JOHN MARONE, KYIV
LIES, DAMN LIES AND UKRAINE'S WTO BID
If Ukraine's efforts to join the World Trade Organization are any indication of the country's overall commitment to economic reform, then we're all being fed a plate of lies.
The working group monitoring Kyiv's WTO bid held an informal meeting in Geneva on October 25, followed by the usual rosy progress report issued by the Ukrainian government.
The web site of the Cabinet of Ministers carried a statement on October 26 indicating that a breakthrough had been reached with Kyrgyzstan on the signing of an agreement on mutual access to the market of goods and services.
The tiny Central Asian republic is the last country with which Ukraine has to sign a bilateral agreement as a requirement for WTO entry.
The obstacle to achieving this has supposedly been a $25 million debt going back to Soviet times that Kyrgyzstan claims to be owed.
"Kyrgyzstan has admitted that its claims on Ukraine are unfounded and instead agreed to a zero import duty on agricultural products in exchange for signing the bilateral protocol on access to the market of goods and services," the Cabinet statement reads.
As a result, according to the government, the next, official meeting of the working group will be the last, clearing the way for final approval of Ukraine's WTO bid by a 43-nation general meeting in February.
Unfortunately, nobody told the Kyrgyz about this.
The AKIpress news agency website based in Bishkek ran a report on October 27, in which it quoted the country's Ministry of Industry, Economic Development and Trade as accusing the Ukrainian government of trying to use the media to force a WTO settlement.
"It is greatly unfortunate that Ukraine has been striving to resolve issues solely in its own favour throughout the negotiating process and in a coercive way without taking into account Kyrgyzstan's legal trade and economic interests," the Kyrgyz government statement reads.
Kyrgyzstan's ambassador to Kyiv confirmed his government's position and denied that his country had dropped its monetary claims on Ukraine.
Ukraine has been negotiating WTO entry for the past 13 years, signing one bilateral treaty after another while getting feedback in Geneva on its reform efforts.
The WTO boasts 150 member states, but only 43 have a say on Ukraine's entry, and Kyrgyzstan is one of them.
By early 2006, when the United State recognized Ukraine as a market economy and cancelled the largely symbolic Jackson-Vanik amendment, Kyiv looked like it had made it over the hump.
A year earlier, President Viktor Yushchenko had come to power with promises of greater European integration.
EU officials have made WTO membership a condition to Ukraine's obtaining a free-trade agreement.
Experts point out other benefits of WTO membership such as the promotion of efficiency and badly needed foreign investment.
However, opening the doors to international competition also poses a threat to vested Ukrainian interests, companies content with holding a monopoly over a captive consumer audience.
In addition, there is Russia, which has proposed that the two "brotherly" nations join together.
According to WTO entry rules, if Ukraine were to get in first, it could hold Russia's bid hostage to outstanding bilateral trade issues such as Russia's export tax on oil, which punishes energy-dependent Ukrainian consumers.
Some observers have accused Russia of using its influence over the otherwise insignificant Kyrgyzstan to hold up Ukraine's WTO bid.
But this is too convenient an excuse for Kyiv. Considering all the economic benefits of WTO entry, would it really be such a burden to pay out $25 million to Bishkek?
The motivation of Ukrainian businessmen with influence if not seats in parliament to keep out foreign competition should not be underestimated.
One need only do a quick cost comparison of what consumers are forced to pay in the Ukrainian capital for food, clothing, mobile communications, etc. in order to guess what kind of profits are at risk from a freer market.
Why improve efficiency and customer service when you can just keep out the competition by buying a seat in the legislature?
The drive to join the WTO has turned into a forced march through the mud without wheels, regardless of who is in control of the government.
Ukraine’s representative at the WTO headquarters in Geneva, Volodymyr Baluta, said his country would enter the WTO in fall 2008.
Following the approval of a final report in November, then a vote by a WTO general meeting in February, it's just a matter of a couple of months, Baluta would have us believe.
"In June 2008, Ukraine will be able to complete all preparations. And if in early fall the council ratifies the agreement on Ukraine's joining to the World Trade Organization, Ukraine will become its member in 30 days," he was quoted as saying in a government statement.
But Ukraine's parliament still has to give final approval, and lawmakers have been the main obstacles in the first place.
But you wouldn't guess this by the statements released by the government over the last year and a half.
The last official working group meeting was held on July 23, after which the Economy Ministry said everything was moving along as planned.
The same picture was drawn in May, when the parliament was said to have approved final amendments to WTO-related bill passed late last year.
The problem with such bills is that they always fall short of the working group's approval and thus have to be reworked, revoted and revisited in Geneva, while months are lost in the process.
Yushchenko first promised WTO membership in the fall of 2006, only to push the deadline back to the end of this year.
But the president has been hard pressed to push through any of the reforms he promised during the country's much touted Orange Revolution.
And with the Orange parties winning only a slim majority in the last elections, their ability to pass much liberal bills looks equally dim until the next presidential poll in 2009.
By that time, the effects of the country's consumer spending spree and certain favorable external circumstances will have been reduced to show the economy for what it really is.
And all the lies, damn lies and WTO waffle won't be able to cover it up.
John Marone, Kyiv Post Staff Journalist, Ukraine
October 30, 2007
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