Chapter 6. Trade policy and the impact of WTO entry

In 2015, after a 19-year long negotiation process, Kazakhstan joined the World Trade Organisation (WTO). The event has marked a milestone in the country’s trade reform process and cemented the trade liberalisation under way. Still, to help reduce high trade costs faced by firms and overcome the geographical disadvantage related to the country’s landlocked position, further reforms are necessary, in particular in the area of trade facilitation and reducing regulatory barriers to trade. Closer economic integration via deep free trade agreements (FTAs) as well as committed domestic reform and investment in infrastructure will play an important role in this process.


Kazakhstan’s trade policy is another key policy area that influences its ability to attract foreign investors. Trade policy has a direct incidence on countries’ investment climates by affecting the relative prices of firms’ inputs and final products sold domestically and in foreign markets. This trend has accentuated even more with the spread of global value chains, where different stages of production are scattered across borders, and rely on effective trade links and cross-border coordination. Recognising the importance of an open trade policy for a conducive business climate, many countries undertook extensive trade-related policy reforms, including through reductions of import tariffs, offering import duty exemptions to certain firms, modernising their border control systems, negotiating bilateral and regional trade agreements, or otherwise facilitating trade.

Kazakhstan has also undertaken a series of important trade policy reforms since early 1990s. For example, the average level of import tariffs were lowered (from 9.5% in 1996 to 2.6% in 2004), and some investors benefitted from full exemptions from import duty payments (e.g. those operating in special economic zones and having signed investment contracts with the state). Certain restrictions on market access of foreign services operators were also reduced, even though the progress has been slower in this regard. Finally, in 2015, the country concluded its accession to the World Trade Organisation (WTO) (see Box 6.1), which marks an important step in Kazakhstan’s trade reform process with implications on the overall business climate. The following section describes the reforms required by the country’s WTO entry and their implications as well as highlights other trade-related reforms required to improve the investment climate.

Box 6.1. Overview of the Kazakhstan’s accession process to the World Trade Organisation (WTO)

The Government of Kazakhstan applied for accession to the WTO on 29 January 1996. The negotiations have lasted for nearly 20 years, culminating in the formal signature of the terms of Kazakhstan’s entry on 27 July 2015 in Geneva, Switzerland. Kazakhstan ratified the WTO Accession Protocol on 12 October 2015, and has officially become the 162nd member of the WTO on 30 November 2015.1 Certain of Kazakhstan’s WTO commitments came into entry at the time of its entry, while others will be implemented within a specified period of time.

Kazakhstan’s WTO accession package comprises of three elements:

  • Goods Schedule, summarizing the country’s commitments in relation to goods

  • Services Schedule, outlining the list of specific commitments relating to the services sectors

  • Report of the WTO Working Party, summarizing other specific obligations that Kazakhstan committed to during the negotiation process.

Besides these three documents, by the time of its entry, Kazakhstan is also subject to the entire legal acquis of the WTO, to which it committed to abide to (negotiated transition periods and other exceptions notwithstanding). The compliance of Kazakhstan with the terms and conditions of its entry is subject to several monitoring and enforcement mechanisms. The most important one is the WTO Dispute Settlement Mechanism (DSM) – a system whereby one or more WTO members can submit a complaint against another WTO member’s policies in case of its alleged breach of WTO rules. The process resembles a regular court procedure, whereby it is states that play the role of plaintiffs and defendants. The process usually involves consultations among the affected governments as well as an investigation by the appointed experts. Once a ruling is reached, and upheld by the Appellate Body in case of an appeal, it has a binding character, and its implementation is monitored by the WTO Dispute Settlement Body.2 In addition, the WTO Secretariat undertakes periodic reviews of countries’ trade policies and countries are required to notify certain measures covered by the relevant WTO agreements that can be discussed in the relevant WTO committees.

There are currently 22 countries undergoing the accession process, among whom Azerbaijan, Belarus and Uzbekistan. Russia joined the WTO in 2012, following a similarly long negotiation process as Kazakhstan.

Source: WTO (2015a), WTO (2015b), WTO (2015c).

Further opening to international trade and investment: Kazakhstan’s WTO entry

Cumulatively, WTO entry was estimated to increase Kazakhstan’s GDP by 3.7% in the medium- and 9.7% in the long run (with heterogeneity across economic sectors).3 The opening of services sectors to FDI was predicted to have by far the largest impact on the Kazakh economy (over two thirds of total gains) (Figure 6.1). It is discussed first. While the impact of the tariff reform is predicted to be small, the positive effect of common WTO rules on the stability and predictability of Kazakhstan’s tariff regime can be important (i.e. tariff bindings, customs valuation rules, etc.), and is discussed in this section as well. In some other areas, further reforms, going far beyond the country’s WTO current commitments, will be required to help meaningfully reduce trade costs faced by firms. This applies, among others to trade facilitation and other reforms that aim to reduce at-the-border and behind-the-border barriers to trade, be it through changes to domestic regulatory process and closer co‐operation with trading partners. Finally, investment in physical infrastructure for trade (i.e. road, railroads, etc.), including through greater participation of private sector infrastructure, will also play an important role.

Figure 6.1. Estimated impact of WTO reforms on Kazakhstan’s GDP (in the medium run)

Source: Authors elaboration based on calculations in Jensen and Tarr (2007).

Reforms in services sectors and other reforms with impact on investment

As mentioned above, pre-accession studies predicted that, among all the WTO-related reforms, the opening of services sectors would have the largest impact on country’s economic welfare (accounting for two thirds of total gains or 2.7% of GDP in the medium run, see Figure 6.1). Kazakhstan has indeed made specific commitments in ten services sectors, including 116 sub-sectors, in its Schedule of Commitments under the WTO General Agreement on Trade in Services (GATS) (WTO, 2016c). The country also implemented a number of reforms liberalising its FDI regime throughout the 19 year-long time WTO accession period during which the terms and conditions of its entry were negotiated. Therefore, many reforms had been undertaken before the country acceded to WTO as well as in 2015 and early 2016 in order to ensure full compliance with the terms of its entry.

Figure 6.2 illustrates the impact of WTO reforms on Kazakhstan’s FDI regime, in 2016 and 2020, by calculating the likely effect of the implementation of WTO commitments on the country’s score on the OECD FDI Regulatory Restrictiveness Index. As can be seen, WTO commitments will help remove restrictions to FDI in some sectors Kazakhstan. For example, in telecommunications, the country committed to removing the maximum foreign equity limit in fixed-line telecommunications (of 49%), which had previously contributed to the Kazakhstan’s elevated score on the FDI Index (Figure 6.2), within 2.5 years from its accession. Similarly, in the case of financial services, the commitment to allow branches of foreign-owned banks by 2020 will have a further liberalising effect.

Figure 6.2. FDI Regulatory Restrictiveness Index in Kazakhstan by sector after the WTO entry, 2015, 2016 and 2020

Source: Authors’ elaboration based on WTO (2015a; 2015c and 2015c) and the OECD FDI Restrictiveness Index.

Kazakhstan has also made horizontal commitments that will impact the degree of its openness in all services sectors. (See Table 6.1 below and Annex 6.A1 for a summary of the country’s WTO commitments in this area.) This applies, among others, to the country’s commitments relating to its local content policies (in mining and more broadly) and rules on hiring of foreign staff. For example, the requirement of local content in goods applied in the subsurface sector was removed altogether, and the share of foreign executives, managers and specialists that can be hired as intra-corporate transferees by firms is not subject to the national foreign labour quota (see Table 6.1). In addition, by 2020, the economic needs test (ENT) will no longer apply to foreign managers and specialists hired as intra-corporate transferees. As a result of these changes, the average FDI Index score of Kazakhstan would fall from 0.139 in 2015 to 0.074 (i.e. around the OECD average) by 2020 (Figure 6.2). Still, the commitments relating to local content and hiring of foreign staff are subject to several transition periods and exceptions (Table 6.1), which means that firms may not immediately perceive the results. For example, exceptions exist in case of local content requirements applied in the subsurface sector (up to 2021), the automotive sector (up to 2018) and in special economic zones (SEZs) (up to 2017), and purchases by state-owned firms.4 In the area of hiring foreign staff, also several conditions and phase-out periods apply.5 In addition, as also noted in Chapter 2, the government will need to ensure that the administrative procedures in this area do not serve as a de facto barrier to hiring foreign personnel, impeding firms’ ability to hire talent and compete. As discussed in the next section, the country has made some commitments relating to regulatory transparency in services sectors in which it made specific GATS commitments to ensure that licensing requirements and other administrative procedures do not pose a barrier to entry were FDI restrictions were removed.

Table 6.1. Kazakhstan’s WTO commitments in services sectors

Policy aspect

WTO commitment


Changes already implemented

Horizontal commitments

Foreign personnel

Changes related to entry and temporary stay of business visitors and intra-corporate transferees (ICT), e.g. annual quota on foreign staff does not apply to ICTs (instead total number of foreign managers and specialists hired as ICTs cannot exceed 50% and no restrictions apply on executives); business visitors can enter visa-free for the period of 90 days; entry of foreign staff as ICT shall be permitted for 3 years, subject to certain conditions, and with a possibility of renewal.

By WTO entry: national quotas on foreign labour shall not apply to ICTs.

By 2020: An economic needs test (ENT) shall not apply for hiring ICTs as managers and specialists after a five-year transition period.

Law 482-V “On Employment of 6 April 2016 and Government Resolution No. 45 of 13 January 2012, last amended on 31 March 2016

Government procurement

Request the status of an "observer" in the WTO Agreement on Government Procurement (GPA) and start of GPA membership negotiations

Start GPA accession negotiations (by tabling an Appendix 1 offer) within four years from WTO entry


Local content

Compliance of all laws, regulations and other measures within the scope of the TRIMS with the TRIMS Agreement and other WTO provisions.

