RTLC_Third_Annual_Report_Oct_2009_-_Sept_2010_Final.pdf

USAID REGIONAL TRADE

LIBERALIZATION AND CUSTOMS

PROJECT (RTLC)

Third Annual Report, October 2009 – September 2010

October 29, 2010

This report was prepared for review by the United States Agency for International Development (USAID) by AECOM International Development, Inc.

REGIONAL TRADE LIBERALIZATION

AND CUSTOMS PROJECT (RTLC)

Annual Report October 1, 2009 – September 30, 2010

USAID COTR: Jeremy Strauss Chief of Party: Tania Revault d’Allonnes

October 29, 2010

Freight trucks transit Kyrgyzstan’s Too-Ashuu pass en-route to the country’s south and the Ferghana valley in October 2009.

This publication is made possible by the support of the American people through the United States Agency for International Development (USAID). The content is the responsibility of AECOM International Development, and does not necessarily reflect the views of USAID or the United States Government.

Table of Contents

1. EXECUTIVE SUMMARY

Achievements: October 2009 – September 2010 Challenges Expected Results for October 2010 - September 2011

2. COMPONENT I: TRADE LIBERALIZATION

2.1 KAZAKHSTAN WTO ACCESSION

2.2 KAZAKHSTAN TRADE POLICY

2.3 KYRGYZSTAN WTO COMPLIANCE

2.4 KYRGYZSTAN DOING BUSINESS REFORMS

2.5 TAJIKISTAN WTO ACCESSION

2.6 TAJIKISTAN DOING BUSINESS REFORMS

3. COMPONENT II: TRADE FACILITATION AND INTEGRATION

3.1 KAZAKHSTAN CUSTOMS CODE REVISION

3.2 KAZAKHSTAN CUSTOMS MODERNIZATION

3.3 KAZAKHSTAN CUSTOMS SINGLE WINDOW

3.4 KYRGYZSTAN CUSTOMS REFORMS

3.5 KYRGYZSTAN CUSTOMS SINGLE WINDOW

3.6 TAJIKISTAN CUSTOMS MODERNIZATION

3.7 TAJIKISTAN CUSTOMS SINGLE WINDOW

3.8 REGIONAL TRANSPORTATION REFORM

4. SUBPROJECTS IMPLEMENTED WITH EFCA

5. INFORMATION DISSEMINATION

5.1 GENERAL

5.2 PRESS CAFÉS

5.3 KYRGYZSTAN E-NEWSLETTER

5.4 SINGLE WINDOW INFORMATION CAMPAIGN

5.5 TAJIKISTAN WTO ACCESSION

6. PERFORMANCE MONITORING AND EVALUATION PLAN

6.1 SPREADSHEET (SEE ANNEX TO THIS SECTION)

7. MANAGEMENT AND ADMINISTRATION ISSUES

Acronyms

A ABBAT = Tajik Association of International Road Carriers ADB = Asian Development Bank AETR = (Accord Européen relatif au Transport Routier) European Agreement Concerning the

Work of Crews of Vehicles Engaged in International Road Transport

B BEI = Business Environment Improvement (USAID Project)

C CA = Central Asia CCARK = Code on Customs Activity of the Republic of Kazakhstan CCC = Kyrgyzstan Customs Consultative Council (see context) CCC = Kazakhstan Customs Control Committee (see context) CDP = Kazakhstan Customs Development Project COM = Kazakhstan Center for Operative Management COP = Chief of Party CTPD = Kazakhstan Center for Trade Policy Development CU = Customs Union of Russia, Kazakhstan and Belarus

D DB = Doing Business DB-TAB = Doing Business – Trading Across Borders DTCP = Kazakhstan Department of Tax and Customs Policy

E EG = Experts Group EFCA = Eurasia Foundation of Central Asia EU = European Union

F FEZ = Free Economic Zone FF = Freight Forwarder FIATA = (Fédération Internationale des Associations de Transitaires et Assimilés) International

Federation of Freight Forwarders Associations

G GATT = General Agreement on Tariffs and Trade GPA = Government Procurement Agreement GSP = General System of Preferences GTZ = (Gesellschaft für Technische Zusammenarbeit) German Society for Technical Cooperation

H HS = Harmonized System of Commodity Classification

I IBC = International Business Council IBM = Integrated Border Management IDEAS Center = International Trade, Development, Economic Governance, Advisory Services IFRS = International Financial Reporting Standards IPR = Intellectual Property Protection IRU = International Road Transport Union IT = Information Technology ITC = International Trade Center

K KAZASP = Kazakh Copyright Protection Association

L LPI = World Bank Logistics Performance Index LTTA = Long Term Technical Assistance

M MCI = Kazakhstan Ministry of Communication and Information MEDT = Kazakhstan Ministry of Economic Development and Trade (see context) MEDT = Tajikistan Ministry of Economic Development and Trade (see context) MER = Kyrgyzstan Ministry of Economic Regulation MinAgri = Kazakhstan Ministry of Agriculture MinFin = Kazakhstan Ministry of Finance MinHealth = Kazakhstan Ministry of Health MinIndustry = Kazakhstan Ministry of Industry MINT = Kazakhstan Ministry of Industry and New Technologies MIT = Kazakhstan Ministry of Industry and Trade MoF = Kyrgyzstan Ministry of Finance MoTC = Tajikistan Ministry of Transport and Communications

