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Ukraine: Optimism About Joining Trade Organization May Be Premature

Washington, 3 September 1997 (RFE/RL) - Ukrainian officials will use Friday's summit with European Union (EU) leaders as another opportunity to push Ukraine's hope of joining the World Trade Organization (WTO). But optimism in Kyiv for early accession is not shared at WTO headquarters in Brussels.

Ukraine's prospective full membership in the global trading organization is not at the center of Friday's EU-Ukraine summit. That meeting is to focus, among other things, on the beginning of talks on a free trade zone between Ukraine and the EU and Ukraine's eventual possible entry into the EU itself.

Deputy Foreign Minister Anton Buteiko said in Kyiv last week, however, that Ukrainian officials also want to develop EU support for Ukraine's admission into the WTO.

There is an optimism in Kyiv that Ukraine can quickly fulfill the requirements of accession by next year. Two top officials handling Ukraine's negotiations with the WTO were in Washington last week, discussing the situation with senior American officials and with top U.S. business people.

In a meeting with the Ukraine-U.S. working group at the International Division of the U.S. Chamber of Commerce, the head of the Multilateral Economic Cooperation Department of the Ukrainian Ministry of Foreign Economic Relations and Trade, Valeriy Piatnytsky and his deputy, Iryna Zhornyak, flatly predicted Ukraine would become a full WTO member during 1998.

The Director of the Chamber's Central and Eastern European Department, Gary Litman, said their optimism seems well founded because they have "a good, earnest approach." Litman told our economics correspondent in Washington that Ukraine has the advantage of an already low tariff regime.

Their biggest problem, he said, is with subsidies for state-owned enterprises. "Their definition of subsidies used to be very narrow," said Litman, "covering only direct budgetary transfers." However, he said, the western view is that many other forms of state assistance, such as debt forgiveness, are forms of subsidies and Ukrainian officials are having difficulty wrestling with that problem.

"If they are able to digest the subsidies problem, they are in very good shape," said Litman.

The U.S. Trade Representatives office, coordinating with the U.S. Agency for International Development, has been providing technical assistance to Kyiv to help in preparing for WTO accession. However, the leadership position of that program is currently vacant and American officials are unable to say when it will be refilled.

Ukraine is one of 30 nations which hold observer status with the WTO, the global body that was created in 1995 to take over from the old GATT (General Agreement on Tariffs and Trade). The GATT dealt only with trade in goods while the WTO has agreements covering services and intellectual property as well.

One hundred thirty one nations are formal members of the WTO and other major candidates to join include China and Russia. But WTO officials say Ukraine is far behind China, Taiwan and the Baltic States in preparing for accession.

A WTO spokesman in Brussels told our correspondent the organization�s working party on Ukraine's accession has met four times, most recently in May, and is due to meet again in late November.

At the last meeting, the spokesman says the working group talked with Ukrainian officials about the establishment of a binding tariff regime. While many of Ukraine's tariffs are low, say WTO officials, a regime acceptable to the WTO would include a system replacing bans or quotas, and would put limits on peaks in tariffs.

Also, WTO officials say Ukraine has been given what are called "questionnaires" seeking detailed, specific information on the country's basic telecommunications system, maritime services and the degree to which foreign service providers are established in Ukraine.

Overall, the WTO spokesman says, the talks with Ukraine are centering on trade in goods, services and agriculture.

An official added, however, that the "hard negotiations have not yet started" since Ukraine and the WTO working group are "still assessing" the current trading situation in Ukraine.

Global experts say the more assistance Kyiv gets from the U.S., the EU and other major international traders, the sooner it will be ready for accession to the WTO. But the process is long and complicated, they warn, and can't be shortened by wishful thinking.