Outstanding issues outlined by chief WTO negotiator
Kazakhstan remains on track to progress early in 2013 from observer to member status in the World Trade Organization, a process begun 16 years ago with its 1996 application for accession to full membership.
On October 15 at a conference in Astana on the theme: “Customs Union and WTO: regional and global aspirations – Russia and Kazakhstan”, Kazakhstan’s Minister for Economic Integration and chief WTO negotiator, Zhanar Aitzhanova, said that concluding the negotiations on Kazakhstan’s accession to the WTO would probably take another six months.
The Minister emphasized that there are several issues which have yet to be resolved and said that the looming year-end deadline for the end of negotiations has created pressure . However, the conditions of the agreement are of such importance for Kazakhstan that it is important to get them right, whether they are drawn up by year-end or in the first quarter of 2013, she said.
Minister Aitzhanova highlighted three key areas where conditions on accession to WTO membership have yet to be finalized. Firstly, despite the fact that Kazakhstan has concluded bilateral negotiations with 30 WTO member States (including the USA), and signed the necessary agreements and protocols, it has still to agree terms with the European Union.
The principal impediment to agreement over four years of negotiation with the EU has been Kazakhstan’s right to apply export customs duties on exports to the EU, the Minister said. At present, 70% of all exports go to the EU and the majority of these are raw materials, which the EU wants to see enter its markets unencumbered by duties. However, Kazakhstan wants to increase the refining of raw materials within its borders, particularly through joint production facilities with European companies in Kazakhstan, which would bring new jobs and additional budgetary revenue, she explained.
Another area of contention is the volume of agricultural subsidies. The key issue here is whether Kazakhstan can provide transport subsidies for grain exports, which has proved a sticking point in multilateral negotiations, according to Minister Aitzhanova. Acknowledging the opposition of major grain-exporting WTO member states such as Australia, Canada and the US, who do not themselves grant export subsidies, the Minister pointed out that Kazakhstan’s position differs in that, as a landlocked nation, its transport costs to the nearest Russian port are enormous, at USD 136 per tonne of grain.
Another agricultural subsidy on which agreement has yet to be reached relates to meat production, where Kazakhstan would no longer be competitive in the market if no subsidies were allowed, Minister Aitzhanova stated.
She also said that that an adequate level of agricultural subsidy is required to protect the 46 % of Kazakhstan’s population living in rural areas, whose wages and welfare depend directly on the competitiveness of the goods they produce.
The final outstanding issue highlighted by the Minister is the level of Kazakhstani content, in purchases that are part of subsoil contracts, which at present goes against WTO norms, in particular, the WTO agreement on trade-related investment measures, she said.
Minister Aitzhanova emphasized that a long transition period would be required during which investors could fulfil their obligations under these existing contracts to purchase Kazakhstani products. Furthermore, she pointed out that Kazakhstani goods account for no more than 15% of the total of investor purchases, with imported goods and equipment accounting for at least 85%, which in her view did not unfairly restrict import levels.
The Minister was confident that Kazakhstan can complete negotiations and be eligible for WTO accession in the course of 2013.