RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/ACC/SPEC/KAZ/7/Add.1 
28 May 2003 
 (03-2856) 
Working Party on the 
Accession of Kazakhstan Original:   English 
 
 
 
ACCESSION OF KAZAKHSTAN 
 
Questions and Replies Concerning Domestic Support  
and Export Subsidies in the Agriculture Sector  
 
Addendum  
  
 The Ministry of Industry and Trade of the Republic of Kazakhstan has submitted the 
following Questions and Replies Concerning Dom estic Support and Export Subsidies in the 
Agriculture Sector with the request that they be  circulated to members of the Working Party. 
  
_______________ 
 WT/ACC/SPEC/KAZ/7/Add.1 
Page 2  
 
 - Supporting table DS:1
 
Question 1 
We note that in the appendix to WT/ACC/SPEC/KAZ/7 Kazakhstan provides a lot of useful 
information on measures listed in supporting table DS:1. 
However, we would ask that Kazakhstan focus on  providing information that is relevant to 
demonstrating how these measures  meet Annex 2 criteria, and to incorporate this information 
into the supporting table.   
For example, could Kazakhstan confirm that no ne of the programs listed under the Annex 2, 
paragraph 2 "general services" category involve direct payments to farmers or processors? 
Answer:  
 Domestic support measures listed in Table DS :1 are taken only under programs funded from 
the Republican budget. 
 Development, discussion, and adoption of bud getary programs are performed in accordance 
with Articles 14, 15, 16 of the Law of the Re public of Kazakhstan No.357-1 of 1 April 1999 "On 
Budgetary System".  
 Funds listed in Table DS:1 under "general servi ces" are allocated for general-type measures 
(e.g. measures on ensuring epizootic safety of the Re public of Kazakhstan, on control of crop diseases 
and damaging insects, assessment of variety and so wing characteristics of seeds and transplanting 
stock of seed breeding stations, etc.) under state programs, as well as for the maintenance of services comprising the system of the Ministry of Agriculture of the Republic of Kazakhstan engaged in general-type services (measures).  They do not prov ide for the redistribution of funds supplied by 
consumers, do not grant price support to producers, and meet the requirements of Paragraphs 1 and 2 
of Annex 2 of the Agreement on Agriculture.    
 For more details on measures of the "Green Box" program, see the revised Tables DS:1.   
Question 2 
We were unable to find additional informatio n in WT/ACC/SPEC/KAZ/7 concerning the state 
procurement of grain program listed under par agraph 3 (which, we would note, should be 
characterized as "public stockholding for f ood security purposes," not "general services").  
Answer:
 
 The Republic of Kazakhstan has placed the state procurement under "public stockholding for 
food security purposes" – Paragraph 3 Annex 2 of th e Agreement on Agriculture in the revised Table 
DS:1.  
Question 3 Please provide information on this measure and how it meets paragraph 3 criteria, in particular 
the requirement that purchases be made at market prices. 
We would reiterate our position that we would ex pect Kazakhstan to include this measure in the 
"green box" if it meets the criteria of paragraph 3, notwithstanding the provisions of footnote 5.  WT/ACC/SPEC/KAZ/7/Add.1 
 Page 3 
 
 
 Answer:  
 Under the Republican budgetary program "Gra in Procurement for the Renewal of National 
Grain Reserves", the Republican budget annually allo cates funds for the procurement of grain for the 
national reserves of the Republic of Kazakhstan. The national grain reserve has been created to meet 
mobilization needs and ensure food security of the Republic of Kazakhstan, and conforms with the 
provisions of Paragraph 3 Annex 2 of the Agreement on Agriculture – "Public Stockholding for Food 
Security Purposes".  
 The public stockholding of grain is performed by the authorized body – the Ministry of 
Agriculture of the Republic of Kazakhstan throu gh the Agent for the management of the national 
grain reserves (the national company CJSC "Food Cont ract Corporation", hereafter – the Corporation) 
in the form of annual grain procurement effected  under the Law of the Republic of Kazakhstan "On 
State Procurement" and Rules for Accumulation, Storage, and Use of the National Grain Reserves following procedures set by the decision of the Go vernment of the Republic of Kazakhstan on the 
state procurement of grain for the corresponding year.   
 The mechanisms of the state procurement of grain (rules for financing transactions with the 
national grain stocks, grain procur ement volumes, rules for contract execution, and requirements to 
the quality of the procured grain) are determined by the decision of the Government of the Republic 
of Kazakhstan demonstrating an appr opriate level of transparency in terms of financial costs.    
 In 1996 the state procurement of grain was perfo rmed in the commodity exchange at market 
prices.  
 Grain of the national grain stocks has been sold on the domestic market at market prices 
based on the results of open biddings or on the co mmodity exchange.  The export grain price set by 
the Corporation also reflects the state of the world market and concluded contracts on grain supply, 
and as such meets the requirements of the criteria of Paragraph 3 Annex 2 of the WTO Agreement on Agriculture, namely, that "sales from food security st ocks shall be made at no less than the current 
domestic market price for the product and quality in question" . 
Question 4 Based on the information provided in WT/ACC/SPE C/KAZ/7, it is our view that the program 
"Development of State National Parks, Fish Hatcheries, and Forestry Associations" does not 
belong in the supporting table because fish and forestry are not c overed under the Agreement 
on Agriculture. 
Answer:
 
