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Ukraine: Can meaningful reform come out of conflict? | Bruegel

Duplicate citations. The following articles are merged in Scholar. Their combined citations are counted only for the first article. Merged citations. This "Cited by" count includes citations to the following articles in Scholar. Add co-authors Co-authors. Upload PDF. The next point to which I wish to refer is foreign policy. During the election campaign, all parties promised to move the country closer to the European Union. The party that has always linked this convergence with the European Union most closely with the issue of accession to NATO, namely the Our Ukraine party, was the one that suffered the heaviest losses.

I therefore ask the European Union to proceed cautiously here. The majority of the population do not want their country to join NATO. All the available data indicate that they do want it to join the WTO. If we consider, against this backdrop, how the partnership agreements should now be shaped, the real needs emerge in the areas where Ukraine still has the difficulties I have listed. It would be good for the European Union to have a strong partner in the East, and it would also be good for Ukraine in view of its general geostrategic orientation. I am thinking of active measures against corruption.

With winter coming, Ukraine also needs a strong government which can negotiate with Russia on the supply and transit of Russian gas. Having read this report, I am inclined to say that Europe has made clear what it wants. The country must have not only an effective government, but also one which demonstrates a political determination to address the problems. After five elections in as many years, the population is understandably tired of all the political squabbling.

The European Union has work to do too. The prospect of EU membership must be extended to Ukraine in the medium or long term. As part of the European Neighbourhood Policy, the European Union can then initiate or support the reforms needed in the country. Sylwester Chruszcz NI. We all hope that growth in trade between Ukraine and EU countries will strengthen economic growth and cooperation with countries in the region.

Good economic relations are advantageous to both sides. I am also thinking at this point of respect for the rights of ethnic minorities and, an issue that is important for me, activities that glorify fascism and genocide should not be permitted. We support democratic and economic processes in our eastern neighbour. On the other hand, it would seem appropriate to avoid biased and one-sided support for any political bloc in Ukraine. Bogdan Golik PSE.

The issue of cooperation with Ukraine is particularly important at present, and all the initiatives aimed at strengthening cooperation are a clear sign of European interest in our eastern neighbour and of openness on the part of the European Union. The problem lies in the fact that the time when it would be appropriate to put into practice the idea of closer cooperation, going further than the European Neighbourhood Policy, which has been of little benefit to Ukraine so far, is actually coming.

The tasks that Ukraine faces have been thoroughly considered in the report. Despite the fact that Ukraine can boast of its achievements as regards liberalisation of trade and capital flows, further reforms and strengthening of the Ukrainian economy, which includes membership of the WTO, are essential. Despite the European aspirations aired during the orange revolution, Ukraine still has to make an unequivocal choice between the European option and the Russian one.

If we want Ukraine to choose the European option, we must state this clearly and we must give this our support. The EU should express its interest in contact with Ukraine by providing active support on the one hand for changes in Ukraine and, on the other, by taking steps within the European Union aimed at a gradual transition from a neighbourhood policy to a policy of integration. For this purpose, steps need to be taken both on the economic front and in the social and political arenas.

It would also be useful to support and implement programmes to promote Ukraine in the European Union as well as the European Union in Ukraine, and also programmes to promote the development of science and education, which is an issue raised by Professor Buzek. The most important step as regards changing the image of the European Union in the eyes of Ukrainians would be to abolish the visa requirement for travelling to the European Union, as well as a clear statement, and this is something of which everyone has spoken, that Ukraine will be able to accede to the European Union, even if this involves an extended time frame.

However, it is important that Ukraine implements systematic economic reforms.

Despite positive changes, such as the membership of the WTO, the public mood indicates the need for serious reforms. Ukraine is developing rapidly. In recent years there has been significant growth in the GDP, but there is still a lot to be done in the area of economic productivity and competitiveness. The influence of oligarchs is decidedly negative. Ukraine is a strategic partner, so it is important to integrate it further into such important sectors as energy and bilateral trade.

