The Beginning of the Friendship
Kazakhstan was one of the republics composing the dissolved USSR. It became independent after the dissolution of the Soviet in 1991. On its east lies China and its west is the Caspian Sea. Its north is bordered by Russia while on its south are the Kyrgyzstan, Uzbekistan and Turkmenistan. Forty-two percent (42%) of its population are the Kazakh minority, 38% are ethnic Russians while the remaining goes to other minorities such as the Ukrainians and Ethnic Germans.
Kazakhstan is regarded as one of the world's richest depositary for mineral resources. Industrial raw materials were also hefty in the area. The development of these two areas contributed to the increase of a highly diversified mineral industry. Its large coast basins were useful in providing fuel for its equally important electric-power industry.
The country is a major producer of iron ore and noneferrous metals such as copper, lead, chromite and zinc. Bauxite for the aluminum industry and other metals were also considered significant in the Kazakh's economy. Petroleum is now being produced in the nation. In fact, it has one of the largest oil fields in the world located in Tenghiz on the Caspian Sea. Agriculture and sheepherding remain major features of the economy.
It was on December 25, 1991 when US recognized the republic of Kazakhstan. The former was said to be the first one to give due recognition to the latter and in January of the following year, a US Embassy was established in Almaty. Since Kazakhstan's independence, it had fostered a wide-range of bilateral relations with the US.
The major aspect covered in the bilateral relations involve security as well as non-proliferation. Kazakhstan was one of the nations who turned down nuclear weapons in 1993. The US helped much in the renunciation through the removal of weapon-grade materials, nuclear warheads and the infrastructure which covers all these materials.
Another major role played by the US in the economic transformation of Kazakhstan was through providing technical assistance. A fund amounting to nearly $1.21 billion from 1992 to 2005 were shed out by the US government to help administer the reform. Significant programs covered were the promotion of market reform, settlement of security issues and the establishment of a foundation for a more open, democratic and prosperous society.
Major Exports and Imports Between the Two Nations
The primary commodities exported by Kazakhstan to other nations involved in world economy include oil and oil products, ferrous metals, machinery, chemicals, wheat, grain, wool and coal. A significant amount of these exports went to its major trading partners like Russia, Germany, China, Italy, France, Romania and US. Its major imports from other countries are foodstuffs, machinery and equipment and metal products. Bulk of these products comes from suppliers from Russia, China and Germany.
The US Census Bureau have recorded the trade relations between the US and Kazakhstan. The latest recorded data were as of November 2008. The exports of US to Kazakhstan were totaled at $880 million for the said 11-month period commencing on January 2008 while the imports from the latter to the former went to as much as $1.49 billion. Comparing it with the 2007 data, the following statistics were tracked:
Treaties Made Between The Two Nations
- Kazakhs Exports to US. The exports coming from Kazakhstan to US were recorded at a total of $1.25 billion for the year 2007. Out of this total amount, 18.91% went to crude with sales of $236.43 million. Other products found on top of the charts of the same agency were: fuel oil; unmanufactured steelmaking and ferroalloying materials; zinc; miscellaneous nonferrous metals; nuclear fuel materials and fuel; semifinished iron and steel mill products; industrial organic chemicals; finished metal shapes and advanced manufactures except steel; and US goods returned and reimports. The last items made total earnings of $7.29 million which is .58% of 2007's total exports from Kazakhstan to US.
- Kazakhs Imports from US. For the year 2007, the imports coming from US sold in Kazakhstan were recorded at $753.01 million. Agricultural machinery and equipment topped the list with sales earnings of $143.44 million which is equivalent to 19.05% of the said year's total. Joining agricultural machinery and equipment on the list were: new and used passenger cars; drilling and oilfield equipment; railway transportation equipment; telecommunications equipment measuring, testing and control instruments; other industrial machines; industrial engines; and other industrial supplies. Industrial supplies were sold for a total of $17.45 million for the said year which is equivalent to 2.32% of the total imports from US to Kazakhstan.
- Fastest-Growing US Exports to Kazakhstan. The goods coming from US exported to the Kazakhstan market were given due recognition. In fact, a lot of these products made a large increase when compared with their statistics for 2006. Leading the list of the commodities along this line was primary synthetic rubber which despite its sales of $278 thousand was already commendable for a 3,971.43%-increase. Other products joining this item were: glass-plate and sheet; writing and art supplies; iron and steel mill products; and chemicals such as fertilizers. Chemical products were sold at $62 thousand which is 2,066.67% higher than how it faired in the Kazakhstan market in 2006.
