UKRAINE AMENABLE TO OUR WTO PROPOSAL ON EXPORT

UNCLAS SECTION 01 OF 02 KYIV 000948

SIPDIS
SENSITIVE

STATE FOR EUR/UMB, EB/TPP/BTA, EB/TPP/MTAA (APRATTIPATI)
STATE PLEASE PASS TO USTR FOR EBRZYTWA, JKEMP, CSMOTHERS
COMMERCE FOR CLUCYK AND DPAREKH
USDA FOR FAS/ONA AND FAS/OCRA
GENEVA FOR USTR

E.O.: 12958: N/A
TAGS: ETRD WTRO PGOV UP
SUBJECT: UKRAINE AMENABLE TO OUR WTO PROPOSAL ON EXPORT
LICENSING, WORKING ON OTHER TRADE IRRITANTS

REFS: A) STATE 50680
B) Yarnell-Desk Email of 5/14
C) KYIV 777
D) KYIV 497


1. (SBU) Summary: We delivered ref A demarche concerning
our WTO export licensing proposal to the GOU on June 2.
The Ministry of Economy, the key GOU agency on trade-
related issues, supports our initiative and is now
seeking interagency clearance on an official GOU
position. The Ukrainians appear interested in any
measure that they think might introduce transparency in
the trade of hydrocarbons. Regarding bilateral trade
irritants, the GOU appears to be planning to cancel the
13 percent import tariff surcharge that remains in effect
for cars and refrigerators. Meanwhile, however, there
have been calls from domestic producers and the President
to introduce new barriers to agricultural imports; the
GOU is for now trying to resist that pressure. Ukraine's
ban on imported U.S. pork due to H1N1 influenza fears
remains in effect, and the Ministry of Economy is
frustrated with the Veterinary Service's slow response in
reviewing the measure. End Summary.

Export Licensing Initiative
--------------


2. (SBU) Econoff delivered ref A talking points and
materials regarding our proposal at the WTO for increased
transparency on export licensing to Volodymyr Baluta,
Head of the Ministry of Economy's WTO Department, on June

2. Baluta said he was now drafting an interagency notice
on the export licensing proposal in order to finalize the
GOU position. Baluta noted that the Ministry of Economy,
which takes the lead in all trade negotiations, supported
the initiative and said he expected other Ministries to
follow suit. Baluta added that he saw the initiative as
particularly targeting exports of raw materials and hoped
it would be a first step towards more transparency in the
export of hydrocarbons. (Comment: Baluta appears very
focused on the potential to extend WTO rules to the oil
and gas sectors, as he has mentioned the issue at almost
every recent meeting with Econoffs. End comment.)

13 Percent Import Tariff Surcharge
--------------


3. (SBU) Baluta reported that, during the week of May 25,
PM Tymoshenko tasked the Ministry of Economy to draft a
Cabinet of Ministers Resolution to cancel the 13 percent
import tariff surcharge remaining on automobiles and
refrigerators (ref D). (Comment: Such a directive from
the PM suggests that the GOU intends to cancel the
remaining tariff hikes within a few weeks, although other
members of the Cabinet could still try to derail the
effort. End comment.) Baluta also noted that, while
Ukraine went ahead with its justification for the tariff
surcharge at the WTO, the Ministry of Economy was
anticipating a condemnation by the WTO Balance-of-
Payments Committee, since Ukraine's balance-of-payments
crisis had clearly abated.


4. (SBU) Econoff expressed concern regarding recent calls
for increased protection for domestic agricultural
producers, particularly Presidential Decree No. 378,
issued on May 29, which called on the government to
reconsider a tariff surcharge on imported meat. Baluta
said that the Ministry of Economy opposed such calls for
increased import barriers and was drafting a note to the
Presidential Secretariat explaining the negative
consequences of raising import duties, including possible
retaliation by other WTO members.

H1N1 Influenza Pork Ban
--------------


5. (SBU) Following up on his promise to examine Ukraine's
import ban on U.S. pork due to H1N1 influenza fears (ref
C),Baluta said that Deputy Minister of Economy Valeriy
Pyatnytskiy had sent a letter of inquiry to the
Veterinary Service. Much to the Ministry of Economy's
chagrin, said Baluta, the Vets had not yet officially

KYIV 00000948 002 OF 002


responded. He noted that, in informal discussions, the
Vets indicated they planned to maintain the ban until as
late as the end of June. (Comment: Chief Vet Petro
Verbitskiy told the press on May 13 that the ban would
soon be lifted (ref B). We are not sure if Verbitskiy
was being duplicitous, or if bureaucracy intransigence at
the Veterinary Service is to blame for the import ban's
continuation. End comment.)

PETTIT