In subsurface and automotive sectors transition periods apply;6 as do in the case of preferences granted under the free warehouse regime and special economic zones, SEZs7 (see next column)

With respect to local content in government procurement, rules will apply once the country joins the GPA- see above.

In case procurement of services by investors in Subsurface, additional commitments apply,8 including max. local content in services and applicable tender procedures

Compliance with WTO rules – by the time of WTO entry, except for:

  • contracts in the Subsurface sector (1 January 2021)

  • contracts in the automotive sector (1 July 2018)

  • preferences granted under the free warehouse regime and SEZs (1 January 2017)

In addition, upon WTO entry, investors in Subsurface cannot be required to procure more than 50% of services from juridical persons of Kazakhstan. Also, when awarding subcontracts through a tender process, an investor shall, for period of six years, consider a putative 20% reduction in price to any bid submitted by a juridical person of Kazakhstan where at least 75% of subcontractors’ qualified employees are citizens of Kazakhstan (50% after six years).

In the Subsurface sector, all local content requirements in goods have been removed and those in services and works cannot exceed 50% (Law No. 365-V of 27 October 2015)

Access to land

No commitment on foreign ownership of land for farming, agricultural production or forestry purposes. Bound at “none” for land used for construction sites or already under industrial or other buildings.

At the time of WTO entry

No change

(The planned amendments to the Land Code, extending the maximum land rental period for foreigners, have been revoked in light of public protests.)


Foreign equity limit to be eliminated 2.5 years after the WTO accession (except for JSC "Kazakhtelecom").

Kazakhstan agreed to apply the WTO Basic Telecommunications Agreement

By mid-2018

Restriction already lifted: as of 1 January 2016, the max. foreign equity limit in fixed-line telecoms has been removed, and replaced by a screening and approval mechanism instead (i.e. in order to directly or indirectly own, use, dispose of or manage an aggregate of more than 49% of the voting shares in a legal entity in the sector, foreign investors must obtain a special government approval). Article 23, Law on National Security (N°527-IV), 6 January 2012, as amended.


Limited commitments (mostly unbound and with exceptions for an incorporation requirement whenever bound)


As of 1 January 2016 the 49% maximum foreign equity limit in air transport has been lifted (even though no WTO commitment exists). However, at the time of drafting, the government has been working on a draft law reinstituting the limitation. Given that there is no WTO commitment, the limit can be reinstituted.

Financial services

Foreign banks will be allowed to establish branches 5 years after accession.

Foreign insurance companies will be allowed to establish branches 5 years after accession.

By 2020

Restrictions lifted as of 2020: Law No. 422-V9 of 24 November 2015 already stipulates that, starting from 16 December 2020, non-resident banks, (re)insurance organisations, and companies, providing brokerage services will be allowed to open a branch, subject to terms and conditions established by national legislation.


Cross-border travel agency and tour operator services to be allowed 2 years after accession

By 2017


* In case of investment contracts signed prior to 1 January 2015, all WTO-inconsistent measures in the Subsurface and automotive sector need to be phased out by 1 January 2021 and 1 July 2018, respectively, or by the time of the expiry of the contact (whichever comes sooner). For contracts signed after 1 January 2015, no TRIMs-inconsistent measures can be included or maintained upon the country’s WTO accession.

Source: Authors’ elaboration based on WTO (2015a; 2015b; 2015c) and information provided by the Government of Kazakhstan.

Finally, in several relatively closed sectors Kazakhstan has made little or no commitments. For example, in the case of air transport, one of the most protected sectors in Kazakhstan as measured by the FDI Index, no commitment regarding the lifting of the maximum foreign equity limit was made.10 While the government still unilaterally lifted the limit in early 2016, it is free to reinstate the limit in the future, given the lack of the WTO commitment; and the plans to do so appear to already exist (see Chapter 2). Such uncertainty is likely to de facto deter any investments above the 49% threshold. Last but not least, no commitments have been undertaken in regards to the maximum rental time of land for agricultural and forestry purposes by foreigners (currently of 10 years). As can be seen in Figure 6.2, the restriction contributes to the country’s relatively high score on the FDI Index. The maximum rental time of such land by foreigners in Kazakhstan is much shorter than in OECD countries, and may be holding down Kazakhstan’s potential in agricultural production (OECD, 2013). Given high sensitivity of reforms in this area, illustrated by recent protests (see Chapter 7), further liberalisation appears difficult in the short term, and would require the government to engage in further communication and dialogue with the population on the reform’s likely consequences – both real and perceived.

In summary, while changes to horizontal or sector-specific restrictions to FDI required by the WTO entry have helped significantly liberalise Kazakhstan’s FDI regime over time, in some sensitive areas, identified as restrictive or burdensome in the past (OECD, 2012), the impact will be felt only gradually and the removal of de jure restrictions on FDI will need to be accompanied by further investment facilitation reforms to ensure improved market access in practice.

Tariffary and quantitative restrictions on trade

Even though tariff reductions were estimated to account for only 6% of the estimated gains from Kazakhstan’s WTO entry, the commitments in this area can have important implications on the stability and predictability of the country’s trading environment that are difficult to capture in standard trade models. For example, tariff bindings can help prevent future tariff increases above the agreed upon levels and the common WTO rules on customs valuation and tariff classification reduce the variation in tariff application in practice. These aspects are described in more detail below.

The WTO tariff binding means that a country cannot apply tariffs above the level agreed as part of its Goods Schedule with other WTO members (see Box 6.1). Following the WTO accession, Kazakhstan’s overall level of import tariffs has been bound at, and cannot exceed, 6.1%.11 This implies a tariff reduction from the current tariff level and can help provide an additional stabilising mechanism to Kazakhstan’s tariff system, which was subject to important tariff increases over the past couple of years (Figure 6.3) as a result of the country’s integration into the Eurasian Customs Union (ECU), and later the Eurasian Economic Union (see Box 6.2). While in the early 2000s the average applied import tariff level in Kazakhstan was 2%, below the OECD average at the time (of 4%), it increased three times following the entry into force of the ECU and adoption of the common external tariff (CET) in 2010.12 One simulation (World Bank, 2015a) foresees that, upon full implementation of WTO reforms by 2020, Kazakhstan’s import tariff levels would have largely returned, on trade-weighted basis, to its pre-ECU period and tariff dispersion would have reduced as well. The authorities are currently negotiating with other ECU members an administrative mechanism that will allow Kazakhstan to implement such tariff reductions without imposing additional tariff reductions onto the other ECU members, but its administrative implementation may nevertheless impose transaction costs at the border on certain investors andtraders.

Figure 6.3. Applied import tariffs in Kazakhstan and OECD countries (in %), 2004-14

Note: Simple average is shown. Tariff data for Kazakhstan for years 2005, 2006, 2007, and 2009 is not available.

Source: Authors’ calculations using UN TRANS database.

Box 6.2. The Eurasian Customs Union and the process of Kazakhstan’s integration

The Eurasian Economic Union (EAEU) is an economic union comprised (as of December 2015) of Kazakhstan, the Russian Federation, Belarus, Kyrgyzstan and Armenia. A treaty aiming for the establishment of the EAEU was signed on 29 May 2014 by the leaders of Belarus, Kazakhstan and Russia, and came into force on 1 January 2015. Armenia’s and Kyrgyzstan’s EAEU Accession Treaties were signed on 9 October and 23 December 2014 and came into force on 2 January 2015 and 6 August 2015, respectively. The creation of the EAEU marks a stage in the economic integration process between the concerned countries, and was preceded by the Eurasian Economic Community (EurAsEC), whose goal was to strengthen economic integration between the countries in the Eurasia region that belong to the Commonwealth of Independent States.13

Kazakhstan together with five other EAEU members is also part of the Eurasian Customs Union (ECU).14 It was formed in 2010 by three founding members – Belarus, Kazakhstan and Russia, and subsequently acceded by Armenia (2 January 2015) and Kyrgyzstan (6 August 2015). All ECU members share a common external tariff and agreed to a common legal and institutional framework governing the Union, including a mechanism for distributing the customs duties collected at the common border, abolition of customs controls within the ECU territory and a common regulatory and decision making body – i.e. Customs Union Commission replaced by the Eurasian Economic Commission on 2 February 2012.15

The Eurasian Economic Commission (EEC) is a permanent regulatory body of the Eurasian Economic Union. It is responsible for setting of new laws and regulations in certain areas under its competence (including in relation to the CET and other trade related procedures), implementing decisions taken at the EAEU level, upholding the EAEU treaties and managing the day-to-day business of the EAEU.

For further information, see the EEC website:

Besides the stabilising effect of tariff binding on the country’s tariff regime, common WTO rules on customs valuation16 can also help reduce the variation in tariff application in practice.17 This is because Kazakhstan’s Customs Code (under review at the time of writing), the ECU Customs Code, and the ECU Agreement on Customs Valuation are now subject to relevant WTO rules on customs valuation, limiting the risk of arbitrary treatment at the border and imposition of higher import values than suggested by the actual value of goods being shipped. The implementation of additional trade facilitation provisions enshrined in the WTO Trade Facilitation Agreement, such as a more extensive use of advanced rulings, could also help improve the practicability of customs processes in practice (see next section).

