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Industrial cooperation and cross-border trade — Kazakhstan expands trade and economic cooperation with neighboring countries

Wednesday, 28 July 2021, 18:20:29

The Ministry of Trade and Integration is developing state policy in the field of domestic and foreign trade, technical regulation of consumer protection. In the first two areas, the desires, needs and plans of the business are extremely important. Today, 18 services are provided in Kazakhstan only through export insurance: from insurance of contracts to support for importers of Kazakhstani products.

Kazakhstan sees great potential for entering the markets of other countries by connecting to WLP Hubs in other countries and increasing the connectivity of trade and transport systems.

Our country is considering the Central Asian region as promising directions, as well as the Indian market, where Kazakhstani traders and logistics companies can get access through registration in the Indian WLP Hub.

In the Republic of Kazakhstan, all the necessary infrastructure has been created to ensure the smooth movement of export-import and transit trade flows. Ongoing work to improve it will allow Kazakhstan to strengthen its status as a trade and logistics hub in the region.

Land routes through Kazakhstan have already shown their competitiveness. This year, transit will exceed the strategic milestone of one million containers, including 700 thousand TEUs (a conventional unit for measuring the quantitative side of traffic flows, the throughput of container terminals or the capacity of freight vehicles) in the Asia-Europe TEU direction.

The World Logistics Passport (WLP) Global Initiative is launched by Sheikh Mohammed (Dubai) in 2019 as part of a strategic vision for international trade. The WLP brings together key public and private entities to provide best practices for the logistics value chain. At the same time, World Logistics Passport is a private sector initiative aimed at stimulating international trade through the first global loyalty program to simplify customs and trade operations, and develop efficient multimodal trade corridors. The initiative provides financial and non-financial benefits to traders and forwarders to increase trade through strategic program partners such as ports, airports, airlines and customs.

The trade turnover between Kazakhstan and the SCO countries amounted to $14.2 billion. Kazakhstan regards the SCO as an important strategic, trade and economic organization. Trade and economic relations of the Republic of Kazakhstan with the SCO member states remain at a high level.

At the end of 4 months of 2021, trade between Kazakhstan and the SCO countries amounted to $14.2 billion, which is 11% higher than in the same period of the previous year ($12.8 billion).

The potential for increasing Kazakhstan's exports to the SCO member countries is about $2 billion in such industries as the chemical industry, food processing, mechanical engineering and other manufacturing sectors of the economy.

For the further development of trade and economic cooperation and maintaining its high positive dynamics, the Kazakh delegation was proposed to continue joint work to expand the range of supplied goods and services, establish direct contacts between business circles.

The Kazakh side also proposed to intensify work on modernizing and expanding digital infrastructure and accelerating digital transformations for cross-border e-commerce, using digital platforms to expand access to trade finance and data exchange. Including, the development of e-commerce infrastructure, support for the development of fulfillment centers, simplification of registration procedures and marketplace entry into the markets of partner countries.

The Shanghai Cooperation Organization includes Russia, China, India, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Uzbekistan. The total population of the SCO member states, as well as observers and dialogue partners, exceeds 3 billion people (about 45% of the world's population).

In 2020, exports to Uzbekistan and Tajikistan increased, while imports from these countries decreased. Exports to Uzbekistan increased by 6.9% and amounted to $2.1 billion, to Tajikistan — by 6.1% and amounted to $693 million.

The trade turnover between Kazakhstan and Uzbekistan in January-April 2021 amounted to $1.2 billion, which is 41.3% higher than in the same period of the previous year.

Exports from Kazakhstan to Uzbekistan in January-April 2021 increased by 54% and amounted to $899.2 million. In general, in 2020, the trade turnover between Kazakhstan and the countries of Central Asia amounted to $4.6 billion.

Trade turnover between Kazakhstan and Tajikistan in 2021 amounted to $335.9 million, which is 17.2% higher than in the same period last year.

The most imported goods are fruits, berries, vegetables: apricots, cherries, cherries, peaches, plums and thorns; grape; bread and flour confectionery; tomatoes; onion garlic; mineral and carbonated waters. And also: cars; ethylene polymers; ores; glass; plastic.

