19 - The 2008 WTO accession of Ukraine: negotiating experience – challenges, opportunities and post-accession approaches

Summary

ABSTRACT

Ukraine embarked on its road to WTO accession in 1992, a year after it had declared its independence. Fourteen years of intense work, steep learning, persistence, political will and flexibility were to follow. Ukraine faced many immediate challenges and tasks in strengthening its independence and creating and establishing the national institutions required by an independent state, moving away from a centralised economy and reinforcing foreign policy. Ukraine had to totally eliminate its post-Soviet legacy. A new system of national government and administration had to be established. Democracy, the rule of law and a free market became the guiding principles for political, social and economic life. WTO accession implied increased competition, which turned out to be quite painful for some companies. However, the negative scenarios foreseen by some researchers did not occur; in fact, the accession offered the national economy new incentives for structural and long-lasting change. However, WTO membership is not simply a recipe for future happiness. While it stimulates trade and business environments, members must still work within the multilateral system to keep up to date.

The task of designing and implementing an independent foreign policy was especially challenging as Ukraine was largely unknown in the world, perceived only as part of the wider Commonwealth of Independent States (CIS) and often confused with Russia. National trade policy per se was effectively absent and had to be adapted from existing policies which coincided with Ukraine's interest at the time. So trade policy needed to be formulated in a way that clearly identified the national economic interests of the new Ukraine while interacting with the rest of the world to allow Ukraine to build new relations and partnerships, promoting future progress and development.

From an economic point of view, Ukraine was a major part of the massive and highly inefficient Soviet economy. The collapse of the Soviet Union resulted in disruption of economic ties which were replaced by rather primitive free trade agreements (FTAs) between the CIS economies. In the case of Ukraine, this led to a 50 per cent decrease in gross domestic product (GDP) and hyperinflation, which in 1993–1994 reached more than 2,000 per cent.

In the 1990s, Ukraine had to drastically change and build a self-reliant and entrepreneurship-based economy.