United Nations ECE/CTCS/2017/5

Economic and Social Council Distr.: General 29 March 2017

English Original: English and Russian only

Economic Commission for Europe Steering Committee on Trade Capacity and Standards Third session Geneva, 12-13 April 2017 Item 5 (b) of the provisional agenda Country follow-up to ECE studies on regulatory and procedural barriers to trade

Report on implemented and planned reforms for removing regulatory and procedural barriers to trade as per ECE’s recommendations: The Republic of

Submitted by the Government of the Republic of Kazakhstan

Summary The Government of the Republic of Kazakhstan is implementing reform measures for removing regulatory and procedural barriers to trade identified in ECE’s joint study with the International Trade Centre, which was carried out in 2012. The reform measures follow closely ECE’s recommendations, as articulated in Part I of the study. The Government wishes to brief the Steering Committee on Trade Capacity and Standards on achievements to date in implementing the recommendations. This document is presented to the Steering Committee for decision.

GE.17-05024(E)  ECE/CTCS/2017/5

I. Introduction

1. Non-tariff measures (NTMs) have come to play a prominent role in determining the flow of goods and services across the globe. This increased importance is mainly due to the continuous reductions in import tariffs within the context of negotiations under the multilateral trading system negotiations. Regional trade agreements constitute another factor, especially those envisaging duty-free access among member countries. 2. NTMs could have a negative impact on trade flows, especially on the export side, by rendering it more difficult for enterprises to access new markets and/or diversify their products. In such situations, NTMs result in restrictive non-tariff barriers (NTBs), which undermine trade and economic development. 3. ECE, together with the International Trade Centre, conducted a study on regulatory and procedural barriers to trade in the Republic of Kazakhstan in 2012. The study identified non-tariff barriers and other obstacles to trade at the most detailed level – by products and by trade partner. 4. The study was based on a comprehensive evaluation methodology, which included questionnaires targeting traders and government agencies involved in supporting foreign trade. It covered main export sectors, including metals and primary metal products, chemicals, non-electric equipment, agriculture and the food industry, wearing apparel, furniture, and transport equipment; all of which are leading industrial sectors. 5. As a result of the assessment, ECE presented practical recommendations that were implemented at both the national level and the regional level of the Eurasian Economic Union (EAEU). Generally, this study was of great help during the elaboration and planning of legislative amendments, including those pertaining to the simplification of procedures throughout the international supply chain: improvement and further automation of the system of permits, improvement of the customs administration system, wider application of risk management in customs operations, and the harmonization of technical requirements and regulations throughout the EAEU territory. 6. This report provides an overview of key reform measures in the Republic of Kazakhstan aimed at eliminating the non-tariff trade barriers identified in the study. 7. It is worth mentioning that the Government attaches great emphasis to the consolidation of a favorable business environment, which is reflected in Kazakhstan’s improved ratings against World Bank's Doing Business indicators and the World Economic Forum (WEF) Global Competitiveness Index.

II. Trade facilitation

8. The coming period will see improved trade facilitation conditions, which will be brought about by the new Customs Code of EAEU that will enter into force on 1 July 2017 to replace the 2009 Customs Code of the Eurasian Customs Union. The new Code is meant to set the foundation for transiting towards uniform customs regulations and procedures in the EAEU territory. 9. The new Code includes novel approaches to automating customs operations and introduces streamlined processes for governing the interaction between the business community and government agencies; all of which minimize paperwork and physical contact with customs officials. The new Code also stipulates comprehensive harmonization of all customs operations between EAEU members.

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10. Upon the new Customs Code entry into force, the Eurasian Economic Commission will be defining the value and volume ceilings for duty-free access into the EAEU territory. Such ceilings will be adopted by all member States. Member States can, at their own discretion, set lower national duty-free ceilings for duty-free import of goods from foreign online stores as well as goods transported by express carriers into the EAEU territory 11. The main features and objectives of the EAEU Customs Code are summarized below: (a) The EAEU Customs Code is focused on promoting electronic data interchange, with priority given to consolidating an electronic customs declaration system. Customs declarations in hard copies will be only requested in exceptional cases. (b) Possibility for automating all customs operations starting with the registration of customs declaration and ending with the release of goods without customs officer participation. (c) Possibility of submitting electronic customs declarations without the support documents. “Customs authorities can request traders to submit support documents only if the risk management system reveals certain risks and submission of documents is meant to either confirm or refute the risk”. (d) The authorized economic operator scheme has been considerably improved. (e) The Code envisages comprehensive harmonization of the transit procedure (conditions for placing goods under this procedure, associated administrative procedures, responsibilities of carriers and other provisions). (f) The Code contains provisions for reducing customs control over conditionally released (preferential) goods. According to the Code, customs control over all conditionally released goods imported before 1st of July 2010, including goods used in subsurface operations will be terminated. These goods, which are under customs control and cannot be sold without payment of previously granted benefits, will be recognized as EAEU goods. (g) The new Code envisages the possibility of submitting advance notification, in the form of e-documents with digital signature, for: • Notice of Arrival; • Placing goods in temporary storage under customs supervision; • Transit declaration; • Declaring imported vehicles. In these cases, the carrier submits the e-documents to Customs only once, and subsequently the documents can be used for all customs operations. The Code contains provisions that allow using information by other border control agencies for expediting control operations. (h) Another improvement is the possibility of filling in (drawing up) customs declarations by the Customs authority without involving customs brokers. It is planned that Customs authorities will perform the whole range of customs services, including filling in customs declarations. This gives traders the possibility to choose between Customs and brokers, leading to considerable cost reductions. (i) Another measure for simplifying administrative procedures involves allowing traders to defer payment (possibility of payment in installments) of customs duties and taxes on imports:

