Ukraine eyes December WTO accession

Ukraine eyes December WTO accession

Ukraine, a country of some 50 million in Central-Eastern Europe, remains optimistic that it will complete a 12-year journey to World Trade Organization (WTO) membership by the end of this year. Ukraine gained its independence in 1991, and its main trading partners until recently have been members of the Commonwealth of Independent States (CIS), particularly Russia. However, the European Union (EU) recently replaced Russia as Ukraine’s leading trade partner, and it is now the main contributor to Ukraine’s accession to the WTO. The reason is that advantages stemming from Ukraine’s accession to the WTO will be reciprocal: It will provide more stability and predictability and better terms of access for EU businesses willing to export or locate in Ukraine. The World Bank also supports Ukraine’s bid to enter the WTO by the end of the year. Paul Bermingham, the Bank’s director for Ukraine, Belarus and Moldova, indicated that WTO membership will enable Ukraine to boost its economy and will help the country become an important player in the international economy. Ukrainian President Viktor Yushchenko expects the country to join the WTO by the end of the year. “We have completed about 60 percent of what needs to be done,” he remarked. Yushchenko indicates that key legislation, including intellectual property and customs tariffs, has been passed. This makes it easier for the WTO session in December, he said. President Yushchenko added that Ukraine is proceeding on schedule and has every chance to be admitted as a member state. Ukrainian Prime Minister Yuri Yekhanurov, however, said that Ukraine has yet to win approval from the US, China and Australia for its bid to join the WTO. Yekhanurov indicates that “the hardest partner” in Ukraine’s negotiations to join the WTO as early as December has been the Ukrainian parliament. If Ukraine becomes a WTO member, what it will mean? Ukraine will have a chance to take advantage of broader participation in the international community. The country will receive better, nondiscriminatory conditions for Ukrainian products destined for foreign markets. Another important factor is the removal of trade quotas. For instance, the elimination of quotas may increase Ukraine’s metallurgy exports to EU member countries by approximately 30 percent ($150-180 million). Accession could also help further liberalize tariff limitations on exports of ferrous metal products to the EU. Furthermore, WTO membership will guarantee a reduction in the country’s anti-dumping investigations. After Ukraine joins the WTO, Ukrainian producers will be able to defend their rights under the WTO trade dispute resolution procedure. Ukraine’s accession to the WTO will also increase the country’s foreign investment, and this will improve living standards in the nation. What will be the disadvantages? Ukraine’s accession to the WTO is expected to increase imports, which may cause a reduction in the country’s industrial output. Another issue is tariffs. Tariffs are a major tool for protecting domestic industries. In September 2005, the Ukrainian Supreme Rada rejected a draft that called for the reduction of export duties on alloyed ferrous metals and non-ferrous metal scraps and alloys. The draft suggested that the existing €30 per ton export duty be lowered to €25 per ton as of January 1, 2006, and then to €18 per ton as of January 1, 2007. However, the Rada dismissed the draft, saying that the duties ensure the availability of the subject raw materials in the local market. Another disadvantage is that opening agricultural markets may devastate Ukrainian farmers. However, during the WTO accession negotiations, Ukraine said that it supports domestic state subsidies.