[A2k] Wall Street Journal: U.S. Restores Trade Benefit to Ukraine

Thiru Balasubramaniam thiru at keionline.org
Sun Oct 27 07:38:32 PDT 2019


U.S. Restores Trade Benefit to Ukraine

Ukraine regains partial access to program that grants poor countries
duty-free treatment on some goods

The Office of the U.S. Trade Representative said $12 million of Ukrainian
trade would be restored to its duty-free status.
By Josh Zumbrun
Oct. 25, 2019 9:46 pm ET

WASHINGTON—The Trump administration restored a small trade benefit to
Ukraine late Friday, two years after the benefits were revoked on grounds
that the country wasn’t protecting U.S. intellectual property rights.

The U.S. said it was partially restoring Ukraine’s access to a program
called the Generalized System of Preferences, which was created in the
1970s to aid over 100 different poor countries by granting them duty-free
treatment on a selection of thousands of goods, from vehicle parts to

The Ukraine move was part of a series of decisions about GSP. The U.S. said
it would revoke benefits for Thailand, and was putting benefits for South
Africa and Azerbaijan under review.

The program, which pertains to a very small share of U.S.-Ukraine trade,
was the subject of a Washington Post story this week, which alleged the
benefits hadn’t been restored as part of a White House campaign to pressure
Ukraine. The Wall Street Journal wasn’t able to confirm that report.

Ukraine had some of its benefits under the program partially revoked in
2017, following a review process that began in 2012 under the Obama

The Office of the U.S. Trade Representative said Friday that $12 million of
Ukrainian trade would be restored to its duty-free status, after a law was
recently passed in Ukraine that aims to better protect intellectual

“Despite shortcomings with this legislation, it provides a framework to
address concerns covered by the GSP review,” the USTR said.

In terms of trade affected, the decision about Thailand was far more
consequential. The USTR estimated the loss of Thailand’s benefits under the
program would remove $1.3 billion of imports from Thailand from duty-free
treatment. That means the trade benefits taken away from Thailand are more
than 100 times the size of trade benefits restored to Ukraine.

The major participants in the GSP trade program are emerging market nations
in Asia, Africa and Latin America, but a few low-income countries in the
former communist bloc participate.

Ukraine has never developed a large trading relationship with the U.S. It
was the 67th-largest U.S. trading partner in 2018.

While many countries bring in billions of dollars of GSP goods, the USTR
said Ukraine’s loss of privileges had only affected about $36 million in
trade per year, or roughly 1% of U.S.-Ukraine trade.

Ukraine’s suspension was viewed by U.S. industries as a minor, but perhaps
useful, tool to push Ukraine to improve intellectual-property protections.
The country has said it is working to strengthen such protections.

Ukraine has been removed from GSP once previously over bootlegged American
movies and music. It was thrown out of GSP in 2001, for doing too little to
stop Ukrainian production of knockoff CDs and DVDs that were distributed
throughout Europe. The country rejoined GSP in 2006.

The long-running dispute has drawn relatively little scrutiny until
questions about the Trump administration’s discussions with Ukraine became
the focus of an impeachment inquiry.

At a 2017 public hearing on Ukraine’s GSP status, only one American—a U.S.
intellectual property attorney—appeared to discuss the issue. Two
representatives of Ukraine’s government also attended. A spokesman for
Ukraine’s embassy and one of the Ukrainian officials who had attended that
hearing didn’t immediately respond to a request for comment.

The U.S. lawyer who had attended the hearing was Eric Schwartz, who
represents the International Intellectual Property Alliance. His
organization filed the initial petition against Ukraine in 2011 that led to
the partial GSP suspension.

Mr. Schwartz said in an interview earlier Friday that he had received a
query from the USTR’s professional staff over the summer about two recent
legal changes in Ukraine. The country had recently passed a law
criminalizing bringing camcorders into movie theaters and had passed a law
to improve royalty collections in its music industry.

Mr. Schwartz said that he told the USTR officials that his organization
“would be supportive of the U.S. government’s decision, whichever way it

“If the USTR felt that keeping the trade sanctions on would get or keep the
Ukraine government engaged and give us better results and improved
copyright enforcement, we supported that,” he said. “If they felt restoring
the benefits would do so, we were fine with that as well.”

Write to Josh Zumbrun at Josh.Zumbrun at wsj.com

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

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