European Commission and

Kazakhstan’s Accession to WTO

PART 1

World Trade Organization membership involves both rights and obligations. The most important of them are probably best illustrated by its three main principles: non-discrimination, reciprocity, and transparency. Non-discrimination is the most important principle of the WTO. This is encapsulated in the well-known most favoured nation clause (MFN). The MFN ensures that any trade concessions offered to one country are extended to all WTO member states automatically in a non –discriminatory fashion.

There are exemptions to the MFN principle in the case of a free trade agreement (FTA) or a customs union. Reciprocity is introduced in order to avoid the free-rider problem under the MFN. It requires that any country receiving trade concessions from another country should offer something comparable in return. This requirement is not normally imposed in the case of developing countries, a status Kazakhstan will probably ask for within the context of WTO accession. Transparency refers to the use of different barrier to international trade.

The WTO regards tariffs as more transparent devices than non-tariff barriers (NTBs) such as quotas and voluntary export restrains (VERs). Therefore the most acceptable method of protection under the WTO is tariffs. The use of NTB should be prohibited wherever possible. The WTO has also established a Dispute Settlement Mechanism, whereby a member country can establish whether another member has been unfair in its trading practices in ways that harm that member.

The benefits of WTO membership are therefore potentially very substantial, even if attention is confined to the basic principles of MFN treatment. Developing countries commonly enjoy these preferences without having to offer the same range of concessions to other countries. This is quite reasonable, as developing countries have much longer transition periods than the developed countries. For countries in transition, accession to the WTO also means that they are able to enjoy important benefits which were not previously available to them.

But the WTO emphasizes that WTO membership is not only about rights, but also about obligations. Unless the acceding country is judged to be ready and capable of taking on the challenges and obligations of membership (possibly after an initial transition period), then it is unlikely to gain entry to the ‘club’.

WTO accession will provide the country with better market access and protection against unfair treatment. It will make it more attractive for FDI, and it will stimulate medium and long-term development of manufacturing. Anticipating WTO accession will also require legal amendments in a number of areas, including agriculture, finance, and intellectual property rights.

The fresh impetus of the last few years to the accession process in Kazakhstan can be explained in terms if idea of making accession a tool of the competitiveness strategy. It is a signal given to markets and investors, as well as to domestic economic interests, that competitive pressure will increase in the country. Governmental authorities responsible for policy planning for each industry sector need to understand and utilize the provisions of the relevant WTO Agreements and to plan appropriate policies for the revitalization of respective industries. At the same time, protection of domestic industries is also important. And it is essential to find an appropriate way of guiding domestic industries to be well-adapted to the global economy.

The question of what is to be expected from WTO accession remains open, because the answer depends on the conditions of accession, on how the strategic issues will be managed in the discussion, and on the strategies of adaptation developed in each sector and the region of the economy. Three major policy areas will be transformed with accession: market access, export subsidies, and internal support (subsidization). In addition, technical barriers to trade (TBT-standards), and sanitary and phyto-sanitary regulations (SPS) and food security will have to be harmonized.

Economic opening-up and WTO accession are good for Kazakhstan because it already has rather low average tariffs, but it is still facing some quantitative restrictions on the export of steel, etc. There are several reasons to think that in the short term the export effects of accession will be less important than the import and domestic policy effects. However, in the medium term, the basic principle of non-discrimination among countries is a very good lever for developing a market economy free from obstacles to fair competition.

In addition, as our neighboring countries are negotiating WTO accession, it is wise for Kazakhstan to do the same. All in all, competition is likely to become more intense for Kazakh products. This will foster economic restructuring, and some activities and regions will inevitably suffer from this. However, this could be a win-win process if it is well prepared and implemented.

The WTO is currently going through a difficult phase in its development, behind these difficulties lie a range of issues, including reluctance on the part of some leading developing countries to open up their economies further to trade with, and investment from, the developed countries.

The Government of Kazakhstan has made World Trade Organization (WTO) accession one of the priority objectives in its economic policy. Kazakhstan applied to the WTO in 1996. The negotiation process has clearly intensified since 2002 along with the increasing political emphasis on WTO accession in the Government’s discourse. As Kazakhstan is involved in a process of customs integration with the Russian Federation and Belarus (the Single Economic Space), it aims at entering the World Trade Organisation simultaneously with them or at least shortly after them.

President N. Nazarbayev decided, after his recent election victory, to launch ambitious new policies. He offered an upgraded economic blueprint with a longer view ahead, to make Kazakhstan one of world’s top 30 most competitive nations within the next 10 years. Now Kazakhstan is highly ranked in the World Economic Growth Competitiveness Index rating. The accession to the WTO is part of this strategy.

