At the last stage of negotiations the Ukraine did not have problem with the USA that is traditional for the majority of the countries of the former Soviet Union - the USA repealed the Jackson-Vanik amendment in regard to the Ukraine and granted it the status of the country with the market economy. At the same time on the threshold of the concluding meeting of the Working Party the Ukraine had to make concessions for a number of countries that are WTO members. This applied to new liabilities to restrict considerably export duties implementation (shortening the list of goods items and adoption of step-by-step schedule to decrease duties rates or abolish them).
On the whole, not denying the importance of political support from the key members of the WTO, that was received at the final stages of the Ukraine’s accession, it should be noted that the Ukrainian delegation and country’s authorities unlike Russian party managed to use the granted opportunities in quite compressed time.
Though the period of 6 months is given to ratify the country accession to the WTO, this period is not fixed ad can be prolonged. In this connection the ability of the Verkhovna Rada îf the Ukraine, taking into account the political situation in the country, to adopt additional amendments to the legislation concerning customs, tariffs and taxes issues and ratify the packet of the documents on the accession is the acutest one.
At the same time it should be noted that a considerable part of the lawmaking on bringing national legislation into concordance with the standards and regulations of the WTO was concluded with the previous Verkhovna Rada’s convocation and the final stage of accession took place under V. Yanukovich’s government. Thus, it can be ascertained that the main political forces of the Ukraine, despite considerable opposition of leading parties concerning other problems of external and internal policy, reached certain agreement on the issue of accession to the WTO.
Taking into account the facts mentioned above it can be assumed that imminent membership of the Ukraine in the WTO can influence the prospects of bilateral Russia-Ukraine trade and economic relations as well as have considerable consequences for the process of Russia’s accession to this organization.
Enjoying rights of a full member in the imminent future the Ukraine can, according to the procedures, become a member of a Working Party on Russia’s accession to the WTO and declare its intention to start bilateral negotiations with this country on admission of goods and services to the market as well as on system issues, including such problems as price formation, customs procedures, application of protective measures in trade and so on. The peculiarity of these negotiations is that they are of unilateral character since only the competitor country, in this case, Russia, is to make concessions.
Despite various declarations on unreasonableness of such negotiations it should be taken for granted that the Ukrainian party can make quite strict demands for Russia concerning wide number of problems existing in bilateral trade and economic relations. The Ukrainian party, having practical experience, and having concluded negotiations with the WTO, is sufficiently mobilized and motivated to set the issues mentioned above at the negotiations with Russia at various levels and in various forms.
It will suffice to say that at present the Ukraine is holding one of the leading places among Russia’s partners as to the number of trade disputes and limitations currently in effect. The Ukrainian party, in its turn, estimates non-balance in mutual trade to be USD 6 bln, and losses from Russia’s limitation measures – at USD 3 bln, the total export of the Ukraine in 2007 being estimated approximately at the rate of USD 50 bln.
That is why it is quite logical that the authorities of the Ukraine has already declared their intention to reconsider the problem Agreement on free trade between two countries (initialed in 1993 but not ratified), many statements of which are unacceptable for the Russian party at present.
The most significant problems existing at the moment in the trade relations between two countries are regulation of supply and transit of mineral resources used as sources of power, exclusion of a number of goods groups from the regime of free trade, arbitrary application of limitations, absence of clear mechanisms for regulation of trade disputes as well as use of export duties as to mineral resources used as energy sources by Russia. It seems that underlying theme of a number of mutual claims in trade and economic sphere is politics.
Both parties, taking into account political and economic advisability, should aim at these unsettled disputes and mutual complaints not becoming potential barriers for Russia’s accession to the WTO. It is universally acknowledged that it is the norms and regulations of the WTO that are the optimal tools settle existing bilateral problems. In the end, WTO’s discipline can by and large have stabilizing influence and act as a catalyst for development of trade and economic relations between Russia and the Ukraine on the new basis, since the interests of the countries in many issues coincide or are complementary.
At present the most important external market for Ukrainian enterprises is that of Russia, 29% of the trade turnover of the country being accounted for by it, and the share of the Ukraine in the total Russia’s trade turnover was equal to 5.5% in 2007 (fifth place). According to the data of the Federal Customs Service, starting from 2002 the steady growth of the volumes of Russia-Ukrainian trade and share of Russia in the Ukrainian trade turnover has been growing intensively. It should be noted that export from the Ukraine to Russia is increasing much faster than the Russia’s to the Ukraine. For instance, in 2007 Russia's export increased by 8.9% (up to USD 16.3 bln), and import from the Ukraine – by 44.2% (up to USD 13.3 bln). It is characteristic that whereas Russian export consists from raw materials and fuel by 50%, Ukrainian import is by far more diversified, and the share of the goods with high added value is considerably larger in it.
As a result, in 2007 for the first time over recent years the positive for Russia balance of tarde with the Ukraine has decreased and this trend is to sustain in the years to come. In concordance with the schedule for cancellation of exemptions from the free trade regime between the two countries, in 2006 import duty rates for tobacco and confectionnary were abolished, in 2009 the similar duty for white sugar wil be abolished and in 2010 – for alcohol.
One more important aspect concerning exceptionally liberal liabilities of the Ukraine as to goods and services admission to the markets should be noted. For instance, average weighted import tariff for industrial goods will be less than 5% (8.3% in 2007), and for agricultural goods – 10.7% (13.8% at present) after expiry of short transitional periods. Duties for civil airplanes, industrial equipment, distilled alcohol, some kinds of fish, medicines and medical equipment, wood, pulp and paper goods, metals, furniture and toys are to be immediately or stage-by-stage nullified. Bans for buses, lorries and passenger cars (older than 8 years) import will be lifted, limitations for non-ferrous metals scraps and grains export will be eliminated.
