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Kazakhstan: Why Is The Government So Enthusiastic About WTO Membership?

The World Trade Organization (WTO) is proving an irresistible lure for Kazakhstan's government, which has made membership a top priority. RFE/RL looks at the economic significance of Astana's commitment to WTO accession.

Prague, 5 August 2003 (RFE/RL) -- The World Trade Organization counts among its members seven former Soviet republics: Armenia, Estonia, Georgia, Kyrgyzstan, Latvia, Lithuania, and Moldova. In Kazakhstan, the government hopes it will soon be next.

The country's prime minister, Danial Akhmetov, recently announced that early entry into the WTO is a key goal for Astana in the near future. He said the country's accession into the international body will act as a catalyst for economic reforms.

Officials at the WTO -- which deals with rules of trade between its current 146 member nations -- appear to hold a similar view. Josep Bosch, the press officer at the WTO's headquarters, says negotiations on Kazakhstan's membership are progressing steadily.

"The government of Kazakhstan has expressed its intention to speed up the negotiations and become a member of the WTO as soon as possible. There was a meeting of the working party last [month] [where] the government again expressed its commitment to continue the negotiations. They are committed to economic reform. Of course the negotiations to become member of the WTO most of the time go hand-in-hand with the economic reforms that the countries are undertaking for a more open, stable, and export-oriented economy," Bosch says.

To join the organization, Bosch says, Kazakhstan still has to make the legislative changes needed to bring its trade laws in line with WTO requirements. These involve, for example, customs regulations, licenses for foreign companies, and intellectual property and foreign investment rights.

In so doing, Bosch says, Kazakhstan will automatically improve conditions for its import and export activity.

But not all analysts agree that WTO membership will prove an automatic cure-all for the Kazakh economy.

Dafne Ter-Sakarian is a senior analyst at the Economist Intelligence Unit in London. She says that the effect of WTO membership on Kazakhstan is likely to be minimal, as it has been for neighboring Kyrgyzstan, which became the first CIS country to join the WTO in 1998. Central Asia, she insists, is not a region where formal regulations really matter.

"In Central Asia, these are very isolated markets. They have a lot of sort of informal barriers to trade amongst themselves. They can only trade amongst themselves because of geographical reasons, and they make it very difficult because they're not liberal, open regimes," Ter-Sakarian says. "So in fact you can officially comply with WTO standards but at ground level, as long as you have a corrupt customs administration and widespread smuggling, it's not really going to make a difference."

As Kazakhstan's industry is "very undeveloped," Ter-Sakarian adds, the short-term impact of WTO accession, if anything, would be negative.

"Kazakhstan doesn't even really know where its competitive advantage might be because all sectors are so weak outside oil and metals. So the impact could be very bad in fact if suddenly WTO regulation worked and the Kazakh markets were open, all sorts of international imports would take over," she says.

In order to counteract the competition of foreign goods, the Kazakh government intends to use the preparatory period for strengthening the competitiveness of the economy by favoring the production of high-tech goods. It is committing itself in encouraging the introduction of scientific-innovative technologies in the non-raw material industries and the creation of innovative companies and techno-parks.

Baqbergen Dosmambetov is a member of the Kazakh parliamentary committee on economy, finance, and budget planning.

"Our goods should be able to compete with imported goods in terms of their quality and price, but currently that is not the case. We think that we need at least two years in order to reach that objective. Without improving the quality of our goods, joining the WTO will bring us problems and disappointments rather than profits and advantages," Dosmambetov says.

But Ter-Sakarian remains skeptical. She says that Kazakhstan's enthusiasm for WTO membership is related to the government's eagerness to improve its image in the West, especially in the light of the so-called "Kazakhgate" scandal. Several corruption cases are being investigated in the U.S., which are connected to this scandal. They focus on bribes paid by Western oil companies to high-ranking Kazakh officials, including President Nursultan Nazarbayev and his family members.

"Kazakhstan recently has had very bad press with the whole 'Kazakhgate' scandal. There are tensions with the U.S., so you need to counteract that by showing commitment to Western 'clubs.' So suddenly there's been a resurgence in the rhetoric about joining the WTO and the commitment in terms of partnership with NATO," Ter-Sakarian says.

Ter-Sakarian says that Kazakhstan is also motivated by the progress Russia has made in its WTO negotiations. If Russia were to join and seriously implement the WTO regulations, then Kazakhstan could get locked out of its main market, she says.

Zhannat Ertilesova, the vice chairman of the Kazakh state antimonopoly agency -- agrees: "Russia -- our major trade partner -- is very close to entering the WTO. If Russia joins the WTO before Kazakhstan, I am sure as an economist, that will not be profitable for Kazakhstan."

Negotiations on Russia's accession to the WTO are entering the final stage, Prime Minister Mikhail Kasyanov told a cabinet session late last month.

(RFE/RL Kazakh Service Director Merkhat Sharipzhanov contributed to this report).