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• Release of goods with differed payments of up to 1 month is possible – for all traders, if a guarantee is presented and interest accrued during the period of delay is paid; • Release of goods with differed payments of up to 6 months is possible – without paying interest in exceptional cases – when importing goods intended for responding to humanitarian crisis such as natural and man-made disasters as well as unforeseen crisis, in case of delays in budget funding, support of agricultural activities, etc. (j) The draft Code envisages the possibility of selling goods in duty-free shops to nationals from EAEU member states traveling within the EAEU territory to another EAEU member state. Such practice is widely used in EU duty-free stores – the dual pricing system. This amendment is needed to develop duty-free trade and is aimed at expanding shopping options for individuals. (k) As far as the statutory terms for completing customs clearance is concerned, the existing Customs Code of the Customs Union sets a time frame of 1 working day. To expedite customs operations, the draft Customs Code of EAEU reduces this time frame to 4 hours from the moment of submitting the customs declaration. Besides, work is underway to implement post clearance control. 12. Therefore, preparation of the draft Customs Code of EAEU is done in a comprehensive manner and is aimed at improving and modernizing customs operations in the EAEU. In addition to the benefits that will be brought about by the new Customs Code, the past few years have seen the implementation of a number of reforms with direct positive impact on trade facilitation conditions in the country. Below is a brief summary of these reforms.

A. Customs clearance and documentary requirements

13. A series of reform measures have been implemented in the area of customs administration to create a modern, transparent, and predictable system and speed up customs clearance. 14. In order to reduce administrative barriers and create enabling investment climate, a decision was made in December 2014 to reduce the number of documents submitted for customs clearance from 10 to 3 for export and from 12 to 5 in case of imports. Currently, the following documents are required for export purposes: a consignment note, invoice (commercial invoice) and export declaration. In case of import: a consignment note, invoice (commercial invoice), import declaration, conformity certificate and transport document. 15. Efforts to improve customs control have resulted in reducing the percentage of consignments subject to physical inspections from 15.4 percent in 2015 to 5.1 percent over an 11 months period in 2016 (3.2 percent in November 2016). At the same time, the efficiency of inspection services increased from 0.8 percent to 2.2 percent over the same period (4.4 % in November 2016). This means in addition to reducing number of physical inspections, the quality of such inspections has been imporved.

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B. Risk management system analysis

16. In 2014, an analysis of risk criteria was conducted, and in 2015-2016 a broad entity- wide approach to risk management with a comprehensive set of criteria was introduced, which allows for addressing all types of risks, including political and operational. 17. Upon the introduction of the entity-wide approach, we divided traders into low- medium- and high-risk categories, taking into account the nature of the products and the traders’ logistical capacity. This categorization helps assign consignments to the customs green, yellow, blue and red corridors, which denote the different forms and levels of customs control. Work has started to categorize other actors in the international supply chain as well as goods. A pilot project on the introduction of the “blue corridor” has been successfully launched in the Karaganda region. 18. To further modernize risk profiling methods, and in coordination with experts from the World Customs Organization’s (WCO), a “Concept Paper for the Development of Risk Management Systems for Tax and Customs Control by National Revenue Authorities of the Republic of Kazakhstan” was elaborated and submitted to the WCO for approval. 19. In addition, the Government is planning to introduce advanced data mining tools into the risk management system. In particular, conventional classification and clusterization methods are currently in use, and experimental risk profiles have been developed and put into pilot operation. 20. An international tender to procure an advanced risk management system, including a “data mining” module was launched and a contract was signed with a vendor. The project is to be completed on 31 December 2018.

C. Border control

21. In order to improve State control functions at border crossing points (BCPs), State revenue agencies have been assigned the task of coordinating activities of government bodies responsible for carrying out inspection at the Kazakh side of the EAEU external border. To implement “one stop” and “single window” systems at road BCPs, since January 2010, the State revenue agencies have the right to perform transport control; since July 2011 – sanitary quarantine control; and, since 2015 – veterinary and phytosanitary control. 22. The State Revenue Committee of the Ministry of Finance of Kazakhstan elaborated and co-signed the joint order of the Ministry of Finance, Ministry of Agriculture and Ministry of National Economy “On approval of Cooperation Procedure between government agencies at ‘Astana’ air border crossing point when organizing the passage of objects, quarantineable products and goods across the customs border of the Eurasian Economic Union” (hereinafter referred to as experiment), which was piloted for a 2-month period upon the signature of the order. 23. During the experimental period, from 8 July 2016 to 6 September 2016, more than 700 state inspection tickets were drawn up. The composition of the consignments moved across the border was as follows: spare parts and equipment – 70 percent; medicinal drugs and chemicals – 15 percent; flowers, consumer goods, consolidated shipments, international mail, diplomatic mail – 15percent. It should be noted that documentary control took from 5 to 15 minutes to complete. The agencies revealed two cases of violation during quarantine phytosanitary control (supervision) (absence of phytosanitary certificate by the exporting country).