 The Republic of Kazakhstan has remove d the above measures from Table DS:1.  
- Supporting table DS:2  
Question 5 
We appreciate the additional information th at Kazakhstan provided in WT/ACC/SPEC/KAZ/7 
on measures that were included in this supportin g table, and understand the difficulties facing 
the Kazakh agricultural sector. WT/ACC/SPEC/KAZ/7/Add.1 
Page 4  
 
 However, we would reiterate our position that  Kazakhstan does not have recourse to Article 6.2 
provisions.  When Kazakhstan revises WT/ACC/SPEC/KAZ/6, it should move these programs to other supporting tables, as appropriate. 
Answer
 
 While being a country rich in land resour ces, for the last few decades the Republic of 
Kazakhstan has been crippled by the aftermath of implemented structural reforms.  The crisis has 
been especially devastating for the agricultu ral sector. Among the major problems impeding its 
recovery are: drastic decline in the gross yield and yield of specific agricultural crops, amount and 
productivity of livestock, obsolescence and unsatisfact ory state of the physical infrastructure.  
 Hence, the current policy of the Republic of Kazakhstan is aimed primarily at attraction and 
expansion of long-term investments.  Investment s in the agricultural sector of the Republic of 
Kazakhstan are usually done on a long-term basis a nd on favorable conditions with participation of 
the international banks (International Bank for R econstruction and Developm ent, Asian Development 
Bank), which, as a general rule, provide financia l aid to poor and developing countries for poverty 
control purposes.     
 Thus, the ADB loan funds listed in Table DS :2 for 1996-1998, have been targeted at 
production and processing of agricultural goods, machiner y for technological stations, development of 
wholesale markets and other market infrastructure,  necessary for marketing of agricultural products, 
as well as financing of the required working capital. 
 Soft loan policies continue into the present time.   In 1998 the Republic of Kazakhstan conclude d an agreement with the Asian Development 
Bank on allocation of credit line to the Project  on Management of Water Resources and Land 
Rehabilitation equal to US$35,331 m illion, currently implemented in the South Kazakhstan Oblast 
encompassing 39.2 thousand hectares of  areas, used to cultivate the bulk of Kazakhstani cotton.  The 
projects includes works on rehabilitation and moderni zation of the irrigation and drainage systems, 
including amelioration of salty soils and measur es to improve water management. The project has 
been developed for a term of 27-35 years, the firs t decade being subject to favorable terms and service 
payment at the rate of 1 per cent per annum.       
 The International Bank for Reconstructi on and Development (IBRD) has allocated 
US$80 million for works on improvement of irrigation and drainage systems.  The project in question 
has been developed to reconstruct the irrigation and drainage systems in order to enhance efficiency 
of irrigated farming activities involving 15 irrigated areas in nine oblasts of the Republic of 
Kazakhstan with the overall area of 32.5 thousan d hectares.  The payback period set for end 
borrowers is 30 years, with the grace period of five years, and the preferential interest rate averaging 
6.5 per cent per annum.  
 Under the IBRD loan, the Republic of Kaza khstan implements starting from 1998 the Project 
on Post-Privatization Agricultural Support, develope d primarily to support agricultural enterprises of 
the Republic of Kazakhstan, developing in the ma rket post-privatization environment.  Among the 
main objectives of the project are: enhanced su stainability of the agricultural loan schemes and 
stabilization of profitability of agricultural enterprise s through application in the agricultural sector of 
soft loans on a long-term basis.  The average inter est rate equaled 12.1 per cent, average loan term – 
2.7 years, duration of the grace period being established by operating banks on a case-by-case basis for every project.    WT/ACC/SPEC/KAZ/7/Add.1 
 Page 5 
 
