06ASTANA21, KAZAKHSTAN’S CHIEF WTO ACCESSION NEGOTIATOR SPEAKS ON

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Reference ID Created Released Classification Origin
06ASTANA21 2006-03-28 11:38 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO4043
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHAST #0021/01 0871138
ZNR UUUUU ZZH
R 281138Z MAR 06
FM USOFFICE ASTANA
TO RUEHC/SECSTATE WASHDC 0078
INFO RUEHTA/AMEMBASSY ALMATY 0072
RUCNCIS/CIS COLLECTIVE
RUEHAST/USOFFICE ASTANA 0080

UNCLAS SECTION 01 OF 02 ASTANA 000021 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS , SCA/CEN - MUDGE 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KZ
SUBJECT: KAZAKHSTAN'S CHIEF WTO ACCESSION NEGOTIATOR SPEAKS ON 
ACCESSION, ECONOMIC POLICIES 
 
 
ASTANA 00000021  001.2 OF 002 
 
 
1. (U) Summary:  In a February 2 meeting, Deputy Trade Minister 
and Kazakhstan's chief WTO accession negotiator Zhanar 
Aitzhanova briefed Ambassador Ordway on the status of economic 
reforms tied to accession and the Ministry's current views on 
economic policy.  End summary. 
 
 
 
WTO Accession 
 
------------- 
 
 
 
2. (SBU) Kazakhstan has submitted its goods and services offer, 
said Aitzhanova.  "We did our best to take your comments into 
consideration," she noted, adding that "some issues still 
remain."  On telecommunications, Aitzhanova remarked, "we are 
still somewhat inflexible, since this is a domestic industry in 
need of protection."  She expressed optimism that "not too many 
problems" in regard to accession remain in the financial sector. 
 With respect to the issue of foreign banks' ability to open 
branches in Kazakhstan, she commented, "We want to support our 
banks.  But we have three dominant banks; interest rates are 
still quite high.  So, this sector needs to open up." 
 
 
 
3. (SBU) Aitzhanova added that Kazakhstanis have started work on 
technical issues, such as sanitary and phytosanitary measures 
(SPS), with help from the EU, and on customs issues under the 
umbrella of the Central Asia Trade and Investment Framework 
Agreement (TIFA).  WTO requirements dictate that any laws 
affecting trade must be available in English.  "We lack the 
capacity," Aitzhanova said, "to translate our laws from Russian 
or to perform economic analysis of our WTO commitments." 
 
 
 
4. (SBU) On labor issues, Aitzhanova said, "we are still very 
sensitive."  Kazakhstan is "unprotected," she noted, due to its 
geography - particularly its proximity to China - and the lack 
of sophisticated immigration or border controls.  She said that 
the idea of maintaining a quota system for unskilled labor only 
is under consideration.  However, the notion of establishing 
regulations, such as requiring companies to advertise in 
Kazakhstani newspapers before hiring foreign workers, is not 
being accepted. 
 
 
 
Economic Policy 
 
--------------- 
 
 
 
5. (SBU) Before WTO accession, Aitzhanova said, the key is 
developing policies; after accession, the focus will be on 
enforcement.  Aitzhanova characterized her new boss, the 
recently appointed Minister of Industry and Trade Vladimir 
Shkolnik, as an energetic, quick learner with a sense of humor, 
and remarked that he is not interfering with her work.  She 
noted that Shkolnik strongly supports the Industrial Innovative 
Development Strategy and sees Kazakhstan as an energy-producing 
state that should not be ashamed that energy represents 80% of 
its exports.  "The key," Aitzhanova commented, "is to use the 
[energy] revenues well to develop other sectors without 
overstretching our resources, financial and human." 
 
 
 
6. (SBU) Turning to agricultural subsidies, Aitzhanova said, "we 
should not reduce them but make them better."  She agreed with 
the Ambassador that developing the textile industry is a 
problematic idea.  Textiles, she noted, are a water-depleting 
sector with the resulting potential for sparking regional 
conflict. 
 
 
 
7. (SBU) Kazakhstan's trade surplus, Aitzhanova said, 
constitutes a quarter of its GDP.  "But," she stated, "until the 
end of 2004, we did not have a regulatory framework on trade. 
Focusing on trade is, for us, a necessity as well as a 
commitment to WTO accession."  On e-commerce, Aitzhanova added, 
Kazakhstan still lacks a regulatory framework. 
 
 
 
ASTANA 00000021  002.2 OF 002 
 
 
 
Clubs: TIFA and Eurasian European Community 
 
------------------------------------------- 
 
 
 
8. (SBU) Aitzhanova responded positively to the Ambassador's 
suggestion that Kazakhstan take a leadership role in TIFA. 
Kazakhstan, she said, can share its experience in sector reform, 
such as banking, and in clearing a path toward joining the WTO. 
"It is one thing when the U.S. comes to teach," Aitzhanova 
observed, "and another when Kazakhstan is succeeding in action." 
 Kazakhstan is considering focusing on financial system issues - 
not only banking and insurance but also exchange rate and 
currency management.  Aitzhanova added that Kazakhstanis are 
considering holding a regional conference on these topics in 
Almaty.  "This," she said, "is crucial for facilitating 
cross-border trade and investment."  The Eurasian Economic 
Community is also important to Kazakhstan, she concluded, 
because of Kazakhstan's "strategic" dependence on Russia in 
shipping its goods to other countries, particularly the EU. 
 
 
 
Comment 
 
------- 
 
 
 
9. (SBU) Comment:  Aitzhanova remains optimistic that Kazakhstan 
will be
 able to complete all WTO requirements in 2006.  However, 
the GOK's inflexibility on the telecommunications sector, among 
others, could make this deadline difficult to meet.  End comment. 
TRACY

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