VZCZCXRO4089
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHKV #0688/01 0821541
ZNR UUUUU ZZH
P 231541Z MAR 07
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 1691
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHGV/USMISSION GENEVA 0059
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHEK/AMEMBASSY BISHKEK 0004
RUEHBI/AMCONSUL MUMBAI 0006

UNCLAS SECTION 01 OF 03 KYIV 000688 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/UMB, EB/TPP/BTA, EB/TPP/MTA 
STATE PLEASE PASS TO USTR FOR KLEIN/MOLNAR 
 
USDOC FOR 4201/DOC/ITA/MAC/BISNIS 
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYCK 
GENEVA FOR USTR 
MUMBAI FOR WKLEIN 
BISHKEK FOR GWINSTEAD 
 
E.O.: 12958: N/A 
TAGS: ETRD WTRO ECON PGOV UP
SUBJECT: UKRAINE: 3/23 WTO UPDATE 
 
REF: A. KYIV 648 
 
     ¶B. WINSTEAD-YARNELL EMAIL OF 3/13 
     ¶C. KYIV 331 
     ¶D. KYIV 200 
     ¶E. KYIV 82 
 
KYIV 00000688  001.2 OF 003 
 
 
¶1. (SBU) Summary: Ukraine has received comments regarding 
recently passed WTO-related legislation from members of its 
WTO Working Party and is working hard to respond to these 
comments quickly.  Legislative drafting on issues of 
importance to the USG, such as IPR, biotechnology, and VAT 
on agricultural products, is already underway, although the 
GOU wants to wait for a Working Party meeting before 
initiating the next round of legislative action.  A new 
revision of the draft Working Party Report is expected in 
late March, and the next Working Party meeting in late 
April or early May.  We continue to hear rumors about a 
breakthrough on the bilateral agreement with Kyrgyzstan, 
the last remaining for Ukraine's accession, but see no 
concrete evidence of progress.  There has been a major 
shakeup at the Ministry of Economy, with a new Minister 
taking over on March 21, but Ukraine's WTO negotiating team 
remains unchanged.  End Summary. 
 
¶2. (U) This latest edition in a series of regular update 
cables regarding the status of Ukraine's WTO accession 
(refs C-E and previous) covers the period February 12 - 
March 23. 
 
GOU Receives Working Party Comments... 
-------------------------------------- 
 
¶3. (SBU) Ukraine in February received comments on its 
recently passed legislation from WTO Working Party members. 
Some GOU officials, including Prime Minister Viktor 
Yanukovych and his foreign policy advisor Konstantin 
Gryshenko, were initially taken aback by the volume of USG 
comments.  They noted that comments from the European 
Commission, for example, were significantly shorter, and 
questioned whether our comments were meant to delay 
Ukraine's accession.  (Comment: The Europeans seem to be 
relying on the USG to insist on necessary changes in 
Ukraine's trade regime.  Luis Manuel Portero Sanchez, head 
of the trade section at the Commission's Kyiv office, has 
repeatedly told Econoff that the EU recognizes remaining 
problems in Ukrainian legislation but will not insist on 
many changes, as they will have "another chance" to do so - 
- presumably referring to Free Trade Agreement negotiations 
that will follow WTO accession.  End Comment.) 
 
¶4. (SBU) Ambassador responded to these concerns on March 8 
by noting that the United States often takes the lead in 
the accession process, and by emphasizing that USG comments 
now pave the way for substantive progress.  Econoff has on 
several occasions delivered a similar message to Ministry 
of Economy officials, who have unanimously described their 
recent series of consultations with USTR as extremely 
helpful.  Vyacheslav Tsymbal, head of the Ministry of 
Economy's WTO Department, told Econoff on March 23 that he 
viewed the volume of USG comments as a positive signal that 
Washington is ready to work out all remaining issues for 
Ukraine's accession. 
 
...And Responds Quickly 
----------------------- 
 
¶5. (SBU) At the working level, the GOU has moved quickly to 
respond to Working Party concerns.  The State Department 
for Intellectual Property (SDIP), in cooperation with the 
Ministry of Economy, has already developed a draft law to 
bring IPR-related legislation fully into compliance with 
TRIPS.  Elena Scherbakova, head of SDIP's International 
Relations Department, told Econoff on March 6 that the GOU 
would try to push this "WTO fix" IPR law through the 
legislative process as quickly as possible.  Oksana 
Amdjadin, from the Ministry of Economy, forecasted on March 
16 that the law could be passed by early summer.  Econoff 
noted that the GOU should also work to ensure that other 
IPR-related laws currently in the draft stage, such as 
amendments to the Copyright and Trademark Laws, are in line 
 
KYIV 00000688  002.2 OF 003 
 
 
with WTO principles.  Scherbakova agreed, noting that these 
other draft laws still require significant changes and 
would not be submitted to the Rada anytime soon.  (Note: 
SDIP is currently accepting public comments in an effort to 
improve both the Copyright and Trademark draft amendments. 
The American Chamber of Commerce and European Business 
Association have both submitted comments reflecting 
concerns of member companies, many U.S. based.  End Note.) 
 
