WILL UKRAINE JOIN RUSSIA'S WTO WORKING PARTY?

C O N F I D E N T I A L KYIV 000722 SIPDIS SIPDIS STATE FOR EUR/UMB, EUR/RUS, EB/TPP/BTA, EB/TPP/MTA STATE PLEASE PASS TO USTR FOR CKLEIN USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYK MOSCOW FOR JKUO GENEVA FOR USTR E.O. 12958: DECL: 04/09/2018 TAGS: ETRD WTRO PGOV UP RS SUBJECT: WILL UKRAINE JOIN RUSSIA'S WTO WORKING PARTY? REF: A. MOSCOW 968 ¶B. YARNELL-KUO EMAIL OF 1/28 Classified By: Economic Counselor Douglas Kramer for Reasons 1.4 (b) and (d) ¶1. (C) Summary: A GOU official recently told the press that Ukraine did not plan to join Russia's WTO Working Party, even though Ukraine looks set to join the WTO within a matter of months, well ahead of Russia. (Note: Ukraine's parliament April 10 ratified the protocol of accession, details septel.) The Ministry of Economy subsequently clarified that, in fact, no official decision had been made. Regardless of whether Ukraine does decide to join Russia's Working Party, the GOU wants to see Russia inside the WTO as soon as possible and is unlikely to do anything to cause delays. End Summary. ¶2. (U) Following approval of Ukraine's accession at the February 5 meeting of the WTO's General Council, Ukraine looks on track to join the WTO within a matter of months. The protocol of accession, along with a final package of 10 laws agreed to as part of the negotiations, was submitted for Rada (parliamentary) ratification April 2. The Rada ratified the protocol April 10 (septel) and passage of the rest of the package is expected to proceed without much difficulty. Ukraine to Forgo Russia's Working Party? -------------- ¶3. (U) An April 8 report by Radio Era, a Ukrainian internet news portal, quoted Lidiya Melnyk, deputy head of the Ministry of Economy's WTO Department, as saying, "Ukraine does not plan to join Russia's WTO Working Party" should Ukraine indeed complete the accession process before its eastern neighbor. Melnyk's statement came amidst widespread speculation on how Ukraine's imminent accession might affect Russia (ref A). No Official Decision Yet -------------- ¶4. (C) We contacted the Ministry of Economy on April 9 to clarify Melnyk's statement. Melnyk explained that, in fact, the GOU had made no official decision on whether or not to join Russia's Working Party and that her statement to Radio Era should be considered a personal opinion. Yet this opinion was based on public statements by the President and Prime Minister, said Melnyk, as she interpreted high-level assurances that Ukraine would not block Russia's accession to mean that Ukraine would not join the Working Party. (Note: President Yushchenko and Prime Minister Tymoshenko have indeed made several public statements in support of Russia's accession. Tymoshenko said in January that Ukraine would not use the WTO as "a tool of pressure on other countries" (ref B),and Yushchenko said in February, "Ukraine is interested in Russia's earliest possible membership of the WTO and will do all it can to facilitate it." End note.) ¶5. (C) Zhanna Pastovenska, responsible for Working Party activities within the WTO negotiating team, also confirmed that the Ministry had not yet received any instructions from the government on how to proceed vis-a-vis Russia's accession. ¶6. (U) When asked at an April 9 press conference about the GOU's plans, Prime Minister Tymoshenko responded that she "had no information" about a government decision to forgo a seat in Russia's Working Party but that Ukraine would participate in "the agreement of the protocols for Russia's accession to the WTO." Comment: Ukraine Unlikely to Stall Russia -------------- ¶7. (C) Although Melnyk believes that Ukraine will not join Russia's Working Party, we have heard the opposite from some other GOU officials, and it is simply too early to tell. Whether or not Ukraine decides to join Russia's Working Party, however, we consider it unlikely that the GOU would raise any major obstacles to Russia's accession. Especially considering difficulties with energy trade, many in the GOU are anxious not to upset the bilateral relationship, and GOU trade officials in particular would prefer to see Russia inside the WTO rather than out. One cannot exclude the possibility that some tiff in the bilateral relationship, similar to recent reactions to sharp Russian comments on Ukraine's NATO ambitions, could spur some in the GOU to seek to use Russia's WTO working party for political leverage. However, we believe the most probable outcome is that the GOU would raise few, if any, trade demands if it does join the Working Party on Russia. End Comment. Taylor