Attachment_J._12_USAID_Regional_Trade_Workshop.pdf

8 April 2015 Almaty, Kazakhstan

USAID Regional Trade Workshop

Summary of findings

1. Trade profiles in brief

- Kazakhstan

- Kyrgyzstan

- Tajikistan

- Uzbekistan

- Turkmenistan

- Afghanistan

- Pakistan

2. Comparative analysis of trade policies

3. Summary of key findings

CONTENTS

KAZAKHSTAN: COUNTRY AT A GLANCE

Upper middle-income country (WB) with a per capita GDP USD 13 000 in 2013, yet below the OECD average of USD 16 240 Purchasing power parity

Natural resource rich: ranks 12th in the world in terms of oil reserves and 19th for natural gas reserves, possesses significant fossil fuel reserves and other minerals

Vast territory and agricultural potential: the ninth largest country in the world but with the lowest population densities in the world; a large agricultural sector featuring livestock and grain

Logistics potential: links the large and fast growing markets of China and South Asia with Russia and Western Europe by road, rail and ports (the Caspian Sea)

01 January 2010: Russia, Belarus and Kazakhstan function under the Customs Union (CU)

29 May 2014: Eurasian Economic Union (EEU) is established, enacted on January 2015 (Armenia - 02 January 2015 and Kyrgyzstan - 08 May 2015)

Accelerated WTO accession process: coming soon

Domestic trade: deficient trading platforms and overall trade infrastructure, infant E-commerce and commodities exchanges, low trade transparency

KAZAKHSTAN: TRADE OVERVIEW

KAZAKHSTAN: TRADE TURNOVER

Export Import Trade turnover

USD bln

Strengths

• Sound policy strategies, including trade

• Strategic location between Europe and Asia to develop transit potential;

• Membership in the Customs Union and Eurasian Economic Union

• Openness for increased trade liberalization (pursuing WTO membership)

Weaknesses

• Landlocked geographic position and underdeveloped transport infrastructure;

• Dependence on food imports from CIS and CU;

• Minerals-oriented exports;

• Weak institutional capacity and corruption;

• Inefficient customs procedures and lack of trade monitoring system

KAZAKHSTAN: TRADE ANALYSIS

KAZAKHSTAN: KEY TRADE BARRIERS

Institutional weaknesses/corruption

Overdependence on oil wealth/non-diversified export

Poor logistics/low transparency

Non-Member to WTO/moderate liberalization

Inconsistent EEU/WTO legislation undermines KZ production

Inadequate private sector consultation

Trade legislation in regards to the Customs Union/EEU legislation harmonization

WTO post-accession assistance: bringing existing legislation and practices in compliance with the WTO requirements; alignment of CU/EEU with WTO

Educating business on CU/EEU and WTO membership implications: capacity building campaigns

Economic diversification and fostering non-extractive trade

Non-tariff barriers to trade: sanitary and phytosanitary measures and technical barriers to trade, other trade obstacles

Developing value chains in agriculture and manufacturing

KAZAKHSTAN: POTENTIAL TA AREAS

KYRGYZSTAN: COUNTRY AT A GLANCE

Double land-locked country in CAR with agricultural (declining); tourism (unrealized); and hydropower (since 2014 net electricity importer) potential

Economy depends on gold exports and remittances from Kyrgyz migrant workers for foreign exchange

WTO Member since 1998 and Eurasian Economic Union Member from May 2015

Major re-exporting country: re-exports account for estimated 20% of GDP

20 December 1998: a full-fledged WTO Member with tariffs average less than 5% with low tariff protection overall, over 20% of tariff lines are bound to zero

08 May 2014: committed to join the Eurasian Economic Union (EEU)

Trade policy is in transition to fulfill EEU Customs Union: CU will have negative implications with respect to WTO membership and for Kyrgyz producers and consumers

