Concluding remarks by the Chairperson

This second Trade Policy Review of the Kyrgyz Republic has provided an excellent opportunity to improve our understanding of its trade and investment policies. I would like to sincerely thank H.E. Mr. Temir Sariev, Minister of Economy, and the rest of the Kyrgyz delegation, for their important input, dialogue, and contribution throughout this exercise. I would also like to thank Ambassador Selim Kuneralp, Permanent Representative of Turkey to the WTO, for his interventions as discussant. The Kyrgyz Republic’s choice of the alternative timeline that allowed them to reply to the questions in advance of the meeting has been well appreciated by Members. We look forward to their replies to the additional and outstanding questions, no later than one month after this meeting.

Members expressed strong appreciation for the extraordinary efforts that the Kyrgyz Republic has made after the break-up of the former Soviet Union to transform itself from a planned economy to a market based economy. Thanks to this, it recovered relatively quickly from an initial significant fall in trade and production and despite a number of obstacles such as being landlocked, geographic remoteness, dependency on former supplier networks, and lack of energy resources. The Kyrgyz Republic promoted and embraced many economic and trade reforms which allowed it to achieve macroeconomic stabilization, price liberalization, reverse a decline in output, and reduce poverty. During the review period GDP growth has been positive, albeit fluctuating, as in the case of inflation. This is a reflection of the fact that the Kyrgyz Republic obviously still faces many challenges. While the Kyrgyz Republic’s total merchandise trade more than doubled during 2006-12, the current account remained in deficit and the export base remained narrow. Gold and unprocessed agriculture products accounted for the majority of exports. Members encouraged export diversification to act as a buffer to external shocks and to develop some of the country’s untapped potential. The country’s Export Development Strategy would be a key element to encourage diversification and reforms, and furthermore promote sectors with considerable unexploited potential, in particular tourism and hydropower.

Members commended the Kyrgyz Republic for being the first former CIS country to accede to the WTO in 1998, a clear expression of the country’s willingness to integrate in the global economy and the multilateral trading system, and for having committed itself to an open trade regime. It was noted that tariff protection is low, averaging 5%, in fact it is one of the lowest among WTO Members. Moreover, approximately 20% of tariff lines are bound at zero reflecting its adherence to the Information Technology Agreement and other zero-for-zero sectors. In addition, the Kyrgyz Republic has not applied anti-dumping or countervailing measures, nor has it resorted to the dispute settlement system.

Furthermore, beyond its overall open trade and investment policy, Members commended the Kyrgyz government for having continued to initiate reforms in a number of areas since its last review. Trade facilitating measures such as the "single window" and "paperless trade" initiative were highlighted. Improvements in the tax code, the pursuit of e-procurement, the reforms to competition policy, the reduction in mandatory standards and technical regulations, and greater alignment with international standards, and efforts to streamline certain bureaucratic practices, among other things, were also welcomed.

While noting many positive developments, Members pointed to a number of areas where further improvements could be made. The main areas for possible improvement brought up by Members during the review include the following points, and we take due note of the Kyrgyz delegation’s constructive statement in this regard:

Tariff rates: Members expressed concern that the Kyrgyz Republic had exceeded its bound tariff rates on approximately 90 tariff lines and stressed the importance that this should be rectified as it had systemic implications for the organization.

Transparency and notification obligations: Members underlined the need for the Kyrgyz Republic to urgently make new or revised notifications in a number of WTO areas to improve transparency and monitor WTO obligations.

SPS matters: Members expressed concern about the lack of a WTO inquiry point and the frequent changes to the SPS framework.

Non-tariff measures: Members noted, with concern, that the Kyrgyz Republic has introduced or kept in place a number of measures such as prohibitions, seasonal duties, safeguard measures, import licences, and products subject to state trading during the period under review.

Regulatory matters such as intellectual property and government procurement were identified as areas that could be further developed. Some Members encouraged the Kyrgyz Republic to join the GPA, and noted the intention to resume accession negotiations once its revised domestic legal framework had been adopted.

Investment: A number of Members commented on the relatively low foreign direct investment (FDI) inflows and asked about the measures envisioned to improve this situation. It was noted that attracting FDI was a key component in further developing the economy, in particular with respect to diversifying its production and export bases. Referring to the country’s 2009-11 Investment Strategy, there were a number of elements identified that, Members believed, could be further developed, such as eliminating administrative barriers, creating more favourable customs and tax regimes, and improving transparency and predictability.

Besides these more specific points, a key issue of the future trade policy of the Kyrgyz Republic for many Members was the country’s confirmed intention to join the customs union currently comprised of Belarus, Kazakhstan, and the Russian Federation. Many questions were posed on the timing of such an initiative, the contents of the planned road map, the legal and regulatory changes envisioned, and the WTO processes to be followed, including with respect to notifications and compensation negotiations stemming from possible alterations of its tariffs. It was clear to Members that this initiative was a major endeavour of the Kyrgyz Republic that would potentially affect many aspects of its current trade policy and relations, and require substantial efforts on behalf of the Kyrgyz Republic in the near future. Members underlined the need to be fully kept informed of developments in this area and ensure the process complies with WTO rules and procedures. In particular they stressed the importance of minimizing the impact on trade and maintaining the country’s level of openness.

In conclusion, Members praised the Kyrgyz Republic for its efforts to promote openness and reforms despite the many challenges it had faced in the past, and still faces today, and encouraged them to keep on this path. At the same time, recognizing that the trade policy of Kyrgyz Republic may be transformed as a result of joining the customs union, Members recalled that a WTO-consistent trade and investment regime was important to secure sustainable growth and diversify its economy.

Members warmly welcomed the second TPR of the Kyrgyz Republic and the information provided so as to take stock and assess the points of progress since its last review. The numerous questions posed and the participation of delegations in this meeting reflected Members’ interest as a trading partner and their engagement in a number of bilateral development and aid programmes. In closing, I would like to thank the Kyrgyz Republic delegation, all the other delegations, the discussant and the Secretariat for this successful review.