Accession to the WTO
Accession to the WTO has always been and remains a foreign policy priority for Kazakhstan. Negotiations on the country’s WTO accession have been on-going for more than 14 years. Kazakhstan has also worked to create the Customs Union, which is viewed as a practical realization of the Kazakh President’s idea concerning the economic integration of Eurasian countries similar to the European Union announced by him in the mid-1990s.
It is well known that a unified customs territory is an integral step towards that high level of economic integration. Neither in negotiations on the WTO, nor in negotiations on the Customs Union did Kazakhstan ever renounce its interests, and the country considers both processes to be mutually complementary rather than mutually exclusive. Therefore, the processes of Eurasian integration and WTO accession have always been in parallel.
Creating Customs Union Protects Kazakhstan’s Economic Interests
The Customs Union has been formed on January 1st 2010. Its goal is further strengthening integration among three countries, facilitate trade and investment both among the Customs Union countries and with third countries. Elimination of internal customs borders and harmonization of legislation of the Customs Union members is already creating additional benefits for the trading partners by insuring free circulation of goods between the Customs Union countries and thus, providing traders and investors with bigger economic space and more attractive market for potential investors.
Kazakhstan’s decision on creating the Customs Union together with Russia and Belarus was based solely on the country’s own economic interests including the following factors:
Mineral Reserves. Kazakhstan has the sixth largest mineral reserves in the world and is a major player in the energy markets. A major portion of mineral and energy resources produced in Kazakhstan is exported to external markets. One of the main tasks of the Government of Kazakhstan is development of nonextractive sectors and diversification of the economy and export promotion of highly marketable products. A unified customs tariff within the Customs Union would expand the regional market and promote Kazakhstan’s exports. Future customs tariff policy within the Customs Union will allow the import of raw materials and equipment under low custom duties within the development of investment projects. Establishment of the Customs Union would entail creation of a unified commodity market with a total GDP of about $2 trillion (2008) and a population of 180 million people, as well as create preferential conditions within the Customs Union. Such a large market within a unified customs territory would make Kazakhstan even more attractive for foreign investors who have considered Kazakhstan as one of the most attractive markets in our part of the world.
Geopolitical Realities. Kazakhstan is the largest land-locked country in the world and much of its foreign trade depends on the routes that go through the territories of neighboring states. Membership in the Customs Union will provide Kazakhstan’s businesses with domestic (non-discriminatory) transit tariffs, taking into consideration that almost all the trading relations, particularly with the European Union, are implemented through the transit of the territory of Russia.
Global Financial Crisis. The crisis has thinned down the flow of FDIs, decreased trade turnover, led to the introduction of protectionist mechanisms by some trade partners, and seriously damaged the economies of neighboring states. This harsh reality, therefore, demanded a more active and joint approach to further integrate and modernize the regional economy. Creation of the Customs Union will allow for more efficient use of the limited financial resources due to the global economic crisis. It will also provide a rationale for companies to use available resources to increase their production capacity.
Accession to the Customs Union. This will provide sizable benefits for Kazakhstan and serves its long-term economic priorities. The decision was based on the need to meet Kazakhstan’s national economic interests including:
- Unimpeded access to global markets
- Expanding trade with large neighboring economies, such as Russia and China
- Accelerated economic diversification by moving towards service and technology based economy.
Therefore, any speculations suggesting political motivation behind the decision are baseless.
WTO and Customs Union Negotiations Moved in Parallel
As mentioned earlier, negotiations on Kazakhstan’s accession to the WTO and efforts to join the Customs Union were moving in parallel. The idea of establishing a single customs territory was initiated earlier and had been moving at a much better pace, which was in full compliance with Kazakhstan’s economic interests. The process of harmonizing tariffs within the creation of the Customs Union demanded flexibility from every member and a transition period was introduced for some major commodities sensitive for Kazakhstan. It is also important to understand that the pace for creating the Customs Union has been, to a large extent, dependent on the political will from the Governments of the three states. Therefore, promotion of trade and economic cooperation with the neighboring countries has become the most important priority.
Kazakhstan’s Decision to Join Customs Union Was Not Sudden
Speculations about Kazakhstan’s “unexpected” and “sudden” decision to join the Customs Union with Russia and Belarus are groundless as well. Kazakhstan’s Special Representative for WTO accession negotiations, Ms. Zhanar Aitzhanova, regularly briefed American counterparts on this issue, as she was also directly involved in negotiations on the Customs Union. Moreover, in February 2009, Kazakhstan at a very senior level informed U.S. Ambassador to Kazakhstan Richard E. Hoagland that the country, together with Russia and Belarus, would soon announce its decision to create the Customs Union. Astana noticed certain constructive reaction on behalf of Washington, however, our American partners seemingly failed to conceive, in all its depth, our signal toward a significant growth of dynamism in the process of creating the Customs Union.
Kazakhstan will continue its individual accession to the WTO.
Kazakhstan Delegation headed by the First Deputy Prime Minister Mr. Umirzak Shukeyev visited Washington DC in September 2010 to hold bilateral consultations with the USTR.
Kazakhstan’s team reassured American counterparts that the accession to the WTO has always been top priority for Kazakhstan’s foreign policy.
The United States welcomes progress achieved by Kazakhstan in bringing its legislation in compliance with the WTO rules and supports its continuous trade liberalization process. In particular, such issues as sanitary and phytosanitary measures, intellectual property rights and veterinary certificates are at the final stage of negotiations.
Kazakhstan and the United States have developed 2010-2011 action plan for completion of the bilateral negotiations.
Kazakhstan has finalized negotiations with the Unites States on Goods market access. Minister of Economic Development and Trade Zhanar Aitzhanova signed a document with U.S. Representative to the WTO Michael Punke in Geneva. Kazakhstan hopes to join WTO by January 1st 2012.
Customs Union members have agreed to coordinate together issues related to the Customs Union as Common external tariff is effective since January 1st 2010. A single unified team including Kazakhstan, Russia and Belarus will be holding multilateral negotiations in Geneva this year to work on compliance of Customs Union legislation in accordance with WTO standards.
Expansion of Global Trade Should Proceed
The Central Asian Trade and Investment Framework Agreement (TIFA) provides a useful background for a regular dialogue between U.S. and Kazakhstan trade authorities on the issues of mutual interest. We share the U.S. vision that the expansion of global trade should proceed through creating opportunities for regional trade, and Kazakhstan stands ready to work with the United States on the implementation of this vision.