Ukraine market economy bid set to fail at summit

Date: 04/07/02

By David Cronin

THE EU looks set to rebuff Ukraine's request that it be recognised as a functioning market economy. The issue will be high on the agenda at the two-day EU-Ukraine summit, which kicks off in Copenhagen today (4 July).

A resolution passed by the Ukrainian parliament last month urged the Union to consider conferring the former Soviet state with open- market status. But EU officials feel such a move would be premature as further reforms, particularly in its energy sector, are needed.

In May, the Union agreed to recognise Ukraine's neighbour Russia as a market economy. The main benefit for Russia will be that its own market data - rather than figures from 'comparable' economies selected by the European Commission - will be scrutinised in cases where it is suspected of 'dumping' cheap goods on the EU.

In theory, this will make it easier for Russian firms to show they are making goods at economically viable prices and not selling below cost.

'We don't believe we can go as far as we did with Russia,' said Commission spokesman Reijo Kemppinen. 'The time is not ready for that yet.'

Kiev's hopes on the issue had been buoyed by a recent letter from Denmark's EU presidency to the country's leader, Leonid Kuchma. 'The EU is now actively discussing the possibility of granting Ukraine the full status of a market economy country, and I personally agree with the idea that it would be a crucial sign to investors,' Prime Minister Anders Fogh Rasmussen wrote.

The Commission will study a 300-page file submitted by Kiev on why such a status would be warranted. EU exports to Ukraine were worth about €3.5 billion between January and October last year, with imports at €2.6 billion during the same period.

The EU looks set to rebuff Ukraine's request that it be recognised as a functioning market economy. The issue will be high on the agenda at the EU-Ukraine summit, Copenhagen, 4-5 July 2002.