The possibility of integrating Ukraine in the trans-European transport networks should be encouraged, as Ukraine could play the strategic role of a transit country through which oil and gas could be supplied to Europe. I hope that, now the Verkhovna Rada elections have taken place, Ukraine will have got on the path towards political stability. I think the EU should continue its open door policy in respect of Ukraine. Ukraine, which has benefited from the continuing process of democratisation, has become one of the most promising trade partners for the European Union.

The acceptance of Ukraine by that organisation will show, once and for all, that the country has gone from being a centrally planned economy to being a fully functioning market economy. As Russia, in offering an agreement on a common trade area with Ukraine, is trying to gain control over that country for its own ends, it is important for the European Commission to present a decisive standpoint supporting Ukraine in its aspirations to become a member of the European Union.

Ukraine should have proper political and economic relations with Russia but, at the same time, we should support its EU aspirations. At the start of the coming year, the solutions relating to the acceptance by Poland of the Schengen Convention will come into force.

It is important that compliance with the regulations on security as regards the borders of the European Union do not, at the same time, create a new Berlin wall for the inhabitants of Ukraine. I hope that the European Commission will allow Poland to introduce these regulations in such a way as to make them beneficial for the inhabitants of Ukraine. I confronted him with the problem of the gruesome, but lucrative and widespread illegal trade in human body parts in his country. To my surprise, he did not deny it. In fact he said it was a very painful issue and asked us in the Committee on Foreign Affairs for help, especially with the buyers, many of whom come from the EU.

It is important to compliment the Ukraine on its honesty about this problem and we should express a strong desire to eradicate it as a trade completely incompatible with human dignity and with closer EU-Ukrainian relations. This report is about helping the Ukraine in areas like trade. This must include the help that the former Prime Minister asked our Parliament for. It is a matter of urgency, as one cannot talk about further collaboration with a country where the trafficking of living and dead humans makes up a significant part of the economy.

The fight against it has to play an important role in the cooperation between the EU and the Ukraine. It is in the interests of the European Union for Ukraine to remain politically stable and to develop its economy. A successful Ukraine could serve as a positive example for all the countries in the region and the states of the former Soviet Union, and help to reinforce democracy in the region.

Ukraine is a European country, and its geographical location, history and cultural traditions bind it to Europe. We must help Ukraine to become capable of applying the WTO rules. WTO membership may lead to a free trade agreement with the European Union. Expanding trade is a common interest for Europe and Ukraine, but there is a need for undistorted trade that also ensures the application by Ukraine of the social, employment, animal health, plant health and environmental rules.

Failing this, we will have to face many problems. Allow me to cite Hungary as an example in this case, since Hungary shares a border with Ukraine. In Hungary, poultry keepers have to make extraordinarily expensive investments in order to fulfil the animal welfare and environmental protection provisions. On the other hand, all the products that they could produce avoiding the animal welfare provisions would come back into the European Union, and as the River Tisza flows from Ukraine into Hungary, we in Hungary will have to face environmental protection problems too.

I am therefore of the opinion that we must help Ukraine to apply all the international social, animal health, environmental protection and animal welfare rules as soon as possible. Thank you very much for your attention. Stavros Arnaoutakis PSE. Ukraine is an important EU trade partner. We support its accession to the WTO and the negotiations for a free-trade area with the Union. In addition, a greater effort is needed to meet the challenges in Ukraine effectively. The following need attention:.

If Ukraine continues with greater vigour to support the reform efforts it has undertaken, I believe the desired results will not be slow in coming. The decision taken in this regard will have a profound significance for future EU-Ukraine relations. If the first option is chosen, there is a high probability that this will lead to political cooperation with the European Union as well as enormous economic tensions with Russia.

If there is a large orange-blue coalition there will be relative economic stability, but the integration of Ukraine with the EU will be significantly delayed. I am not sure whether the EU today is in a position to provide Ukraine with assistance that would be sufficient to compensate that country for the losses brought about by a conflict with Russia. This issue is important, in that the EU has to make a declaration now as to whether it is prepared for significant financial and political involvement in helping Ukraine.

