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18 April 2005, a round table took place at the Supreme Rada of Ukraine to discuss problems related to Ukraine’s accession to the WTO. The event attracted a lot of journalists. Olha Fischuk, the reporter from a popular Internet-newspaper “Grani-Plus”, asked the Economic Expert of the Institute for Rural Development Tamara Ostashko to give her comments on possible WTO accession consequences for the Ukrainian agricultural producers, in particular, and the rural area on the whole.
Tamara Ostashko, Economic Expert of the NGO Institute for Rural Development, Candidate of Economic Sciences:
— Basically, adverse effects for agriculture will be caused by the reduction of some support measures for agricultural producers. These are so-called “Amber Box” measures influencing prices and markets. But the “Green Box” measures subsidizing the development of rural areas, rural population and rural infrastructure will not be restricted. This is a big advantage for Ukraine since, unlike in other transition economies, almost one third of our population lives in the countryside.
This will be of certain advantage also for small-scale agricultural producers, as they produce 64% of our agricultural output working in the private household sector without state support (at present support is provided to agricultural enterprises).
Another risk aspect relates to the domestic market protection level. Dairy and meat production are the most risky industries for our producers. That is, cheaper, but as experience has shown, lower quality products will be imported, with which it will be hard for our products to compete. We had already experienced similar situation in the market liberalization period, and it had a very negative impact on the agricultural sector and our own agricultural producer’s status. Today this may provoke growth of rural unemployment.
By other transition economies’ experience, small processing enterprises were first to shut down. Meat, dairy, egg, potato, vegetable and fruit producers suffered most. These goods are produced predominantly in private households. This is the largest risk group, and negative effects may be most serious for it. At the same time, these may be somewhat compensated by the Green Box measures.
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