 
  Also, starting in 2000-2001 in the framework  of IBRD loans the Republic of Kazakhstan 
implements a number of projects to regulate the wate r course of the Syr-Darya river, preserve the 
northern part of the Aral Sea, maintain water s upply and ensure adequate sanitary conditions for the 
settlements adjoining the Aral Sea region.  Am ong the main objectives of the projects are:  
preservation of the northern part of the Aral Sea, im provement of ecological conditions in the delta of 
the northern Aral Sea, rehabilitation of dams, and in crease of the volumes of water supply to the city 
of Aralsk.  
 Both the IBRD and the ADB show interest in  the future cooperation with the Republic of 
Kazakhstan in the agricultural sector.  At presen t, the Republic of Kaza khstan is developing the 
following project documents in the framework of loans of these international banks for 
implementation in subsequent years:  
- second stage of the IBRD loan "Post-privatization Agricultural Support"; 
- ADB-aided project "Improvement of Water Supply to Rural Areas"; 
- project of the IBRD loan ‘Enhancement of the Competitive Power of Kazakhstani 
Agricultural Products';  
- project in the framework of the ADB loan on "Rural Development".   
 All of the above investment projects conform completely with the provisions of Paragraph 2 
Article 6 of the WTO Agreement on Agriculture. 
- State guarantees for non-governmental external loans.  
 State guarantees for non-governmental external loans are one of the measures for invigoration 
of investments in the agricultural sector of the Republic of Kazakhstan.  
 State guarantees are granted based on the Resolutions of the Government of the Republic of 
Kazakhstan taken for each investment project. 
 State guarantees are granted on condition that borrowers repay budget funds, spent by the 
Government of the Republic of Kazakhstan in th e process of fulfillment of its obligations of a 
guarantor and requirements under the Law of the Rep ublic of Kazakhstan No. 464-I of 2 August 1999 
"On State Borrowing and Debt and Borrowing and Debt Secured by the State". 
 Therefore, given the interest shown by interna tional credit organizations in direct long-term 
investments into the agricultural sector, the Republ ic of Kazakhstan is willing to create favorable 
conditions and preserve the opportunity  to expand the volume of invest ments in the agriculture in the 
future.  This attitude presents ample reasons for incl usion of Table DS:2 in the commitments taken by 
the Republic of Kazakhstan on domestic support.    
- Leasing of agricultural machinery  
 The current technical level of agricultural pr oduction is the main crippling factor, curbing 
efficient development of the sector, and leading to deterioration of crop cultivation technologies, 
spreading of pests, plant diseases, loss of soil hu mus, and, as a result, decline of the quality and 
quantity of products.    
 The average age of existing agricultural mach inery is 13-14 years, the standard operation 
period being 7-10 years.  The availability factor of existing machinery is 0.7 or lower while the load 
per unit exceeds the norm by 1.2-1.6 times. WT/ACC/SPEC/KAZ/7/Add.1 
Page 6  
 
  Between 1994 and 1999 supply of new machinery to  the agricultural sector practically ceased. 
For the last three years noting the funds allocated  from the budget, the Republic of Kazakhstan has 
purchased 7,279 units of agricultural machinery wort h app. KZT 13,648 million, which has but very 
little overall effect on the quantity of machinery available in the sector, accounting for a mere 
0.5 per cent of the required level. 
 At present, the ratio of agricultural machin ery available to agricultural producers to 
agricultural machinery  required constitutes 70 per cent, 80 per cent of which are obsolete and need 
replacement.  Unsatisfactory solvency and lack of marketable security prevents the bulk of 
agricultural producers to receive loans from second-tier banks for the purchase of necessary 
equipment.   
 The development of leasing practices ensuring avai lability of agricultural machinery is one of 
the top priority objectives attainment of which is  planned for a long-term perspective. Under the 
2003-2005 National Program of Agricultural Production, approved by the President of the Republic of 
Kazakhstan, the Republic of Kazakhs tan intends to replace approximately 10 per cent of existing park 
of agricultural machinery and tractors at the invest ment rate of no less than KZT 13 billion for three 
years, allocated from the Republican budget.   
 Given the above, any reduction of public expenditures incurred in the process of  provision of 
agricultural machinery to agricu ltural producers through application of leasing mechanisms is 
absolutely unacceptable for the Republic of Kazakhstan.   
- Subsidies granted to low-income enterp rises, and enterprises in stringent conditions
 
