[A2k] Washington Post: White House delayed Ukraine trade decision in August, a signal that U.S. suspension of cooperation extended beyond security funds

Thiru Balasubramaniam thiru at keionline.org
Sun Oct 27 07:28:58 PDT 2019



White House delayed Ukraine trade decision in August, a signal that U.S.
suspension of cooperation extended beyond security funds

David J. Lynch and Josh Dawsey
Oct. 24, 2019 at 10:19 p.m. GMT+2

The White House’s trade representative in late August withdrew a
recommendation to restore some of Ukraine’s trade privileges after John
Bolton, then-national security adviser, warned him that President Trump
probably would oppose any action that benefited the government in Kyiv,
according to people briefed on the matter.

The warning to Robert E. Light­hizer came as Trump was withholding $391
million in military aid and security assistance from Ukraine. House
Democrats have launched an impeachment inquiry into allegations that the
president did so to pressure Ukrainian President Volodymyr Zelensky to
investigate the business activities of former vice president Joe Biden’s
son Hunter. As part of the inquiry, lawmakers are closely scrutinizing the
White House’s actions between July and September.

The August exchange between Bolton and Lighthizer over the trade matter
represents the first indication that the administration’s suspension of
assistance to Ukraine extended beyond the congressionally authorized
military aid and security assistance to other government programs. It is
not clear whether Trump directed Bolton to intervene over Ukraine’s trade
privileges or was even aware of the discussion.


One former U.S. government official said the president wanted “the total
elimination” of the global trade program at issue. Known as the
“generalized system of preferences,” or GSP, it allows 120 countries to
ship roughly 1.5 percent of total U.S. imports without paying tariffs.

But in March 2018, Trump signed legislation reauthorizing the program
through 2020, and Lighthizer in recent weeks has been negotiating with
India over restoring its GSP status, which was suspended in March.


At issue in Bolton’s warning over the trade privileges was Lighthizer’s
recommendation to the White House that the president reinstate Ukraine’s
ability to export some products to the United States on a duty-free basis.
Roughly a third of Ukraine’s benefits under the program was suspended in
December 2017 amid long-standing concerns that the country was routinely
violating U.S. intellectual property rights.

That suspension took effect in May 2018. After the Ukrainian government
then took steps to address the U.S. criticism, such as by passing a law to
improve the collection of copyright royalties, officials in the Office of
the U.S. Trade Representative considered allowing the country to regain
about a third of its suspended duty-free privileges.

Over the summer, USTR officials reached out to the Inter­national
Intellectual Property Alliance, or IIPA, an industry coalition that had
filed the initial complaint against Ukraine, to ask if it would object if
the government restored some of Ukraine’s GSP rights. IIPA represents
copyright holders in the music, film, book and software industries who are
being cheated out of millions of dollars in royalty payments.

Long a haven for piracy, Ukraine was one of 11 countries this year listed
on USTR’s priority watch list for intellectual property violations. U.S.
officials say Ukrainian government offices often use counterfeit software.
Black-market operators produce pirated physical and digital products. Some
claim to represent copyright holders and collect royalty payments on their
behalf but then fail to distribute them to the artists.

“We were supportive of the U.S. government decision one way or the other,”
said Eric Schwartz, an attorney representing IIPA.

The USTR’s decision to partially suspend Ukraine’s duty-free privileges
affected products such as chocolate bars, helium, mushrooms, deodorant and
telescopic gun sights, according to a 2017 Federal Register notice.

The partial suspension dramatically affected U.S. imports of those
individual products. Ukrainian chocolate shipments to the United States
last year fell by more than half, to $110,000 from $247,500, according to
the U.S. International Trade Commission’s online database.

But Ukraine is a minor participant in the GSP program, and its partial
suspension carried modest financial consequences. Of the country’s $1.4
billion in sales to American customers last year, just $51 million entered
the United States via the duty-free program.

India, which also has been suspended from the program, is its largest
beneficiary, with $6.3 billion in U.S. sales last year.

“We really haven’t heard much about this suspension from the Ukraine side,”
said Morgan Williams, president of the U.S.-Ukraine Business Council. “We
think they ought to be more interested in it.”

Over the years, various Ukrainian governments have failed to follow through
on repeated promises to tighten their enforcement of intellectual property
rights. At a USTR hearing in September 2017, Vitalii Tarasiuk, head of the
economics and trade office at the Ukrainian Embassy in Washington, said
intellectual property protection was “one of the top priorities” for their

He also said “ongoing Russian aggression” limited the resources Kyiv could
devote to improving its intellectual property environment.

Trump took office pledging to crack down on foreign countries that had
taken advantage of the United States in trade. Even as he confronted major
trading partners such as China and the European Union, the president
dispatched Lighthizer to address shortcomings in smaller trade programs.

Three days before Christmas 2017, the president cracked down on Ukraine for
a chronic failure to “provide adequate and effective protection of
intellectual property rights (IPR) despite years of encouragement and
assistance from the U.S. Government,” according to a USTR statement at the

“President Trump has sent a clear message that the United States will
vigorously enforce eligibility criteria for preferential access to the U.S.
market,” Lighthizer said in announcing the move. “Beneficiary countries
choose to either work with USTR to meet trade preference eligibility
criteria or face enforcement actions. The administration is committed to
ensuring that other countries keep their end of the bargain in our trade


When Kyiv failed to act quickly enough, the administration implemented the
partial cutoff April 26, 2018. Ukraine subsequently passed legislation to
address some of the White House’s concerns. The measure was welcomed by
U.S. industry and government officials. But it left in place existing rogue
operators, many with government connections, a major shortcoming in the
eyes of American critics.

Still, U.S. officials, with industry support, thought it made sense to
reward Ukraine’s efforts by restoring to duty-free status some of the
products that had been eliminated last year.

Per routine practice, Light­hizer’s recommendation was reviewed widely in
the administration this year, including at the Office of Management and
Budget and the State Department. The formal paperwork was sent to the White
House staff secretary’s office but never advanced to the president’s desk
for a signature, officials said.

In response to questions, a senior administration official last month said
the Ukraine decision had been delayed as part of a routine review. This
month, the Ukraine announcement was set to be packaged with separate trade
actions involving Thailand and Mali, and was readied for action.

Then as the Ukraine-focused House impeachment inquiry gathered steam,
Lighthizer yanked the Ukraine recommendation for a second time.

Dan Balz, Anne Gearan and Shane Harris in Washington and David Stern in
Kyiv contributed to this report.

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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