N NASMET = National Association of Small and Medium Enterprises of Tajikistan

O OSCE = Organization for Security and Co-operation in Europe

P PMEP = Performance Monitoring and Evaluation Plan PPP = Public-Private Partnerships PTB = (Physikalisch-Technische Bundesanstalt) German National Metrology Institute

Q QI = Quality Infrastructure

R RKC = Revised Kyoto Convention RTLC = Regional Trade Liberalization and Customs Project

S SAD = Single Administrative Document SCS = Kyrgyzstan State Customs Service SE = State Enterprise SLA = Service Level Agreement SME = Small and Medium Enterprises SPS = Sanitary and Phyto-sanitary SRS = Software Requirement Specifications SW = Single Window SWSE = Single Window State Enterprise

T TA = Technical Assistance TAFA = Trade and Accession Facilitation for Afghanistan (USAID project) TAB = Trading Across Borders (indicator) TBT = Technical Barriers to Trade TCN = Third Country National TIR = (Transport International Routier) International Road Transport TR = Technical Regulation

TRIPs = Trade-Related Aspects of Intellectual Property Rights TSG = The Services Group (now AECOM International Development)

V VAT = Value Added Tax

U UAIS = Unified Automated Information System UNECE = United Nations Economic Commission for Europe US = United States USA = United States of America USAID = United State Agency for International Development

W WB = World Bank WCO = World Customs Organization WG = Working Group WP = Working Party WTO = World Trade Organization

1. Executive Summary

The Regional Trade Liberalization and Customs Project (RTLC) helps bring the economies of Kazakhstan, Kyrgyzstan, and Tajikistan into conformity with international standards on international trade. The Project aims to decrease the costs of doing business across these countries’ borders by assisting governments to develop modern trade policies, reducing unnecessary regulation, improving the ability of customs administrations and other agencies involved in international trade to efficiently process transactions, improving transportation and logistics systems, and improving access to relevant information for the private sector.

The reforms that RTLC encourages and facilitates will lead to faster trade turnover, higher economic growth rates, lower corruption, poverty reduction and greater stability.

There were several significant achievements in the project countries during the third project year.

Achievements: October 2009 – September 2010

All project countries show significant improvements in logistics performance. The World Bank Logistics Performance Index (LPI) 2010 report, released in January 2010, showed positive gains for all three countries, particularly Kazakhstan. The LPI study is a global, comprehensive set of indicators that measure logistics efficiency, taking into account private sector performance as well as Customs, infrastructure and the regulatory environment. It is a key barometer of ease of trade across borders. Kazakhstan ranked 62nd overall out of 155 countries surveyed, moving up 71 positions since the previous LPI survey in 2007. Kyrgyzstan ranked 91st, moving up from the 103rd position, while Tajikistan ranked 131st, moving up from 146th position. Improvements were seen in the performance of customs and freight forwarders, including by those partners with whom RTLC has been providing training programs and technical assistance. Some of the data used in the report for Central Asia was actually collected by an RTLC research project, using World Bank methodology. These results were combined with those collected by the World Bank to compile the LPI scores for Central Asia.

The charts below illustrate the improvements in logistics performance for all three countries, as perceived by outside practitioners, from 2007 to 2010.

Kazakhstan - Logistics Performance 1

2007 2010

Efficiency of Arranging Shipments

Competitiveness of Logistics Services

Timeliness of Shipments

LPI Global Ranking 2007 2010 Kazakhstan 144th 62nd

Kyrgyzstan 103rd 91st

Tajikistan 146th 131st

Kyrgyzstan - Logistics Performance 1

Tajikistan - Logistics Performance 1

New leadership reinvigorates Kyrgyzstan’s Single Window project. The new Director of the Single Window State Enterprise (SWSE) Kylych Djakypov, selected and appointed at the request of Minister of Economic Regulation Umataliev, has brought renewed leadership, direction, and attitude to the project. SWSE, GTZ, and RTLC finalized the draft Software Requirement Specifications (SRS) document, which was reviewed by RTLC expert Chris Page at the request of the Single Window Working Group. After six months of procrastination, Customs finally signed the SRS agreement, along with the Ministry of Economic Regulation and SWSE. The SRS agreement specifies general requirements for the SW information system and defines the interactions of government agencies involved. This important step will allow the project to move forward on the software tender, equipment procurement, and training. RTLC also started the next step, a Service Level Agreement (SLA) that will define in detail the roles and responsibilities of the SWSE and the government agencies that interact with it.

Tajikistan streamlines procedures for customs declarations. Several superfluous documents required for customs clearance have been eliminated, which should improve Tajikistan’s ranking in the Doing Business 2011 report. One document required for import was eliminated, and two required for export. The project hopes to achieve further improvements throughout 2011.

Tajikistan is ready for its 5th WTO Working Party meeting. Tajikistan continued to make progress on its WTO accession process. With extensive assistance from RTLC, the Tajik Government answered and clarified all 165 questions on trade regulations and practices

2007 2010

Efficiency of Arranging Shipments

Competitiveness of Logistics Services

Timeliness of Shipments

2007 2010

Efficiency of Arranging Shipments

Competitiveness of Logistics Services

Timeliness of Shipments submitted by the EU and US. Tajikistan continued its efforts to bring the legal system of Tajikistan into compliance with WTO rules and disciplines, and approved a new action plan to accelerate the process, prepared by RTLC together with IDEAS Center and in cooperation with the Ministry of Economic Development and Trade of Tajikistan. The action plan lists all the legal documents that have to be changed and includes a list of issues to be resolved this year, as well as instructions and delegation of powers. As a mandatory legal act for all the ministries and agencies, the Action Plan is expediting the legal reforms necessary to achieve WTO compliance.