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24. Physical control (visual inspection/physical inspection) duration was 10 minutes; if there was a need for sampling, laboratory tests and the issuing of test reports, control period varied between 10 to 240 minutes (4 hours). 25. Physical control was carried out for the following purposes: • Quarantine phytosanitary control (supervision) – 100 percent (pursuant to the EAEU legislation (Decision of the Customs Union Commission No.318) and the national legislation of the Republic of Kazakhstan (Law “On plant quarantine”)). • Veterinary-sanitary control and supervision – 2 percent. • Sanitary-quarantine control – 0.3percent. 26. The following positive aspects were revealed during the experiment: introduction of single window principle, quick information exchange between inspection agencies, identification of the product code under the Customs Union Foreign Trade Commodity Classification System (CU FT CC) by State revenue agencies, transparency when exercising different types of state control, reduction in the time spent on preliminary operations from 89 minutes to 44 minutes, reduction in customs clearance time from 119 to 74 minutes, reduced corruption during state control operations. 27. The following is planned to further improve State control at the EAEU border crossing points and to avoid 100 percent quarantine phytosanitary control: (a) Consider introducing risk management system for the regulated goods (quarantine, phytosanitary control). (b) Consider transferring documentary, sanitary, veterinary and phytosanitary control functions to the public revenue authorities at air, railway and marine border crossings at the EAEU external border. 28. Moreover, we have amended the “Rules of creation, categorization, classification, and also regulations of polozhennost and standard requirements to arrangement and material equipment of customs, customs posts and check-points of the Republic of Kazakhstan”. At present, categorization (from 1 to 5) of customs offices, customs posts and checkpoints is done according to the volume of foreign trade operations, type of international traffic, status, working hours, nature of traffic and form of operation. 29. It is worth noting that at present, customs offices, customs posts and checkpoints are divided into two categories: border and inland. Border customs offices, customs posts and checkpoints are further divided by: • Type of international traffic: automobile (road), railway, marine, river, air, pedestrian, mixed; • Nature of international traffic: cargo, passenger, cargo-passenger; • Form of operation: permanent (operating on a regular basis), seasonal and temporary; • Status: multilateral and bilateral • Working hours: day-time, 24/7. • Inland customs posts are further divided by: • Geographic location • Structure and amount of cleared goods • Industrial and trade capacity

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• The number of trades • Direction of trade flows.

D. Introduction of advance notification

30. Mandatory advance notification was introduced: • As of August 1, 2013 with regard to goods imported to the customs territory of the Customs Union by road transport; • As of October 1, 2014 with regard to goods imported to the customs territory of the Customs Union by rail; • As of April 1, 2017 mandatory advance notification will be introduced with regard to goods imported by air transport. 31. It is worth mentioning that as of February 23, 2016 advance notification for goods imported by rail is transmitted via the automated information management system “Contractual and Commercial Activities” of JSC “National Company “KTZ” (hereinafter – IMS CCA) allowing to: • Receive data in a timely manner and reduce idling time when performing customs operations; • Support the risk management subsystem in customs informations systems; • Avoid errors in customs declaration revealed after admitting the train; • Create information resources for broker services provision; • Integrate customs information systems with the railway systems and clients’ systems.

E. Currency control

32. Following the recommendations to reduce the number of documents required for currency control, the draft Customs code envisages assigning contract identification numbers instead of the transaction passport issued by the National Bank of Kazakhstan. 33. Amendments have been made to the Code of the Republic of Kazakhstan “On customs affairs” that abolish the requirement to submit to customs authorities (as part of the documentary requirements for customs declaration) a document confirming foreign trade transaction. 34. For the purpose of compliance with the customs legislation, in April 2016, the National Bank of Kazakhstan introduced amendments and addenda to item 20 of “Rules of implementation of export-import currency exchange control in the Republic of Kazakhstan and receipts of accounting contract numbers by residents on export and import”, as established under the National Bank of the Republic of Kazakhstan Resolution No.42 dated February 24, 2012. 35. During customs clearance, goods under export/import contracts should have identification (ID) number according to the above-mentioned Rules, and officials from the State revenue agencies regional division compare the contract ID number specified in the customs declaration with the ID number specified on the export/import contract registered by the commercial bank with the National Bank of Kazakhstan.

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36. Thus, currently, for obtaining customs declaration, traders do not have to confirm their compliance with currency legislation by means of submitting transaction passport.

F. E-declaration

37. An automated system for customs and tax administration (ASTANA-1) has been developed. At present, we are in the process of customizing the national prototype of ASTANA-1. The pilot operation of the system in the trial mode has started in Astana, Almaty and . The project is implemented in cooperation with UNCTAD (United Nations Conference on Trade and Development). 38. Commencement of commercial operation of ASTANA-1 information management system is planned for 2017. 39. An English version of the ASTANA-1 system manual is available. The specialists are currently adjusting the system in accordance with the legislation of the Republic of Kazakhstan.

