UKRAINE CONSIDERING ITS ROLE IN RUSSIA'S WTO

C O N F I D E N T I A L KYIV 001330

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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Ukraine with an old, out-of-date services schedule from 2000.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