Tajikistan Customs automation projects moving forward. RTLC put forth a major effort to introduce a Unified Automated Information System (UAIS) in Tajikistan’s customs service. UAIS promises to provide efficient electronic processing of many standard customs functions and is a pre-requisite for the Single Window (SW) system. Basic functions of UAIS include risk analysis, customs declarations, and data processing. With RTLC’s technical assistance and oversight, the SRS was approved by Customs, allowing ADB financing of the system’s development to begin.

Guntis Stammers, RTLC expert on customs IT, was seated at Tajik Customs to manage the implementation of the system, with intermediate outcomes achieved in staff training, quality control, and startup of a Customs IT Helpdesk to support UAIS, SW, and other digitization efforts.

Challenges

Kazakhstan accedes to the Russia-led Customs Union, shelves new draft Customs Code.

The rapid and somewhat unpredictable process of forming the Customs Union led to the annulment of much of RTLC’s work on Kazakhstan’s customs law, and significantly slowed progress on WTO, Single Window, and other issues during the project year. The Belarus-Kazakhstan-Russia Customs Union was officially declared on January 1, 2010, but came into doubt several times before ratification in June. Kazakhstan won some key concessions on imports of used cars and maintaining its low-tariff 'simplified procedure’ regime, which is not consistent with international norms. Russia appeared to refocus its energy on joining the WTO. It was hoped that Russia’s initiative would push Kazakhstan to move ahead with its own WTO accession, which was not the case until late in the project year.

With accession to the CU, Kazakhstan’s government adopted a national Customs Code (the Code on Customs Activity of the Republic of Kazakhstan – CCARK) in line with that of the CU’s code. This development has led to the shelving of the revised national Customs Code for Kazakhstan, drafted with significant input from RTLC and compliant with the World Customs Organization’s Revised Kyoto Protocol. Though the RTLC-supported draft was superseded, several provisions originated in the draft were implemented in the CCARK; namely authorized economic operators, the ability to ship dismantled goods and parts thereof under a single code, the ability to use a single security instrument for all customs duty and tax payments within a given period, and the introduction of bail as a new way to secure payment of customs duties and taxes.

For the first time, fences line the borders between Kazakhstan and Kyrgyzstan. Erected during March-April 2010, the fences have reduced smuggling, but border closures at most border crossing points between the countries and new rules related to the Customs Union have reduced overall trade considerably.

Photo: RTLC Customs Expert Gulnara Sultanalieva

It should also be noted that significant capacity building of the team drafting the code was achieved through international expertise and materials provided by RTLC. While the political needs of the Customs Union limited reform, some of the provisions recommended by RTLC were eventually adopted into the CU code. RTLC maintains the hope that the evolving CU will integrate further reforms as its members move towards WTO accession in the coming months.

Kazakhstan restructures its government and assigns new partners to RTLC. On March 12, significant changes were made to the structure of the Government of Kazakhstan. RTLC has largely overcome the early challenges, as individual partners have changed buildings, responsibilities, supervisory bodies and leadership:

MIT renamed: The Ministry of Industry and Trade was renamed the Ministry of Industry and New Technologies (MINT).

MEDT established: Trade regulating issues were moved to the Ministry of Economic Development and Trade (MEDT). Former Vice Minister of Industry and Trade Aitzhanova was appointed Minister of Economic Development and Trade. Former MIT Vice-Minister Suleimenov will now address issues related to WTO and the Customs Union.

Entrepreneurship support and Doing Business issues will be under the responsibility of newly appointed Vice Minister Bishimbayev.

Budgeting moved: The budget planning responsibilities of MEDT were moved to the Ministry of Finance (MinFin) together with the Department of Tax and Customs Policy (DTCP).

Another major structural change in the government was in the area of information and communication. The Agency of Information and Communication was eliminated. A new Ministry of Communication and Information (MCI) was formed, which also took responsibilities for e-Government and e-Licensing.

Kyrgyzstan suffers through government overthrow, violence and instability. The fall of the Bakiev government in Kyrgyzstan in April 2010 had wide-ranging effects on the RTLC Project.

Some initiatives have stalled as a result. Some RTLC partners have left the government, while others changed portfolio. Violence in the south of the country in June took much of the attention of the government away from long-term projects and priorities throughout the spring and summer.

While the referendum of June 27 passed without major incident, the subsequent resignation of the interim government’s umbrella cabinet caused some further disruption in the execution of government functions. The majority of decisions were postponed until after the new Government is formed and the situation is completely stabilized. Elections to a reconstituted Parliament on October 10 will determine future policy and have a broad impact on the composition and priorities of RTLC’s partners.

Kyrgyzstan Customs remains an impediment to reform. Customs refused for over half a year to adopt the SW SRS agreement crucial for SW implementation, as it considered itself not ready to implement the related international standards and principles. Customs finally signed the agreement in the last week of September 2010, which should allow the SW project to move forward on the software tender, equipment procurement, and training. However, it is unclear whether Customs Chairman Kulmatov intends to implement the agreement fully. RTLC is also addressing some anti-competitive rules imposed by Customs that negatively affect traders:

RTLC, the Customs Consultative Council, and Ministry of Economic Regulation (MER) continue to try to eliminate certain rules giving Customs onerous control over warehouses, inter alia. While RTLC has provided significant support to the Chairman’s plans, in particular in completely redesigning Customs officials’ compensation, the pace of significant pro-trade reform of the service remains disappointing, and distrust of and from business is high.