- Fastest-Growing US Imports from Kazakhstan. Kazakhstan goods made its fair share on US grounds as well. As a matter of fact, positive variances were recorded from 2006 to 2007. Topping the list of these goods were computer accessories, peripherals and parts which had total sales of $553 thousand. These were commendable for a 1,417.95%-increase from 2006. Other products found on the list were: rugs and other textile floor coverings; zinc; nuclear fuel materials and fuel; and alcoholic beverages except wine and related products. The last items made as much as $2.60 million and was significantly higher by 430.63% from what it made in 2006.
In order to foster the ties between these two nations and to widen the range of
their bilateral relations, both the governments have decided to enter into
mutually-cooperating treaties. These pacts provided a privilege to a more open market.
Among the significant trade agreements recorded for these two nations were:
Trade Barriers Between The Two Nations
- Kazakhstan Bilateral Investment Treaty. This treaty was signed on May 19, 1992 which was about five months after Kazakhstan obtained its independence. The pact was entered into force around two years later on January 12, 1994. The agreement was concerned with the reciprocal encouragement and protection of investment between the two nations without giving more regard to one than the other. This was more of a legal-basis for all business engagements made by both sides of the contracting party. Furthermore, this was also considered as an integral component in the expansion of trade and investment opportunities. This was sought to assist Kazakhstan in its transformation to a more prosperous market economy thus encouraging the role of the private sector and other structural and macroeconomic policies. Both domestic and international investments were also pushed through this pact.
- Kazakhstan Trade Relations Agreement. This agreement was said to provide a basis for the expansion of trade for both nations. The operations of companies coming from and going to both territorial jurisdictions formed part of this pact as well. Intellectual property protection was further strengthened in the provisions of this treaty. Moreover, procedural guidelines were also established in order for each contracting party to protect its domestic industries from any untoward increases on prices of imports coming from the other nation. Specific provisions for settlement of disputes were also undertaken should there be any drastic effect arising from the trade. This pact was entered into force on February 18, 1993.
Since Kazakhstan was a former member of the USSR which was considered as one of the toughest enemies of US in global economy standing, there were several disputes which arise from the trade relations of the two. Aside from this known fact, there were other reasons which led to economic concerns. The following conflicts had somehow shaken the relationship of these allies:
Future Trade Opportunities Between the Two Nations
- US Trade Deficit. In 2003, the US recorded a trade deficit amounting to $224 million with Kazakhstan. This was quite devastating especially that a trade surplus of $270 million was recorded in the preceding year (2002). There were numerous fingers pointing to import policies as the main reason to this economic downfall.
- Import Policies. The main issue regarding the trade deficit involved the necessary papers required by Kazakhstan from US companies doing business with them. A so-called transport passport was being asked from these companies before allowing imported goods from US to enter the Kazakhstan grounds. Although a part of the document may sound favorable to be able to detect money laundering, it also hinders a wider range of business activities which may be done in the market.
- Standards, Testing, Labeling and Certification. Kazakhstan's present system known as Metrology, Accreditation, Standards and Quality (MAS-Q) was uneven and weak. This led to different complains from businessmen on the real basis and aim of the mandatory requirements for certification. The regular changing of the committee on MAS-Q hindered the progress because frequent changes have to be made thus making long-term possibilities on investment even more difficult.
There were other investment and service barriers which were known to hinder the trade between the US and Kazakhstan. As long as the latter will be willing to change its standards and have policies which are in accordance with international laws, the barriers will be eliminated. After all, these two countries are already governed by a bilateral investment treaty. It is actually a matter of getting Kazakhstan to focus on the vital provisions of its country's regulations. If this will be achieved, there is no reason for both nations' world economy standing not to prosper.
Getting into market research, scrutinizing business opportunities, trade missions and business opportunity exchanges will help start a continuing favorable flow in these two economies. Legal and financial concerns shall also be resolved in compliance to world standards. New technologies may also be introduced by the US to Kazakhstan.
US-Kazakhstan Trade References