72648 v1 World Trade Indicators 2009/10 Kazakhstan Trade Brief Trade Policy includes a ―Buy Kazakh‖ clause and encourages the government to increase the share of goods and Following Kazakhstan‘s independence in 1991, trade services purchased from domestic producers.4 liberalization and privatization gained momentum in the mid�1990s. As a result, based on its 2.1 percent MFN Tariff Trade Restrictiveness Index (TTRI)1, External Environment Kazakhstan has an economy more open to trade than As indicated by a Market Access TTRI5 (including an average Europe and Central Asia (ECA) (4.4 preferences) of 1.1 percent, Kazakhstan‘s exports face percent) or upper-middle-income (6.9 percent) a more favorable trading environment than ECA and country. Thanks to the low TTRI, Kazakhstan‘s trade upper-middle-income comparators (2.6 and 2.3 regime is ranked as the 7th most liberal out of 125 percent, respectively). The weighted average rest of the countries. Kazakhstan is slightly more open with non- world tariff (including preferences) faced by the agricultural trade (TTRI of 2 percent) than with country‘s exports is 0.9 percent, with agricultural agricultural trade (2.4 percent). Kazakhstan‘s simple products facing a less favorable trading environment average MFN applied tariff is 6.2 percent, but taking (4.6 percent tariff) than non-agricultural products (0.8 into account preferences, the simple average of the percent tariff). Kazakhstan was on the receiving end of applied tariff is 5.6 percent. The country‘s maximum an anti-dumping investigation in 2008 initiated by MFN applied tariff, excluding alcohol and tobacco, is India regarding Kazakh exports of hot rolled steel 92.3 percent. products. Over the course of 2008 the real effective In the context of the food crisis and in order to ensure exchange rate of the Kazakh tenge appreciated by 4.5 domestic food security, Kazakhstan imposed a five- percent, making exports relatively less competitive month ban on exports of wheat, with the exception of abroad. In nominal terms, the tenge appreciated by 1.8 flour, starting from April 2008. The ban had an impact percent against the U.S. dollar.6 However, as the especially on Kazakhstan‘s neighbors, as the country is Russian ruble depreciated against the U.S. dollar in the the only exporter of grains in Central Asia.2 Also, since second half of 2008, it put Kazakhstan at a the onset of the global economic crisis, Kazakhstan disadvantage since the Russian Federation is one of its has reduced import tariffs on equipment and raw main trading partners. To counteract this, authorities materials that are not locally produced, and increased in Kazakhstan devalued the tenge by 20 percent import tariffs on finished products that are relative to the U.S. dollar in February 2009.7 domestically produced,3 thus increasing effective An observer at the WTO, Kazakhstan has several free protection. It also reduced import tariffs on several trade agreements and signed a trade and investment other products including aluminum wire and palm oil, framework agreement with the United States on June and imposed import tariffs on central heating boilers 1, 2008.8 A year later, in June 2009, Kazakhstan‘s in May 2009. Moreover in January 2009, the Prime Minister declared that the country will seek to government introduced an anti-crisis plan that join the WTO as a customs bloc with Belarus and Russia. The three plan to officially create the customs union on January 1, 2010.9 This decision effectively Unless otherwise indicated, all data are as of August 2009 brings to an immediate halt the national-level and are drawn from the World Trade Indicators 2009/10 accession negotiations of the three countries. Database. The database, Country Trade Briefs and Trade-at-a-Glance Tables, are available at Behind the Border Constraints http://www.worldbank .org/wti. If using information from this brief, please provide the In terms of the conduciveness of its institutional following source citation: World Bank. 2010. environment to business, Kazakhstan ranked 63rd out ―Kazakhstan Trade Brief.