 This section includes funds of the Republican budget allocated for the invigoration and 
development of small businesses.  These funds have been intended for soft loans granted to small 
businesses by the Foundation of Support of Small a nd Medium Businesses of the Ministry of 
Economy of the Republic of Kazakhstan, including farm s as a form of small businesses, for a term of 
up to ten years at the interest rate of 12 per cent per annum for the production of agricultural goods 
and purchase of equipment and mini-technologies for the processing of agricultural goods.    
 Borrowing at second-tier banks is difficult for agricultural producers given a very limited 
amount of available marketable security.  This problem is paramount for low-income agricultural 
enterprises with limited capital assets, that can be of but little use as loan guarantees.    
 To address this issue and to raise the level employment in rural areas, the Republic of 
Kazakhstan granted soft loans to farms, strongly aff ected by adverse effects of reforms, implemented 
in mid 1990's.      
 The document WT/ACC/SPEC/KAZ/7 contains an error – the description of subsidies 
granted by the Foundation for Support of Small and Medium Businesses to low-income enterprises 
and enterprises in stringent conditions has been  replaced by the description of the "Farm's 
Development" program.  The Republic of Kazakhs tan offers its apologies and submits the amended 
variant to serve as a basis for all future considerations.   
- Supporting table DS:4  
Question 6 
It is unclear if Kazakhstan has included support that is equal to or less than 5 per cent of the 
value of production.  WT/ACC/SPEC/KAZ/7/Add.1 
 Page 7 
 
 
 Answer:  
 The document WT/ACC/SPEC/KAZ/6 does not take into account de minimis level of support 
in AMS. The Republic of Kazakhstan is submitti ng the revised Table DS:4 including 10 per cent 
de minimis .  
Question 7 
We note that if Kazakhstan includes de minimis  support in the base period, then it will have to 
include de minimis  levels of support in the calculation of its current total AMS. 
Answer:  
 The Republic of Kazakhstan is submitting the revised Table DS:4 including the level of 
de minimis. 
Question 8 
What is the source of the data on value of agricu ltural production ("gross output").  How was it 
calculated? 
Answer:  
 Value of agricultural products have been in cluded based on the information of the Statistics 
Agency of the Republic of Kazakhstan. 
Question 9 
Could Kazakstan double check the value of sugar b eet seeds - it seems to be  very low relative to 
support. 
Answer:  
 The Republic of Kazakhstan confirms having ma de a technical error and submits a correct 
value of beet-root seeds in the revised Table DS:4.  
Question 10 
Kazakhstan should aggregate all non-product-sp ecific support in supporting table DS:9 and 
enter the total nonproduct-specific AMS in supporting table DS:4. 
It would also be helpful if Kazakhstan could move all of the footnotes that explain these 
measures to supporting table DS:9. 
Answer:  
 The Republic of Kazakhstan is  submitting tables on domestic support, revised to reflect the 
above comments.    
Question 11 
The de minimis  provision for non-product-specific support  is applied to the total non-product-
specific AMS, not to each of its components. WT/ACC/SPEC/KAZ/7/Add.1 
Page 8  
 
 Answer:
 
 The Republic of Kazakhstan is  submitting tables on domestic support, revised to reflect the 
above comments.  
Question 12 
It is not necessary to calculate the total AMS as a percentage of the value of agricultural 
production. 
Answer:  
 The Republic of Kazakhstan is  submitting tables on domestic support, revised to reflect the 
above comments.  
Question 13 
It is unclear what the difference is between the two entries entitled "Total:  Current total AMS" 
and "Total (All aggregate measures of support)" at the end of supporting DS:4 (page 7) in 
WT/ACC/SPEC/KAZ/6.  There should just be one calculation of the total AMS. 
Answer:  
 The Republic of Kazakhstan is  submitting Tables on domestic su pport, revised to reflect the 
above comments.  
- Supporting table DS:5  
Question 14 
Can Kazakhstan confirm that it does not maintain  any market price support measures, such as 
government procurement or intervention progr ams that set a price for the purchase of 
commodities? 
Answer:  
 At present, the Republic of Kazakhstan uses no mechanisms aimed to support market prices 
or interference programs, targeted at setting fixe d prices on purchase of goods.  This norm has been 
stipulated in Article 18 of the Law of the Repub lic of Kazakhstan No. 1543-XII of 4 July 1992 "On 
Protection and Support of Private Entrepreneurship".  
 Private entrepreneurs deal in their goods (w orks, services), both produced by themselves, and 
purchased from third parties, using prices (tariffs, charges), set independently or on a contractual 
basis.  
 Direct state regulation of prices on goods, produced by private entrepreneurs, is allowed only 
in cases when entrepreneurs abuse their monopolistic standing in the market. 
 Setting of state prices with the view to prevent overcharging practices employed by 
monopolists is effected along guide-lines devel oped in the anti-monopoly legislation.      WT/ACC/SPEC/KAZ/7/Add.1 
 Page 9 
 
