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Ukraine’s Approach to Regional Integration Efforts: WTO, FTA with EU and FTA

with CIS countriesIgor Burakovsky, Institute for Economic Research

and Police Consulting

Athens, 23-24 February, 2009

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How to Integrate into the World Economy

Basic ways of Ukraine’s integration into the world economy (as well as for any other country):

1) Through flows of goods, services, capital, labour force

and technologies (determined by the level of economic development of the country as such)

2) Through institutions (depends upon the policy of the country towards different international political and economic structures)

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20 Most Globalized Countries: Economic Dimension

KOF 2008 (out of 208)

A.T. Kearney/Foreign

Policy 2007

Singapore, Luxemburg,Ireland, Malta, Belgium, Netherlands, Estonia,

Hungary, Bahrain,Sweden, Cyprus, Czech

Republic, Denmark,Chile, New Zealand,Portugal, Finland,

Slovak Republic, Austria

78Ukraine -

KOF

17Ukraine -

A.T. Kearney/Fo

reign Policy

Singapore, Panama, Malaysia,

Ireland, Czech Republic, Slovakia,

Hungary, Denmark,

Switzerland, Chile, Romania, Taiwan, Slovenia, Croatia, Austria, Thailand, Ukraine, Australia,

Sweden, Israel

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Integration and Competitiveness

Ukraine – 72nd rank (out of 134 countries)

World Economic Forum, 2008-2009

Ukraine – 54th rank (out of 55 countries)

Institute for Management Development, 2008

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Ukraine Foreign Trade: Export (mln USD)

Export (total) 67002,5 million USD

CIS 35,5%

Russia 23,5 %

EU 27,1%

Source: State Statistics Committee

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Ukraine Foreign Trade: Import, 2008Source: State Statistics Committee

Export (total) 85534,4 million USD

CIS 39,2%

Russia 22,7%

EU 33,7%

Source: State Statistics Committee

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Ukraine’s Foreign Trade

• More or less equal distribution of trade flows among major geographical partners

• Russia still the biggest partner • Fundamental trade reorientation ahead or…?• Crisis and changes in trade structure• Structural changes will determine Ukraine's

trade commodity and geographical structure

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WTO: accession process successfully completed

1993: Intention to join WTO declared

2008: Ukraine became 152nd member of WTO

From 2008 onwards: difficult road of implementation of commitments and “mastering” WTO as a policy tool

Crisis as a source of protectionist mood

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Ukraine’s Commitments

Market access for goods and services, export

restrictions, pricing policies, trading rights, fees

and charges for services rendered, internal taxes

(VAT and excise tax), customs valuation and

customs formalities, industrial policy and

subsidies, technical barriers to trade, intellectual

property protection, sanitary and phytosanitary

measures, TRIMs , etc.

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WTO: General Regulatory Framework

• Liberalization of trade regime;• Changes of national regulatory regime:

introduction of internationally recognized principles, tools and mechanisms;

• Promoting internal reforms in various fields of economic policies;

Conclusion: changes of “universal” or “general” nature in trade and trade related policies

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Ukraine - CIS: Free Trade Arrangements

CIS Free Trade Agreement: signed but has to be implemented yet

Ukraine ratified CIS FTASingle Economic Space Agreement: intention to

have Free Trade Agreement declaredBilateral Free Trade Agreements among CIS

countriesGUAM (Georgia, Ukraine, Azerbaijan, Moldova)

intention to have Free Trade Agreement declared

FTA with Former Yugoslav Republic of Macedonia

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Free Trade Arrangements among CIS countries:

• Trade liberalization

• Customs procedures

• No specific institutional provisions

• No legal approximation envisaged

Conclusion: trade with some exemptions without any reform commitments

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Ukraine – EU: Some Basic Arrangements in Historic Perspective

Agreement on Trade in Textile Products (signed in 1993)Agreement on setting up a Contact Group on Coal and Steel (signed in 1994); Partnership and Cooperation Agreement (signed in 1994); Agreement on Trade in Certain Steel Products (signed in 1997, August 2005); Agreement for Cooperation between the European Atomic Energy Community and the Cabinet of Ministers of Ukraine in the Field of Controlled Nuclear Fusion (signed in 1999). Since 1 January 1993 - beneficiary of the Generalized Scheme of Preferences (GSP).

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Ukraine - EU: Way AheadNegotiations on Association Agreement (with no membership perspective?)

Negotiations on Deep Free Trade Agreement (FTA+)

What exactly FTA-plus means?

FTA with EU: legal approximation and trade liberalization

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Integration with EUThe choice of the European integration option reflects

commitment to introduce rules and standards that have already been implemented in the region.

Today it is clear that the perspective of EU accession can generate deeper domestic reforms than different regional projects in the CIS region. But both could provide a significant boost to reform by providing incentives for more liberal trade policies and better economic governance.

Under certain circumstances even rapprochement with the CIS could be regarded as a movement towards the EU – for instance if universally recognized WTO rules and regulations are introduced within the CIS

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Thank you!