At Yalta summit, four presidents discuss Single Economic Space (05/30/04)

At Yalta summit, four presidents discuss Single Economic Space

by Roman Woronowycz
Kyiv Press Bureau

KYIV - The presidents of the four states of the former Soviet Union that intend to form a common market, including Ukraine's President Leonid Kuchma, expressed satisfaction on May 24 with the pace at which the new economic ties are developing. However, little was said about the timetable for the implementation of a free-trade zone, which Ukraine considers the keystone in the development of the trade partnership.

Mr. Kuchma, speaking during a press conference in Yalta at the end of a special three-day summit on the Single Economic Space (SES) agreement, said now that the Parliaments of Ukraine, Russia, Belarus and Kazakstan had ratified the document, it was time to prepare the legal framework.

"This will undoubtedly be a complicated process, but it is very important," explained Mr. Kuchma in opening the third day of the summit, a meeting of the four heads of state, held at the historic Livadia Palace.

He said that experts were working on some 80 international documents that would be required to make the Single Economic Space a reality. Many of them would need parliamentary approval.

Mr. Kuchma reiterated that a "full-fledged free-trade zone" remains a priority in order to show the world that the four countries are serious in their intent.

"I am sure that the implementation of the first phase in the creation of the SES will become a litmus test to show the parties' real preparedness and the will to go further than political declarations towards a higher quality of economic cooperation," Mr. Kuchma commented.

However, during the three-day summit almost no one at any level was ready to agree that the free-trade zone would not include a major list of excepted goods, enumerations that have dislodged earlier efforts between Russia and Ukraine to develop a free trade zone, most often presented by the Moscow side.

Interfax-Ukraine reported on May 24 that one Russian source said that while there is a possibility that a free trade zone agreement could be signed this year, it would most likely include some exceptions and limits as to certain products.

In the past Russia has maintained that oil and gas should not be part of a free trade zone agreement. On May 22, during a press conference after a ministerial-level meeting at the Yalta summit, Ukraine's First Vice Prime Minister Mykola Azarov reminded journalists that Russia had yet to cancel its value-added tax on oil exports as it had said it would.

Russian President Vladimir Putin said he expected that around 60 agreements would form the basis for the SES structure, which would be signed by the end of 2005. He remained silent on his country's plans for the free-trade zone, but expressed conviction that the four member-states would not find their path to the World Trade Organization hindered by their common market.

It will not stop any country from taking part in global or European integration processes," explained Mr. Putin, according to Interfax-Ukraine.

The presidents of Ukraine, Russia, Belarus and Kazakstan signed a declaration of intent on September 19, 2003, to form an economic union, which would initially consist of a free-trade zone for the region. The declaration called for the eventual development of a customs union and ultimately for open borders and a common currency.

Before the agreement was signed, Ukraine's Cabinet of Ministers found it difficult to recommend approval of the accord, which was developed at the initiative of Presidents Kuchma and Putin the previous February. The reason for the internal government dispute was whether the agreement in identifying a supranational regulatory body to oversee the work of the SES violated the Constitution of Ukraine.

There was disagreement also over whether the accord would benefit Ukraine when Russia, with by far the largest economy among the four countries, would retain most of the voting weight within the regulatory body.

Ukraine's Verkhovna Rada also saw vociferous objections from the national democratic opposition, which called the document the first step toward the surrender of the country's sovereignty. The parliaments of all four countries ratified the document on April 20-21, with the Verkhovna Rada supporting it with 265 votes.

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