Last but not least, the WTO rules on quantitative trade restrictions can also have a stabilising effect on Kazakhstan’s trading environment. Prior to the WTO entry, Kazakhstan regularly took recourse to quantitative restrictions on exports in the agricultural sectors. Namely, it frequently introduced bans on exports of certain grains and other agricultural products (see Table 6.2 below and OECD, 2013) in an attempt to control domestic prices. At times, these measures introduced additional uncertainty into the market and reduced local firms’ export opportunities (OECD, 2013). Export bans and quantitative restrictions on commercial products are prohibited under WTO rules, except in certain circumstances justified under existing WTO provisions.18 Should these rules and potential challenges under the WTO Dispute Settlement Mechanism dissuade Kazakhstan from use of such measures, it could reduce the noise in market signals and have a stabilising effect on investment opportunities of firms operating in the sector.19

Table 6.2. Temporary export bans of agro-food products imposed by Kazakhstan, 2007-12


HS Code



1206 00 (sunflower seeds)

1512 (sunflower oil)

Government Resolution No. 976 of 20.10.2007


1206 00 (sunflower seeds)

1512 (sunflower oil)

Government Resolution No. 260 of 18.03.2008


1205 (rapeseeds)

1507 (soya oil)

1514 (rapeseed oil)

Government Resolution No. 777 of 28.08.2008


1206 00 (sunflower seeds)

Government Resolution No. 930 of 08.10.2008


1201 00 (soybeans)

1207 20 (cotton seeds)

1207 99 (other oilseeds)

Government Resolution No. 930 of 08.10.2008


1008 10 (buckwheat)

1103 19 (buckwheat cereal preparations)

1201 00 (soybeans)

1206 00 (sunflower seeds)

1207 99 (cotton seeds)

1507, 1512, 1514, 1515 11, 1515 19 (vegetable oils),

vegetable and animal fats (1516)

Government Resolution No. 1024 of 05.10.2010


1701 99 (white sugar)

Decision of the Customs Union Commission No. 334 of 16.04.2010


1701 99 100 (white sugar), 1701 99 900 (other sugar)

Decision of the Customs Union Commission No. 334 of 16.04.2010


1512 1 (sunflower oil, safflower oil, cotton oil)

Government Resolution No. 942 of 23.08.2011

Source: OECD (2013) based on information from the Eurasian Economic Commission.

The simultaneous effect of being bound by different rules on tariff, quantitative restrictions and other measures with impact on trade can help the government ensure greater coherence in the area of trade policy. Being subject to WTO rules on export restrictions, subsides, and other rules, means that such actions should be less frequent in the future, and may allow for an emergence of clearer market signals in the agricultural and other sectors.

Trade facilitation

WTO entry also means being subject to the growing disciplines on trade facilitation and rules on certain border procedures, notably as enshrined in the WTO Trade Facilitation Agreement (TFA). Being a landlocked country, improving the efficiency of border procedures as well as trade infrastructure should be a priority for Kazakhstan to attempt to compensate for some for the geographical disadvantages. Meanwhile, Kazakhstan is scoring poorly on efficiency of its border procedures. For example, Kazakhstan ranked 119th out of 190 economies in the area of ease of trading across borders on the World Bank’s Doing Business indicators in 2017, which is significantly below the average score and has remained unchanged for several years. This appears to be consistent with the insights from the available firm-level data: it takes longer for an average firm to clear exports and imports through customs in Kazakhstan than elsewhere in the region; and only 5% of firms do export, as compared to 19% in the region as a whole (Figure 6.4).

Figure 6.4. Firms’ trade experience in Kazakhstan compared to other countries, 2013
In %

* This indicator is computed using data from manufacturing firms only.

Source: Word Bank’s Enterprise Survey, 2013.

The World Bank (2015a) estimated that, if reforms associated with Kazakhstan’s WTO entry were to be accompanied by a 30% decrease in the costs of trade facilitation, the overall impact on welfare would increase by about one percentage point of GDP per year (which implies a nearly 5% GDP gain by 2020). The OECD analysis using the OECD Trade Facilitation Indicators (TFI) also suggests that implementation of a comprehensive trade facilitation reform, involving improvements across all eleven areas covered by the TFA, could reduce trade costs by about 13% in upper middle-income countries like Kazakhstan (Box 6.3). While these estimates likely represent the upper bound of possible gains, government could consider undertaking key reforms to reap benefits. For example, streamlining and automating border processes, including through the use of risk management processes – where Kazakhstan lags most behind the average – are found to have the most impact on trade costs in countries like Kazakhstan. This area should hence be prioritised by the government, as already envisaged in the President’s 100 administrative steps and other strategic documents.20

Box 6.3. What are the OECD Trade Facilitation Indicators and how does Kazakhstan perform?

As goods cross borders many times, first as inputs and then as final products, fast and efficient customs and port procedures are essential. Unduly complex processes and documentation raise costs and cause delays, with businesses and consumers ultimately bearing the cost. Conversely, countries where inputs can be imported and products and services exported within short and reliable timeframes are more attractive investment locations.

To help governments improve their border procedures, reduce trade costs, boost trade flows and reap greater benefits from international trade, OECD has developed a set of Trade Facilitation Indicators (TFIs) that identify areas for action and enable the potential impact of reforms to be assessed. The OECD indicators cover the full spectrum of border procedures for more than 160 countries across all income levels, geographical regions and development stages. The indicators seek to reflect not only the regulatory framework in the concerned countries, but delve, to the extent possible, into the state of implementation of various trade facilitation measures. The TFIs track the policy areas of the WTO Trade Facilitation Agreement (TFA), namely:

  • Information availability;

  • Involvement of the trade community;

  • Advance rulings;

  • Appeal procedures;

  • Fees and charges;

  • Formalities (Documents, Automation, Procedures);

  • Border agency co-operation (Internal and External);

  • Governance and impartiality.

Estimates based on the indicators provide a basis for governments to prioritise trade facilitation reforms and to mobilise technical assistance and capacity-building efforts in a more targeted way. Such analysis shows that the potential trade costs reduction from implementation of all the options contained in the TFA range between 10.4% and 17.4% for all countries, and about 13% for upper middle-income countries like Kazakhstan. Streamlining and automating border processes, the use of risk assessment as well as the use of advance rulings are estimated to have the largest impact on reducing trade costs of such countries (Moïsé and Sorescu, 2013; OECD, 2014). Given that Kazakhstan lags behind its income group in the area of formalities (see figure below), further progress in streamlining and automating border procedures could have a sizable impact.

Kazakhstan’s performance on the OECD Trade Facilitation Indicators, 2016


Further reform in this area could include implementing the Single Window for Trade,21 operationalising the Authorised Economic Operators programme,22 introducing the electronic customs clearance and payment systems23 as well as improving the border risk management system and intra-agency co-operation in Kazakhstan.24 To support such trade facilitation reforms, the authorities are in the process of implementing several modernisation programmes.25 They also undertook a diagnosis of the country’s readiness to implement the WTO TFA provisions.26

While these efforts are laudable, given that several of the on-going reforms have been planned for years,27 better monitoring of progress as well as an allocation of adequate resources and targeted capacity-building programmes will be crucial to help the government achieve the intended results. One tool to facilitate monitoring is a conduct of a Time Release Study (TRS), which has been used in numerous OECD and other economies to trace average time spent by goods at each stage of the border process, help identify bottlenecks, and monitor reform implementation (Box 6.4). The experience of other countries shows that TRS can be a powerful tool to identify specific lacuna in the entire body of border processes (not only customs procedures), facilitate inter-governmental coordination, and support strategic planning and oversight of on‐going reforms. The government could undertake such a study in collaboration with the World Customs Organisation and consider making its results publically available to help raise awareness about the progress made and remaining challenges as well as help generate support for reforms.

Box 6.4. Time Release Study: A trade facilitation benchmarking tool

A Time Release Study (TRS) is a standardised method to assess the trade facilitation performance of Customs administrations and other agencies and private entities operating at the border (e.g. brokers, forwarding and shipping agents, carrier.) It was elaborated following similar initiatives undertaken by the Customs Administrations of Japan and the United States and endorsed by the WCO in 1994, then shaped into a methodological Guide in 2002. TRSs serve the principles of the WCO Kyoto Convention to simplify and harmonise customs procedures internationally to reduce overall trade transactions costs. A TRS involves a detailed diagnostic of the efficiency of border processes and identifies potential corrective actions. As such, it is a powerful performance assessment tool for customs and other border services and provides a pre-reform benchmark that can serve a number of policy purposes:

  • When undertaken over a series of years, it allows monitoring the evolution of progress and assessment of the efficiency of particular reform measures. For example, Japan’s successive TRS exercises (there were 9 between 1991 and 2010) helped sustain reforms that reduced sea cargo intervals from 7 days in 1991 to 2.6 days in 2009 whereby customs clearance takes on average 3.1 hours (see the figure below). Japan customs also use TRS to measure impact of particular reforms such the implementation of the Authorised Economic Operator (AEO) status. In 2009, AEOs in Japan experienced average times between goods arrive and release over a day shorter than non-AEOs.

  • Today a number of countries use TRS as a tool for internal benchmarking and to support strategic planning, including the United States, Japan, Mexico, Korea, Australia, Colombia and others. For example, the Australian Customs and Border Protection Service conducted a Time Release Study (TRS) in 2007, published the results in 2009, and decided to conduct the study on an annual basis as an aid to strategic planning. The TRS has covered all border-related procedures, including Sanitary and Phytosanitary (SPS) procedures managed by 41 other concerned government agencies, and identified 1.3 days of interval between the arrival and release for sea cargo.

  • Most recently, countries have also started using TRS in an international and regional context. One example is the Trans-Tasman TRS carried out in 2010 as a joint effort by the Australian and New Zealand Customs Services in order to identify opportunities for streamlining trade between the two countries. Customs officers in both services worked together on the scope of the TRS, and the study lead to revision of 4 border procedures responsible for delays. Another example is a pilot TRS carried out in a northern corridor of the East African Community (EAC) which aimed to identify bottlenecks in the flow of cargoes from/to Mombasa sea port in Kenya to/from customs office in Kampala, Uganda.

Monitoring of trade facilitation reforms using TRS in Japan, 1991-2009

Source: Japanese Customs.