G. Introduction of a Single Window for export/import operations

40. Following the introduction of e-declaration, a Single Window principle will be introduced. It is aimed at reducing to the minimum the number of documents and time spent during customs clearance, i.e. if there are no risks traders will have to submit only one document – customs declaration. 41. Therefore, traders will not have to submit export/import permits and licenses, since these documents will be obtained from the information management systems of government agencies. 42. Moreover, the clearance time will be reduced to 10 minutes. If the system reveals no risks, it will allow for proceeding to the so-called “automatic release” of goods. This approach is already envisaged in the EAEU Customs Code. 43. We have introduced a traceability system for goods subject to veterinary control and supervision, and access to the information management system was provided to all EAEU member States. 44. Within the framework of EAEU, it is planned to establish an integrated information management system aimed at ensuring information exchange with authorized veterinary bodies of the EAEU member-states. 45. It is worth noting that border control authorities shall have permanent and free access to all the information concerning border crossing (information on goods, vehicle, driver) to be able to decide on the necessity of their participation in document checks or physical inspection operations. 46. The Government has introduced an automated system for selective control of consignments. However, this system is not linked to Single Window system for the purpose of information exchange and reports preparation and does not allow using resources efficiently.

III. Road infrastructure

47. Transport is an important element of trade, enabling the movement of goods and provision of services. There are certain peculiarities of regulation in this sector.

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Advancement of integration between EAEU member States in the different transport sub- sectors (road, water, air and rail) is based on the provisions of the EAEU Treaty and other legal acts adopted by the EAEU bodies. Elimination of barriers to the free movement of goods as well as the establishment of a common transport market will have a positive effect on the economy of the EAEU in general. The set goals and objectives will be achieved by implementing a Program for 2016-2025 on “Gradual Liberalisation of Cargo Transportation Carried out by Carriers Registered on the Territory of one of the EAEU Member States between Points Located on the Territory of Another EAEU Member State for the Period from 2016 to 2025”, the “Agreement on Navigation” and the “Main Directions and Implementation Stages of the Coordinated (Agreed) Transport Policy of the Eurasian Economic Union”. 48. The country is undertaking extensive work to improve the quality of roads. There are 97 thousand kilometers (km) of public , including national network – 23.7 thousand km and local network – 73.3 thousand km. 49. From 2010 to 2015, 28 thousand km of public roads benefited from construction works, including 11.3 thousand km of national roads and 16.7 thousand km of regional and district roads. 50. The condition of 75 percent of public roads has been improved. This is a 15percent increase compared to 2010 (60 percent). 51. Total length of national roads belonging to categories I and II is 6,813 km, including category I – 1,779 km, category II – 5,034 km, which is 2,223 km more compared to 2010 (4,590 km, including category I– 950 km, category II– 3,640 km). 52. At present, we are implementing a project for the reconstruction of international transit corridor “Western Europe – Western China”. Completion of the project is scheduled for 2017. 53. To further develop the road network, the “Nurly Zhol” State program for infrastructure development for 2015-2019 was elaborated. 11 road projects are planned within the framework of the Program (Centre-South, Centre-East, Aktobe-Atyrau- Astrakhan, Almaty – Ust-Kamenogorsk, Beyneu-Aktau, Kokshetau-Petropavlovsk-Russian border, Uralsk-Kamenka, Uzynagash-Otar, Zhetybai-Zhanaozen, -, South- Western bypass road in Astana). Upon the completion of project, all these roads will become part of technical categories I and II.

IV. Technical regulations

54. The main purpose of technical regulations in EAEU is to protect human life and (or) health, property, environment, life and (or) health of animals and plants, to prevent consumer deceptive activities, to ensure energy efficiency and resource saving. 55. One of the main principles of technical regulations, spelled out in the EAEU Treaty, is the prohibition of excessive regulations in business activities. 56. A unified policy in the field of technical regulations is pursued in the Eurasian Economic Union. 57. The process of adopting and implementing the Customs Unions technical regulations, which set single technical requiements for products, started in 2012. 58. At present, 40 technical regulations of the Customs Union and of the Eurasian Economic Union (hereinafter – CU TR and EAEU TR, respectively) have been adopted, 35 of which have become effective. The EAEU TR “On requirements for mineral fertilizers”

