GENEVA May 18 Laos, a small nation dependent on
aid and rice farming, wants to join the World Trade
Organization. WTO powers including the United States, China and
the European Union want it to.
But it can't, because Ukraine - and only Ukraine - half a
world away and with no trade to speak of with Laos, says 'No'.
It is also alone of the 155 members of the world trade body
in keeping out Yemen, whose Western-backed government, a product
of the Arab Spring, wants international help to stabilise a
nation beset by poverty, conflict and an al Qaeda insurgency.
Frustrating Laos and Yemen, both of whom have spent over a
decade negotiating membership, is part of a pattern of
single-handed consensus-busting that diplomats from major blocs
say is turning Ukraine, second biggest of the former Soviet
states, into the new "bad boy" of the Geneva-based global
For a nation that hopes to seal its emergence from Russia's
shadow into a closer embrace with the European Union by
co-hosting next month's Euro 2012 soccer tournament, Ukraine
would not win many diplomatic popularity contests; EU states
complain of graft and rights abuses and this week froze a
cooperation pact due to its jailing of opposition leader Yulia
Now, at WTO headquarters in Geneva, Ukrainian diplomats are
seen as pursuing a policy that looks like bullying, though their
explanations leave many speculating on other motives - ranging
from bloody-minded revenge for Kiev's own rocky journey to
membership to treating Laos and Yemen as mere bargaining chips
in a wider strategy of diplomatic reward and retribution.
Among other puzzles, Ukraine has asked the WTO to block an
Australian anti-smoking measure that bans branding on cigarette
packets - though it exports little tobacco itself to Australia.
"Petty", "predatory" and "pernicious" are just a few of the
adjectives attached to Ukraine by diplomats in Geneva, not to
mention "pain in the ass". As one negotiator put it: "For these
guys, the idea of 'soft power' is just nonsense."
But Ukrainian trade negotiator Valery Pyatnytsky insists
that he is merely promoting fair trade. His country attached
"paramount importance", he said, to finding compromises and
completing talks with the two aspirant WTO members - both of
which could hope to join the body this year, if Ukraine relents.
But Kiev would resist outside pressure to cut a deal, he added.
"The completion of negotiations with other... members cannot
impose any obligation or imperative requirement to immediately
end the process of bilateral negotiations," he said in emailed
replies to Reuters. For a country to accede to the trading club,
all existing members must agree, giving Ukraine a veto.
Pyatnytsky said his country was trying to guarantee its
current and future economic interest by asking the candidates to
cut tariffs on imports in the farming and metals sectors:
"Ukraine's metals industry is interested in exporting to
Yemen and Laos, which will help develop infrastructure and to
modernise industry in these countries," he said.
In theory, opening pathways for exports would help Ukraine
reduce its trade deficit, which more than doubled last year to
$6.7 billion. But in practice, Laos and Yemen are insignificant
markets. State Statistics Service data show $17 million of
Ukrainian goods went to Yemen in 2011, or 0.02 percent of total
Ukrainian exports. Laos bought $48,700 of Ukrainian produce.
One trade expert involved in WTO negotiations said Ukraine
was demanding more access for steel and cement. But it could not
hope to benefit from such a concession from Yemen and Laos,
since the terms would apply to all their trading partners.
"There's no way they can deliver cement to Laos that's
competitive with China," he said. "The ones who would profit
would be all the other exporters except Ukraine."
Some trade diplomats suggest Ukraine is simply pressurising
new entrants because its own journey to WTO membership was a
rough ride, and it feels others should get the same treatment.
While that seems a bizarre basis for policy, some Ukrainians
say it is not out of character for President Viktor Yanukovich.
Taras Kuzio, a critic of the government and a Ukraine expert
at the School of Advanced International Studies at John Hopkins
University, said: "I think it's the political culture of people
in power. They feel aggrieved because they took a long time to
join, the negotiations were tough and they want payback. They
have a strong inferiority complex towards the outside world."
Others, however, question how far that can explain strategy
pursued by, among others, trade negotiator Pyatnytsky, whose
professionalism fellow diplomats have come to respect: "He's a
super smart guy and doesn't care about being popular," one said.
For some, playing the "awkward squad" may be a route for
Ukraine to win concessions in other areas.
In particular, its stance irritates other WTO members who
back a rare consensus in the fractious world of trade policy
that the poorest countries should be given as much help as
possible to join and not be forced to open their own markets.
WTO members hope to draft new guidelines for the poorest
economies in July, which would help candidates such as Ethiopia,
Liberia and Sudan, and restore some confidence in a WTO system
that was badly shaken by the failure of the Doha round of trade
talks last year, when the major blocs were left in deadlock.
Ukraine's complaint in March against Australia's cigarette
packaging rules prompted speculation it was using its seat at
the WTO in the interests of big Western tobacco manufacturers
which use Ukraine as a friendly, low-cost manufacturing base in
Europe - though companies and the government denied that.
Other recent irritants in Kiev's relations with wealthy
exporters have included accusations that it is planning to slap
new import tariffs on cars and that it has exceeded agreed
import tariffs on other goods by setting a minimum monetary
level of duty, rather than a percentage tax.
Yemen and Laos are not the first to face Ukrainian hurdles
to membership. Almost as soon as Kiev joined the WTO itself in
2008 it made a slew of demands on Montenegro, delaying the tiny
ex-Yugoslav republic's own membership until just last month.
Russia, which joined in December, faced little trouble from
Ukraine, which depends on Moscow for energy, but Serbia, newly
confirmed as a candidate for European Union membership, is
struggling to agree terms with Ukraine for its entry to the WTO.
Some diplomats believe Ukraine sees WTO negotiations as a
lever on the European Union, which froze Kiev's bid for a free
trade deal late last year because of the Tymoshenko case.
Kuzio at Johns Hopkins questioned whether a government that
imprisoned a popular former prime minister just weeks before
signing an EU trade deal that had been years in the making was
"logical" enough to pursue such a strategy, however.
Faced with Ukraine's demands, Laos and Yemen asked senior
WTO diplomats for an unprecedented intervention to help with
bilateral negotiations, according to an internal WTO report by
the ambassadors who took part - from Denmark, Germany and China.
The three envoys "encouraged Ukraine to re-engage
intensively". Laos agreed to cut tariffs and Yemen made a
"comprehensively revised offer", while Ukraine bowed to pressure
from other members to drop a demand for Yemen to cut tariffs
below current levels. Pyatnytsky said Ukraine was also offering
a 10-year transition period for Yemen and Laos to cut tariffs.
But Yemen said the gap with Ukraine remained "considerably
large", the report said. Trade Minister Saadaldeen bin Talib
came to Geneva for a last-ditch effort with a mandate for "going
the extra mile", but he also asked Ukraine for "reasonableness"
so that any offer could be accepted by the government in Sanaa.
Talib pledged to stay as long as possible to get a deal but
left Geneva without a breakthrough on May 5, after a week in
which "the atmosphere deteriorated substantially", one source
said - Ukraine had even threatened, perhaps rhetorically, to
block Yemen's membership for another decade.
Several people involved in the process said there was no
chance of a Ukrainian deal with Yemen in the nearest future.
Laos and Ukraine are set for talks later in May.
(Additional reporting by Olzhas Auyezov in Kiev; Editing by