Tajikistan’s Customs Automation project remains under-resourced by Customs. Customs delayed hiring staff for UAIS administration, and the current staff is not sufficient to fulfill all UAIS administration functions properly. RTLC is working to convince Customs to devote more resources to the Helpdesk, or to identify resources for this purpose from other donors.

Expected Results for October 2010 - September 2011

Kazakhstan Customs become more efficient with e-licensing interface. The implementation of an IT project to integrate the Center for Operative Management (COM) of Kazakhstan Customs with the State e-Licensing Database will reduce costs to traders by removing the necessity to present issued licenses and permits at border posts, as the customs officer at the border would have electronic access to them. The system will be a component of the eventual SW system.

Kazakhstan may return to WTO negotiations. Public pronouncements that the government will accelerate WTO accession efforts, including negotiations with several trade partners. RTLC will continue to provide assistance as requested, building the capacity of officials to understand and implement these commitments by providing expert reviews, training and informational seminars.

Kyrgyzstan’s Single Window systems procured, installed, and ready for rollout. RTLC experts took an active role in the development of SRS agreement, together with GTZ, ADB and newly appointed SWSE Director Djakypov. Now the SRS has been signed by all relevant partners, the SWSE will proceed with procurement of the necessary software and equipment and with capacity building of Customs officials to operate the system, with technical assistance from GTZ and RTLC. With instability and lack of government control in southern Kyrgyzstan, the SW may at first be limited to the north of the country.

Tajikistan completes its 5th round of WTO negotiations. The 5th WTO Working Party meeting will take place in November 2010. RTLC and Tajikistan expect positive outcomes of this round of negotiations, and perhaps even a 6th round will follow during the project period. By the end of project, RTLC will have helped set Tajikistan on a clear and short path to accession.

Customs Automation projects in Tajikistan implemented. RTLC and the Tajik Customs Service plan to complete full automation of customs operations in 2011 and create an effective IT Helpdesk to facilitate the UAIS system. These steps will have a significant positive impact on trade facilitation in Tajikistan, and leave the country prepared to implement a functioning SW system.

Pilot Export Partnerships project helps promising SME leaders open new export markets.

The flagship activity of RTLC’s cost extension for year four will empower a cadre of business leaders to access markets through an export partnership with synergistic companies. RTLC will provide training, advocacy assistance, networking, and technical assistance to develop the export potential of the competitively selected participants.

2. Component I: Trade Liberalization

2.1 Kazakhstan WTO Accession

2.1.1 General

The Customs Union (CU) has had a pervasive effect on Kazakhstan’s WTO accession, since Kazakhstan’s negotiating position must be developed in light of its new CU obligations, as well as those already negotiated with the WTO. Further progress on accession to the WTO will depend largely on the liberality and flexibility of the CU’s policies and structures.

After tabling its WTO accession negotiations while it acceded to the Customs Union, Kazakhstan restarted bilateral negotiations at the end of year three. Bilateral negotiations with the US took place on September 7-10, 2010, when the Presidents of the US and Kazakhstan once again expressed their commitment to intensify efforts on Kazakhstan’s accession to the WTO.

RTLC’s role in the accession process is limited to providing technical assistance on specific questions in response to requests from government bodies. During year three, the majority of requests for assistance on trade policy appeared to stem from the need to prepare for intra-CU negotiations, rather than WTO negotiations. In order to form the CU, the three countries were obliged to form common positions on many WTO-related issues.

During year three, RTLC provided the following specific assistance on trade policy in Kazakhstan:

A 3-day seminar on WTO members’ non-tariff regulation policies lead by RTLC WTO experts Umida Khaknazar and Edil Kalashev, and EU project consultant Marius Bordalba. Fifteen experts from MEDT, Customs, MinHealth, MinAgri, MinFin, MinIndustry, and the Committee on Technical Regulation were trained on these policy options and requirements.

RTLC short-term expert Richard Ellis led a seminar on risk management in food safety. The effort increased the capacity of the MinHealth and MinAgri on effective, non-excessive inspections of businesses.

A presentation on the Role of Trade Participation for Business in support of the UN conference on Public-Private Partnerships (PPP) and Single Window (SW) in Almaty.

While all of RTLC’s assistance contributed to Kazakhstan’s ability to move ahead with its WTO accession, and thus contributed to the USG’s policy goal of encouraging all countries to join the WTO and apply internationally agreed trading disciplines, in the absence of a political commitment to pursue the accession, these activities would only move Kazakhstan incrementally towards international trading norms. It remains possible that Kazakhstan will intensify efforts to join the WTO, particularly considering Russia’s publicly stated intention to do so. RTLC will continue to seek opportunities to assist Kazakhstan in this process. One area of significant ongoing trade policy cooperation is intellectual property rights reform.

Attention in Kazakhstan turns back to WTO accession after accession to Customs Union.

Extensive assistance to Kazakhstan to continue its improvements in IPR enforcement.

Information on using GSP, coping with new CU rules, helps Kyrgyz businesses adapt.

Significant strides made in reforming Tajikistan’s trade laws and technical regulations.

2.1.2 Intellectual Property Rights Reform

During the reporting period, RTLC rendered significant support to Government on intellectual property rights issues, as part of its WTO accession assistance.

