Third Draft November 2008

The Benefits of Joining the Asia-Pacific Trade Agreement (APTA) for Azerbaijan, Kazakhstan and Kyrgyzstan

by

Richard Pomfret

CONTENTS:

1. From the Bangkok Agreement to APTA

2. Azerbaijan, Kazakhstan and Kyrgyzstan: Economic Structure and

Relation to ESCAP

3. Trade Policies of Azerbaijan, Kazakhstan and Kyrgyzstan

4. Current Trade Flows and Patterns of Trade between Azerbaijan,

Kazakhstan and Kyrgyzstan and APTA Members

5. Impact of Azerbaijan, Kazakhstan and Kyrgyzstan Joining APTA

6. Potential Benefits to Azerbaijan, Kazakhstan and Kyrgyzstan from

Extensions to APTA

7. Conclusions

1

The Benefits of Joining the Asia-Pacific Trade Agreement (APTA) for Azerbaijan, Kazakhstan and Kyrgyzstan

This study analyses country-specific benefits of APTA membership for Azerbaijan,

Kazakhstan and Kyrgyzstan. After a review of the Asia-Pacific Trade Agreement

(APTA) and of the three countries’ economic structure and trade policies, the

analytical starting point is a detailed assessment of the three countries’ disaggregated

bilateral trade with the five APTA members in Section 4. This is used in Section 5 for

a baseline assessment of the impact of applying current APTA trade preferences to

existing exports of Azerbaijan, Kazakhstan and Kyrgyzstan. The conclusion is that

APTA accession offers positive but small benefits to existing exporters.

For Azerbaijan, Kazakhstan and Kyrgyzstan an economic imperative is to use

the breathing space granted by buoyant primary product exports to develop a

diversified economy. The study argues that APTA membership could play a positive

and strategic role in this process by offering improved market access to some large

Asian markets. If domestic conditions are conducive to entrepreneurship,

internationally competitive producers in Azerbaijan, Kazakhstan and Kyrgyzstan

would be encouraged to export within APTA. In sum, the larger benefits from APTA

accession are likely to come from a deepening and widening of the Agreement to

ensure greater product coverage, guaranteed market access, trade facilitation

measures, and so forth, as well as bringing in new members. This is a plausible vision

as long as members are serious in their 2006 commitment to revitalize APTA.

1. From the Bangkok Agreement to APTA

As early as the 1960s the United Nations regional commission began to explore

instruments for intra-regional trade expansion and other measures for economic

cooperation in the Asia-Pacific region. In July 1975, under the aegis of a Trade

Negotiations Group convened by the United Nations Economic and Social

Commission for Asia and the Pacific (ESCAP), seven countries met in Bangkok and

agreed on a list of products for mutual tariff reductions. This First Agreement on

Trade Negotiations among Developing Country Members of ESCAP became known

as the Bangkok Agreement. It was ratified by five of the participating countries

(Bangladesh, India, Lao People’s Democratic Republic, the Republic of Korea and Sri

2

Lanka); the Philippines and Thailand had attended the Bangkok meeting but did not

ratify the Agreement.1

In the first round of negotiations, concluded in 1975, tariff preferences were

agreed on 104 products, plus special concessions were granted to Lao PDR on fifteen

items. In 1979 the tariff preferences were renegotiated as some signatories felt that

the balance of advantages was unequal. The number of products covered was reduced

to 93, plus special concessions to Lao PDR on sixteen items and to Bangladesh on

three items.

The second round of negotiations, held between 1984 and 1990, resulted in

tariff concessions being exchanged on 438 items, plus special concessions to

Bangladesh on 63 items. During the second round a number of countries attended as

observers: China, Indonesia, Iran, Malaysia, Nepal, Pakistan, Papua New Guinea, the

Philippines and Thailand. In 2001 China formally became a member of the

Agreement, and listed 739 concessions, in addition to 18 items for which special

concessions were granted to least developed member countries.

The third round was held from 2001 to 2005. The outcome was a large

increase in the number of items covered, from 1,721 to 4,270, and a widening of the

margin of preference, from 22% to 27%. The number of special concessions granted

to least developed member countries was increased from 112 to 587, and the margin

of preference on these increased from 32% to 59%. The concessions and margins of

preference after the third round are listed in Table 1.2 The third round also formalized

rules of origin for APTA-qualifying trade.3 In November 2005 the Ministerial

Council of the Bangkok Agreement adopted a new name for the Agreement: the Asia-

Pacific Trade Agreement (APTA).4

1 Lao PDR has not issued customs notification of concessions granted and is thus not an effective participating member, although some other members have extended their APTA concessions to include Lao PDR. Papua New Guinea acceded to the Agreement in December 1993, but the government has still to ratify the Agreement. Pakistan announced its intention to accede in February 1998, but has not completed the accession process. 2 A more detailed analysis is contained in the study by Indra Nath Maukherji “Asia Pacific Trade Agreement: Implications of Exchange of Trade Preferences for Member and Prospective Member Countries”, available at http://www.unescap.org/tid/apta/tradepref.pdf, which also considers the impact of APTA accession by Bhutan, Cambodia, Indonesia, Mongolia, Myanmar, Nepal, Pakistan, Philippines, Thailand and Vietnam. 3 APTA rules of origin require 45% local value-added (35% for least-developed country members) or a cumulative content of over 60% from APTA members. For more details, see the document available at http://www.unescap.org/tid/aptaro.pdf 4 The Ministerial Council is the highest decision-making authority of APTA. After the inaugural meeting in November 2005 in Beijing (China), the second meeting of the Ministerial Council was held in Goa (India) in October 2007.

3

APTA is a preferential trading arrangement aimed at expanding trade within

the ESCAP region. It was approved by GATT in 1978 “provided that any preferential

treatment under the Agreement shall be designed to facilitate trade between the

participating states and not to raise barriers to trade of other contracting parties”.5 All

developing member countries of ESCAP are eligible to accede to APTA. Secretariat

services are provided by the Trade and Investment Division of ESCAP.

Although the five APTA countries account for over a tenth of world trade and

trade among the members has been growing, it seems unlikely that more than a small

proportion of their total trade is undertaken at APTA preferential tariff rates.6 Not

only is the positive-list approach to integration slow and partial, but it also invites

selection of items where there is little expectation of trade creation at the expense of

domestic producers. Moreover, several of the APTA members participate in other

regional trading arrangements.7 Finally, although mention has been made of non-

tariff barriers and trade facilitation (not to mention trade in services, investment and

other deep integration issues), these topics have yet to feature in APTA outcomes.

The members have since 2006 committed themselves to a process of

revitalizing APTA. Apart from expanding the coverage of APTA by a fourth round

of negotiations, due for completion by September 2009, the members are also

committed to actively promoting the accession of new members.

5 APTA was notified to the WTO under the Enabling Clause covering preferential tariffs on imports from developing countries, so that the conditions are less stringent than they would be under Article XXIV. The issue has been raised at the WTO of whether South Korea qualifies as a developing country. 6 Utilization rates are high on imports from Bangladesh, which as a least-developed country benefits from greater margins of preference, but low on imports from other APTA members. Rajan Sudesh Ratna has calculated (in “APTA Market Access: Results from the Third Round”, paper presented at the APTA seminar organized by ESCAP in Bishkek, 5 November 2008) that, in the ten-month period from September 2006 to June 20007, 88% of imports from Bangladesh into the Republic of Korea and 58% of imports from Bangladesh into China that were eligible for APTA preferences actually claimed the preferential tariff rate, while the utilization rates on all APTA-eligible imports were 13% for the Republic of Korea and 25% for China. Because coverage expanded after the third round of negotiations, however, the utility rate (i.e. the share of total imports from APTA partners receiving preferential treatment probably increased in all cases, but the levels remain small, e.g. utility rates of 3-4% on APTA imports into the Republic of Korea and China in the ten-month period analysed by Rajan Sudesh Ratna. 7 Bangladesh, India and Sri Lanka are in the South Asian Free Trade Area (SAFTA) and in BIMSTEC (the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation). India has signed bilateral trade agreements with several potential APTA members (for example, with Bhutan, Nepal, and Thailand). China and the Republic of Korea have FTAs with ASEAN, and are negotiating with India.

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2. Azerbaijan, Kazakhstan and Kyrgyzstan: Economic Structure and Relation to

ESCAP

After the dissolution of the Soviet Union at the end of 1991, Azerbaijan, Kazakhstan

and Kyrgyzstan joined the United Nations in July 1992 and together with Tajikistan,

Turkmenistan and Uzbekistan elected for membership in the UN’s Asian regional

commission. Azerbaijan, Kazakhstan and Kyrgyzstan are among the twelve

landlocked developing countries that are ESCAP members, but none of the three is a

designated least-developed country.

Table 2 provides summary economic statistics for the three countries. At the

time of independence, although Azerbaijan and Kyrgyzstan were among the poorest

of the republics of the Soviet Union, all three could be considered middle-income

countries, with good human development indicators (e.g. almost universal literacy).

They experienced hyperinflation in the early 1990s and a deep decline in real output

in the early and mid-1990s, which was most severe in war-affected Azerbaijan

(Tables 3 and 4). The economic situation turned around in the second half of the

1990s, since when all three countries have experienced positive growth and moderate

inflation. With booming energy prices, important new discoveries and the

construction of new pipelines, oil-rich Kazakhstan and Azerbaijan have been among

the fastest growing economies in the world since the turn of the century.8

All three countries’ role in the Soviet economy was as producers of raw

materials: cotton, energy products and minerals, plus some farm products (especially

grain in northern Kazakhstan). This specialization has become more pronounced,

with the development of a goldmine in Kyrgyzstan and the booming oil exports of

Azerbaijan and Kazakhstan (Table 5). The three countries’ export specialization can

be illustrated by Balassa’s index of revealed comparative advantage.9 A number

below one indicates that the country exports less of a good relative to the global

average, while a number above one indicates above average export specialization.