¶6. (SBU) The GOU is also actively working on draft 
legislation to bring VAT treatment of agricultural products 
in line with WTO rules, and to create a legal framework for 
products of biotechnology, as agreed in our bilateral 
Market Access Agreement.  The GOU sent proposed language 
for a biotech law to Washington on March 7.  Tsymbal told 
Econoff on March 23 that the GOU would wait for feedback 
from Washington before proceeding. 
 
¶7. (SBU) Former Minister of Economy Volodymyr Makukha (who 
might have continuing responsibilities for WTO if he 
becomes a Deputy Minister of Foreign Affairs) told 
Ambassador on March 23 that four legislative issues -- used 
car imports, VAT on agricultural products, insurance, and 
banking -- are particularly sensitive in the Rada and would 
be difficult for the GOU to readdress.  He queried the 
Ambassador on Washington's possible "flexibility" on these 
issues, and Ambassador promised to relay his concerns. 
 
¶8. (SBU) Econoff asked Tsymbal if the GOU had yet developed 
a complete action plan laying out the legislative and 
regulatory changes necessary for accession.  Tsymbal said 
that, because there could be disagreement among Working 
Party members regarding the necessity of some changes, the 
GOU would wait until the next Working Party meeting before 
finalizing its action plan.  An advisor to the Ministry 
told Econoff on March 14 that several draft laws likely to 
be necessary for accession, such as amendments to the Law 
on Veterinary Medicine, had already been drafted, but that 
the GOU would want to receive its "marching orders" from 
the Working Party before initiating the legislative 
process.  (Comment: Some GOU officials had misguidedly 
presented the package of WTO-related laws passed in 
December 2006 as the last required for accession.  The GOU 
can expect public criticism when it announces that 
additional legislation is required.  The GOU will be better 
able to secure new legislation in the wake of a Working 
Party meeting.  End Comment.) 
 
Next Steps 
---------- 
 
¶9. (U) Ukraine's Working Party held informal consultations 
in Geneva on March 16.  The WTO Secretariat is now revising 
the draft Working Party Report and should distribute a new 
revision at the end of March.  The next Working Party 
meeting is expected to take place in late April or early 
May.  A plurilateral meeting to discuss agricultural 
support levels will likely take place on the margins of the 
Working Party meeting. 
 
More Rumors of Kyrgyz Bilat Breakthrough 
---------------------------------------- 
 
¶10. (SBU) Local media reported that President Yushchenko 
and Prime Minister Viktor Yanukovych discussed Ukraine's 
sole remaining bilateral market access agreement (ref C) 
with their Kyrgyz counterparts on March 7 and 10, 
respectively.  One report claimed that an agreement would 
be signed within "5-7 days."  Deputy Prime Minister Mykola 
Azarov subsequently announced on March 16, "The Kyrgyz 
government has officially notified us that it is prepared 
to sign the [agreement]."  A source within the Cabinet of 
Ministers also said that agreement had been reached, and 
that a formal announcement would likely be made in late 
March. 
 
¶11. (SBU) Tsymbal confirmed that talks did occur but was 
much less optimistic that an agreement would be immediately 
forthcoming.  He told Econoff on March 23 that the GOU had 
not yet received a reply from the Kyrgyz on its most recent 
 
KYIV 00000688  003.2 OF 003 
 
 
proposal.  Post understands from Embassy Bishkek that 
Kyrgyz officials were also more pessimistic as of March 13 
(ref B).  New Minister of Economy Anatoliy Kinakh told 
Ambassador on March 23 that he hoped a resolution could be 
worked out at the next meeting of the Ukraine-Kyrgyzstan 
Bilateral Commission planned for the second week of April. 
(Comment: Previous rumors of a breakthrough with the Kyrgyz 
have proven misleading.  Post therefore views these latest 
reports with cautious optimism.  End Comment.) 
 
Shakeup at Ministry of Economy 
------------------------------ 
 
¶12. (U) Anatoliy Kinakh, head of the Party of 
Industrialists and Entrepreneurs, replaced Volodymyr 
Makukha as Minister of Economy on March 21 (ref A). 
Meeting with the Ambassador on March 23 (septel), Kinakh 
affirmed his full commitment to pursuing WTO accession as 
soon as possible.  Ambassador told Kinakh that the USG 
continues to strongly support Ukraine's accession, and 
outlined a few key issues, such as grain export 
restrictions, biotech framework, and beef/pork imports, 
that the GOU needs to work on.  Five new deputy ministers 
were also named, but Deputy Minister and lead WTO 
negotiator Valeriy Pyatnytskiy survived the shakeup.  No 
changes in Ukraine's WTO negotiating team are expected. 
 
TAYLOR