KYRGYZSTAN: TRADE OVERVIEW

KYRGYZSTAN: TRADE TURNOVER

• China $2.1 b

• Russia $1.6 b

• Kazakhstan $673 m

• USA $244 m

• Turkey $218 m

• Japan $187 m

• Germany $164 m

• Korea $148 m

• Belarus $142 m

• Ukraine $132 m

• Refined petroleum $1.0 b

• Cars $273 m

• Pile fabric $239 m

• Delivery trucks $208 m

• Medications $190 m

• Knit Woman suits $170 m

• Synthetic Fabric $128 m

• Wheat $ 91 m

• Gasoline $ 83 m

• Chocolate $ 77 m

$1.68 billion Exports

KYRGYZSTAN: TRADE TURNOVER

$6.43 billion Imports

• China $2.1 b

• Russia $1.6 b

• Kazakhstan $673 m

• USA $244 m

• Turkey $218 m

• Japan $187 m

• Germany $164 m

• Korea $148 m

• Belarus $142 m

• Ukraine $132 m

• Refined petroleum $1.0 b

• Cars $273 m

• Pile fabric $239 m

• Delivery trucks $208 m

• Medications $190 m

• Knit Woman suits $170 m

• Synthetic Fabric $128 m

• Wheat $ 91 m

• Gasoline $ 83 m

• Chocolate $ 77 m

• Location as transit country and strong re-export;

• Relatively diversified economy;

• Strong services sector;

• Open trade regime (WTO Member)

• Good potential to develop agriculture, hydropower and tourism

Weaknesses

• Political instability and corruption;

• Landlocked geographic position and underdeveloped transport infrastructure;

• Minerals-oriented exports;

• Weak institutional capacity and corruption;

• Lack of information on CU and CU vs. WTO potential conflicts;

• Inconsistencies with international standards

KYRGYZSTAN: TRADE ANALYSIS

KYRGYZSTAN: KEY TRADE BARRIERS

Institutional weaknesses/corruption

Shadow economy

Poor logistics/low transparency

Unfavorable business climate/lack of

FDI

Lack of information on trade/EEU membership implications

Lack of marketing for value chains

(e.g. textiles)

Trade-related information available on Internet

Release and clearance enhancements

- Pre-arrival processing

- Electronic payment

- Separate release from payment of duties

- Risk Management and Post Audit

- Expedited shipments and perishable goods

- Authorized economic operators

Border agency cooperation

KYRGYZSTAN: POTENTIAL TA AREAS

TAJIKISTAN: COUNTRY AT A GLANCE

Land-locked economy

Poor (transport) infrastructure (multimodal weaknesses) and lack of competition in trucking

Not harmonized customs procedures with neighboring countries (Afghanistan)

TAJIKISTAN: TRADE OVERVIEW

WTO Member since 02 March 2013 and considering the Eurasian Economic Union Customs Union membership

CAREC Cross-border Transport Agreement Corridor 5 signatory

Pursues accession to the Afghan-Pakistan Transit Trade Agreement; the WTO Trade Facilitation Agreement and WTO compliance; and PPP on trade-related issues

TAJIKISTAN: TRADE TURNOVER

• Neighboring with both large capital-production markets;

• Membership in the WTO/liberal trade/access to DSM and global trade policy;

• Hydropower, agricultural, and extractive potential;

Weaknesses

• Landlocked geographic position and underdeveloped transport infrastructure/transit potential;

• No access to China through Kyrgyzstan;

• Technical and non-tariff barriers imposed by Uzbekistan and violation of TIR rules;

• Weak institutional capacity and corruption;

• Inefficient customs procedures/ zero-tolerance to South Asia consignments

TAJIKISTAN: TRADE ANALYSIS

TAJIKISTAN: KEY TRADE BARRIERS

Institutional weaknesses/corruption

Complicated relations with neighbors

Poor logistics/customs

Complicated dialogue building/language barriers

Political security

Deficient human capital/labor migration

Enhance coordinated border management practices of the border agencies at the BCP; support the implementation of the Single Window concept

Economic analysis to support the decision making process with respect to joining the Customs Union

Contribute to the reform of a robust and sustainable National Trade Facilitation Committee to facilitate TFA implementation

Support private trade and transit sector to build capacity for linkage with South Asia

WTO post-accession assistance

TAJIKISTAN: POTENTIAL TA AREAS

UZBEKISTAN: COUNTRY AT A GLANCE

Robust GDP growth since mid-2000sy

Major extractive resources: gold, uranium and gas

Other key economic development elements: trade policy remains restrictive; agriculture remains a key economic sector; classified among the world’s net creditors

UZBEKISTAN: TRADE OVERVIEW

Sales turnover of goods (except cotton and lint) for export in foreign currency is charged of zero rate of value added tax;

export of excisable goods is not charged by excise tax

No tariff preferences system, quota system; anti-dumping and countervailing duties have not been set so far

Licensing of export of goods (works, services) was canceled since November 1, 1997 with the exception of specific goods

