VZCZCXYZ1110
RR RUEHWEB

DE RUEHKV #1726/01 2781452
ZNR UUUUU ZZH
R 051452Z OCT 09
FM AMEMBASSY KYIV
TO SECSTATE WASHDC 8531

UNCLAS KYIV 001726 
 
SIPDIS 
 
STATE FOR EUR/UMB AND EEB/TPP/MTA 
 
E.O. 12958: N/A 
TAGS: EAID ETRD EAGR UNGA
SUBJECT: UKRAINE'S LEGISLATIVE PROGRESS SINCE WTO ACCESSION 
 
REF: KYIV 1027 
 
¶1. (U) Summary.  Ukraine's accession to the World Trade 
Organization (WTO) on May 16, 2008 was seen as a major step 
forward in the country's ongoing integration with the 
international economic system.  With a few noted exceptions, 
Ukraine is living up to the terms of its WTO accession.  One 
of central requirements for Ukraine's accession was that 
parliament amend its trade-related laws to bring its legal 
code into alignment with WTO guidelines.  Ukraine enacted 
five key laws just prior to accession, and passed several 
more thereafter, but one year after accession, two required 
legal amendments are still unresolved.  Further, one 
non-WTO-compliant law allowing the government to impose new 
tariffs as a balance of payments measure was enacted in 
February 2009, and with its expiration in September 2009 
comes word of additional non-compliant protectionist tariff 
proposals being considered in parliament. End Summary. 
 
¶2. (U) Ukraine's accession to the World Trade Organization 
(WTO) on May 16, 2008 was seen as a major step forward in the 
country's ongoing integration with the international economic 
system.  As part of the accession process, the Verkhovna Rada 
(Ukraine's parliament) was required to pass or amend several 
pieces of legislation to bring the country's legal code into 
alignment with international standards on a variety of trade 
issues. 
 
--------------------------------------------- - 
WTO-Compliant Regulations Passed, as Required 
--------------------------------------------- - 
¶3. (U) Just prior to the accession date, the Verkhovna Rada 
enacted five pieces of legislation, amending laws on 
insurance; protection of national producers from subsidies, 
dumping and imports; foreign investment; protection of 
intellectual property rights; standards, technical 
regulations, and conformity assessment. 
¶4. (U) Over the following year, the Verkhovna Rada continued 
to pass WTO-related legislation to bring Ukraine's legal code 
up to WTO standards.  Amendments were made to the laws on 
grain export quotas; veterinary medicine; state support of 
book publishing; taxation of and subsidies for agricultural 
producers; grain storage; application of value added taxes to 
agricultural production and international transportation.  In 
general, Ukrainian authorities are, to the best of their 
ability, operating in accordance with the provisions of these 
new laws and regulations.  The USG actively provides 
technical assistance and training for Ukrainian officials and 
professionals on application of these amended trade laws in 
accordance with international best practices, especially in 
the area of intellectual property rights enforcement. 
---------------------------------------- 
Non-Compliant Tariff Surcharges Expired 
---------------------------------------- 
 
¶5. (U) One law passed by the Verkhovna Rada after WTO 
accession contained provisions that conflict with Ukraine's 
WTO obligations.  Notably, the February 4th law "To Improve 
the Payment Balance of Ukraine in Connection with the World 
Financial Crisis" established a special procedure for 
introducing temporarily increased import duties, which was 
not fully compliant with the WTO rules regarding balance of 
payment difficulties.  This law expired on September 7th, 
¶2009.  Customs officials estimate that, in net terms, the 
decreased volume of trade and reduced sales tax revenue 
attributable to the tariff cost the GOU in excess of UAH 
500,000 (USD 60,000). 
 
-------------- 
Remaining Work 
-------------- 
 
¶6. (U) Two pieces of legislation that are required to bring 
Ukraine's legal code fully into WTO compliance have not yet 
been passed into law.  They are Draft Law no. 2297 "On Fish, 
other Living Aquatic Resources and Food Made of Them", which 
deals with Sanitary & Phyto-Sanitary (SPS) requirements and 
Technical Barriers to Trade (TBT) issues; and Draft Law no. 
3322 "On Quality and Safety of Food Products and Food Raw 
Materials", which would define the legal parameters of the 
term 'standard', harmonizing it with international norms on 
food safety and quality.  The first was deleted from the 
agenda of the Verkhovna Rada on February 3, 2009 and the 
second was revoked by the Cabinet of Ministers on May 20, 
¶2009. 
 
