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Financial Times
Ukraine steps closer to WTO entry

By Alan Beattie in London and Roman Olearchyk in Kiev
Published: January 17 2008

The European Union yesterday paved the way for Ukraine to join the World Trade Organisation, a move which will admit a highly productive agricultural and steel economy and give Kiev power to delay Russia’s entry to the global club.

Peter Mandelson, EU trade commissioner, said he had reached agreement with Ukraine on the capping of export duties on a number of products including metals, animal hides, live cattle and other agricultural goods. Under WTO rules each existing member can block new members from joining unless they make trade reforms.

“We intend to abolish export duties when we negotiate a free trade agreement with Ukraine,” he told the FT. “In the meantime we wanted a commitment that export duties would not be raised.”

The EU has complained that export duties on metals constitute a hidden subsidy to Ukraine’s own metal-processing industry by making it too expensive to export the raw material to metallurgical factories abroad.

Final agreement for Ukraine to join the 151-member WTO could come as early as the first week in February, whereupon it would gain the power to demand concessions from Russia, its neighbour, which first applied to join the organisation in 1993.

Mr Mandelson said he doubted Ukraine’s accession to the WTO would hold up Russia’s entry, adding that Moscow’s target of joining by the middle of this year was “ambitious but doable”.

Relations between Russia and Ukraine have been strained since the so-called ”Orange Revolution” in Ukraine in 2004.

Speedy western integration efforts spearheaded by Kiev’s president, Viktor Yushchenko, were derailed last year under the Moscow-leaning government of Viktor Yanukovich.

But Kiev’s western integration drive, including plans to join the WTO, Nato and EU in the distant future, is expected to resume after the pro-western Yulia Tymoshenko took over as premier late last year.

Earlier this week, Kiev’s leaders published an open letter to Nato asking for their country to be accepted into a so-called membership action plan - the first of many steps towards joining the military alliance.

The letter, signed by Mr Yushchenko, Ms Tymoshenko and parliament speaker Arseniy Yatseniuk, asked Nato officials to accept Kiev into such a program at the April summit in Bucharest

Russia’s WTO accession has been held up by objections from the EU, the US and other influential members, not least on the implementation of laws protecting intellectual property rights. The US music and movie industry in particular has complained that counterfeiting is rife in Russia and that the judicial system is unable or unwilling to stop it.

Mr Mandelson said EU farmers should not fear competition from Ukraine, which has a highly productive agricultural sector and is one of the world’s largest wheat growers. “As far as wheat is concerned there is plenty of demand to go round at the moment,” he said.