Permanent Normal Trade Relations (PNTR) Status for Ukraine and U.S.-Ukrainian Economic Ties Page: 4 of 5
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United States accounted for about 3% of Ukrainian exports and 2% of Ukrainian imports.
In 2004, over half of U.S. imports from Ukraine consisted of steel and steel products plus
coke that is used in making steel. The sharp increase in U.S. imports from Ukraine in
2004 was due largely to the lifting the U.S. government restrictions on steel imports that
had been in place from March 2002 to December 2003. Anhydrous ammonia, a fertilizer,
accounted for another 14% of U.S. imports from Ukraine.
Poultry and other meats accounted for slightly over one-fifth of U.S. exports to
Ukraine in 2004. The Ukrainian government lifted a two-year ban on imports of U.S.
poultry in December 2003 after the two countries agreed to a new veterinary certificate,
leading to a sharp increase in U.S. exports to Ukraine in 2004. Machinery, especially
agricultural machinery, is another major U.S. export to Ukraine.
Foreign investment in Ukraine is modest. Excessive government regulation, an
inadequate commercial code, corruption, lack of enforcement of property rights, and an
underdeveloped banking system have contributed to a poor investment climate.s As of
January 1, 2005, the volume of foreign direct investment (FDI, investment in production
facilities, real estate, etc.) in Ukraine stood at $8.4 billion. Of that amount, investors from
the United States accounted for $1.2 billion, or 14%, and were the leading source of FDI
in Ukraine.6
Issues in U.S.-Ukrainian Economic Ties
Several economic issues may arise during a debate on PNTR for Ukraine. From the
U.S. perspective, one of the most serious issues is the lack of Ukrainian enforcement of
intellectual property rights (IPR). The United States Trade Representative (USTR)
identified Ukraine as a priority foreign country in 2002, 2003, and 2004, under the section
182 of the Trade act of 1974, as amended, also called "Special 301." At this time, Ukraine
is the only country that the USTR has so identified, although other countries have been
identified as potentially problematic.7 The USTR took this action because of Ukraine's
failure to adequately prevent the production and distribution of pirated optical disks, CDs
and CD-ROMs. As a result, the United States withdrew GSP benefits for Ukraine in
August 2001, a benefit that the United States had extended to promote trade and economic
development in Ukraine. In January 2002, the United States also imposed 100% tariffs
under 23 tariff items with an annual value of around $75 million. On August 31, 2005,
the United States announced that it was going to lift the tariff-sanctions in recognition of
steps Ukraine had taken to improve its IPR laws. The Office of the USTR indicated that
s U.S. Department of Commerce. U.S. and Foreign Commercial Service. Doing Business in
Ukraine: A Country Commercial Guide for U.S. Companies. February 2005. Not paginated.
6 Ibid and the Ukrainian Statistical Office.
7 Office of the United State Trade Representative. Special 301 Report. Washington. 2004.
8 Under "special 301," the USTR is required to identify each year trading partners that do not
adequately protect intellectual property rights. If that country fails to remedy the situation, then
the USTR is required to apply trade sanctions commensurate with the losses to U.S. holders of
the IPR.
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Cooper, William H. Permanent Normal Trade Relations (PNTR) Status for Ukraine and U.S.-Ukrainian Economic Ties, report, November 22, 2005; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc821486/m1/4/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.