CIS summit participants agree to establish free trade zone (06/25/00)

CIS summit participants agree to establish free trade zone

by Roman Woronowycz
Kyiv Press Bureau

KYIV - The heads of government attending the Commonwealth of Independent States (CIS) summit in Moscow agreed on June 20 to a compromise that foresees the establishment of a trade zone across the territories of member-states by the end of 2001.

"The free trade zone within the framework of the Commonwealth of Independent States may be ready for implementation on January 1, 2002," said Belarusian Prime Minister Vladimir Yermoshyn, the new chairman of the CIS Heads of Government Council.

Ukrainian Prime Minister Viktor Yuschenko, last year's chair, who was elected vice-chairman of the council for this year, said the forum had made a legal decision to adopt procedures for the levying of taxes within the principles of the free trade zone agreements already signed. According to Interfax-Ukraine, of particular concern were taxes on trade goods in the country of destination. He also announced that the list of goods that would be excluded from free trade provisions had been reduced by a quarter.

He said that the Russian side, which has shown the most resistance to the establishment of a free trade zone, had expressed a "strict readiness" to cut the list of commodity groupings of exports to Ukraine that would still be subject to taxation. Mr. Yuschenko did not list what goods would still be included.

"It's a pretty great victory," said Mr. Yuschenko.

The agreement signed by the CIS members was left intentionally vague, however, after the Russian delegation added an amendment that stated that terms for launching the zone shall not be stipulated in the document.

Ukraine has spearheaded the drive to turn the CIS region into a free trade zone, efforts initiated by Mr. Yuschenko's predecessor, Valerii Pustovoitenko. Russia has been opposed to the move because much of the trade between the countries of the CIS has centered upon it, anyway, and believes that it may be economically hurt if the member-states draw away from it with increased trade among themselves.

But, as Mr. Yuschenko explained during the meeting, trade within the CIS has fallen drastically since the Soviet Union fell apart. He said that in the last eight years mutual trade dropped from 80 percent of gross trade to 27 percent, while trade with countries outside the CIS has risen from 24 percent to 73 percent.

He compared the situation in the CIS with that of the European Union and underscored that the EU's internal trade comprises a steady 63 percent of the gross of member-states. He noted, however, that in the first quarter of this year, commodity exchanges within the CIS had risen by 47 percent over the same period in 1999.

The free trade zone issue has been central to how relations between the 15 member-states would continue to develop. Before a CIS meeting last year, Ukraine's President Leonid Kuchma had all but written off the organization as dead. Events in the last year, including progress on the free trade zone issue, and the election of a new CIS executive secretary, Yurii Yarov of Russia, have given him more reason to be optimistic that the commonwealth will be more than a token umbrella organization for the countries once under Moscow's rule as part of the USSR.

On June 21, after his own series of meetings with the other presidents, he waxed absolutely optimistic.

"We are for the widest integration, first and foremost with Russia and all of the CIS countries," said Mr. Kuchma. To make clear that his words referred only to economic cooperation, he added, "Ukraine has its first and last chance to be independent. We will not lose that."

The Ukrainian delegation signed a total of 13 political and economic documents in Moscow, five with provisos attached, including a strategic plan for CIS development through 2005 and a joint anti-terrorism program through 2003 that includes the establishment of an anti-terrorism center. The provisos, for the most part, stipulate that Ukraine's participation is conditioned by Verkhovna Rada approval or subordination to the national laws of Ukraine.

Ukraine did not sign several agreements, including one on the establishment of a headquarters for joint military cooperation. Ukraine is not a signatory to the CIS agreements on joint military cooperation within the CIS framework.

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