WTO General Council: Ukraine Renegotiation Request Under Fire

12 December 2012

Ukraine's request to renegotiate nearly 400 tariff lines again came under fire from several of its fellow WTO members yesterday, which had been set as the deadline for Kiev's trading partners to state their interest in negotiating compensation for the proposed revisions. The Geneva-based organisation, in an earlier meeting this week, also formally approved Tajikistan's accession to the global trade body, leaving domestic ratification as the last remaining step before Dushanbe can become a full member.

Members criticise Ukraine request

Ukraine's request to renegotiate 371 tariff lines just four years after acceding to the 157-member WTO was criticised by some members at the General Council - the organisation's highest decision-making body outside of the ministerial conference - yesterday. The comments came just two weeks after nearly 30 members had asked Kiev at a meeting of the Goods Council to withdraw the controversial request.  (See Bridges Weekly, 28 November 2012)

Ukraine had submitted a notice late last year alerting members that it would seek to invoke a provision in the General Agreement on Tariffs and Trade (GATT) - Article 28 - that indeed allows for renegotiating accession terms. However, details about the proposed size of the request - which Ukraine tabled in September - has alarmed other WTO members over the past few months, specifically over the systemic and commercial implications of such a move by Kiev.

With yesterday being the deadline for members to claim their rights to negotiate with Ukraine for compensation for the proposed tariff schedule revisions, various spoke to express their concerns at Kiev's move, and to reiterate their calls for Ukraine to drop the renegotiation proposal.

Among the concerns raised were whether Ukraine would be able to adequately compensate members for such changes, and the timing of the request - given that Kiev's WTO membership only took effect in 2008. The size of the request is also unprecedented, some noted; while Article 28 has been used by other members in the past, this has usually been for making small, technical adjustments to a member's tariff schedule, and not for a widespread revision of this scale.

The issue of transparency was also brought up by various members, trade sources commented to Bridges, given that there is little information about the new level of bound tariffs that Ukraine is seeking. While some members have asked for this information, Kiev has reportedly not yet provided these details.

"There's been disappointment that here we are at the end of the 90-day period and yet we have seen no real transparency from Ukraine," one developed country delegate commented to Bridges ahead of the meeting.

Some worry that, should the process proceed further, it could prompt other new members - current and future - to follow suit with their own renegotiation requests, a result that could have larger systemic implications for the global trade body and, they say, potentially undermine the predictability of the multilateral trading system.

"Everyone is looking at Russia most immediately - they've been very quiet about it," one delegate commented; Moscow is one of the WTO's newest members, and underwent a long and difficult negotiation process.

"Ukraine has not been shy to say that the Doha Round is nowhere near ending, and that we have high bound lines and others do not," the delegate continued, noting other newly acceded members could theoretically make the same argument.

Ultimately, several members at Tuesday's meeting did notify the General Council of their claim of interest for negotiating compensation with Ukraine. However, those that did so stressed that submitting such a claim does not mean that they accept Ukraine's proposal.

In response, Ukraine noted that it has held several rounds of technical meetings with members and is ready for more constructive discussions, adding that such negotiations under Article 28 are not easy. Trade policy "is a living thing," Ukraine said in conclusion.

General Council approves Tajikistan accession

In a separate meeting of the General Council the day prior, WTO members formally signed off on Tajikistan's accession to the global trade body. Dushanbe will now have until 7 June 2013 to ratify the accession package, and will become a full WTO member 30 days afterward.

"For Tajikistan, a small and landlocked country, WTO accession is a road leading to the world economy. For the WTO, it is another step towards universality and a sign of confidence in the values and benefits of the multilateral trading system," said Director-General Pascal Lamy.

The Working Party tasked with Tajikistan's membership negotiations had signed off on Dushanbe's accession terms in late October. (See Bridges Weekly, 31 October 2012) The Central Asian country had launched its efforts to join the WTO in 2001.

Tajikistan's accession would make it the WTO's 159th member.

Meanwhile, Laos - whose accession terms were approved by members in late October - ratified its accession package last week and is set to deposit the instrument of ratification at the WTO in the coming days. Vientiane's membership would therefore become final in January, ahead of Dushanbe.

While members welcomed the expected accessions of Laos and Tajikistan at the longer General Council meeting on Tuesday, some also used the opportunity to raise their concerns over another accession that had been expected for 2012 - specifically, that of Yemen.

While Yemen and Ukraine had reached a bilateral agreement in market access for goods at the July General Council, little has happened since, some said. Ukraine is the only member that still needs to formally agree to Yemen joining the 157-member trade body.

All members that spoke on Tuesday on the subject ultimately urged Ukraine to finalise any remaining issues it has with Yemen, especially given the latter's status as a least developed country.

ICTSD reporting.

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