Kyrgyzstan closer to joining Customs Union

Membership may solve labour migrant problems, but create others

By Asker Sultanov

2011-08-11

BISHKEK – Kyrgyzstan still has hesitations about joining the Russian-Kazakhstani-Belarusian Customs Union (CU), but the CU is playing its trump card, giving reassurances that trade between Kyrgyzstan and the CU will multiply, Kyrgyz exports will increase and entrepreneurs will have more opportunities.

“Kyrgyzstan’s foreign trade with the CU countries in January to May of this year increased 20% compared to the same period last year to $918m (40.5 billion KGS) and Kyrgyz exports increased 30%,” Igor Kurkov, who directs the Russian State Customs Committee’s Representative Office in the Kyrgyz Customs Service, told Central Asia Online.

Pointing out the growth in trade, Kurkov said Kyrgyzstan stands to gain from joining the CU.

“The member-states above all else are pursuing economic goals in wanting Kyrgyzstan to join,” he said. “We want to remove trade barriers, create a common economic space and thereby improve the countries’ economies and increase trade. Now an inter-departmental commission is considering Kyrgyzstan’s decision to join the CU.”

The CU is interested in Kyrgyzstan because it produces food and light-industrial goods, Russian trade representative to Kyrgyzstan Vladimir Nekrasov said.

However, Nikolai Chuikov, director of the Forecast and Analysis Division of the Kyrgyz government’s economic section, said, “Foreign trade has increased mainly because of agricultural production, energy production and fuel purchases.”

The increased trade and export indicators are encouraging, “But, on the other hand, Russia’s representatives are crafty, omitting to mention that the wholesale markets that provide a livelihood for more than 15% of the country will be left high and dry with our joining the CU,” said economist Almaz Kasymov.

Key sectors of the economy already lost US $358m (about 15.8 billion KGS) in the first six months of 2011 from the impact of the CU, according to Project Future, a Kyrgyz NGO.

CU regulations force Kyrgyz vendors, who formerly re-sold Chinese goods cheaply to Russia and Kazakhstan, to pay high CU customs duties when selling to them.

“If the CU really opens doors for Kyrgyz entrepreneurs, it will greatly improve our country’s overall economic situation,” Kasymov said.

CU to grant more rights to migrants

The CU is also promising to help migrant workers with employment, a key issue for Kyrgyzstan.

“The CU (would) significantly improve conditions in Russia and Kazakhstan for migrants from Kyrgyzstan, many of whom now live in difficult conditions and are there illegally,” said Kurkov.

The Kyrgyz Economic Development Ministry’s Public Oversight Council issued a report in July stating, “Kyrgyzstan’s participation in the CU will ensure a free immigration policy without quotas and limitations, which will allow migrant workers to enjoy all of the social rights that the host country’s citizens have.”

“Kyrgyzstan’s membership in the CU could eliminate the problems linked to migration faced by our citizens in the CU countries,” the report stated.

Russia is developing a new migration policy that will end temporary-residency limitations and simplify the re-settlement process for highly skilled professionals, particularly for those from Kyrgyzstan, Vladimir Filippov, director of the Russian Federal Migration Service (FMS)’s Representative Office in Kyrgyzstan, said.

“Generally speaking, the new plan will facilitate migrant workers’ activities,” he said. “It eliminates quotas for migrants from Kyrgyzstan and greatly simplifies document processing – instead of 15 (documents), they will have to fill out only one to look for work.”

“The FMS and Kyrgyzstan’s Education Ministry ... will also provide training for high-demand trades in Russia such as gas welder, machinist, plumber and others. Russia will provide the funding for training,” he said.

The training centres will stay connected with Kyrgyz citizens in Russia to inform them about employment opportunities and the procedure for filling out documents, he added.

Patience is a virtue

Russia and the CU might try to rush Kyrgyzstan, but the country will not decide until it has considered the fundamentals, Chuikov said.

“Kyrgyzstan’s government decided in April to set up an inter-departmental commission on joining the CU,” he said. “The commission is currently preparing an extensive report on Kyrgyzstan’s foreign trade, which will be presented at the meeting of the Eurasian Economic Community’s Inter-State Council. The CU member-states will not specifically review the question of Kyrgyzstan joining the CU before 2012.”

An important factor for making the final decision, said Chuikov, will be the presidential election on October 30. “No decision on the CU will be made before the presidential election; everything depends on the election.”

