Friday, February 21, 2014

The View from Kazakhstan

Of all the central Asian countries that were formally a part of the Soviet Union, Kazakhstan has had the most success since the fall. This achievement is mainly a factor of their abundance of mineral resources, industrial potential, and focus on harmony between the different ethnic groups within the country. Other Central Asian nations have been plagued by ethnic conflict ever since they became independent states in 1991. President Nazarbayev of Kazakhstan has also put a lot of energy into maintaining relationships with Russia, the United States, and other Central Asian countries. This speech was given by the Kazak ambassador to the U.S. on the accomplishments of Kazakhstan and its possible future membership of the WTO.

Thank you, Dr. Starr, for the opportunity to participate in this event today. Thank you, in particular, for bringing us together to discuss the important topic of WTO accession.
Let me start by saying that Kazakhstan today is widely recognized as a success story. Over the past two decades, Kazakhstan had become an independent, secure and prosperous nation where our citizens enjoy the many benefits of what has been remarkable economic growth.

The country’s geographic location, strong economy, openness to trade, transparency and predictability were keys to this achievement.

Kazakhstan is committed to creating and maintaining the best investment climate in our region. Investments in Kazakhstan are safe and protected by the rule of law. The total amount of foreign direct investment in Kazakhstan reached 160 billion US Dollars in 2012. This is the highest volume of FDI per capita in Central Asia and beyond.
Of course, this didn’t happen overnight. Our international partners and foreign investors have been vital to our success, and will be crucial to our future. American investors have made a big contribution to the development of Kazakhstan. Nowadays, major American companies routinely work in Kazakhstan and contribute a lot to our development and social fabric.

By the end of 2012 the annual trade turnover between our countries equaled more than 2.5 billion US dollars.

We would like build on this progress and expand our relationship with the world. We want to preserve, if you will, Kazakhstan's place as the center of the Great Silk Road of trade.

Kazakhstan is the economic engine in our rapidly growing region of the world.
This leads us to the topic of our discussion, WTO accession.

We are optimistic that Kazakhstan will soon become part of the World Trade Organization. Those talks are continuing apace and we are confident that they will succeed and we will become a full partner in the global trade regime.
That would be a milestone for a young nation.

Kazakhstan submitted its application for WTO membership in 1996. The Working Party on Kazakhstan’s accession to the WTO consists of 39 WTO member-states with 27 European Union member states as one party.

Kazakhstan has signed protocols that capped off bilateral negotiations on goods market with 30 WTO member-states including United States and the European Union.

The gradual liberalization of key sectors of the economy is proceeding together with Kazakhstan’s bilateral negotiations on access to the services market.

For example, Kazakhstan will eliminate the 49% limitation on foreign participation in telecommunications sector. In addition, the 49% foreign-capital restriction for joint ventures supplying architectural, urban-planning, construction and engineering services has been eliminated. In fact, legal entities of Kazakhstan with 100% foreign ownership will be allowed to provide those services.

In the financial services sector, Kazakhstan has already made an important step toward liberalization. Back in 2006, Kazakhstan eliminated the 50% limitation on foreign participation in the banking and insurance sectors.

Accession to the WTO has always been and remains a foreign policy priority for Kazakhstan. To make that happen Kazakhstan has implemented comprehensive reforms aimed at building sustainable market economy policies and institutions.

One of the major challenges still being addressed by the Government is how to balance effective implementation of Kazakhstan’s key economic priorities, economic diversification and the development of processing industries with the country’s commitments to WTO accession. In particular, we are carefully reviewing the policies applied by WTO members to facilitate development of “services based” industries, which supply new types of services and produce high value-added goods in a WTO-consistent way.

Working Party meetings in Geneva are focused on a draft Working Party report, and Kazakhstan has submitted draft legislation to implement WTO agreements in many key areas, including customs practices, sanitary and phytosanitary regulation, technical barriers to trade and licensing.

Kazakhstan has also worked to create the Customs Union, which is viewed as a practical realization of the Kazakh President’s vision of integrating Eurasian countries similar to the European Union.

It is well known that a so-called “single economic space” is an integral step toward 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 complementary rather than mutually exclusive. Therefore, Eurasian integration and WTO accession have always moved forward in parallel.

As you might be aware, Kazakhstan is the largest land-locked country in the world and much of its foreign trade depends on the routes that go through neighboring states. Establishment of the single economic space created a unified commodity market with a total GDP of about $2 trillion and a population of 170 million people. Such a large market within a unified customs territory would make Kazakhstan even more attractive to foreign investors who have already considered Kazakhstan one of the most attractive markets in our part of the world.
To summarize, much work has been done to both create the Customs Union and to become a members of the WTO. 95% of existing laws are in compliance with WTO norms. To sum up, there is momentum to finalize all the outstanding issues. We plan to become a full-fledged WTO member this year. So we invite US businesses to actively participate in the discussions.

Kazakhstan looks forward to enhancing its trade relations with the world and with the region. We would like to see Kazakhstan as a trade and logistics hub, just as it was during the Great Silk Road. It is no surprise that Kazakhstan fully supports the New Silk Road vision that the U.S. announced. It would transform Kazakhstan from "land-locked" to "land-linked" and allow it to serve as a "land bridge" between Asia and Europe. I would like to commend Dr. Starr and this institution, CACI, for its tremendous efforts to make Central Asia more visible internationally.

On that note, I would like to conclude and will be happy to answer your questions.


Kairat Umarov, Ambassador of Kazakhstan to the U.S, "WTO and the Central Asian States" Washington D.C. Feb 13, 2013

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