If we do not provide an unequivocal viewpoint, we could ourselves provoke destabilisation of the internal situation in Ukraine. This huge country with a population of 46 million has a right to take pride in its democratic achievements since the collapse of the Soviet Union. It has undoubtedly developed into one of the most promising EU partners. As a representative of the European Parliament delegation, more than a month ago I had the opportunity to observe the parliamentary elections in this country and was satisfied that there is an obvious trend towards increasing the development of democratic civic institutions, democracy is becoming an integral part of life in Ukraine, and the elections in that country are no different from those in the EU Member States.

Assistance after membership of the WTO is finalised is also of great importance, such as assistance with official negotiations on the Free-Trade Agreement and a new, more detailed agreement between the EU and Ukraine. My best wishes to our colleagues from Ukraine in finalising the formation of the new government and commencing the important tasks that await them. It is a natural bridge linking us with Russia and Central Asia. To a great extent, the EU and Ukraine share the same economic and trading interests and, for this reason, it is sensible to go down the path of further integration of our markets in order to gain the greatest benefits.

The way to achieve this is to create a common free trade area, but first Ukraine must complete its process of accession to the WTO. We should do everything we can, politically and diplomatically, to support Ukraine in its bid to gain this membership. It will also be necessary to provide ongoing support to help Ukraine fulfil WTO requirements.

We should remember that, behind Ukraine, there is the mighty hand of Russia, which would once again like to dominate this part of Europe. For this reason it is a good idea to give Ukraine the status of a market economy, which should bring that country closer to Western Europe and, as a result, should lead to membership of the European Union. The agreement also requires WTO members to ensure protection of copyrights, trademarks, geographical indicators of products, and patents by imposing and enforcing appropriate laws.

Russia has passed a number of laws to protect the holders of copyrights, patents, and trademarks and is a member of the major multilateral intellectual property rights conventions. This revision replaced Russia's IPR laws with one law. The United States and the EU want Russia's assurance that the revision does not signify a weakening of legal protection of intellectual property rights.


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Russian production of pirated DVDs has increased and has been a special source of concern. Losses due to copyright piracy of U. IPR protection is of serious concern to the U. Several factors have contributed to the downturn. One factor is Soviet agriculture policy. The Soviet government determined what and how much the economy should produce and directed resources accordingly.

In the s, the government decided that the Soviet people should eat more meat, and it subsidized animal feed production and imports of animal feed to fulfill this objective. The government set meat prices at a low level to make it affordable to consumers. However, after the collapse of the Soviet Union, market prices were instituted and state subsidies were dramatically cut, increasing the cost of meat production. While the Russian federal government has cut support, local and regional governments have continued to provide assistance in the form of equipment, favorable credits, and export subsidies.

They are concerned about food security and unemployment and about maintaining the supply of housing, education, and other services that state farms provided to the rural communities during the Soviet period and continue to provide. A second factor contributing to the decline in agricultural production has been the slow pace of restructuring of Russian farms.

Despite the introduction of privatization, the vast majority of former state and collective farms remain intact as joint stock operations or cooperatives and operate in virtually the same inefficient manner as they did under the Soviet government. The Russian federal government is under pressure from regional and local governments and from factions within the Russian parliament to protect agriculture from further erosion and to provide time and resources to permit it to become competitive.

This pressure has translated into a difference in positions in the accession negotiations between Russia and agricultural exporting countries including the United States, Canada, and Australia over the level and longevity of government support to agriculture. The Russian government has argued for higher levels and longer phase-out periods for supports than its negotiating partners are willing to accept.

Russian negotiators have also asserted that it should not be required to bind itself to dramatically lower support levels during the accession process while other WTO members are currently in the process of negotiating the agriculture subsidies in the current round of WTO negotiations, Doha Development Agenda DDA. The WTO members have argued that the subsidies that Russia wants to maintain distort trade and are concerned that they give Russian agriculture producers an unfair advantage.

