Kazakhstan and Tajikistan: WTO Accession and U.S. Trade Relations

Kazakhstan and Tajikistan: WTO Accession and U.S. Trade Relations

Updated May 30, 2017
Kazakhstan and Tajikistan: WTO Accession and U.S. Trade
Relations
Overview
accession process—the longest of any WTO member. The
country submitted an application in January 1996, a year
On November 30, 2016, Kazakhstan acceded to the World
after the WTO was founded. In recent years, the delay was
Trade Organization (WTO). Kazakhstan’s WTO
attributed to the formation of the Eurasian Economic Union
commitments include binding tariffs at an average of 6.1%
(EAEU), a customs union with Russia and Belarus, and the
and adopting all WTO rules and agreements. Tajikistan,
need to harmonize the tariffs and customs laws of the
another eastern-bloc country, became a WTO member in
EAEU countries.
2013.
In approving Kazakhstan’s accession protocol we are
WTO rules require that all members extend
concluding almost two decades of negotiations.
nondiscriminatory, most-favored-nation (MFN) tariff
Moreover, we are delivering a result which will have a
treatment “immediately and unconditionally” to other WTO
major economic impact, a major systemic impact, and
members. The United States currently grants Kazakhstan
a major human impact. Because, crucially, the benefits
and Tajikistan temporary MFN (in U.S. law called normal
of accession can help to create jobs, raise incomes,
trade relations or NTR) status under Title IV of the Trade
and improve people’s lives. WTO Director-General
Act of 1974, the so-called Jackson-Vanik amendment.
Roberto Azevêdo
Congress will need to enact legislation to provide
Kazakhstan and Tajikistan permanent NTR (PNTR)
Kazakhstan/Tajikistan-U.S. Trade
treatment if the United States is to benefit fully from the
Relationship
terms of its WTO membership, including enjoying
Kazakhstan’s tariff concessions and engaging in WTO
The United States currently grants Kazakhstan and
dispute settlement procedures with Kazakhstan. Other
Tajikistan temporary NTR status under Title IV of the
eastern-bloc WTO members that have United States PNTR
Trade Act of 1974, the so-called Jackson-Vanik
status are Albania, Armenia, Bulgaria, Georgia,
amendment. PNTR status may only be granted to
Kyrgyzstan, Moldova, Mongolia, Russia, and Ukraine.
Kazakhstan and Tajikistan if Congress approves it through
Besides Kazakhstan and Tajikistan, Title IV still applies to
legislation.
Azerbaijan, Belarus, Cuba, North Korea, Turkmenistan, and
Uzbekistan.
What is the “Jackson-Vanik” Amendment? Congress
enacted the so-called Jackson-Vanik Amendment (Title IV
WTO Membership Status
of the Trade Act of 1974) to respond to strict emigration
policies implemented in the 1970s by the Soviet Union and
How does a prospective member join the WTO? Any
other communist countries during the Cold War. Title IV
state or customs territory that has full autonomy over its
requires the President to deny PNTR (i.e., MFN) status to
trade policies may join (“accede to”) the WTO by agreeing
any country to which the United States did not provide this
to its terms. This includes, first, agreeing to the body of
treatment on the date of enactment (January 3, 1975). At the
rules and agreements that comprise the WTO. Second, a
time, this included the Soviet Union, China, and other
prospective member must satisfy specific market access
communist-led regimes. Congress has since passed
conditions of other WTO members on an individual basis,
legislation to grant PNTR to several of these countries.
which involves engaging in a series of bilateral
Russia was the latest country to receive PNTR status in
negotiations. These bilaterally negotiated commitments are
December 2012 (P.L. 112-208).
then extended to all members based on the WTO’s MFN
principle. Third, a WTO working party drafts the candidate
Title IV denies PNTR status if a country: (1) denies its
member’s “protocol package” along with a report on the
citizens the right or opportunity to emigrate; (2) imposes
actions the country will take to bring its trade regime into
more than a nominal tax on emigration documents, visas, or
conformity with WTO obligations. This package is
other paperwork necessary for emigration; or (3) imposes
presented to the entire WTO membership for approval.
more than a small tax or fine because a citizen wants to
Membership requires a two-thirds majority vote of all WTO
emigrate.
members. In many cases, as with Kazakhstan, the
prospective member’s own parliament or legislature must
Title IV prohibitions also extend to participation in any US
ratify the agreement before membership is effective.
government program of credits, credit, or investment
guarantees. Before a country can receive temporary trade
How long has Kazakhstan been engaged in the accession
status, the country must have concluded a bilateral trade
process? Kazakhstan has undergone an almost 20-year
agreement (BTA) with the United States that provides for,
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Kazakhstan and Tajikistan: WTO Accession and U.S. Trade Relations
among other things, reciprocal extension of NTR treatment.
ferrochromium ($40 million), enriched uranium ($26
Congress must approve the BTA agreement through a joint
million), refined lead ($20 million), and tantalum ($19
resolution.
million).
How can the President provide countries with
As of 2015 (latest data available), total world foreign direct
temporary normal trade relations (NTR) status? The
investment (FDI) stock in Kazakhstan amounted to $120
President may temporarily remove the restriction in Title IV
billion. According to the most recent international United
by two methods: 1) he/she may determine that a country is
Nations data (for 2012), the United States had no FDI flows
not violating any of these conditions; or (2) waive the full
to Kazakhstan, however, U.S data could have been withheld
compliance requirement if he/she determines that a waiver
to avoid disclosure of data on individual companies.
would substantially promote its objectives (i.e., freedom-of-
emigration). Both methods require regular reporting to
Tajikistan is one of the least-developed countries in the
Congress and an annual renewal process that is subject to a
region, with a per capita GDP of just over $1,100. At
congressional joint resolution of disapproval.
present, it has a limited trade relationship with the United
States, with U.S. exports of $18.8 million and imports of
Why does Title IV apply to Kazakhstan and Tajikistan?
$31.1 million in 2015.
Kazakhstan and Tajikistan became independent countries in
1991 due to the breakup of the Soviet Union. The United
Figure 1. U.S. trade with Kazakhstan ($US)
States signed a bilateral trade agreement with Kazakhstan in
May 1992 and with Tajikistan in July 1993.Then-President
George H.W. Bush extended temporary NTR treatment by
waiving the requirements of Title IV for both countries
beginning in June 1992 (Executive Orders 12809 and
12811, respectively). In December 1997, then-President
Clinton informed Congress that both countries were in full
compliance with the provisions of Title IV.
To what other countries does Title IV still apply? Title
IV still applies to Azerbaijan, Belarus, Cuba, North Korea,
Turkmenistan, and Uzbekistan.
What happens if Congress does not grant PNTR status
to Kazakhstan and/or Tajikistan? If a WTO member
determines that it cannot comply with the application of

