09ASTANA497, KAZAKHSTAN: LEAD WTO NEGOTIATIOR REQUESTS FLEXIBILITY

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Reference ID Created Released Classification Origin
09ASTANA497 2009-03-20 02:26 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO5039
OO RUEHAG RUEHAST RUEHBI RUEHCI RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK
RUEHKW RUEHLA RUEHLH RUEHLN RUEHLZ RUEHNEH RUEHNP RUEHPOD RUEHPW
RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHTA #0497/01 0790226
ZNR UUUUU ZZH
O 200226Z MAR 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4966
INFO RUCNCIS/CIS COLLECTIVE 1394
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0771
RUEHKO/AMEMBASSY TOKYO 1474
RUEHUL/AMEMBASSY SEOUL 0458
RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
RHEHNSC/NSC WASHDC 0954
RUEKJCS/SECDEF WASHDC 0867
RUEKJCS/JOINT STAFF WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL

UNCLAS SECTION 01 OF 02 ASTANA 000497 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, S/SRAP, EUR/RUS, EEB 
STATE PLEASE PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON EINV EFIN EAID RS KZ
SUBJECT:  KAZAKHSTAN:  LEAD WTO NEGOTIATIOR REQUESTS FLEXIBILITY 
 
REF:  (A) 08 ASTANA 2445; (B) 08 Astana 2570 
 
1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
2.  (SBU) SUMMARY:  On February 18, the Ambassador met with Vice 
Minister of Industry and Trade Zhanar Aitzhanova to discuss the 
status of Kazakhstan's WTO accession negotiations with the United 
States.  Aitzhanova expressed frustration with the negotiations, 
claiming that the United States is asking for more concessions from 
Kazakhstan than it has from other countries.  She noted, "We started 
this [WTO negotiation] process [with the United States] before the 
global economic crisis.  It's a very different world now."  She said 
that she is currently focusing on WTO negotiations with other 
countries, and at the same time working intensely on the proposed 
customs Union with Russia and Belarus because of the "real immediate 
benefits" of the latter.  END SUMMARY. 
 
KAZAKHSTAN TO CONTINUE WTO NEGOTIATIONS 
 
3.  (SBU) During a February 18 meeting with the Ambassador, 
Kazakhstan's lead WTO accession negotiator, Vice Minister of 
Industry and Trade Zhanar Aitzhanova, explained that despite 
frustrations with the accession process, Kazakhstan remains 
committed ultimately to entering the WTO.  Aitzhanova had just 
returned from a trip to Saudi Arabia, and said that Kazakhstan is 
currently working to intensify its WTO negotiations with the Saudis, 
who are seeking challenging commitments from Kazakhstan in energy. 
 
 
CUSTOMS UNION FORMATION ADVANCING RAPIDLY 
 
4.  (SBU)  Aitzhanova detailed advancements made in the formation of 
the Russia-Belarus-Kazakhstan customs union (ref A), though admitted 
that it is highly unlikely Russia and Kazakhstan will meet the 
proposed April 1 deadline for the establishment of unified customs 
tariffs.  According to Aitzhanova, the Kazakhstani government is 
currently "making its case" at political and technical levels in 
Moscow, with negotiations expected to resume in Kazakhstan after the 
March 22 Nauryz holiday. "It is not easy," she argued, "but the 
customs union is a two-sided process.  Unlike WTO negotiations where 
there is little flexibility, with Russia, everything is open to 
negotiation and political intervention." 
 
