Fears That WTO Entry Could Hit Domestic Economy

Kazakstan’s planned accession to the World Trade Organisation may be less of a problem for local manufacturers than many of them think, because trade tariffs will remain unchanged for many of the products most vulnerable to competition, and because the country does less than half its trade with WTO members anyway.



The terms under which Kazakstan will enter the WTO, and the implications of doing so, continue to be hotly debated in the country. A provisional entry date has been set for mid-2007.



On October 26, the National Consumers’ League issued a warning that Kazakstan’s business sector was not ready for WTO accession due to the low quality standards of local production. Many observers fear that the harmonisation and reduction of customs tariffs that come with WTO membership will bring an influx of better-quality imports, pricing out the less competitive local producers.



Economic sectors outside Kazakstan's natural resource-based industries are falling behind, and this poses serious risks. In contrast to the oil and gas industry, these areas of the economy have not had to compete in a global market. The most vulnerable ares are agriculture, food production and light industry.



However, Gulnar Smailova, an analyst with the Institute of World Economy and Politics in Kazakstan, predicts that there will be no short-term catastrophic effects, as the tariffs for such vulnerable products will remain almost the same when the country joins the WTO – in other words, lower on average than those of some WTO members.



Other economic analysts say the regional customs union that is planned as part of the Eurasian Economic Community, Eurasec, created within the framework of Eurasec, could offer Kazakstan a chance to join the WTO on more favourable terms as part of an alliance with major trading partners which are also negotiating membership of the world trade body.



So far Kyrgyzstan is the only member of the to have joined the WTO; Russia, Kazakstan and Belarus have accession plans at various stages of readiness.



Eurasec has six members – Russia, Belarus, Kazakstan, Kyrgyzstan and Tajikistan - while Uzbekistan, Ukraine, Armenia and Moldova are observers. Of these countries, only Belarus, Kazakstan and Russia have fully signed up to the proposed customs union. For the moment, Kyrgyzstan, Tajikistan and Uzbekistan wish to have observer status only in the customs union.



Over 50 per cent of Kazakstan’s trade is with Eurasec members such as Russia, Belarus, Ukraine, Kyrgyzstan and Uzbekistan. “Our producers therefore have nothing to fear,” said Bektas Mukhamedjanov, director of the International Institute of Contemporary Politics.



In the longer term, however, Kazakstan will need to prepare itself to survive in a fiercely competitive environment. According to Smailova, “WTO members will lower their tariffs every year and demand that others including Kazakstan do likewise…. That’s the danger.”



Mukhamedjanov believes that if the Kazak government manages to introduce national certification for domestic products in line with international standards, local producers will be under less of a threat. “The problem is not so much joining the WTO, but setting quality standards for our goods,” he said. Once the government has introduced these standards, “it will be possible to compare Kazak products with any others. At the moment that’s impossible, unfortunately,” he added.



Although Kazakstan wants to join the WTO next year, NBCentralAsia observers say there is no guarantee that will happen.



The accession process should come to an end with the completion of talks with a number of key players: the United States, which is demanding implementation of copyright laws and a more open market; Brazil, which is setting tough conditions for lower agricultural tariffs; the European Union, Australia, Canada, Switzerland and Malaysia.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)