UKRAINE CONSIDERING ITS ROLE IN RUSSIA'S WTO

C O N F I D E N T I A L KYIV 001330 SIPDIS STATE FOR EUR/UMB, EB/TPP/BTA, EB/TPP/MTA STATE PLEASE PASS TO USTR FOR CKLEIN, PBURKHEAD, EPORTER STATE PLEASE PASS TO DEPT OF AGRICULTURE WASHINGTON DC USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYK USDA FOR FAS/ONA (KRAMOS, AMANNIX, MSALLYARDS) USDA FOR FAS/OCRA (JFLEMINGS) GENEVA FOR USTR MOSCOW FOR JKUO E.O. 12958: DECL: 07/06/2018 TAGS: ETRD WTRO PGOV RS UP SUBJECT: UKRAINE CONSIDERING ITS ROLE IN RUSSIA'S WTO ACCESSION, WORKING ON ITS OWN OUTSTANDING COMMITMENTS REF: A. C.KLEIN-YARNELL EMAIL OF 6/20 ¶B. KYIV 1202 ¶C. KYIV 1077 ¶D. KYIV 915 ¶E. KYIV 722 Classified By: Acting Economic Counselor William Klein, Reasons: 1.4(b) and (d) ¶1. (C) Summary: Ukraine's lead WTO negotiator Valeriy Pyatnytskiy told us on July 4 that Ukraine did not intend to block Russia's WTO accession, and was not planning to request any tariff concessions from Russia, but would likely make some requests of Russia given the importance of their bilateral trade relationship. In particular, Ukraine would like to broaden and clarify its Free Trade Agreement with Russia. Regarding Ukraine's own accession commitments, Pyatnytskiy said he was hopeful that, during the week of July 7, Parliament would approve a few outstanding bills, including a WTO-compliant version of a Customs Tariff Law amendment. In any case Ukraine would continue to enforce the lower, WTO-consistent rates by administrative means if the Parliament failed to act, he said. Pyatnytskiy also pledged to keep working on sub-legislative issues of importance, such as regulations covering the products of biotechnology and to eliminate mandatory certification of foodstuffs. End Summary. Russia's WTO Accession -------------- ¶2. (C) Acting Econ Counselor and Econoff met on July 4 with Valeriy Pyatnytskiy, Deputy Minister of Economy and Ukraine's lead WTO negotiator, to review Ukraine's outstanding WTO commitments and better understand how Ukraine intends to approach Russia's WTO accession process. (Note: Ukraine joined Russia's WTO Working Party shortly after its own accession on May 16, but has given somewhat mixed signals regarding the extent to which it intends to negotiate with the Russians (ref E). End Note.) Pyatnytskiy said that the GOU was still reviewing information provided by the WTO Secretariat on Russia's trade regime and was conducting an internal, interagency discussion as to what Ukraine should request from Russia. He expressed concern that Russia was thus far not taking Ukraine seriously as a negotiating partner, noting as an example that Russia had provided Ukraine with an old, out-of-date services schedule from 2000. ¶3. (C) Pyatnytskiy stated clearly, "We have no intention of blocking Russia's accession," but argued that, because Russia accounts for as much as a third of Ukraine's total trade, Ukraine had a large and legitimate stake in the Russian accession. He said the GOU recognized that it had joined at a late stage of Russia's accession and therefore did not want to raise any new issues, but, given the importance of bilateral trade, would reserve the right to make certain requests. ¶4. (C) Pyatnytskiy said the GOU did not intend to make any requests for tariff concessions, since the two countries already have a Free Trade Agreement (FTA) for manufactured goods. Instead, Ukraine would seek to make its trade relationship with Russia "clearer and more predictable," he said, perhaps by amending their FTA, which dates to the early 1990s and is no longer fully applicable in the context of a normal market economy. In particular, Pyatnytskiy said the GOU would like to see the FTA broadened to include services, rather than just goods. ¶5. (C) Pyatnytskiy identified the following sections of Russia's Working Party Report as being of particular interest to the GOU: Technical Barriers to Trade (TBT); Sanitary and Phytosanitary (SPS) measures; export duties (Ukraine is concerned about special, higher rates that Russia might seek to apply to Ukraine); import licensing; and the coexistence of Russia's federal regulations and regional ones. ¶6. (C) Acting Econ Counselor told Pyatnytskiy that USTR was willing to field questions from the GOU regarding the Russian negotiations (ref A). Pyatnytskiy said he would certainly be grateful for any information we could provide, and would also be interested in any USG advice as to how Ukraine should proceed with the negotiations. Ukraine's Outstanding Commitments -------------- ¶7. (SBU) Acting Econ Counselor emphasized the importance of Ukraine's outstanding WTO commitments and asked Pyatnytskiy for a status update. Regarding the contentious amendment to the law "On the Customs Tariff of Ukraine" (refs B-D), Pyatnytskiy said he was hopeful that the Rada (parliament) would accept the recommendations outlined in President Viktor Yushchenko's recent veto of the bill and formalize the immediate reduction of customs duties in line with WTO commitments. He also noted that, in absence of any Rada action, the GOU would continue to enforce the lower, WTO-consistent rates. Pyanytskiy said he was also hopeful for a positive vote during the week of July 7 on several other outstanding WTO bills, such as the Veterinary Medicine Law, the Fish Law, and the Food Safety Law. (Note: July 11 is the Rada's final plenary session before the summer recess. End Note.) ¶8. (SBU) Pyatnytskiy said the Ministry of Economy was pushing hard on the biotechnology front, with the goal of getting Cabinet of Ministers approval for all of the roughly ten regulatory acts, necessary to fully open the Ukrainian market for biotech products, as a joint package. He said the Ministry of Economy appeared to have succeeded in fighting off calls to introduce a restrictive labeling system for biotech products, but he noted that the Ministry of Environment was still blocking further progress. Pyatnytskiy also emphasized the GOU's commitment to eliminating certification of foodstuffs, although he recognized that doing so required serious institutional changes and faced resistance from some governmental bodies, particularly the State Standards Committee. TAYLOR