The highest imports to Kazakhstan come from Uzbekistan. In 2020, it amounted to $783.1 million. In June of this year. During the working trip of the Minister for Trade and Integration of the Republic of Kazakhstan to Uzbekistan and Tajikistan, Kazakhstani entrepreneurs signed 6 contracts for $3 million on a pilot supply of various products.

For example, contracts for $500 thousand for the purchase of Uzbek cherries, for the supply of fruits and vegetables from the Gafurov district of the Sughd region to Kazakhstani retail chains.

During the negotiations, issues on laying trade routes / corridors were also discussed.

Until Jan. 1, 2021, the Uzbek side applied excise taxes on a number of goods when importing products, which had a negative impact on the volume of mutual trade.

The main excisable goods were motor gasoline, diesel fuel, fuel oils, motor oils, compressor lubricating oil, turbine lubricating oil, parts of washing machines, confectionery, and flour. Such measures of regulation of foreign trade activity were equally applied by Uzbekistan to all countries-participants of the Agreement on a free trade zone of the CIS.

From Jan. 1, 2021, Uzbekistan does not apply excise taxes on imported goods. In January-April 2021, 85 commodity items on 10 signs of the foreign economic activity nomenclature were exported to Uzbekistan in the amount of $50.3 million, which were subject to the excise tax on imports.

In January-April 2020, the volume of exports for these goods amounted to $28.9 million. That is, after the abolition of the excise tax on imports by Uzbekistan, there is an increase in exports from Kazakhstan to Uzbekistan of excisable goods by 74.3%.

Exports of confectionery products in 2020 amounted to $601.6 thousand, while in 2021 from January to May, exports amounted to $964.2 thousand, an increase of 60.3%.

The export of flour in 2020 amounted to $25.3 thousand, while in 2021 from January to May 2021, the exports amounted to $33.7 thousand, an increase of 33.3%.

At the same time, the question of the application by Uzbekistan of the Agreement on the country of origin of goods remains. In accordance with the CIS FTA Agreement, Kazakhstan and Uzbekistan do not apply import customs duties in mutual trade, provided that the criteria for sufficient processing are met, which are determined by the 1993 rules for determining the CIS country of origin.

It should be noted that not all Kazakhstani goods meet the criteria for sufficient processing of the 1993 rules, therefore, such products are subject to import customs duties in Uzbekistan.

In this regard, negotiations on Uzbekistan's accession to the 2009 CIS rules are being actively pursued on the bilateral platform. At the moment, Kazakhstan is responsively applying the 1993 rules when importing Uzbek goods.

An agreement was also reached on guaranteed supplies of Kazakhstani products to the shelves of Uzbek stores in the amount of $50 million. More than 55 Kazakhstani companies presented their products to potential partners from Uzbekistan as part of the trade and economic mission of business circles of the Republic of Kazakhstan in Uzbekistan.

Currently, more than 50% of Uzbekistan's trade turnover passes through the territory of Kazakhstan. The Asian Development Bank estimates that interregional trade and transit trade along existing corridors will increase by 35% in 2025 and 65% in 2030, compared with 2019 levels.

At the same time, the load on the existing checkpoints will almost double. The Kazakh side voiced a proposal not to increase the load on border checkpoints and "not to transport a large amount of goods across the border, but to create goods at the border."

Currently, Kazakhstan is revising the Concept for the further development of the Khorgos node, is working on the launch of border hubs with Russia with further access to the markets of the EAEU and the EU.

Also, export contracts were signed for the supply of pasta, apple juice and compound feed to Uzbekistan. A striking event was the conclusion of the Agreement between Qaztrade JSC and the largest retail chain in Kazakhstan, Magnum, to increase the supply of Kazakhstani products to Uzbekistan by 50 million US dollars in 2021.

Magnum plans to open a chain of stores in the neighboring republics in the nearest future. We, as an export promotion operator, have been negotiating for a long time, and today they ended with an agreement to increase the representation of Kazakhstani products on the shelves in Magnum stores in Uzbekistan. Now Kazakhstani producers will be able to conclude direct contracts for the supply to the Magnum-Uzbekistan network. Promotion of goods through trade networks is today one of the most effective tools for trade, including cross-border.