Assistance to the Judicial System A large project aimed at improving the capacity of judges to deal with IPR issues and creating improved practices is underway. It consists of several stages: an overview of IPR court decisions in various regions of the country, the development of recommendations for legislative reforms, a conference to discuss these findings and develop further recommendations, and the publication of a handbook on IPR issues for judges using the results of the project. If sufficient information and precedent exists, the project will develop a Supreme Court Resolution on IPR. RTLC Expert Kaudyrov and the Supreme Court team are reviewing some 300 court cases at this time. The conference to discuss the results of the review is set for November 26, 2010.

IPR Border Measures On June 7-9, 2010, RTLC organized a three-day conference in Astana entitled “Customs Measures on the Protection of IPR.” Participants included representatives from Customs, MEDT, CTPD, and the local business community. RTLC also invited government officials dealing with IPR protection from Kyrgyzstan and Tajikistan, EU experts from Estonian and Bulgarian customs, IPR right holders operating in Kazakhstan (G-Star, Epson, Swiss Watch Federation, Henco, Pfizer, Puma, Colgate-Palmolive), SNB-React (a Dutch counterfeit-fighting organization) and UNECE representatives. Presentations were given on countervailing measures for border officials, counterfeit indicators, and protecting agencies. RTLC received very positive feedback from the participants and a request from UNECE to conduct a similar event for a larger audience in June 2011.

Legislative Assistance RTLC is providing ongoing assistance in analyzing and commenting on proposed legislation for optical disc licensing, and the pre-exclusivity period with respect to patents for medicine. These are key weaknesses in IPR enforcement in Kazakhstan, though the situation has been improving over the past few years.

Economic Impact Analysis Through its partner EFCA, RTLC initiated a grant-funded study of the implications of illegal import, production, and use of intellectual property on Kazakhstan’s economy. Three applicants were chosen to complete the first project stage by developing the research methodology: the Kazakh Copyright Protection Association (KAZASP), the Kazakh Law University and the law firm Alexander and Partners. In early October 2010, the sides will determine whether a consortium should be formed to complete the study successfully.

2.2 Kazakhstan Trade Policy

2.2.1 Doing Business Reforms

The President’s goal of raising Kazakhstan’s ranking in the World Bank’s Doing Business report into the top 50 increased government attention on the Trading Across Borders (TAB) indicator.

Kazakhstan was ranked 182 out of 183 in the 2008 report. However, the Prime Minister’s position that no changes should be made that might be inconsistent with the new Customs Union Code and other CU requirements has effectively suspended reform work in this area.

Nevertheless, RTLC continued its efforts in this area, addressing all requests for assistance from MEDT. RTLC provided recommendations on how Kazakhstan can improve its standing in the World Bank’s DB-TAB indicator and prepared additions to the Plan for Reforms on Doing Business, forwarding those recommendations to government agents for approval. As referenced above, these proposed changes remain suspended.

Kazakhstan

Export documents Export license Inspection report Packing list Tax certificate Terminal handling receipts Bill of lading Certificate of conformity Certificate of origin Commercial invoice Customs export declaration Currency exchange permit Transaction permit

Import documents Transit documents Customs import declaration Inspection report Packing list Tax certificate Technical/Health certificate Terminal handling receipts Bill of lading Cargo release order Certificate of conformity Certificate of origin Commercial invoice Currency exchange permit Transaction permit

Time needed for Export

8 days LESS!

Time needed for Import

9 days LESS!

Kyrgyzstan

Export documents Transit document Bill of lading Certificate of origin Commercial invoice Contract Customs export declaration Terminal handling receipt Certificate of conformity Inspection report Packing list Tax certificate Technical standard Cargo release order

Import documents Transit documents Terminal handling receipts Bill of lading Certificate of origin Commercial invoice Customs import declaration Certificate of conformity Cargo release order Contract Inspection report Packing list Tax certificate Technical standard

Time needed for Export

1 day LESS!

Time needed for Import

3 days LESS!

Tajikistan

Export documents Bill of lading Sale purchase contract Certificate of origin Commercial invoice

CMR

Customs export declaration Confirmation of payment Packing list Technical/Health certificate Terminal handling receipts Cargo release order Conclusion of TJ universal commodity exchange Foreign exchange permit

Import documents Bill of lading Certificate of origin Commercial invoice Customs import declaration Inspection report Packing list Tax certificate Technical/Health certificate Terminal handling receipts Transaction permit Foreign exchange permit

On April 7, 2010, RTLC organized a round table on “Ways to Improve Trading Across Borders in 2010” and attracted 70 business representatives. The event was widely covered in the local media, and gave businesses the opportunity to advocate for reforms before government officials.

ABOLISHED!

ABOLISHED!

ABOLISHED!

ABOLISHED!

ABOLISHED!

ABOLISHED!

RTLC experts met several times with World Bank experts responsible for Doing Business. On previous occasions, RTLC had questioned the findings of these experts in relation to the TAB indicator, as it seems the World Bank staff may be counting some documents that are not actually obligatory to complete a foreign trade. RTLC submitted a detailed explanatory note on the issue.

The World Bank representative promised to review the results again. It remains unclear whether this will affect Kazakhstan’s TAB rating in the 2011 report. At this time, RTLC does not envisage a significant increase in the TAB rating for Kazakhstan in 2011 and is careful in predicting any improvement of the ranking.

