- •List of table
- •List of figures
- •Introduction
- •Chapter 1
- •Intellectual and historical background of establishing the customs union
- •1.1 The Regionalism
- •1.1.1 Defining Regionalism: What is Regionalism?
- •1.1.2 Old and New Regionalism
- •1.1.3 Trends in “New Regionalism”
- •1.1.4 New Trade Theory and New Regionalism
- •1.2 Regionalism models in Post-Soviet Area
- •1.2.1 Formation of Post-Soviet sovereign state institutions
- •1.2.2 Integration processes in Central Asia.
- •1.3. Customs Union as a type of Regionalism
- •1.3.1 Major Steps in the process of the formation of Customs Union
- •1.3.2 The logic behind the formation of Customs Union
- •Chapter 2 the analysis of the possible effects of the kazakhstan’s accession to the customs union on the country’s agricultural sector
- •2.1. Specifics of the economic structure for the Kazakhstan
- •2.1.1 The General Features of Kazakhstan’s Economy
- •2.1.2 Kazakhstan Agricultural Overview
- •Idle Land
- •2.1.3 Overview of Agricultural sector since 1990
- •2.2. The declining of agriculture/production after 1990 till early 2000
- •2.2.1 The Evolution of Polices since 1991
- •2.2.2 Prices and Subsidies
- •Chapter 3 findings and recommendations
- •3.1 The Neoliberalims: The severance of Agricultural Sector
- •3.2 The Positive Effects of the Customs Union Agricultural Sector of Kazakhstan
- •3.3 Economic Consequences
- •Recommendations
- •Conclusion
- •References Book and Article References
- •Internet References
- •Appendix
1.3.2 The logic behind the formation of Customs Union
In the formation of Customs Union Russia, firstly, gains more advantages. Because, significant quantities of Russia-China trade go through Kazakhstan. Likewise, a significant amount of Russia-EU trade goes through Belarus. The CU, when viewed as a political project, reflects the intention of Russia to obtain control over the periphery of the post-Soviet space. Indeed, Russia is the prime initiator and mover of the CU. Russia seeks to counterbalance and stabilize alternative political (and economic) regional influences, particularly those of China. Balancing Chinese expansion is a key concern of Russia’s import substitution-based modernization policy that is being promoted by the Russian government (one of the most visible examples of this “modernization” drive was the closing of the famous Cherkizovo market in Moscow in 2009). Economically, Russia’s main goal is to rein in the autonomy (samodeiatelnost in Russian) of its neighboring states. Their independence in regional and global markets can be costly to Russia if they follow policies at odds with Russia’s own development plans. The relatively free trade regimes within Kazakhstan and Belarus have allowed importers to use them as transit points for bringing goods into Russia, thereby bypassing protective Russian tariffs. Such trade issues particularly underlined Belarusian-Russian relations. Since 1995, Belarus’ duty-free export trade to and from Russia were vital for building President Alexander Lukashenko’s shadowy business empire.
Russia seeks to stop the uncontrolled importation of a wide range of manufactured goods (including automobiles, clothing, and pharmaceuticals), which pose exessive competition to Russian companies and industries. By extending its internal market and better protecting its vital sectors, Russia makes itself more attractive for foreign investors aspiring to enter the markets of the CU member-states. While this can be technically true for all participants of the CU, studies have shown that it is the largest member of a custom union that benefits the most.
Another important consideration for Russia is the collection of import duties. Under the terms of the CU, these have to be divided according to a certain formula. Earlier on, Russia had to battle for its share of duties from Belarus, with which it shared a common customs territory. Russia is also interested in using the CU as an instrument to prevent the uncontrolled export of its raw materials through the territories of neighboring states (particularly Belarus).
Russia has a clear interest in receiving easier access to the markets of CU member states. The CU rules streamline the non-tariff limitations and revise agricultural subsidy rates. Belarus heavily subsidizes its collective farm sector, a practice that it may have to abandon soon. Importantly, leaving the average level of agricultural subsidies intact, Russia, through a redivision of “subsidy quotas,” may increase its own subsidies to agriculture before joining the World Trade Organization (WTO).
The advantages of the CU for Belarus and Kazakhstan are not as clear. Easy access to the vast Russian market, which economists of the Russian government have predicted will generate up to $16 billion for Belarus and Kazakhstan over five years has already been enjoyed to a certain extent by the two states. Therefore, the benefit of joining the CU seems to be about “retaining” privileges and opportunities—continued access to the Russian market—but also, importantly, political goodwill and support from Russia on regional and global issues. One could say that with Russia’s move toward modernization, friendship has a higher price.
The tangible economic benefits for the two smaller states are primarily in the area of protecting goods produced in Belarus or Kazakhstan. For example, Belarusian producers of agricultural machinery and textiles may benefit from the application of higher import duties on competitors’ products. Another advantage is the application of national railway transportation rates that may actually invigorate trade between Kazakhstan and Belarus, particularly with regard to shipping Kazakh oil to Belarusian refineries, even though the Kremlin may not be happy at such a prospect and the oil will have to be declared as having Russian origin. Still, a more cost-stabilized and predictable transportation sector between the three countries could yield noteworthy gains.