Abrupt liberalization of Ukraine’s import regime can lead to uncontrolled import of goods from third countries into the territory of Russia, taking into account some transparency of customs’ border between two countries – the event that will call for adoption of additional measures in the field of customs administration of bilateral trade. In the field of services liabilities have been undertaken to open nearly all sectors to admission of foreign suppliers, including telecommunication, business services, education, finance, medicine, construction services, transportation and tourism and so on. Foreign banks and insurance companies will be able to open their branches in the territory of the Ukraine.
The Ukraine has refused from export support of agricultural goods and foodstuffs and the volume of annual support of agriculture within the framework of yellow basket is fixed at the minimum level allowed – 5% of the gross production of the industry, but no more than USD 613 mln.
As to system issues, the Report of the Working Party formulates fundamentally new liabilities of the Ukraine that far exceed WTO’s requirements and regulations, including those on export duties application, government trade enterprises operation and etc.
Unprecedented liabilities of the Ukraine to reduce the number of export duties and to abolish them stageby-stage are especially worrying, being of primary importance for Russia. For instance, EU trade commissar P. Mandelson believes that the number of legal issues concerning application of export duties by Russia should be expanded. There are three key points that are outlined: compulsory nature of Russia’s liabilities to the WTO, period of their validity and their coverage as to tariff positions included. Additional argument of the EU is the fact that the Ukraine has already adopted such liabilities in the WTO. A number of Ukrainian politicians have already expressed the same opinion.
Thus, Ukraine’s accession makes a precedent unfavorable to Russia forming practically new standards of membership in this organization.
It seems that Ukraine’s accession created extra complications in addition to existing problems for Russia’s accession to the WTO in the forthcoming future. Russian delegation is yet to solve many such problems that the Ukraine has faced before. As the experience of other countries-competitors demonstrates, the final stage of the accession is the most difficult and requires not only high professional qualities but also high level of work coordination between all the departments concerned. Information of country’s authorities on requirements presented for Russia is highly important for negotiation position on WTO’s accession to correspond with the declared strategy of country’s social and economic development up to 2020.
In the general politic context multipronged problem of abrogation of Russia from Jackson-Vanik amendment should be singled out: because of a number of reasons American party should do it before Russia’s accession. At the same time, USA Administration has repeatedly declared that it will consider the advisability of this decision only after conclusion of the negotiation process of the Russia’s accession to the WTO on the whole on conditions that are acceptable to the USA. This approach suggests obtaining of additional concessions from Russia and manipulation of accession dates by the USA.
The position mentioned and a number of reasons of internal nature including the ratio of political forces in the Congress of the USA, on which the Russia’s abrogation from this amendment depends, do not allow making prediction for dates and final conditions for Russia’s accession.
Ukrainian party, in its turn, will continue negotiations on integration into the EU immediately after receipt of official membership and has already begun official full-scale negotiations on creation of the zone of free trade with the EU in February 2008. It is characteristic that the sides are going not only to liberalize goods and services trade but also provide, on Ukraine’s suggestion, free transfer of labor force. Even if the last condition that is unprecedented for the EU’s trade policy is not fulfilled, it will still mean some enhancement of opportunities as to access to European trade and services markets. As a result economic growth rates may increase, according to estimations of Ukrainians economists, on average by 3 p.p. per annum, depending on world economic situation and conditions of agreement.
Meetings of the Government of the Russian Federation in February M. Goldin At the meetings of the Government of the Russian Federation in February the following issues were discussed among others: measures aimed at the increase of efficiency of the use of the Investment Fund of the Russian Federation means; project of the main directions of customs and tariffs policy for 2009 and for the planned period of 2010 and 2011; the bill “On making changes to some legislative acts of the Russian Federation in connection with adoption of the Federal law “On additional measures of government support for families with children”.
At the meeting of the Government of the Russian Federation on 7 February the issues of the increase of efficiency of the use of Investment Fund of the Russian Federation means were discussed. At the moment investment projects have been approved by the Investment committee on selection of investment projects and 13 projects have approved by the Government of the Russian Federation to be fulfilled with the use of Investment Fund of the Russian Federation means. For three projects the financing started in 2007. However for only one of those - investment project “Construction of oil processing factories in Nizhnekamsk”- funds envisaged by budget allotments in 2007 to fulfill it, were not received by the executors due to the complicated budget process and were returned to the budget because of the end of the financial year.
Practice of the Investment Fund of the Russian Federation on selection and financing of investment projects revealed the necessity to make changes to the Statement on the Investment Fund of the Russian Federation directed to the increase of its operation efficiency. In this connection the project of the Decree of the Government of the Russian Federation has been prepared.
The new version of the Decree envisages such a form of granting governmental support as subsidies to the budgets of the subjects of the Russian Federation to make objects of the capital construction of the governmental property that will enable financing the most important regional projects at the expense of the Investment Fund of the Russian Federation.
The new version of the Statement introduces the notion of the “complex investment project” as a combination of several projects that will allow the regions to overcome the threshold value for the minimum project cost (RUR 5 bln) and will give opportunity to develop at the expense of the Fund infrastructure that is necessary to fulfill a set of investment projects that may have different commercial investors. Within the framework of such projects complex infrastructure will be created in several regions that meets the aims of the Fund creation to the utmost.