At the end of the reporting period, the obligation to work on the TAB indicator was delegated to the division of Non-tariff regulation of the Department of International Trade Policy of MEDT, and a specific person was assigned the task of improving Kazakhstan’s rating. This reform had been suggested many times by RTLC, and it bodes well for improvements in Kazakhstan’s TAB performance in project year four.

2.2.2 Trade Regulations

General System of Preferences RTLC experts in Kazakhstan conducted an analysis of local legislation that should be taken into account by Kazakh businessmen planning to use GSP. The analysis drew on the report produced through an EFCA subgrant in Kyrgyzstan on the General System of Preferences.

At the request of the then-Ministry of Industry and Trade, RTLC prepared a series of seminars on GSP for Kazakhstan’s businessmen. RTLC WTO Expert Edil Kalashev conducted seminars in Astana and in five regions of Kazakhstan in cooperation with regional Chambers of Commerce.

Over one hundred local businessmen attended the seminars, where they learned how to gain duty-free access to the American market. RTLC distributed the EFCA grant funded electronic guidebook for using the GSP with provisions specific to Kazakhstan at these events.

Non-Tariff Barriers to Trade A new law that is expected to facilitate the use of electronic documents and thus improve the environment for implementing the Single Window entered into force on August 6, 2010. RTLC legal expert Omarov provided technical assistance to the Ministry of Economic Development and Trade’s entrepreneurship department and the Majilis to develop the Law on e-Government, which obliges state agencies to deliver electronic services to users in a timely fashion.

Technical Regulation The Committee on Technical Regulation and Metrology requested that RTLC assist in refining the Technical Regulation and Quality Infrastructure Establishment Program for 2010-2014, and other areas of technical regulation. RTLC WTO expert Jovan Jekic reviewed the Law on Technical Regulation, the Law on Accreditation in the sphere of Conformity Assessment, and the Law on the Integrity of Measurement for their compliance with the WTO Technical Barriers to Trade (TBT) Agreement. Jekic characterized these laws as partially compliant with WTO agreements, and provided comments and suggestions for improvement of some key issues. The Committee provided very positive reviews of Jekic’s analysis, which will be used in considering further refinements for WTO compliance during year four.

2.3 Kyrgyzstan WTO Compliance

2.3.1 Intellectual Property Rights Compliance

RTLC assistance to Kyrgyzstan with respect to intellectual property rights is mainly related to compliance and full implementation of the WTO TRIPs Agreement. In the previous reporting period, RTLC conducted two international conferences on IPR enforcement and provided assistance for the preparation of a Legislative Action Plan and in drafting the necessary amendments to the law. The proposed amendments would strengthen sanctions in case of infringement as required by WTO, restore criminal penalties in case of willful infringement in commercial scale plagiarism and unlawful access to computer information, and would increase administrative fines. Changes should be made to the Criminal, Criminal Procedure, Administrative, Civil, and Customs Codes and other substantive laws.

However, the overthrow of the Bakiev government in Kyrgyzstan has had a negative effect on RTLC initiatives in integrated border management training and IPR enforcement that have stalled as a result. Nevertheless, RTLC was able to involve Kyrgyz Customs in its border measures training in Astana in June 2010, bringing three officers to Kazakhstan for the training.

2.3.2 Technical Regulations Reform

Amendments to the Law on the Basics of Technical Regulations (TRs) were signed by President Bakiev in November 2009. The new amendments provide for the possibility of adopting TRs by decision of the Government, introduce the concept of “presumption of conformity”, and prolong the transition period for an additional two years, among other changes.

The Government is planning to develop 52 regulations by the end of 2010 but MER lacks expertise for most of this work. If successful, Kyrgyzstan would have in place a workable and efficient system for ensuring that products produced in or imported to Kyrgyzstan meet international safety standards. RTLC recognizes the need for TRs and plans to continue providing support in implementing this plan.

RTLC expert Victor Efremov assisted in preparation of the draft TRs on Food Safety, Bottled Mineral Water Safety, Drinking Water Safety, Safety of Meat Products, Electromagnetic Compatibility, Electrical Safety, Food Hygiene, Safety of Food Additives, Safety of Food Products and Production Processes, Bakery Products Safety, Safety of Fresh Fruits, and Bread and Pasta Products Safety. These TRs have been approved by the Expert Commission and submitted for review by the relevant ministries and agencies. Adoption of these newly drafted regulations is on hold pending the seating of a new Parliament and Government, in the wake of the overthrow of the Bakiev government in April 2010.

Victor Efremov left RTLC at the end of project year three, but he will continue his TRs work with the USAID BEI project in Kyrgyzstan. RTLC will identify a local consultant to assist with technical regulation issues on an as-needed basis.

RTLC staff met with Senior Advisor Shyam Kumar Gujadhur from the International Trade Center (ITC), a WTO technical assistance organization, to discuss steps to improve the Sanitary and Phyto-sanitary (SPS) notifications systems of the Government of Kyrgyzstan in July 2010. ITC and RTLC have similar goals in this area, and the sides agreed to share resources and work together to improve MER’s capacity in this regard starting after the parliamentary elections.

2.3.3 Government Procurement Agreement

In acceding to WTO in 1998, Kyrgyzstan accepted an obligation to begin negotiations on accession to the WTO Government Procurement Agreement (GPA) within five years. Twelve years later, Kyrgyzstan has not acceded. RTLC has established relations with the Government Procurement Methodology Department of the Ministry of Finance, which was assigned the responsibility to prepare the country to accede to the GPA agreement at the beginning of 2010.