NEGOTIATIONS ON SERVICES STALLED 
 
5.  (SBU) Aitzhanova insisted that both she and her team are and 
will remain responsive to U.S. WTO negotiators.  Aitzhanova noted 
that there is still significant work to be done on agricultural 
issues, specifically about livestock and poultry, where U.S. firms 
directly compete with Kazakhstani ones.  She expressed frustration 
at the status of negotiations with the United States on services. 
As she described it, there continue to be three primary areas of 
contention in the service negotiations:  telecommunications, 
personnel, and financial services.   Aitzhanova claimed that on 
services, both U.S. and the EU negotiators continue to demand far 
more from the Kazakhstanis than they have from other countries.  For 
example, in telecommunications, Kazakhstan is willing to grant 
European satellite service providers access to existing, 
domestically-licensed telecommunication companies, but not general 
access to the greater market, as the Europeans are demanding. 
Kazakhstan is also being asked to give "open access" to the mass 
media, including broadcasting -- but this goes too far the 
Government of Kazakhstan. 
 
6.  (SBU) Regarding personnel services, including the hiring of 
qualified specialists, Aitzhanova explained that while this issue 
has been largely resolved with the EU, U.S. negotiators remain 
committed to removing any Kazakhstani local-content provisions from 
an accession agreement.  "This issue is extremely important for 
President Nazarbayev, and would be too large a concession for us" 
said Aitzhanova, explaining that because almost 90% of the work in 
Kazakhstan's extractive sector is performed by foreign companies, 
 
ASTANA 00000497  002 OF 002 
 
 
the government must protect and develop domestic industry and human 
resources. 
 
7.  (SBU) In Aitzhanova's opinion, the United States is asking 
Kazakhstan to sign more a more concessionary agreement that is has &#x
000A;asked of other countries, and singled out Vietnam as an example of a 
country getting a better deal from us.  Feeling perhaps that 
Kazakhstan is becoming the victim of its own previous economic 
successes, Aitzhanova said "Every time we point this out, we are 
told that because the Kazakhstani government is so liberal, access 
should be liberal."  Over the course of the meeting, Aitzhanova 
became increasingly frank in criticizing the WTO negotiation process 
with the United States.  "If this continues to be the case, we will 
go to the customs union and get real immediate benefits," she 
maintained.   As for services, "We have nothing left to offer," she 
said.  "Washington recommends future digital video conferences, and 
we are ready for them.  But we will only repeat what we have said," 
Aitzhanova explained. 
 
NEXT STEPS UNCERTAIN 
 
8.  (SBU) "Frankly, we feel frustrated," Aitzhanova continued, "I 
know what you want, and frankly I do not have much to offer." 
Aitzhanova also repeated several times her belief that she feels the 
continued demands of the U.S. negotiators do not reflect the current 
economic realities facing Kazakhstan.  "My experience is that 
negotiators are not always following what is going on in the world. 
We need reality to be reflected.  We started this [WTO negotiation] 
process [with the United States] before the global economic crisis. 
It's a very different world now."  Aitzhanova intends to focus on 
finalizing accession agreements 
with Ecuador, Saudi Arabia, and El Salvador, but at the same time 
will be responsive to USTR.  (NOTE:  With negotiations moving 
forward with the EU on export duties, Aitzhanova claimed she might 
be able sign an agreement on that specific issue during a planned 
trip to Brussels later in March.  END NOTE.) 
 
CUSTOMS UNION LIKELY TO TRUMP WTO 
 
9.  (SBU) According to Aitzhanova, prolonged negotiations with USTR 
on sensitive issues related to financial services, done in the light 
of the deteriorating global financial situation, are very likely to 
give the customs union with Russia and Belarus a particularly 
attractive gloss.  "There has been much talk, but little progress, 
and now this is being overlapped by the customs union," said 
Aitzhanova.  "If we don't get something that reflects reality, we 
will need to postpone the WTO decision.  "Without more flexibility 
from the United States, the customs union will take precedence." 
Aitzhanova acknowledged that Kazakhstan ultimately will seek entry 
into the WTO, and concluded that the Kazakhstanis know they must 
participate in the global market place. 
 
10.  (SBU) Aitzhanova noted that Prime Minister Karim Masimov 
continues to work flat-out on the economy, travelling in the regions 
to address growing unemployment and "very concerned about what will 
happen to the banks tomorrow."  She confirmed that Masimov would 
welcome a call from a senior Obama Administration official. 
 
HOAGLAND

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