Relations with Tajikistan are based on agreements within the CIS, as well as a number of bilateral agreements. Today, the customs authorities of Tajikistan apply special tariffs to imported confectionery products from Kazakhstan. The Ministry of Trade and Integration will hold talks with the Tajik side to level the situation.

At the same time, the issue of reducing the tariff for the transportation of grain and flour was raised at the Intergovernmental Commission with Tajikistan in March 2021, the Kazakh side initiated the issue of establishing a reduction factor of 0.4. In general, it should be noted that the elimination of barriers to the entry of Kazakh products to foreign markets is a constant work within the framework of the Intergovernmental Commission and bilateral negotiations at a high level.

In turn, Kazakhstan and Russia are discussing a "green corridor" for agroexpress in the framework of cooperation between the two countries in the formation of the Eurasian commodity distribution system and the flow of goods from Central Asia - Kazakhstan - Russia.

The agrological corridor Russia - Uzbekistan should become a trilateral one, because commodity cargo flows pass through the territory of Kazakhstan.

It is necessary to synchronize the work of regulatory authorities so that trains run without long delays, this is critical for the delivery of perishable goods. Thus, the business of the three countries will be given competitive advantages.

It is worth noting that a Roadmap is also being prepared to expand trade and economic cooperation between Kazakhstan and Tatarstan.

In particular, one of the areas of cooperation may be cooperation in the field of dairy farming and the implementation of joint projects on deep processing of milk in Kazakhstan. Including on the basis of international centers of cross-border cooperation.

It is possible to expand the range of exports from Kazakhstan to the amount of $396.3 million. The list of products includes more than 100 non-primary goods in various industries.

The trade turnover between Kazakhstan and Lithuania amounted to $481.6 million, an increase in 2020 by 16.6% despite the global COVID-19 pandemic, which caused enormous damage to the global economy.

The growth of exports to Lithuania is justified by an increase in the supply of such goods as: crude oil, sulfur, copper, scrap of ferrous metals, etc. The growth of imports from Lithuania is justified by an increase in the import of such goods as: consoles, panels, tables for electrical equipment, equipment for processing rubber or plastics, other equipment for agriculture, horticulture, forestry, etc.

At the same time, Kazakhstan has a great potential to increase the export of processed goods to Lithuania by more than 50 items in the amount of $205 million.

Lithuania is also interested in the development of mutual trade with Kazakhstan and is ready to supply products in various fields.

The potential for increasing the export of goods from Kazakhstan to Egypt is $291.6 million.

Exports from Kazakhstan to Egypt in 2020 amounted to $5.5 million. The main export goods from Kazakhstan to Egypt are: salts of phosphoric acids — $2.9 million (53.9% ), sulfur — $1.5 million (26.9%), ferroalloys — $899 thousand (16.5%).

Imports to Kazakhstan from Egypt in 2020 amounted to $78.9 million.The main imports to Kazakhstan from Egypt are: mixtures of aromatic substances — $34.6 million (43.8%), ready-made binders — $30.7 million (38.9 %), medicines — $8 million (10.2%), USA, citrus fruits — $1.6 million (2%). Egypt from the point of view of increasing exports for Kazakhstan is a promising country. The potential for increasing exports of goods from Kazakhstan to Egypt is $291.6 million.

Despite the consequences of the coronavirus pandemic, the volume of mutual trade between Kazakhstan and Afghanistan at the end of 2020 increased by 55.2% and amounted to $623.6 million.

In January-April 2021 trade turnover increased by 2.8% and amounted to $163 million, while exports in January-April 2021 increased by 2.5% and amounted to $161.8 million.

In order to support the positive dynamics in trade turnover and as a measure to increase trade turnover, the Kazakh side proposed to diversify the export structure between the countries.

Kazakhstani experts have prepared a list of potential goods that can be supplied to the Afghan market from Kazakhstan. These are more than 45 types of products for a total of $360 million. Thus, there is an opportunity to increase the supply of products from the petrochemical industries (in the amount of $91 million), food (in the amount of $226.2 million), metallurgical (in the amount of $15 million), machine-building (in the amount of $2.4 million), chemical (worth $16.8 million), light (worth $6.4 million), woodworking and furniture (worth $2.1 million).

