accession process quickly, preferably before the New 
Year.  He hoped that the GOU would manage to pass roughly 70 
percent of the outstanding regulatory acts by the end of 
September.  The Ministry of Economy was also working 
feverishly on draft legislation, he said, with the goal of 
submitting a complete, final package of necessary 
legislation, including the ratification, as soon as a new 
Rada (parliament) took office following the September 30 
elections.  Pyatnytskiy said he wanted the Working Party to 
meet again in early October in order to keep to this 
aggressive timeline. 
 
Comment: Missing Kygryz Bilat Now a Barrier 
------------------------------------------- 
 
10. (C) Bilateral agreement with Kyrgyzstan has long been on 
the list of outstanding items, but only recently has it 
emerged as a serious obstacle to accession.  The lack of an 
agreement is now delaying accession work, as the WTO 
Secretariat cannot move forward on consolidating the goods 
 
SIPDIS 
schedule until an agreement is reached.  While Pyatnytskiy 
occasionally has a tendency to over-dramatize, it is clear 
his frustrations in this case are genuine.  Post will 
continue to explore with the GOU, Embassy Bishkek, and 
Washington how we might help move the process forward. 
Taylor

Wikileaks

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