‖ World Trade Indicators 2009/10: of 183 countries in the 2010 Ease of Doing Business Country Trade Briefs. Washington, DC: World Bank. index. Kazakhstan‘s Logistics Performance Index Available at http://www.worldbank.org/wti. score, which reflects the extent of trade facilitation in World Trade Indicators 2009/10 Kazakhstan Trade Brief the country, is below the regional and income group Notes averages, reflecting a relatively less conducive climate for trade. It scores 2.12 on a scale of 1 to 5, with 5 1. TTRI calculates the equivalent uniform tariff that being the highest score, while the regional and income would keep domestic welfare constant. It is weighted by group averages are 2.59 and 2.85, respectively. It import shares and import demand elasticity. ranked 133rd out of 150 in the world and 23rd in the 2. Lillis, April 16, 2008. ECA region (with Turkey leading the regional group). 3. WTO, July 15, 2009, p. 34. The logistics indicators in which it performed the best 4. Global Trade Alert, 2009a; 2009b. was domestic logistics costs, while its weakest 5. MA-TTRI calculates the equivalent uniform tariff of performance was in the quality of transport and IT trading partners that would keep their level of imports infrastructure for logistics. constant. It is weighted by import values and import demand elasticities of trading partners. 6. IMF, August 2009. Trade Outcomes 7. World Bank, April 2009. Kazakhstan‘s real trade growth (in constant 2000 U.S. 8. Ahsan, October 5, 2008. dollars) dropped from an average of 10.3 percent over 9. Stratfor Global Intelligence, June 9, 2009. the 2005–07 period to 4.8 percent in 2008 and is 10. Hufbauer and Stephenson, May 2009. expected to turn negative in 2009, with trade falling by 11. EIU, 2008, p. 23. 6.4 percent. Real import growth decelerated from 16.7 12. WTO, April 2009. percent over the 2005–07 period to 8.9 percent in 13. The National Bank of Kazakhstan. 2008, and real export growth from 5.5 to 1 percent. 14. The National Bank of Kazakhstan. Growth of both real exports and imports is expected to be negative in 2009. References Kazakhstan is one of the top 20 developing country Ahsan, Nazmul. October 5, 2008. ―US Scraps TIFA Draft, exporters,10 mainly exporting oil and base metals. In Sends New Proposal.‖ Bilaterals.org, July 20, 2009. 2007, crude oil and gas condensate exports made up . by high metal and oil prices for much of the year, the Asian Development Bank. 2009. Asian Development country recorded high export revenues in 2008, with Outlook 2009: Rebalancing Asia’s Growth. Manila: Asian export growth in nominal U.S. dollar terms accelerating to 47.1 percent from 24.8 percent in 2007. Development Bank. On the back of this improvement, the nominal trade Economist Intelligence Unit (EIU). 2008. Country Profile: growth rate remained constant at 30 percent in 2008, Kazakhstan. EIU. despite a decline in import growth (from 36.5 to 10.2 ———. June 2009. Country Report: Kazakhstan. EIU. percent). However, due to the fall in commodity prices Global Trade Alert. July 14, 2009a. ―Kazakhstan: Tariff and demand in its main trading markets, such as the Treatment of Miscellaneous Products.‖ GlobalTrade EU and Russia,12 Kazakhstan‘s exports are projected Alert.org. July 20, 2009 . first quarter of 2009 in comparison to the same period ———. June 25, 2009b. ―Kazakhstan: Anti-crisis in 2008.13 The fall in nominal imports in 2009 is Programme Includes ‗Buy Kazakh‘ Clause.‖ projected to be smaller than in exports (25.2 percent). GlobalTradeAlert.org. July 20, 2009 . first quarter of 2008.14 The FDI share of Kazakhstan‘s Hufbauer, Gary, and Sherry Stephenson. May 2009. GDP was 11 percent in 2008, a marginal increase from ―Trade Policy in a Time of Crisis: Suggestions for 10.6 percent the year before. Developing Countries.‖ CEPR Policy Insight No. 33. Peterson Institute for International Economics; Organization of American States. International Monetary Fund (IMF). May 11, 2009a. ―Crisis Virtually Halts Growth in Caucasus and Central Asia.‖ IMF Survey online. IMF, Washington, Kazakhstan Trade Brief World Trade Indicators 2009/10 DC. July 13, 2009. . stratfor.com/analysis/20090609_russia_belarus_ ———. August 2009b. International Financial Statistics kazakhstan_forming_customs_bloc>. (Country Tables). IMF, Washington, DC. World Bank. April 2009. ―Country Brief 2009: Lillis, Joanna . April 16, 2008. ―Kazakhstan: Grain Kazakhstan.‖ World Bank, Washington, DC. July 20, Export Ban Stokes Inflation Fears Elsewhere in Central 2009. . Asia.‖ Eurasianet.org. . Profile—Kazakhstan.‖ WTO, Geneva. The National Bank of Kazakhstan. ―Balance of Payments ———. July 15, 2009b. ―Report to the TPRB from the of Kazakhstan: Analytic Presentation.‖ August 7, 2009. Director-General on the Financial and Economic . Geneva. Stratfor Global Intelligence. June 9, 2009. ―Russia, Belarus, Kazakhstan: Forming a Customs Bloc.‖ Stratfor