Economic aspects of the Kazakh­Uzbek relations in international law

Initially, the economic cooperation between Kazakhstan and Uzbekistan have developed quite successfully. This is confirmed by statistical data. For the post-Soviet history of bilateral economic relations greatest volume of trade recorded in 1992. According to the Executive Committee of the Interstate Council of Kazakhstan, Kyrgyzstan and Uzbekistan, in this year the trade turnover between Kazakhstan and Uzbekistan reached a record level of 2.6 billion USD. At the same time Kazakhstan’s exports to Uzbekistan amounted to 15.2% of turnover with the CIS countries, and imports of Uzbek goods in Kazakhstan – 12.9%.

in    January    1994,    to    enhance    economic cooperation  between  Kazakhstan  and  Uzbekistan signed a treaty on the establishment of a common economic  space,  which  soon  joined  the  Kyrgyz republic, and then the republic of tajikistan. by their  nature,  the  document  had  a  clear  integration focus. in particular, he assumed the free movement of   goods,   services,   capital,   labor,   and   provide conditions for the agreed-bank settlement, budget, tax, price, customs and monetary policy [1].

at  the  heart  of  the  so-called  lay  cooperation project  approach.  the  program  was  developed  by the  economic  integration  of  the  states  Parties  to the year 2000, which included the implementation of  more  than  50  joint  projects  in  various  sectors. interstate and prime ministers of the three countries were defined 10 priority projects to be funding   as a priority specially created Central asian bank. Prepared by the Kazakh-Uzbek scientific and technical program consisting of 107 projects in 16 priority areas of science and technology [2].

initially,  the  economic  cooperation  between Kazakhstan  and  Uzbekistan  have  developed  quite successfully.  this  is  confirmed  by  statistical  data. For  the  post-soviet  history  of  bilateral  economic relations greatest volume of trade recorded in 1992. according   to   the   executive   Committee   of   the interstate  Council  of  Kazakhstan,  Kyrgyzstan  and Uzbekistan, in this year the trade turnover between Kazakhstan and Uzbekistan reached a record level of 2.6 billion UsD. at the same time Kazakhstan’s exports   to   Uzbekistan   amounted   to   15.2%   of turnover  with  the  Cis  countries,  and  imports  of Uzbek goods in Kazakhstan – 12.9% [3].

however, in the future, since 1993, the pace of integration of the economies of the two neighboring countries  has  abated.  Unfortunately,  it  should  be noted that this tendency continues in the moment [4]. today,  in  a  state  of  stagnation  staying  major areas  of  economic  cooperation,  including  trade, joint ventures, projects on industrial cooperation and economic  integration  between  the  two  countries. rapid decline in the annual bilateral trade has led to the fact that the real parameters of this indicator in 1999, according to the Uzbek customs statistics, fell to 249.1 million UsD. thus, in comparison with 1992,  the  volume  of  bilateral  trade  has  decreased more than 10 times [5].

Kazakhstan fully liberalized economic activity and  floated  tenge.  in  Uzbekistan,  on  the  other hand, there remains the leading role of the state in the economy. Many medium and large bulk of the Uzbek enterprises still remain in state ownership or control. this complicates the organization of direct contacts  between  economic  entities  of  the  two countries. in some cases, requires the imposition of special government decisions [6].

Development of economic relations is constrained by the lack of convertibility, as well as ongoing policy of Uzbekistan to protect the domestic market from the influx of foreign goods, including manufactured in neighboring countries.

serious differences in domestic economic legislation states lead to the fact that they often contradiction is of the same bilateral international instruments. as a result, the latter in some cases simply had no practical mechanism. For example, the free trade agreement, which came into force in May 1998, could not be used to the full in connection with  unliberal  foreign  trade  and  the  lack  of  free access to the currency conversion in Uzbekistan [7]. the above circumstances prevent the formation

of a single economic space. Unsatisfactory state of economic  cooperation  was  largely  predetermined by  the  improper  performance  of  the  provisions of  the  previously  signed  bilateral  and  multilateral agreements    and    treaties.    Currently,    between Kazakhstan    and    Uzbekistan    provide    valuable joint  legal  base,  numbering  91  document.  their regulatory  influence  extends  to  practically  all  the possible forms of cooperation [8].

overall, the economy of modern Uzbekistan is in a state of protracted crisis – low share of industry in GDP (about 16%), mainly represented by the mining, oil, textile and food industries, the closed nature of the economy, weak development of the private sector, a significant level of poverty in the country. Domestic consumption remains stagnant. high unemployment, supported by growth in the young working population, increases social tensions [9].

