Sunday, January 20, 2008

Ukraine reaches agreement aiding its WTO membership efforts

source: Ukraine steps closer to WTO entry

EU trade commissioner, Peter Mandelson, reached an agreement with the Ukraine to cap export duties on a number of products including metals, animal hides, live cattle and other agricultural goods. This agreement brings the Ukraine, a highly productive agricultural and steel economy, one step closer to joining the World Trade Organization. Once the EU and Ukraine negotiate a free trade agreement, export duties will cease. Until then, the Ukraine will not increase existing duties.

Prior to this agreement, the EU felt that export duties on metals constituted a hidden subsidy to Ukraine’s own metal-processing industry because it made it considerably more expensive to export the raw materials to metallurgical factories outside the country. This sentiment was problematic because WTO regulations allow a member country to block new members from joining if they refuse to make certain trade reforms.

The Ukraine may gain admission to the WTO as early as the first week of February at which time it would gain the power to demand concessions from Russia, who first applied for admission to the organization in 1993. The western integration efforts of Kiev President Viktor Yushchenko were derailed last year by the Moscow-leaning government of Viktor Yanukovich. However, these efforts, including plans to join the WTO, NATO and at some point in the future, are expected to resume under pro-western premier Yulia Tymoshenko. To date, Russia’s desire to join the WTO has been held up by objections from the EU and the US, particularly with respect to the implementation of laws protecting intellectual property rights. The US music and movie industry contend that counterfeiting is rampant in Russia and that the judicial system is both unable and unwilling to control it. Despite these barriers, Moscow aims to join the WTO by the middle of 2008, a goal Mandelson describes as “ambitious but doable.”

Mandelson also noted that farmers in member countries should not fear competition from Ukranian farmers. Although the Ukraine is one of the world’s largest wheat growers, Mandelson notes that “as far as wheat is concerned there is plenty of demand to go round at the moment.”

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