Main Arguments for Protecting Trade (from video) • Protects Jobs • Protects Industries • Fair • Can Raise Revenue • National Defense • Infant Industry • Export Promotion
Types of Trade Restriction • Tariff - Тариф • Quota – квота (жеңілдік) • VERs Voluntary Export Restraints (өз еркімен экспортты шектеушілер) • Non Tariff Barriers (Health and Safety Regulations) (тарифтік емес кедергілер) Also support exports through subsidies. (Субсидиялар)
Trade Barriers - Economic • tariffs • taxes on imports • quotas • limits on the quantity that can be imported. • VERs • Voluntary Export Restrictions • Non tariff barriers • i.e. rules and regulations making importing difficult/impossible
Tariffs • Advantages • Government gets revenue • Discourages imports • Disadvantages • May not work • Increases prices • Could be retaliation • On boards draw a graph showing tariffs
Quotas • Advantages • Can be targeted • Is bound to work • Disadvantages • Raises domestic prices • Can be retaliation
Voluntary Export Restrictions • Advantages • Very effective • Fosters good relations • Disadvantages • Country may not agree to it
Non Tariff Barriers/Health and Safety • Advantages • Not as obvious as other barriers • Can avoid retaliation • Disadvantages • Maybe more annoying than other barriers
Subsidies • Advantages • They encourage certain industries • Not as contentious as other barriers • Disadvantages • Cost the government money • On boards draw a graph showing subsidies
Subsides • Advantages • They encourage certain industries • Not as contentious as other barriers • Disadvantages • Cost the government money • On boards draw a graph showing subsidies
In groups of 3 – 4 (10 minutes) • Decide what should be Kazakhstan’s priorities e.g. what industries you would try to help and why? • What trade barriers tools would you use and why? • Present this to the rest of the group.
Tariffs in Kazakhstan • For final products more than for raw materials. • E.g. sausages 44% • packed juice, 46%
Export Duties • “Kazakhstan levies export taxes on a limited number of commodities when they are exported to non-Economic Union countries.” Ferrous metal scrap is cited as an example,
Tariffs in Kazakhstan • The current tariff schedule based on six percentage rates: • 0, 5, 10, 15, 20 and 30.
Non-Tariff Barriers in Kz • “The Investment Law” • Puts investment in priority sectors of the economy • Puts local and foreign investors on an equal footing • Doesn’t guarantee international arbitration • Doesn’t protect investors against future changes in legislation
The procurement rules of June 2002 • Strong State control over the tender procedures in the oil and gas sector,
The transaction passport To help make importing easier To solve many of the paperwork issues
Government procurement • “The government has taken steps to improve the transparency of the procurement process.
Services • Oil companies must purchase services only from Kazakhstan-based companies unless the required service is unavailable in Kazakhstan.”
The Law on Production Sharing • Agreements also requires that KazMunay Gas, the national oil company, should have at least 50% in offshore oil and gas projects. • Foreigners are not allowed to own more than 20% of a mass media company in Kazakhstan.