8 For more details on the countries’ economies, see Richard Pomfret The Economies of Central Asia (Princeton University Press, 1995), Asian Economies in Transition (Edward Elgar, 1996) chapter 8 (on Azerbaijan, and The Central Asian Economies since Independence (Princeton University Press, 2006). 9 Bela Balassa (Trade Liberalization and 'Revealed' Comparative Advantage, Manchester School 33 (1965), 99-123) defined revealed comparative advantage as a country's share of world exports of a good divided by its share of total world exports. The index is 100.(Xi,j /Xw,j)/(Xi,,t /Xwt), where Xi,j is exports by country i of good j, Xw,j is global exports of good j, Xi,,t is country i’s exports of all goods, and Xw,t is total world exports.

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Table 6 shows the strong specialization of Azerbaijan and Kazakhstan in oil and gas

exports and of Kyrgyzstan in gold (reported under SITC group 9). Kyrgyzstan

continues to have some specialization in agricultural exports, although in part this

shows up in the index because overall exports are small. Kazakhstan is a much more

important food exporter, but in the country’s aggregate trade data grain exports are

overshadowed by oil. Apart from Kazakhstan’s processed metals, all three countries

have a pronounced comparative disadvantage in manufactured goods (groups 6-8).

For Azerbaijan and Kazakhstan the concentration of exports on oil and oil

products became even more pronounced in the period 2002-7 as oil prices rose

rapidly. Table 7 illustrates the point for Azerbaijan, where by 2007 exports consisted

almost entirely of oil and oil-related products. The situation was only a little less

extreme for Kazakhstan, whose farm exports were aided by booming world grain

prices in 2007-8 and which continued to export steel and minerals. For both

countries, even as they benefit from booming energy revenues, concerns about Dutch

Disease effects and the need to promote economic diversification are important.10

The three countries’ direction of trade before 1992 was heavily oriented

towards markets within the Soviet Union, and the historic trade patterns continued to

be important for most of the 1990s. Almost all railways and roads run north to

Russia; the only significant exception is a rail link from Kazakhstan to China which

opened in 1992 and which has been primarily used by Kazakhstan to export iron and

steel to China, and Azerbaijan’s road links to Iran and Turkey. Relatively easily

transportable high value-weight items such as gold and cotton were soon being sold

on the global market. Oil exports were more difficult to redirect, given the inherited

pipeline network, but especially after the opening of new pipelines in the early 2000s,

10 A Dutch Disease effects arise when exchange rate appreciation due to exports from a booming sector make other traded goods uncompetitive; the concerns include the possibility that the declining sector may have desirable dynamic externalities or that if the boom ends due to exhaustion of the commodity or to falling world prices there will be high set-up costs to re-establishing the activities which have been destroyed. Azerbaijan’s National Oil Strategy has four pillars: provision of capital and technology by major oil companies, establishment of multiple transport routes, accumulation of managerial expertise, and investment in sustainable development; the last is primarily the responsibility of the national oil fund, which transfers some oil revenues to the government budget and is mandated to invest the remainder to mitigate Dutch Disease effects (so far primarily by conservative overseas investment). Kazakhstan’s national oil fund (in which some USD23 billion had been allocated by mid-2008) has less formal guidelines, but the President has a vision of the country becoming a diversified and transparent market economy by 2030. Kazakhstan has pursued diversification by such polices as the billion-dollar 2003-5 Agriculture and Food Program, the Innovative Industrial Development Strategy for 2003-15, and a cluster model of industrial policy advocated by Harvard Professor Michael Porter and adopted in 2004. See Martha Brill Olcott, Kazakhstan: Will “BRIC” be spelled with a K? China and Eurasian Forum Quarterly 6(2), 2008, 41-53.

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such as the Baku-Tbilsisi-Ceyhan pipeline to Turkey’s Mediterranean coast, energy

exports are becoming more geographically diversified. A feature of oil exports is that

the final destination may be unknown, and of little interest, to the producer.

Azerbaijan’s trade statistics for 2006 and 2007, for example, show over 85 per cent of

exports going to countries not identified in the State Statistical Committee’s trade data

(Table 8), and this is overwhelmingly oil and oil products.

The sources of imports have also diversified, although Russia remains the

largest supplier to all three countries.11 In particular, China has become an important

trading partner, and is now the second-largest supplier of imports to Kyrgyzstan and

to Kazakhstan and seventh-largest supplier to Azerbaijan.12 However, apart from

China, Asian countries have lagged as trading partners, and other APTA member

countries have not featured strongly in the three countries trade (Section 4).

3. Trade Policies of Azerbaijan, Kazakhstan and Kyrgyzstan

For all three countries trade policies are difficult to track in the early post-

independence years. Borders were extremely porous. Different practices applied to

trade with CIS countries and external trade, although the two may not have been easy

to distinguish at borders which were internal to the former Soviet Union.13

Azerbaijan was involved in a conflict with Armenia over the disputed Nagorno-

Karabakh territory; war displaced about a million people in 1992-4 and, even after a

ceasefire was agreed, Armenia continued to occupy a substantial part of Azerbaijan’s

territory. After the mid-1990s trade policy became more transparent and better

enforced.

All three countries applied for membership of the World Trade Organization

(WTO) and, although the Kyrgyz negotiations were speedily concluded, Azerbaijan 11 Treating the European Union as a single entity, according to WTO trade data the EU is the biggest supplier of imports and market for exports for Azerbaijan 12 Imports of Chinese consumer goods are difficult to measure because some arrive through unmonitored channels. In Kyrgyzstan large quantities of Chinese imports end up in two huge bazaars (in Bishkek and near Osh) where sales are often to customers from Uzbekistan. 13 A large part of international trade in the 1990s was conducted by individual shuttle traders (chelnoki) travelling to cities in the Gulf, Turkey, China, India or southeast Asia, and often bypassing or bribing the customs officials. The Kazakh authorities estimated that over a quarter of total imports in 1995 and a third in 1996 were shuttle imports (reported in the International Monetary Fund IMF Staff Country Report No. 97/67 Republic of Kazakstan - Recent Economic Developments, August 1997, p. 114-50), but by their nature such estimates are gross approximations. The shuttle trade phenomenon has become relatively less important in the twenty-first century as the retail sector, especially in the principal cities has become better organized, but it has not disappeared.

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and Kazakhstan have still to accede to the WTO. In 1998 Kyrgyzstan became the first

Soviet successor state to join the WTO, reflecting its liberal trade policies with low

tariffs and few non-tariff barriers to trade. Kazakhstan’s accession negotiations

moved apace in 1996-7 as a fairly liberal tariff schedule was adopted, but slowed

down after 1998 when the economy was hit by the Russian Crisis and the government

reacted by introducing ad hoc trade restrictions.14 The pace of negotiations picked up

again in 2003-5, but since then they appear to have stalled at the final stage.15

Although Azerbaijan applied for WTO membership only a year after Kyrgyzstan and

Kazakhstan, it has taken a more cautious approach; the accession negotiations have

moved slowly and are at a more preliminary stage than Kazakhstan’s.16

Azerbaijan, Kazakhstan and Kyrgyzstan joined the Commonwealth of

Independent States (CIS) in 1992 and have signed statements of intent to create

preferential trading arrangements within the former Soviet space. Apart from the

Eurasian Economic Community (EurAsEC), of which Kazakhstan and Kyrgyzstan are

members, these agreements have had little impact to date. The three countries have

been members of the Economic Cooperation Organization (ECO) since 1992, and

Kazakhstan and Kyrgyzstan are members the Shanghai Cooperation Organization

(SCO), neither of which has had an impact on trade policy.17

Despite their differing paths to WTO accession, all three countries now have

low average tariffs with few peaks and relatively few non-tariff barriers to trade. The

WTO reports average tariffs of 4.8% for Kyrgyzstan, 7.8% for Kazakhstan and 9.6%

14 Following the August 1998 Russian crisis, Kazakhstan introduced a 20% value-added tax on all personal imports from Russia, the Kyrgyz Republic and Uzbekistan, and then in December 1998 enacted a law on “Measures to Protect the Domestic Market from Imported Goods”. Under this law, tariffs as high as 200% were imposed on a number of goods imported from the Kyrgyz Republic and Uzbekistan in February 1999, when other restrictions such as import quotas on cement imports from the Kyrgyz Republic were also imposed. In April 1999 the 200% February tariffs were eliminated, but new licensing procedures, transit fees and mandatory deposits on imports from the Kyrgyz Republic and Uzbekistan were introduced. 15 After 2001 several rounds of talks with countries expressing interest in specific aspects of Kazakhstan’s application formed the basis for the Working Party’s Factual Summary. This appeared in September 2004, and was followed in May 2005 by a Draft Working Party Report, which was revised in September 2006. The Working Party Report normally signals the final stage of the accession process but there has been little formal progress in the following two years. 16 The Working Party did not meet until June 2002. Since then the Working Party has met five times, most recently in May 2008, but has not yet produced a Factual Summary. 17 See Central Asia Human Development Report: Regional Cooperation for Human Development and Human Security (United Nations Development Programme, Bratislava, 2005), Central Asia: Increasing Gains from Trade through Regional Cooperation in Trade Policy, Transport and Customs Transit (Asian Development Bank, Manila, 2006), and Richard Pomfret, The Central Asian Economies since Independence (Princeton University Press, 2006), chapter 10.

8

for Azerbaijan.18 Thus, although all three countries are concerned about the decline

of some economic activities and the risk of becoming over-reliant on primary product

exports whose price is volatile, none has resorted to tariff protection as a primary

instrument of industrial policy.19 Other than in non-traded activities, any new

investments have to be internationally competitive and dynamic producers will need

to find export markets.