Overall, a TRS represents a powerful performance assessment tool for customs and other border processes, which can help monitor progress over time, aid strategic planning, and facilitate reform in an international context. As such it can support countries efforts to increase their integration into GVCs, and on a global level to support the overall goal to harmonize customs procedures and reduce trade transaction costs.

Source: OECD, Matsuda (2012).

In the long run, a substantial improvement in the time and reliability of border procedures coupled with increased investment and realisation of infrastructure projects can help significantly reduce the cost of trading in Kazakhstan. While the WTO accession, including the ratification of the WTO TFA by Kazakhstan, will assist the government in the process, further domestic reform, including effective implementation and monitoring of progress will be crucial to help tangibly reduce the costs of trading in Kazakhstan.

Other regulatory barriers to trade and transparency

Beyond improvements in trade facilitation, a progressive removal of other non-tariff barriers (NTB) to trade (such as overly burdensome technical regulations or opaque licensing requirements), and improving the overall quality and predictability of the regulatory environment for trade activity, will be critical to help increase trade opportunities for Kazakh firms and making Kazakhstan a more attractive investment destination. For example, a recent survey by UNECE (2014) shows that, on average, NTBs affect 30% of importers and exporters in Kazakhstan, and in some sectors they significantly prolong the time it takes to import and export.28 As Kazakhstan has the ambition of diversifying its trade structure away from oil products towards goods and services that may face higher regulatory requirements (such as agro-food or manufactured products), engaging in negotiations with its main trading partners–at the EAEU level but also beyond–about progressive reduction or NTBs will be an important aspect of reducing trade costs faced by firms.

It appears that EAEU-level regulations are the main source of NTBs in Kazakhstan.29 Proving compliance with technical regulations, including sanitary and phyto-sanitary (SPS) and conformity assessment, prove most burdensome. Kazakhstan is hence facing a double challenge of using EAEU integration to reduce the regulatory barriers to trade stemming from other EAEU members’ legislation, while avoiding establishing new barriers, at the EAEU level, which could render trade with third countries more difficult (i.e. cause trade diversion).30 The government is conscious of this challenge, and recognises that further progress in this area will require changes to the domestic and EAEU-level regulatory processes, progressive adoption of international standards, improvements in the accreditation and certification infrastructure as well as further coordination with the other trading partners through further international trade agreements and regulatory co-operation (discussed next).

WTO accession does involve certain transparency-enhancing measures and measures relating to technical barriers to trade (TBT) that will be binding to Kazakhstan upon its entry. For example, several WTO provisions require Members to publish laws, decrees, resolutions or other measures of general application pertaining to or affecting trade in goods, services or intellectual property rights before they can be enforced.31 Kazakhstan also committed to publish all laws, regulations, decrees, decisions and administrative rulings, whether issued or adopted by the Republic of Kazakhstan or by a competent body of the EAEU; and to providing a reasonable time to WTO members and other interested parties to comment (normally not less than 30 calendar days) before the measure is adopted.32 The Protocol also stipulates that Kazakhstan will comply with notification requirements embedded in various WTO Agreements,33 provide the right for an independent review of its conformity with WTO obligations;34 and undergo periodic reviews of its trade policy by the WTO Secretariat.

In addition, as mentioned earlier, Kazakhstan made several broad commitments relating to governance of the country’s services sectors in its WTO Accession Protocol. For example, it committed to ensuring that licensing procedures would not in themselves constitute a restriction on the supply of service in the services sectors in which it made specific WTO commitments.35 It also agreed to abide to a set of specific guidelines relating to the process of setting and implementing licensing requirements and procedures in these sectors (e.g. regarding their publication, review and approval process, and notification about the final decision).36 The government also committed to ensuring that relevant regulatory authorities in these sectors would not be accountable to any service suppliers they regulated; and that, where practicable, regulations of general application in these services sectors shall be published in advance; an opportunity to comment regulatory proposals shall be provided to interested parties, and a reasonable time between the publication of a proposed regulation and its entry into force shall be ensured.37 If the opportunity of existence of these specific commitment is seized by the Government to improve the regulatory transparency and quality in these sectors, it could translate into a more pro-competitive and transparent regulatory environment in these sectors, making them more attractive for investment.

All these measures help monitor the changes in Government’s actions in the area of trade policy and, hence, can help increase their transparency. They are subject to the WTO dispute settlement mechanism and have been employed in disputes more frequently over time, which may increase compliance.38 Other WTO members are also bound by the same WTO rules in this area, and Kazakhstan can monitor and require notifications or explanations from other WTO members as well. Still, such obligations remain relatively broad, and rarely supplant the need for, on the one hand, continued domestic reform to improve the quality of domestic regulations and remove unnecessary administrative burdens to trade and, on the other, further co‐operation and commercial agreements with trading partners to help reduce the incidence of TBTs abroad.

Further trade integration – going beyond WTO

As highlighted above, WTO accession marks an important step in Kazakhstan’s economic integration with the rest of the world. Still, trade costs faced by Kazakh firms, including foreign investors in investing in the country, can be reduced further through signing of further preferential trade agreements, as well as development of physical infrastructure for trade.

Up until now, Kazakhstan has mainly signed Free Trade Agreements (FTAs) with other CIS countries, as well as Georgia and Serbia (Table 6.3), and has continued its integration within the Eurasian Economic Community. Most recently, the Treaty on Eurasian Economic Union (EAEU) was signed on 29 May 2015, and came into effect on 1 January 2015, creating an economic union between Kazakhstan, Russia, and Belarus that provides for free movement of goods, services, capital and labour as well as allowing for progressive harmonisation in relevant legislation and coordination of trade and economic policies. Studies estimate that the removal of NTBs among the member countries within that process as well as improved border coordination and joint trade facilitation reforms, described earlier, could bring important gains to Kazakhstan, outweighing the costs related to trade diversion.39 The government should therefore pursue further diplomatic efforts to facilitate harmonisation, whenever possible avoiding the introduction of standards and regulations that are different or more stringent than international standards and could unduly impact its trade opportunities with other countries.

Table 6.3. List of preferential trade agreements signed by Kazakhstan


Title of agreement



Date of signature

Date of entry into force


Kazakhstan-EU Agreement on Enhanced Partnership and Co-operation (EPCA)

EU; Kazakhstan





Eurasian Economic Union - Viet Nam FTA

Eurasian Economic Union; Viet Nam




Treaty on Eurasian Economic Union (EAEU)

Eurasian Economic Union

In force




Belarus-Kazakhstan-Russia Agreement on Services and Investment

Belarus; Kazakhstan; Russian Federation;

In force




Common Economic Zone Agreement (2003)

Belarus; Kazakhstan; Russian Federation; Ukraine

In force




EC-Kazakhstan Co-operation Agreement

EU; Kazakhstan

In force




Armenia - Kazakhstan FTA

Armenia; Kazakhstan

In force




Eurasian Economic Community (EAEC)

Belarus; Kazakhstan; Kyrgyz Republic; Russian Federation; Tajikistan

In force




Georgia - Kazakhstan FTA

Georgia; Kazakhstan

In force




Kazakhstan- Kyrgyz Republic FTA

Kazakhstan; Kyrgyz Republic

In force




Kazakhstan - Ukraine FTA

Kazakhstan; Ukraine

In force




Treaty on a FTA between members of the Commonwealth of Independent States (CIS)

Armenia; Belarus; Kazakhstan; Kyrgyz Republic; Moldova, Republic of; Russian Federation; Tajikistan; Ukraine

In force




Kazakhstan - Serbia FTA

Kazakhstan; Serbia

In force




Agreement on the Customs Union between the Russian Federation, Belarus and Kazakhstan

Belarus; Kazakhstan; Russian Federation

In force



Note: For a full list of RTAs signed by Kazakhstan consult Annex 23 of the country’s WTO Accession Protocol.

Source: OECD based on Kazakhstan’s WTO Accession Protocol and the WTO Regional Trade Agreements Information System (RTA-IS) (

In parallel Kazakhstan has also been strengthening its relationship with the EU, which remains its main trading partner (Figure 6.5). The terms of Kazakhstan-EU relationship have been historically defined by the Partnership and Co-operation Agreements, the first one having been signed in 1995 and the most recent one, Enhanced Partnership and Co-operation Agreement (EPCA) on 21 December 2015.40 The agreement covers a whole array of trade policy issues, including trade in goods and services, trade facilitation, intellectual property rights, TBTs and regulatory co-operation, competition, treatment of state-owned enterprises, and many others. It also includes a dedicated dispute settlement mechanism to which the provisions of the Agreement are subject, with certain exceptions.41 In some cases, the agreement refers to and reaffirms WTO commitments (e.g. on import and export restrictions); in others it includes additional provisions (e.g. IPR protection, SOEs, TBTs and regulatory co‐operation), and provides a basis for deepening the trade-related reform process. Kazakhstan could benefit from further co-operation and capacity building in these areas, and notably regulatory co-operation and border procedures mentioned above, to facilitate trade in non-traditional products. In addition, some of the tariff hikes on certain Kazakh products could be reduced to limit the disadvantage placed on some firms (Figure 6.A2.2. in the Annex).

Figure 6.5. Kazakhstan’s exports by partner country, 2000-14

Source: Authors’ calculations using the UN COMTRADE database.

Finally, given this binary approach to trade negotiations–oriented primarily towards the EU and the EAEU, Kazakhstan may have unexploited opportunities for closer economic integration with other countries, such as China or Iran, and other economies with whom it benefits from a relatively high trade complementarity (World Bank, 2015a). This could also help reduce Kazakhstan’s dependence on the European and CIS markets. Given that tariffs faced by Kazakh exporters in some regions are still relatively high (Table 6.4), and these tend to be markets where NTMs for Kazakh products may be relatively low (given the less developed regulatory environment than in the EU market, for example), there could be scope for exploring further options for singing new FTAs and building on Kazakhstan’s recent trade reform momentum.