scope of mutual trade is one of the traditional and   important   areas   of   bilateral   cooperation. Uzbekistan is the third largest in the Cis in terms of trade with Kazakhstan. according to the customs statistics  of  the  republic  of  Kazakhstan,  during the  period  from  2000  to  2006,  the  trade  turnover between  Kazakhstan  and  Uzbekistan  reached  $ 2,478,900,000 – the export of $ 1.3497 billion and imports of $ 1,129,200,000 [10].

in general, there is progressive increase in turnover, with the exception of 2002 when there was a significant decline of Kazakhstan’s exports. however, the dynamics of the trade is characterized by changes in trends in export and import flows.

export growth is  due  to  increased  supply from  Kazakhstan  in  the   framework   of groups of commodities: wheat, barley, flour, sugar and sugar products, calcium phosphates, asbestos, ores and concentrates, crude oil, petroleum products, including motor gasoline and diesel fuel, alloys, waste and scrap iron or steel, rolled metal, ball or roller bearings, lead, and other products.

in   2004-2005.   the   situation   has   changed. the   balance   of   bilateral   trade   in   Kazakhstan was  negative  due  to  a  significant  increase  (2.5 times) of Uzbek imports. this is due to increased supplies   from   Uzbekistan   foodstuffs,   clothing, ethyl  alcohol,  lubricating  oil,  natural  gas,  mineral or  chemical  fertilizers,  the  profile  of  the  iron  and steel, various machinery, equipment for agriculture, horticulture,  poultry  and  other  commodities.  in 2006,    Kazakhstan’s    exports    greatly    exceeded imports from Uzbekistan, which provided a surplus for Kazakhstan [11].

Development  of  mutual  trade  constrains  the practice  of  trade  with  Uzbekistan  exemptions  and duties.  at  the  last  in  2005  in  tashkent,  Kazakh- Uzbek intergovernmental negotiations head of the Kazakh  delegation  said:  «our  two  countries  have a free trade regime, which provides for exceptions and limitations. the talks was about to drastically reduce  the  range  and  number  of  such  exceptions and limitations ... «. on this issue, the delegations signed a separate protocol [7].

according to the Uzbek side level of trade does not correspond to the potential of the two economies. should ensure the removal of all barriers to mutual trade, as the two economies are complementary to each other. in this case, between countries often artificially created barriers that must be removed to ensure the normal operation of free trade.

in this case, there is a difference in the estimates of the volume of trade between countries. the above data of the Kazakhstan Customs Committee several of them with the statistics cited by the news agency Uza. according to him, the volume of trade in 2004 totaled $ 425.9 million, and in 2005 – $ 516.4 million. this increase of $ 9.5 billion was due to the favorable situation in world cotton prices, precious and non- ferrous metals and an increase of Uzbek exports of foodstuffs, machinery and equipment [11].

in recent years, an increasing number of joint ventures. according Uza in 2006 in Uzbekistan, there were about 50 workers in the field of trade, construction, food processing, machine building, light industry, metal processing. in the field of light and food industry, transport,  building  materials are representative of 24 Kazakhstan firms and companies [12].

in  turn,  in  Kazakhstan  with  the  participation of  investors  in  Uzbekistan  created  more  than  100 companies. they operate in the sphere of trade, food, pharmaceutical industry, construction, construction materials,   fertilizers,   cotton   processing,   wood, furniture and glass products.

increase in the number of joint ventures and the development of direct contacts between business structures promotes signed in 2005 an agreement on

«Cooperation between the Chamber of Commerce and industry of Uzbekistan and the Union of Chambers of Commerce of Kazakhstan.»

there  is  a  growing  interest  in  tashkent  in attracting Kazakh investments. the Government of Uzbekistan adopted the proposal of the Development bank of Kazakhstan to open a representative office in the country with the words «in order to promote cooperation in the banking and investment sectors, as well as the integration of the economies of Uzbekistan and Kazakhstan.»

however, in accordance with the legislation of Uzbekistan, opens an office as a foreign legal entity cannot carry out banking transactions. a lack of correspondent accounts of Kazakh banks constrains the development of cooperation between economic entities republics.

Progressive development of relations in the field of gas transportation. Kazakhstan great interest here is the Uzbek natural gas. they provide for the needs of  the  southern  regions  of  Kazakhstan,  increasing significantly during the heating season. Work is gas companies of the parties for the delivery of Uzbek gas to Kazakh consumers and further its transit.

in December 2005, between the NC «KtG» and «Uztransgaz» signed an agreement on the reception and transmission of natural gas in the amount of 1.58 billion cubic meters in 2006, at the same time the cost was $ 55 per 1 thousand. M³ [8].

