WTO Accession

Economic News

22 Jul 2010
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Ukraine's so-called "Orange Revolution" brought to the world's attention in late 2004 seemed for awhile to presage a period of political change that would move the country toward membership in the World Trade Organisation (WTO), the North Atlantic Treaty Organisation (NATO) military alliance and eventually to full membership in the EU. Almost three years later, some of those dreams - some would say illusions - have crumbled as those who fought for change, those who still harbor political ideas much like those of Soviet times and those whose only thought is for their own financial interests have collided repeatedly and disruptively.

After considerable progress over the past year, it appears likely that WTO accession is still very much in the balance and may be postponed at least temporarily and perhaps even further by the chaos surrounding impending parliamentary elections on September 30, 2007.

Slowly but surely, some of the most troubling hurdles have been breasted as the parliament passed part of the laws needed to complete the legislative package demanded by the WTO.

On July 24, the Pacific constitutional monarchy of Tonga gained WTO membership, leaving Ukraine and Russia as the largest economies remaining outside the WTO trading framework.

For quite a long time it appeared that there might be a battle over which of the two republics, the two largest members of the old Soviet Union, would enter the WTO first, with some fear that one might try to block the other's entry. However, other events seem to have muted the Ukraine-Russia rivalry and put Ukraine in a clear lead to be the first to enter.

Ukraine's WTO progress has been slow but fairly steady under the constant prodding of President Viktor Yushchenko and the recent leadership of Anatoliy Kinakh, former prime minister and now minister of the economy.

While Russia's WTO bid remains in the deep freeze, not helped by President Vladimir Putin's public charges in June that the organisation is "archaic, undemocratic and inflexible" a July 17 Brussels visit by Ukraine's new foreign minister, Arseniy Yatsenyuk, seemed almost euphoric in comparison.

After a meeting with Yatsenyuk, EU external relations commissioner Benita Ferrero-Waldner declared the EU "fully supports Ukraine's early entry into the World Trade Organisation" and "welcomed good progress in the negotiations". Ferrero-Waldner added the new agreement with Kiev "will be the most advanced agreement within the EU's neighbourhood policy".

EU Trade Commissioner Peter Mandelson was equally effusive about Ukraine's prospects during the working group meetings.

In spite of all the WTO happy talk coming out of Kiev and Brussels, there are still some difficulties, at least in the short run.

Parliamentary elections are scheduled for September 30 and that appears unlikely to change. However, what happens after September 30 is much more volatile and unpredictable.

Although the old parliament could possibly call itself back into session, the possibility of that happening seems extremely remote.

There is a long tradition of post-election chaos with court challenges to either the entire election or to individual races taking up some time. Even when the membership of the new parliament is more or less final, the law does not allow the parliament to begin regular business sitting until a majority has been agreed within the parties that win seats in the proportional elections.

The jockeying for committee chairs and particularly for the speakership of the parliament is often more hard-fought than the elections. What all this means in practical terms is that it is highly unlikely that the parliament could even begin considering the remaining WTO accession legislation before late November or early December. With the period between what it generally called Catholic Christmas (December 25) and the New Year's celebrations an almost impossible time for legislative activity to occur, even further delays are considered quite possible.

Yuriy Alatortsev, political analyst, told OBG, "In spite of the fact that almost all the necessary preliminary work has been accomplished, I am convinced that the legislative situation will stymie any progress on final approval of required WTO legislation until very late in this year or early next. It is ironic that after all the years of discussion and debate, Ukraine's WTO accession should be held hostage to a political situation that is in no way related to the trade issues at hand. I believe we will get the job done, but I have no confidence in it happening any earlier than the first quarter of 2008."

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