GENEVA, Feb. 5 – Ukraine’s accession to the World Trade Organization received a green light on Tuesday after the trade body’s General Council approved accession terms, ending more than 14 years of difficult talks.
Ukraine, the second-biggest nation outside the WTO after Russia, will now have to ratify the deal before July 4 and will become a member 30 days after the ratification.
President Viktor Yushchenko, who personally attended the General Council meeting, welcomed the approval, suggesting that joining the WTO will help to strengthen relations between Ukraine and the rest of the world.
“Ukraine’s membership to the WTO is truly an historic moment and a decisive milestone in the development of our economy,” Yushchenko said in an address to members. “We are convinced that our efforts will yield results and allow us to build closer economic ties worldwide.”
The development is a major victory for Yushchenko, a pro-Western leader, who since becoming the president in early 2005 has pledged to bring Ukraine closer economically and politically to the West.
Joining the WTO is the first step in Yushchenko’s pro-Western foreign policy course, which also includes getting membership in NATO and perhaps in the European Union.
Pascal Lamy, the director-general of the WTO, on Tuesday praised Yushchenko’s efforts for taking Ukraine to the organization.
“President Yushchenko’s personal commitment to his country’s accession was a major factor in the successful outcome of these negotiations,” Lamy said. “So, President Yushchenko, colleagues, a warm welcome to Ukraine to the WTO — laskávo prósimo do SOT [welcome to the WTO]!”
Ukraine’s economy, estimated at $176 billion in 2008, is expected to accelerate expansion by an extra 1.5 to 1.8 percentage points annually after the accession to the WTO, analysts said.
This may improve prospects for economic growth this year. The government has originally predicted growth at 6.8% in 2008, compared with 7.3% growth recorded in 2007.
Ukraine’s government believes the country’s exports to the rest of the world will rise faster than imports after the accession to the WTO.
Ukraine reported exports of goods and commodities at $38.4 billion in 2006, while imports were at $45 billion, according to figures released by the WTO. Ukraine’s exports of services were at about $10.7 billion in 2006, while imports were at $8.5 billion.
“Ukraine's WTO Membership will strengthen the multilateral trading system and provide this country with a stable and predictable trade environment that will contribute to boosting its growth and prosperity,” Lamy said.
“As a member, Ukraine will undoubtedly play an active and constructive role in the management and future development of the Organization.
“With its unique geographical position, economic structure and natural resource endowments, Ukraine has particular interests and concerns that should be reflected in the multilateral trading system.
“Ukraine's entry will represent a further step towards making the WTO universal in scope and coverage,” Lamy said. “This will undoubtedly benefit all current and future members.” (tl/ez)
Ukraine’s commitments for WTO accession
Market access for goods
As outlined in Ukraine’s market access schedules, Ukraine will have its customs duties capped at rates ranging between zero and 50% (bound rates). Some bindings involve reductions phased in over a period of up to 2013.
Ukraine’s average tariff bindings are 10.66% for agricultural products and 4.95% for industrial goods.
The highest tariffs Ukraine may apply are on items such as sugar (50%) and sunflower seed oil (30%). Other products with tariff ceilings of 25% include certain radio-broadcast receivers, catgut, and certain conveyor/transmission belts.
Product categories with lower tariffs that will initially or eventually be eliminated include civil aircraft, construction equipment, distilled spirits, certain types of fish, pharmaceuticals, certain chemicals and petroleum oils, medical equipment, wood, pulp & paper, certain yarn and fabric, certain base metals, steel, information technology products (ITA), furniture, and toys.
Ukraine has agreed not to apply any “other duties and charges” — beyond its ordinary customs duties.
In agriculture, Ukraine has agreed not to subsidize exports. Ukraine will limit its trade-distorting domestic support provided to farmers to 3.04 billion hryvnias ($613 million) as well as an allowance of 5% of the value of domestic agricultural production.
As with all WTO members, Ukraine will have no spending limits on domestic support programs that have no or minimal impact on trade, provided these programs meet the criteria laid down in the Agreement on Agriculture.
Ukraine will open a tariff quota on raw cane sugar (260 000 metric tons annually, and increasing to 267 000 metric tons by 2010). This quota will be administered on a first-come first-served basis within 3 years of accession.
Market access for services
Ukraine has made specific commitments in all 11 “core” service sectors — including business services, communication services, construction and related engineering services, distribution, education and environmental services, financial services (insurance and banking), health and social services, tourism and travel, recreational, cultural and sporting services, and transport services — as well as in other areas including beauty, hairdressing, spa and massage services.
