More Carrot, Less Stick

KIEV, Ukraine -- Last week, a top official from the U.S. Commerce Department came to Ukraine to announce that his country had finally recognized the former Soviet republic as a market economy.

David A. Sampson, the Deputy Secretary of the U.S. Department of Commerce, in Kiev last week

Up until then, Ukraine was vulnerable to various U.S. trade restrictions, which it could not appeal in court with the argument that the country’s economy was market-oriented.

Many of these trade restrictions are still in place by the EU, Russia, the U.S. and other countries as Ukraine is still not a member of the WTO. But now Ukraine has a chance to defend its export rights to the U.S. in court without having to prove it’s a market economy.

We congratulate Ukraine on this accomplishment and welcome everything that it will mean for its dynamic economy. However, much more remains to be done before Ukraine takes the much more important step of becoming a WTO member.

Ukraine has worked hard convincing other WTO member countries one by one to accept it as a member. President Viktor Yushchenko’s administration has been active in pushing much of the necessary legislation through parliament.

The process, however, is certain to continue being painful, as a large portion of the legislature – communists and lawmakers loyal to business interests keen on keeping protection laws in place – continue to block the rostrum whenever WTO-friendly bills are discussed. “Protection of the domestic producer” is their self-serving battle cry. Spoiled by sweet inside deals which gave them monopolistic control over a large share of Ukraine’s economy, they have no desire to face competition, which fuels growth and quality in any open market.

It is probably no coincidence that the factions in parliament which oppose WTO membership often voted in line with Russian interests on issues such as an official status for the Russian language and joining a trade union with Russia.

Moscow, which has urged Ukraine to join the Single Economic Space and hammered its southern neighbor with higher gas prices, also wants to join the WTO, but doesn’t like the idea that Ukraine could get in first. Being first would give either country an enviable advantage over the other: setting conditions for aspiring members. The U.S. Commerce Department seems to be eager to avoid such a conflict by suggesting Ukraine and Russia join simultaneously.

We salute any proposal that would allow Ukraine to join at least as early Russia, which has more than once displayed its desire to pressure Ukraine into becoming more compliant to its interests.

Moving on, the U.S. and EU need to continue rewarding Kyiv’s reform efforts. And the next step for Washington should be Congress’s annulment of the Cold-War era Jackson-Vanik amendment, which authorized trade restrictions intended to pressure the Soviet authorities into letting Jews emigrate.

This goal has long been achieved. The Senate removed Ukraine from the list last November. The bill has yet to be approved by the House of Representatives. If the U.S. is serious about helping Ukraine, be it for geopolitical reasons or honest desire to aid an aspiring democracy, it should ensure that this is accomplished soon.

Source: Kyiv Post Editorial