(a) Kyrgyzstan

In 1994 Kyrgyzstan’s government abolished the state monopoly on international

trade, and since 1995 the country has pursued a trade policy based on moderate most-

favored nation (MFN) tariffs with a maximum rate of 15% and no specific duties.

Most tariffs were set at 10%, with 5% for imports from developing countries and 0%

on intra-CIS trade. The effective tariff in the second half of the 1990s was around

2%. Higher VAT rates applied to imported goods than to identical domestically

produced goods, but this was discontinued after WTO accession in 1998.

In February 1996 Kyrgyzstan initiated its WTO accession process and became

a WTO member in December 1998. Kyrgyzstan’s WTO commitments are

remarkably liberal, with bound tariffs set at low rates and with virtually all sectors

included in its GATS commitments. The growth of international trade and integration

into the global economy since WTO accession has been disappointing, partly because

the business environment remains unattractive to private investors due to institutional

shortcomings and widespread corruption, but the poor trade performance is also due

to geography and lack of regional cooperation to facilitate transit.20

18 Azerbaijan and Kyrgyzstan are in the WTO’s World Tariff Profiles 2006 (latest version) – available at http://www.wto.org/english/tratop_e/tariffs_e/tariff_profiles_2006_e/tariff_profiles_2006_e.pdf and the Kazakhstan estimate is from the Country Profile section of the WTO website. According to a report Trade Taxes in CAREC Countries prepared by Veronica Bacalu of the IMF for the September 2006 CAREC Trade Policy Coordination Committee meeting, actual collected duties are even lower; the ratio of duty collected to total imports in 2005 was 1.2% in Kyrgyzstan, 2.4% in Azerbaijan and 2.6% in Kazakhstan - the report is available at http://www.adb.org/Documents/Carec/trade-taxes-eng.pdf 19 This is in contrast to neighboring Uzbekistan and Turkmenistan, both of which have adopted import-substituting industrialization strategies. 20 Roman Mogilevsky (“Role of Multilateral and Regional Trade Disciplines: Kyrgyzstan’s Experience”, CASE Studia i Analizy 278, Center for Social and Economic Research, Warsaw, 2004) provides more details on the accession terms. For an assessment of post-accession trade performance see Richard Pomfret “Lessons from Kyrgyzstan’s WTO Accession for Kazakhstan, Tajikistan and Uzbekistan”, Asia-Pacific Trade and Investment Review, 3(2), December 2007, 27-46.

9

Neither Russia nor any other Central Asian country is a WTO member, so that

Kyrgyzstan operates in a dual-track trade environment whereby much of its trade is

conducted outside WTO rules. Kyrgyzstan is a member of several regional

organizations, of which the most significant is the Eurasian Economic Community

(EurAsEC) which contains its major CIS trading partners.21 In February 2000,

reflecting the lack of progress towards a customs union, a new agreement was signed,

which envisaged tariff harmonization within five years, but by 2005 the common

external tariff covered only 6,156 of the 11,086 tariff lines identified in the union’s

classification system (and these were largely ones where the members’ pre-existing

tariffs had been similar). Tariff harmonization within EurAsEC is implausible for

Kyrgyzstan, which as a WTO member has bound tariffs at levels below what is

acceptable to Russia. Russia’s tariffs are higher than those of Kyrgyzstan, both on

average and with peaks on individual items, and it is highly unlikely that Russia

would agree to lowering its tariffs to the bound rates agreed by Kyrgyzstan in its

WTO accession. Even if the Kyrgyz authorities were tempted to override their WTO

obligations, they would not want to raise tariffs which would hurt the country’s

consumers to the benefit of Russian producers, when Russia’s own tariffs would

remain unchanged providing no new preferential advantage to Kyrgyz exporters.22 In

sum, despite strong paper commitments the EurAsEC is unlikely to evolve into a

stronger trading arrangement in the near future.

Despite the existence of a regional agreement, Kyrgyzstan’s trade relations

with its contiguous neighbors suffer from lack of WTO commitments. Following the

1998, Russian Crisis, Kazakhstan introduced a number of draconian import duties,

including tariffs of up to 200% on dairy fats and margarines, which hurt Kyrgyz dairy

exports. Kyrgyzstan reacted with restrictions on the wheat trade, although a seasonal

(July-November) export tax on wheat in 1999 and 2000 appeared to have minimal

impact. More important than trade taxes has been the lack of agreement on issues like

21 In 1996 Kyrgyzstan signed a customs union agreement with Belarus, Kazakhstan and Russia, and in 1999 the union was extended to include Tajikistan. In October 2000 the union was renamed the Eurasian Economic Community and the institutional structure was strengthened. In October 2005 Uzbekistan acceded to the Eurasian Economic Community, and this was accompanied by dissolution of the Central Asian Cooperation Organization, another regional organization with lofty aspirations but minimal achievements. 22 Patrizia Tumbarello (Regional Integration and WTO Accession: Which is the Right Sequencing? An application to the CIS. IMF Working Paper 05/94, February 2005, Table 4) estimates the net welfare cost of Kyrgyzstan implementing the EurAsEc customs union at $3.5 million, which is the difference between loss of consumer surplus ($26.3 million) and gain in tariff revenue ($22.5 million).

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customs valuation or transit which have augmented the costs of inter-regional trade in

Central Asia. Since December 2003, however, the situation with Kazakhstan has

improved substantially.23

For a landlocked country, almost all of whose overland trade passes through

Kazakhstan or Uzbekistan, transit arrangements are crucial. Partly for this reason

Kyrgyzstan has been an active participant in Central Asian Regional Cooperation

(CAREC), a forum for trade facilitation among Central Asian countries, Azerbaijan,

Afghanistan, China and Mongolia.

(b) Kazakhstan

Since 1995 Kazakhstan has pursued a trade policy based on moderate most-favored

nation (MFN) tariffs, although with some variability of implementation. Kazakhstan

is a member of several regional organizations, although the only one to have a

significant influence is the Eurasian Economic Community.24

Following the Russian price reform of January 1992, an immediate concern

in Kazakhstan was the fear of losing goods in return for rapidly depreciating Soviet

rubles, and export restrictions were imposed. The export controls were also aimed at

supporting the interstate delivery system, although this disintegrated rapidly in 1992-4

as exporters found more favorable prices outside the system. Export duties were

simplified in 1995 and abolished in 1996. The government showed some predilection

for non-CIS markets as the value-added tax was initially refunded only on exports to

non-CIS markets; this disincentive to supply CIS markets was removed in the 1997

budget, and all exports are now zero-rated for VAT.

The initially ad hoc tariff schedule was simplified during 1995 and 1996 to

form 12 bands, ranging from 1-100%. In January 1997, a new tariff schedule reverted

to 13 bands, but with a maximum of 50% and a lower weighted average tariff

23 In January 2005 the Kazakhstan parliament ratified the 1998 International Transport Agreement, establishing permit-free transit for Kyrgyz trucks and in March 2005 the two countries’ customs authorities signed an agreement establishing that transiting trucks do not have to pay a deposit at the border and no longer have to be accompanied by customs officials. See IMF, First Review under the Three-Year Arrangement under the Poverty Reduction and Growth Facility, October 2005, p.14. 24 In February 2003 the leaders of Russia, Belarus, Ukraine and Kazakhstan agreed to create a Common Economic Space, but the outcome of the December 2004 Ukraine election undermined Ukraine-Russia cooperation.

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(12%).25 Tariffs were further reduced in July 1998, with fewer tariffs over 20% and a

weighted average tariff of slightly less than 9%. After the Russian crisis and

appreciation of the tenge, several temporary tariffs of up to 200% and bans on some

imports, mainly food products from Russia, Kyrgyzstan and Uzbekistan, were

introduced in the first half of 1999, although these were rescinded fairly quickly.

Apart from these temporary spikes, the only major peak at the 6-digit level is the

100% duty on ethyl alcohol (HS220700); no other category has an individual tariff

line peak over 30%.

In January 1996 Kazakhstan lodged its application for WTO membership.

The process lagged in the late 1990s, associated with slowing reform and economic

crisis,26 but resumed in the early 2000s (Table 9). Key issues in Working Party

meetings in 2003-4 concerned high tariffs on some industrial and agricultural goods,

Kazakhstan’s desire to maintain some export subsidies and to have ‘developing

country’ status, inadequate coverage of areas for liberalization under GATS, and

weak legislation on TRIMS and inadequate institutions to meet SPS, TBT or TRIPS

requirements.27 Kazakhstan responded positively to these concerns. Investment laws

passed in 2003 adhere to non-discrimination principles, creating a level playing field

for domestic and foreign investments; incentives are granted to both, provided they

are directed towards priority economic sectors such as food processing, machinery

and textile production, information technology, construction, tourism, and

transportation. In 2004, Kazakhstan adopted new laws bringing safety regulations

into conformity with WTO rules on technical barriers to trade. Kazakhstan also

changed its tax code and licensing and business registration requirements in

compliance with WTO norms, implemented internationally recognized accounting

and reporting standards; eliminated restrictions on foreign participation in the banking

and insurance sectors in 2005, fostered a competitive market in the

telecommunications, transportation and energy sectors, and liberalized its trade

25 International Monetary Fund: Republic of Kazakhstan – Recent Economic Developments, IMF Staff Country Report No.97/67 (August 1997), 62. At the same time Kazakhstan introduced preferential tariffs of zero for 46 low-income countries and 75% of the general tariff for other developing countries. 26 Trade reform commitments included in 1998 EFF-supported programs were not implemented. Kazakhstan, however, maintained its commitment to current account convertibility. 27 The industry policy formulated in 2002-3, which included sector- and even firm-specific assistance to promote diversification and non-oil development, may have also complicated the accession process. See International Monetary Fund, Staff Report for the 2003 Article IV Consultation, 7th. May 2003, p.14, and International Monetary Fund, Republic of Kazakhstan: Selected Issues and Statistical Appendix; IMF Staff Country Report No. 03/211, July 2003, p.37-55.

