Kazakhstan joined the WTO.
And now, as always, after the fait accompli, let’s weigh everything and consider whether we need it or not.
First of all, what is the World Trade Organization?
In simple terms, it is an international organization that is responsible for ensuring that goods and services are freely sold from one country to another for the joy of consumers. For this purpose, the WTO ensures that the governments of the participating states do not arrange barriers to imports in the form of high customs duties, quotas, procedural discrimination, and so on.
Outwardly it looks very fair, free, and capitalistic.
Why capitalistic? Because in the conditions of open competition only the strongest win.
It is not difficult to understand that accession to the WTO, first of all, is beneficial to the exporters of the country that has entered, that is, those who export their products to other countries.
Let’s see who will be delighted with joining the WTO in Kazakhstan.
In 2014, we exported products worth $ 78.2 billion. At the same time, the lion’s share of exports is oil and oil products (77.6%), metals and products from them (8.3%), chemical products (3.8%). If we dig deeper, we will see that the main importer of our oil products is Europe (Italy, Switzerland, Holland). But, as far as I know, there have never been any problems with the export of petroleum products to these countries. We mainly ship metallurgical products to Russia and China. That is, theoretically we should rejoice that the WTO will now not allow Russia and China to put obstacles to our metals. However … we are part of the Eurasian Economic Union with Russia. Goods within the union are not subject to customs duties. So the WTO is not our assistant in negotiations with Russia. As for China, its attitude to the WTO and the periodic disregard for international trade requirements are well known. I have a certain skepticism about the influence of the WTO on our disputes with China.
What about other, less significant export positions? Probably the only thing that can be mentioned is wheat and flour. In principle, exporters of these products should benefit from Kazakhstan’s accession to the WTO. But … again a misfortune. The main importers of Kazakhstan wheat and flour are Iran, Afghanistan, Tajikistan, Uzbekistan, Azerbaijan. Again, Iran and Afghanistan are not WTO members, and they are indifferent to the demands of this organization. And Tajikistan, Uzbekistan and Azerbaijan are members of the CIS and should generally skip our goods without customs duties. However, Uzbekistan easily bypasses this obligation by introducing an excise tax on flour instead of the customs duty. I think, in the dispute with him, the WTO is again not our assistant.
It turns out, the advantages of Kazakhstan’s accession to the WTO for our main exporters are not so great.
Now, as for those who should not be happy with Kazakhstan’s accession to the WTO. I’m talking about the Kazakhstani producers of products. From now on, we will not be able to protect them with high customs duties and other veterinary, phytosanitary and environmental tricks. Is it bad? In principle, for them – it’s bad. But there is good news. As far as agriculture is concerned (and this is the most sensitive sector), we are still not reaching the level of state support stipulated by the WTO – 10% of GDP. Today, our subsidies are estimated at around 4.6%. That is not what is needed to be reduced, but we have the opportunity even to increase subsidies in agriculture. But it’s true that we do not use this opportunity even without the WTO, and I think, we will not use it with the WTO either.
There is a problem with customs duties and quotas. For example, Kazakhstan currently applies a restrictive quota for the importation of poultry meat. Up to 110 thousand tons of this product can be imported with a reduced duty of 25 euros per kilogram, all that is higher – with a duty of 80 euros per kilogram.
Even during negotiations with the WTO, they demanded to raise this quota or cancel the restrictive duty in general.
I do not know what our negotiators could ultimately agree on, but it’s clear that the American “Bush’s legs” will squeeze out the domestic ham. This can be a serious blow to the emerging from the tribes of the poultry industry.
A similar situation, as far as I know, threatens the domestic production of sugar beet. We apply a differentiated seasonal duty rate for the import of sugar cane. During the harvest season of local beets (autumn-winter), the duty is high, at the rest of the time – low. Brazil can insist through the WTO on the abolition of higher taxes in the winter season.
I do not know about the existence of problems on the other agricultural commodity groups. As far as I remember, the current rates practically fit into the requirements of the WTO, and our government will not have much to change. So, for agriculture, that is, for food, except for poultry and sugar, WTO accession will not strongly affect Kazakhstani consumers.
I cannot judge other industries. I do not have exact information about what our negotiators agreed on. The first thing that comes to mind is the questions of machine building. Without high customs duties on imported cars, tractors, agricultural machinery, own production will be in serious danger.
Summarizing the above, we can make the following conclusion.
Accession to WTO will not bring significant advantages in promoting Kazakhstan’s products to foreign markets. First of all, due to the fact that we are exporting the range of goods that do not meet strong resistance from the buyer countries, and in the second place, because the WTO will not help us where we have problems.
Damage to domestic producers supplying goods to the domestic market may be significant in several sectors. While the main mass of manufacturers of innovations will not be particularly affected.
In this scenario, the main advantages from Kazakhstan’s accession to the WTO that I see are political and image advantages. Of course, the entry of our country into the club of civilized international merchants raises our authority and gives hope to investors that the game is conducted according to the rules. This image may not immediately, but in time will yield an economic effect in the form of direct investment.