Posts Tagged ‘WTO’


Russia pushes Ukraine at the borders

August 16, 2013

Only last week, when writing about the Roshen chocolate ban by Russia, I stated “The Russian message here is quite simple – Tone down the pro-EU rhetoric and your confectionery will suddenly meet the required standards once again.  For those other vocally pro-EU business persons of public notoriety and influence, should you also fail to tone down your pro-EU rhetoric, what has happened to Poroshenko is very likely to happen to you also – soon.  End of message.”

On Friday talks begin relating to the lifting of the ban of Roshen chocolate and put an end to this back-door sanctions.

Having seen very little reaction from Ukraine over this matter – and certainly not anything like the reaction the Kremlin would have hoped for – it seems Russia has found it necessary to up their anti in trying to make its case to the Ukrainian leadership not to continue to pursue the EU Association Agreement.

It appears that now, all Ukrainian imports into Russia can expect very long and expensive delays – in the case of dairy products, quite possibly ruinously long.

Russian reasoning – risk management.  “On midnight on August 14, all Ukrainian importers without exception were added to the first forty enterprises which were entered into to the risk profile of the risk management system of the Federal Customs Service this July. At the same time, the steps to prevent risk were tightened further. As a matter of fact, this means a full halt of Ukrainian exports indefinitely, for weeks or even months.”

Now it has to be said, I would be surprised if this matter was not resolved by the end of the month.

After all amongst the products that will be considerably delayed in arriving with Russian customers are products such as trains and rolling stock, maintenance parts for the aforementioned, steel, pipes and other metals for construction use, jet and prop aviation engines, transformers and road building aggregate and materials – discounting chocolate and dairy produce.  All items where replacements are not easily and quickly sourced within Russia – at least not yet.


The aim of this Russian exercise is not to cause lengthy delays to Russian businesses relying on these Ukrainian products – but to cause panic in Kyiv and amongst Ukrainian producers, whilst providing a little taste and fair warning of the pain that may lay ahead if it signs the Association Agreement.

So, will it work?

I very much doubt it.  If the EU and its Member States are prepared to sign the agreements in November, Ukraine undoubtedly will sign – regardless of the Russian posturing between now and the EaP Summit in November.

What may work will be any shenanigans in the years between any signing and ratification by all parties – for that period of time will produce very little in the way of tangible benefits visible to the public who will start to wonder if the pain inflicted by Russia during those years is really worth taking.


Tajikistan joins WTO effective 2nd March

March 3, 2013

Well congratulations to Tajikistan on successfully joining the WTO  – full membership taking effect yesterday, 2nd March.

Having applied back in May 2001, Tajikistan  has joined in little over a decade – which is quite timely for a FSU nation – all things considered – particularly so if one is in no rush whilst waiting for Russia to be bound by membership rules before joining a few international clubs in which Russia sits, yourself.

Next stop, undoubtedly will be joining the Customs Union with fairly immediate effect – followed by the Eurasian Union if it is up and running in a practical sense by 2015 – which as matters progress, looks likely.

A small but interesting regional development.


Ukrainian WTO Membership – (to answer the other question)

July 17, 2012

Regular readers will recall a few days ago, I was asked two very good questions on twitter, which I recited to you here answering only one of the questions relating to the greening of Ukraine and stating I would return to the question of the WTO and the benefits, or not, of membership.

For those of you who followed the conversation between the scholarly @Aghidel and myself via tweets what I am about to write is nothing new.

For those who didn’t, as stated I will quickly summarise my thoughts.

Many will look at the mechanics of the WTO and look to issues such as Canadian complaints of Ukrainian steel being “dumped”.  That is in practice what the WTO is all about at a nuts and bolts level.  It is though much more than that for Ukraine.

Through a different lens, membership of the WTO is also about what memberships Ukraine doesn’t have.  It is not in NATO and neither is it in the CSTO.  It is not in the EU and neither is it in the Customs Union or overly willing to take part in the Eurasian Union.  It doesn’t hold a lofty seat at the UNSC or at the WB or the IMF.