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was adopted by the Eurasian Economic Comission Council (hereinafter – EEC Council) on November 30, 2016. 59. Further work on the development and approval of draft EAEU TRs and draft amendments to CU TRs will materialise within the framework of the “Plan of Development of Technical Regulations of the Customs Union and Amending Technical Regulations of the Customs Union” (hereinafter - the Plan), approved by Decision of the EEC Council No.79 of October 1, 2014 (as amended by the Decision of the EEC Council of February 12, 2016). 60. The Republic of Kazakhstan has undertaken the following: • An Action Plan for helping manufacturing companies comply with new regulations was prepared. This action plan is focused on certain sectors and is based on the assessment of enterprises’ production capacity. • In 2015-2016, over 200 training workshops and seminars were conducted to educate more than 8,000 managers and specialists from enterprises, conformity assessment bodies and government agencies. The following topics were covered during the seminars: technical regulation in the Republic of Kazakhstan and EAEU; new trends in standardization, management systems, accreditation and conformity assessment; metrological issues; adaptation of the EAEU technical regulations. • In 2014-2016, more than 857 round-table discussions were held in the regions to consider 1238 proposals regarding draft technical regulations and 1266 proposals regarding interstate and national standards. Such round table discussions allowed (in each region of the country, in the priority industrial sectors) for conveying to the enterprises the importance of adopting the new technical regulation system of the EAEU, explaining in detail the essence of new requirements, laying the basis for participation of specialists in discussions regarding draft documents. • Analysis has been conducted to reveal technical regulations of the Republic of Kazakhstan that duplicate the EAEU technical regulations. Following this exercise, the draft Resolution of the Government of the Republic of Kazakhstan “On annulment of certain decisions” was prepared. It envisages the abolishment of 26 duplicating technical regulations.

V. Standardisation

61. EAEU member States plan to harmonize national legislation in the field of standardization, accreditation, measurement assurance and state control. All these will allow for reducing technical barriers and for simplifying market access procedures for goods and services destined to the common market. 62. The draft law of the Republic of Kazakhstan “On standardization” has been developed, which envisages the establishment of a National Standardization Body. The aim of the draft law is to ensure close interaction between the agencies involved in standardization, so as to create enabling conditions for enhancing the competitiveness of domestic goods, labour and services as well as their free access to domestic and external markets, and for ensuring national security. Pursuant to the draft law, it is planned to elaborate 14 regulations in the field of standardization aimed at setting provisions on the use of reference documents on standardization; establishment, maintenance and support of the Single Public Repository of Regulatory Technical Documents; consideration and application of international, regional standards as well as standards of foreign countries; etc.

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63. In terms of implementing the recommendation to include specific clauses that reference technical specifications in existing laws, we would like to inform that the Law of the Republic of Kazakhstan of November 9, 2004 No.603 “On technical regulation” approves the Rules of Application of Reference Documents on Standardization. The rules were approved by the acting Minister of Investments and Development on December 4, 2015. Within the framework of these rules, RSE “Kazakhstan institute of standardization and certification” analyzed existing regulations in energy, environment, construction and health for the presence of norms and provisions containing reference standards. 64. During the analysis, out of 250 regulations of the Republic of Kazakhstan (Codes, Laws, Resolutions, Rules, etc.) we revealed 6 regulations that contained 7 non-relevant references to standards. 65. The results of the analysis were submitted to the authorized government agencies of Kazakhstan, namely, the Ministry of Energy, Ministry of Health and Social Development to introduce amendments into the respective regulations and legal acts.

VI. About recommendations on conformity assessment and accreditation

66. As part of the broader efforts to remove barriers to trade and establishing conditions for the international recognition of conformity certificates, the National Accreditation Centre (hereinafter - NAC) is working towards sustaining full membership with international accreditation organizations, including ILAC (International Laboratory Accreditation Cooperation), РАС (Pacific Accreditation Cooperation), IAF (International Accreditation Forum). Below is a brief overview of recent achievement:

A. Cooperation with ILAC

67. It is worth mentioning that in October 2010, the ILAC MRA (Mutual Recognition Arrangement) for testing and calibration was signed. NAC became a full member of ILAC. 68. In 2011, a license agreement on the use ILAC-MRA-NCA mark by testing laboratories was signed. The combined ILAC-MRA-MCA mark is used in test reports issued by the laboratories accredited by NAC. Such test reports are recognized in the countries that signed ILAC MRA, thereby reducing the costs and time spent by domestic exporters who no longer have to comply with additional conformity assessment procedures. 69. In November 2013, NAC successfully passed a re-assessment by ILAC’s international experts. Based on the re-assessment results, NAC confirmed its status of a full ILAC member and a signatory to ILAC-MRA. 70. In October 2015, NAC sent an application to ILAC to expand ILAC-MRA to medical laboratories. In July 2017, ILAC will conduct a joint assessment of NAC. 71. As of December 7, 2016 182 laboratories signed the agreement on the use of ILAC- MRA-NAC laboratory mark. Out of 182 laboratories, 24 issue test protocols for abroad. 993,446 test protocols were issued to legal entities, of which 27,897 protocols were for abroad.

B. Cooperation with РАС

72. In June 2012, NAC signed the РАС-MLA (Multilateral Recognition Arrangement) for products. This agreement contributes to international recognition of accreditation among

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signatories of the РАС-MLA for products. PAC is an association of accredited bodies and other stakeholders aimed at facilitating trade among countries belonging to Asia and the Pacific. 18 foreign accreditation bodies, such as JAS-ANZ (Australia and New Zealand), KAN (Indonesia), ANSI (the USA), KAS (South Korea), NSC (Thailand), IAJapan (Japan) and others, including NAC, are signatories to the РАС-MLA for products. 73. In March 2015, NAC successfully passed the re-assessment by PAC’s international experts and confirmed its status as a full PAC member and a signatory to РАС MLA. 74. In October 2015, NAC sent an application to РАС to expand the scope of the РАС- MLA to include ISO/IEC 17021 (according to ISO 9001) and ISO/IEC 17024 (personnel certification) standards. Expanded recognition of NAC will lay the basis for the international recognition of quality management systems conformity certificates and personnel conformity certificates issued by the Kazakhstani conformity assessment. 75. In May 2016, NAC was assessed with regards to expansion of the recognition scope to include ISO/IEC 17021 (management systems) and ISO/IEC 17024 (personnel certification).