UZBEKISTAN: TRADE TURNOVER

2008 2009 2010 2011 2012

Russia

Korea

China

Kazakhstan

Germany

Ukrain

Turkmenistan

USA

Turkey

Brazil

Japan

Latvia

India

Import destination of Uzbekistan (2012) (official statistics)

UZBEKISTAN: TRADE TURNOVER

Export destination of Uzbekistan (2012) (official statistics)

2008 2009 2010 2011 2012

Russia

Kazakhstan

China

Afganistan

Turkey

Ukrain

Iran

Turkmenistan

France

UAE

Kirgizstan

Tadjikistan

Korea

• Agricultural and extractive potential;

• Transit potential;

Weaknesses

• Landlocked geographic position;

• Underdeveloped transport infrastructure/transit potential;

• Weak institutional capacity and corruption;

UZBEKISTAN: TRADE ANALYSIS

UZBEKISTAN: KEY TRADE BARRIERS

Isolation

Currency regime

State-regulated economy

Poor transportation / logistics

No information

Continued support under REC Project on fostering B2B partnerships, fruits and vegetables export promotion, capacity building in ISO standards, WB DB ranking improvement, study tours/conferences/workshops

Continued support under the ATAR Project on transport and logistics facilitation

UZBEKISTAN: POTENTIAL TA AREAS

TURKMENISTAN: COUNTRY AT A GLANCE

Area: 491,210 sq. km.

Population: 5 million (est.)

2014 GDP: $44 billion 2014 Foreign Trade: $36.5 billion (exports $19.8 bln; imports $16.7 bln)

The sixth largest natural gas reserve holder in the world and was the second largest dry natural gas producer in Eurasia, behind Russia, in 2012

TURKMENISTAN: TRADE OVERVIEW

Pursuing new export and transit routes for natural gas and electricity

Export diversification (chemical industry; fertilizers; textiles;

gas processing; agro-production)

Consideration of WTO membership

TURKMENISTAN: TRADE TURNOVER

Imports $bln (2013) Total: $16 bln

TURKMENISTAN: TRADE TURNOVER

Exports $bln (2013) Total: $18.8 bln

• Stable political situation;

• Abundant natural resources;

• Relatively large territory;

• Access to the Caspian Sea;

• Developed transportation infrastructure

Weaknesses

• Bureaucracy and corruption;

• Poor business climate/Dutch disease;

• Scarce access to finance;

• Lack of transparency/contract enforcement;

• Internal orientation of local production

TURKMENISTAN: TRADE ANALYSIS

TURKMENISTAN: KEY TRADE BARRIERS

Lack of government capacity

Isolation

State-regulated economy

Visa issues Lack of competitive value chains

No information

TURKMENISTAN: POTENTIAL TA AREAS

Assistance to the Institute of Trade Turnover

Work with Chamber of Commerce and Industry to promote Turkmen exports

Facilitation of SME exports through the Union of Industrialists and Entrepreneurs of Turkmenistan

Build capacity of international marketing/ Development of export consulting service

International oil, gas exploration and trade frameworks/ WTO and international trade capacity building

Capacity building in Energy Trade (PPA negotiations; modern tele-mechanic systems; energy regulations, energy curricula)

AFGHANISTAN: COUNTRY AT A GLANCE

AFGHANISTAN: TRADE OVERVIEW

Trade and transit hub: regional integration with CAR and SA (in the context of SAFTA and SATIS) and securing alternative routes

Consider WTO accession: regardless of accession - ensure access to the largest potential markets – Pakistan, India and Europe; strengthen trade analysis capacity

Increase export through adding value and improving competitiveness: cost reduction (energy and reduction in corruption) and conformity with international safety requirements and quality standards

Modernize trade related procedures for customs and affiliate agencies

AFGHANISTAN: TRADE TURNOVER

Country 2012 2013 2014 Import

Trend

Export

Trend Import Export Import Export Import Export

CAR 1,070.3 9.8 1,231.3 26.4 1,159.3 39.5 8% 304%

China 1,003.2 9.0 912.0 12.9 1,100.2 11.3 10% 25%

Germany 329 1 68 2 37 5 -89% 536%

India 212.8 82.1 159.3 77.8 143.2 127.9 -33% 56%

Iran 1,021 14 980 31 923 22 -10% 53%

Pakistan 1,431.4 123.3 1,365.4 122.7 1,229.8 152.4 -14% 24%

Russia 454.1 7.7 249.4 4.6 188.3 6.7 -59% -14%

UAE 194.8 11.4 164.1 24.1 160.4 27.9 -18% 144%

USA 131 3 84 1 98 1 -25% -55%

World 7,256 289 6,452 347 6,405 464 -12% 60%

• Land bridge between Central and South Asia;

