Ukraine faces storm of protest over WTO tariffs plan

By bne IntelliNews October 17, 2012

bne -

Popular as it is around the globe right now, Ukraine has managed to unite the likes of China and the US in protest over proposed WTO tariff plans.

A total of 58 countries launched a coordinated attack on October 16, lambasting Kyiv's proposals to renegotiate hundreds of tariff ceilings at the World Trade Organization, accusing the increasingly barmy government of protectionism. Some countries claimed that the changes would undermine the entire world trade system if they are put into effect, reports Reuters.

Ukraine is reportedly looking for loopholes in WTO rules that would allow it to protect its domestic industry. The economy has been hurt by the falling price of steel - its main hard currency earner - and Kyiv is becoming increasingly desperate in its search for a way to prop up the hryvnya.

The WTO's 157 members have the right to raise or lower tariffs within an agreed range, known as the "bound tariff". The boundaries of this range are not immutable as some smaller countries have managed to negotiate small changes, but none on the scale that Kyiv proposed in a document it sent to the WTO last month. The plan details more than 350 tariffs the country intends to alter.

The suggestion is so unpopular that it has united countries normally at loggerheads over trade policy such as the USA, Argentina and China, reports the newswire. Ukraine's senior trade negotiator, Valery Pyatnytsky, defended the move as fully in line with the spirit and letter of WTO rules.

"We intend to carry out negotiations on reviewing bound tariffs for import duties because, in the current economic situation and due to threats that all WTO members are facing, the Ukrainian government must have certain flexibility in carrying out its trade policy with regards to tariffs," he said.

Ukraine's claims for a readjustment in tariff rates is not entirely unjustified however. Pyatnytsky cites the WTO's failure to finish the Doha Round of talks, which were supposed to benefit emerging markets. However, many are now angry that they opened their markets in anticipation, but as with the talks having failed, the likes of the US and EU remain closed to their exports.

Ukraine is not seeking to challenge the traditional "asymmetry" of the system, but "there is space and potential in the system to accommodate Ukraine's trade policy adjustments", Pyatnytsky said. Indeed, many of the countries that have objected to Ukraine's proposed revisions include those markets that have benefited from failure of the Doha talks.

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