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Cablegate: Ukraine: Gou Rushes Wto Legislative Package

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PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHKV #1338/01 1521328
ZNR UUUUU ZZH
P 011328Z JUN 07
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 2543
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHGV/USMISSION GENEVA 0077
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBI/AMCONSUL MUMBAI 0043

UNCLAS SECTION 01 OF 02 KYIV 001338

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EUR/UMB, EB/TPP/BTA, EB/TPP/MTA
STATE PLEASE PASS TO USTR FOR KLEIN/MOLNAR
USDOC FOR 4201/DOC/ITA/MAC/BISNIS
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYCK
GENEVA FOR USTR
MUMBAI FOR WKLEIN

E.O.: 12958: N/A
TAGS: ETRD WTRO ECON PGOV UP
SUBJECT: UKRAINE: GOU RUSHES WTO LEGISLATIVE PACKAGE
THROUGH PARLIAMENT AMID POLITICAL CRISIS

REF: A. MOLNAR-PYATNYTSKIY EMAILS OF 5/29 AND 5/30
B. KYIV 1314
C. KYIV 897
D. KYIV 790

KYIV 00001338 001.2 OF 002


1. (SBU) Summary: Ukraine's Rada (parliament) voted on May
31 to adopt 11 laws considered necessary for WTO accession.
The drafting process was rushed to meet the timeline for
the Rada's planned dissolution, however, and close scrutiny
will be necessary to ensure the adopted laws are WTO
consistent. In parallel, the Rada "re-passed" a group of
53 laws that had previously been adopted under legal
ambiguity in April and May. Among these laws were several
that may not be consistent with WTO rules, especially one
reinstating mandatory certification for imported
agricultural products. While these newly adopted laws may
not be perfect from a WTO standpoint, Ukraine's pro-WTO
forces recognized that they had a narrow window to push
through legislation, and by so doing should help push
Ukraine's accession into the final stages. End Summary.

2. (U) Ukraine's Rada (parliament) on May 31 adopted a
package of 11 laws identified as necessary for WTO
accession. The vote came after President Viktor Yushchenko
extended the suspension of his decree dissolving the Rada,
part of the compromise meant to resolve the country's
political crisis (ref B).

A Rushed WTO Package
--------------------

3. (U) The following bills made up the adopted WTO package:
-- Amendment to the law "On Value Added Tax" (regarding
taxation of agricultural enterprises);
-- Law "On the Establishing, Testing, Transportation and
Use Of Genetically Modified Organisms" (to create a
framework for the creation, testing, and use of products of
biotechnology);
-- Amendment to the law "On Insurance" (to cancel 75% limit
for insurance in case of marine, aviation, and transport
insurance);
-- Amendment to the law "On the Customs Duty of Ukraine"
(to convert Ukraine's tariff nomenclature to HS 2002);
-- Amendment to the law "On Safety and Quality of Food
Products" (to change the time of advance notification of
inspection from 48 hours to 60 days);
-- Amendment to the law "On the Export Duty Rates for Seeds
of Certain Oil Crops" (to cancel indicative prices for
those products);
-- Amendment to the law "On the Export Duty Rates for Scrap
Ferroalloys" (to fix schedule of reductions to begin upon
accession);
-- Amendment to the law "On the Export Duty Rates for Scrap
Nonferrous Metals and Semi-Finished Products Made of Those
Metals" (to fix schedule of reductions to begin upon
accession);
-- Amendment to the law "On Standards, Technical
Regulations, and Methods of Determining Compliance" (to
ensure precedence of international over regional standards
and introduce provisions related to conformity assessment
recognition);
-- Amendment to the law "On Procedures of Payments in
Foreign Currency" (to extend payment period from 90 to 180
days); and
-- Amendment to the Civil Code of Ukraine to allow for the
destruction of counterfeit and pirated goods, and
equipment.

4. (U) Post notes that most of these laws, with the
exceptions of the customs duty amendment and the oil crop
seeds amendment, were on USTR's most recent list of
necessary legislation sent to the Ukrainians (ref A).

5. (SBU) The vote followed hurried preparations by GOU
officials once it became clear that the President intended
to allow the Rada to function only for a matter of days. A
senior member of Ukraine's WTO team confided to us on May
30 that the legislative package was indeed rushed through
the drafting process. According to this official, the
Ministry of Economy was not able to review for WTO
consistency many of the final drafts submitted to the Rada,

KYIV 00001338 002.2 OF 002


with the Presidential Secretariat and other Ministries
doing their own last-minute drafting. (Comment: Post also
understands that Washington agencies had intended to
provide additional comments on several of the draft bills.
End Comment.)

Additional Laws Pass as Part of Political Compromise
--------------------------------------------- -------

6. (U) As reported by ref B, the Rada on May 29 "re-passed"
53 laws that previously passed in April and May, after
Yushchenko had formally dissolved the Rada. Included among
those 53 were several laws that may not be WTO-consistent.
President Yushchenko has so far neither signed into law nor
vetoed the bulk of the 53 bills (with a few exceptions not
relevant to WTO accession), but media reports speculate
that the President may have promised to sign all the laws
without exception, as part of the deal meant to solve the
political crisis.

7. (U) Post has identified the following laws as of
possible concern for WTO accession:
-- Amendment to the law "On the Quality of Imported
Agricultural Produce" (Establishes compulsory certification
on imported agricultural goods in clear violation of WTO
rules);
-- Amendment to the law "On Sugar Production and
Regulation" (Changes the authority from the Rada to the
Cabinet of Ministers for establishing minimum and maximum
prices for sugar, and could raise objections from
Australia);
-- Amendment to the law "On Grapes and Wine" (Relates to
geographical indications and could raise European Union
concerns);
-- Amendment to the law "On the Basis of State Monitoring
(Control) of Economic Activities" (Alters Ukraine's
inspections regime);
-- Two amendments to the law "On Licensing Economic
Activities" (Changes some licensing procedures, in
particular extends the term of inspection for licensing
from 10 to 30 days for transportation services);

8. (SBU) Ambassador sent a letter to President Yushchenko
in April urging him not to sign the law concerning
compulsory certification of imported agricultural goods.
Lead WTO negotiator Valeriy Pyatnytskiy assured Ukraine's
Working Party in Geneva in May that this particular bill
would not enter into force, as the GOU recognized that it
violated WTO rules. Head of the Ministry of Economy's WTO
Department Vyacheslav Tsymbal told Econoff on May 31 that
he still hoped the President would veto this particular
law. (Comment: Despite the negative implications for
accession, the President might not want to threaten a wider
political deal by vetoing this law. The GOU understands
that the draft is not WTO compliant, however, and, should
the President sign it, would likely seek its repeal once
the Rada is again in session. End Comment.)

Comment: Making Lemonade
------------------------

9. (SBU) Ukraine's political crisis threatened to delay
work on the legislative front, as the GOU was facing the
prospect of no sitting legislature until after fall
elections. The pro-WTO forces, with critical support from
the President's office, therefore decided to push through
everything they could now, during the narrow window of
opportunity available. What passed will likely prove to be
imperfect, but at least should keep up the accession's
momentum and bring Ukraine to the doorstep of the WTO. And
the fact that MPs voted in favor of several controversial
measures, such as creating a framework for the products of
biotechnology, demonstrates a strong, political-level
commitment to complete accession as soon as possible.

TAYLOR

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