In short it is in neither an economic or security regional alliance.

Therefore, membership of OSCE, the UN, Council of Europe, BSEC and WTO et al are necessary, if secondary and somewhat unreliable, external anchors in the international arena which go someway to providing economic, security and policy foundations and international dialogue.

Needless to say, if Ukraine remains adamant it will not join specific clubs to the ire of one or another neighbour, these anchors in recognised clubs, no matter how prima facie toothless they may appear, have a perhaps unseen role in Ukrainian political psyche.   No doubt a quite deliberate policy given that the Ukrainian public are as against joining NATO as they are the CSTO for example.  UN peacekeeping and humanitarian aid is about as far as external Ukrainian boots on the ground policy will fly with the majority of the Ukrainian public.

Ergo, my point to my learned scholarly friend, was that despite the frictions that WTO membership may cause Ukrainian businesses on occasion, things such as WTO membership at a political level are necessary anchors into the world in which Ukraine lives.   The more such anchors and the longer Ukraine avoids making choices that will upset one or another neighbour, the more important these anchors are.


Agricultural protectionism in Ukraine

November 28, 2011

Now many economists, of which I am not one, would and do claim that the EU Single Market is fairly protectionist.  The last US Congressional hearing I watched via an Internet link had three US economists telling the panel that the US was also a very protectionist market as well.  I shall of course defer to their professional assessments although I would question the extent to which they are protectionist given the rise of globalisation and the multinational which to all intents and purposes is nation-less but penetrates these domestic markets with incredible ease.

Of course Ukraine has its own interests to protect as well and one such area is agriculture.  The moratorium preventing foreigners owning agricultural land will undoubtedly be extended (again) by the current authorities to 2013 very shortly (and no doubt again after that).  Foreigners will have to continue to lease large areas of Ukrainian agricultural land as they do now for some years to come I suspect rather than own it.

I do find a recent statement from the Ukrainian President quite interesting though.  Whilst in Sumy, he stated that the State will continue to protect the domestic agricultural producers of Ukraine.  He went on to state that he foresaw, as global accessibility grows for the Ukrainian producer/exporter, that a minimum of 15% profits for grain should be a benchmark for the sector.

Clearly the Ukrainian government is keeping a close eye on this sector of Ukrainian economic activity.

How this fits within any DCFTA agreement with the EU I am not sure.  Certainly agriculture was a particularly difficult part of the negotiations, albeit overcome now by all accounts.  To be fair, agricultural policy and the CAP is also a bone of contention within the EU itself and it is their own policy so it is hardly surprising it would have been a difficult area in any DCFTA negotiations.

Maybe this statement flies directly in the face of any DCFTA with the EU.  Not being privy to the agreed text, who am I to know?  AT the very least it would seem to be a suggestion of governmental price fixing in a free market environment.  Whether it goes against the grain with the WTO is also a relevant question, although there are so many governments within the WTO slanting the fair playing field through hidden or overt subsidies to certain sectors, overtly or covertly price fixing or dumping, it is often difficult to see any relevance the WTO has at times.

There have also been recent suggestions, from amongst others the Prime Minister, that Ukraine should consider a joint grain pool with Russia and others on the Black Sea.  These rumours began in earnest after it became clear that Russia will succeed in accession to the WTO at long last.  Are we about to see Ukraine become part of some OPEC-esque grain consortium once Russian WTO membership has been achieved?

Will the 15% profit suggested by President Yanukovych become 20% after discussions with other leaders who may well enter a regional grain pool?  How transparent will such a multinational grain pool be?  It has every possibility of becoming a feeding trough for the corrupt national leaderships.

Is further State interference in the agriculture sector a good or a bad thing?  As a producer, the power of the State behind you seeking 15% profits is no bad thing until you are accurately taxed due to increased State interest in your production.

As an international consumer, what is the profit margin you accept when buying Ukrainian grain and would you feel economically threatened by an OPEC styled grain consortium?

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