Within the framework of bilateral cooperation, the role of transport, as active trade implies an increase in freight traffic. For example, the transit of Kazakh goods through Uzbekistan to the south over the past four years has increased by almost 20%. Kazakhstan takes measures for  the  development of transportation. For example, in 2005 the Uzbek side was provided reduction factors to the tariffs for railway transportation of agricultural products, chemical, mining and metallurgical industry [13].

since 2006, there are reduction factors for the carriage of goods on the site «aktau – oasis» (0.5 to rate tariff Policy railroad rK), transportation of copper (0.83), fruit and vegetable products (0.6).

For advancing cooperation on transport in 2006, the parties signed an intergovernmental agreement on international road transport, a new procedure for transport of goods to the permit-free basis.

Despite the fact that our economies are agrarian- oriented, the level of cooperation in the agricultural sector remains low. here, activities are mainly limited to the export and import of agricultural products.

so, from Kazakhstan to Uzbekistan exported wheat and meslin, barley, flour, sugar and sugar products, wool, and from Uzbekistan to Kazakhstan imported livestock, fruit and vegetables, including grapes, kenaf. according to statistics of Uzbekistan, of the total exports (more than 2 million tons of fruits and vegetables per year) Kazakhstan occupies only 4% in the export of this commodity group (ie, abouttons). the issue of increasing the volume is usually solved one-off measures – in the form of  agreements  on  the  organization  of  direct deliveries. such an important item in the structure of  the  Uzbek  import  as  cotton  fiber,  Kazakhstan occupies a small amount – about 5% [9].

in general, cooperation in this field, in particular the increase in the volume of trade in agricultural products is constrained by restrictive measures on the part of Uzbekistan on the export of goods to foreign countries, including Kazakhstan.

one of the key issues of bilateral cooperation is to meet the growing needs of both countries in a wide range  of  goods.  thus,  the  increase  in  Kazakhstan fruit and vegetable imports from Uzbekistan in the northern  regions  of  the  country,  especially  in  the spring, will provide a low level of prices for these products.

here  in  the  first   place   necessary measures to remove artificial barriers to the provision of increasing turnover. it is necessary to consider the following areas:

1. Cancel  to   certain   goods   of   exceptions and  limitations  to  reduce  their  ultimate  cost  and increasing there is the question of drawing up a priority list of goods and applicable restrictions as well as the mechanism of their formation phase cancellation,  cancellation  procedures  agree  on  a timetable.
2. Facilitation of customs clearance of goods at the border in order to accelerate the export of goods from the customs territory in both today acts introduced  in  2005  a  simplified  procedure  in respect of the importation of fruits and vegetables up to 1 ton, which also reduced the cost of customs clearance. Nevertheless, on the one hand, we must continue to work to expand the range and volume of goods under a simplified procedure of customs clearance,  on  the  other  -ensure  reduced  fees  for customs clearance [7].

in general, the practical implementation of these measures should contribute to a real increase in turnover and the formation of co-operation at a later stage full free trade area, not only bilaterally, but also in the Central asian  region.

Cross-border cooperation is a new trend in bilateral relations. in particular, in March 2006 during the ninth session of the joint  Kazakh- Uzbek intergovernmental commission on bilateral cooperation Kazakh side proposed the establishment of a joint center for cross-border cooperation. it is intended to be placed in the territorial area saryagash. establishment of the center will simplify    customs procedures in the supply of products between the two countries, as well as regulate trade in the border regions [3].

however, cross-border cooperation in  the future should be considered in a broader context, including in the list of areas not only trade, but also co-operation, joint ventures entities on both sides, carrying out their activities in the border area.

it seems useful to the development of measures for  the  development  of  the  Kazakh-Uzbek  border cooperation that will enhance various areas of trade and economic relations between the entrepreneurs of the border area. these measures include: the study of the existing cross-border cooperation experience to adapt and apply it to the format of the Kazakh- Uzbek  relations;  simplification  and  harmonization of  taxation  tariff  regulation  procedures  for  cross- border  trade;  providing  support  at  the  state  level economic entities of both parties involved in cross- border cooperation, including questions of payment and settlement relations of economic agents of the parties; optimization of operating conditions across the border residents of border areas, products, and other factors of doing business. Mechanism for the implementation  of  these  measures  can  be  issued in  the  form  of  an  appropriate  intergovernmental agreement   on   the   development   of   cross-border Kazakh-Uzbek cooperation [5].

