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Eurasian Economic Integration: Benefits & Challenges for Kazakhstan

Explore the benefits and costs of Eurasian economic integration for Kazakhstan, including trade opportunities, investment attractiveness, and challenges such as trade regime changes and market access issues. Delve into the impacts on trade with Russia, EU, and China, as well as the implications on domestic industries and consumer prices. Examine the delaying accession to WTO, the human factor, and the prospects and outlook for future integration efforts.

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Eurasian Economic Integration: Benefits & Challenges for Kazakhstan

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  1. Kazakhstan and Eurasian economic integration:benefits, costs and prospects Nargis Kassenova KIMEP University

  2. Promised benefits • More trade (market of 170 m people and better opportunities for doing business in Russia and Belorussia) • More attractive for companies and investments because of lighter taxation and better “doing business” indices • Access to Russian domestic tariffs for transit of goods • Preparation for WTO • No other alternative – it will be easier to withstand crises together

  3. Kazakhstan-Russia trade Trade turnover in 2008 – $20b (before crisis)

  4. Trade creation or trade diversion? • Ad valorem equivalent tariff rate increased from 6.45 % to 12.1% • Trade regime less liberal

  5. Kazakhstan - EU trade: • Turnover in 2013: • $54.7 b (41%) • EU imports – $9 b (share fell from 29% in 2009 to 18.6% in 2013) • Exports to EU – $45.6b (53.9%) in 2013

  6. Kazakhstan – China trade: • Turnover in 2013: • $22.7 b (17%) • Imports: $8.3 b (17.1%) against $3.5 b (12.6%) • Exports: $14.3 b (17.1%)

  7. Problems experienced by Kazakh producers: • Certification • Subsidies • Larger capitalization of Russian companies • Some success stories: automobile industry, textile, computer equipment (?!) • Black market

  8. Access to Russian domestic tariffs: • Promised unification of transport tariffs didn’t take place, instead Kazakh transport companies as of 1 January 2014 pay international tariffs • According to the Treaty, common market for gas, oil and petroleum products by 2025

  9. Preparation for WTO • Delay with Kazakhstan’s accession, confusion • Withstanding crises together • Crisis spillover effect

  10. Other benefits: • Human factor: more comfortable for ethnically Russian population in the country • Good relations with Russia

  11. Other discontents • Weak negotiators on the Kazakh side • Imbalances in decision-making • Differences in goals: economic vs. political • Differences in desired pace and scope of integration

  12. Prices on consumer goods went up • (Food prices on the five-year period grew 70%) • Spillovers: currency devaluation (11 February – 19% tenge devaluation)

  13. Prospects • Birds view: Can it be a success-in-the making? • Eurasian integration seems to be in line with global trends (in terms of growing regionalism in trade), but goes too deep and too fast • Political integration (delegating part of the country’s sovereignty) goes against the trend of continuing nation-building

  14. There is no new set of attractive values that would create the basis for a new union • Russia is no longer our “window to the world” • Current Russian approach diverges from Kazakhstan’s desired course • Wait out and try to maintain its multivector foreign policy following the aspiration to integrate into the global economy and community

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