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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

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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 outstanding 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