The process of harmonization with the WTO agreements is underway and significant progress is expected, since the government is increasing human and financial resources in this area. The appointment of a Vice-Minister responsible only for WTO Accession (within the Ministry of Industry and Trade) as well as the gradual increase in the size of the Kazakh permanent delegation in Geneva are clear indications of the country’s commitment.

PART 2

The issues that Kazakhstan will have to deal with implementing WTO Agreements are the following: (1) to respect WTO principles and rules and domestic policies, (2) to participate in multilateral negotiations based on the analysis of its own industries and domestic policies, and (3) to prepare domestic laws which are consistent with WTO principles and rules. In this regard, it is essential for Kazakhstan to plan and undertake its national policy by having a good understanding of the present situation and future prospects on its own industries.

WTO Agreements cover a broad and wide array of areas, while Kazakhstan finds itself in a variety of situations. To be effective it is necessary to identify issues and needs with regard to each area to be supported. Governmental authorities responsible for policy planning for each industry sector need to understand and utilize provisions of the relevant WTO Agreements and to plan policies for revitalization of respective industries. At the same time, protection of domestic industries is also important. And it is essential to find an appropriate way of guiding domestic industries to adapt to the global economy.

It is noteworthy that the WTO accession of Kazakhstan is one of the key objectives of bilateral cooperation with EU. Some more serious measures should be taken on the way to harmonization towards market economy principles, and in particular towards WTO core principles, according to the EU legislative approach.

In this framework, the European Commission of the European Union has launched several projects aimed at supporting WTO accession for Kazakhstan. They are being implemented in partnership with the Committee for Technical Regulation and Metrology of the Ministry of Industry and Trade and the Kazakhstan Institute for Standardization and Certification. The project team consisting of four long-term legal and economic experts are providing assistance to the Ministry of Industry and Trade of the Republic of Kazakhstan, in particular to the Committee for Technical Regulation and Metrology, the Kazakhstan Institute for Standardization and Certification and other relevant state organs.

The main goals of such projects are to support WTO Agreement for Kazakhstan by harmonizing Kazakhstan’s legislation on technical regulation and standardization with the WTO Agreement on Technical Barriers to Trade, and with the corresponding EU legislation, and to provide support to the Government of Kazakhstan on the most effective implementation of measures in accordance with WTO requirements.

The specific objectives include:

a) bringing the present legal framework on technical regulation and standardization in compliance with the WTO TBT Agreement and corresponding EU legislation;

b) upgrading the professional expertise of the staff of the Committee for Technical Regulation and Metrology, Kazakhstan Institute for Standardization, Department of WTO;

c) building the capacity of the Information Centre under the Committee; and promoting cooperation between Kazakhstani and European standards, accreditation, metrology and conformity assessment bodies.

In addition, the project will run an extensive awareness raising campaign on WTO-related issues and the process of WTO accession for Kazakhstan. The European Commission has allocated substantial sums of money for different projects in Central Asia, which are designed to transfer European expertise to the region. These projects will be implemented by a consortium of European consulting firms. 10% of this budget is dedicated to supplying IT equipment to the Ministry of Industry and Trade, for the creation of information centres. The Delegation of the European Commission is providing additional money for a series of initiatives designed to help Kazakhstan prepare to enter the World Trade Organization. The additional support is being used for:

a) a series of training seminars and events that provide high-level technical expertise concerning legislative harmonization, European Union Directives on key subjects, standardization, certification, and conformity assessment.

b) technical assistance and support for Kazakhstan’s participation in several international organizations that promote cooperation for product safety and the qualifications of entities that test products. These include the European Committee for Standardization (CENELEC), the International Accreditation Forum, Inc. (IAF), and the International Laboratory Accreditation Cooperation (ILAC);

c) a Public Awareness Campaign, which started in 2006. In cooperation with its Partners, the Project Team held a series of events in different locations of Kazakhstan, and issued a number of brochures and publications. The events publications provide important information for officials, industry representatives, and the public;

d) the review and utilization of harmonized and international standards in Kazakhstan, so that Kazakh products can be accepted as competitive in the international marketplace.

The European Commission also finances support to the Government of Kazakhstan on preparing analysis of the economic consequences of WTO accession for the national economy of the Republic of Kazakhstan and the most effective measures to be implemented in order to achieve compliance with the requirements of WTO Agreements.

The budgets of these projects are huge. The objectives of these projects are:

1) to make an analysis of the current status of the selected sectors of the national economy with a view to their compliance with the relevant requirements of WTO Agreements;

2) to forecast the economic consequences of WTO accession for the selected sectors of the national economy;

3) to make recommendations for long term and medium-term planning in some national economy selected sectors during the post-accession period.

These selected sectors where the European Commission will provide assistance to the Ministry of Economy and Budget Planning are: agriculture, transport and roads, and the issue of Local Content.

