Ukraine might join the SES earlier than the WTO
The Cabinet of Ministers approved on March 3 the bill on establishing the Single Economic Space (SES). The document was immediately submitted to Verkhovna Rada for ratification. The governments of Ukraine, Russia, Belarus, and Kazakhstan had earlier decided to have the agreement ratified within the first six months of 2004. Russian State Duma Speaker Boris Gryzlov told his Ukrainian counterpart Volodymyr Lytvyn during his recent visit to Ukraine that he parliaments of both countries would ratify the agreement simultaneously. The impression is that the two main SES founders chose to insure against possible political embarrassments. All this clearly indicates that this Eurasian regional organization could be legalized well before the end of spring.
Meanwhile, the government seems to have shelved for the time being what it often called the top priority of Ukraine’s economic integration, WTO membership. Minister of the Economy Mykola Derkach is not as zealous as his predecessor in trying to make the subordinate departments accelerate negotiations with the World Trade Organization. As of today, bilateral agreements have been signed with fewer than half of the WTO members that make up the working group on Ukraine. It will take about a year of coordinated diplomatic effort to bridge this gap. And although Deputy Minister of the Economy Valery Pyatnytsky, in charge of this area, keeps saying that all the treaties are on the point of being signed, his optimism seems to be based on propagandistic considerations. Incidentally, although he promised last fall that the negotiating process would be over before the end of 2003, only five or six bilateral agreements have been signed since then.
Yet, the picture would not look so bleak if this were the only obstacle to Ukraine’s entry into the WTO. What seems to be the main barrier today is the government’s reluctance to make active efforts for integration with the World Trade Organization, for example, to lobby in Verkhovna Rada so it passes a sizable package of laws. As most of these are not to the liking of various lobbyist groups, the problem will never be solved unless the cabinet displays political will. Meanwhile, deputies are actively passing economic laws that either run counter to WTO standards or essentially complicate negotiations on admission to this organization. This applies, in particular, to parliament’s latest attempts to moderate the import of sugar, automobiles, and other items. That the Ukrainian government prefers to concentrate its main efforts on joining the Single Economic Space looks — against the backdrop of these difficulties — like choosing the easy way out. For SES membership does not require higher standards in economic policy and industrial production. The other SES members are approximately at the same (if not even lower, especially Belarus and Kazakhstan) level of economic development as this country is.
It is Russia that will derive the greatest benefit from this scenario. Moscow has never hidden its fears that Ukraine might join the WTO before Russia. For this would give Kyiv a nice opportunity to achieve — via WTO procedures and institutions — the most favorable customs regime in trade with the northern neighbor. Moscow clearly wants to see Ukraine’s movement towards the WTO slowed down. In an interview with The Day, Konstantin Myshak, chief of the department of bilateral relations with CIS countries at the Russian Ministry of Economic Development, thus outlined his vision of this issue, “I think the two countries should first establish the SES, coordinate their positions about the WTO, assess the impact this step will have on our markets, and only then join the World Trade Organization together. This will benefit both Russia and Ukraine.”
This viewpoint clearly shows that Kyiv had to make a choice at a certain stage: either to speed up integration with the WTO or to concentrate its political efforts on establishing the SES. And no matter how hard First Vice Premier Mykola Azarov may try to persuade us that these are quite independent areas in the work of the Cabinet’s economic ministers, the future SES partners may well link them. This linkage could make WTO membership as close a goal as association with the EU, which means not close at all. The Ukrainian government’s obvious concession to Moscow in SES matters will only be justified if the establishment of the SES begins with the signing of a revised treaty on free trade with Russia on conditions favorable for our country. Yet, Moscow has not yet shown any readiness to meet us halfway.