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policies through lowered import duties. The Draft Report of the Working Party,

which is the basis for the final negotiations phase of WTO accession, was completed

in May 2005 and revised in September 2006.

By mid-2008 Kazakhstan had finalized bilateral negotiations with twenty

countries, and only the United States, the European Union, Australia and India

remain.28 The major remaining sticking point is Kazakhstan’s wish for a transitional

period to legislate local content provisions for investments into non-energy goods

production industries and services such as machinery production and chemical

industries. The WTO has also requested third-party access to Kazakhstan’s existing

energy pipelines and a favourable investment climate for the construction of new

pipelines, to which Kazakhstan affirms that it will maintain non-discriminatory access

to its pipelines after its accession to the WTO, but will not make such commitments

on a non-reciprocal basis. Political considerations may also be influencing the timing

of Kazakhstan’s WTO accession.29

Kazakhstan has aimed to keep special ties with other former Soviet republics,

variously described as a free trade area, customs union or unified economic space,

although the practical implementation has often been difficult to document. In May

1993, when the CIS was clearly failing to establish itself as an economic organization,

ten CIS members, including Kazakhstan, reached an agreement to form an economic

union; a formal treaty to that effect was signed in September 1993, but it had little or

no effect. In January 1995 Kazakhstan signed a customs union agreement with

Belarus and Russia. Tariffs on trade between members were eliminated in March,

and there were moves towards harmonizing external tariffs in 1995-6, although this

seemed to halt with Kazakhstan’s January 1997 tariff revision. The union was

extended to include Kyrgyzstan in 1996, Tajikistan in 1999 and Uzbekistan in 2005.

As described in the previous subsection, a February 2000 agreement envisaged tariff

harmonization within five years, but implementation is far from complete. As with

Kyrgyzstan, a common external tariff anywhere close to Russia’s tariff is

unacceptable to Kazakhstan because Russia’s tariffs are higher than those of

28 Zhanar Aitzhanova, Deputy Minister of Industry and Trade and a leading WTO accession negotiator for Kazakhstan, speaking at a Central Asia Caucasus Institute (CACI) Forum on 4th. June 2008 at the Johns Hopkins University in Washington DC. 29 Many commentators expected the large CIS countries, Kazakhstan, Russia and Ukraine, to coordinate their WTO entry. After Ukraine’s WTO accession in the first half of 2008, however, Kazakhstan failed to conclude its accession while asserting that its timetable was not tied to that of Russia

13

Kazakhstan, both on average and with peaks on individual items. Although the

Kazakh authorities have indicated that Russia’s tariff is used as an informal

benchmark for Kazakhstan’s offers of bound tariff levels in its WTO negotiations, it is

unlikely that Kazakhstan would want to raise tariffs which would hurt the country’s

consumers to the benefit of Russian producers, when Russia’s own tariffs would

remain unchanged providing no new preferential advantage to Kazakh exporters.30

(c) Azerbaijan

Azerbaijan’s more disruptive transition from Soviet republic to independent state is

reflected in a slower adoption of a sustained trade policy regime. Between 1991 and

1995 trade policy was largely driven by ad hoc measures, e.g. Azerbaijan signed the

CIS free trade agreement in 1994, but this was not implemented.31 After 1995,

however, as the political situation stabilized and the economy began to grow, more

consistent trade policies were adopted. Export restrictions were gradually reduced,

and had disappeared by 1997. A simplified tariff schedule was introduced, and peaks

were smoothed off.

By 2005 the simple average applied tariff on all goods was 9.6 percent: 14.3

per cent on agricultural goods and 8.8 per cent on non-agricultural goods). There

were no contingency measures (anti-dumping or countervailing duties or other

safeguard measures) in force, and on 99 per cent of tariff lines the duty was expressed

in ad valorem terms. There is also a substantial free list, with 28 per cent of

agricultural imports and 12 per cent of non-agricultural imports entering Azerbaijan

duty free in 2005.32

Azerbaijan signed the CIS free trade agreement in 1994, but it was never

implemented. Azerbaijan has bilateral free trade agreements with seven of the

countries: Georgia, Kazakhstan, Moldova, Russia, Turkmenistan Ukraine and

30 Patrizia Tumbarello (Regional Integration and WTO Accession: Which is the Right Sequencing? An application to the CIS. IMF Working Paper 05/94, February 2005, Table 4) estimates the net welfare costs to Kazakhstan from tariff harmonization at Russian levels to be $32 million; the trade diversion and trade destruction would impose large costs on consumers ($255 million), which would be only partially offset by higher tariff revenue ($223 million). 31 Azerbaijan also signed nine bilateral trade agreements with CIS countries during the 1990s; four of these appear to be active, under which imports from Georgia, Kazakhstan, Russia and Ukraine enter Azerbaijan duty-free. The other agreements were with Belarus, Moldova, Turkmenistan and Uzbekistan. 32 Data from World Trade Organization Trade Profiles 2007, page 12.

14

Uzbekistan, but implementation of the bilateral agreements is incomplete.33

Azerbaijan has been a member of the GUAM grouping since its establishment in

1997, together with Georgia, Ukraine and Moldova (Uzbekistan joined in 1999, but

left de facto in 2002 and de jure in 2005); GUAM has had little economic impact, but

is seen as a counterweight to Russian influence in the CIS.

4. Current Trade Flows and Patterns of Trade between Azerbaijan, Kazakhstan

and Kyrgyzstan and APTA Members

Bilateral trade flows between Azerbaijan, Kazakhstan and Kyrgyzstan and APTA

members account for a small share of all three countries’ trade (Table 10), apart from

trade of Kazakhstan and Kyrgyzstan with contiguous China. China is the fourth

biggest destination for Kazakhstan’s exports and sixth biggest for Kyrgyzstan. For

Azerbaijan, India is the tenth largest export destination and Korea the twelfth largest,

but each of these two countries accounts for less than three per cent of the total value.

Both Azerbaijan and Kyrgyzstan do not export at all to Sri Lanka or Bangladesh. In

general, the APTA countries are not major destinations for the three countries’

exports.34 The three countries’ imports from APTA members are more significant.

China is the second largest import supplier to Kazakhstan and Kyrgyzstan, and

seventh largest to Azerbaijan. Korea is the ninth biggest supplier of imports to

Kyrgyzstan and eleventh biggest to Kazakhstan. Korea is the second largest APTA

supplier to all three countries, and India third-largest. However, the three countries’

import demand is small compared to the total exports of the APTA member countries.

Table 11 illustrates the evolution of trade flows between Azerbaijan,

Kazakhstan and Kyrgyzstan and APTA members since 2002. The values of trade

with China, India and the Republic of Korea have increased, in some cases (e.g.

Kazakhstan’s trade with China, Kazakhstan’s imports from the Republic of Korea,

and Kyrgyzstan’s imports from China) substantially. Apart from those few

33 A March 2003 Asian Development Bank report (Azerbaijan: Trade and Trade Facilitation Review, page 35) claimed that only imports from Georgia, Kazakhstan, Russia and Ukraine entered duty-free -- http://www.adb.org/Documents/Reports/Trade_Facilitation/trade_facilitation_review_AZE.pdf 34 It should be noted that, with the greater commodity concentration, it is increasingly difficult to say much about the direction of exports because oil and gold are sold on world markets and may be going anywhere – including APTA countries - once they leave the Caspian Basin or Kyrgyzstan. However, oil and gold normally enter countries duty-free, so they are of little relevance to discussion of preferential tariffs.

15

exceptions, the overall picture is of small values and shares. For analytical purposes

the “latest year” data reported in Table 10, and analyzed in this and the next section

seem to be representative of recent trade relations between Azerbaijan, Kazakhstan

and Kyrgyzstan and APTA members.

Bilateral trade flows between Azerbaijan, Kazakhstan and Kyrgyzstan and

APTA members exhibit similar characteristics to the three countries’ aggregate trade

flows, with exports concentrated in a narrow range of energy-related products and

minerals. The largest single exception is Kazakhstan’s iron and steel exports to China

and Korea. Azerbaijan exports substantial amounts of oil-related equipment to India

and Korea. Although the magnitudes are smaller, Kyrgyzstan’s manufactured

exports, especially its niche in communications and monitoring equipment, are

important for the country. Imports into the three countries from APTA members are

dominated by manufactured goods. The export data presented in the Appendix tables

are summarized in the remainder of this section.

(a) Azerbaijan

Azerbaijan’s exports to APTA countries are heavily concentrated in a small number

of HS06 categories (Table A1). Azerbaijan’s exports to India ($145 million) and

Korea ($125 million) in 2007 were almost entirely concentrated in oil products

(HS270900). Casting alloy ($312,000) and roots for pharmacological use ($36,260)

were the only other exports to Korea. Non-oil exports to India amounted to less than

$100,000 in total and the largest category ($85,800 in HS780199) is a miscellaneous

group.

Out of $10.1 million exports to China in 2007, over 90 percent consisted of

equipment for oil production; $8 million was drilling equipment (HS843143), $0.8

million special purpose vehicles (HS870590), $0.5 million other boring machinery,

(HS843049) and $0.1 million geological survey instruments (HS901580) and

interchangeable tools with diamond parts (HS820790). Azerbaijan exported $334,463

worth of roots for pharmacological use and $33,820 of fruit and vegetable juices to

China. The only other item with over $50,000 worth of exports to China in 2007 was

“other silk waste” (HS500390 -- $79,807).

Azerbaijan had no exports to Bangladesh or Sri Lanka in 2007.

16

(b) Kazakhstan

Kazakhstan is by far the largest Central Asian exporter to APTA countries, and its

exports cover a fairly large range of commodity categories, although the values are

heavily concentrated in energy products and minerals (Table A2). Exports to China

are much larger than to the other four APTA countries. Exports to Bangladesh and to

Sri Lanka in 2006 consisted of a single iron and steel product, which is not included

in either of the APTA countries’ preferential tariff list.

