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Kazakhstan's participation in the Customs Union

Wednesday, July 6, 2011 - 11:04

From January 1, 2010 Kazakhstan, Russia and Belarus announced the launch of the Customs Union (CU) of the three states, and from July 1 this integration association started working in full mode. The parties abolished customs barriers, which existed in mutual trade before, and kept the barriers only in trade with third countries.
Despite the huge debates within the country about the economic viability of this solution, it is worth noting the significance of the political significance of this step. The implementation of the Eurasian initiatives of Kazakhstan within EurAsEC manifested as a rather abbreviated one, both in the spatial and qualitative dimensions. However, this integration project demonstrates the choice of Kazakhstan for the integration with Russia at first. This choice is of strategic importance for the positioning of Kazakhstan not only in the region, but throughout the former Soviet Union.
From now on Kazakhstan's accession to the Customs Union and the adoption of the Customs Code will have a huge impact on the economic cooperation of member countries of the Union. It seems that in these conditions, the process of achieving a balance in the functioning of national economies will be quite long and complex. This is linked to the differences in national economic legislation, to the match of the export range of countries participating in the CU, and to the lack of mechanisms and practice of economic integration at the micro level within the Union.
According to the firm view of economists, Kazakhstan's membership in the Customs Union will inevitably affect the process of country’s accession into the World Trade Organization (WTO). It's no secret that the process of accession to the WTO is more a political matter now rather than a result of the readiness of the economy of the country to participate in the organization. Despite the fact that the idea of joining three states together was rejected, now the authorities of the CU members say about an individual, but one-time entry into the WTO. They name even probable timing of entry - 2012. It is hard to judge how feasible it is, taking into account bureaucratic formalities and instability of the behavior of the Belarusian side.
As for Russia, it is no secret that the establishment of Customs Union, and subsequently the Common Economic Space (CES), is a grave political importance. On the basis of the mechanisms and the achievements of the EU in the economic integration, Russia seems to be trying to create economic union dependent on it in the former Soviet Union. In general, it is worth noting that this process is actually running and, in case of an appropriate and consistent approach of Astana, the Customs Union will bring clear dividends to its participants, including Kazakhstan.
However, despite the political importance of the entry in this integration association, the questions of the viability and the effectiveness of cooperation within the CU are not clear yet. Striking examples of this were the conflicts between Russia and Belarus that shook the new association during the past year. First, there was the "oil scandal" between Minsk and Moscow, which resulted in the quick statements of some media that the Union existed for less than ten days. Then the wine scandals, when it was found out that the cargos of alcohol were detained at the border because of the fact that the procedure of getting the licenses changed. There are a lot of problems and scandals, and these issues are solved very slowly, and often such situations are politically motivated.
In addition, since the political significance of the CU for all of its participants is extremely large, then the likelihood is high that many of the economic gains could be lost or jeopardized for the political projects. From this point of view, for example, the actively discussing joining of Kyrgyzstan to the Customs Union can be fatal for the weak emerging mechanisms of economic cooperation. On the one hand, this is connected with the fact that Kyrgyzstan, in contrast to the CU members, is an active member of the WTO. Taking into consideration the fact that WTO rules are very different from the contractual and legal conditions of the Customs Union, especially as for the imports from third countries, the accession of Kyrgyzstan to the CU in practice is unlikely to be possible before the present members of the Union don’t enter the WTO. In addition, domestic political and economic development of Kyrgyzstan after the events of April 2010 is rather unstable, so the accession of Kyrgyzstan to the CU attracts serious risks for the whole Union and for the economies of member countries.
On the other hand, the increased interest in the development of the CU is displayed by other post-Soviet countries such as Tajikistan and Armenia. It is not excluded that Russia while pursuing economic integration, will force the involvement of new members to the CU, which will certainly affect the quality of the whole mechanism of the international organization.
Also, we consider it to be very important that recently in Russia we see the significant increase of the factor of xenophobia, there is a sharp increase in ethnic conflicts and intolerance of immigrants from Central Asia and Caucasus. The problems of the department of the North Caucasus is increasingly discussed in the community, as well as the tightening of the immigration laws connected with the working people, that are coming to Russia, including those who come from the Central Asian region.
All this causes several questions, firstly, about the possibility of the Russian Federation to become the leader of the integration processes in the post-Soviet space in the growing trends of disintegration within the country. And, secondly, there are concerns about how effectively will be the economic integration within the Customs Union at the micro level (i.e. between ordinary businesses and in their interactions with customers), if the population of Russia is now becoming more aggressive toward the people of "non-Slavic" ethnic.
After entering the Customs Union and the increase of economic integration between Kazakhstan and Russia, there is a vacuum of objective and science-based information about the processes, taking place in Russia, in terms of the interests of Kazakhstan. The business community and the population of Kazakhstan have no clear understanding of the opportunities offered after becoming a member of the CU, as well as there is no understanding of the risks that are taking place during the cooperation with Russian businessmen.
Moreover, taking into consideration the significance of the impact of the information space of Russia in Kazakhstan, many complex and contradictory processes that are going on in Russia, are seen from the Russian point of view, which of course distorts the perception and makes it impossible to build bilateral relations, especially at medium and low level which would be based on the interests and needs of Kazakhstan.
According to this, is it appropriate to stimulate the creation of an independent research organization specializing in the study of Russia, as well as the creation of a number of interactive and informational sites that provide qualitative, efficient and versatile information that allows you to overcome the myths and stereotypes that exist in public opinion of both countries.

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