Kazakhstan – Improving the Trade Policy Framework, Management and Regulations

Kazakhstan Trade Report - June 1, 2015

For Kazakhstan to take advantage of global integration and diversification opportunities, the government should consider improving the national trade policy framework, its management, and its regulations.  

Kazakhstan’s economy is now integrating into the Eurasian Customs Union (Belarus-Kazakhstan-Russia) and the government is addressing an accelerated schedule to integrate further into the Common Economic Space.

Kazakhstan is finalizing accession to the World Trade Organization (WTO), while its trade strategy includes a number of free trade agreements (FTAs) to be negotiated. 

The country is an active member of the Central Asia Regional Economic Cooperation (CAREC). 

These agreements have the potential to provide unprecedented opportunities for the Kazakhstani economy to benefit from regional and global economic integration.

With its accession to the WTO, Kazakhstan will be finalizing its first generation trade reforms (tariff reforms) and should start focusing more on its second generation trade reforms. These include trade facilitation, services, regulations and non-tariff measures, competition policy, and other behind the border factors.

These behind the border factors are strongly affected by the quality of policy making, that is to say, the trade policy institutions, which in turn strongly affect the competitiveness of Kazakhstani producers.

This Kazakhstan Trade Report is composed of three policy notes that discuss how to improve the trade policy framework, its management and its regulations.

Policy Note 1. Improving the Trade Policy Framework

This Note recommends joining the WTO on a tariff schedule that is more liberal than Russia’s. If the authorities are interested in joining a Free Trade Agreement (FTA), they should carefully assess the costs and benefits of such agreements before negotiations. If negotiating an FTA, the authorities should adopt a design that includes:

  • low external most favored nation (MFN) tariffs;
  • few sectoral and product exemptions;
  • nonrestrictive rules of origin;
  • measures to facilitate trade. 

Policy Note 2. Improving Trade Policy Management

This second Note postulates that to benefit more fully from the WTO membership and future regional or bilateral agreements, the institutional framework for trade policy management will need a clearer strategic vision, better coordination within the government and with private sector, and enhanced human capacity. 

Policy Note 3. Improving the Regulatory Framework for Non-Tariff Measures

The third Note suggests that for the private sector to benefit from global integration and diversification, the government should ease the burden of regulations that affect trade (non-tariff measures - NTMs). This can be achieved by reducing the number of NTMs, their restrictiveness and cost; and by building institutional capacity to assess and properly regulate them.

Summary of Recommendations

Improving the trade policy framework, its institutions and its regulations will require analytically sound, well supported, prioritized actions. 

In trade policy, acceding to the WTO should remain a first priority, especially if this is achieved on a tariff schedule that is more liberal than that of Russia’s tariff schedule. If the authorities decide to pursue a new FTA, it is recommended that they assess its effects on the economy before starting negotiations. 

The trade policy institutions are well developed, so the focus should be more on prioritizing the country’s objectives, building analytical, policy development and implementation capacity. The role of the private sector as an active partner in this process cannot be overstated. 

Finally, as the country finalizes its tariff reforms, it needs to focus on simplifying the regulatory framework that affects non-tariff measures. Without such a simplification, the non-tariff measures will constrain opportunities for export growth and diversification, and ultimately Kazakhstan’s goal to integrate into the global economy.

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