agreement on a significant increase in the volume of  trade  between  the  two  countries  suggest  steady growth in freight traffic. this implies a strengthening of the role of transport in the sphere of development of bilateral cooperation and, therefore, greater interaction transport complexes on both sides to each other, that will  increase  the  efficiency  of  transportation.  Joint activities  of  the  parties  should  be  directed  to  the development of transit potential of our countries, the gradual  reduction  of  tariffs  for  cargo  transportation, optimization  procedures  of  customs  control  at  the border and transportation infrastructure services.

tariffs for transportation.

this direction should be aimed at improving the competitiveness of international transport. it should continue to work together to develop a mechanism for gradual reduction in transportation tariffs. the decrease should be carried out in respect of payment for transport in export-import and transit in the area. in the future, it is advisable to consider the formation of a unified system of tariff application as for freight and passenger transportation.

simplification of customs control increase the competitiveness of international transport services, including transit, will contribute to simplifying and speeding up customs control. in this area, it is advisable to take measures aimed at:

facilitation of crossing the  border  all  modes of transport by combining the border, customs, transport and other controls between themselves;

implementation at checkpoints service vehicles and people on the basis of a one-stop; optimization procedure of customs clearance of vehicles and also reducing the list provided for this document.

the development of transport infrastructure. transport  capacity   is   largely   dependent   on the  state  and  level  of  development  of  transport infrastructure. in this vein, efforts should be directed at the development of transport networks and routes, the    modernization    of    transportation    facilities, reducing  the  cost  of  transportation,  improving  the quality  of  transport  services,  the  introduction  of new types of transportation. here to work through issues: reconstruction of highways south and west transport   corridors,   «tashkent   –   shymkent   – taraz – bishkek – almaty – Khorgos – Urumqi», «Kungrad – beyneu – aktau» and section   «beyneu atyrau»; reconstruction of railway routes of the corridor «bishkek – tashkent – aris – Kyzylorda Kandagash – aktobe – Uralsk – saratov»; modernization repair base of road and rail vehicles; renewal of the rolling stock; implementation of information management systems of international transport; infrastructure objects of roadside service, and especially on motorways transit corridors [4].

the  financial  sector  today  has  become  one of   the   most   promising   areas   of   cooperation. experience  and  capacity  of  the  banking  sector  in Kazakhstan, the pursuit of its subjects to enter the foreign markets enables its financial institutions to participate in the activities of the financial sector in Uzbekistan. one of the main segments that require the development of banking, investment and may be lending.

there is some interest in tashkent to promote cooperation  in  this  field.  the  first  concrete  step was the decision of the Government of Uzbekistan to open a representative of the Development bank of   Kazakhstan   and   the   beginning   of   the   legal proceedings in his desk. the possibility of the bank will  allow  to  implement  various  joint  projects.  in this connection, it should generate a list of priority projects, primarily related to the production, storage and transportation of hydrocarbons.

however, the arrival and expansion of the Kazakhstan business  structures  on  the  territory of Uzbekistan is constrained by the lack of correspondent accounts of banks in Kazakhstan banking structure in Uzbekistan.

in this case, the banking legislation of Uzbekistan has  various  restrictive  rules   on   the  operation of representative offices of foreign banks and companies. Necessary to adopt an intergovernmental agreement aimed at creating favorable conditions for the activities of representative offices of Kazakhstan companies and banks in Uzbekistan.

Cooperation in the oil and gas sector should be focused  on  the  creation  of  a  common  oil  and  gas market. the main objectives here are to increase the depth of processing of hydrocarbons and the quality of the oil. existing capacity of the atyrau, Pavlodar and  shymkent  (Kazakhstan),  as  well  as  bukhara and  Fergana  (Uzbekistan)  refineries  are  equipped with  mainly  primary  refining  technologies.  the quality of the fuel and its content of valuable by- products are not high enough that detects low prices on the product.

References 

1. basic Documents of the interstate Council of the republic of Kazakhstan, the Kyrgyz republic and the republic of Uzbeki- stan. almaty, 1995.
2. s. Primbetov CaPs: work no end // Kazakhstan t 1999 on 17 June.
3. Uzbekov W. Central asian economic Community and the Kazakh-Uzbek relations // priorities of Kazakhstan’s diplomacy at the turn of the century. almaty,
4. Kazakhstan-Uzbekistan: the path of integration. Kazakhstan t №20. January 24, 1991.
5. Kazakhstan-Uzbekistan: direct links. «live in peace with each other ...» Kazakhstan t №283. December 10, 1991.
6. http://www.statistics.uz.
7. http://www.review.uz.
8. http://www.avesta.uz.
9. http://www.cer.uz.
10. http://www.worldbank.org.
11. http://www.left.ru.
12. http://www.ino.uzpak.uz.
13. http://www.statistics.kz.