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P 151356Z NOV 07
FM AMEMBASSY KYIV
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RUEHZG/NATO EU COLLECTIVE

UNCLAS SECTION 01 OF 02 KYIV 002824 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/UMB, EB/TPP/BTA, EB/TPP/MTA 
STATE PLEASE PASS TO USTR FOR KLEIN/BURKHEAD 
USDOC FOR 4201/DOC/ITA/MAC/BISNIS 
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYK 
GENEVA FOR USTR 
 
E.O.: 12958: N/A 
TAGS: ETRD WTRO ECON PGOV UP
SUBJECT: UKRAINE SIGNS BILATERAL WTO AGREEMENT WITH KYRGYZSTAN, 
REMOVES MAJOR OBSTACLE TO ACCESSION 
 
REF: A) BISHKEK 1354 
     B) Kasper-Klein Email of 11/01 
     C) KYIV 2722 
     D) KYIV 2500 
     E) KYIV 331 
 
¶1. Summary: Ukraine signed a WTO bilateral agreement with Kyrgyzstan 
on November 14, removing the major hurdle to accession.  The GOU 
agreed to pay $27.3 million worth of humanitarian assistance to 
Kyrgyzstan in order to secure the deal.  Meanwhile, the GOU reports 
that it has also signed an agreement with Vietnam, the last needed 
for accession.  Disagreement with the EU over export duties remains 
the only unresolved issue.  The GOU still needs to follow up on 
several commitments of importance to the USG, but we are confident 
that these issues will not delay accession.  With the Kyrgyz 
agreement now signed, Ukraine is poised to wrap up accession within 
a matter of months.  End Summary. 
 
Kyrgyz Bilat - Done 
------------------- 
 
¶2. Following high-level negotiations in Bishkek November 12-14 (ref 
A), Ukraine and Kyrgyzstan signed a WTO bilateral Market Access 
Agreement on November 14.  Ukrainian Foreign Minister Arseniy 
Yatsenyuk made the announcement to the media late in the evening on 
the 14th, and the official website of the Kyrgyz President carried a 
similar press release on the 15th.  As part of deal, Ukraine agreed 
to provide $27.3 million in "humanitarian aid as the result of the 
recent earthquake" to Kyrgyzstan.  This figure matched the amount 
claimed by Kyrgyzstan as debt owed by Ukraine (refs B, C, E), but 
Ukraine refused to recognize the claim as state debt.  President 
Viktor Yushchenko issued a decree on November 13 instructing the 
government to provide this assistance money, and the Cabinet of 
Ministers formally approved the proposal on November 14.  (Note: We 
have not been able to discuss the details of the agreement with 
Ukraine's lead negotiators, as they have not yet returned to Kyiv. 
Their staff at the Ministry of Economy has confirmed the signing of 
the deal, however.  End Note.) 
 
Vietnam Bilat - Done 
-------------------- 
 
¶3. Newly-acceded WTO member Vietnam joined Ukraine's WTO Working 
Party late in the game, just in time for the latest Working Party 
meeting on October 25 (ref C).  Ukraine's lead WTO negotiator 
Valeriy Pyatnytskiy traveled to Vietnam for talks immediately before 
his trip to Kyrgyzstan, and Ministry of Economy official Zhanna 
Pastovenska told Econoff on November 15 that a bilateral Market 
Access Agreement had already been signed.  (Note: Pyatnytskiy and 
Serhiy Korsunskiy, Director of the MFA's Economic Cooperation 
Department, had previously told Econ Counselor that the Vietnamese 
only wanted Market Economy Status from Ukraine, and that since 
Ukrainian anti-dumping laws did not have provisions for Non-Market 
Economy Status, this made the issue easy to solve.  End Note.) 
 
EU Export Duties Issue - Still Unresolved 
----------------------------------------- 
 
¶4. Perhaps the only issue still holding up Ukraine's accession is a 
disagreement with the European Union over export duties.  The 
Europeans have requested beefed-up language in the draft Working 
Party Report regarding Ukraine's commitment not to use export duties 
that violate WTO rules.  In particular, the Europeans want Ukraine 
to promise not to introduce any new export duties "unless justified 
under an exception of the WTO Agreement."  Pastovenska, who takes 
the lead for Ukraine on drafting the Working Party Report, told 
Econoff on November 15 that the GOU had not made any progress in 
talks with the Europeans on the subject.  Luis Manuel Portero 
Sanchez, Head of the European Commission's Trade and Economic 
Section in Kyiv, told Econoff on November 9 that the Europeans had 
seen no progress from their side either, and said he thought 
consultations between EU and USG negotiators might help. 
 
Outstanding U.S. Issues - Not Holding us Back 
--------------------------------------------- 
 
¶5. Post continues to stress that the GOU still needs to follow 
through on several issues of importance to the USG, including 
implementing regulations to create a system of registration for the 
products of biotechnology, amendment to the country's trade remedy 
laws, and amendment to laws affecting Technical Barriers to Trade 
(TBT).  The GOU has shown goodwill and willingness to move forward 
 
KYIV 00002824  002 OF 002 
 
 
in all these areas, however, and we are confident of continued 
progress.  One problem area, however, could be Ukraine's use of 
grain export restrictions, which the GOU has promised to eliminate 
prior to accession, but have meanwhile been extended well into 2008 
(ref D).  However, GOU negotiators have consistently confirmed to us 
they will follow through on their commitment to lift the 
restrictions. 
 
Comment: Major Hurdle now Cleared 
--------------------------------- 
 
¶6. The conclusion of an agreement with Kyrgyzstan marks a major step 
forward for Ukraine's accession.  Kyrgyzstan's prior intransigence 
(ref B) had threatened to delay accession indefinitely.  With this 
hurdle now cleared, Ukraine is poised to wrap up accession within a 
matter of months.  The GOU will seek a final Working Party meeting 
as soon as possible to approve the final version of the Working 
Party Report, in the hopes to finish in time for a WTO General 
Council vote at its December 19-20 meeting.  By that time, Ukraine's 
new Parliament should be in place, ready to pass a few outstanding 
laws and to ratify the accession. 
 
TAYLOR