RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/ACC/SPEC/UKR/6/Add.4 
8 February 2005 
 
 (05-0506) 
Working Party on the 
Accession of Ukraine Original:   English 
 
 
 
ACCESSION OF UKRAINE 
 
Questions and Replies on Domestic Support and  
Export Subsidies in the Agricultural Sector  
 
Addendum  
  
 The following submission, dated 2 February 2005, is being circulated at the request of the 
Delegation of Ukraine. 
  
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 WT/ACC/SPEC/UKR/6/Add.4 
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 Question 1 
We would like to thank Ukraine for recent responses (WT/ACC/UKR/120 of 6 September 2004 
and WT/ACC/SPEC/UKR/6/Add.2 of 8 September 2004).  We support Ukraine's accession on 
the basis of appropriate commitments on mark et access and conformity with WTO rules.  
Answer:
 
The whole process of WTO accession is based for Uk raine on the principles of full compliance with 
the WTO rules and procedures as put in writing in the WTO plurilateral agreements.  By putting its own procedures in writing the WTO clearly indicates the adherence to the fundamental principle of 
this organization, namely the "transparency".  At the last meeting on the domestic support of 
agriculture in Ukraine (on 21 September 2004) a Memb er emphasized the need for Ukraine to comply 
with the WTO "standard methodology" when com puting the AMS for the purpose of forming its 
domestic support commitments.  Ukraine would greatly appreciate if that Member provides it with a list of agreements and WTO Secretariat's official documents which set forth the standard methodological framework, in addition to those liste d in Annex 3 of the Agreement on Agriculture 
and WT/ACC/4 document.  
- Local currency Question 2 We continue to strongly urge Ukraine to p resent its domestic support commitment values in 
local currency (Hryvnia) rather than  US dollars.  This reflects the currency in which domestic 
prices are paid to producers and is st andard practice amongst WTO Members. 
Answer:
 
The use of local currency for the purposes of unde rtaking the domestic support commitments is a 
standard practice for the WTO member countries w ith the stable local cu rrency.  There are two 
reasons why the AMS computations for the years 1994 through 1996 are provided in the US dollars.  Firstly, 1996 was the year of the monetary reform in Ukraine, when the current national currency – 
Hryvnia – was introduced and replaced the old Uk rainian "karbovanets" currency (Order of the 
President of Ukraine No. 762 "On Monetary Reform  in Ukraine" of 25 August 1996).  And, secondly, 
the inflation rates were extremely high during 1994 and 1995.  For the computation purposes we used 
the aggregate annual official exchange rates for Ukrainian "karbovanets" (for the years 1994 and 
1995) and Hryvnia (for 1996) to US dollars as set by the National Bank of Ukraine (aggregate annual 
rates). 
The wording of the Agreement on Agriculture a nd WT/ACC/4 document provides for the notification 
of the monetary value of a domestic support measure , but there is no requirement in either of these 
documents as to the use of foreign or local currencies for that purpose. 
- Eligible production 
Question 3 We note that Ukraine has designated volumes of product purchased under State 
orders/contracts, as "eligible production", rather than total levels of production.  Ukraine has 
also stated that using total production w ill increase AMS levels and has called for the 
calculation of market price support to be revised.  WT/ACC/SPEC/UKR/6/Add.4 
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 In our view it is not in the membership's intere sts to artificially reduce a member's base level of 
AMS.  It is more important to ensure that the principles and methodologies of calculating the AMS are accurately followed, to uphold the integrity of the Agreement on Agriculture.  Government intervention effectively provides pr ice support for all production, not just the 
quantity purchased by the government for interven tion.  By taking marginal quantities off the 
market, support is provided for the remaining quantit ies that are sold on the market.  It is for 
this reason that most WTO members use total pro duction levels as the ‘eligible production' in 
this calculation.  
We again ask Ukraine to please conform to this standard.  
Answer:
 
