ENCOURAGING UKRAINE TO HELP ALLEVIATE THE GLOBAL

UNCLAS KYIV 001038

SIPDIS
SENSITIVE

TREASURY FOR ALIKONIS
DEPT PLS PASS USTR FOR CKLEIN/PBURKHEAD/EPORTER
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYK
USDA/FAS/OCRA FOR JFLEMINGS/DADAMS
USDA/FAS/OGA FOR ROMEARA/JLAGOS
USDA/FAS/PECAD FOR MLINDEMAN

E.O. 12958: N/A
TAGS: ETRD EAGR TBIO UP
SUBJECT: ENCOURAGING UKRAINE TO HELP ALLEVIATE THE GLOBAL
FOOD CRISIS

REFS: A) KYIV 980
B) STATE 52628
C) STATE 53353
D) STATE 53346
E) KYIV 198
F) 2007 STATE 160639

Treat as Sensitive but Unclassified. Not for Internet.


1. (SBU) Summary: Post has delivered points contained in
refs B-D regarding the President's Global Food Security
Initiative and agricultural trade issues. On May 21, the
GOU moved to cancel restrictions on grain exports. We
continue to work with Ukraine on introducing a regulatory
framework to allow for the use of products of
biotechnology; here, the GOU has made progress but is being
slowed by the Ministry of Environment, which remains
ideologically opposed to biotech. End Summary.


2. (U) Post has delivered ref B points regarding the
President's Global Food Security Initiative to several GOU
interlocutors, focusing on the issues of export
restrictions and biotechnology (refs C-D),which have been
long-standing topics of our bilateral trade discussions.
Special Representative for Commercial and Business Affairs
Frank Mermoud raised the topic with Serhiy Korsunsky,
Director of the MFA's Economic Cooperation Department, on
May 20 and with Valentyna Zavalevska, Deputy Minister of
Agriculture, on May 21. EconOff also approached the local
World Bank office to discuss a possible joint demarche.
Martin Raiser, World Bank Economic Adviser, told us on May
23 that he did not believe a joint message was necessary,
as the World Bank had just a few days before issued a
public statement urging Ukraine to abolish restrictions on
food exports.

Progress on Export Restrictions
--------------


3. (U) Both Korsunsky and Zavalevska opined that the GOU
would soon move to cancel restrictions on grain exports due
to the good harvest. On May 21, the Cabinet of Ministers
did in fact vote to eliminate the restrictions, effective
immediately (ref A). The Cabinet did vote to retain a
quota of 300,000 tons for sunflower oil exports up to
September 1, but President Yushchenko issued a decree May
28 overturning the quotas. Therefore, the status of these
restrictions remains in doubt.

Slower Progress on Biotech
--------------


4. (SBU) As part of our bilateral WTO Market Access
Agreement of March 2006, Ukraine promised to "establish a
policy based on modern risk assessment principles and
guidelines" in regulating products derived from modern
agricultural biotechnology. Law 1102-V, "On the State
System of Biosafety in Creating, Testing, Transporting and
Using Genetically-Modified Organisms," adopted by the Rada
(parliament) in May 2007, established the broad legal
framework for a biotech regulatory system.


5. (SBU) GOU agencies still need to issue implementing
regulations in order for the system to become operable,
however. We have repeatedly urged the GOU to issue these
regulations as soon as possible and have noted the
importance of this commitment made by Ukraine in our
bilateral agreement. We have also provided technical
assistance to the GOU to assist in drafting the necessary
implementing regulations. Drafts of most of the nine
required regulations have progressed well, but some staff
at the Ministry of Environment continue to oppose
biotechnology on an ideological basis and appear to be
blocking the process. Post intends to continue dialogue
with the GOU on establishing a fair regulatory environment
and is planning public outreach efforts to broaden support
for biotechnology (refs E-F).

TAYLOR