C. Cooperation with IAF

76. In October 2013, during joint General Assembly of IAF/ILAC, held in in Seoul, South Korea, NAC was admitted as a full member of IAF. In 2014, NAC became a signatory to the IAF MLA for products and signed the license agreement on the use of the IAF-MLA-NAC combined mark. 77. IAF brings together 78 accreditation bodies from 69 countries, all of which are signatories to the MLA. IAF’s main objective is conclusion of the MLA, which international recognition of accreditation documents issued by signatory countries. IAF strategic goal is to create a single system that would allow recognizing conformity certificates world-wide. 78. As of December 7, 2016, 54 conformity assessment bodies (among them 19 branches) signed the agreement on the use of the IAF MLA NAC combined laboratory sign. 79. In March 2015, new forms of conformity certificates containing the IAF MLA NAC combined laboratory sign were introduced. 80. On July 1, 2016 conformity certificate annex forms in the English language were introduced. 81. Since the beginning of 2016 1,591 conformity certificates have been issued, of which LLP “Research centre “Ugol”” issued 27 conformity certificates containing the IAF MLA NAC combined laboratory sign to Russia, Belarus, Kyrgyzstan, Uzbekistan, Finland, Ukraine. 82. Moreover, as of December 7, 2016 the national segment of the Single Register of Conformity Assessment Bodies and Testing Laboratories of the Customs Union included 81 conformity assessment bodies and 287 testing laboratories that assess conformity with the requirements of technical regulations of the Customs Union. 83. As of December 1, 2016 the Single Register of Issued Conformity Certificates and Registered Conformity Declarations, drawn according to a single form, included 47,976 conformity certificates and 91,559 conformity declarations.

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84. All in all, 237,462 conformity certificates (of which 235,704 – for conformity with CU TRs) and 378,457 conformity declarations (of which 372,479 – for conformity with CU TRs) were issued using the unified Customs Union form. 85. It is worth noting that as of December 1, 2016 according to electronic registration data, at the national level the register contained 33,112 conformity certificates for products, 1,714 conformity certificates for services, 8,518 conformity certificates for management systems and 85 conformity declarations. 86. Information about the issued conformity certificates and registered conformity declarations, drawn up according to the unified form, is published on the website of the authorized body www.memst.kz (in the form of a link) and on the website of the accreditation body www.nca.kz (in the form of a search box).

VII. Metrology

87. As far as issuance of calibration certificates is concerned, since 2012, RSE “Kazakhstan institute of metrology” has been issuing calibration certificates that comply with ISO/IEC 17025 and recommendations of COOMET (Eurasian cooperation of national metrological institutions). According to institute’s internal documents, calibration certificates are issued in Russian and English. 88. As far as harmonization of metrology (development of calibration laboratories, etc.) with international requirements is concerned, we are currently working on introducing amendments to the Law of the Republic of Kazakhstan of May 7, 2000 “On assuring the uniformity of measurements” (hereinafter – the draft law), which envisages the following:

 Bringing the metrology system in line with the international measurement traceability model by developing the calibration sector. Provisions on metrological traceability will be added; calibration using standards will be introduced.

 It is planned to develop calibration techniques and draw up calibration certificates in line with international requirements.

 Reduction of the scope of state metrological control system from 11 to 6 positions.

 State metrological control system will cover only the areas that are critical for security, environmental protection, fair trade in accordance with international practice. This means much wider use of calibration.

 It is also worth mentioning that conformity assessment activities will be excluded from the calibration sphere, meaning that accredited testing laboratories in Kazakhstan will work in full compliance with ISO/IEC 17025-2009 “General requirements for the competence of testing and calibration laboratories” in terms of measurement traceability. 89. Generally, all the suggested amendments will allow bringing the national system in compliance with the international model: • in measurements traceability through the procedures of comparison and calibrations; • in the field of state regulation of measurements reliability through harmonization of regulations with international practice and through establishment of measurements accuracy requirements in different sectors. 90. We would like also to inform that in order to discuss the above-mentioned amendments to the Law “On assuring the uniformity of measurements” with international

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experts, we translated the existing law and concept into English. With the assistance of Physical Technical Federal Institute of Germany (PTB), we discussed the draft with the international expert in the field of legal metrology, former Vice-President of the International Organization of Legal Metrology (OIML) Mr. Manfred Kochsiek (March 11- 13, 2015). 91. For the purpose of introducing international best practices and migrating to calibration approach, we actively work and cooperate within the framework of the PTB (Physikalisch-Technische Bundesanstalt) project “Strengthening quality infrastructure in Central Asia”. In 2015-2016, a number of events dedicated to the topic of calibration were organized. The events were attended by representatives of accredited verification and calibration laboratories of the country and international experts.

