THE PROSPECTS OF KYRGYZSTAN’S ACCESSION TO THE CUSTOMS UNION AND COMMON ECONOMIC SPACE
Keywords:
Kyrgyzstan, Customs Union, Common Economic Space, Common Customs Tariff, economic modernization, competitiveness, sensitive commodities, transition period.Abstract
This article looks at the goals, conditions, and possible consequences of Kyrgyzstan’s accession to the Customs Union (CU) and Common Economic Space (CES), describes the current state of the country’s export and import situation, and analyzes the role of re-export in the Kyrgyz economy in the past decade. It studies the alleged positive effects and risks that could arise if Kyrgyzstan joins the CU and CES and presents the data of an analysis of the comparative advantages of commodity groups. The authors justify the importance of pursuing a coordinated policy with the other CU countries to develop priority industrial and agricultural sectors. This will encourage large companies to come to Kyrgyzstan and open their branches in the country, as well as help to solve tasks aimed at modernizing agriculture and creating an agroindustrial cluster.
Keeping in mind that commodity flows and business will have to undergo major reorientation after the country joins the CU and CES, the authors conclude that a certain transition period will be needed to enable gentler adaptation of the economy. The authors propose creating a mechanism based on EU experience within the CU and CES to support countries with slower rates of development.
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This article was prepared based on the results of a study of the prospects for Kyrgyzstan’s participation in the integration project being implemented by the Russian Federation, Kazakhstan, and Belarus carried out in 2013 by a group of experts. This article refers to certain provisions of the report published by the National Institute of Strategic Studies of the Kyrgyz Republic (see: “Prospects for Kyrgyzstan’s Participation in the Eurasian Economic Union: Pluses and Minuses,” National Institute of Strategic Studies, Bishkek, 2013, 99 pp.), which the authors participated in writing.
The Customs Union was created in 2010 by the Russian Federation, Kazakhstan, and Belarus. The agreements of the said countries on the establishment of a Common Economic Space came into force on 1 January, 2012.
See, for example: Preferential Trade Agreement Policies for Development: A Handbook, ed. by J.-P. Chauffour,J.-Ch. Maur, World Bank, 2011; How to Design, Negotiate, and Implement a Free Trade Agreement in Asia, ADB, 2008.
See: Bazaars and Trade Integration in CAREC Countries, Report prepared by World Bank, May 2009.
See: R. Mogilevskii, “Trends and Patterns in Foreign Trade of Central Asian Countries,” Working Paper No. 1, May 2012, University of Central Asia.
See: Bazaars and Trade Integration in CAREC Countries.
See: RBC Daily, 28 August, 2013, available at [http://www.rbcdaily.ru/economy/562949988684705], 29 January,2014.
See: Website of the Ministry of Agriculture of the Republic of Kazakhstan, available at [http://mgov.kz/tezisy-doklada-na-temu-razvitie-pererabaty-vayushhej-promy-shlennosti-v-respublike-kazahstan/], 29 January, 2014.
See: Trade and Development Report, 2007, UNCTAD, 2007.
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