23. Translate into Russian:

to involve both rights and obligations; free trade agreement; the free rider problem; a customs union; voluntary export restraints; WTO accession / membership; substantial benefits; to offer the same range of concessions; to enjoy preferences; (not) to be previously available; protection against unfair treatment; medium and long-term development; to require legal amendments; to utilize the provisions of the relevant agreements; to develop strategies of adaptation; the revitalization of respective industries; major policy areas; domestic industries; market access; obstacles to fair competition; export subsidies; to foster economic restructuring; food security measures; to face quantitative restrictions.

24. Find and translate sentences with the following:

trade concessions; to offer smth. in return; to ask for a status; within the context; transparent devices; to confine attention to; transition period; countries in transition; to enjoy important benefits; better market access; upgraded economic blueprint; the accession process; tool of the competitiveness strategy; domestic economic interests; competitive pressure; adaptation to the global economy.

25. Translate into English:

приоритетные цели; подать заявление о вступлении в ВТО; процесс переговоров; в правительственном контексте; быть вовлеченным в процесс; защита от несправедливого обращения; нацелить на вступление в ВТО; свободное торговое соглашение; одновременно с кем-либо; распространяться на другие государства; с дальним прицелом; 50 наиболее конкурентоспособных наций в мире; набирать обороты / cилу; обеспечить стране лучший доступ на рынок; вряд ли получит доступ; членство в ВТО; таможенный союз; средние тарифы.

26. Match the following abbreviations with corresponding full phrases:

27. Translate the following passages:

1. The issues that Kazakhstan will have to deal with …….. to each area to be supported.

2. The European Commission has allocated ……… one million two hundred thousand euros.

28. Make up word combinations with the following:

29. Fill in the gaps with prepositions:

to be extended ___ smth; harmonization ___ market economy principles; to be illustrated ___ smth; to be encapsulated ___ smth; ___ a non-discriminatory fashion; exemptions ___ smth; to confine attention ___ smth; ___ a longer period ahead; to be transformed ___ accession.

30. Answer the following questions:

1. What are the three principles of WTO? 2. Why do members of WTO try to avoid the free-rider problem? 3. What do they do to get rid of this problem? 4. What does the term “non-discrimination” mean? 5. Why is reciprocity introduced? 6. Is the requirement to offer something comparable in return to receiving trade concessions imposed in any case? 7. What are the non-tariff barriers? 8. What does WTO regard as more transparent devices in trade? 9. What are the benefits of WTO membership? 10. Will our country benefit from joining the WTO? 11. Does each WTO member gain enough from the system?

31. Match lines in both columns to form phrases:

32. Make up sentences of your own with the following:

to be transformed with accession; the acceding country; to negotiate WTO accession; conditions of accession; to export effects of accession; in the short term; in the medium term; with a longer view ahead; within the next 10 years.

33. Match lines in both columns to form phrases:

34. Fill in the gaps with one of the given words:

market ___ principles domestic economic interests

the most ___ method human and ___ resources

upgraded ___ blueprint high-level ___ expertise

free ___ agreement voluntary ___ restrains

low ___ tariffs intellectual ___ rights

35. Render the second part using the following:

to implement agreements; to prepare domestic laws; to cover a broad and wide array of areas; to participate in multilateral negotiations; to be consistent with WTO principles; policy planning; to undertake national policy; to plan policies for the revitalization of respective industries; to identify issues precisely; to find an appropriate way ; to guide domestic industries; to adapt to the global economy; the key objective of bilateral cooperation; the EU legislative approach; to launch a project; the project team; to provide assistance / support to; the main goal of the project; in compliance with; to promote cooperation with; to be dedicated to supplying smth.

36. Translate the following excerpts into Russian:

1. A secure energy supply requires a combination of internal and external policies. The legitimate right of any individual state to pursue its own external relations for ensuring security of energy supplies and to choose its internal energy mix is not in question. Nonetheless, the development of a coherent and focused external EU energy policy, drawing on the full range of EU internal and external policies, would enhance the collective external energy security of the Union. It would also help the EU face more effectively possible strategies by major external energy suppliers to adversely influence market fundamentals.

2.The EU and the world need reliable, affordable and sustainable flows of energy. This is a key element for economic development and the achievement of the Lisbon goals. There is an obvious link between energy security, sustainability and competitiveness.

37. Sort out each item given below accordingly:

integrating into the global trading system; increasing domestic tariffs for gas; reducing governmental support in some areas; trading on equal terms with other countries; losing sovereignty in policy-making; acquiring better access to overseas markets; lowering tariffs on our products; participating in elaborating trade regulations; killing the local competition; increasing investments; boosting a country’s economic growth; creating new jobs; destroying jobs; lowering barriers imposed on import of goods.

