2005: THE YEAR IN REVIEW: Membership in WTO: gains and setbacks (01/15/06)

2005: THE YEAR IN REVIEW

Membership in WTO: gains and setbacks

No other political issue better epitomized Ukraine's internal conflict over orientation toward East or West than the fight for World Trade Organization (WTO) membership waged by the Orange forces in the Verkhovna Rada.

Although the pro-Western deputies formed a majority in the Rada, the pro-Russian forces demonstrated this year that with enough obnoxious delaying tactics and even fisticuffs, a minority bloc can do a pretty good job in stalling votes on bills.

As early as the World Economic Forum in Davos, Switzerland, on January 28, President Viktor Yushchenko set the goal of Ukraine meeting all WTO membership requirements by November.

It became apparent in late May that resistance to the WTO would be fierce. By a narrow margin, the Rada rejected a package of amendments to Ukraine's intellectual property rights laws that would have brought Ukraine into compliance with WTO standards.

International observers accused Mr. Yushchenko and former Prime Minister Yulia Tymoshenko of failing to inform and mobilize their parliamentary forces about the importance of the intellectual property rights vote. Numerous Our Ukraine deputies were either not present in the Rada for the vote or simply neglected to vote for the package of bills in June.

"The failure of the Our Ukraine bloc in the Parliament to strongly support Ukraine's rapid movement toward major international economic and trade agreements has been alarming to many private business and government leaders around the world," said Morgan Williams, the director of government affairs for SigmaBleyzer.

In response to Western investors and financiers, some voicing their concern about Ukraine's lack of progress at the World Economic Forum in Kyiv, Ms. Tymoshenko announced on June 21 she would lead a campaign to rally votes to support a WTO package of bills. She asked that the Rada approve a package of 14 bills critical to WTO admission.

On July 5 Mr. Yushchenko appeared before the Rada and urged the national deputies to consider Ukraine's national interests and vote for the bills with Ukrainian citizens' interests in mind. WTO membership would add $1.6 billion to Ukraine's annual budget and improve GDP growth by 1.9 percent, he said.

To prepare Ukraine's economy for WTO admission, 350 laws needed to be amended, 150 government regulations needed to be reviewed and 1,300 laws had to be canceled.

However, Communists and pro-Russian parliamentary deputies proved that they were willing to go to extremes in order to prevent any progress toward WTO membership.

For two days on July 6-7 Verkhovna Rada Chairman Volodymyr Lytvyn tried to lead Ukraine's Parliament in voting on 14 bills that would allow for WTO entry by the year's end. Pro-WTO national deputies outnumbered their enemies - the Communists and the Social Democratic Party - United (SDPU). Despite their majority, pro-WTO deputies managed to pass only two bills during those two days: a bill criminalizing the piracy of intellectual property and a law reducing import duties on meat and other products, except for wine, pure alcohol and tobacco.

Inconsistent support from the Socialist Party disappointed Economy Minister Serhii Teriokhin, who blamed them for the failure of several bills. The party should leave the Our Ukraine coalition government, he said.

Both the Socialist Party and Mr. Lytvyn's People's Party of Ukraine voted against the package of 14 bills, preferring to vote on each bill separately in order to protect special interests on specific issues.

Following the WTO legislative battle in the remaining days before the summer recess, during which the Rada approved only eight of 14 necessary bills, Ms. Tymoshenko said she considered the parties of Oleksander Moroz and Mr. Lytvyn her opponents, accusing Mr. Lytvyn of sabotage.

However, political observers put the blame on Mr. Yushchenko and Ms. Tymoshenko, who didn't invest enough time to prepare the Rada and rally the necessary votes. Ms. Tymoshenko sternly rejected accusations that she waited until the last minute.

Little progress on WTO bills was made after the summer recess, as pro-Russian deputies managed to block voting on several occasions.

On November 1 the Rada approved two more WTO bills, the first amending the law defending domestic producers from import dumping, and the second amending the law to adopt special measures for imports.

At this point, Mr. Yushchenko estimated that Ukraine had passed 65 percent of the necessary legislation for WTO admission, while the Ministry of the Economy stated that Ukraine was in compliance with about 80 percent of the WTO's accession requirements.

It wasn't until the first anniversary of the Orange Revolution on November 22 that Mr. Yushchenko finally acknowledged in his speech that his country wouldn't make his hoped deadline of November to gain WTO admission.

On December 14 the Verkhovna Rada rejected two bills required for Ukraine's WTO accession, including one lowering export tariffs on ferrous scrap metal, live cattle and leather materials. The same day, U.S Trade Representative Rob Portman said in Hong Kong that Russia and Ukraine should join the WTO together.

But, Presidential Secretariat Chief Oleh Rybachuk had said on October 28 that Ukraine isn't conducting talks with Russia to join the WTO. "It is technically impossible to synchronize the two independent countries' entries."

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