Ukraine joins the WTO – the beginning of a long story?

February 6, 2008

It is confirmed: Ukraine will now accede to the WTO. A big 47-million booming market, Ukraine was the third biggest country outbeside Russia and Iran outside the WTO fold.

Europe is now keen to sign a bilateral free trade agreement with this new frontier country on its Eastern borders. To watch now:

– Ukraine is strong in agriculture: how far will Europe want to open its market in sensitive agricultural products? It could be that the current price hike in agricultural products renders Europe more flexible…

– Ukraine is also very strong in metals. EU anti-dumping exercises tend to focus on metals, and have been hitting Ukraine. How will protectionist forces within Europe influence the outcome of the FTA?

– Ukraine’s economy still needs deep structural and institutional market reforms. Opening up services, accepting international competition in key industries (machinery, cars) might be hard to swallow.

– The EU wants to offer a comprehensive FTA, among others in order to stave off Ukrainian ambitions to join the EU. Given current enlargement fatigue in Europe, the politics of this FTA will be interesting to watch…

– There is/was a tacit “Russia first” policy in WTO accession talks of countries belonging to the former Soviet bloc. Given delays in Russia’s accession, Ukraine is not willing to wait. Russia is not in the position to oppose Ukrainian accession before itself, despite criticising the move by telling Ukraine it is joining on unfavourable conditions (Ukraine accepted restrictions in agricultural subsidies that Russia is still debating with its partners). With FTA talks with the EU looming ahead, Russia’s reaction will need to be watched closely however.

The next CIS country WTO accession in the pipeline is Kazakhstan. ECIPE is preparing a research paper on the matter, it should be out around the end of the month or early March. Watch that space…!


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