 
 - Supporting table DS:6  
Question 15 
It would be helpful to better understand the program "Financial support to agricultural 
producers" of the products listed in this  table.  How do these measures operate? 
Answer:  
 These measure are performed under the budgeta ry program "Preservation and Development 
of Seed and Livestock Breeding".  Funds are allocated from the Republican budget for:  
- preservation and development of seed breeding, aimed at the partial reduction of the price 
of selected crop seeds (up to 40 per cent), breeding stock, semen, and hatching eggs, marketed by domestic producers (up to 20-25 per cent); 
- compensation  of the price of rare or endangered species, purchased for breeding purposes 
(100 per cent); and 
- compensation of costs incurred by the purchase of breeding bulls and preservation of their 
semen.   
 Mechanisms of implementation of this progr am and the rules of allocating funds from the 
Republican budget for the purposes of preservation a nd development of seed and livestock breeding 
are approved by the Government of th e Republic of Kazakhstan annually.  
 State subsidies are granted to seed breedi ng stations and economic agents engaged in 
livestock breeding, certified in accordance with set procedures, for actual volumes of selected seeds of 
regionalized varieties of crops included in the Stat e Register of Selection Achievements Allowed for 
Use in the Republic of Kazakhstan, sold to domest ic agricultural producers at reduced prices, as well 
as actual quantity of breeding stock, marketed under set quotas and cost estimates.    
 Norms for subsidies for each variety of select ed seeds and breeding stock species, as well as 
measures aimed at their preservation are set annua lly by the Government of the Republic of 
Kazakhstan.     
 Seed and livestock breeding stations sell selected crop seeds and breeding stock to domestic 
agricultural producers independently using prices coordi nated with the Ministry of Agriculture of the 
Republic of Kazakhstan, reduced by  the amount of the subsidy.   
Question 16 
We would note that the WTO Secretariat's technical note WT/ACC/4 sets out the methodology 
and table formats for the supporting tables.  Suppo rting table DS:6 is to be used for measures 
that affects the producer price and involve direct  payments from the government to producers. 
If these measures do not affect producer pri ce, we would suggest that Kazakhstan consider 
moving them to supporting table DS:7. 
Answer:  
 Based on the above description, funds grante d by the Republic of Kazakhstan under Table 
DS:6 meet requirements set out in the technical paper WT/ACC/4 for inclusion in Table DS:6, i.e. 
they are targeted at the reduction of prices on pro ducts of livestock and seed breeding stations and are 
allocated under budgetary programs from the Republican budget.   WT/ACC/SPEC/KAZ/7/Add.1 
Page 10  
 
 Question 17 
What is the "Foundation of Agricultural Support,"  and why is it the source of data for some 
payments, but the Ministry of Agriculture is the source for other payments? 
Answer:
 
 The State Foundation for Agricultural Support is the structural component of the Ministry of 
Agriculture of the Republic of Kazakhstan (hereafte r – the Foundation).  The Foundation is an agent 
engaged in allocation and control over targeted use of funds, allocated from the Republican budget for 
the purposes of support of the national agricultural sector.      
- Supporting table DS:7  
Question 18 
We note that the format used in WT/ACC/SPEC/ KAZ/6 for this table differs from that in the 
WTO Secretariat's technical note WT/ACC/4 .  Please refer to WT/ACC/4 for the correct 
format. 
Answer:  
 The Republic of Kazakhstan noted the above co mments and revised Table DS:7 on domestic 
support accordingly . 
- Supporting table DS:9  
Question 19 
As noted in Q5 andQ6 in SPEC/KAZ/7, income tax breaks and VAT breaks should be removed. 
Answer:  
 The Republic of Kazakhstan has removed VAT benefits and income tax from Tables DS:4 
and DS:9.  
Question 20 
If we understand the response to Qu estion 6 correctly, it appears that  some of the forgiven debt 
and rescheduled arrears concerns tax debts.  Agai n, tax debts that have been forgiven or 
rescheduled do not belong in the AMS calculation. 
Answer:  
 The Republic of Kazakhstan has removed defe rred tax arrears of agricultural producers from 
Table DS:9.   
Question 21 
It would be useful to have more information on  any other types (i.e., not taxes) of debts that 
have been rescheduled or forgiven, the legislat ive basis for these measures, and details on the 
benefits to producers were calculated.  WT/ACC/SPEC/KAZ/7/Add.1 
 Page 11 
 