Table 6.4. Import tariffs applied on Kazakh exports by region, 2015

Tariff type

Simple average

Weighted average

CIS countries






OECD members



Middle East and North Africa*



East Asia and Pacific*



South Asian countries*



Latin America and Caribbean*



* Low and Middle income only.

Source: OECD calculations using the UN TRAINS database.

Encouraging more private investment into infrastructure

Trade facilitation and other trade reforms can do little to meaningfully reduce trade costs faced by firms and help them connect to global markets if the country’s underlying infrastructure is undeveloped or of poor quality. This is particularly important in the case of landlocked countries, like Kazakhstan, that already pay a transport premium and relay on a well-developed network of surface transport corridors and transit routes to connect with the outside world.

Despite improvements, infrastructure in Kazakhstan requires further investments to help reduce costs and connect far-flank regions to markets, and benefit from its strategic location. According to one study, the share of transport cost to the total cost of goods in Kazakhstan is 8% in the case of railway transportation and 11% in case of road transport, compared to 4-4.5% in industrialized countries (Rana, 2016). The country also ranked 79th out of 140 countries on the quality of transport infrastructure in the World Economic Forum’s Global Competitiveness Index 2015-2016, with the quality of roads being particularly badly evaluated (107th rank). Still, some international organisations point to progress made in recent years. For example, the country improved its ranking on the World Bank’s Logistics Performance Index (LPI) from 137th place in 2007 to 57th place in 2016. Likewise, according to the World Bank’s Enterprise Survey, while 37% of firms identified transport as a major constraint to doing business in 2009, this share dropped to about 8% in 2013 (Figure 6.6). These results may indicate a certain degree of optimism among market participants about the on-going efforts. Going forward, improved regulatory framework for private sector participation in infrastructure – identified as a constraint in the previous review – and observance of due process in project selection and implementation will be critical to ensure planed future projects are duly implemented.

Figure 6.6. Percent of firms identifying transportation as a major constraint, 2009 and 2013

Source: World Bank Enterprise Survey.

Improvements in the coverage and quality of infrastructure require investments – both public and private. Mobilising private investment in infrastructure can be a way to gather additional capital as well as to reap additional efficiency gains in project delivery or operations (OECD, 2015). As such, the Policy Framework for Investment recommends a list of questions for the government’s consideration to allow for a creation of an enabling environment for investment in infrastructure (Box 6.5).

Box 6.5. The enabling environment for investment in infrastructure

The OECD Policy Framework for Investment (PFI) provides policy makers with a list of questions for consideration to help create an enabling environment for investment in infrastructure, which is provided below. They relate among other to the adequacy of the domestic legal framework, the appropriate regulatory environment as well as the existence of due processes in project selection and implementation to ensure transparency and reduce the risk of mismanagement and corruption.

  • What is the overall policy and institutional framework for private investment in infrastructure and how has it been informed by international good practices?

  • Does the government have a strategy for public-private partnerships, and if so are its provisions and institutions consistent with the broader regime for infrastructure procurement? Does the legal basis for PPPs avoid conflicts with other legislation, either through a PPP act or through sectoral legislation explicitly admitting PPP delivery modes?

  • Is an open and non-discriminatory investment environment in place for infrastructure providers, including between foreign and domestic and new providers and incumbents? What are the restrictions on foreign investment in infrastructure sectors, if any? To what extent are foreign private companies able to compete on an equal basis with both domestic companies and foreign state-supported companies in seeking access to infrastructure markets?

  • What modalities for private investment in infrastructure does the government promote? What are the most common concession/PPP modalities across sectors? Is the combined procurement of design, construction and long-term operation allowed? Is the bundling of small infrastructure projects possible in order to minimise transaction costs and thus facilitate attracting investors? Are concession contracts allowed to include no-compete (or exclusivity) clauses? Please describe the main characteristics of licences and concessions.

  • How do regulatory agencies and the competition authority co-ordinate in assessing the costs and benefits of unbundling network industries and ensuring adequate competition in infrastructure markets?

  • To what extent do regulatory and competition authorities have adequate political support and independence to denounce anti-competitive behaviour by infrastructure providers (including by SOEs), particularly when challenging vested interests?

  • Are there clear and transparent guidelines to ensure predictability and consistency in selecting, preparing and procuring infrastructure projects? Are the institutional roles and responsibilities of agencies responsible for these different phases clearly identified in the legal framework? Are these agencies adequately staffed in number and skills to allow the agency to work at the level required by the industry?

  • Are there regulations to guarantee full disclosure of all project-relevant information between public authorities and their private partners, including on the state of pre-existing infrastructure?

  • What forms of infrastructure procurement exist and subject to what conditions? When unsolicited proposals are permitted, are there distinct, clear and transparent selection procedures for such proposals? To what extent do existing procedures adequately address the specific transparency issues such proposals entail?

  • Are there any preference margins for domestic versus foreign bidders, or for SMEs versus larger bidders, in infrastructure procurement procedures? If so, what is the extent of these margins and do they vary according to the sector and size of the project?

  • What role does the government play in ensuring that corruption is not involved in the procurement process? What steps have been taken to minimise the risk of bid-rigging in infrastructure contracts?

  • Are competition authorities involved in the procurement process, and how? How are the responsibilities co-ordinated between procurement agencies and the competition authority?

  • Do selection procedure ensure appropriate due diligence of bidders to assess the realism of the bids, their financial soundness, risk profile and prior experience? Do procedures adequately address any potential conflict of interest?

  • Are authorities legally required to set and publicise the criteria according to which infrastructure providers will be chosen when an invitation to tender is made? Are the performance standards required from winning bidders carefully defined and publicised in advance of tenders?

  • Are authorities required publicly to explain award decisions in terms of careful and verifiable references to those criteria? Can bidders challenge the decision by the awarding authority in an independent tribunal?

  • Are the cost-benefit assessments and the ranking of different projects of a tendering process made public?

  • What dispute resolution mechanisms exist to ensure that disputes arising at any point in the lifetime of an infrastructure project are handled in a timely and impartial manner?

Source: OECD Policy Framework for Investment (2015).

In the previous Review, the OECD noted that “given the importance of infrastructure for national and international integration in such a large and remote country as Kazakhstan, the stock of infrastructure is inadequate and outdated”. It noted that the inadequacy of the legal framework for Private-Public Partnerships (PPP) as well as high presence of state-owned enterprises in several segments of the infrastructural markets are an important factor limiting private participation in infrastructure.

Since then the government has implemented several reforms to improve the legal framework for infrastructure development. In particular, a new PPP Law was adopted on 31 October 2015 to provide a legal framework for co‐operation between the state and business entities in delivery of PPP projects. This marks an important change in light of the OECD 2012 recommendations and considering that the private sector has repeatedly pointed to the inadequate legal framework as an important limiting factor for their participation.42 The Law introduced several changes to the legal framework of Kazakhstan, amending and extending some of the provisions of the Law on Concessions, which is the principal source of rules governing concessions as described in Chapter 2.43 For example, prior to the adoption of the PPP Law, PPP was defined in accordance with Article 19 of the Law on Concession as a form of co-operation between the state and private businesses aimed at financing, creating, reconstructing and (or) operating social and critical infrastructure; now, pursuant to the PPP Law, PPP can apply in any sector of the economy (Ernst and Young, 2015). In addition, several new terms have been defined in the Law (such as “public partner”, “private partner”, “PPP project”), while the main principles of balance, consistency, competitiveness and efficiency have been adopted from the Law on Concessions. The law also provides for an intended more robust institutional framework that includes a PPPs agency, the PPP Centre (established in 2008),44 whereas the National Chamber of Entrepreneurs – Kazakhstan’s umbrella business association – hasbeen assigned a role in the implementation of PPP projects.45

To-date, no PPP project based on the new Law has been implemented, and investors appear to be awaiting the results from the first pilot project to assess the adequacy of the new legal framework.46 Hence, currently, it is too early to assess the impact of the recent changes on the attractiveness of investment in infrastructure for private firms and their future willingness and ability to engage in infrastructure projects. Still, the cumulative effect of the various initiatives undertaken by the government over the years appears to be producing some results. As noted in Chapter 2, EBRD has been assessing positively the direction of the undertaken reforms and has substantially increased its investment in Kazakhstan in recent years, with nearly half of project portfolio being in infrastructure.47 With several large scale projects planned for the coming years, within the Silk Road initiative and beyond,48 the expectations are high, and it will be critical for the authorities to ensure that corruption and project delays do not hamper the realisation of these plans in practice.

Policy recommendations

Overall, while the WTO accession process marks a fundamental step in the country’s trade policy reform, it addresses some, but not all, trade-related policy challenges in Kazakhstan. The long process of negotiation has led to liberalisation of several barriers to FDI in services, and led to a reform of some elements of local content policies. The predictability of the country’s trade regime has also likely improved, being now bound by common WTO rules and an international enforcement mechanism. To reduce meaningfully trade costs faced by firms and facilitate their participation in global markets, the government will, however, need to go further. This will involve a committed trade facilitation reform, further investment in physical infrastructure and economic co-operation with key trade partners, inside and outside of the region, via preferential trade agreements and regulatory co-operation. The progress in the latter area will mean not only a better access to foreign inputs by foreign firms investing in Kazakhstan but also better market access conditions for Kazakh firms abroad.

Trade policy

  • Build on the momentum from the WTO entry to engage in further trade reforms: The WTO entry has marked an important step in the country’s reform process. In some sectors Kazakhstan made limited commitments at the time of its WTO entry or opted for numerous transition periods and exceptions. The authorities could consider if further opening in some of these areas would not be beneficial. An offer to join the GPA could also be tabled swiftly.

