Efficiency of trade integration in the Customs Union of the Eurasian Economic Community

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Prof. Bulat D. KHUSAINOV, Head of
Department, Globalization and Regional
Integration Studies,Institute of Economy, MES
of RK

• Efficiency of trade integration in the Customs
  Union of the Eurasian Economic Community

Regional conference Influence of Russias
joining the World Trade Organization on the
Central Asia
November 14-15, 2012 ? Bishkek
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Table 1 Dynamics of the external trade
changefor the countries members of the
Customs Union, 2001-2011 (in to the previous
year)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Belarus Belarus Belarus Belarus Belarus Belarus Belarus Belarus Belarus Belarus Belarus Belarus
Total 100,0 108,7 125,7 140,0 108,6 128,7 125,9 136,7 68,9 120,6 143,2
Kazakhstan 100,0 105,3 126,1 141,1 89,8 126,1 130,8 131,1 68,5 117,7 138,8
Russia 100,0 184,1 150,1 44,0 523,4 53,2 516,4 74,5 101,5 223,0 88,1
Kazakhstan Kazakhstan Kazakhstan Kazakhstan Kazakhstan Kazakhstan Kazakhstan Kazakhstan Kazakhstan Kazakhstan Kazakhstan Kazakhstan
Total 100,0 112,0 134,1 155,3 138,7 137,3 124,8 149,1 60,7 131,9 141,3
Belarus 100,0 129,4 161,3 150,8 144,7 151,5 147,8 108,0 74,4 205,3 88,1
Russia 100,0 87,0 129,7 145,7 124,4 134,6 126,9 123,1 62,3 62,4 166,3
Russia Russia Russia Russia Russia Russia Russia Russia Russia Russia Russia Russia
Total 100,0 107,9 124,9 134,6 132,3 129,1 125,7 133,2 64,3 137,3 117,6
Belarus 100,0 107,7 126,1 141,8 89,4 126,0 130,7 131,5 68,3 119,0 138,5
Kazakhstan 100,0 90,7 132,3 140,6 120,6 131,2 126,1 121,8 65,2 119,0 129,4
Source According to data of the UN COMTRADE
database and National statistics services of the
countries members of the Customs Union.
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Table 2 Share of the external trade of the
countries members of the Customs Union,
2001-2011
Share of Kazakhstan and Russia in trade with Belarus Share of Kazakhstan and Russia in trade with Belarus Share of Kazakhstan and Russia in trade with Belarus Share of Kazakhstan and Russia in trade with Belarus Share of Kazakhstan and Russia in trade with Belarus Share of Kazakhstan and Russia in trade with Belarus Share of Kazakhstan and Russia in trade with Belarus Share of Kazakhstan and Russia in trade with Belarus Share of Kazakhstan and Russia in trade with Belarus Share of Kazakhstan and Russia in trade with Belarus Share of Kazakhstan and Russia in trade with Belarus Share of Kazakhstan and Russia in trade with Belarus
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Kazakhstan 0,19 0,32 0,38 0,12 0,57 0,24 0,97 0,53 0,16 1,44 0,89
Russia 59,74 57,85 58,05 58,50 48,38 47,39 49,24 47,23 47,01 45,90 44,49
Share of Belarus and Russia in trade with Kazakhstan Share of Belarus and Russia in trade with Kazakhstan Share of Belarus and Russia in trade with Kazakhstan Share of Belarus and Russia in trade with Kazakhstan Share of Belarus and Russia in trade with Kazakhstan Share of Belarus and Russia in trade with Kazakhstan Share of Belarus and Russia in trade with Kazakhstan Share of Belarus and Russia in trade with Kazakhstan Share of Belarus and Russia in trade with Kazakhstan Share of Belarus and Russia in trade with Kazakhstan Share of Belarus and Russia in trade with Kazakhstan Share of Belarus and Russia in trade with Kazakhstan
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2001
Belarus 0,30 0,35 0,42 0,40 0,42 0,46 0,55 0,40 0,49 0,76 0,47
Russia 27,01 20,97 20,29 19,03 17,07 16,73 17,00 14,04 14,40 6,81 8,02
Share of Belarus and Kazakhstan in trade with Russia Share of Belarus and Kazakhstan in trade with Russia Share of Belarus and Kazakhstan in trade with Russia Share of Belarus and Kazakhstan in trade with Russia Share of Belarus and Kazakhstan in trade with Russia Share of Belarus and Kazakhstan in trade with Russia Share of Belarus and Kazakhstan in trade with Russia Share of Belarus and Kazakhstan in trade with Russia Share of Belarus and Kazakhstan in trade with Russia Share of Belarus and Kazakhstan in trade with Russia Share of Belarus and Kazakhstan in trade with Russia Share of Belarus and Kazakhstan in trade with Russia
Belarus 6,48 6,48 6,53 6,88 4,65 4,54 4,72 4,67 4,96 4,30 5,06
Kazakhstan 3,38 2,84 3,01 3,15 2,87 2,92 2,93 2,68 2,72 2,35 2,59
Source According to data of the UN COMTRADE
database and National statistics services of the
countries members of the Customs Union.
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Table 3 Level of trade integration of the
countries members of the Customs Union,
2001-2011
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