The Russian side has argued that without government support, Russian agriculture could not compete with EU and U. During the Uruguay Round, WTO members agreed to expand disciplines over trade in agricultural products, and agricultural trade is on the agenda of the current round, the DDA.

Ukraine’s WTO Accession - Challenge for Domestic Economic Reforms | Ihor Burakovsky | Springer

Under the Agricultural Agreement all WTO members, except least developed countries, are committed to reduce tariffs and subsidies on the production and export of agricultural goods. Some WP members have raised concerns over Russia's sanitary and phytosanitary SPS standards, that is standards and certification procedures that determine the safety of meats and other animal products, plants, and plant products. They argue that these procedures are not scientifically based and discriminate against imports thus violating WTO rules.

Under the Agreement on Sanitary and Phytosanitary Measures SPM , WTO members are permitted to apply controls on products in order to protect public health and safety, but those controls must be scientifically based and must not discriminate against imports. The United States has expressed particular concern about this issue. In March , the Russian government imposed a ban on imports of U. Russia had become the largest market for U. After months of negotiations, the United States and Russia agreed in August on a new veterinary certificate for U. On April 3, , the two sides announced the resolution of the problems, allowing the inspection of the facilities to go forward and U.

Services, especially financial services banking, insurance, and securities , are a relatively new phenomenon in the Russian economy. Under the Soviet Union, services were government-owned and operated and were confined to personal services for example, lodging, hair salons, restaurants. They were not well developed because they were not a government priority. Financial services were virtually non-existent in the Soviet Union because their function as intermediaries between savers and borrowers of capital had no role in the Soviet planned economy.

The services sector has grown rapidly during Russia's transition to a market economy but has not matured in most cases. The United States, the EU, and other advanced developed WTO members have argued that Russia needs an efficient financial services industry to promote economic growth and development and that opening the industry to foreign investment would introduce expertise and new capital. Russian officials and business representatives claim that their service industries must have government protection as "infant industries," because they are too immature and would be wiped out if they had to face foreign competition too soon.

An example is the fledgling Russian insurance industry. Private insurance companies have been developing since the government monopoly was removed after the collapse of the Soviet Union, but not sufficiently to meet demand. Foreign insurance companies that could help fill the gap and bring expertise and a wide range of products are restricted. In addition, foreign providers are prohibited from underwriting and reinsuring mandatory insurance—auto and health insurance and insurance taken out by government entities—the fastest growing insurance market in Russia.

The Russian banking sector is similarly underdeveloped. Foreign participation in the banking sector is restricted by government laws and regulations. Foreign banks may operate in Russia only as subsidiaries and not as branches of the parent bank. Foreign banks have cited the lack of an effective deposit insurance program as a disincentive for new, private banks to develop. Furthermore, a liberalized banking sector would likely boost other sectors of the economy. The Russian government has also indicated it wants long distance and international telephone communications to remain in the control of a monopoly, Rostelcom, until In general, the GATS is designed to apply internationally accepted rules, such as most-favored-nation treatment, to trade in services that are similar to those applied to trade in goods.

For example, WTO rules on goods trade contained in the GATT apply to all goods, but many of the rules, contained in the GATS, including, "national treatment," apply only to those services and the modes of delivery of those services on which that the member country has identified in its schedule of commitments. Russian aircraft manufacturers, as the case with the Russian defense-related industries in general, have seen demand for their production plummet after the government dramatically cut defense expenditures and after airlines from former Communist countries in Central and Eastern Europe and the former Soviet Union shifted to European and U.

The Russian government wants to protect domestic aircraft manufacturers from further erosion of business. For it to become competitive, it needs to be protected from foreign competition and therefore must apply high tariffs to imported aircraft. The United States and EU are pressing Russia to sign on to the plurilateral WTO Civil Aircraft Agreement CAA only 26 members are currently signatories which commits the signatories to eliminate tariffs on trade in civil aircraft and some related equipment. In an bilateral Memorandum of Understanding with the United States, Russia stated that it would sign the CAA but has backed off that commitment during the accession negotiations.