  • Engage in further trade negotiations with countries where trade complementarity is high and no Free Trade Agreement exists. Kazakhstan has thus far prioritised trade integration within the Eurasian Economic Union and with the European Union. Meanwhile, trade opportunities may also exist elsewhere (e.g. Iran) and signing further trade agreements could support the objectives of economic diversification.

  • Engage in further negotiations with the main trading partners to reduce non-tariff barriers (NTBs) to trade and intensify regulatory co-operation. Regulations of other Eurasian Economic Union’s members appear to be the main source of NTBs in Kazakhstan. Pursuing further regulatory co-operation within the Union would hence be beneficial, provided that new Union-level NTBs are not created that reduce trade opportunities with third countries.

  • Pursue ambitious trade facilitation reform to help reduce trade costs faced by all firms: Being a remote and landlocked country, Kazakhstan relies on the efficiency of its border procedures and adequacy of its surface and air infrastructure for trade in non-oil products. Meanwhile, Kazakhstan scores significantly below the OECD average and the best performers in the region in this area, and previous customs modernisation plans have not been fully implemented.

  • In particular, streamlining and automating border procedures should be pursued further by the authorities to help reduce trade costs faced by firms. While progress at the level of the Eurasian Economic Union will require diplomatic solutions, better oversight internally may also be required. A Time-Release Study can help the government identify the most acute bottlenecks, prepare a detailed action plan and allow for better monitoring of progress in practice. It can also provide a basis for engaging in targeted capacity-building programmes with relevant organisations and donors (e.g. WCO, the EU).

Infrastructure investment

  • Build stronger PPP capacities within the government. With the enactment of a new PPP law, Kazakhstan should not underestimate the importance of well-trained professionals able to manage complex tender offerings and risks linked to large-scale infrastructure projects.

  • Strengthen integrity frameworks relating to infrastructure investment, including conflict of interest and the procurement system.

  • Ensure that the pilot PPP project does not suffer from irregularities and project delays: Many investors await the implementation of the first pilot PPP project to assess the adequacy of the new regulatory framework for PPPs. The authorities are advised to pay particular attention to project’s implementation to send the right signal to the investors.


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Annex 6.A1. Description of Kazakhstan’s WTO commitments in the services sector

Kazakhstan has made specific commitments in ten services sectors, and 116 sub-sectors, under its Schedule of Commitments under the WTO General Agreement on Trade in Services (GATS). Some of them horizontal in nature – affecting two or more services sectors – while other sector-specific. They are described in more detail below and summarised in Table 2.1 in Chapter 2.

Horizontal commitments

Regarding restrictions on hiring key foreign personnel, Kazakhstan has made specific commitments, in its WTO Services Schedule, in relation to the entry and temporary stay of business persons and intra-corporate transfers (ICT) of executives, managers and specialists.49 For example, the total number of ICTs is limited to 50% of the total number of foreign managers and specialists within each service supplier, with the minimum of three individuals, while the corresponding shares are 70% and 90% for other categories of foreign employees.50 The entry and temporary stay of ICTs should be permitted for 3 years, subject to certain conditions51, and can be extended for another year, on the basis an economic needs test (ENT). In addition, after the expiry of the five-year transition period after the country’s WTO entry, an ENT shall not apply for hiring ICTs as managers and specialists.52 Business visitors53, in turn, can also enter and remain in Kazakhstan without obtaining a work permit for a period not exceeding 90 days. Still, despite these commitments, restrictions on key personnel remain important in Kazakhstan and will remain to be reflected in Kazakhstan’s scores on the FDI Index even once all WTO commitments are fully implemented.

Kazakhstan has also undertaken several specific commitments relating to its use of local content policies, as predicted at the time of the previous Investment Policy Review (OECD, 2012: 40). For example, from the date of its accession to the WTO, Kazakhstan is required to ensure that all laws, regulations and other measures applied in Kazakhstan, which are within the scope of the TRIMs Agreement, would be consistent with the relevant WTO provisions, including the TRIMs Agreement, whether adopted by Kazakhstan or the competent bodies of the EAEU, except in the Subsurface and automotive sectors.54 In the case of automotive and subsurface sectors exceptions and transition periods apply.55 However, even in these sectors, Kazakhstan will not be able to include any provisions that are WTO-inconsistent in the newly concluded contracts (nor include them in the signed contracts that are being renewed).56 In addition, government committed not to require more than 50% of local content in services from investors in the subsurface sector.57 When a tender procedure is used for services procurement, investors shall, for a period of six years, consider a putative 20% reduction in the price of any bid submitted by a juridical person of Kazakhstan where at least 75% of that subcontractor’s qualified employees58 are citizens of Kazakhstan (to be reduced to 50% after six years), provided that the subcontractors meets the standards and qualitative characteristics stipulated in the tender documents.59 The government also committed notto adopt any local content measures in the sector that exceeded the measures provided for in Law No. 291-IV “On Subsurface and Subsurface Use” of 24 June 2010, as applied in September 2011, and clarified the method for calculating local content.60

This language and the extent of commitments are similar to the type of commitments that certain recent WTO adherents have committed to in their Accession Protocols, such as the Russian Federation (in 2012) or China (2001).61 The principal basis for such commitments and the WTO rules on local content stems from the TRIMs Agreement62 as well as relevant provisions in GATS, the SCM Agreement; and the GPA. To-date, there have been 34 disputes relating to local content policies in WTO, quoting various WTO provisions, including the TRIMs Agreement, GATT, GATS, and the SCM Agreements), which means that, in case of non-compliance, Kazakhstan may face a risk of potential disputes with other WTO members.63 The use of local content is also prohibited in some Bilateral Investment Treaties and Free Trade Agreements that Kazakhstan had entered. Given these commitments, the government, as seen in Chapter 2, has amended its Subsurface legislation to stipulate that i) new investment contracts in the sector cannot include any local content provisions related to the purchases of goods, and ii) local content in works and services shall not exceed 50%.64 The law continues to grant a conventional 20% discount to Kazakh entities providing works and services to Subsurface users when a tender procedure is applied; and excludes preferences provided to domestic producers of goods, works and services participating in procurement tenders of quasi-state entities.

When it comes to access to land, Kazakhstan has made no commitments in relation to restrictions on private ownership of land used for farming, agricultural production and forest planning (while no restrictions exist on other forms of land).65 Hence, the currently applied maximum rental period of 10 years does not need to be extended as a result of the WTO entry. As noted in Chapter 2, such short lease period may pose a barrier to investment in commercial agriculture sector and the associated services in Kazakhstan. While the government planned to extend the lease period, the reform has been stalled due to public protests.

Sector-specific commitments

In telecommunications, WTO entry has already brought about a reduction in the level of restrictions: Kazakhstan has committed to remove the foreign equity limits in the sector within 2.5 years following the country’s WTO accession (except for JSC Kazakhtelecom) and already removed the limit at the start of 2016 (see Chapter 2). The WTO commitment will also prevent the government from reinstituting the previous maximum equity restriction, once the transition period expires. Still, other regulatory barriers to market entry for both foreign and domestic operators persist in the sector, which are not be covered by the WTO GATS or other related commitments, and may limit de facto investment and trade opportunities in the sector post WTO entry.66

Transport is another sector where Kazakhstan has had a relatively high level of restrictions on foreign entry prior to WTO entry.67 However, Kazakhstan made few limited commitments in the sector.68 Notably, it did not commit to remove the foreign equity limit (of 49%) in the air transport sector. Commitments in other transport sectors have been limited too. For example, the local incorporation requirement in maritime transport has not been removed, and the requirement to register vessels in Kazakhstan has remained unbound.69 Beyond the changes related to removal of any horizontal restrictions, Kazakhstan’s score on the FDI Index in the sector will hence not change as a result of WTO entry. Still, as described in Chapter 2, the country has recently undertaken liberalisation, removing the equity limit. Allegedly, during the summer of 2016 a new law was in the process of being drafted, which would, if passed, reinstitute the previous restriction. The lack of WTO commitments in this area means that such changes could occur in the future.

Finally, financial services are a third services sector in which restrictions on foreign entry were relatively high in Kazakhstan compared to the OECD average (Kazakhstan’s score of 0.183 is five times higher than the OECD average in 2014), and will require changes upon WTO entry. Currently, foreign banks and insurance companies may open a representative office with permission of the National Bank of Kazakhstan (NBK) but may not open branches (see Chapter 2). Within its WTO accession, Kazakhstan committed to allowing foreign banks and foreign insurance companies to open branches within 5 years after accession (i.e. by 2020). In addition, there are certain provisions relating specifically to the issuance of licenses for companies operating in the financial services sector enshrined in Kazakhstan’s broad commitments on licensing requirements.70 Still, even after the expiry of the five year transition period, certain limitations will apply both in the insurance and banking sectors71 and other specific restrictions will apply to the re-insurance services.72 Still, this is one area where WTO commitments will imply further future liberalisation, and lead to reduction of scores on the OECD FDI Index.

Annex 6.A2. Overview of Kazakhstan’s trade structure
Figure 6.A2.1. Number of export and import products in Kazakhstan and comparator economies, 2000-14

Source: WITS database.

Figure 6.A2.2. Kazakhstan’s export structure with the main trading partners, 2000-14


Figure 6.A2.3. Kazakhstan’s import structure with the main trading partners, 2000-14


Figure 6.A2.4. Top twenty Kazakh export products with the highest applied import tariff in the EU, 2015

Source: Authors’ calculations using the UN TRAINS database.

Table 6.A2.1. Average EU import tariffs applied on Kazakh exports and the value of affected Kazakh exports, 2015

Average applied tariff

Value of exports (in bln USD)

Share in exports (in %)

WTO HS Petroleum




WTO HS Industrial




WTO HS Agricultural




Total Trade




Note: Product groups are based on standards WTO HS product classification.