 
 The information in footnotes 6 and 7 to support ing table DS:4 are helpful in this regard and 
should be moved to supporting table DS:9 as prev iously noted.  Also, it would be helpful to 
understand each of the components of debt relief and restructuring, 
Answer:  
 The Republic of Kazakhstan is submitting more details on deferred debts, see annexes to the 
revised Tables on domestic support.  
Question 22 
In particular the "credits to cover debit balance in  the republic's offset," which is unclear to us. 
Answer:  
 Under the Decree of the President of  the Republic of Kazakhstan No. 1542 of 
4 February 1994 On offsetting of mutual debts", all economic agents, irrespective of the form of 
ownership, took part in the Republic's offset, ai med to cancel mutual defaults in payment of 
enterprises and organizations, and establish favorable  conditions for uninterrupted circulation of 
commodities and services.  Procedures of the Repub lic's offset have been determined by the 
Resolution of the Cabinet of Ministers of the Re public of Kazakhstan No. 181 of 14 February 1994 
"On Procedures of Republic's Offset".   
 Based on the results of the Republic's offset , under the Decree of the President of the 
Republic of Kazakhstan No. 181 of 14 February 1994 "On Procedures for Completion of Republic's 
offsetting of mutual debts of enterprises and organi zations", and in order to prevent growth of money 
quantity:     
- in case of credit balance – funds left on accounts must be exchanged on dated marketable 
bills of the Ministry of Finance of the Republic of Kazakhstan, the order of discounting 
and payment of which has been set out in the Resolutions of the Government of the Republic of Kazakhstan No. 178 of  8 February 1996 and No. 18 5 of 8 February 1996; and 
- in case of debit balance – the Decree provide d for short-term loans of enterprises and 
organizations for a term of six months (nine months for agricultural producers), allocated 
from the credit facilities of the National Ba nk of the Republic of Kazakhstan under the 
loan agreement concluded between the Nationa l Bank of the Republic of Kazakhstan and 
the Ministry of Finance of the Republic of Kazakhstan.   
 These loans and due interest have been sch eduled for payment until 5 December 1994.  
 The Ministry of Finance of the Republic of K azakhstan has fulfilled all its obligations before 
the National Bank of the Republic of Kazakhstan on repayment of credit facilities, whereas numerous 
enterprises and organizations failed to repay received loans by the specified da te.  In accordance with 
the Resolution of the Government of the Repub lic of Kazakhstan No. 1045 of 22 August 1996 
servicing banks recalculated the amount of due interest, payable for the use of received loans as of 15 September 1996 at the refinancing rate of the National Bank and added to  outstanding debts.   
 To continue proceeding on the above, the right of the Ministry of Finance to claim repayment 
by agricultural producers of their outstanding debts relating to the following:   
- target-oriented loans secured by the Ministry of Finance;  
- target-oriented loans secured by  oblast administrative bodies; WT/ACC/SPEC/KAZ/7/Add.1 
Page 12  
 
 - overdue debts relating to short-term loans accounted for in banks on the balance account 
No. 620; 
- loans, granted for wages payment to agricultural producers;   
- loans to cover debit balance in  the Republic's offset, and 
- have been transferred to the State Foundation for Agricultural Support of the Republic of 
Kazakhstan (now CJSC "Foundation of Financial Support to Agriculture") in accordance 
with the Resolution of the Cabinet of Minist ers of the Republic of Kazakhstan No. 224 of 
6 March 1995 "On Transfer of Loan Debts of  Agricultural Producer s Irrespective of the 
Form of Ownership to the State Foundation for Agricultural Support".   
 Further, in accordance wi th the Resolution No. 651 of 28 May 1996 "On Agreement of 
17 May 1996 Concluded between the Ministry of Fi nance of the Republic of Kazakhstan and the State 
Foundation for Agricultural Support", debts of agricultural producers, transferred to the State Foundation for Agricultural Support (including loan s for to cover debit balance) have been 
restructured by 50 per cent cancellation by the Govern ment of the Republic of Kazakhstan of its claim 
for repayment of the principal, and 100 per cent cancella tion of past due interest payments, as well as 
by deferral of the remaining share of requirements.  Similar conditions applied to restructuring and 
deferral of debts of agricultural producers before the Foundation.    
Question 23 
It is important that we understand this componen t of Kazakhstan's support calculations, since it 
will serve a basis for future notifications - so it's important that we get it right in Kazakhstan's 
supporting tables. 
Please provide information on the other programs listed in supporting table DS:9 - "fertilizers," 
"plants protection," and "mixed fodder". 
Answer:
 
