Archive for November 1st, 2011

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WTO, Russia and Ukraine

November 1, 2011

Following on from the tail end of yesterday’s post and Russian accession to the WTO, as I briefly mentioned, it has far more ramifications for Ukraine that many will initially consider.

As I stated, Ukraine has refused the invitation of joining the Russian led Customs Union on the basis that said Union would have to adhere to WTO rules and whilst Ukraine robustly supported Russian accession to the WTO, Russia has yet to join.

That said of the 153 nations in the WTO, only Georgia is blocking Russian entry.  It seems the negotiating skills of the neutral Swiss have now paved the way for Russian entry and Georgian refusal to Russian accession has now been removed.

Rumour has it Russian accession to the WTO will be completed sometime in December and not before time many would argue.

However, barring something equivalent to a political force majeure  that would stop this happening, it does have obvious implications to Ukraine and the EU.  The time line of Russian WTO accession is on the same line as DCFTA and AA negotiation completion and document initialing.  Not the same thing as document ratification and brining agreements into force between the EU and Ukraine.

Ukraine only last week signed a FTA with the CIS nations that comes into force in 2012.

It would be incredibly naive to think that the diplomatic channels have remained closed regarding negotiations on joining the Customs Union or the proposed Eurasia Union on the premise of Russian accession to the WTO one day.  Undoubtedly negotiations will have continued and probably in the knowledge that Georgia could be coerced into agreement swiftly, clearing the way for Russian accession.

It would be equally as naive to think that the Eurasia Union will have the same political sensitivities over issues like Ms Tymoshenko.  In fact the Russian Department of Defence is the complainant over theft/fraud allegations of an on-going investigation into Ms Tymoshenko’s opaque dealings when in charge of the monopoly gas intermediary United Energy Systems.

How swiftly after Russian WTO accession will the Eurasia Union option for Ukraine raise its head more prominently?  Assuredly swiftly enough to challenge the EU deal should political sensibilities slow the ratification process.  As I have written before, the EU deal will not be the only one offered to Ukraine and commentators who have written that it would be are deluded and completely out of touch with the regional games.

That said, for Ukraine it is not necessarily an either/or situation.  As long as it honours deals with both the EU and the Eurasian Union, all of which will have the back-stop of WTO rules, it could be a partner in both.  It does, after all, have FTA agreements already in place with nations that belong neither to the EU or the Eurasia Union that will continue to operate regardless of any new FTA deals.

If the EU has any sense and realises the strengths and weaknesses of its position, it would do well to consider the possibility of splitting the DCFTA deal from the AA rather than incorporating it all into one package if necessary.  Incorporating the DCFTA into the AA package when negotiations began some years ago made sense…..then.  Now as the cumbersome EU behemoth reaches the final whistle, it seems there could well be a late equaliser from the East that will force extra time unless it is prepared to change tactics at short notice.

Brace yourself for some headline grabbing political movement in the next 6 months as the game is far from over.

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