Identifier
Created
Classification
Origin
07KYIV2392
2007-09-18 04:38:00
CONFIDENTIAL
Embassy Kyiv
Cable title:  

UKRAINE'S WTO NEGOTIATOR WANTS TO WRAP UP

Tags:  ETRD WTRO KG UP 
pdf how-to read a cable
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)

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 concern. 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