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Kazakhstan's accession to WTO carries risks, Russian minister says

29 July 2015 13:50 (UTC+04:00)
Kazakhstan's accession to WTO carries risks, Russian minister says

By Aynur Karimova

Kazakhstan's accession to the World Trade Organization carries risks, since the level of tariff protection for a number of items will be lower than those fixed by the Common Customs Tariff of the Eurasian Economic Union.

This remark was made by Russia's Economic Development Minister Alexei Ulyukayev in an interview with the 'Russia 24' channel on July 27, ITAR-TASS reported.

"Of course, certain problems and risks arise here. They are connected with the fact that the conditions for membership of Kazakhstan at the WTO imply a decline of the level of tariff protection for a large number of items. They are lower than fixed by the Common Customs Tariff of the Eurasian Economic Union," he said.

The minister pointed out two problems, the first being a technical issue.

"We, together with our Kazakh colleagues, should ensure the customs administration of such a quality that would not allow products from third countries to come to our markets through the lower barrier and distort trade conditions on which we have agreed when we entered the World Trade Organization," the minister noted.

The second issue is that, "According to the WTO rules, after a three-year transition period, the country has the right to apply for adjustment of tariffs, and refinement of compensation that can be obtained in a form of improvement of tariffs on some items," Ulyukayev said.

The press service of the ministry told ITAR-TASS that for Kazakhstan to adhere to its commitments as a member of the WTO, there are several issues that need to be addressed within the EEU.

These issues are particularly related to Kazakhstan having tariff conditions differing from its commitments to the Common Customs Tariff of the Eurasian Economic Union.

"We have already established an interagency working group to address these issues and plan to discuss them within the Eurasian Economic Commission," the ministry said.

Kazakh President Nursultan Nazarbayev signed the protocol on the nation’s accession to the WTO on July 27 at the WTO General Council session in Geneva.

The accession to the world’s largest trade alliance came after talks lasting almost two decades to allow Kazakhstan to embrace global competition on beneficial terms.

“Kazakhstan will soon start operating under the WTO rules. However, we have been adjusting our economic policies for a long time in this direction by removing barriers, acting as an engine of regional integration, and promoting the principles of open collaboration,” Nazarbayev said.

Director-General Roberto Azevêdo signed the Protocol on the Accession of Kazakhstan on behalf of the WTO, following the General Council’s approval of the terms of entry for the Central Asian country.

“This is a truly historic occasion for Kazakhstan, and for the WTO. For Kazakhstan, this is recognition of the efforts you have made over recent years and your commitment to this process. It is an endorsement of the extensive program of reforms, which you have undertaken,” Azevêdo stressed.

Azevêdo called the decision to join the WTO a “message to the world that Kazakhstan is open for business.”

“Kazakhstan’s accession adds an important voice to our discussions here. It brings the organization closer to the heart of Central Asia. And it brings us closer to our goal of universal membership,” he said.

The negotiations on Kazakhstan’s membership were finalized by the Working Party on June 10. Kazakhstan’s WTO accession package was adopted by the 52-member Working Party through a referendum on June 22.

During the course of the negotiations, Kazakhstan adopted 50 new laws and introduced amendments to 10 international agreements within the framework set out both by the Customs Union and the EEU.

Throughout the long period of talks with the WTO, Kazakhstan’s GDP per capita increased 18-fold and reached the levels of Central and Eastern Europe. The country’s external trade volume increased to $120 billion annually, of which more than 90 percent is with WTO member states.

“Kazakhstan is rich in mineral resources, and we intend to change the structure of our economy to remove the dependency on exporting raw materials. Today 54% of our GDP is linked to the services industry. It includes the financial sector, telecommunications, construction, energy, and transport. The liberalization of the financial services within the WTO will proceed in parallel with the process of establishing the Astana International Financial Centre. We hope that it will become a backbone of Kazakhstan’s financial infrastructure, and eventually a financial hub for the entire region. We invite all countries to participate in this project,” Nazarbayev said.

Experts believe that membership would facilitate Kazakhstan’s trade with more than 160 other WTO member countries. It is also expected to generate accelerated economic growth by opening up Kazakhstan to foreign investors. Such an opportunity would be most welcome as the country is currently experiencing economic hardship due to the dramatic fall in global oil prices. On the other hand, Kazakhstan is affected by Russia's economic slump as well.

Kazakhstan's geographic location also paves the way for the country's membership in the trade organization. Located in the heart of the Eurasian continent, Kazakhstan could serve as a transit route from East to West and from South to North. The country has been developing its railways and roads in recent years with an aim to become a central hub along the major trade routes.

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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova

Follow us on Twitter @AzerNewsAz

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