U.S. grants Ukraine market economy status (02/26/06)

U.S. grants Ukraine market economy status

by Zenon Zawada
Kyiv Press Bureau

KYIV - The U.S. government on February 17 announced it had granted Ukraine market economy status, thereby sharply improving the country's chances for World Trade Organization (WTO) membership this year.

Ukraine earned the status on February 1, said David Sampson, U.S. deputy secreary of commerce, who was in Kyiv for meetings with Ukrainian government officials regarding bilateral trade and investment relations.

"This determination reflects the impressive economic developments that have occurred in Ukraine over the past several years," Mr. Sampson said.

"We are committed to working together to achieve Ukraine's accession to the WTO," he said. "As a member of WTO, Ukraine would become partners in an ever-expanding group of nations that favor democratic and free-market economic values. This would open up potentially vast opportunities for local businesses, and would attract major industrial players."

Along with the status, Ukraine will face less stringent anti-dumping criteria, an improved international credit rating and lower borrowing costs, said Borys Tarasyuk, Ukraine's minister of foreign affairs.

It will also help to repeal the Jackson-Vanik amendment, a law passed by the U.S. Congress in 1974 placing trade restrictions on the Soviet Union because it forbid Jews from emigrating.

In granting Ukraine market economy status the U.S. Commerce Department considered six primary criteria: the extent of currency convertibility, free bargaining for wage rates, foreign investment, government ownership or control of production and government control over the allocation of resources and other appropriate factors.

"While there is no direct link between receiving market economy status and entering the WTO, this is evidence that Ukraine is moving closer to that goal," said Mr. Tarasyuk.

WTO membership would create "potentially vast opportunities for local businesses and attract major industrial players," Mr. Sampson said.

Ukraine's bid for market economy status began in 2002 in relation to an anti-dumping investigation on steel wire rod. "Anti-dumping" refers to government efforts to prevent importation or sale of foreign-made goods at prices significantly lower than domestic prices for the same goods.

With its new status, Ukrainian companies are further protected from U.S. anti-dumping sanctions or investigations, Mr. Tarasyuk said.

The European Union officially recognized Ukraine's as a market economy on December 21, 2005, and Ukraine officially acquired this status on December 30, 2005.

During his visit to Kyiv, Mr. Sampson also met with Prime Minister Yurii Yekhanurov, First Vice Prime Minister Stanislav Stashevskyi, Finance Minister Viktor Pynzenyk and Foreign Affairs Minister Tarasyuk.

"I congratulate all Ukrainians for making positive changes and achieving market economy status. This determination reflects the impressive economic developments that have occurred in Ukraine over the past several years," said Mr. Sampson. "Today's announcement underscores our commitment to expanding our bilateral economic relationship that will lead our two countries to peace, prosperity and stronger commercial ties."

U.S. President George W. Bush and Ukrainian President Viktor Yushchenko met in April 2005 in Washington, where the two leaders discussed integrating Ukraine into the world economy and promoting investment and trade between the two countries.

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