Attachment_J._14_Trade_Workshop_Constraints_Snapshot.docx

Key Trade Constraints for Central and South Asia USAID Trade Workshop April 7-8, 2015

Kazakhstan

· This contributes to the overall cost of trade

2. Transparency and inadequate private sector*

· Methods about how this data is collected is dubious; need better data collection methods

· There is a perceived risk that businesses are not prepared for WTO accession

3. EEU Harmonization*

· Rules created in Moscow for EEU add to the cost of product production standards because they are focused on the Russian market, not Kazak economic opportunities. There is a perceived risk that WTO accession will put competitive pressure on unprepared companies

· EEU policies are growth prohibitive. It is difficult to adjust standards of product, which are geared to Russia and not other markets

4. Transport and Logistics*

* Numbers 2, 3, 4 are tied for 2nd place

· Rules that inhibit trucks from one country to pass into another country; the registration process; the cost of doing trade. Trade facilitation methods need enhanced (proper software and procedures)

· Logistics adds 70% of the product costs versus 7% in places such as the US; lack of transparency; locals need R&D and access to finance, etc.

· There needs to be better analysis to prioritize the infrastructure built. The benefits do not always match the cost requirement

Kyrgyzstan

· WTO rules, regulations, requirements are not made public

· Lack of compliance with international safety standards

· The CU and WTO need to be harmonized and the government is requesting assistance.

· There is a lack of information on the CU, legal reforms needed for accession, and unknown implications on WTO

· When they join the WTO there are special rates negotiated at a lower percentage. When Russia joined the WTO after KR, they negotiated rates at a higher rate than KR, so we don’t know how that will be affected when they join the CU. Rates expected to go up once KR joins CU; who will cover that “damage.” There is a lot of grid-lock in renegotiating the rates

· The shadow economy is estimated to be 50%. There are three types of businesses: 1) the informal; 2) the patent regime (semi-formal); and 3) formal.

· Since there is a significant time and cost requirement to become a formal business, most businesses remain semi-formal

· There is a lack of institutional memory within government institutions.

· Lack of transparency

· Need for good documentation for traders

Tajikistan

· Border management practices are not professionalized

· Local businesses do not want to get too large or they will be taken over.

· There is low capacity within the government

· Enhanced customs border coordination is needed, especially between Tajikistan, Pakistan, and Afghanistan

· There are different trade regimes with its neighbors

· Poorly implemented transit agreement with neighbors

· Uzbekistan imposes trade barriers that are in violation of the International Road Transport (TIR) rules

· Remittances make up approximately 50% pf GDP

4. Logistics and transport*

*Numbers 3 and 4 are tied and number 4 is related to number 2

· The single window is not implemented

· Logistics costs are prohibitive

· Security and transit through Afghanistan is a major issue

Uzbekistan

4. Heavily regulated trade*

*Numbers 1 and 2 are tied and 3 and 4 are tied. Number 4 is related to number 1

· Trade preference system has not been adopted

· Quota system has not been adopted

· Anti-dumping duties have not been set

· Exports require 100% prepayment

Turkmenistan

· Centralized, government controlled economy

· Economic diversification is a government priority but there is limited capacity to develop the SME sector

· Over-reliance on natural resources (ie, gas)

· Private sector production is oriented for internal consumption

· Rent seeking behavior

· When statistics are available, they are perceived to be relatively accurate

4. Visa difficulties*

*Numbers 3 and 4 are tied

· It is difficult to obtain a visa to enter Turkmenistan, which inhibits access and international trade

Central Asia

· 90% of all cargo is transported by railway

· Trucks need special registration to cross the borders (there is a different regime) and is less efficient than rail

· Transportation conventions and agreements are not signed and/or implemented

· Deficient trading platforms

5. Capacity building for government and private sector*

Number 3 is related to 5

· Inefficient government structures

· There is a perceived risk that businesses are not prepared for CU, EEU, or WTO

Afghanistan

· Corruption

· Not a WTO member

· Significant non-tariff barriers

· Trucks registered in Tajikistan cannot move through Afghanistan and vice versa. Some people register trucks in both countries and they switch plates and documents

· Railway cars from Afghanistan to Central Asia need to be offloaded by trucks and then reloaded

· There are no air flights between Afghanistan and Central Asia.

· Capital costs are high

4. Weak value chains*

Numbers 3 and 4 are tied

· Value chains are weak

· Afghanistan produces similar goods as in Central Asia

Pakistan

· Needs to sign and leverage current trade agreements better

· Flawed trade agreements

· No direct flights with neighboring countries

· Lack of information

· India trade is not connected through Pakistan