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Regulatory and Procedural Barriers to Trade in Kyrgyzstan

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Regulatory and Procedural Barriers to Trade in Kyrgyzstan UNECE UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE Regulatory and Procedural Barriers to Trade in Kyrgyzstan Needs Assessment al Regulatory and procedural barriers to trade in Kyrgystan edur gyzstan c yr o r ade in K t r y and P T o or t t ssessmen arriers Needs A Regula B Information Service United Nations Economic Commission for Europe Palais des Nations UNITED NA CH - 1211 Geneva 10, Switzerland Telephone: +41(0)22 917 44 44 Fax: +41(0)22 917 05 05 E-mail: [email protected] Website: http://www.unece.org TIONS UNITED NATIONS Layout and Printing at United Nations, Geneva – 1515116 (E) – August 2015 – 307 – ECE/TRADE/412 UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE Regulatory and Procedural Barriers to Trade in Kyrgyzstan Needs Assessment United Nations New York and Geneva, 2015 2 Regulatory and Procedural Barriers to Trade in Kyrgyzstan Needs Assessment Note The designation employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers of bounda- ries. This study is issued in English and Russian. ECE/TRADE/412 Copyright © 2015 United Nations All rights reserved Foreword 3 Foreword With an annual turnover amounting to 130 per cent of Kyrgyzstan’s gross domestic product (GDP), the powerful role of trade in determining the economy’s development trajectory cannot be over-empha- sized. However, the trade sector is yet to be exploited to its full potential. It remains driven by imports, which have been consistently outstripping export growth. The share of exports in GDP has also been as- suming a declining trend over the past few years, with the consequence of aggravating the trade deficit to an estimated USD 4.2 billion in 2013. Reversing this trend continues to rank high on the Government’s development agenda, which remains challenged by Kyrgyzstan’s remoteness from international maritime routes, harsh topography and rela- tively small domestic market in comparison with neighbouring countries. The impact of these challenges is compounded by behind and at-the-border non-tariff barriers to trade, which, by inflating transaction costs, undermine export competitiveness and create a disincentive to investment in new economic ac- tivities. This study will enable the Government to further engage in removing these barriers. It also sets the stage for generating dynamic synergies between interventions targeting productivity determinants and those linked to export growth, as stipulated in the National Strategy for Sustainable Development of the Kyrgyz Republic for 2013-2017 and the Program for the Transition of the Kyrgyz Republic to Sustainable Devel- opment for 2013-2017. The two policy documents set out a comprehensive sector- focused development effort, the implementation of which will be guided by the Governmental Plan for Export Development of the Kyrgyz Republic for 2015–2017. The plan accords priority to the following four cross-cutting areas: (i) simplification of procedures for exporters; (ii) improvement of quality control and quality management; (iii) access to trade information and export promotion; (iv) trade finance. The recommendations emanating from this study will enable the Government to ensure the success- ful achievement of development objectives under the first three areas. This is all the more so since the recommendations were developed within the context of a participatory approach, which combined ev- idence-based research with broad-based consultations to bring about consensus among the different public and private sector institutions. It must be stressed that this study represents an intermediate step and will be followed by concerted efforts to mobilize the required financial resources for implementation. Thus, with the support of the UN- ECE, the Government has developed a prioritized action plan which will be integrated into Kyrgyzstan’s United Nations Development Action Framework (UNDAF) and used as a basis for developing a national Aid-for-Trade (AfT) plan. The Government will also work closely with UNECE to develop multi-agency technical assistance projects for implementing the recommendations. Christian Friis Bach Kylychbek Djakypov Executive Secretary and Deputy Minister of Economy Under-Secretary-General of the Republic of Kyrgyzstan United Nations Economic Commission for Europe 4 Regulatory and Procedural Barriers to Trade in Kyrgyzstan Needs Assessment Preface Since 2010 the UNECE has been undertaking studies of regulatory and procedural barriers to trade in selected UNECE member countries with economies in transition, with a view to: assisting countries in their efforts to achieve