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Ukraine Ambivalent About CIS Economic Space

by Tatania Smolenskaya, Tax-News.com, Moscow

30 August 2005

CIS leaders met in Kazan at the weekend to mark the 1000th anniversary of the central Russian city's founding, but Ukraine held back from full participation in the Common Economic Space (CES) which was to have been formed with Russia, Belarus and Kazakhstan.

Dmitry Sukhoparov, director of the International Cooperation Department of Russia's Industry and Energy Ministry said that 93 agreements had been drawn up as part of the formation of the CES, of which Russia, Belarus, and Kazakhstan had ratified 61. "Of the 93 agreements, Ukraine took part in 34. Only 17 have been ratified by all four," he said.

Of the 29 fundamental agreements that define the regulatory and legal framework for free trade zones, Ukraine ratified 14. The other countries disagree with Ukraine over seven of these, one of which is on forming supranational institutions.
"Ukraine always said that its constitution does not allow it to form supranational institutions," Sukhoparov said.

In the first half of 2005, Russia's trade with the member states of the Common Economic Space (CES) - Belarus, Ukraine and Kazakhstan - has reached nearly $21 billion.

Ukraine wants to create a Free Trade Zone without customs seizures and limitations. Sukhoparov says that in any case there are virtually no customs seizures between the three other countries - only with Ukraine. Russia and Ukraine have not yet coordinated common customs tariffs, and free migration of labor force within the CES is a non-starter, as Ukraine has announced that it would not allow the entry/exit of persons without foreign passports beginning in 2006.

Sergei Teryokhin, the Economics Minister of Ukraine, said after recent talks with his Russian colleague, German Gref, that Ukraine would withdraw from the CES and hence would like to develop bilateral cooperation with Russia. Ukraine has not contradicted him so far; and senior Ukrainian officials constantly reiterate their desire to join the EU, which would be inconsistent with full CES membership.

Ukrainian president Viktor Yushchenko said Ukraine was not ready for creation of an intergovernmental agency that would oversee the CES. "Politically ... to get approval from the Ukrainian parliament for this step right now is impossible and this has to be taken into account," he said. But he was careful not to exclude CES membership.

 

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