Source: Authors’ calculations using the UN TRAINS database.


← 1. See Jensen and Tarr (2007). The sectors that benefit and expand most are those that export the largest share of their output (e.g. electrical equipment, chemicals, oil and gas, basic metals and communications equipment) while those that are most protected or export little, contract most (e.g. medical equipment, wood products, vehicles, non-metal products and publishing (Jensen and Tarr, 2007: 25). The study uses a static computable general equilibrium (CGE) model covering 56 economic sectors and using small open economy assumptions and accounting for Dixit-Stiglitz variety-productivity effects in downstream sectors. The authors have applied a similar model to assess the effects of Russia’s entry to the WTO (Jensen, Rutherford and Tarr, 2007) and found similar results (in case of Russia, they predicted the gains to amount to 3.3% of Russia’s GDP). Besides Jensen and Tarr (2007), there are several other studies that aim to quantify the overall economic welfare gains from Kazakhstan’s WTO accession (e.g. World Bank, 2013; World Bank; 2015). They rarely model the effect of local content policy reforms, usually measuring the effect of reduction in tariffs only, at times taking into account the likely effect of a complementary trade facilitation reform (e.g. World Bank, 2015).

← 2. Kazakhstan’s President signed on 12 October 2015 the Law No. 356-V “On ratification of the Protocol on accession to the Marrakesh Agreement as of April 15, 1994”, which was first approved by both chambers of the Parliament. Subsequently, the government has officially notified the WTO about the completion of the ratification process, and on November 30 Kazakhstan became the 162nd WTO member. For the WTO press release: kaz_30nov15_e.htm.

← 3. Ukraine’s Business Ombudsman Council is accountable to a governing board comprising local and foreign business associations, international organisations and government representatives. See Wehrlé, F. (2015), High Level Reporting Mechanisms in Colombia and Ukraine, Working Paper Series No. 19, International Centre for Collective Action and OECD, Basel, Switzerland.

← 4. For more information on the WTO DSM, see:

← 5. WTO (2015a: §0896-97; §0933-0934; §0945-0950).

← 6. See WTO (2015c: 30).

← 7. See WTO (2015a: §0896-97).

← 8. See WTO (2015a: §0933-0934).

← 9. See WTO (2015c: 30).

← 10. For example, the limit on foreign staff among managers and specialists still remains as the total number of foreign managers and specialists hired as ICTs must not exceed 50% (see WTO, 2015c: 5).

← 11. Law No. 422-V “On amendments and addenda to certain legislative acts of the Republic of Kazakhstan on the issues of non-performing loans and assets of the second-tier banks; on rendering financial services and activities of the financial institutions and the National Bank of the Republic of Kazakhstan” of 24 November 2015.

← 12. The agreed bound tariff levels of Kazakhstan are reflected in the country’s Schedule of Goods, which forms a part of its Accession Package. See WTO (2015b).

← 13. This phenomenon hasbeen documented in several earlier publications. See, for example, Shepotylo (2011), Jandosov and Sabyrova (2011), World Bank (2012) and World Bank (2015).

← 14. The EurASEC lasted between 2000 and 2014 and comprised of Belarus, Kazakhstan, the Kyrgyz Republic, Russia and Tajikistan. It was established on 10 October 2000 and terminated on 31 December 2014 (in order to be replaced by the EAEU on 1 January 2015).

← 15. The Treaty on the Establishment of the Common Customs Territory and Formation of the Eurasian Customs Union came into force on 1 January 2010.

← 16. By the end of 2010, the customs duties collected on goods originating outside the CU were distributed according to an agreed formula of 4.70% for Belarus, 7.33% for Kazakhstan and 87.97% for Russia.

← 17. WTO Agreement on the Implementation of Article VII of the GATT 1994, i.e. WTO Customs Valuation Agreement.

← 18. According to the government, Kazakhstan has fully implemented the WTO Agreement on Customs Valuation during the process of accession to the WTO. For instance, Articles 4.3 and 4.4 of the Agreement on the Determination of Customs Value of Goods, Transferred Across Customs Border of the Customs Union of 25 January 2008 were amended as of 10 October 2014. Pursuant to the changes, declarants were provided an opportunity to demonstrate two different means of establishing the acceptability of a transaction value: examination of the circumstances surrounding the sale and demonstration by the declarant that the transaction value closely approximated a “test value” previously accepted by the customs body. Furthermore, the Commission jointly with EAEU member States adopted severaldocuments that incorporated the remaining provisions of the Interpretative Notes.

← 19. GATT 1994 (Article XI)

← 20. In the past the government undertook measures that had a conflicting impact on price formation and trade opportunities by firms in certain sectors. For example, while introducing temporary bans on grain exports, the government continued providing a transport subsidy for grain exporters (OECD, 2013).

← 21. The Strategic Plan of the Ministry of Finance 2011-2015 outlined a customs modernisation plan.

← 22. According to the authorities, several elements of a Single Window for Trade have been implemented throughout the 2011-13 period (pursuant to the government plan enshrined in the Government Resolution No. 771 of 3 July 2011). Still, several elements are lacking or require significant improvements. Currently, there is work planned to create a Single Window for Trade at the level of the ECU for the period 2015 to 2020, which will impact the progress in this area.

← 23. While the status of an AEO is enshrined in the ECU’s Customs Code, the operationalization of the programme has proven challenging. As of 2015, there have been no firms in Kazakhstan that benefitted from the AEO status.

← 24. Electronic declaration is in the process of being implemented in the context of the government’s collaboration with UNCTAD on customs modernisation. A pilot system is planned to be implemented in July 2016 and the full ASYCUDA system should be implemented by July 2017. Electronic payment is currently not integrated into the automated declaration processing system even though such plans exist within the plan of implementing electronicdeclaration system. The self-diagnosis undertaken by the government of Kazakhstan stipulates that several legal changes will be required as well as better intra-governmental coordination, improved the functioning of the available IT systems, and provision of training and capacity building for agencies and staff involved to achieve such integration in practice.

← 25. Article 23 of the Customs Code of Kazakhstan (currently under revision) together with the Order of the Minister of Finance No. 244 and 501 and the Agreement on Mutual Administrative Assistance of the Customs Bodies of the Customs Union Member States of 21 May 2010 (Law No. 311-IV of 30 June 2010) provide a legal basis for the application of automated customs risk management system. However, the system, in place since 2010, is still rudimentary and applied by Customs only (and no other border agencies). For example, UNECE (2014) reports that at certain customs points, all commercial traffic is physically inspected.

← 26. For example, in 2015, the government entered collaboration with UNCTAD to help modernize its customs procedures, including to align its regulations with the WTO TFA and other international standards as well as to implement the integrated customs management system ASYCUDA. The co-operation is planned for 2016-20, and the ASYCUDA system should be implemented by July 2017. For more information, see &Sitemap_x0020_Taxonomy=UNCTAD%20Home.

← 27. The diagnostic has been undertaken by the Kazakhstan’s government(Ministry of National Economy) in collaboration with UNECE and UNCTAD between October 2014 and January 2016.

← 28. For example, the Strategic Plan of the Ministry of Finance (2011-15) already outlines the customs modernisation plan albeit it is unclear what results were achieved in practice.

← 29. For example, exporters and importers of some products (e.g. certain seeds, metal sheets, electric motors) are all required to submit more than 10 supporting documents in Kazakhstan in order to make a cross-border shipment, each of which can take a dozen days to obtain (UNECE, 2014).

← 30. According to UNECE (2014), the EAEU regulations are a predominant source of NTBs in Kazakhstan (52.6%), followed third-country regulations (34.9%) and domestic regulations (12.4%).

← 31. For example, the World Bank (2015: 17) stipulates that some regulatory changes required by EAEU internal integration, e.g.: i) issuance of more stringent regulations; ii) excessive mandatory certifications; iii) new state product registration requirements; iv) new requirement of registering third country suppliers; and v) prevalence of quantitative controls; have led to imposition of new NTMs and may lead to trade diversion.

← 32. Article X(1) of GATT 1994, Article III of General Agreement on Trade in Services (GATS) and Article 63 of the Agreement on Trade Related Aspects of Intellectual Property (TRIPS).

← 33. See §1146-1148, §0208 and § 0250 in WTO (2015a). §0250 clarifies specifically that the ECU Commission Decision No. 308 of 18 June 2010 had been amended to establish and put into effect a mechanism for publicationof proposed EAEU legal acts before their adoption and to provide reasonable period of time for Members and interested parties to provide comments to the competent EAEU bodies.

← 34. Several WTO agreements impose specific notification requirements on WTO members, e.g. regarding notification of the use of relevant subsidies or TRIMs, as covered by the ASCM and TRIMS agreements. In addition, §1149 and 1150 of Kazakhstan’s WTO Accession Protocol stipulate that Kazakhstan is to submit all initial notifications by the time of its accession; the remaining notifications according to the timetable outlined in Table 4 of the Protocol, and all subsequent notifications in conformity with relevant WTO provisions.

← 35. See §0209 in WTO (2015a).

← 36. See WTO (2015a: §1132-1134).

← 37. For example, all licensing requirements and procedures must be set out in normative acts and any law establishing or implementing them needs to be published prior to its effective date. The relevant authorities need to review and make a decision on granting or denying a licence within the period specified in official procedures or, if no time period was specified, without undue delay. For a full list of commitments in this area, see WTO (2015a: §1132).

← 38. See WTO (2015a: §1133).

← 39. Since the establishment of the WTO and 2008, there have been at least 20 cases involving consideration of Article of the GATT Agreement (Ala’i, 2008: 789), which represents 5% of all cases submitted during that period, as recorded by the WTO website.

← 40. See e.g. Vinokurovet al. (2015), World Bank (2015a), World Bank (2015b), Knobel et al. (2016).

