Eurasian Integration Yearbook 2012

Alexander Pavlov. “Assessing the Economic Effectof Kyrgyzstan’s Accession to the Customs Union”Customs Unionand the Single Economic Spaceas it is closed for the imports of foreign goods. The case of imports-openKyrgyzstan confirms the economic theory assumption.One possible domain for investment and cooperation is the country’s fuel andenergy complex by way of utilising Kyrgyzstan’s transit potential. The extent ofinvestment in Kyrgyzstan could substantially increase in the event of cooperationin the sphere of hydropower.As a WTO member, Kyrgyzstan enjoys the most favoured nation regime withall the member states of the organisation. A free trade regime has also beenestablished with the CU countries and some CIS countries. By joining the CU,Kyrgyzstan is expected to unify its trade regulations in accordance with thoseestablished by the CU member states for trade with third countries.Currently, the united delegation of Belarus, Kazakhstan and Russia that isconducting negotiations on joining the WTO is also in talks on free tradeagreements with a number of individual countries (New Zealand, Vietnam),and with the European Free Trade Association (EFTA) that unites Liechtenstein,Iceland, Norway, and Switzerland. The delegation has also completednegotiations with Serbia and has enacted an agreement with Montenegro. UponKyrgyzstan’s accession to the CU, it will have to sign the same agreements withthose countries with similar exclusions, which may lead to the need to reviseKyrgyzstan’s WTO commitments. The CU member states, as well as Kyrgyzstan,have preferential treatment with many other countries. The unification ofKyrgyzstan’s regulations should take place through the adoption of the CU’slegal standards, which will affect its international obligations with regard toWTO member states.The formation of regional unions is allowed within the WTO (Article 24 of theGeneral Agreement on Tariffs and Trade, or GATT). In addition, Kyrgyzstan hasthe right to initiate secondary negotiations on altering its commitments on tariffs(Article 28 of GATT). Negotiations with the WTO may pertain to compensationconditions or reduction of import duties on other goods. Every three years,Kyrgyzstan has the right to make changes in its list of commitments on tariffs forthe next three-year period. The last period of exercise of this right covers up toDecember 31, 2011. Thus, Kyrgyzstan may make alterations in its WTO-relatedcommitments in favour of the CU.The CU’s legislation allows membership in the WTO. Analysis of the protocolon Kyrgyzstan’s accession to the WTO reveals that the republic’s internationalobligations and legislation differ from the legal framework of the CU and SES,providing much less protection for the Kyrgyz domestic market. In particular,this applies to the Customs Tariff of the Kyrgyz Republic (CT), which should bealtered to be aligned with the CU Common Customs Tariff (CU CCT).When the Customs Tariffs of Kyrgyzstan and the CU are compared, it canbe seen that of 10,968 Kyrgyzstan’s duty rates 3,288 (30%) concur with andEurasian Development Bank65