????????? 1,54 2,53 2,67 0,67 2,66 0,93 3,38 1,58 2,72 5,45 3,69
?????? 3,14 3,04 3,06 3,08 2,55 2,49 2,59 2,49 2,47 2,42 2,34

???????? 2,36 2,63 2,92 2,48 2,71 2,69 2,91 1,79 2,45 3,86 1,95
?????? 23,7 17,9 16,1 13,7 10,6 9,26 8,64 6,22 7,63 3,20 3,72

???????? 51,2 49,2 46,0 42,4 30,0 26,3 25,0 21,0 24,9 21,8 20,8
????????? 2,97 2,42 2,39 2,27 1,77 1,62 1,49 1,19 1,44 1,11 1,20
Preference coefficients (K1) of Belarus in trade
with Kazakhstan and Russia
Kazakhstan
Russia
Preference coefficients (K2) of Kazakhstan in
trade with Belarus and Russia
Belarus
Russia
Preference coefficients (K1) of Russia in trade
with Belarus and Kazakhstan
Belarus
Kazakhstan
Source According to data of the UN COMTRADE
database and National statistics services of the
countries members of the Customs Union. NOTE
Preference coefficient is calculated on the basis
of the formula ?1 Ti / Tw, where Ti stare
of trade partner in the trade with any state Tw
share of trade partner in international
external trade.
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Figure 1 Mutual preference coefficients (?2) in
external trade for Belarus, Kazakhstan and
Russia, 20012011
K2 (average K1ij, K1ji ), where K1ij
preference coefficient of i-country for j-country
, and K1ji - preference coefficient of
j-country for i-country
Belarus and Kazakhstan
Kazakhstan and Russia
Belarus and Russia
Source According to data of the UN COMTRADE
database and National statistics services of the
countries members of the Customs Union
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Figure 2 Timing difference between export per
capita (on the basis of the purchasing power
parity) in Kazakhstan and Russia, 1990-2010
Constant dollars, 2000 according to the
purchasing power parity
In 2010, Kazakhstan fell behind Russia on the
index export per capita with regard to the
purchasing power parity by more than 11 years
Index 150
more than 11 years
In 2010, the Russia index in USD equivalent
exceeded the Kazakhstan index by 150
TIME
Kazakhstan
Russia
Source Hereinafter, according to data of the UN
COMTRADE database and National statistics
services of the countries members of the
Customs Union.
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Figure 3 Timing difference between export per
capita (on the basis of the purchasing power
parity) in Kazakhstan and Belarus, 1990-2010
In 2010, Kazakhstan fell behind Belarus on the
index export per capita with regard to the
purchasing power parity by more than 13 years
Constant dollars, 2000 according to the
purchasing power parity
Index 164
more than 13 years
In 2010, the Belarus index in USD equivalent
exceeded the Kazakhstan index by 164
TIME
Kazakhstan
Belarus
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Figure 4 Timing difference between export per
capita (on the basis of the purchasing power
parity) in Kazakhstan and Russia, 2010-2030
In 2020, Kazakhstan on export per capita with
regard to the purchasing power capacity will
fall behind Russia by more than 12 years. By
2030, retardation may exceed 16 years.
Constant dollars, 2000 according to the
purchasing power parity
???? ????? 6,2
Growth rate 6,2
Index 266
Growth rate 3,2
More than 16 years
By 2030, excess of the Russias index in USD
equivalent may increase in 2.66 times.
TIME
Kazakhstan
Russia
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Figure 5 Timing difference between export per
capita (on the basis of the purchasing power
parity) in Kazakhstan and Belarus, 2010-2030
Constant dollars, 2000 according to the
purchasing power parity
At average annual growth rates of 2001-2010, by
2020 Kazakhstan will fall behind Belarus by more
than 12 years on export per capita with regard
to the purchasing power capacity. By 2030,
retardation will exceed 17 years.
Index 271
Growth rate 5,8
Growth rate 3,2
More than 17 years
By 2030, excess of the Belarus index in USD
equivalent may increase in 2.7 times.
TIME
Belarus
Kazakhstan
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Conclusions and proposals