In order to further develop trade cooperation, Kazakhstan is ready to purchase fruits and vegetables from Afghanistan. In addition, the Kazakh side expressed interest in cooperation on the basis of the International Trade Center Termez. There is also a need between countries to intensify investment. In this connection, it is proposed to use the potential of the Khorgos ICBC as a platform for wholesale and retail exports to the PRC market.

Kazakhstan intends to increase exports to Cuba by $40.6 million. The volume of trade between Kazakhstan and Cuba in 2020 was very low, which, according to our data, amounted to $234.2 thousand, which is 32.4% less than the previous year ($346.7 thousand). Exports from Kazakhstan to Cuba in 2020 decreased by 85.9% and amounted to $0.3 thousand. Kazakhstani experts prepared a list of potential goods that can be supplied to the Cuban market from Kazakhstan. These are more than 17 products worth $40.6 million. Ambassador Emilio Pevida Pupo stressed that Cuba is ready for comprehensive cooperation. And also, given that the country has become an observer in the EAEU, hopes for cooperation on mutually beneficial terms. He also noted that Cuba has so far achieved impressive success in the development of biotechnology and pharmaceuticals and is ready to share its knowledge and developments and provide support in this area. Considering that a Memorandum of Cooperation was recently signed between the chambers of commerce of Kazakhstan and Cuba, the parties agreed to continue work in the field of expanding trade relations.

Let us remind you that on June 18, Kiev hosted the 14th meeting of the Interstate Kazakh-Ukrainian Commission on Economic Cooperation. The co-chairman from the Kazakh side is the Minister of Trade and Integration of the Republic of Kazakhstan, Bakhyt Sultanov. Co-chairman from the Ukrainian side — First Deputy Prime Minister, Minister of Economy of Ukraine Oleksiy Lyubchenko.

Opening the meeting, the sides emphasized the significant potential for cooperation and mutual interest in joint comprehensive efforts to unleash it. Ukraine remains one of the main trade partners of Kazakhstan. However, in the past few years, a decrease in the volume of mutual trade has been recorded. In this regard, the co-chairs of the Commission exchanged specific initiatives to increase the volume of trade turnover.

For example, Bakhyt Sultanov suggested to his Ukrainian colleagues at the first stage to jointly work out the issue of supplying 70 commodity items for which Kazakhstani enterprises can increase non-resource exports by $350 million. This alone will lead to an increase in Kazakhstani exports by 45.5% in the near future.

According to the head of the Kazakh delegation, the development of trade and economic relations would be facilitated by the opening of a Kazakhstan trading house in Kiev and a Ukrainian trading house in Nur-Sultan, in which the best products of Kazakhstani and Ukrainian production would be presented. To intensify mutual trade, the Kazakh side proposed to Kiev to deepen cooperation through the opening of joint cooperation projects in various fields. Kazakhstan and Ukraine already have a successful experience of such cooperation in the field of mechanical engineering, industry, agriculture and the IT industry.

At the same time, there is a potential for joint ventures, including for the promotion of finished products to third countries, the co-chairs of the Commission agreed. Speaking about specific projects, the Ukrainian side expressed interest in the joint production of automotive equipment.

For its part, Kazakhstan announced its readiness to supply Hyundai cars of Kazakhstan production to the Ukrainian market and to work out in detail the proposal of partners at the expert level. In Kiev, issues of cooperation in the field of standardization, conformity assessment and metrology were also discussed, including the possibility of applying and disseminating national standards of one side in the territory of the other side.

According to the Minister of Trade and Integration Bakhyt Sultanov, this would create conditions for the elimination of technical barriers to trade, contributing to the further strengthening of trade and economic cooperation between the countries. The parties considered the issues of Kazakh-Ukrainian cooperation in the field of transport and transit traffic. Particular attention was paid to the development of transit freight traffic within the Trans-Caspian international transport route.

