Five Trade Trends in Central Asian Connectivity

ASTANA — One of the topics of the Astana International Forum, which took place on June 8-9, was the trade connectivity in Central Asia and its growing role in global trade. 

Deputy General Director of QazTrade Center for Trade Policy Development Nurlan Kulbatyrov. Photo credit: Kulbatyrov’s personal archive.

Because a regionalization trend has replaced the globalization trend, the aim of Central Asian countries to expand regional trade cooperation and assure independent, sustainable growth is evident. The geographic position of Central Asian countries, with a vibrant market of over 76 million people and no marine borders, necessitates the development of an economic policy that promotes regional cooperation and trade. 

Aida Haidar, The Astana Times News Editor.

With five critical trends in regional cooperation and trade growth on the rise, regional trade is undergoing significant transformation.

The intra-regional trade is getting stronger

Central Asian countries have made significant progress over the last two decades, with excellent growth potential. In the previous 20 years, the region’s GDP has expanded by an annual average of 6.2% in real terms, reaching $347 billion. Since 2000, foreign trade turnover has surged sevenfold. In 2022, the Central Asian countries’ foreign product trade worth was nearly $190 billion.

Kazakhstan is the Central Asian trade champion, with 80% of the region’s total volume of mutual trade. Intra-regional trade increased by 73.4% (from $5.8 to $10 billion) between 2018 and 2022.

Uzbekistan is Kazakhstan’s biggest trading partner in Central Asia, with bilateral trade reaching roughly $5 billion in 2022. In the medium term, the country intends to grow trade with Uzbekistan to up to $10 billion and with the Kyrgyz Republic to up to $2 billion.

The pursuit of paperless trade and digitalization

Kazakhstan is at the forefront of this development because paperless trade provides a bridge and foundation for faster trade growth. The following ongoing activities are particularly noteworthy in this regard.

The ratification process for the Framework Agreement on Facilitating Cross-Border Paperless Trade in the Asia-Pacific Region has already begun. This was made possible by a 2021 joint study conducted by Kazakhstan, Uzbekistan, and the Kyrgyz Republic on the technical and legal suitability of paperless cross-border trade, which resulted in specific recommendations.

The Central Asian governments also signed a regional legal instrument on the interaction of National Committees for Trade Facilitation in April 2023, with the support of the German Agency for International Cooperation’s project Trade Facilitation in Central Asia, to take cooperation among countries’ committees to a new level, facilitating the expansion of information exchange and consultations.

In May 2023, the Central Asia Gateway trade information portal was launched in the region’s countries. Combining information from all countries’ trade facilitation portals, the trade information portal provides businesses with easy access to information on cross-border trade formalities, considering the specifics in the context of trade within the region, outside the region, and to the region’s countries, thus strengthening regional trade relations with international partners. The International Trade Center carried out the campaign as part of the Ready4Trade-Central Asia project, funded by the European Union.

Integration of Central Asia into global trade

Central Asian countries are prominent supporters of regional and global trade liberalization. All countries participate in regional trade within the Commonwealth of Independent States. Two nations in the region, Kazakhstan and the Kyrgyz Republic, are members of the Eurasian Economic Union. 

Central Asia was one of the last regions in the world where half of the countries were not members of the World Trade Organization (WTO). In recent years, the situation has begun to change: three countries in the region are members of the WTO, and two more – Uzbekistan and Turkmenistan – are in the process of negotiating membership.

Accession to the WTO was accompanied by internal trade reforms, improved market access, and lowered obstacles in the Central Asian region for all member nations. As a result, countries’ internal trade has become globalized.

Development of trade and transport connectivity in Central Asia

Given the geopolitical context, the region is looking for new transportation corridors while attempting to improve cross-border collaboration. The intensity of regionalization processes in Central Asia has resulted in increased trade between the countries. This necessitates the development of transportation and communication systems, as well as mutual coordination and cooperation.

The decision to create the Central Asia International Center for Cross-Border Cooperation on the border between Kazakhstan and Uzbekistan, as well as the Kyrgyz-Kazakh industrial, trade, and logistics complex near the Ak-Tilek and Karasu checkpoints, was an essential step along this path. 

These projects will promote interregional cooperation among countries by establishing joint ventures, attracting mutual investments, and hosting exhibitions, fairs, and other events to increase regional commercial ties. Similar programs are being conducted in other Central Asian countries. The well-established trade and transportation infrastructure will serve as the foundation for future trade cooperation. 

With access to the Caucasian and European markets via the Caspian ports of Aktau and Kuryk, Kazakhstan has enormous transit potential. Kazakhstan encourages the use of economic corridors and transport hubs that connect East and West, and the country is trying to build the Aktau container hub as well as boost the capacity of the Aktau seaport and the port of Kuryk for this purpose. The digitization of transit procedures will also assist Central Asian businesses in undertaking international trade in less time and at a lower cost.

A new project to improve trade connectivity between Kazakhstan and Central Asia was launched in May 2022 as part of the cooperation between the Ministry of Trade and Integration and the Organization for Economic Cooperation and Development. This is a logical extension of the previously completed project on Central Asian transportation connectivity.

Institutionalization of export promotion

Infrastructure for export promotion is a top priority for all Central Asian countries. Each country in the region is working to improve current infrastructure or establish new export support institutions.

The United States Agency for International Development (USAID) Central Asia Trade Program is one of the projects to improve export infrastructure. It aims to boost Central Asian countries’ trade potential through increased cooperation and knowledge exchange among Central Asian export promotion institutions.

Last year, for the first time, a trip was planned for Central Asian export agencies to study Kazakhstan’s expertise in export development and promotion. A platform was established for knowledge exchange and information between organizations. As a result of the tour, the participants advocated holding such gatherings annually in each region’s countries. 

Uzbekistan hosted Central Asian export promotion organizations in 2023 to exchange experience and develop skills in conducting foreign trade activities in the region.

The authors are Deputy General Director of QazTrade Center for Trade Policy Development Nurlan Kulbatyrov, and Aida Haidar, The Astana Times News Editor. 

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