• Rich in natural resources;

• High quality agricultural produce;

• Medical herbs/licorice;

• Textiles

Weaknesses

• Security – financial and physical;

• Endemic corruption, particularly customs;

• Ineffective judicial system;

• High cost of trading;

• Commanding Heights capital investments;

• Smuggling to and from Afghanistan

AFGHANISTAN: TRADE ANALYSIS

AFGHANISTAN: KEY TRADE BARRIERS

Security

Weak government capacity/ corruption

(customs)

High trading costs Lack of investments/ access to finance Smuggling

Ineffective judicial system

AFGHANISTAN: POTENTIAL TA AREAS

WTO commitments and post-accession support/WTO TFA

Regional trade agreements which are currently being negotiated

The Convention on International Transport of Goods Under Cover of TIR Carnets (TIR Convention)

Customs modernization in line with World Customs Organization and WTO- TFA/Single stop at border crossings with neighboring countries

Single stop at border crossings with neighboring countries

HACCP and Global Good Agricultural Practices

Modernization of laboratories and qualification for international accreditation

PAKISTAN: COUNTRY AT A GLANCE

Pakistan connects three vital regions - South Asia, Central Asia and West Asia;

A potential regional trade hub – emerging junction for multiple corridors;

A number of regional market access initiatives and transit facilitation agreements exist

The CARs offer a huge trade potential as a market of 64.97 million people;

One of the least integrated regions in the world

PAKISTAN: TRADE OVERVIEW

Political will, prioritization of regional trade and trade liberalization

Vision 2025 – Regional Connectivity a Growth Pillar;

FBR/Customs Reform Roadmap – EDI, Single Window;

MOC Wagah and Torkham Master Plans – ADB, WB assistance needed;

Establishment of a Land Port Authority to strengthen regional trade

PAKISTAN: TRADE TURNOVER

• Trade hub/transit potential

• Trade-pro political will and support;

• Promising strategies;

• Emphasis on regional trade;

• Efforts to liberalize trade;

Weaknesses

• Distorted trade regime;

• Inefficient trade facilitation;

• Poor trade and transit infrastructure;

• Limited GoP technical capacity;

• Essential domestic reforms not in place;

• Lack of export products and markets diversification

PAKISTAN: TRADE ANALYSIS

PAKISTAN: KEY TRADE BARRIERS

Lack of government capacity

Restricted trade/deficient trade facilitation

Non-diversified export

Deficient domestic reforms

Security concerns/language barriers

Lack/poor trade infrastructure/logistics

PAKISTAN: POTENTIAL TA AREAS

Improve compliance with international conventions and global standards

Improve harmonization of trade and customs procedures

Modernization of BCPs – EDI; Single business window operation

Technical assistance to better leverage PTA/FTAs

Facilitate knowledge sharing between traders and business associations

Improvements in cold chain logistics and transport

COMPARATIVE ANALYSIS OF TRADE POLICIES

• Virtually all countries rank first on this indicator

Weak government/institutional capacity & corruption

• All countries Lack/poor trade infrastructure/logistics/customs

• Kazakhstan

• Turkmenistan

• Pakistan (non-diversified export)

Overreliance on natural resources / non-diversified exports

• Afghanistan

• Tajikistan

• Pakistan

Security concerns

• Turkmenistan

• Uzbekistan Isolation

COMPARATIVE ANALYSIS OF TRADE POLICIES (2)

• Kazakhstan

• Kyrgyzstan

• Tajikistan

Legislative inconsistencies/lack of EEU/WTO harmonization

• Uzbekistan

• Tajikistan (language as well)

• Afghanistan (language)

Complicated relations/dialogue with neighbors/language barriers

• Turkmenistan

• Kyrgyzstan

• Uzbekistan

Strong state regulation / suppressed business /FDI lack

• Turkmenistan

• Kyrgyzstan (lack of marketing) Lack of competitive value chains

• Afghanistan (investments)

• Uzbekistan (information)

• Kyrgyzstan (information on EEU)

Lack of investments / Lack of information

USAID REGIONAL TRADE WORKSHOP: SUMMARY OF FINDINGS

THANK YOU!