Ukraine’s WTO commitments contained in Working Party report
Privatization: Ukraine will provide regular reports to WTO Members on the developments of its privatization program and on other issues related to its economic reforms.
State owned enterprises: Upon accession, Ukraine’s laws governing trading activities of state-owned enterprises will fully conform to the WTO provisions. All state-owned enterprises will operate on a commercial basis. Within one year of accession, Ukraine will notify and provide information on the activities of these companies to the WTO.
Pricing policies: Price controls will be applied in accordance with WTO principles and will take into account the interest of exporting WTO members.
Upon accession, Ukraine will not apply mandatory minimum prices on imported products.
All rail transportation fees will be applied on a non-discriminatory basis.
Ukraine will continue to publish a list of goods and services for which prices are determined by the government.
Policy-making and enforcement framework: Ukraine will uniformly implement WTO provisions and the protocol of accession on its whole territory. Upon accession, Ukraine will provide for the right to appeal administrative rulings on WTO matters to an independent tribunal.
Trading rights (the right to import and export): Registration fees for medicines, pesticides and agricultural chemicals, as well as licensing fees for the import and export of alcohol beverages and tobacco products, will be in compliance with WTO requirements and will be brought to the level of the cost of services provided.
Individuals and companies wishing to import/export will not be required to have physical presence or investments in Ukraine and will only need to register with the relevant authorities.
Fees and charges for services rendered: Ukraine will apply fees according to WTO principles and information regarding these fees will be provided to WTO members upon request.
Internal taxes (VAT and excise tax): Domestic taxes will be applied in a non-discriminatory manner to imports from WTO members and to domestically produced goods.
Quantitative import restrictions, import licensing: Upon accession, Ukraine will eliminate and not introduce, re-introduce or apply quantitative restrictions on imports or other non-tariff measures that could not be justified under the WTO Agreement.
Ukraine will not introduce a ban on ground beef that could not be justified under WTO rules and will maintain transparent and science based standards for trade in this product.
Ukraine will eliminate the import ban on buses, trucks and cars older than eight years.
Ukraine will implement its import licensing procedures in conformity with the WTO Agreement.
Customs valuation: Full implementation of the Custom Valuation Agreement upon accession
Rules of origin: Full implementation of the Rules of Origin Agreement upon accession
Other custom formalities: An expert opinion of the Chamber of Commerce regarding the classification of goods will no longer be required to obtain import or export licenses.
Pre-shipment inspections: If introduced, pre-shipment inspections will be temporary and will comply with the WTO rules.
Anti-dumping, countervailing duties and safeguard regimes: Upon accession, Ukraine will amend its trade remedies legislation so that such measures will only be applied in conformity with WTO rules.
Export duties: Ukraine will reduce its export duties on oilseeds, live cattle, animal skins, ferrous and non ferrous particles. From the date of accession Ukraine will not apply any obligatory minimum export prices.
Export restrictions: Such measures, including export licensing requirements, will only be applied in conformity with WTO rules.
Upon accession, export bans on nonferrous scrap metal will be eliminated and Ukraine will remove export restrictions on grains, as well as those on precious metals and stones other than gold, silver, and diamonds.
Industrial policy, subsidies: Upon accession, Ukraine will eliminate all export and import-substitution subsidies.
Technical Barriers to Trade (TBT): Ukraine will comply with the TBT agreement upon accession.
Ukraine will give priority to international standards over regional and other national ones.
All national and regional standards will be voluntary, except those referred to in technical regulations intended to protect national security interests. By 30 December 2011, all of Ukraine’s technical regulations will be based on the relevant international standards.
Ukraine’s technical regulation on shelf-life for fish will be brought into conformity with the CODEX alimentarius guidelines.
Ukraine will reduce further the number of products subject to mandatory third party certification and will notify the revised list to the WTO by 31 January 2012.
Sanitary and Phytosanitary (SPS): Ukraine will comply with the SPS agreement upon accession and will streamline the responsibilities of its supervisory and control bodies in the SPS area.
Ukraine will not block imports of meat and meat products treated with hormones.
Free zones: Such zones will be administered in compliance with WTO provisions.
Government procurement: Upon accession, Ukraine will become an observer to the plurilateral Government Procurement Agreement (GPA) and will start negotiations to become a Party to this Agreement.
Civil Aircraft: Ukraine will become a signatory to the plurilateral Civil Aircraft Agreement in 2010.
Regional trade agreements: Ukraine will, upon accession, submit notifications and copies of its Free Trade Areas and Custom Union Agreements to the WTO.