Ukraine joins WTO -- Economic growth for Ukraine and EU

May 12, 2008

On May 14, Ukraine officially becomes the 152nd member of the World Trade Organization (WTO). Membership gives Ukraine reduced tariffs with its two biggest trading partners, EU and Russia, as well as the rest of the world. It will help the country's steel and farming sectors, while hurting the protected auto and small business sectors. It could boost GDP growth by 1.7% and FDI by $3.5 billion.

What Ukraine's WTO membership means:

WTO membership could also lead to a bilateral free trade agreement between Ukraine and the EU, which would then set up Ukraine for accession to the EU as a member. It also give Ukraine more leverage in dealing with Russia, since Russia will need Ukraine's approval for its membership to the WTO later this year. (Source: Economist, Entry secured, April 14, 2008 )

Ukraine is led by President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, who led the country's 2004 Orange Revolution which ousted a corrupt, pro-Russian government. President Yushcenko built his career on reducing corruption, thus improving the business climate and the economy. He now wants to privatize government industries to bring in FDI, list Ukrainian companies on the New York Stock Exchange, and join NATO. Yushchenko is permanently scarred from an alleged poisoning by pro-Russian opponents in 2005.(Source: BBC, Profile: Viktor Yushchenko; TempletonThorp.com, Good WTO News for Yushchenko, )

Tymoshenko was reinstated as Prime Minister in last fall's Parliamentary election, following a fall-out with Yushchenko in 2005. Pro-Russian Viktor Yanukovych was elected Prime Minister in a March 2006 parliamentary election. Yanukovych remains powerful and influential, (Source: BBC, Profile: Yulia Tymoshenko)

Action steps:
Make sure you have a healthy allocation of international and emerging markets in your portfolio.

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