Russia does grant some tariff waivers to allow domestic airlines to fulfill needs that cannot be accommodated by domestically manufactured aircraft. It has recently favored the European firm, Airbus Industries in granting those waivers. The United States has demanded that the waivers should be granted without favoring any particular company. In addition to the above issues, the United States, the EU, and other working party members have raised other issues about Russia's trade and foreign investment regime and want Russia to make changes as part of the conditions for its accession to the WTO.

They include:.

The agreement symbolized Russia's reaching critical milestone in its WTO accession process, although other milestones remain The agreement allowed the United States to address sensitive issues in its economic relations with Russia, although the United States did not accomplish all of its original objectives. The agreement and the sideletters cover a broad range of issues. The bilateral agreement addresses some sensitive issues regarding Russian imports of U. Russia had banned imports of beef and beef by-products since a case of bovine spongiform encephalopathy BSE , or "mad cow disease," was discovered on a farm in Washington State in Under the bilateral agreement, Russia agreed to permit the immediate resumption of imports of de-boned beef, bone-in beef, and beef by-products from cattle younger than 30 months and to allow imports of beef and beef by-products from cattle of all ages after the United States receives a positive evaluation as a beef producer from the World Organization for Animal Health.

Under the agreement, Russia accepts U. Department of Agriculture's Food and Safety and Safety Inspection Service FSIS certifications of pork and poultry producing facilities for producing products that can be exported to Russia and procedures to expedite the certification process.

Ukraine’s WTO Accession

Russia also agreed to accept U. Russia previously had only allowed frozen pork to be imported for further processing. The bilateral agreement also covers various Russian government tariff-related measures. It commits Russia to continue to apply until the provisions of a U. The quotas established under the agreement were revised under a bilateral agreement reached on December 29, , that is to run through On the other hand, Russia did not agree to U.

It will also reduce tariffs on narrow-body aircraft. Russia has agreed to establish procedures to expedite imports of products of encryption technology and reduce duties on exports of scrap metal. Regarding insurance, Russia acceded to U. After five years, Russia will consider whether to lift the discretionary restriction on foreign investment in banking and insurance. Russia still will not allow foreign bank branches to operate. Russia also agreed to increase market access of foreign providers to other service areas including telecommunications, audio-visual services, energy services, express delivery services, distribution services, business services, and environmental services.

The bilateral agreement and sideletters commit Russia to strengthen enforcement of intellectual property rights, including the elimination of plants that produce optical disks, closing down websites that distribute pirated products, and strengthening enforcement at its borders to ensure that pirated goods are not imported. Russia also made a commitment to accede to the provisions of the WTO agreement on trade-related aspects of intellectual property rights TRIPs and to protect proprietary information provided by pharmaceutical companies to obtain marketing approval. Russia still needs to complete negotiations with the working party and bilateral agreements with Saudi Arabia and Ukraine, two recently admitted members of the WTO.

The working party members, including the United States, have argued that Russia still needs to resolve issues regarding government support of the agriculture sector and that its fulfillment of its commitments on IPR protection and industrial goods trade will be closely watched by them before finalizing the accession process.

The working party process has been placed on a formal hold, and the WP has been conducting only informal meetings. Georgia has prevented formal meetings because of Russian restrictions on Georgian exports and, more recently, over Russia's recognition of South Ossetia and Abkhazia. Furthermore, the Russian government said it is reconsidering unspecific commitments its has made as part of the accession process, and Prime Minister Putin has expressed doubts about the benefits of WTO accession to Russia. Because the United States is the world's largest economy, its support is critical to the success of Russia's application.