VIII. The common market of medical products

92. Pursuant to the EAEU Treaty, a common market of medical products in accordance with the Agreement on Common Principles and Rules for Circulation of Medical Products (medical devices and equipment) within the EAEU became operational as of January 1, 1 2016. 93. The legal framework that defines the common rules for the circulation of medicines and medical products in EAEU became effective on February 12, 2016, pursuant to adoption of theRules for Registration and examination of Safety, Quality and Efficacy of Medical Products approved by Decision of the EEC Council No. 46 of February 12, 2016. 94. For the purpose of implementing the legislation, 6 Decisions of the EEC Board and 21 Decision of EEC Council on medicines, as well as 3 Decisions of the EEC Board and 10 Decisions of the EEC Council on medical products were elaborated in 2015-2016. 95. In general, we have completed the adoption of the whole package of secondary legislation on the circulation of medicines in the EAEU. They will become effective after all member States ratify the Protocol on Accession of the Republic of Armenia to the Agreement on Common Principles and Rules of Circulation of Medicines and Medical Products within the EAEU. 96. Two procedures are also of great importance for reducing regulatory and procedural barriers, including the requirements for introduction and maintenance of the quality management system for medical products depending on the potential risk of their use (developed by the Russian Federation); and, the procedure for the authorized bodies of EAEU member States to suspend or prohibit the use of medical products that endanger human life and/or health, poor-quality, counterfeit or falsified medical products and withdraw such products from circulation. 97. It is worth noting that till December 31, 2021 the release of medical products into the EAEU will be governed by two procedures, including the unified requirements of the Union (for circulation on the common market) and the national legislation of the EAEU member States (for circulation on the market of the member-state).

1 It is assumed that the common medical products market will become fully operational 10 days after the date of effectiveness of the Protocol (signed on December 2, 2015) on Accession of the Republic of Armenia to the Agreement on Common Principles and Rules of Circulation of Medicines and Medical Products within the Eurasian Economic Union dated December 23, 2014.

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IX. Veterinary and phytosanitary measures

98. Pursuant to the EAEU Treaty, for the purpose of ensuring sanitary and epidemiological well-being of the population, as well as veterinary, sanitary and phytosanitary security in EAEU, member States pursue a coordinated policy in the field of application of sanitary, veterinary and phytosanitary measures. Member States jointly develop, adopt and implement international treaties and Commission’s acts on application of SPS (sanitary and phytosanitary) measures. 99. Currently, the most considerable restriction in this sphere is the right of EAEU member States to introduce temporary sanitary, veterinary and phytosanitary measures on a unilateral basis without securing approval of other member States. Such right is envisaged by the EAEU Treaty and is a valid constraint. 100. Practical implementation of this right leads to serious consequences within the framework of the Union. Among such problems we can name the issue with supply of meat products from the Republic of Kazakhstan to the Russian Federation. This issue is planned to be resolved with the participation of the Eurasian Economic Commission. 101. According to item 4, Article 56 of the Treaty, procedure of interaction of member States’ authorized bodies during the introduction of temporary sanitary, veterinary and phytosanitary measures is approved by the Commission. The procedure was considered at the session of the Commission Council on May 16, 2016. After the session, the document was sent for additional approval by the member States. Adoption of this document is at the final stage. 102. Restrictions that are related to lack of regulation of single requirements and procedures in the field of application of quarantine phytosanitary measures include absence of single EAEU rules and norms to ensure plant quarantine. 103. With regard to the above-mentioned restriction, the Eurasian Economic Commission’s Board adopted draft documents at the meeting on September 27, 2016. It is expected that by July 1, 2017 the restriction will be fully eliminated leading to unified approaches of member States’ authorized bodies when exercising their powers. 104. In the sphere of SPS measures, there is also a barrier related to differences in operation of laboratories to support veterinary measures in the EAEU member states. This is due to the absence of common testing rules and methodologies. 105. According to item 13 of the Protocol on application of sanitary, veterinary and phytosanitary measures (annex 12 to the Treaty), testing rules and methodologies during veterinary control (supervision) are defined by the Commission. 106. In order to remove this barrier, the Commission has prepared draft document, which will be considered by various Commission's bodies in 2017.

X. Simplification of companies’ inclusion in the register of importers

107. The inclusion of third country enterprises with the right to market their products in the territory of EAEU into the Register of Third Country Enterprises is governed by the “Regulation on the procedure for exercising joint inspections of objects and sampling of goods (products) subject to veterinary control (supervision)” approved by the Decision of the EEC Council No.94 dated October 9, 2014.

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108. A simplified procedure for evaluating applications for inclusion in the register (in accordance with item 47 of the Regulation) against guarantees of relevant competent authority in third countries is performed by one of the EAEU authorized bodies that receive such the applications.

