Kazakh car manufacturers ask officials to revise tariff policy with Uzbekistan

ASTANA – KazAvtoProm, the Kazakh Car Industry Union, released an open letter to Minister of National Economy Timur Suleimenov expressing concern about access of their products to the Uzbek market.

Photo credit: kapital.kz

Photo credit: kapital.kz

“The draft resolution of the Uzbek President ‘On measures for streamlining of foreign economic activity of Uzbekistan’ adopted Sept. 19 raises concerns about the prospects for Kazakh products’ access to the Uzbek market. The document includes the prohibitive excise tax on automotive equipment from Kazakhstan in the amount of $2.40 per cubic centimetre. At the same time in terms of car import, cars from Russia and Ukraine, a symbolic excise rate of 2 percent of the customs value is provided. In other words, the Uzbek market will remain closed for Kazakhstan automakers and their products will be under price discrimination,” read the letter.

The correspondence added “the unequal position of Kazakhstan and Uzbekistan in the supply of automotive equipment has been preserved for almost a decade and a half.” Since 1996, the Uzbek automobile industry has exported more than 85,000 cars valued at $720 million to the Kazakh market. The products are not subject to customs duties and excises when crossing the border into Kazakhstan. The Kazakh automotive equipment industry is unable to supply the Uzbek market, however, as access is blocked by strict customs tariffs barriers.

“This situation cannot be characterised as the relations of equal foreign trade partners. It’s time to move from a zero-sum game to a dialogue based on respect for mutual interests and the negotiations held as part of the recent interstate forum created the necessary prerequisites for such changes,” according to the letter.

The union asked the ministry to find negotiating opportunities for revising the Uzbek tariff policy in relation to Kazakh car industry products and assist in organising its access to the Uzbek market in accordance with the principles of free competition.

KazAvtoProm seeks to consider “the possibility of introducing symmetric measures of market protection of the Kazakhstan automobile market in terms of excise duty – both for cars and car equipment supplied by Uzbek enterprises to the local market,” noted the correspondence, in case the negotiation process does not lead to the expected result.