Kazakhstan’s 2006 exports to China amounted to 3,592.5 million dollars.

These were primarily raw materials: $1,370 million were mineral fuels (HS27), $550

million zinc (HS79), $524 million copper (HS74), $331 million ores (HS26), $281

million iron and steel (HS72), $203 million inorganic chemicals (HS28), $199 million

hides and skins (HS41) and $43 million wool (HS51). Apart from iron and steel,

Kazakhstan exports a large range of manufactured goods (HS84-96) to China, but

current quantities are small.

Korea and India are not major export markets for Kazakhstan, ranking 24th and

37th by value of exports in 2006, and in both cases Kazakhstan’s exports are heavily

concentrated in a few products. Of Kazakhstan’s $215 million exports to Korea, $126

million was iron and steel (HS72) and $88 million precious metals (HS71); apart from

$1 million of copper (HS74) and $0.8 of cotton (HS52), other export items were

small. Of Kazakhstan’s $59 million exports to India, $46 million was cereals (HS10),

$7 million asbestos (HS252400) and $6 million iron and steel (HS72)

(c) Kyrgyzstan

Kyrgyzstan’s exports to APTA countries are overwhelmingly directed to China, $62

million in 2007 (Table A3). Exports to Korea and India were small: $3.1 million to

Korea and less than a million dollars to India. There were no exports to Bangladesh

or Sri Lanka in 2007.

Kyrgyzstan exports primary products to China; out of $61.9 million exports to

China in 2007, $14.6 million were hides and skins (HS41), $7.9 million aluminum

(HS76), $6.9 million mineral fuels (HS27), $2.6 million copper (HS74), and $2.1

million wool (HS51). However, Kyrgyzstan also exports a substantial range of

manufactured goods, including specialized monitoring units ($14.3 million under

17

HS870590) and communications equipment ($4.3 million HS842539) and walkie

talkies ($587,212 under HS852520).35

Exports to Korea were also concentrated in monitoring and communications

equipment, such as HS847141 ($584,594) and 847160 ($242,104) and walkie talkies

($1,047,351 under HS852520). Apart from $552,000 of cereal exports (HS10), no

other export amounted to over $100,000. Exports to India are spread over a large

number of categories, each of minor value, with the residual category (HS99999)

accounting for almost a quarter of the total.

5. Impact of Azerbaijan, Kazakhstan and Kyrgyzstan Joining APTA

This section analyses the benefit to Azerbaijan, Kazakhstan and Kyrgyzstan from

joining APTA under the existing list of tariff preferences. With the product coverage

and margin of preference agreed in the third round of negotiations and effective since

September 2006, acceding to APTA would yield benefits primarily on Kazakhstan’s

exports of some metal products. Otherwise, preferential treatment would only apply

to a small number of the existing exports of Azerbaijan, Kazakhstan and Kyrgyzstan,

mostly with small current trade flows. Application of current APTA preferences

would reduce the duty paid on about half a billion dollars worth of exports from

Azerbaijan, Kazakhstan and Kyrgyzstan out of total exports worth $45 billion and

exports of around $4 billion going to APTA member countries. The main items are

summarized in Table 12.

The largest trade flows to benefit would be Kazakhstan’s metal (copper and

iron and steel) exports. Flat-rolled iron and steel product (HS 7208 and 7209) exports

worth $37 million would benefit from a 50% margin of preference in Korea. In

China, Kazakhstani exports worth $50 million would benefit from a 30% margin and

another million dollar’s worth of exports would benefit from a 15% preference

margin, while miscellaneous iron and steel products (HS732690) worth $2.9 million

might be eligible for a 30% margin of preference Kazakhstan’s iron and steel exports

to India would not receive preferential treatment. Exports to Bangladesh and to Sri

35 These specialized production units reflect the Kyrgyz republic’s role in the Soviet era, when it produced some key inputs for the military complex, and its isolated location was an advantage. With the dissolution of the Soviet Union, these producers lost their captive internal market, but they have succeeded in creating some export lines in which they have a comparative advantage.

18

Lanka in 2006 consisted of a single iron and steel product, which is not included in

either of the APTA countries’ preferential tariff list.

Copper exports (HS740811) to China, worth $159 million in 2006, would

benefit from a 30% preference margin and aluminum alloys worth $4.5 million in

2006, would benefit from a 15% preference margin. Some energy products would

qualify for preferential treatment, such as Kazakhstan’s exports of naphthalene

(HS270740) and liquefied propane (HS2711) to China, both of which are already

million dollar plus export items. Gold jewelry exports (HS 711319) to Korea, worth

$1,971,389 in 2006, would benefit from a 30% margin of preference.

Kyrgyzstan would benefit from preferential treatment for its

telecommunications and monitoring equipment to China and Korea. Margins of

preference range from zero to 50% depending on the precise coverage of the

preferential treatment, which is defined at very narrow commodity definitions,

including some communications equipment and components but not others. Some

Kyrgyz clothing exports (HS61-62) might qualify for preferential access to China and

Korea, although current trade flows are small.

The biggest export flow from Azerbaijan to benefit from APTA preferences

would be the $124 million oil exports to Korea, but the MFN tariff is low; it was cut

from 3% to 1% in March 2008. The main gain to Azerbaijan would come from lower

duties charged on exports of oil equipment to China, which should have a margin of

preference ranging from ten to ninety percent. Azerbaijan’s exports of fruit and

vegetable juices would potentially benefit from China’s APTA preferential tariffs.

However, the preferences apply to subcategories of HS06 groups, varying from a ten

to a fifty percent margin of preference and including some fruit juices and not others,

and may not match Azerbaijan’s specific exports. Azerbaijan’s exports to China of

plants for pharmacological use should benefit from a fifty percent tariff preference.

Exactly how valuable these preferential duties would be to the three countries

depends upon the current tariff rates. Moreover, some preference margins are defined

more narrowly than at the HS 6-digit level and whether they apply to a specific export

item may be a matter for clarification and negotiation. Most of the benefits arise

from China’s offered preferences, which cover a much wider range of products than

other APTA countries’ offers, but because Chinese applied tariffs are fairly low the

actual reduction in duty paid may be small. Benefits to the exporter also depend upon

the elasticity of demand for its exports. If it is a small supplier of a competitive

19

market, then a preferential tariff reduction will accrue to the exporter, whereas if the

exporter faces inelastic demand then most of the benefit will accrue to buyers in the

importing country.

In joining APTA, new members will be expected to offer their own

preferential terms for imports from APTA members. This may be beneficial or

harmful for the acceding country, depending upon whether the increase in imports

under preferential terms is trade-creating or trade-diverting. Given the moderate

MFN tariffs of Azerbaijan, Kazakhstan and Kyrgyzstan, the magnitude of these

effects is likely to be small. There will also be political pressure against offering

much in the way of preferential treatment, insofar as major trading and political

partners, notably Russia and to a lesser extent the USA and EU, would be unhappy to

see their exports entering Azerbaijan, Kazakhstan and Kyrgyzstan on worse terms

than imports from APTA members.

6. Potential Benefits to Azerbaijan, Kazakhstan and Kyrgyzstan from Extensions

to APTA

The main attractiveness of APTA trade preference is their potential to stimulate

economic diversification through export-oriented activities and access to global value

chains. For this reason, the analysis in the previous section, which was restricted to

current exports, is too limited. The most attractive APTA preferences are the ones

that would encourage expansion of non-traditional exports whether Azeri fruit juices

or Kyrgyz specialized electronic equipment or export activities that do not yet exist.

It is difficult to predict the precise products that would be exported, but the process

would be best aided by wide-ranging low preferential tariffs plus guarantees that the

preferential tariffs would not be raised if a successful investor in Kyrgyzstan or

Azerbaijan or Kazakhstan identified a successful export niche.

The attractiveness of APTA to Azerbaijan, Kazakhstan and Kyrgyzstan would

be much enhanced if it can offer more than tariff preferences. For Kazakhstan, for

example, a lower tariff on iron and steel exports would be beneficial, but even more

important would be a guarantee against anti-dumping duties or other safeguard

measures or non-tariff barriers, given the political clout of big steel in China, India

and Korea. Such guarantees, which are currently absent from APTA, are critical if

any acceding country is to seriously view APTA as a means for gaining a foothold in

20

existing APTA members’ markets. A flaw in many preferential tariff programs, such

as the Generalized System of Preferences, is that the non-contractual nature of

preferences and ease with which the importing country can restrict preferential access

if preferred imports start to threaten domestic vested interests reduce the incentive for

a beneficiary country to invest in a potential export activity; under such conditions

non-utilization of preferential access becomes self-fulfilling.

On the agenda for APTA is extension of coverage to include trade facilitation,

services and investment. Such deepening of APTA commitments could be beneficial

to Azerbaijan, Kazakhstan and Kyrgyzstan. Although they are not major exporters of

services, the oil-exporting countries are beginning to have significant outward flows

of direct foreign investment. More importantly, as an obstacle to diversifying

merchandise exports trade costs are today often a greater barrier than tariffs. Trade

facilitation is in its impact often non-discriminatory, but by being at the negotiating

table APTA members can influence the choice of which trade costs to target for

reduction.

Also on the APTA agenda is extension of membership. Expanded

membership generally makes a preferential trading arrangement more attractive to

incumbent members. Few of the countries currently mentioned as potential new

members are important trading partners of Azerbaijan, Kazakhstan or Kyrgyzstan,

although neighboring Pakistan or the larger ASEAN economies have potential as

export markets.

7. Conclusions

The Bangkok Agreement and its successor APTA were acknowledged to have had a

disappointingly small impact on intra-Asian trade before China’s accession in 2001

and the 2006 commitment to revitalize APTA. Assessment of the benefits of

membership must be forward-looking, based on the premise that the existing members

are committed to deepening the Agreement by going beyond tariff preferences and

widening it by attracting new members.