PNTR status, or any other WTO rule toward a new WTO
Source: CRS chart based on U.S. Census Bureau Data.
member, it can “opt out” of its obligations toward that
member by invoking the non-application provision (Article
Figure 2. World FDI Stock, Kazakhstan ($US billions)
XIII of the WTO Marrakesh Agreement). A WTO member
that opts out of its obligations is also excluded from the
trade concessions granted by the new member. The United
States currently invokes non-application with regard to
Tajikistan, which acceded to the WTO in 2013, but has not
officially invoked non-application to Kazakhstan as of this
writing.
What relevant legislation has been proposed? No
legislation has been proposed in the 115th Congress to date.
In the 114th Congress, S. 3413 / H.R. 4219 would have
extended nondiscriminatory treatment to the products of
Kazakhstan. H.R. 3400 would have done so for products of
Kazakhstan, Tajikistan, and Uzbekistan. Uzbekistan began
the WTO accession process in 1994, but the process has not
been concluded to date.

U.S. Trade by the Numbers
Source: CRS chart based on United Nations Conference on Trade
and Development data.
The United States exported about $10.6 billion in
merchandise to Kazakhstan in 2016, and imported about
Vivian C. Jones, Specialist in International Trade and
$625 million. Top U.S. exports included communications
Finance
satellites ($439 million), chicken cuts ($71 million), and
parts of oil and gas field machinery ($56 million), and
Ian F. Fergusson, Specialist in International Trade and
combine harvester-threshers ($17 million). Major U.S.
Finance
imports from Kazakhstan included petroleum oils ($302
IF10294
million), uranium ores and concentrates ($123 million),
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Kazakhstan and Tajikistan: WTO Accession and U.S. Trade Relations

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https://crsreports.congress.gov | IF10294 · VERSION 5 · UPDATED