Kazakhstan and Eurasian economic integration: benefits, costs and prospects Nargis Kassenova KIMEP University

Promised benefits O More trade (market of 170 m people and better opportunities for doing business in Russia and Belorussia) O More attractive for companies and investments because of lighter taxation and better “doing business” indices O Access to Russian domestic tariffs for transit of goods O Preparation for WTO O No other alternative – it will be easier to withstand crises together

Kazakhstan-Russia trade Trade turnover $12.4b$17.9b$22.7b$23.4b (17.9%) Import$9b (31.3%) $11b (39.4%) $16.2 (41.4%) $17.6b (36%) Export$3.5 (8%) $4.8b (9%) $7.5 (8%) $5.8b (7%) Trade turnover in 2008 – $20b (before crisis)

O Trade creation or trade diversion? O Ad valorem equivalent tariff rate increased from 6.45 % to 12.1% O Trade regime less liberal

O Kazakhstan - EU trade: O Turnover in 2013: O $54.7 b (41%) O EU imports – $9 b (share fell from 29% in 2009 to 18.6% in 2013) O Exports to EU – $45.6b (53.9%) in 2013

O Kazakhstan – China trade: O Turnover in 2013: O $22.7 b (17%) O Imports: $8.3 b (17.1%) against $3.5 b (12.6%) O Exports: $14.3 b (17.1%)

O Problems experienced by Kazakh producers: O Certification O Subsidies O Larger capitalization of Russian companies O Some success stories: automobile industry, textile, computer equipment (?!) O Black market

O Access to Russian domestic tariffs: O Promised unification of transport tariffs didn’t take place, instead Kazakh transport companies as of 1 January 2014 pay international tariffs O According to the Treaty, common market for gas, oil and petroleum products by 2025

O Preparation for WTO O Delay with Kazakhstan’s accession, confusion O Withstanding crises together O Crisis spillover effect

O Other benefits: O Human factor: more comfortable for ethnically Russian population in the country O Good relations with Russia

Other discontents O Weak negotiators on the Kazakh side O Imbalances in decision-making O Differences in goals: economic vs. political O Differences in desired pace and scope of integration

O Prices on consumer goods went up O (Food prices on the five-year period grew 70%) O Spillovers: currency devaluation (11 February – 19% tenge devaluation)

Prospects O Birds view: Can it be a success-in-the making? O Eurasian integration seems to be in line with global trends (in terms of growing regionalism in trade), but goes too deep and too fast O Political integration (delegating part of the country’s sovereignty) goes against the trend of continuing nation-building

O There is no new set of attractive values that would create the basis for a new union O Russia is no longer our “window to the world” O Current Russian approach diverges from Kazakhstan’s desired course O Wait out and try to maintain its multivector foreign policy following the aspiration to integrate into the global economy and community