Ukraine has told its trading partners it wants to raise maximum tariffs on hundreds of imported goods, a move that could unleash protectionist forces and may even pose a threat to the US$18 trillion global trade system.
In a document marked “secret” sent to members of the WTO last week and seen by Reuters, Ukraine says it intends to raise the limit on the tariffs it can legally impose on more than 350 goods. Based on figures in the proposal, Kiev’s plan would hit overall imports worth more than US$4.6 billion last year.
The document, which diplomats said they had received on Sept. 14, consists of 85 pages of annexes detailing the items affected. It says Ukraine is prepared “to enter into negotiations and consultations” with WTO members for the concessions.
There was no response to requests for comment from Ukraine officials in Geneva or Kiev. Ukraine, a relative newcomer to the WTO whose trade deficit widened by more than 50 percent last year to US$14 billion, has already threatened to block car imports and said last year it would act to improve its terms at the WTO.
The US said Ukraine’s possible decision would raise “serious concerns,” although WTO officials played down the move, which, though radical, is permissible under the agency’s rules.
Some trade experts fear the plan, which would force hundreds of trade deals to be renegotiated, could trigger increasingly protectionist policies worldwide. The four-year-old global financial and economic crisis has so far not led to a rush to protectionism, but under pressure to help their producers weather the storm, governments have pounced on “unfair” moves by their rivals. The US and Brazil were the latest to trade diplomatic blows.
Some diplomats say Ukraine’s plan to renegotiate on so many goods — cars, trucks, agricultural machinery, meat, flowers, fruit, vegetables, washing machines and even syringes — is tantamount to reopening negotiations on its membership terms.
“We don’t know what is behind Ukraine’s move,” one trade diplomat said. “Maybe the financial crisis. Maybe political reasons. Maybe industrial.”
Longstanding WTO members typically have high ceilings and set tariffs well below the maximum, giving them wriggle-room in tough times. The tariffs of newer members, many of which were forced to accept tough terms to join the WTO, are often set right at the ceiling. Some, including Ukraine, which joined in 2008, have bristled over that constraint.