¶7. (U) In an effort to support the draft WTO-related 
legislation and make further progress toward harmonizing 
Ukraine's legal code with WTO requirements, President 
Yuschenko issued Decree 713 on September 4, 2009.  This 
decree requires the Cabinet of Ministers to support the 
following Draft Laws in the Verkhovna Rada:  1365 on Market 
Surveillance; 2297 On Fish and Other Live Products (once it 
has been re-introduced on the agenda); 3301 On the Amendment 
of Article 1 of the Law On the Importation in Ukraine of Raw 
Cane Sugar; and 3421 On the General Safety of Products. 
Decree 713 further tasks the Ministers with writing and 
submitting legislation to the Rada on the following topics: 
On the Amendment of the Law On Standards, Technical 
Regulations and Procedures for Conformity Assessment - 
abolishing the requirement for manufacturers to register 
conformity statements; On the Amendment of the Law on Quality 
and Safety of Food Products - a revision to the bill revoked 
on May 20, 2009; On the Amendment of Certain Laws of Ukraine 
to Bring the Product Nomenclature in Compliance with the 2007 
Harmonized System of Description and Coding of Goods - meets 
commitments in accordance with International Conventions in 
this area and brings import duty rates into accord with WTO 
accession requirements. 
 
¶8. (U) Despite Ukraine's accession to the WTO, several GOU 
regulations continue to create costly problems for U.S. 
exporters attempting to operate in the Ukrainian marketplace. 
 Recent implementation of a regulation long on the books but 
not enforced requires packaged goods to have a stamp on their 
import documents attesting to the existence of a waste 
recycling contract with the GOU monopoly UkrEcoComResursy. 
Fines are levied for non-compliance, even if importers have 
existing contracts with private waste management firms in 
Ukraine. Importers report to the Embassy that although they 
attempt to comply with this requirement, they are unable to 
reach anyone at UkrEcoCoResursy.  On July 28, 2009, the 
Cabinet of Ministers published Decree no. 767 requiring all 
importers to provide a copy of the Shippers Export 
Declaration (SED) (filed with the U.S. Census) to provide a 
basis for the valuation of their goods.  Enforcement of the 
decree is scheduled to begin on October 27th, 2009.  U.S. law 
explicitly prohibits U.S. firms from providing the SED to 
foreign buyers in most cases.  In addition, Ukraine has 
recently circulated a draft veterinary & phytosanitary 
regulation that would require any U.S. processing plant that 
wants to export animal-products (meat, seafood, genetic 
materials) to Ukraine to submit to inspections by the 
Ukrainian veterinary service.  These types of problems create 
delays and additional expenses for U.S. firms.  Furthermore, 
the GOU often fails to properly notify the WTO of new 
regulations affecting trade, such as those mentioned above. 
However, when areas of non-compliance with WTO mandates are 
brought to GOU attention, officials usually make efforts 
(though not always effectively) to remedy the situation. 
 
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Comment 
-------- 
 
¶9. (SBU) Comment.  Ukraine has made significant process in 
aligning its legal code with the international norms 
stipulated by the WTO.  However, the onset of the global 
financial crisis has spurred considerable protectionist 
sentiment in domestic industries, particularly the Ukrainian 
automotive sector.  This has resulted in several power blocs 
in the parliament lending their support to WTO non-compliant 
tariff legislation as a means of harnessing populist 
sentiment in advance of upcoming elections, despite the 
harmful effects such measures have on budget revenue. 
Sources at the Ministry of Economy and Customs Office have 
told EmbOffs that they do not support the enactment of 
additional tariffs and that future non-WTO compliant measures 
may be enforced only against non-WTO members, such as Russia, 
Ukraine's largest trading partner.  End Comment. 
PETTIT