XI. Streamlining and simplification of veterinary certificates .

109. A veterinary certificate – is an international document that confirms (guarantees) veterinary safety of the regulated consignments and wellbeing of the country in terms of infectious animal diseases in accordance with the requirements of the importing country. 110 Pursuant to the “Standard for provision of public services associated with issuance of veterinary certificate for export”, a veterinary certificate is issued within 3 days. At the same time when obtaining a veterinary certificate to meet the veterinary requirements of the importing country it is necessary to obtain an examination report that confirms safety of the exported consignment. 111. In this respect, simplification of veterinary certificate issuance procedure may lead to incompliance, violation of the requirements of the importing country and suspension of export. 112. The following documents are issued in the field of veterinary: (a) Issuance of a veterinary certificate for transported objects during export; (b) Issuance of a veterinary-sanitary conclusion (opinion) for the objects of state veterinary control and supervision; (c) Issuance of state registration certificates for veterinary drugs and feed additives; (d) Issuance of a veterinary statement; (e) Assignment of identification numbers to manufacturing facilities that grow animals, procure (slaughter), store, process and sell animals, animal products and raw material; as well as to the organizations that produce, store and sell veterinary drugs, feeds and feed additives; (f) Issuance of an act of examination (test report) by veterinary laboratories; (g) Issuance of a license for veterinary activities; (h) Issuance of a permit for export, import or transit of transported goods with due account of epizootiс situation on the respective territory; (i) Identification of farm livestock and issuance of a veterinary passport; (j) Competency and qualification review of natural persons and legal entities conducting entrepreneurial activities in the field of veterinary; (k) Approval of regulatory technical documents for new, improved veterinary drugs, feed additives; (l) Testing veterinary drugs and feed additives; (m) Registration of laser stations, products (equipment) and attributes for identification of farm livestock and manufacturers thereof in a database meant for issuance of individual numbers.

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113. The following documents are issued in the field of phytosanitary: (a) Issuance of a quarantine certificate for transportation of regulated products on the territory of the Republic of Kazakhstan; (b) Issuance of a phytosanitary certificate for the export of regulated products out of the Republic of Kazakhstan; (c) Approval of the importation of quarantine objects (quarantine harmful organisms) for research purposes; (d) State registration of pesticides (agricultural chemicals); 114. Issuance of a conclusion (statement) of the CU member-states’ authorized body on the reasonability of importing non-registered plant protection agents for the purpose of conducting registration and performance testing, as well as reasonability of importing a limited quantity of non-registered plant protection agents for elimination of hotbeds of newly-detected quarantine harmful organism without licensing.

XII. Non-tariff measures in relation to third countries

115. The spheres of tariff and non-tariff regulation are among the key elements in securing unimpeded and fair trade between member States. 116. Duty-free trade (including tariffs and other equivalent duties, taxes and charges), non-tariff measures, special safeguard, anti-dumping and countervailing measures are applied in fair trade in the territory of the Customs Union. The Common External Tariff is applied, and unified regulatory measures for governing trade in goods with third parties are followed. Therefore, exceptions and restrictions in the spheres of customs tariff and non- tariff regulation, first of all affect the outer boundary of the CU. Therewith, the CU domestic market is also affected, sometimes materially. 117. One possible option for mitigating the impact of exceptions and restrictions would be the development of traceability arrangements (e.g., marking of the goods). In 2016, the Agreement “On the implementation, in 2015-2016, of a pilot project for the introduction of labeling control (identification) signs on the heading FT CC 4303 Articles of apparel, clothing accessories and other articles of fur”, came into force. It is planned to prolong the project. Pursuant to this Agreement, each article of fur should be labelled with control identification marks (RFID-tags), and cannot be placed on the EAEU market without these marks. This allows carrying out full-scale control over articles of fur from the moment of manufacture or import till the moment of sale. The goods traceability arrangements may be used in building cooperation between member States, if one of them uses special economic measures. 118. The procedure of application of non-tariff measures in relation to third countries is regulated by the EAEU Treaty dated May 29, 2014. These measures include: • prohibition; • quantitative restrictions; • exclusivity; • automatic licensing (supervision); and, • permitting procedure. 119. Goods subject to non-tariff measures are included into the Unified list of goods, approved by the EAEU supranational body – the EEC.

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120. This list includes goods, which were forbidden and restricted for import to, and export from, the customs territory of the EAEU. 121. The restrictions in respect to such goods are based on national security concerns and for addressing illicit traffic and distribution of narcotic drugs and psychotropic substances, arms, and rough diamonds. 122. It must be noted that this list is revised regularly with the aim of maintaining a liberalized trade regime. For example, import licenses for alcoholic products, pharmaceuticals and veterinary pharmaceuticals were abolished.

XIII. Conclusion

123. The primary purpose of the work for identifying and removing trade barriers and reducing exceptions and restrictions is to ensure effective trade performance in Kazakhstan. 124. The work carried out will allow for maintaining trade policy measures that serve the economic, trade and political interests of the country; creating favorable environment for the development of export-oriented manufacturers and the promotion of domestic goods; and, cooperating closely for the benefit of establishing efficient and effective foreign trade policy mechanisms. 125. In the long term, the reduction of trade barriers will result in increasing enterprise profits, creating favorable investment climate, and promoting competition. 126. In the meantime, the EAEU in cooperation with business community works towards the removal of barriers, exceptions and restrictions with the aim of securing the “four freedoms” of the common market.

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