Kazakhstan Chamber of Commerce in the USA

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Kazakh WTO bid, customs union membership help define economic policy

Posted on September 28, 2010 by KazCham

Central Asia Newswire

WASHINGTON, DC – Thursday, September 16, 2010 – Kazakh First Deputy Minister Umirzak Shukeyev told Central Asia Newswire (CAN) in an interview in Washington on Wednesday that Kazakhstan’s decision to join a customs union with Russia and Belarus is a natural extension of its efforts to join the World Trade Organization (WTO).

“For us, joining the World Trade Organization and the Customs Union is part of the same economic policy,” Shukeyev said. “Our main policy is to expand our customer base.”

Kazakhstan wants to diversify its economy beyond the oil and gas sector – which accounts for 70 percent of all foreign direct investment, Shukeyev said. The country would like to attract investors for “light customer goods.”

Kazakhstan’s small 16-million population, however, hasn’t been large enough to attract major investors to these industries.

“Our attempts [to bring investors to Kazakh light industries] have been encountering problems” because of the small domestic market, he said.

Joining the customs union “means we will go from having a consumer base of 16 million to 170 million.”

Shukeyev also told CAN that the new customs union has already begun to show the benefits of increased trade with Russia.

“Getting rid of customs points with Russia [on the Russian-Kazakh border] means our trade has expanded by 40 percent over the last 8 months when compared to the same period last year,” Shukeyev told CAN.

Shukeyev also said that the Customs Union could grow to include other nations down the line.

“As far as other members, we have always wanted it to be open to the Eurasian countries,” he said. “There are many who want it, and there are specific requests from Tajikistan and Armenia” to join the customs union.

He played down, however, Russia’s suggestions earlier this year that the customs union should adopt a unified currency.

If it happens at all, it will be “far into the future,” he said.

“We look to Europe [which has the integrated currency system] and have seen that there are negative implications as well,” Shukeyev noted.

“After the crisis in Greece, many started to think twice” about integrating currency.

Greece, a member of the European Union and the European Monetary Union, discovered last year that its debt far outstripped previous estimates and thus threatened the stability of the shared currency. To stabilize the euro and the euro-zone, the EU was forced to provide Greece with an emergency bailout totaling $145 billion. Greece has imposed another round of austerity measures to minimize its debt.

Related to Kazakhstan’s WTO bid and customs union membership, Kazakh Trade and Economic Development Minister Zhanar Aitzhanova said on Tuesday from Washington that if the customs union countries are admitted to the WTO, they would need time to adjust to the removal of import duties and to harmonize their trade regulations.

Shukeyev could not say how long precisely the adjustment period would last.

“It’s hard to tell how long it will take,” he said. “The most important thing is that we have agreed that there will be an adjustment process.”

He said the adjustment period would depend on whether the three participant countries could agree on a specific formula on which to base their trade relations.

“If we reach a specific formula, [the adjustment period] won’t take very long. But if we will start negotiations again [on specific goods and services], it will take a long time.”

SOURCE: Kazakhstan News Bulletin No 28, Released by the Embassy of the Republic of Kazakhstan to the United States of America

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