For Azerbaijan, Kazakhstan and Kyrgyzstan accession to APTA would bring

benefits to some existing exporters, but the benefits from receiving current APTA

tariff preferences would be relevant to only a few products and cover only about two

per cent of the three countries’ total exports and an eighth of their exports to the five

21

APTA members. In sum, there are positive consequences but they are quantitatively

small.

This static analysis, may, however, substantially understate the potential

benefits from joining APTA. If APTA members are serious about revitalization, then

the tariff preferences should incorporate an implicit guarantee not to resort to

safeguards (important for Kazakhstan’s iron and steel exports) as well as a

commitment to extending the preferences to cover more products. Moreover,

bringing trade facilitation onto the APTA agenda will further reduce the barriers to

trade among members.

These considerations are important for Azerbaijan, Kazakhstan and

Kyrgyzstan. All three countries inherited a production structure heavily concentrated

in a narrow range of primary products and, although that has brought benefits in an

age of soaring oil and metal prices, the governments are concerned about diversifying

their economies. Given the reasonably high human capital endowments, there are

undoubtedly export niches in processed foods or manufacturing that the countries

could fill. Success presupposes a good domestic environment for such activities, but

it can be helped by favorable market access and APTA members constitute a

substantial market. In sum, the benefits from APTA accession accrue to some extent

from receiving existing tariff preferences granted by APTA members, and to a much

greater extent from the opportunity to find new export activities targeted at APTA

markets.

Accession to APTA would also presuppose a reciprocal granting of

preferential access to APTA members. This may be politically awkward for

Azerbaijan, Kazakhstan and Kyrgyzstan, due to their relations with other large

economic powers, and could be best accommodated within the framework of low

MFN tariffs (i.e. in a setting consistent with Kyrgyzstan’s WTO commitments and

Kazakhstan and Azerbaijan’s WTO accession). What acceding countries could offer

unreservedly to existing members is a commitment to work on trade facilitation and

other new areas. Such a commitment would be consistent with the spirit of the

original approval of the Bangkok Agreement within GATT. Deepening intra-Asian

trade relations in an expanded APTA, without creating large margins of preference on

high MFN tariffs, would be a win-win situation for all concerned.

22

Table 1: Products Covered and Margin of Preference offered under APTA: After the third round of negotiations (completed mid-2005; in effect September 2006)

Number of products covered Margin of preference General

Concessions Special

Concessions General

ConcessionsSpecial

Concessions Bangladesh 209 -- 14.1 -- China 1,697 161 26.7 77.9 India 570 48 23.9 39.7 Korea 1,367 306 35.4 64.6 Sri Lanka 427 72 14.0 12.0 Total 4,270 587 26.8 58.8

Source: Trade and Investment Division UN-ESCAP, Facts About the Asia-Pacific Trade Agreement

(Bangkok Agreement): Informal Information Note, Bangkok, October 2006, page 5. Notes: Special concessions are to least developed country members. Margin of preference -- [(MFN

tariff – APTA preferential rate)/ MFN tariff].100 -- is the simple average of all items, expressed in percentage terms.

Table 2: Azerbaijan, Kazakhstan and Kyrgyzstan: Economic Indicators

Azerbaijan Kazakhstan Kyrgyzstan

Population (2007, million) 8.6 15.1 5.3 Life expectancy (2008) 66.3 67.6 69.1 GDP (2007, USD billion at current prices)

31.1 95.5 3.5

GDP per capita (2007, purchasing power parity)

8,521 10,658 2,315

Openness [(exports + imports)/GDP], 2006

111 92 120

Current account balance (percent of GDP), 2006

+16 -2.2 -16.8

Sources: IMF World Economic Outlook, October 2007; IMF International Financial Statistics,

February 2008; OECD, Black Sea and Central Asia, 2008.

23

Table 3: Azerbaijan, Kazakhstan and Kyrgyzstan: Growth in real GDP 1989-2007

(per cent)

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1999; 1989=100

Azerbaijan 1 6 Kazakhstan 0 0 -13 -3 -9 -13 -8 1 2 -2 2 63Kyrgyzstan 8 3 -5 -19 -16 -20 -5 7 10 2 4 63

Source: European Bank for Reconstruction and Development Transition Report Update, April 2001, 15.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Azerbaijan 10 11 11 10 11 11 10 24 31 23 20 Kazakhstan -2 3 10 14 10 9 10 10 11 9 5 Kyrgyzstan 2 4 5 5 0 7 7 0 3 8 7 Source: European Bank for Reconstruction and Development Transition Report (accessed online at

http://www.ebrd.org/country/sector/econo/stats/index.htm 21 July 2008). Notes: 2007 = preliminary actual figures from official government sources. Data for 2008 represent

EBRD projections.

Table 4: Azerbaijan, Kazakhstan and Kyrgyzstan: Inflation 1991-2007 (per cent change in retail/consumer price index)

Source: European Bank for Reconstruction and Development Transition Report Update, April 2001, 16.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Azerbaijan -1 -9 2 2 3 2 7 10 8 17 20 Kazakhstan 7 8 13 8 6 6 7 8 9 11 17 Kyrgyzstan 11 36 19 7 2 3 4 4 6 10 19 Source: European Bank for Reconstruction and Development Transition Report (accessed online at

http://www.ebrd.org/country/sector/econo/stats/index.htm 21 July 2008). Notes: 2007 = preliminary actual figures from official government sources. Data for 2008 represent

EBRD projections.

1991 1992 1993 1994 1995 1996 1997 1998 1999 Azerbaijan Kazakhstan 79 1,381 1,662 1,892 176 39 17 8 7 Kyrgyzstan 85 855 772 229 41 31 26 36 12

24

Table 5: Azerbaijan, Kazakhstan and Kyrgyzstan: Export Concentration, 1994 and 2002 (top three products’ share of total exports)

Azerbaijan Kazakhstan Kyrgyzstan

1994 2002 1994 2002 1994 2002 Oil 32.5 88.8 Oil 16.7 50.6 Nonferrous metals 15.3 51.7 Cotton 15.5 1.0 Steel 14.5 9.8 Electricty 10.0 9.8 Metals 16.5 1.0 Copper 10.5 7.1 Machinery 10.9 12.0 Top 3 64.5 90.7 Top 3 41.7 67.5 Top 3 36.2 73.5 Source: Katrin Elborgh-Woytek: Of Openness and Distance: Trade Developments in the

Commonwealth of Independent States, 1993-2002, IMF Working Paper No.03/207, October 2003, page 8.

Table 6: Azerbaijan, Kazakhstan and Kyrgyzstan: Export Specialization

(Balassa Index of revealed comparative advantage), average 2001-6 SITC group 0 1 2 3 4 5 6 7 8 9 Azerbaijan 0.6 0.8 0..9 8.8 2.3 0.2 0.2 0.1 0.0 0.1 Kazakhstan 0.6 0.2 2.1 6.9 0.1 0.2 1.4 0.0 0.0 0.3 Kyrgyzstan 1.5 3.5 3.6 1.4 0.0 0.2 0.7 0.2 0.5 10.5 Notes: calculations using UN COMTRADE database. SITC groups = 0 food and live animals, 1

beverages and tobacco, 2 inedible crude materials, 3 fuels and lubricants, 4 animal and vegetable oils and waxes, 5 chemicals, 6 manufactured goods by material, 7 machinery and transport equipment, 8 miscellaneous manufactures, 9 other.

Table 7: Commodity Composition of Registered Trade, Azerbaijan, 2003-7 (million USD)

2003 2004 2005 2006 2007*

Total Exports: 2,625 3,743 7,649 13,015 14,315 Oil and oil products 2,250 3,097 6,618 11,999 13,448 Chemicals and petrochemicals 85 144 204 294 110 Metals 55 97 106 150 116 Floating drill rigs 47 50 40 75 122 Other machinery and equipment 0 136 265 76 62 Cotton 33 36 40 39 19 Other 155 183 376 382 438

Total Imports: 2,723 3,582 4,350 5,269 4,159 Food 424 538 555 651 538 Natural gas 215 253 277 465 52 Chemicals and petrochemicals 86 120 165 203 185 Metals 419 513 400 508 444 Machinery and equipment 859 1,116 1,578 1,841 1,469 Other 720 1,042 1,375 1,601 1,471

Source: national data reported in International Monetary Fund: Republic of Azerbaijan: Statistical

Appendix, IMF Staff Country Report 08/216, July 2008, Table 22. Note: * first nine months.

25

Table 8: Direction of Registered Trade, Azerbaijan, 2003-7 (percentage shares)

2003 2004 2005 2006 2007*

Exports: CIS 12.7 16.4 11.9 7.3 6.1 of which, Russia 5.6 5.6 3.8 2.7 2.5Iran 1.9 4.1 2.2 2.3 2.5Turkey 4.1 4.9 3.6 4.4 5.5UK 0.3 0.2 0.1 0.1 0.1Other countries 81.0 74.4 82.2 85.9 85.8

Imports: CIS 31.8 33.3 31.8 33.5 29.2 of which, Russia 15.6 17.0 16.4 23.1 16.5Iran 5.7 4.8 3.2 2.6 3.8Turkey 8.2 7.0 8.5 9.2 12.5UK 8.9 10.2 8.3 8.6 7.2Other countries 44.0 43.5 47.0 44.8 45.5

Source: national data reported in International Monetary Fund: Republic of Azerbaijan: Statistical

Appendix, IMF Staff Country Report 08/216, July 2008, Table 23. Note: * first nine months Table 9: Azerbaijan, Kazakhstan and Kyrgyzstan: Status of WTO Accession

Negotiations Kyrgyzstan Kazakhstan Azerbaijan Application February 1996 29 January 1996 30 June 1997

March 1997 19-20 March 1997 7 June 20029 October 1997 14 October 20049 October 1998 30 June 2005

13 July 2001 30 March 200615 July 2003 6 May 2008

4 March 20043 November 2004

Working Party Meetings

7 June 2005Factual Summary 9 October 1997

(revised 3 September 2004)Draft Report of Working Party

July 1998 20 May 2005

Latest revision of Report

29 September 2006

Source: http://www.wto.org (accessed 30 July 2008).