According to the definitions of Paragraph 8 of A nnex 3 of the Agreement on Agriculture the eligible 
production used for the purpose of calculation of market price support is defined as the quantity of production eligible to receive the applied administered prices.  
The figures of State procurements presented by Uk raine in DS:5 Table as the volumes of "eligible" 
production equal the volumes of production of goods w ith certain quality characteristics eligible  to 
receive the applied administered prices.  The admini stered prices were applied for the products with 
certain quality characteristics based on wh ich class and sort they belonged to.  
We accept the above-mentioned statement to the ef fect that by taking marginal quantities off the 
market, support is provided for the remaining quantities that are sold on the market. One should still take into consideration the peculiarities of Ukra ine's economy-in-transition.  Certain volumes of 
production cannot be treated as the commodity output.  For instance, the marketability of the grain 
products produced in Ukraine fails to exceed 50 pe r cent.  Farmers themselves consume a share of 
non-market (commodity) output of certain products, and so this share never reaches the market.  
Sufficient volumes of products are given or sold to the farmers at prime cost of production.  These 
volumes of production are not affected by the prices set by the government in an administrative manner.  
- Negative Value of AMS Question 4 We note Ukraine's response to this question – th at using negative values of trade distorting 
support (AMS) inflates the AMS level.  However, we strongly feel that this is inconsistent with 
the intent and rules of the WTO agreement and it does not reflect the principle of transparent notification. We maintain that negative price supp ort is in effect a tax on agricultural producers 
whereas AMS is a measure of domestic support in favour of agricultural producers. 
We again ask Ukraine to please amend its calcul ations to equate negative AMS values to zero. 
This will involve recalculating averages after negative values are set at zero, as well as 
de minimis  levels. 
Answer:
 
Ukraine takes notice of this comment.  Ukraine w ill provide the response at the next plurilateral 
meeting on support to agriculture. WT/ACC/SPEC/UKR/6/Add.4 
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 - Base period 
Question 5 Document WT/ACC/4 requires members to provi de data relating to a three-year recent and 
representative base period. 
We understand that Ukraine originally elected 1994-1996 as the base period, as negotiations on 
agriculture as part of the accession process co mmenced in 1997.  However, in the interest of 
transparency and compliance with the intent of the spirit of the Agreement on Agriculture, 
where a country's accession process extends over a number of years, the base period should be 
updated to ensure it is both recent and representative .  We wish to draw to Ukraine's attention 
that since the establishment of the WTO in 1995,  the majority of acced ing members have used 
the most recent available representative base period. 
We note Ukraine's arguments that Uruguay Round negotiations lasted eight years, although the 
base period for commitments was not updated.  However we do not agree with Ukraine's 
comparison. The length of the Uruguay Round negoti ations were not as a result of delays in the 
negotiation of individual Members' commitments, but of delays in broader agreement to rules 
amongst the entire membership.  
In July 2003 Ukraine provided data for the period 2000-2002 – which the membership 
welcomed.  We again ask Ukraine to use this peri od as part of a more recent and representative 
base period.  
Answer:
 
The WTO practice of conducting the negotiations on accession allows the countries to enjoy a certain 
degree of freedom in selecting the "base" period.  The reference made to the selection of "the recent 
and representative period" elected as a base period is not reflected in writing in the wording of the 
Agreement on Agriculture as approved by the WTO members on a plurilateral basis.  Ukraine believes that it is not in full compliance with the pr inciple of "transparency" which is the fundamental 
principle of the WTO.  In addition, the final plurilateral agreement on agriculture within the 
framework of the new round has not been reached ye t.  This lack of the final agreement excuses 
Ukraine from the need to unde rtake the commitment to comply with mere "intents".  
The information related to the le vels of support in the years 2000 through 2002 has been provided 
based on the request of member countries to obt ain the means of monitoring the execution of 
domestic support programs during the post-base period year s.  Ukraine also provided the justification 
of why it had originally elected the years of 1994  through 1996 as a base period and why it was not 
acceptable for Ukraine to elect the latest calendar three-year period as a base period in the "Position 
Materials on the Scope of State Support Necessary fo r the Realization of the Strategy of Ukraine's 
Agriculture Development" document as presented in Annex 11 to the document 
WT/ACC/UKR/110/Add.1 on 24 October 2003.  
We ask Members to take into consideration the ar guments presented in that document which put into 
perspective the problems Ukraine fa ces with its agriculture.  We also ask Members to support the 
Ukraine's position at the plurilateral negotiations on  domestic support of agriculture in Ukraine. We 
believe that Ukraine's position reflects the arguments  of a country with its economy in transition from 
the planned to a market oriented economy. 
Ukraine also wishes to explain its hope that when  the WTO reaches the final agreement within the 
framework of the new round of its plurilateral nego tiations on agriculture support it will take into  WT/ACC/SPEC/UKR/6/Add.4 
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 account the economy-in-transition peculiarities of ot her countries like Ukraine.  This will allow 
Ukraine to stick to its position in respect to the selected base period.  
- Export Subsidies (WT/ACC/UKR/120)  
Question 6 We welcome Ukraine's commitment (reply to Question 81 of WT/ACC/UKR/120) to bind its 
agricultural export subsidies, as defined in par agraphs 1(a) to (f) of Article 9 of the Agreement 
on Agriculture, at zero. We look forward to a statement to this effect as per WT/ACC/4.  
Answer:
 
Ukraine will confirm this commitment as per document WT/ACC/4.  
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