 Financial funds for the programs fertilizers,  plant protection, and mixed fodder listed in 
Table DS:9 are allocated directly to agricultu ral producers from the Republican budget by the State 
Foundation for Agricultural Support.  Disbursement mechanism and procedures have been stipulated 
in the Procedures of Allocation of Funds from the State Foundation for Agricultural Support, adopted 
annually by the Government of th e Republic of Kazakhstan.    
- Fertilizers  
 Financial aid has been granted based on bi dding results to agricultural producers, who 
submitted applications for reduction of fertilizers costs.  Reduction constituted 50 per cent of the 
overall costs of mineral fertilizers, used for crops in tensively reared on irrigated lands and seed areas 
of agricultural crops, excluding transportation, storag e, and fertilizer placement costs, within limits 
allocated from the Republican budget for this purpose for the corresponding year.  
- Plant Protection  
 In order to establish moderate prices on plan t protection products and ensure timely measures 
on control of dangerous crop pests and diseases, f unds have been allocated from the Republican 
budget to reduce the level of costs of plant prot ection products.  Agricultural producers received 
financial aid of 60 to 40 per cent of the price of pesticides, depending on the used type.  The list of plant protection products and their quality required  to meet compensation norms have been developed 
by the Bid Evaluation Committee of the Ministry of  Agriculture of the Republic of Kazakhstan based 
on the results of evaluation of bids, submitted by ag ricultural producers.  The pivotal principal of the  WT/ACC/SPEC/KAZ/7/Add.1 
 Page 13 
 
 
 decision is the great importance attributed to the u se of pesticides in the process of rearing specific 
varieties of crops given phytosanitary conditions in the country.   
- Mixed Fodder  
 Financial aid is granted to specialized breedi ng stations listed in the Schedule adopted by the 
Ministry of Agriculture of the Republic of Kazakhstan with the view to reduce the price of purchased 
mixed fodder on a KZT 5,000 per 1 ton basis. 
 In order to apply for the aid, Oblast Depa rtments of Agriculture shall submit certificates on 
purchase of mixed fodder by livestock breeding stations  to the Ministry of Agriculture of the Republic 
of Kazakhstan.  The Ministry, following set verification procedures, develops summary certificates for the Foundation on allocation of finances for re duction of prices on mixed fodder.  The Foundation 
transfers the required volume of financial aid directly to breeding poultry farms.   
Question 24 
How does the program "Farm's Development" differ from the product-specific support 
measures listed in supporting table DS:6?  We note  that the source for this program is also the 
State Foundation for Agricultural Support and some  of the measures appear to be similar (for 
example, the cattle AMS includes support for ca ttle reproduction and b reeding, how does this 
differ from "acquisition of breeding cattle" indicated in footnote 8?). 
Answer:
 
 The Farm's Development progr am and product-specific support measures listed in Table DS:6 
differ in the following. 
 The programs are financed from the Republican budget. Budgetary funds are allocated in the 
framework of budgetary programs by the authorized body – the Ministry of Agriculture of the 
Republic of Kazakhstan and the agent for allocation and control over targeted use of budgetary funds 
– the State Foundation for Agricultural Support.    
 Funds for programs listed in Table DS:6 have been allocated to seed breeding and livestock 
breeding centers through the State Foundation for Agricultural Support to achieve reduction of price 
of produced and sold products.      
 Funds allocated for the ‘farming development' program have been granted to farms in the 
form of soft loans for a term of 5 years at the interest rate of 10 per cent per annum  for:  
- implementation and application of new agricultural production technologies;  
- purchase of tractors, agricultural machinery, trucks, lubricants and combustibles, seeds, 
fertilizers, herbicides, pesticides, veterinary drugs;   
- purchase of breeding stock; and 
- other purposes, aimed at the effectivization of production and marketing of agricultural 
products.   
 Funds have been allocated to farms based on the bidding results, i.e. to projects found 
perspective by the Bid Evaluation Committee.  Winni ng bidders have received contracts providing for 
reduced prices on selected seeds and premium breeding stock.   WT/ACC/SPEC/KAZ/7/Add.1 
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 Question 25 
Could Kazakhstan confirm that all figures lis ted in represent budgetary outlays and not 
estimates of support?  If these figures were calc ulated, please move the figures to column 4 and 
provide calculation details. 
Answer:
 