greater regional and global economic integration; informing donors as to where assistance might be required; and, strengthening policy discussions within the Steering Committee on Trade Capacity and Standards and its subsidiary bodies on where additional work is required. This study summarizes the key findings of the fourth UNECE trade needs assessment, which focuses on Kyrgyzstan. It provides a systemic analysis of regulatory and administrative barriers to trade in the coun- try, along with an in-depth analysis of trade in agricultural products with high export potential. It also highlights the consequences of these barriers for Kyrgyzstan’s export competitiveness and regional inte- gration. A review of trade facilitation and quality assurance development efforts as well as the results of face-to- face interviews with supply chain actors formed the basis of the analysis. The interviews were conducted in 2014 and targeted: traders operating in strategic export industries identified in consultation with the Government; representatives of trade support institutions; providers of transport and logistics services; and, officials from relevant State agencies. This study was prepared by the UNECE Market Access Section in close consultation with public and pri- vate sector stakeholders, who were brought together within the context of a national inter-agency work- ing group during the early stages of the assessment to act as the UNECE counterpart. The study takes into account the results of the secretariat’s consultative meeting with the inter-agency working group, which was held in Bishkek, Kyrgyzstan in June 2015. It also takes into account the working group’s written com- ments, submitted to the UNECE in July 2015. Acknowledgments 5 Acknowledgments This study was prepared by Ms. Hana Daoudi under the guidance of Mr. Mika Vepsäläinen. The UNECE would like to acknowledge the contribution of Ms. Savia Hasanova and Ms. Polina Kotuleva, who super- vised the national team from the Business Development and Investments Council under the Government of Kyrgyzstan that carried out the face-to-face interviews with traders, and who worked beyond the call of duty to ensure due diligence. The UNECE would also like to acknowledge the contribution of the following consultants who carried out face-to-face interviews with relevant stakeholders and summarised the results of the interviews in back- ground reports that were used for preparing this study: Mr. Chris Page who conducted face-to-face in- terviews with State agencies responsible for trade facilitation as well as some private sector stakeholders; Mr. Jiří Sobola, who conducted face-to-face interviews with agencies responsible for Standardization, Quality Assurance, Accreditation and Metrology; and, Mr. Urmat Takirov, who carried out the Business Process Analysis; and, Ms. Asel Kasenova, who conducted face-to-face interviews with represenatives of market support institutions and trade associations. The secretariat also would like to acknowledge the contribution of Mr. Maximilano Mendez-Para, who prepared a background research paper on Kyr- gyzstan’s regional integration efforts that was used for preparing this study. The UNECE would like also to thank the international polling institution, SATISCAN Sàrl, that designed an electronic database for compiling the results of the face-to-face interviews with traders; provided on the job training to the national team of experts who conducted the interviews; and, conducted the data validation and reconciliation of the results generated from the interviews. The UNECE would like to extend its gratitude to Messrs Kylychbek Djakypov, Deputy Minister of Economy of Kyrgyzstan and Danil Ibraev, former Deputy Minister of Economy of Kyrgyzstan, who chaired of the inter-agency working group and provided undivided attention and support to the secretariat throughout the assessment. Special thanks go to Mr. Rafkat Hasanov, Economic and Financial Expert, Secretariat of the Business Development and Investments Council under the Government of Kyrgyzstan, for provid- ing valuable contributions throughout the preparation of this study and for assisting the secretariat in ensuring broad participation of relevant public and private sector stakeholders during the face-to-face interviews. The UNECE would also like to extend its gratitude to all national stakeholders, who proposed concrete policy recommendations during the interviews and the consultative meeting. The assessment was made possible thanks to the financial support of the Russian Federation. 6 Regulatory and Procedural Barriers to Trade in Kyrgyzstan Needs Assessment Contents Foreword ........................................................................................................
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