11/17 WTO UPDATE: UKRAINE MAKES GREAT STRIDES ON

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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 --

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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

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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