The Kazakh side also suggested to the Ukrainian colleagues to more actively use the opportunities of the Khorgos International Center for Cross-Border Cooperation to attract investments and as a platform for wholesale and retail export of Ukrainian products to the PRC.

A separate topic of the negotiations is ensuring the synergy of cooperation in the IT sphere. At the same time, the parties confirmed their intentions to begin pilot implementation of a number of technological solutions in the field of public administration and medicine.

It is worth noting that since the beginning of the year, Kazakhstani exporters of processed goods in 2021 have already reimbursed more than 3.5 billion tenge:

1) for the promotion of domestic processed goods (advertising, warehouse rental, certification, exhibition) 5 applications from entities for a total amount of 48,070,176 tenge.

2) 159 applications from 86 entities for the delivery of domestic processed goods for a total amount of 3,452,696,347 tenge, namely:

- rail delivery of 3,067,927,342 tenge;

- car delivery 355,036,349 tenge;

- air delivery 19,894,519 tenge;

- sea delivery 9,838,137 tenge.

Of the total number of approved applications, 54 came from small businesses, 19 from medium-sized and 16 from representatives of large businesses.

Among the approved applications, 844,646,980 tenge are the costs associated with the delivery of upper processing goods, 2,271,603,226 tenge of middle processing goods and 384,516,317 tenge of lower processing goods. Based on the results of the first half of the year, the development amounted to 60% of the allocated funds. Consideration of applications takes place in the order of priority according to the date of the initial registration of the application.

For reference: The following types are subject to reimbursement of part of the costs:

1) costs associated with advertising goods abroad;

2) costs of direct participation in foreign exhibitions, forums, fairs, competitions, congresses;

3) costs associated with the development, translation into foreign languages ​​and the publication of a specialized catalog for distribution abroad;

4) costs of maintaining branches, representative offices, retail space, warehouse and retail shelves abroad;

5) costs of carrying out procedures related to the registration of trademarks abroad, on electronic trading platforms;

6) costs of carrying out activities related to the procedures for confirming the compliance of goods with the requirements established by technical regulations, standards, including organization standards, or the terms of contracts or confirmation of the right to carry out activities for the sale of goods abroad (certificates, permits, registration certificates and other documents) , as well as the costs incurred in the delivery of test samples of products to the test point and back for passing the certification procedure (in the case of a certificate or other supporting document);

7) costs associated with the procedures for obtaining a permit for the use of objects of exclusive rights (franchising) abroad;

8) costs associated with the passage of foreign certification, accreditation, inspection of subjects of industrial and innovative activities (in the case of a positive passage of the certification procedure, accreditation, inspection and the presence of a certificate or other supporting document);

9) costs associated with the delivery of goods and payment for transportation services by road, rail, air, sea transport and the organization of transportation.

Regarding the issue of regulation of fisheries subsidies, this issue is important from the point of view of preserving the environment and expanding aquaculture.

It is expected that the new rules on fisheries subsidies will apply to fishing subsidies and fishing-related activities at sea. Thus, subsidies for the development of aquaculture and inland fisheries are excluded from the scope of the consolidated text.

The draft agreement prohibits subsidies that promote overfishing and overcapacity. However, the rules that are being developed make it possible to maintain support programs if the state implements fisheries management measures that allow maintaining fish stocks at a biologically sustainable level.

It also provides for a ban on subsidizing vessels or operators involved in illegal, unregistered and unregulated fishing (IUU fishing). Reducing IUU fishing in the economic zone and in the oceans will help improve the sustainability of fish stocks.

The Minister of Trade and Integration of the Republic of Kazakhstan will take part in the 12th ministerial conference, which will be held in Geneva in December this year, and will achieve tangible results for the global trading system, including the establishment of new rules for subsidizing fisheries and the achievement of the globally agreed UN Sustainable Development Goal on reducing harmful fisheries subsidies.

All 164 WTO members are participating in the negotiations. The Republic of Kazakhstan became the 162 full member of the WTO in 2015. The WTO negotiations on fisheries subsidies originate with the 2001 Doha Round mandate and the 2005 Hong Kong Ministerial Declaration. Since then, little progress has been made, but with the adoption of the Sustainable Development Goals in 2015, negotiations on fisheries subsidies have been re-energized.