26

Table 10: Azerbaijan, Kazakhstan and Kyrgyzstan: Trade with APTA Countries, latest year (current US dollars)

Value of exports Share Value of imports ShareAzerbaijan (2007) total 6,058,319,100 5,712,178,288

Bangladesh -- 0 1,479 0.0China 10,103,551 0.2 278,794,421 4.8India 144,947,941 2.4 71,983.972 1.3Korea 124,771,069 2.1 91,556,391 1.6Sri Lanka -- 0 10,232,949 0.2

Kazakhstan (2006) total 38,244,423,102 23,663,081,975

Bangladesh 1,167,107 0.0 1,139,164 0.0China 3,592,514,164 9.4 1,924.942,799 8.1India 59,407,632 0.2 150,569,090 0.6Korea 215,015,731 0.6 359,331,551 1.5Sri Lanka 321,293 0.0 4,719,765 0.0

Kyrgyzstan (2007) total 1,134,181,270 2,416,987,376

Bangladesh -- 0 364,955 0.0China 61,876,518 5.5 355,557,541 14.7India 831,384 0.1 8,927,026 0.4Korea 3,120,296 0.3 39,058,401 1.6Sri Lanka -- 0 1,004,106 0.0

Source: UN Comtrade database Note: -- = no reported trade; shares are as a percentage of total exports or imports.

Table 11: Azerbaijan, Kazakhstan and Kyrgyzstan: Evolution of Trade with APTA Countries, 2002-7 (millions of US dollars)

2002 2003 2004 2005 2006 2007 Kazakhstan Import Exports Import Exports Import Exports Import Exports Import Exports Import Exports World 6,584.0 9,651.5 8,408.3 12,926.6 12.631.8 19,922.3 17,352.2 27,849.0 23,663.1 38,244.4 32,756.4 47,755.3 Bangladesh 1.6 1.2 1.0 1.6 0.8 3.1 1.7 1.2 1.1 1.2 1.2 10.3 China 313.0 1,004.2 523.5 1,653.1 758.1 1,931.5 1,251.8 2,423.9 1,924.9 3,592.5 3,507.3 5,639.6 India 55.1 4.2 73.0 5.9 86.0 8.6 100.9 19.9 150.6 59.4 147.6 48.1 Korea 110.2 48.9 114.6 55.5 247.7 162.8 256.1 187.5 359.3 215.0 625.9 217.4 Sri Lanka 3.0 0.2 2.7 0 3.3 0.2 4.1 0 4.7 0.3 5.3 0.1 2002 2003 2004 2005 2006 2007 Kyrgyzstan Import Exports Import Exports Import Exports Import Exports Import Exports Import ExportsWorld 579.4 460.3 717.0 581.7 940.9 718.7 1,107.8 672.0 1,718.2 794.1 2,417.0 1,134.2Bangladesh 0.0 0 0.1 0 0.1 0 0.1 0 0.2 0 0.4 0China 59.0 40.1 77.6 23.3 80.0 39.3 102.9 26.6 245.6 38.1 355.6 61.9India 2.9 0.8 3.7 0.7 4.0 0.6 3.9 10.2 6.2 3.7 8.7 0.8Korea 6.9 1.1 11.7 0.4 25.0 0.5 27.8 1.3 29.1 2.1 39.1 3.1Sri Lanka 1.5 0 1.7 0 1.9 0.0 1.4 0 1.3 0 1.0 0

Source: UN Comtrade database

2002 2003 2004 2005 2006 2007 Azerbaijan Import Exports Import Exports Import Exports Import Exports Import Exports Import ExportsWorld 1,665.6 2,167.5 2,626.4 2,591.7 3,515.9 3,615.4 4,211.2 4,347.2 5,266.7 6,372.2 5,712.2 6,058.3Bangladesh 0 0 0 0 0.1 0 0 0 0 0 0 0China 51.0 1.3 92.4 19.3 145.5 31.7 173.8 99.2 222.5 6.4 278.8 124.8India 19.4 2.2 35.4 1.3 47.0 5.4 55.9 1.6 57.5 1.0 72.0 144.9Korea 7.3 0 16.0 1.0 24.1 3.8 41.6 0.5 46.9 68.4 91.6 10.1Sri Lanka 10.7 0 6.0 0.1 9.1 0 8.7 0 9.1 0 10.2 0

Table 12: Major Items which would benefit from Application of Current APTA Preferences to Exports from Azerbaijan, Kazakhstan and Kyrgyzstan

Exporter Importer Item Value MOP

Kazakhstan China flat-rolled iron and steel products $50m 30% Kazakhstan China ------- ditto ------------- $1m 15% Kazakhstan Korea ------- ditto ------------- $37m 50% Kazakhstan China miscellaneous iron and steel products $3m 30% Kazakhstan China copper $159m 30% Kazakhstan China aluminum alloys $5m 15% Kazakhstan China naphthalene and liquefied propane $3m 14-30% Kazakhstan Korea gold jewelry $2m 30% Kyrgyzstan China telecommunications and monitoring

equipment $19m up to

50% Kyrgyzstan Korea ------- ditto ------------- $1m 50% Azerbaijan Korea oil $124m 50% Azerbaijan China oil equipment $9m 10-90% Source: Appendix tables Note: value of current trade flows is for 2006 for Kazakhstan and 2007 for Azerbaijan and Kyrgyzstan.

1

APPENDIX TABLES Table A1: Azerbaijan: Exports to APTA Countries, HS 6-digit categories, 2007

(current US Dollars) HS Code China India Korea value MOP value MOP value MOP 121190 334,463 50 36,260 200980 33,820 10-50 270900 144,854,972 124,422,809 50 391590 26,000 401693 35,710 420291 50 442090 45 10 481730 30 482050 15 490199 130 490600 60 491191 30 500390 79,807 570249 4,650 33 621010 670 30 630232 55 630251 80 630900 350 640590 770 30 700992 25 701329 977 730711 12,971 731100 9,086 732394 100 732399 10,450 95 732690 89 740321 34,650 740400 8,250 740929 33,000 760120 312,000 50 780199 85,800 7 780419 4,500 820551 60 10 820790 60,000 15 841229 34,796 841391 18,457 50 843049 458,721 843143 7,981,850 20-90 847141 120 847330 390 850300 9,796 5 851999 80 852439 15 870590 841,817 10

2

871200 50 890310 40 901580 72,450 30 940360 50 5 950390 125 5 950590 45 950691 300 960500 25 5 970110 605 Source: UN Comtrade database (no reported exports to Bangladesh and Sri Lanka). Note: MOP = margin of preference as in Table 1. Some preferential tariffs apply only to sub-categories (eg.

HS121190 for China). Blank cells not included in the preferential tariff list

3

Table A2: Kazakhstan: Exports to APTA Countries, HS 6-digit categories, 2006 (current US Dollars)

HS code

Bangladesh

MOP China MOP

India MOP

Korea MOP

Sri Lanka

MOP

01060 110 03037 48,172 50 05079 37,000 9,290 10011 2,000 10019 45,523,6 11010 46,017 12060 186,808 12076 11,082 12111 5,480 23,343 12119 25,300 50 17,200 14042 3,473,172 21069 4,306 22019 9,600 22086 93 23063 351,997 25010 93 25030 20,545,262 25061 791 25169 8,350 30 25174 1,303 25174 $614 25240 3,120,152 7,179,71 25262 281 26011 39,123,327 26011 252,698,162 26020 2,795,593 26030 2,304,708 26070 1,227,507 26080 6,146,654 26100 21,468,363 26110 649,500 26139 3,150,609 26171 953,442 26179 784 26203 153,458 27011 450 27011 13,167 27074 1,190,258 14 27090 1,317,196,5 27100 49,943,502 27111 1,608,410 30 27111 4,060 30 27139 12,533,280 28020 125,279 28049 1,105,835 28182 48,686,309 28191 3,265,489 42,278 28199 1,950,645 28261 5,000

4

28332 1,597,193 403,948 28352 24,390 28365 1,414 28413 4,596,570 858,232 28429 130,489 28441 140,277,545 28469 732,000 29152 2,807 30049 38,293 31055 3,813,075 32091 42,915 32141 179 38249 1,315 8 39011 12 5 39123 31,147 39151 77,600 39152 34,740 39159 169,546 39162 449 30 39169 32,149 39173 101 30 39201 310 30 39202 216 39233 328 39234 30 39235 285 39239 401 30 39241 1,200 39249 122 39252 200 30 39263 78 39264 245 17 39269 67 10 40122 372,768 40159 680 41011 1,472,627 41012 11,879 41022 210,625 14 41031 41,121 41039 19,100 41042 188,476,465 41051 8,147,769 42021 1,250 21 42029 1,230 42050 82 43021 730 44152 865 44182 344 44201 163 46012 17,111 47042 309 48089 101 48112 20 48113 2,885

5

48149 56 51021 61,230 51052 43,181,550 51122 18 52010 11,080,505 52021 116,995 52029 224,790 52052 14,457 52052 745,545 52052 26,501 52111 35,804 57021 1,223 57024 110 57025 4,402 57033 3,349 61044 4,472 15 61099 448 33 61159 45 61161 9,778 62019 88 62043 20,125 62052 1,135 50 62111 180 27 62114 2,727 27 62149 122 63023 37 30 63039 25 63049 484 63059 163 63061 800 63090 3,917 1,814 64029 30 30 64031 25 64051 20 65059 1,879 5 66020 245 67021 336 68061 24,500 68091 550 68111 13,600 68113 192,249 69029 3,711 69089 420 69109 131 69111 17,787 17 69120 210 40 70099 60 70132 34 5 70133 986 5 105 70169 228 5 71069 23,712,3 71081 51,258,7 71081 10,924,2 71131 1,971,38 30