← 41. The EPCA has by now been ratified and came into force as of 1 May 2016.

← 42. The scope of the dispute settlement mechanism is outlined in Chapter 14 of the Agreement and Article 160. All provisions of the Agreement, except for Articles 156, 158, 159(3) and (4), are subject to the mechanism.

← 43. See e.g. Roundtable on some aspects of public-private partnership development in Kazakhstan, available at

← 44. The July 2006 Concession Law No. 167-III, as amended (the “Concession Law”). See Chapter 2 for an assessment of the Concession Law.

← 45. The PPP Development Centre’s mandate is to evaluate concession/PPPs deals and to recommend further improvements in PPPs (As established by Government Resolution No. 693 dated 17 July 2008 “On Establishment of a specialised organisation on concessions”). It is involved in all stages of the process, including appraisal of contracts, feasibility studies, assessment of concession applications submitted for tenders, consideration of state guarantees for individual concessions and co-financing by the state budget and the monitoring of concession projects. For more information, see the Centre’s website:

← 46. Pursuant to the National Chamber Law dated 4 July 2013, the Chamber’s mandate is to ensure favourable legal, economic and social conditions for business initiatives and to promote a mutually beneficial partnership between the business community and Kazakhstan government authorities. Accordingly, for example, potential private partners shall be selected from the Register of Potential Private Sector Partners maintained by the Chamber.

← 47. Information obtained through consultations of the OECD Secretariat with business stakeholders in Kazakhstan in 2015-2016. The first major PPP project in Kazakhstan involves construction and operation of light rail line in Almaty with the estimated project cost of USD 521 million, construction period of 2 years (2016-2018) and operation period of 27.5 years. In July 2016 the project was at the stage of preparation of a concession proposal. For more information, see PPP Centre’s website (

← 48. EBRD’s investment in Kazakhstan increased from EUR 328 million in 2013 to EUR 790 million in 2015 (i.e. increase of 141%). The current project portfolio (of EUR 2,455 million) comprises of infrastructure projects (44%), energy (41%), industry, commerce and agribusiness (11%) and financial institutions (4%). See EBRD (2016).

← 49. According to the Ministry for Investments and Development’s Committee on Highways, USD 4.2 billion (1.5 trillion KZT) were allocated in 2015 to support domestic transport. In addition, several large infrastructure investment projects are planned with the participation of Chinese investors within the Silk Road initiative; includinga dry port on the China-Kazakh border (Khorgos Gateway); three railways (including one high speed railway from Moscow to Kazan) and two gas pipeline projects. For more information, see the Ministry for Investments and Development website (

← 50. See WTO (2015c: 3-6).

← 51. See WTO (2015c: 5).

← 52. “The entry shall be permitted for three years, based on the permits, annually issued by the authorized body, provided that the company fulfils one of the following requirements: i) offer training, retraining or advanced training programs for their Kazakhstani employees in skills necessary for subsequent replacement of foreign workforce, or ii) create additional jobs for Kazakhstani employees. The above stated categories of persons must have at least one year work experience in a company, which represents a juridical person of another Member and within which they are being transferred to Kazakhstan”. WTO (2015c: 5-6).

← 53. See WTO (2015c: 4).

← 54. Business visitors mean persons who are not domiciled within the territory of Kazakhstan and are representatives of a service supplier of the WTO Member and entering the territory of Kazakhstan in order to conduct negotiations on sales of services of this supplier, enter into agreement on sales of services, participate in business meetings or establish commercial presence of a service supplier, and are not engaged in making direct sales to the general public or in supplying services themselves nor receive remuneration from a source within Kazakhstan.

← 55. WTO (2015a: §0896).

← 56. In case of contracts between the state and an investor in the Subsurface sector and industrial assembly agreements in the automotive sector that were signed prior to 1 January 2015, all TRIMs-inconsistent measures need to be removed by 1 January 2021 and 1 July 2018, respectively,or by the time of the expiry of the initial duration of the contract, whichever comes sooner. See WTO (2015a, §0897).

← 57. See WTO (2015a: §0896). All WTO-inconsistent measures included in contracts signed with investors in the automotive and Subsurface sector prior to 1 January 2015 would cease to be enforced by1 July 2018 and 1 January 2021, respectively. Kazakhstan is also obliged to engage in consultations with interested WTO members regarding the new WTO-consistent measures that will be applied instead in those two sectors by no later than 1 July 2019 and 1 January 2019, respectively; as well as notify WTO members of any measures planned to replace the currently applied measures at least six months prior to their adoption.

← 58. In addition, even if a potential investor might have offered a level of Kazakhstan content for personnel or services above 50%, the Government shall not take it into account when determining the tender winner for purposes of granting subsurface use rights. WTO (2015a, §1127)

← 59. Qualified employees mean executives, manager and specialists as defined in Kazakhstan’s commitments on intra-corporate transfers in its Schedule of Services (WTO, 2015c: 3)

← 60. See WTO (2015c: 2-3).

← 61. See WTO (2015a, §1127). Kazakhstan content of personnel in the Subsurface sector would be calculated as the proportion (on a per capita basis) of executives, managers and specialists who were citizens of Kazakhstan; and Kazakhstan content in all services rendered to the investor would be defined as the share of the total annual amount of payments (expenditures) for services under all contracts that were paid to juridicalpersons of Kazakhstan. In the case of Kazakhstan’s content in all services rendered to the investor, the amount paid to juridical persons of Kazakhstan would, however, be reduced by any amount paid for services that were performed by enterprises that were not juridical persons of Kazakhstan.

← 62. Since the relatively recent accession of the Russian Federation to the WTO, already several WTO disputes have arisen quoting the country’s alleged breach of the provisions under the TRIMs Agreement. For example, the WTO case DS462 submitted by the European Union against the Russian Federation and the case DS463 submitted by Japan quote the alleged breach of Article 2.1 and 2.2 of the TRIMs Agreement. Both cases are on-going and have not yet resulted in a ruling on the subject.

← 63. The TRIMs Agreement specifically provides that no Member shall apply measures that are inconsistent with Article III of GATT (on national treatment) and Article XI of GATT (on quantitative restrictions) through an application of measures that are “mandatory or enforceable under domestic law or under administrative rulings, or compliance with which is necessary to obtain an advantage, and which require: a) the purchase or use by an enterprise of products of domestic origin or from any domestic; source, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production; or b) that an enterprise’s purchases or use of imported products be limited to an amount related to the volume or value of local products that it exports.” See the WTO TRIMs Agreement, Article 2 and the illustrative list of measures in the Annex.

← 64. According to the WTO, issues relating to the alleged inconsistency of certain measures with the TRIMs Agreement have been raised in 34 requests for consultations under the DSU, 16 of which have moved to the establishment of a panel, 6 have been settled or terminated through a mutually agreed solution, and the remainder is currently in consultation. In addition, a number of cases have referred to other WTO provisions and concluded in the ruling. For example, in the case DS139 (Canada-Autos), Article 3.1(b) of the SCM Agreement was found to prohibit both de jure and de facto local content-contingent subsidies; and several cases relating to the use of local content in the energy area have referred to the relevant provisions in the GATT, TRIMs and SCM Agreements (e.g. DS412, DS426, DS452, DS456). For a discussion of this issue, see for example Bohanes (2015).

← 65. Law No.365-V “On the Introduction of Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan with Respect to the Accession to the World Trade Organisation” of 27 October 2015 that came into force on 9 November 2015.

← 66. See WTO (2015c: 3).

← 67. For example, cross-ownership among incumbent firms limit competition in the domestic market and incumbent operators have long exclusivity rights in such areas as long-distance and international services and interconnectivity for mobile operators, for example. This has resulted in relatively low competitiveness of the sector, whereby the costs of long distance telephone services and broadband internet access are three to six times higher than in comparator countries such as Russia, selected EU countries, and can serve as a break on the competitiveness of localfirms (Jensen and Tarr, 2008: 4). Hence, in order to help attract investment and ensure level playing-field between different operators in the sector, further regulatory changes in the area of competition, corporate governance and sector-specific regulations will be required (see Chapter 2 and the section on competition policy in this chapter).

← 68. Kazakhstan has an average score of 0.325 in the transport sector on the FDI Index (i.e. about two times higher than Kazakhstan’s overall FDI Index score and the OECD average in that sector). Air transport is also the second most restrictive sector in Kazakhstan, after fixed telecommunications.

← 69. See section 11 in the Schedule of Specific Commitments in Services (WTO, 2015c: 28-33).

← 70. See WTO (2015c: 28-31).

← 71. Kazakhstan’s relevant regulatory authority is to make an administrative decision on a completed application for issuance of a licence and authorization for the supply of a financial service, and, if appropriate, approval of new products and rate changes, within a reasonable period of time, and would promptly notify the applicant of the decision. Where it was not practicable for a decision to be made on: i) an application for supply of banking services to receive an authorization within six months, and to receive a licence within two months; and, ii) an application for supply of other financial services to receive an authorization within three months, and to receive a licence within one month, the relevant regulatory authority would notify the applicant without delay. See WTO (2015a), §1132.

← 72. The minimum amountof total assets of the non-resident insurance company, which has filed in an application to open a branch, must amount not be less than USD 5 billion; the experience of the parent insurance company of non-resident insurer should be at least 10 years, and the day-to-day activity of the branch should be manage by at least two residents of the Republic of Kazakhstan. See WTO (2015c: 18-19). The minimum amount of total assets of the non-resident bank, which has submitted the application for opening of a branch, must be not less than 20 billion US dollars, and the minimum amount of deposit, which can be accepted from natural persons by foreign bank branches must be not less than 120,000 US dollars; and the day-to-day activity of the branch should be manage by at least two residents of the Republic of Kazakhstan. WTO (2015c: 22)