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Kazakhstan and Eurasian economic integration: benefits, costs and prospects

Kazakhstan and Eurasian economic integration: benefits, costs and prospects. Nargis Kassenova KIMEP University. Promised benefits. More trade (market of 170 m people and better opportunities for doing business in Russia and Belorussia)

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Kazakhstan and Eurasian economic integration: benefits, costs and prospects

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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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