After a long time of negotiations Ukraine has finally introduced into the WTO. The Ukrainian authorities still need to ratify the WTO entry agreement, but the recent developments in the Supreme Soviet suggest that the process might not be as smooth as it should be.

Having hardly finished entering the WTO, Ukraine enters another international economic integration exercise. On February 18, European Union Commissioner Peter Mandelson and Ukrainian President Viktor Yushchenko officially carried out negotiations for a free trade agreement (FTA) between the EU and Ukraine.

With the WTO entry, trade liberalization with the EU will not have much effect on the UkraineEU trade turnover. Therefore, as part of enhancing the common collaboration relationship the parties have committed to negotiating a so-called deep free trade agreement that will largely integrate Ukraine into the EU inner market. That means that in addition to trading liberalization, significant regulatory harmonization will occur.

The profits of the deep FTA include increase in foreign direct investment and export volumes as well as diversification of exports. Enhanced international competition will also stimulate Ukrainian enterprises to increase their efficiency. All that will in the very end benefit Ukrainian consumers.

However, regulatory balancing with the EU will mean costs for Ukrainian producers. The negotiations will specify the exact timing and depth of harmonization. The costs, which Ukrainian organizations will incur in order to comply with the EU regulations, are likely to concentrate in the short-to medium-run, while benefits will appear in the long-run. It is likely that Ukraine will be eligible for the EU money in order to ease the regulatory harmonization.

Regarding tothe progress made in the WTO negotiations we can expect a faster negotiation process for the FTA. Optimists, who are mainly focused on Ukraine's political elite, think that the FTA talks can be completed in a year. Pessimists, who are mainly international experts, speak about three to five years of negotiations. A more realistic estimate of the negotiation's speed is about one to two years.

The FTA negotiations will involve multiple stakeholders: businesses and various state agencies. If there is a will not to procrastinate with the FTA, the process should be greatly-coordinated at the government level. Business organizations and large firms should be prepared to come forward with their suggestions for Ukraine's negotiation conditions. So far the government's efforts to receive inputs from the business community were less than a success. Negotiations of the Agreement will require the involvement of experts. The state should come up with a mechanism to finance the work of external experts.