• If in a long-term perspective Kazakhstan will
  maintain a low index of goods and services export
  per capita, then the level of citizens wellbeing
  will considerably lower as compared to Belarus
  and Russia
• At considerable differences between key
  parameters of national economies development,
  which are clearly testified by the detected
  timely retardation, Kazakhstan may become the
  satellite country of the existing and created
  regional integration associations Customs
  Union, Single Economic Space and oncoming
  Eurasian Economic Union
• 3) Kazakhstan may become in the situation, which
  occurred during the Soviet Union period, being a
  primary attachment to well-developed economies.
  As is known, such situation was typical for all
  republics of the Central Asia. It should also be
  noted that further growth of absolute and timely
  retardation of the key economic indices of
  Kazakhstan, as compared to Belarus and Russia,
  may cause enhancement of social strain, including
  anti-integration moods in the Kazakhstan society,
  and as a consequence, unpredictable effects
• Without serious change of the competitive
  positions structure in export of Kazakhstan,
  which mainly form the national economy structure,
  considerable growth of the goods and services
  export index per capita should not be expected.
  This provides the necessity in immediate
  development of efficient trade policy, including
  the national export program, aimed at elimination
  of the strained primary structure of Kazakhstan
  export. It should also include the national
  import program, reflecting factual needs of the
  national economy and reducing dependence on
  import of production, which may be produced on
  the territory of the country.

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Conclusions and proposals
5) During development of the trade policy, it is
necessary to make an emphasis on the mechanisms,
providing balanced economic growth mainly due to
export at simultaneous reduction of dependence on
the foreign capital inflow. Also, it should be
noted that the national export program should be
developed with regard to application of new
technologies by Kazakhstans companies as well as
to consumer preferences, because statistically
significant value of the export activitys
influence on innovation processes does not cause
doubts and is confirmed by numerous researches.
6) Alongside with the trade policy, it is
necessary to develop the national industrial
policy, aimed at considerable change of the
production structure, including considerable
increase in the share of the processing sector of
the industry. At that, trade and industrial
policies should be associated and related to each
other. 7) Within the framework of the Customs
Union, it is necessary to develop the single
foreign trade policy both within and beyond the
integration formation, which may be based on
principles of the single trade policy of the
European Union, adjusted in accordance with
peculiarities of three states. This will promote
improvement of competitiveness of export
potential on external markets both for the
integration formation and for each country in
particular. Solution of this objective lies in
the sphere of political and legal decisions as
well as goes beyond the scope of the present
research. Economic aspects of development of the
agreed trade policy by the countries members of
the Customs Union are based on the sphere of
balanced usage of traditional instruments
customs and tariff regulation, efficient
protectionism and liberalization of trade.
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??????????? ??????!????????? ?? ????????!Thank
you for attention!

Republic of the Kazakhstan, Ministry of the
Education and Science, Institute of
Economy Tel. [phone] Fax 7 (727)
272-78-29 Cell 7 707 715-2300 7 701
715-2300 E-mail BKhusainov_at_gmail.com
BKhusainov_at_mail.ru