However, the United States has also insisted that Russia enter the WTO on "commercial terms," that is, on terms that do not distort trade, and that Russia immediately adhere to WTO agreements upon accession. And the trade and economic policy is itself part of a larger U. GSP program , and financial assistance to U. The Bush Administration has indicated that Russia's accession to the WTO could be jeopardized because of Russia's August military incursion into Georgia and its recognition the independence of South Ossetia and Abkhazia. The large increase in U. Department of Commerce Data. Bureau of the Census.

Despite the increase in bilateral trade, the United States and Russia still account for small shares of each others exports and imports. In , Russia accounted for about 0. The United States accounted for 2. Major U. The United States was technically the third largest source of foreign direct investment; however, the first two, Cyprus and Luxembourg, are considered to be largely sources of repatriated Russian capital rather than of original foreign capital.

These concerns are largely mirrored in the demands the United States has made on Russia during its negotiations in the WTO. For their part, Russian policymakers have asserted that U. For example, they point out that the United States only recently removed the "nonmarket economy status" that was applied in antidumping duty cases against Russian imports. That methodology leads to higher dumping margins and antidumping duties and, therefore, placed imports from Russia at a competitive disadvantage vis-a-vis other imports or U.

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In response to requests from Russian steel producers, the U. Department of Commerce examined the possibility of no longer treating Russia as a nonmarket economy and removed the designation on June 7, More critical for Russia has been the U. Section of Title IV requires the President to continue to deny NTR status to any country that was not receiving such treatment at the time of the law's enactment on January 3, In effect, this meant all communist countries, except Poland and Yugoslavia. These restrictions can be removed if the President determines that the country is in full compliance with the freedom-of-emigration conditions set out under the Jackson-Vanik amendment.

For a country to retain that status, the President must reconfirm his determination of full compliance in a semiannual report by June 30 and December 31 to Congress. His determination can be overturned by Congress via the enactment of a joint resolution of disapproval at the time of the December 31 report. The Jackson-Vanik amendment also permits the President to waive full compliance with the free emigration requirement, if he determines that such a waiver would promote the objectives of the amendment, that is, encourage freedom of emigration.

This waiver authority is subject to an annual renewal by the President and to congressional disapproval via a joint resolution. Before a country can receive NTR treatment under either the presidential determination of full compliance or the presidential waiver, both the United States and the country in question must have concluded and enacted a bilateral agreement that provides for, among other things, reciprocal extension of NTR or MFN status.

The agreement and a presidential proclamation extending NTR status cannot go into effect until a joint resolution approving the agreement is enacted. In , the United States and the Soviet Union signed a bilateral trade agreement. The agreement was subsequently applied to each of the former Soviet states. The United States first granted NTR treatment to Russia under the presidential waiver authority beginning in June and, since September , under the full compliance provision.

Presidential extensions of NTR status to Russia have met with virtually no congressional opposition. Russian political leaders have continually pressed the United States to "graduate" Russia from Jackson-Vanik coverage entirely. They see the amendment as a Cold War relic that does not reflect Russia's new stature as a fledgling democracy and market economy.

Moreover, Russian leaders argue that Russia has implemented freedom-of-emigration policies since the fall of the communist government, making the Jackson-Vanik conditions inappropriate and unnecessary. While Russia remains subject to the Jackson-Vanik amendment, some of the other former Soviet republics have been granted permanent and unconditional NTR-Kyrgyzstan on June 29, , and Georgia on December 29, Perhaps, what has particularly irked Russian leaders is that the United States granted permanent and unconditional NTR status to China, ostensibly still a communist country, January 1, , and to Ukraine, March 23, The initiative would be a political symbol of Russia's treatment as a "normal" country in U.

For investors and other business people, PNTR may mean a more stable climate for doing business. But many observers have concluded that U. The answer to that question depends on when Russia and the more than sixty members of the working party can finish hammering out the conditions of accession. Negotiators have reportedly reached agreement on most issues, but disagreements on difficult issues of energy pricing, agriculture, services, civil aircraft, and intellectual property rights, have slowed down the process.

Russian leaders have stated a goal of completing the negotiations by the end of in order to become a WTO member by January 1, The stakes for Russia in joining the WTO are high.