Kazakhstan goes to the WTO: why is it and what is fraught for Russia
2 July during a meeting on the implementation of the program of industrialization of Kazakhstan, President Nursultan Nazarbayev of the Republic announced plans to join the Republic to the World Trade Organization before the end of this year. In addition to the ambiguity of the real advantages of this step and serious threats to the republic’s plans to create a full-fledged engineering industry with a deep degree of localization of production, there is another problem: Kazakhstan can be the key for Western access to the Russian market.
The fact is that Russia, joining the WTO, negotiated increased import duties for itself, which was the reason for such lengthy negotiations. In general, these duties allowed to soften the blow of the WTO on the Russian economy. Now, the West is trying, pushing Kazakhstan, to force it to join the organization with a level of duties lower than the Russian one. If Kazakhstan, by the way, leading negotiations with the WTO from 1993 of the year, the US and the EU make concessions, goods will be delivered to the republic, which will then be re-exported to Russia, which will give a significant competitive advantage to the West. Thus, the US and the EU through negotiations want to create a hole in the customs border of the Russian Federation.
Formally, Russia can protect itself from re-export by imposing additional goods on foreign goods at the border of Kazakhstan, but in reality this would mean making the Customs Union meaningless as a single market for goods, services and capital. In addition, this step will require the restoration of checkpoints and the return of customs officers to the border with Kazakhstan. You will also have to solve the problem with Belarus, whose leadership will undoubtedly demand compensation for the deterioration in the terms of trade within the CU.
To prevent such a scenario, the government of the Russian Federation began to help Kazakhstan in the negotiations on joining the WTO.
In addition, it is not clear why the republic needs this in principle. Apparently, the leadership of Kazakhstan is trying to maximize the markets for their products. However, the intention to join the WTO may cause an irreparable blow to the engineering and manufacturing industries that have been created in the republic over the past 14 years, which have increased by a quarter over the past 5 years.
In the course of negotiations, the West will also require Kazakhstan to abandon the so-called “Kazakhstani content”, to put it simply, not to require business entities to increase the degree of localization of production in the republic. Thus, membership in the WTO will force Kazakhstan to abandon the greenhouse conditions for its industry. The question of subsidies to agriculture, which are estimated to be worth about $ 20 billion, will be raised. Kazakhstan will need to convince the WTO of the need for such large-scale injections into the agro-industrial complex. Otherwise, the republic risks finding itself without livestock breeding, which will not withstand competition with foreign goods generously supported by subsidies.
The winners should be metallurgists who can bypass quotas and expand the geography of metal sales. However, for the market it will be necessary to conduct long and stubborn battles, because a substantial part of the world's metallurgical capacities at the moment, unable to withstand the competition, stand idle, and the market as a whole is saturated. The oil industry's lack of Kazakhstan’s membership in the WTO has in no way prevented its successful development over the past 20 years.
There are no guarantees that Kazakhstani products will be able to get free access to the EU markets, which still uses protectionist measures when trading with the Russian Federation. Also, no one guarantees a shaft of foreign direct investment in the economy of the republic, which, as a rule, is directed to such highly profitable sectors of the economy as trade and real estate operations, but not in engineering.
In general, Kazakhstan turned out to be a hostage of Russia's hasty accession to the WTO, which has already got out of the Russian economy. Kazakhstan now risks aggravating its economic situation by joining the Organization. However, Russia minimized the damage to the economies of Belarus and Kazakhstan, coordinating with them the rates of duty.
It is noteworthy that the Director General of the WTO is far less optimistic about the prospects for membership in the organization. Roberto Azavedo only hopes that Kazakhstan will join the WTO, but he has no firm confidence in this.
By the way, taking into account the Ukrainian crisis and the unwillingness of Russia to take a decaying Ukraine for maintenance, the US and EU attempts to win back Russian stubbornness in Kazakhstan are not excluded, and therefore there are no guarantees that Kazakhstan will join the WTO by the end of this year. Too much in this policy issue.
The fact is that Russia, joining the WTO, negotiated increased import duties for itself, which was the reason for such lengthy negotiations. In general, these duties allowed to soften the blow of the WTO on the Russian economy. Now, the West is trying, pushing Kazakhstan, to force it to join the organization with a level of duties lower than the Russian one. If Kazakhstan, by the way, leading negotiations with the WTO from 1993 of the year, the US and the EU make concessions, goods will be delivered to the republic, which will then be re-exported to Russia, which will give a significant competitive advantage to the West. Thus, the US and the EU through negotiations want to create a hole in the customs border of the Russian Federation.
Formally, Russia can protect itself from re-export by imposing additional goods on foreign goods at the border of Kazakhstan, but in reality this would mean making the Customs Union meaningless as a single market for goods, services and capital. In addition, this step will require the restoration of checkpoints and the return of customs officers to the border with Kazakhstan. You will also have to solve the problem with Belarus, whose leadership will undoubtedly demand compensation for the deterioration in the terms of trade within the CU.
To prevent such a scenario, the government of the Russian Federation began to help Kazakhstan in the negotiations on joining the WTO.
In addition, it is not clear why the republic needs this in principle. Apparently, the leadership of Kazakhstan is trying to maximize the markets for their products. However, the intention to join the WTO may cause an irreparable blow to the engineering and manufacturing industries that have been created in the republic over the past 14 years, which have increased by a quarter over the past 5 years.
In the course of negotiations, the West will also require Kazakhstan to abandon the so-called “Kazakhstani content”, to put it simply, not to require business entities to increase the degree of localization of production in the republic. Thus, membership in the WTO will force Kazakhstan to abandon the greenhouse conditions for its industry. The question of subsidies to agriculture, which are estimated to be worth about $ 20 billion, will be raised. Kazakhstan will need to convince the WTO of the need for such large-scale injections into the agro-industrial complex. Otherwise, the republic risks finding itself without livestock breeding, which will not withstand competition with foreign goods generously supported by subsidies.
The winners should be metallurgists who can bypass quotas and expand the geography of metal sales. However, for the market it will be necessary to conduct long and stubborn battles, because a substantial part of the world's metallurgical capacities at the moment, unable to withstand the competition, stand idle, and the market as a whole is saturated. The oil industry's lack of Kazakhstan’s membership in the WTO has in no way prevented its successful development over the past 20 years.
There are no guarantees that Kazakhstani products will be able to get free access to the EU markets, which still uses protectionist measures when trading with the Russian Federation. Also, no one guarantees a shaft of foreign direct investment in the economy of the republic, which, as a rule, is directed to such highly profitable sectors of the economy as trade and real estate operations, but not in engineering.
In general, Kazakhstan turned out to be a hostage of Russia's hasty accession to the WTO, which has already got out of the Russian economy. Kazakhstan now risks aggravating its economic situation by joining the Organization. However, Russia minimized the damage to the economies of Belarus and Kazakhstan, coordinating with them the rates of duty.
It is noteworthy that the Director General of the WTO is far less optimistic about the prospects for membership in the organization. Roberto Azavedo only hopes that Kazakhstan will join the WTO, but he has no firm confidence in this.
By the way, taking into account the Ukrainian crisis and the unwillingness of Russia to take a decaying Ukraine for maintenance, the US and EU attempts to win back Russian stubbornness in Kazakhstan are not excluded, and therefore there are no guarantees that Kazakhstan will join the WTO by the end of this year. Too much in this policy issue.
- Ivan Lizan
- http://www.odnako.org/blogs/kazahstan-idyot-v-vto-zachem-eto-emu-i-chem-chrevato-dlya-rossii/
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