The government’s reassignment of procurement responsibility to MoF should facilitate Kyrgyzstan’s accession to GPA and provide for more transparent e-procurement. However, the Ministry lacks the expertise to fulfill its functions or draft a replacement law on government procurement. RTLC has provided assistance to MoF in this transition:

RTLC agreed to develop a joint work plan on GPA and e-procurement with technical experts from the Ministry.

RTLC responded to a government request for support on reforming the government procurement system and identified two local consultants with extensive experience in this area. The consultants developed a draft law on government procurement, which is compatible with the requirements of the WTO GPA.

Further work in support of government procurement reform depends on political will and certain decisions as to how the system should be organized. Further technical support is likely to be undertaken by the World Bank with RTLC assistance as it relates to WTO accession and international trade norms.

2.4 Kyrgyzstan Doing Business Reforms

RTLC played a central role in Kyrgyzstan’s dramatic improvement in its Doing Business – Trading Across Borders (DB-TAB) rating announced in 2009, rising from 181st to 154th place. The improvement was related directly to the elimination of five documents required for both imports and exports during 2009. RTLC continues its efforts to reduce these required documents from 13

– the highest number of any country in the world in 2007 – towards the world standard of four.

In year three, RTLC staff drafted proposals to MER and CCC on eliminating the Certificate of Transport, which is necessary for customs clearance and is not a typical requirement. This document contributes to Kyrgyzstan’s low ranking on the DB-TAB indicator. Removing this document seems to have the support of these bodies; however, considering the political environment, Government has taken no action to adopt such resolutions during this transition phase. RTLC hopes to make progress on this issue during year four.

Methodology for DB-TAB This year, RTLC experts conducted a study on the most used seaport for Kyrgyzstan’s foreign trade, which found that Riga, Latvia, was preferred for both import and export. This conflicts with

RTLC WTO Expert Edil Kalashev explains the potential benefit of GPA accession to a roundtable on WTO membership in Bishkek on December 19, 2009.

Photo: RTLC RCOM Myles Smith the World Bank's Trading Across Borders indicator assumption that Kyrgyzstan's traders prefer Shanghai. The Ministry of Economic Regulation and RTLC provided the results to the World Bank in Washington for consideration. According to MER, the World Bank’s decision on whether or not to accept this study is expected in November 2010. If the World Bank accepts the findings, this may result in a correction in Kyrgyzstan's TAB ranking.

With the World Bank Doing Business report due out in early November 2010, RTLC will continue to work with MER and have further discussions with the World Bank team to accept RTLC’s suggestions to refine its methodology to the Kyrgyz context.

2.5 Tajikistan WTO Accession

2.5.1 General

Tajikistan continued to make progress towards its WTO accession, completing all the necessary prerequisites for the 5th WTO Working Party meeting. With extensive assistance from RTLC, the Government submitted all the necessary replies and clarifications to the EU and US questions (165 in total). In addition, two key accession documents – questionnaires on Import Licensing Procedures and Customs Valuation – have been finalized and approved. All the documents, along with the translations of the laws and regulations requested by WTO members (11 documents) were submitted to the WTO Secretariat. The Government appeared to be increasingly serious about completing the WTO accession.

Thanks to the support of RTLC, Tajikistan is duly prepared for the 5th Working Party meeting, which is now tentatively scheduled for November 2010. With a continued vigorous effort, Tajikistan could complete its accession by 2012.

2.5.2 Legal Framework Reform

One of the serious issues slowing Tajikistan’s WTO accession is the time-consuming legal procedure required to either introduce a new law or amend an existing one. The time needed for the procedure, which includes several rounds of circulation of the draft among many ministries and agencies, takes six to 12 months at best.

Considering the circumstances and the need to expedite the WTO accession process, RTLC, supported by Swiss Cooperation Office/IDEAS, developed a detailed action plan, which lists all legal documents that have to be changed. As a mandatory legal act for all the ministries and agencies, adopted by the government, the Action Plan is expected to advance the legal reforms necessary to achieve WTO compliance.

In its effort to help the Government bring the legal system of Tajikistan into compliance with WTO rules and disciplines, RTLC prepared a number of draft amendments to existing legislation necessary for WTO compliance, most notably the following:

Amendments to the Civil Code for compliance with TRIPS enforcement provisions;

Amendments to the Penal Code for compliance with TRIPS enforcement provisions;

Amendments to the draft Veterinary Law for compliance with the SPS Agreement.

In addition, a model Law on Protection of Undisclosed Information, which addresses the issue regulated by TRIPS Article 39, as well as a draft model Law on Foreign Trade, were prepared and presented to MEDT. The latter, if adopted, would regulate foreign trade related matters and trade remedies in compliance with relevant WTO Agreements, most notably GATT, Antidumping, Countervailing and Safeguard Agreements.

Upon request from MEDT, RTLC reviewed a draft Law on (Internal) Trade, prepared by an MEDT working group, and a draft Law on Permits, developed by Goskominvest and IFC. The first will have to be redrafted as it is not compliant with WTO rules and disciplines and lacks key WTO principles, including the national principle and transparency. The latter law was found to be good in principle, but has to be partially amended to comply with the WTO Licensing Agreement and international best practices. Once adopted and applied, the law is expected to improve Tajikistan’s ranking in the Doing Business report, though probably not before the 2012 report is released after the end of project year four.

