Annex II. 1. Trading Across Borders Indicators
The set of charts below shows the relative position of Kazakhstan compared to other economies in transition for various components of the Ease of Trading Across Borders indicator.
Berg, A., and A. Krueger, 2003, “Trade, Growth and Poverty: A Selective Survey,” IMF Working Paper 03/30, International Monetary Fund, Washington DC.
Elborgh-Woytek, K., 2003, “Of Openness and Distance: Trade Developments in the Commonwealth of Independent States, 1993-2002,” IMF Working Paper 03/207, International Monetary Fund, Washington DC.
Felipe, J., and U. Kumar, 2010, “The Role of Trade Facilitation in Central Asia: A Gravity Model,” Levy Economics Institute Working Paper No. 628.
Havrylyshyn, O., 2010, “Trade and Institutional Environment: the International Experience and a Proposed Agenda of Measures for CAREC Countries,” Reference Document, 13th TPCC Meeting, Central Asian Regional Economic Cooperation (CAREC) Program.
Hoekman, B., and A. Nicita, 2008, “Trade Policy, Trade Costs, and Developing Country Trade,” World Bank Policy Research Working Paper 4797.
IMF, 2010, “Do Financial Crises Have Lasting Effects on Trade?,” World Economic Outlook, October 2010, International Monetary Fund, Washington DC.
Jandosov, O., and L. Sabyrova, 2011, “Indicative Tariff Protection Level in Kazakhstan: Before and After the Customs Union,” RAKURS Center for Economic Analysis Discussion Paper No. 5.3.
Prepared by Dmitriy Rozhkov (MCD).
The Heritage foundation index of trade freedom (Table II.1) is calculated using a combination of measures on trade-weighted average tariff rates and the existence of non-trade barriers. The latter include quantity and price restrictions; regulatory restrictions such as licensing; investment restrictions, including exchange and other financial controls; customs restrictions; and direct government intervention, such as subsidies and other aid. The overall index of economic freedom combines indices of business, trade, fiscal, monetary, investment, financial, labor freedoms, as well as indices of government spending, property rights and corruption.
Among the Caucasus and Central Asia (CCA) countries, the Kyrgyz Republic became a member of the WTO in 1998, Georgia in 2000, and Armenia in 2003. All other CCA countries except Turkmenistan are in the process of negotiating the membership, albeit with the different degree of intensity.
Another notable outlier is Azerbaijan, also a large energy producer and exporter, When Kazakhstan and Azerbaijan are excluded, intra-CCA trade accounts for about 15 percent of total exports and imports of the region, still a relatively low number, but significantly above that for Kazakhstan.
A single economic space is intended to provide for the free movement of all factors of production and set the basis for coordination of macroeconomic policies across member states. The authorities of Kazakhstan and Russia envisage the creation of several supra-national bodies by 2013-14, although the details have not been announced yet.
Kazakhstan’s share of total customs duties collected in the customs union has been set at 7.3 percent. Russia’s share is 88 percent, Belarus’s is 4.7 percent.
According to WTO, the average tariff rate in Russia is currently around 10½ percent. Jandosov and Sabyrova (2011) estimate a significant increase in Kazakhstan’s indicative aggregate level of tariff protection after entering the customs union.
These are simple (not trade-weighted) averages of tariff rates with countries outside of the customs union.
Prior to July 2010, the simplified regime was based on a single customs fee (including VAT) of €0.6 per 1 kg for the light industry goods and 13 percent of value for fruits and vegetables. This was replaced by a general regime with ad valorem tariff rates of 10 to 20 percent, but not less than € 1-4 per kg depending on the product (Kaminski and Mironova, 2011).
The negotiations are mainly focused on the conditions of access to Kazakhstan’s markets for goods and services and on agricultural issues. The authorities expect to conclude bilateral negotiations with most partners by end-2011.
Havrylyshyn (2010) summarizes existing literature on the importance of institutional impediments to trade, and assesses the relative position of CAREC countries with respect to the quality of institutions.