6

71132 1,957 14 72012 343,927 72015 150,100 72023 7,605,144 3,381,35 72024 123,613,102 66,092,8 50 72024 583,105 8,117,75 50 72025 422,582 7,860,40 50 72042 176,346 72042 220,696 72044 654,054 72044 59,820,047 72081 748,240 72083 39,034 152,616 115,396 72083 1,002,356 2,523,90 3,179,41 50 72083 947,329 653,262 8,076,37 50 72083 1,167,10 14,774,732 804,096 26,615,6 50 72085 41,117 72085 296,225 72085 117,882 15 72085 833,582 15 72089 1,250,705 72091 4,614,484 30 282,865 58,056 72091 30,289,329 30 137,862 136,342 72091 9,493,310 30 72092 801,944 72092 4,846,817 72092 4,607,746 30 321,2972092 2,560,007 72099 1,064,300 30 72101 7,188,903 706,675 72104 1,011,854 72124 6,180 72163 787,335 72269 232,647 73021 4,486,275 73023 7,022,401 73030 87,798 73041 253,555 73053 30,661 73061 130,681 73063 323,480 73069 28,673 73072 111 73083 4,860 73084 239,622 73089 138,141 73090 48,785 73181 842 73181 343 50 73202 4,375 15 73221 245 73239 82 73239 88 288 30 73261 183,287

7

73269 2,852,629 15 13,860 74011 1,282,645 74031 321,739,044 1,258,59 74032 7,456,120 74032 145,289 74032 29,104,793 74040 279,881 170,736 74050 5,122,406 74072 65,238 74072 70,016 74081 158,549,263 30 74082 937 74091 480 74091 96,555 74092 4,891 74093 8,608 74111 40,162 30 74112 11,349 76012 4,469,565 15 76020 225,005 76061 6,638 30 76061 71,700 30 76109 7,000 76169 56 76169 48,600 15 78019 2,321,213 78020 26,904 79011 438,073,383 79011 111,223,193 79020 275,063 79070 112 81039 18,566 10 81071 4,536,676 81081 900,000 81121 120,000 81129 796,727 81129 146,049 82071 285,714 82083 16 82152 3,754 82159 2,156 83030 56 84136 474 84138 5 50 84151 7,350 10 84159 160 20 84181 1,053 565 84182 4,466 10 84182 2,471 84185 973 84198 40 100 84209 4,133,350 84211 137 84212 60

8

84212 27,972 30 84213 $15 37.5 84279 1,500 84291 104,350 84295 40,000 84304 1,196,096 84314 396,298 30 84331 30 84439 663 84501 130 84571 8,583 84581 820 84581 8,976 84589 2,477 84589 37,753 84592 4,574 84594 30,949 84596 21,713 8-17 84602 9,595 84609 828 84612 2,916 84614 25,677 84619 1,507 84622 35,000 800 84622 9,900 7,700 84669 22,601 84716 50 84717 16 84729 8,000 84733 9,491 84735 7,691 84772 3,300 10 84773 2,400 84842 231 85013 551 8 85044 4,101 50 85049 23,755 30 85091 402 10 85094 2,694 85114 4,195 85115 67 85119 4,900 85143 3,509 100 85162 600 85163 1,148 85163 435 85164 2,940 11 85166 600 210 85167 3,003 85182 32 85199 80 30 85201 34 85219 475 20 85229 185,687 10

9

85231 28 85243 66 85243 9,611 85245 42 20 85245 8 85251 2,000 85281 20,503 30 6,687 10-85282 9,525 85291 3,364 100 85299 28,934 50 85362 3,312 85365 216 100 85381 1,400 50 85421 27,248 85424 1,132 85481 10,913 86071 45,240 86090 6,237 87012 73,000 87029 44,740 87032 41,000 10 87032 123,990 10 87054 104,000 10 87081 875 4 87088 9,070 10 87089 55,241 87089 4,083 87091 100 87120 38 87150 15 87163 9,800 90099 2,000 90159 4,144 90251 710 5 90258 2,742 90308 24,000 90318 10,000 91059 11 92071 25 94016 294 300 5 94016 11,288 210 10 94017 368 94018 2,235 94034 10,169 94035 1,930 94036 7,014 360 30 94039 438 5 94042 105 5 94049 45 94051 2,821 95034 4 10 95037 50 95039 207 8 20 30 95049 15 30

10

95061 295 95061 25 95063 50 95069 61 160 30 95072 1,285 96032 15,040 96034 5,088 97011 472 1,487 Source: UN Comtrade database (no reported exports to Bangladesh and Sri Lanka). Note: MOP = margin of preference as in Table 1. Some preferential tariffs apply only to sub-categories.

Blank cells not included in the preferential tariff list.

11

Table A3: Kyrgyzstan: Exports to APTA Countries, HS 6-digit categories, 2007 (current US Dollars)

China India Korea HS Code value MOP value MOP value MOP

040110 11050100 122,865 080211 150,949 080212 51,563 080231 50,703 080530 73 8080610 2,775 080620 55,943 080810 3,189 080820 640 17 081090 2,807 33 21,229081190 2,565090111 1,044 26 40090240 975 50 10 20 50100110 168,000100190 384,000110429 30,000121110 26,421 35,297130190 2,160 375140420 58,534 150200 116 100 160220 30,360 4,301 1,325170199 267 1170290 146 62 113170490 26 18 180690 3,520 20 190530 52,886 190590 30,366 14 4,301 990200799 822 200860 196 200990 730 13 39 304210690 4,819 8 220110 1,463 1,497 131220210 2,652 39 122220300 911 59 54220421 1,860 130 840220600 353 220820 1,418 214 154220860 1,093 12 118 1,046250590 831250870 517 251400 160 251710 13,550252010 160

12

252100 240 252329 20,330 25 253090 157 260300 79 261690 458 261710 162,481 261900 159 262090 9,000 270111 168,900 270119 150 30 271000 6,718,756 3,280 89,764271600 24,360 280461 504,780 4,561280469 119,179 7,843 50300490 13,440 8 16,886330499 500 381190 781 373381800 49,264 1,750 53382000 169 112390120 1,327 5 391510 79,562 391590 22,903 392113 416392410 13,862 2,790 587392490 4,413392520 5,400 30 392630 2,500 401693 179,520 410110 5,245,659 28,734410121 1,937,795 410129 5,000 410210 2,759,781 410221 142,727 11 410229 333,205 14 410310 380,422 6,469410422 2,345,554 2,558410439 4,484410512 825,458 7,758410520 18,000 410612 106,064 20,974411000 245,269 420229 14,550 30 481830 123 490199 94490700 1,913500310 44,827 500390 90,582 510111 69,174 510119 472,189 510121 416,683

13

510129 647,201 15,000510210 17,739 510220 914 510320 44,421 510529 366,377 510530 22,534 520100 56,301 520210 2,283 520419 20,627520514 75,135 30 520911 1 520919 7 540120 5,640 551219 3,730 19,500 50551512 40,600 551599 17,673610110 2,000 28 610342 4,400 15 610910 1,100 33 611010 1,600 611020 2,750 21 611030 5,500 32 611212 4,200 30 611430 18,880 611593 1,100 32 620312 1,375 30 620329 2,400 30 620342 50,250 19 620419 45,987 37.7620429 2,400 29 620449 1,000 27 620453 2,000 27 620990 2,000 630260 1,000 630900 44640299 11,420 50 640590 8,662 30 650400 6,854650590 3,900 5 710812 40,980720421 112,898 720429 4,988 720441 14,186 720449 553,975 720450 1,200 721420 5,006 100 721499 4,549722830 3,114722840 $4,221730690 $4,565

14

731029 1,506732690 5,076740321 85,800 740329 59,370 740400 2,421,075 740929 32,245 760120 1,552,339 15 760200 1,724,045 13,811760410 48,589 760429 4,528,200 30 760611 672 30 761090 41,595 761699 1,560 15 780110 50,868 780199 35,321 780200 59,516 780600 15,190790200 57,119 810199 5,032 810299 2,625 30,823820190 6,941 820590 18,723 10820750 11,638 7820770 28,300820790 1,573 5841319 3,000 841370 27 5 842240 14,762842539 4,300,000 842790 33,436 842911 39,204 842940 212,620 842951 460,002 842952 152,289 10 843039 75,098 843041 598,424 843139 454,226 50 843143 52,046 30 846620 160 30 847141 584,594 50847160 242,104847180 88,575847490 60,425 847989 5,200 50 850440 7,381 50850710 6,000 31 851310 1,000 12 851529 25 5 851539 250 851750 163 100

15

851790 4,628 851850 1,000 87,448852110 101,800 40 852190 23,600 20 852320 200 30 852431 443852520 587,212 50 1,047,351852812 52,500 20 852910 7,840 100 852990 5,723 10-100 186 50854411 189 30 854810 65,586 860900 529,200 4,500870190 36,988 870324 42,632 10 870410 215,029 870510 106,024 870540 53,253 10 870590 14,265,915 10 870894 49 870899 2,250 871190 4,702871639 15,382 880400 148,960 901580 110,135 30 920290 24,804920992 6,498940330 2,766940540 20,433 50940600 30,000 30 950341 1,800 10 950430 12,000950490 21,000950720 400 960850 21,780 961800 250 999999 1,648,592

202,113 65,250

Source: UN Comtrade database (no reported exports to Bangladesh and Sri Lanka). Note: MOP = margin of preference as in Table 1. Some preferential tariffs apply only to sub-categories.

Blank cells not included in the preferential tariff list.