Reps of Kuchma-Gore Commission focus on foreign investment (02/08/98)

Reps of Kuchma-Gore Commission focus on foreign investment

by Roman Woronowycz
Kyiv Press Bureau

KYIV - U.S. representatives to the Kuchma-Gore Commission, which met in Kyiv on February 5-6, applauded Ukraine's efforts to overcome the financial crisis the country is experiencing as a result of the collapse of Asian financial markets and Ukraine's heavy reliance on foreign borrowing, but said that Ukraine must begin to take assertive steps to attract foreign business.

"We believe this is the time to act aggressively to move on the problems involving investment in Ukraine," said Jan Kalicki, the head of the U.S. delegation to the Committee on Trade and Investment, which is part of U.S.-Ukraine Bilateral Commission chaired by Ukraine's President Leonid Kuchma and U.S. Vice-President Al Gore. The commission's purpose is to promote economic and strategic relations between the two countries

Mr. Kalicki said that by taking steps to reduce the size of the 1998 budget deficit, by laying plans for the de-regulation of business and licensing reform, and by continuing the privatization of state-run enterprises Ukraine has taken positive steps to overcome the international financial crisis that has engulfed much of Asia and has affected Ukraine. "At a time of international financial instability, Ukraine recognized the need to move boldly," said Mr. Kalicki. However, he noted that barriers remain to foreign trade and investment in Ukraine.

Mr. Kalicki said Ukraine still needs to undergo basic structural reform of the economy and to better grasp the concept of rule of law. "We want to focus on actions and not on words," he said.

During its two-day stay in Kyiv, the U.S delegation, led by Richard Morningstar, special ambassador to the CIS, discussed the general investment climate in Ukraine and the state of economic reforms with various high government officials, including Prime Minister Valerii Pustovoitenko and Vice Prime Minister for Economic Reform Serhii Tyhypko.

An accent was placed on investment in the agricultural and energy sectors, both of which are due for mass privatization this year. "It is, of course, the key to expansion of business investment in Ukraine," said Mr. Kalicki.

The U.S. side agreed with a move by the president to introduce legislation for a fixed tax system to draw small businesses out of the shadow economy. But Mr. Kalicki said Ukraine needs to do more to make government procurement and the privatization process more transparent.

Mr. Kalicki said the two sides also agreed on the need to reduce "the layers and layers of licensing requirements in Ukraine and to bring under control the constant tax inspections which businesses face here."

Ukrainian problems in piercing the U.S. market were also discussed, an issue that may have caused some friction between the two sides. Volodymyr Ihnaschenko, vice-chairman of Ukraine's National Agency for Reconstruction and Development, and Mr. Kalicki's Ukrainian counterpart on the trade and investment committee, said the Ukrainian side had raised the issue of certain Ukrainian firms being barred for allegedly dumping goods on the U.S. market.

Mr. Kalicki of the U.S. side downplayed problems Ukrainian businesses face in entering the U.S. market. He underscored that Ukraine's access to the U.S. market "compares very favorably" to the access given other European countries. He also stressed that the number of anti-dumping cases is insignificant compared to the overall amount of trade between the two countries.

"We would be pleased if Ukraine would accord U.S. businessmen the same openness we accord you," said Mr. Kalicki. "We, quite frankly, don't feel that we have the same access and would be very pleased if we could get it."

The next Kuchma-Gore Commission meeting is scheduled for April in Kyiv, with Vice-President Gore due to attend.

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