11/30 UKRAINE WTO UPDATE

C O N F I D E N T I A L SECTION 01 OF 02 KYIV 004415

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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: DECL: 11/29/2016
TAGS: ETRD WTRO ECON PGOV UP
SUBJECT: 11/30 UKRAINE WTO UPDATE

REF: A. THORBURN-MOLNAR EMAIL OF 11/30


B. KLEIN-KRAMER EMAIL OF 11/27

C. KYIV 4315

D. KYIV 4304

E. KYIV 4237

F. KYIV 4183

Classified By: DEPUTY CHIEF OF MISSION, FOR REASONS 1.4 (B) AND (D)


1. (SBU) Summary: Ukraine's Parliament continued its
progress on outstanding legislation for WTO accession during
this week, adopting five additional laws, four of which
related to the agricultural sector. Parliament has now
adopted 17 out of the 21 required laws. On the eve of PM
Yanukovych's visit to Washington, the GOU appears very
committed to accession, and a bit anxious for affirmation
that the USG is not trying to synchronize its accession with
Russia's. This week's movement on agriculture-related
legislation highlights the GOU's seriousness on WTO, and
upcoming meetings in Washington should help focus Ukrainian
officials on how to address outstanding issues. End Summary.


2. (U) This is the latest edition in a series of regular
update cables regarding the status of Ukraine's WTO accession
(refs D-F).

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 continued during the week of November

27. Parliament adopted (in final reading) five of the laws:
-- "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).


4. (U) All of the laws passed by large margins. To date,
Ukraine's parliament has adopted 17 of the 21 WTO-related
laws. Parliament passed an additional law in the first
reading on November 29 -- "On the Export Duty on Scrap of
Ferrous and Non-Ferrous Metals and Alloyed Steel" (to replace
the export ban on scrap metals with an export duty). An
additional two draft laws -- one on the taxation of
agricultural enterprises and the other on motor vehicle
imports -- have been submitted to the parliament but have 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 -- 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.


5. (SBU) Socialist MP Vitaliy Shibko, Chairman of
Parliament's Foreign Policy Committee, confirmed to Econ
Counselor on November 22 that Parliament was fully committed
to passing as much legislation as possible before PM Viktor
Yanukovych's upcoming visit to Washington. Shibko commented
that Ukraine had, in effect, already made the decision to
join the WTO and now was turning its attention to helping
domestic industry face the increased competition that would
result.


6. (C) Some domestic lobbies will continue to fight, however.
Tariel Vasadze, a Yulia Tymoshenko Bloc MP who doubles as
the Honorary President of the Ukrainian Automobile
Corporation, told Econ Counselor on November 21 that he was
advocating for 3-5 year transition periods for Ukrainian
commitments made in "critical sectors" -- not surprisingly to
include automobile manufacturing. Econ Counselor cautioned
that trying to insert any such transition periods could
reopen the entire negotiation process and sabotage Ukraine's
accession. Vasadze replied that his party understood that it
could not oppose the WTO legislation, but lamented the
agreements made by prior Ukrainian governments and argued

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that the Russians had gotten a better "deal" in its bilateral
with the United States.

Concerns about Russia
--------------


7. (C) Vasadze's comments echoed some media commentary
following the recent signing of the U.S.-Russia bilateral
agreement, when several Russian officials claimed that they
had secured a "better" deal than Ukraine. Ministry of
Foreign Affairs Second Territorial Directorate head Anatoliy
Ponomarenko (protect) asked DCM on November 24 regarding the
terms of the U.S.-Russian bilateral and asked for
confirmation that the USG was not seeking to synchronize
Ukrainian and Russian accession. (Note: Ponomarenko asked
that we be very careful not/not to link this inquiry to MFA
in any conversations we might have on these two issues with
the PM or his staff. End Note.) Drawing on information
provided in ref B, DCM and Econ Counselor reassured the GOU
that the USG wanted both Russia and Ukraine to joint but was
in no way attempting to synchronize the accessions. Econ
Counselor also explained that the two countries' bilateral
agreements with the United States reflected different trade
interests, but stressed the U.S. bilateral largely reflected
Ukraine's offer, which dated back to the Kuchma
administration.


8. (SBU) Deputy Minister of Economy and lead WTO negotiator
Valeriy Pyatnytskiy expressed his concern to Econ Counselor
on November 29 on the need to move forward quickly.
Pyatnytskiy said he had recently completed discussions with
EU reps and was interested in working out remaining issues
with U.S. officials as soon as possible. Pyatnytskiy's
Deputy, Vyacheslav Tsymbal, and Vladimir Gurzhiyev, Deputy
Chief of the Veterinary Service, met with Ag Attache on
November 30 to underscore their desire for face-to-face
meetings in Washington to discuss veterinary-related
legislation as well as beef and pork certificates (ref A).

Comment: Rada Doing its Part
--------------


9. (SBU) Parliamentary leaders had promised to make quick
work of the WTO laws when taking up their consideration just
over a month ago, and Parliament has kept its word. While
Working Party members will want to ensure that the versions
of the laws passed meet their expectations and WTO rules,
Ukraine is approaching the end of its work on the legislative
front. Adoption of four agriculture-related laws this week
was particularly significant, as political leaders have
repeatedly stressed that they view the agricultural sector as
most sensitive. PM Yanukovych commented on November 30 that
Ukraine should be looking to adapt "the mechanisms of
(agricultural) support to World Trade Organization
standards," further signaling that the GOU is serious about
moving forward on the most sensitive issues required for WTO
accession. Upcoming meetings in Washington with Ukrainian
officials will be an opportunity to help focus the GOU on how
to reach the WTO finish line.
Taylor