Agriculture and agricultural trade play a significant role in the Ukrainian economy. The Ukrainian Government considers agriculture to be a strategic sector which needs strong state support. But nine years of mostly Sovietstyle intervention in agricultural have resulted in huge welfare losses for farms and society as a whole. Self-sufficiency policy, significant barriers to foreign and domestic trade in agricultural products and inputs, combined with Government intervention in agribusiness and an absence of market institutions has led to the stagnation of the sector.
A country’s trade policy determines the transmission of price signals from the world market to domestic markets and, thus, has a vital influence on domestic resource allocation and a country's ability to exploit its comparative advantage. To ensure that domestic markets receive appropriate price signals, a country must be fully integrated into the world trade system. To this end, membership in the World Trade Organisation (WTO) is a sufficient and perhaps even a necessary condition.
Ukraine submitted an official application for WTO accession in November 1993. The first meeting of the Working Party on Ukraine’s WTO accession was held in February 1995. In early 2000, after six meetings of the Working Party, it appears that Ukraine is still a long way from membership.
The purpose of this paper is to test the compatibility of current agricultural policies in Ukraine with the letter and spirit of the WTO's requirements, as well as to propose policy recommendations that would guide Ukrainian agricultural policy towards a market-oriented, liberal framework. The paper is organised as follows. We begin with a short introduction to the WTO, an analysis of the benefits of WTO membership for Ukraine, and an update of the status of Ukraine's efforts to join the WTO. In section 2 we outline major elements of the Uruguay Round Agreements on Agriculture and on Sanitary and Phytosanitary Measures, as well as shortcomings of these Agreements and changes that might emerge from the coming Millennium Round. Section 3 presents an analysis of current agricultural policies in Ukraine and their compatibility with WTO requirements. In section 3 we also analyse special issues associated with WTO accession for transition economies and Ukraine's preparation for the Millennium Round. Section 4 concludes with policy recommendations designed to ease Ukraine's accession to the WTO.