RTLC has also overcome significant resistance from Tajik Customs and Tajikstandard to fulfilling their own requirements on questionnaires and technical regulations. In particular, Customs erroneously claims that the customs legislation of Tajikistan was WTO compliant and did not need any amendments and/or changes.

2.5.3 Technical Barriers to Trade Reform

Technical regulations in Tajikistan are still largely unreformed from the Soviet era, and impose onerous requirements on importers. By rationalizing the system and reducing the role of Tajikstandard, the new system will reduce opportunities for corruption by minimizing superfluous interactions with government agencies while introducing more predictable trade procedures.

On February 12, 2010, Government approved an Action Plan and a Strategy of the National System of Quality Infrastructure Development, which provides a plan for introducing serious legal and institutional reforms in the area of standardization, certification, accreditation, metrology and state inspection for the period of 2010-2012. It also indicates that the institutional reforms aimed to be completed by 2015 will provide for a harmonization of the technical regulation system with WTO rules and best international practices.

RTLC led an experts group consisting of Tajikstandard and GTZ employees to develop draft documents that met international standards, and provided a smooth transition to modern rules and standards systems in Tajikistan. At times, Tajikstandard became a more constructive partner in the reform process. At their request, RTLC developed a Draft Law on Standardization which meets international rules. An important step was to change the status of standards in Tajikistan from mandatory to voluntary. Government should sign the draft into law in the winter of 2010-11.

The new law will be one of the cornerstones, together with the Law on Technical Regulation and the Law on Conformity Assessment, of a reformed system of standardization and technical regulation in Tajikistan. These three laws will regulate the area of technical barriers to trade (TBT) in a manner consistent with WTO requirements, which in turn will result in a smoother accession to the WTO.

As in Kyrgyzstan, RTLC is coordinating its activities related to establishing SPS and TBT Enquiry and Notification Points at appropriate government agencies and ministries with the International Trade Centre. By the end of year three, the TBT Enquiry Point has been established within Tajikstandart and two of its employees assigned to positions in the Enquiry Point. It is expected that all the enquiry and notification points will be up and running by the end of 2010, which will also assist in Tajikistan’s overall WTO accession process.

2.6 Tajikistan Doing Business Reforms

RTLC experts cooperated with the Investment Council and the World Bank Doing Business Team members in developing an action plan for improving Tajikistan's DB ranking for 2011-12. In cooperation with government partners, the Action Plan was finalized in late April and was formally issued as a government decree.

The Project also assisted the World Bank DB team to review the recently revised legislation, which eliminated documents required for import/export. The review process has shown that the number of documents needed for import was reduced by one (from 10 to 9), whereas the number of documents needed for export by two (from 10 to 8). This reduction should improve Tajikistan’s ranking in the DB 2011 Report. However, RTLC expects only minor improvement in the overall TAB ranking, as improvements in timeliness for deliveries will lag behind any reduction in required documents. More significant improvements should be apparent in the following Doing Business Report for 2012.

RTLC Customs Expert Sholpan Dossymkhanova recommends reforms for improving Tajikistan’s Doing Business

– Trading Across Borders ranking.

Tajikistan took up the advice – the country eliminated three import/export documents during project year three, which should improve its score on the upcoming Doing Business 2011 report.

Photo: RTLC DCOP Tapio Naula

3. Component II: Trade Facilitation and Integration

3.1 Kazakhstan Customs Code Revision

The new Kazakh Code, drafted with RTLC support in 2009, was a significant improvement on the previous one with major implications for trade facilitation. However, it was tabled after accession to the Customs Union became imminent. A new draft of the National Code developed by the Ministry of Finance during the reporting period provides for the implementation of the Customs Union Customs Code, as well as those provisions that are left to be regulated nationally.

As before, RTLC was asked to provide two RTLC experts to help draft the text and provide recommendations for amendments. Sholpan Dossymkhanova and Irina Ansarova worked up to 80% of their time on this document for about three months. RTLC expert Chris Page reviewed four resolutions (CU Customs Valuation Agreement, Protocol on Consistent Use of Valuation Rules, Resolution on Valuation Controls, and Resolution on Declaration of Customs Value) created as part of the Customs Union project.

Some of the provisions suggested by RTLC for the tabled Customs Code were used as the basis for drafting the new National Code. Those preserved provisions included authorized economic operators and the use of the contract of guarantee as an additional means of guaranteeing payment of duties and taxes. Also, some of the existing norms of the original Customs Code for informing traders on regulations were preserved in the new version at RTLC’s suggestion.

However, some of the work of RTLC experts was lost in the process of Kazakhstan’s shift in priorities from adopting international best practice to harmonizing its regulations with those of Russia.

RTLC staff participated in the Majilis hearings on the new Customs Code in the spring. RTLC experts clarified and provided comments on the draft to parliamentary staff and members in order to prepare final amendments. Substantial comments related to: simplification of the requirements for customs carriers and representatives; provisions for the application of the guarantee mechanism for customs duty and tax payments, clarification and limitation of the grounds for post-customs audit.

The new Customs Union Customs Code came into effect on July 1, 2010. Many provisions will be delayed in implementation, and many more remain unclear, including currency controls between member countries, export controls, and exceptions to the Common External Tariff. RTLC has identified twenty problem areas to the conduct of business that should be corrected, and provided this information to the Customs Control Committee (CCC) in July 2010 for consideration for adjustments.

It…