In March 2021, the new Director General of the WTO Ngozi Okonjo-Iweala announced her intention already in this year to complete protracted negotiations to ban excessive fisheries subsidies.

Today, the issue of transition to digital technologies remains relevant, where technical regulation is being fully introduced into the information system.

On Dec. 30, 2020, the Law of the Republic of Kazakhstan "On Technical Regulation" was adopted in a new edition, which provides for the introduction from July 1, 2021 of the processes of technical regulation, standardization, accreditation, conformity assessment and ensuring the uniformity of measurements in the information system of technical regulation.

As part of the implementation of this Law, a pilot project of the electronic certification service in the field of conformity assessment "E-certification" was launched, which provides for full traceability of the processes of issuing documents for confirmation of conformity in electronic form. The issuance of conformity assessment documents is carried out exclusively in electronic form without the use of strict reporting forms.

The main task of the information system is to eliminate "gray" certification, create conditions for automation and digitalization. Thus, to achieve a reduction in the processing time of applications for conformity assessment. One of the innovations of the Law is also “cameral control”, which provides for the transition from control of subjects to control of objects. The objectives of the “cameral control” are the timely suppression and prevention of violations, granting the subject of control and supervision the right to independently eliminate violations.

It is expected that a preventive control mechanism will be launched without a visit, which will apply to 120 groups of controlled products, 180,000 business entities (according to the statistics portal), 1,500 accreditation entities, NCE Atameken and more than 40 expert organizations to determine the country of origin of goods. At the same time, the actual staff of regional inspectors is 95 people. In the current system, control is carried out by unscheduled inspections based on complaints, as well as messages from other government agencies. To set up automatic signaling when signs of violation of the law are detected, scenarios are worked out in which notifications will be generated. To save time, it is planned to configure the system to automatically generate and send notifications directly to the subject of control by electronic delivery methods (SMS, messages to the personal account of the e-gov.kz portal, and others).

For example, a digital platform will react to the presence of such risks as:

- too short a time frame for testing;

- certification of products by an expert auditor who is certified for another type of product;

There are many more examples where the system can signal. The developers are finalizing the registries, compiling logical scenarios and risk factors, working on integration with the necessary sources. In the future, when a more developed integration with the systems of other government agencies is achieved, automation will become available to identify violations in all supervised areas.

Further, the Law "On Technical Regulation" provides for the automation of all processes of technical regulation within a unified information system, which should include blocks of technical regulations, accreditation, conformity assessment, standardization, ensuring the uniformity of measurements and hazardous products.

In total, more than 90 business processes, 3 registers of the State systems of technical regulation, standardization and metrology have been automated. More than 2,000 participants (KTRM, KazStandard, NCA, certification bodies, laboratories, technical committees, training centers, and so on) participate in all technical regulation processes on an ongoing basis, about 10,000 more legal entities (applicants) on a periodic basis as part of the submission applications for conformity assessment.

Within the framework of cooperation between the Ministry of Trade and Integration of the Republic of Kazakhstan and BTS Education, an e-commerce course has been developed for students of Kazakhstan.

The Ministry of Trade and Integration of the Republic of Kazakhstan is carrying out systematic work to stimulate the development and increase the share of e-commerce to 15%. In this area, active work is underway to train a large number of students in the basics of e-commerce. In this regard, BTS Education has created an e-commerce course for Kazakh youth.

The aim of the course is to teach everyone who wants to make money online, to tell about trends in e-commerce. The course is available on the platform www.JumysBar.kz. At the moment, the first mini-course on running and monetizing a personal blog on the Internet is available. Any Kazakhstani can study at a convenient time for him, in an online format, with the possibility of repetition at any time, using an electronic device. An excellent opportunity is provided to master a demanded specialty from scratch. In the near future, it is planned to launch a series of mini courses on relevant topics. Every month, a new mini-course will be formed and launched to teach new skills, for example, maintaining pages on social networks, opening an online store, selling goods on international online platforms, and so on. Self-test questions will be available after each theoretical material. Also, interviews with various successful online business entrepreneurs, success stories of domestic businessmen will be published.


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