Should Kazakhstan Be in the WTO?

West uses WTO negotiations with Kazakhstan to inhibit post-Soviet integration

In early July 2014 President Nursultan Nazarbayev said that Kazakhstan will join the WTO this year following 18 years of negotiations. However, against the backdrop of deepening Eurasian integration, economic contradictions as well as political steps on the part of the United States and some Western countries, may pose an obstacle to this plan.

Negotiations on Kazakhstan's accession to the WTO have been on foot since 1996. As at the beginning of 2014 an agreement has almost been reached on four areas of the economy: goods, services, agriculture and systemic issues. The only issues which remain outstanding are agrarian subsidies, local content and tariff harmonization. In the case of the latter, the issue is adapting Kazakhstan's commitments to the WTO with the tariff regulations of the Customs Union.

According to Kazakhstan’s Minister for Economic Integration, J.Aytzhanova, agriculture is most vulnerable. A country with challenging climatic conditions, obsolete agricultural technology and equipment, and an outflow of population from rural areas (in which 44% of the population currently lives) cannot abandon, as its potential WTO partners insist it must, the broad support measures of the Agro-Industry Complex. According to some estimates, entry into the trade organization will require the Republic of Kazakhstan to cut back subsidies for agricultural sector from USD 2.5 billion to USD 1.5 billion.

The WTO also seeks the reduction of "Kazakhstan support", ie the requirement that foreign users of the country’s subsoil procure goods and services from Kazakhstan producers. Despite the fact that for more than 20 years Kazakhstan persistently sought compliance with that requirement, "Kazakhstan support" in the realm of goods and services has reportedly declined from 95 to 50%.

In 2013 the US and the EU also raised the question of reducing customs tariff protection for such product groups as airplanes, helicopters, agricultural machinery and cars, which Kazakhstan currently supports as a member of the Customs Union. According to Russia’s First Deputy Prime Minister Igor Shuvalov, Kazakhstan is cast in the role of a hostage through which the West conducts discussions with Russia, seeking, through Kazakhstan’s membership of the Customs Union, to enter the Russian market on terms previously rejected by Moscow upon its accession to the World Trade Organization. As a result, the Americans will not admit Kazakhstan to the WTO because Kazakhstan maintains the level of Russian duties on those categories of goods within the framework of the Customs Union. This was confirmed at a meeting of the Eurasian Economic Council in October 2013 and by President Nursultan Nazarbayev, who offered that Moscow and Kazakhstan conduct further negotiations with the US and the EU together. The Russian side has responded to this request.

Russia is objectively interested in this. Moscow, for example, succeeded in obtaining a grace period from the WTO for the progressive reduction of import duties on cars. If Astana cannot obtain the same conditions, all the Russian advantages will be offset: foreign products will reach the Russian market via Kazakhstan. However, some officials in Kazakhstan, in particular the Deputy Minister for the Economy, T. Zhaksylykov, have already declared their readiness to accept "a significant reduction in customs duties on imported cars."

Finally, many experts interpret the position of Washington and Brussels as politically motivated: the West uses the negotiations for Kazakhstan's entry into the WTO to inhibit post-Soviet integration, which, in December 2012, the then U.S. Secretary of State Hillary Clinton described as Moscow's attempt to revive the Soviet Union and promised to do everything possible to slow or prevent. This means the difficulties in negotiating Kazakhstan's accession to the WTO are due not only to the economic interests of Western countries, but also to the geopolitical objective of deterring the Eurasian integration project. 

WTO West Kazakhstan economics