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Cablegate: Ukraine: President Vetoes Flawed Customs Tariff

VZCZCXRO4439
OO RUEHLN RUEHVK RUEHYG
DE RUEHKV #1202 1721552
ZNR UUUUU ZZH
O 201552Z JUN 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5881
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RUEHGV/USMISSION GENEVA PRIORITY 0130
RUCNCIS/CIS COLLECTIVE

UNCLAS KYIV 001202

SIPDIS

STATE FOR EUR/UMB, EB/TPP/BTA, EB/TPP/MTA
STATE PLEASE PASS TO USTR FOR CKLEIN, PBURKHEAD, EPORTER
USDOC FOR 4201/DOC/ITA/MAC/BISNIS
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYK
USDA FOR FAS/ONA (KRAMOS, AMANNIX, MSALLYARDS)
USDA FOR FAS/OCRA (JFLEMINGS)
GENEVA FOR USTR

E.O.: 12958: N/A
TAGS: ETRD WTRO PGOV UP
SUBJECT: UKRAINE: PRESIDENT VETOES FLAWED CUSTOMS TARIFF
LAW

REFS: A) KYIV 1077
B) KYIV 1182

1. On June 20, President Viktor Yushchenko vetoed a bill
amending the Law "On the Customs Tariff of Ukraine," which
Ukraine's Rada (parliament) had adopted on June 3. While
the original draft law was meant to lower Ukraine's tariff
rates in line with commitments made during WTO accession
negotiations, the version of the law that passed would have
delayed tariff reductions until January 1, 2009 for a
sizeable list of goods, including meat and poultry, cocoa
powder and chocolate, wines, and automobiles (ref A).

2. The bill now returns to the Rada, which would have to
muster 300 votes in order to override the Presidential
veto. (Note: While this draft law was still working its
way through the legislative process, the Tymoshenko
government had issued instructions to the State Customs
Service to apply the lowered tariff rates from May 16 --
the date of Ukraine's WTO accession -- regardless of the
Rada's actions. Those instructions will continue to govern
tariff collection until a new law comes into effect. End
Note.)

3. In his explanatory note to the Rada, President
Yushchenko argued that the April ratification of the
protocol of accession dictated that tariffs for all
products must be lowered from the date of accession, and
that such an international agreement takes precedence over
domestic legislation. Likely referring to a joint letter
sent on June 13 by the Ambassador and other interested
Embassies in Kyiv, Yushchenko also noted, "I would like to
emphasize that the EU, Canada, Norway, the U.S., Japan, and
a number of other WTO-member countries have already
expressed their concern with the possibility of a violation
of undertaken commitments." The President's note
recommended that the Rada amend the bill in order to
eliminate all delays in tariff reductions.

Comment: Veto Override Possible, but not Assured
--------------------------------------------- ---

4. Although 367 MPs, well over the 300 required for a veto
override, voted in favor of the bill originally, an
override is not certain. Seventy-one of the 72 MPs from
President Yushchenko's Our Ukraine - People's Self-Defense
bloc had voted in favor and may now have to reconsider
their vote given the President's strong opposition. In
addition, current political instability has all but shut
down the Rada (ref B), making it quite possible that a vote
will not take place anytime soon. Only one more plenary
session, to be held July 8-11, remains before the Rada's
long summer holiday. Although customs tariff collection is
currently operating under a legally unclear mechanism (an
unpublished letter from the PM to the head of Customs), and
is subject to the political whims of the GOU, the situation
remains more favorable than if the President had signed the
law and brought back the higher, pre-WTO tariff rates for
those goods covered by the deferral of tariff reductions to
January 2009. End Comment.

TAYLOR

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