Kyrgyzstan needs to assess the social and economic consequences when deciding whether to join the CU, independent analyst Rakymbai uulu Nurdin said.

“We must remember that we belong to another organisation, the WTO, and there is the issue of harmonising the CU and WTO’s tariff policies. ... Kyrgyzstan should be mindful of its obligations to the WTO. Of course, Russia and Kazakhstan are important partners for Kyrgyzstan, but we cannot forget about an equally important neighbour: China,” Nurdin said.

Nurdin proposed holding a public debate on the issue. Chuikov agreed. “After the inter-departmental commission was set up, the Economic Regulation Ministry ... held three roundtables and two conferences in May and June about the impact of the CU on Kyrgyzstan’s economy.”

Kyrgyz parliamentarians, NGOs, analysts and entrepreneurs from Dordoi Market, the country’s largest wholesale market, all attended the events.

“The Economic Regulation Ministry is constantly working on a wide-ranging discussion of joining the CU,” Chuikov said. “It also periodically informs the public about the pros and cons of joining the CU.”

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Reader Comments

  • The respectful government of KR, have you ever thought of Kyrgyzstan joining the Customs Union? Prices will go up, causing popular discontent and a "riot." Think about the situation and do not allow the prices to rise. Do not live just for today ...

    November 20, 2011 @ 11:11:00PM Armanio №001
  • Yes, we'd better wait for the CU members to join the WTO, and then we enter the CU, and then we will not lose anything like Akhmatov said. Officials who decide on the issue of CU membership should think of simple people. You have a lot of money, enough for your life. In short, Kyrgyzstan must be free, we do not benefit from the CU in any way.

    November 10, 2011 @ 12:11:00PM Руслан
  • Kyrgyzstan should enter the Customs Union. This is the only correct decision for the development of our economy as we need to export products, raw materials, and goods. Imports must not be in excess of exports. Our exports are agricultural products, so Kyrgyzstan is an agricultural country, and a crisis is expected in the near future, a crisis of clean natural products, and we are a source of clean natural products. This is our wealth, we should value it and export it. This is the only right decision for the fate of the Kyrgyz people, I'm for the Customs Union.

    October 22, 2011 @ 01:10:00AM Толкунбек
  • Akylai, you probably think Kyrgyzstan ends with Bishkek 70% ... We need to be patient for three years and the CU will show its positive side!

    October 5, 2011 @ 04:10:00AM Жоомарт
  • People, don't worry. Russia, Kazakhstan and others will withdraw from the Customs Union soon and form the Western Union instead. This is temporary panic called a move to deflect attention. To make people seek security, but they won't find it. That is why people are losing values, priorities and the taste of life. I wish you peace and love.

    September 11, 2011 @ 07:09:00PM Gost
  • I'm sure common sense will prevail in Kyrgyzstan and they will join the CU. This is the only chance to preserve Kyrgyzstan as a state. Any different road leads only to "feudalism".

    September 7, 2011 @ 11:09:00AM Владимир
  • 70 percent of the Kyrgyz somehow survive working in the Dordoi market. I do not mean traders only, but many people collect boxes and plastic tape from Chinese goods packaging. People collect the tape all over the market and sell it to recyclers for 5 cents per kilogram making a living for their entire families. Many guys work as loaders and cart drivers. Where will they go or will they go to other countries and work there like slaves? They better collect garbage here than work like slaves away from their families braving cold and hunger. If I keep writing, there will not be enough pages here. Set up a commission and count how many people are fed by vendors. If goods stop coming from China, the Dordoi workers will be slowly dying out. They have mortgages and will be left without roof over their heads, and the country will plunge into chaos. For instance, Kazakh traders can no longer go to China because of high taxes if they fail to handle new prices. Ordinary people are already half-starved, they will soon be naked and barefoot. Now, whatever they say, life is better in the RK. All who left for other countries are coming back however hard it may be. It is good to have a small salary in your native country. I also traveled a lot with my children and suffered a lot. We have such a resource-rich country, I think we should be able to live independently. Maybe we do not understand. On the other hand, Kyrgyzstan should better join the Customs Union, but traders involved in trade will not have a bright future with high customs duties. I may be wrong, but it's just my opinion. I can not sit and wait when the fate of our people is at stake.

    August 16, 2011 @ 05:08:00AM акылай