38. Fill in the gaps with one of the given adjectives:

The European Union is a strategic partner for Kazakhstan. Kazakhstan is developing ___ (1) cooperation with the European States and such organizations as the Organization of Security and Cooperation in Europe (OSCE), the Organization of Economic Cooperation and Development (OECD), the Council of Europe and TACIS. The ___ (2) directions of such cooperation are: improvement of ___ (3) agreements on ___ (4) protection and ___ (5) use of nature, introduction of alternative ___ (6) and ___ (7) technologies.

39. Translate the following excerpt into Russian:

Increasing dependence on imports from unstable regions and suppliers presents a serious risk. Some major producers and consumers have been using energy as a political lever. EU external relations can be used more effectively to pursue the common objective of securing reliable flows of affordable and environmentally sustainable energy. It is important that a coherent approach be adopted that pursues the following objectives:

1. promoting transparency and improved governance in

the energy sector through energy partnerships with third countries, so as to create mutually beneficial, transparent, non-discriminatory and stable conditions for energy trade;

1. improving production and export capacities in producer

and transit countries for further development and upgrading energy transportation infrastructure;

3. enhancing physical and environmental security and

energy infrastructure safety by improving conditions for trade in energy through non-discriminatory transit and access to export pipeline infrastructure.

40. Fill in the gaps with prepositions:

We hope that users of nature will support our actions ___ (1) prevention of environmental damage and ___ (2) imple-mentation of actions directed ___ (3) the improvement of the environmental quality as a whole. At the same time, we see our mission ___ (4) implementation of ideas of sustainable development in each region of Kazakhstan and each industrial enterprise. Now, according ___ (5) the index of ecological stability on environmental legislation and policy, developed in the Yale center, the republic of Kazakhstan is in the 78^th place with the estimated score ___ (6) 43.5 points. We should raise our ecological stability level ___ (7) at least 60-70 points. We should be ___ (8) the level of developed countries of the world. And for this purpose, we should renew our approach ___

(9) our positioning in the world economic system. We should use alternative power potential and diversify the national economy by widely introducing new “breaking-through” technologies that minimize waste. The essential tasks set by the President of Kazakhstan are to establish environment protection practice ___ (10) accordance ___ (11) the world’s standards.

41. Translate the following excerpts into Russian:

1.The realization of the initiatives concerning sensible use of natural resources may become an important instrument of sustainable economic growth, contributing to the stability of the state as a whole and reduction of poverty. However we clearly understand that an absence of appropriate management can lead to a negative influence on the economy.

2.Energy resources and access to export routes are the priority of domestic and foreign policy of the country, one of the most significant components of national security. Thus energy resources are one of the long-term priorities of Kazakhstan's development. The strategic goal is seen in their efficient use so that the revenues are used to achieve sustainable economic growth and improve the quality of people's lives.

3.The main orientations of the energy policy of Kazakhstan are energy security, energy efficiency and environmental safety. Therefore, the long-term governmental energy policy is built on clear-cut and consistent activities made by the Government of Kazakhstan on realization of energy policy and commitment to establishing strong and sustainable companies open to constructive dialogue. Adherence to predictable and transparent investment policy is also vitally important as tax revenues from oil and gas account for one third of total budget revenues.

42. Fill in the gaps with the article where necessary:

We have achieved significant mutual understanding with ___ (1) business community, and with users of ___ (2) nature concerning ___ (3) maintenance of sustainable development. The project of the Environmental Code was frequently discussed with all interested parties and users of nature.

I consider that we have achieved ___ (4) certain consensus on all ___ (5) key issues. We have ___ (6) mutual goal with ___ (7) business community of Kazakhstan. It is clear that Kazakhstan needs eco-technological progress in order to become one of the world leaders. Everyone who is interested in ___ (8) prosperity of Kazakhstan and preservation of native nature needs to cooperate more closely.

43. Translate and remember the phrases in black type:

The Republic of Kazakhstan is open to new fields of cooperation with the EU, such as development of joint projects in the field of preservation of biodiversity, development of new methods for environmental decontamination and introduction of more effective systems of monitoring. Kazakhstan is ready to support international efforts in climate preservation. It will work with Carbonic Funds of the EU on effective decrease of negative burden on environment. Carrying out complex comparative research on the influence of environmental factors on human health in EU and Kazakhstan looks interesting. It is important to strengthen cooperationin environmental protection issues in the course of oil operations in the Caspian Sea. Kazakhstan is really interested in developing energy-savings and alternative power programs.

44. Agree or disagree with the following statements:

1. If a country succeeds in ensuring that truly talented people are entrusted to look out for and nurture other talent, it can be assured that the country is on the right nation-building track. After all, a nation is only as good as the people running it.

2. Sometimes it is not necessary to attract talent through financial or material incentives, but rather, attracting talent can be achieved by simply providing a conductive environment where there are other similarly talented people within a particular organization.

3. Qualified human resources have an impact on a country’s scientific and technical progress, which in the opinion of many economists is the sole condition of steady welfare improvement.