 The Republic of Kazakhstan confirms, that the data and program descriptions contained in the 
Table reflect budgetary expenditures and are not a result of calculations.   
- Export Subsidies  
Question 26 
We would reiterate our position that Kazakhstan should undertake a commitment not to apply 
export subsidies on the date of accession. 
Many members have called for the elimination of  export subsidies in the WTO agriculture 
negotiations. 
Answer:  
 While not trying to forestall results of th e multilateral negotiations of Doha Development 
Agenda, the Republic of Kazakhs tan considers expedient to unde rtake commitments on export 
subsidies under the current Agreement on Agricultu re, adopted in the course of the Uruguay Round.  
 The Republic of Kazakhstan needs to use e xport subsidies based on the following objective 
factors: 
- Geographical location (land-locked country), v astness of territory, remoteness from major 
markets (countries) involved in import of agri cultural products, all drastically decrease 
the competitive power of Kazakhstani agricultu ral products in foreign markets in terms of 
price parameters; 
- In the Republic of Kazakhstan the bulk of expor t products is transported by railway, the 
share of transportation costs in the product value rising as high as 30 per cent.  Given the 
high share of transportation costs in the expor t price, domestic products of the Republic of 
Kazakhstan are not competitive in the fore ign markets.  The share of foods and 
agricultural products in the total volume is  decreasing and fluctuates recently between 
8 and 10 per cent of the total export turnove r, while more than 50 per cent of export 
turnover is covered by grain.  Furthermor e, while in some years the Republic of 
Kazakhstan exported 10-12 million tons of grai n, in 2001 and 2002 this figure plummeted 
to 3.3 and 4.3 million tons, respectively; 
- The production of the basic export product (g rain) exceeds by far (by more than two 
times) the level of demand on the domestic market. Agricultural production involves the major part of the population of the Republic of Kazakhstan, export sales of agricultural 
products being the only source of income for the population of rural areas.  Given this, the Government of the Republic of Kazakhstan maintains support of the export of products; 
and 
- At the same time, it should be noted that major trade partners of the Republic of 
Kazakhstan – WTO members (the United States, the European Union), have the right to subsidize export products which right they exer cise very intensively.  The application of  WT/ACC/SPEC/KAZ/7/Add.1 
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 export subsidies will allow the Republic of  Kazakhstan to ensure equal competitive 
opportunities for the Kazakhstani traders.  
Question 27 
While we appreciate the responses that Kazakhstan provided in WT/ACC/SPEC/KAZ/7 with 
respect to the programs that have been included in supporting table ES:1, it is not clear to us 
how these measures operate. 
For example, is the internal transportation  subsidy contingent upon export?  Or do 
commodities that are shipped within Ka zakstan afforded the same subsidy? 
Answer:  
 Transportation subsidies for agricultural products have been granted in the form of decreasing 
coefficients applied to current tariffs on trans portation of agricultural products by railway in 
accordance with Rules for setting and cancellation of  decreasing coefficients to tariffs on cargo 
transportation by rail transport.   
 Overall, these benefits are granted both for tr ansportation of agricultural products within the 
Republic of Kazakhstan and transporta tion of exported products.  It should be noted, that in reality 
transportation benefits granted to agricultural products relate mostly  to exports, as intra-republican 
cargo transportation usually involves motor vehicles,  as more available given lower price and higher 
transportation speed.     
 Hence, based on the provision of Paragra ph 1(e) Article 9 of the WTO Agreement on 
Agriculture, the Republic of Kazakhstan has in cluded the above transportation subsidies in 
Table ES:1 of its commitments in the agricultura l sector in the context of the WTO accession.   
Question 28 The description of "direct export subsidies"  for grains provided through the CJSC "Food 
Contract Corporation" provided in Kazakhstan's response to Q8 is not entirely clear to us, and 
we would also ask for more information on this  program operates, data on expenditures, and 
calculation details. 
Answer:
 
 Direct export subsidies for grain have b een granted in 1997 and 1998 under the following 
schemes. 
- 1997  
 To aid agricultural producers with the sale of  grain and purchase of agricultural machinery on 
favorable terms, the State Food Contract Corporatio n (hereafter – the Corporation) (at present – CJSC 
"Food Contract Corporation" with 100 per cent of shares owned by the State) in pursuance of the 
Order of the Prime-Minister No. 294-p of 21 J une 1996 "On Purchase of Combine Harvesters" has 
purchased combine harvesters "Niva" from the produ ction plant in the Russian Federation (for a sum 
of US$11,140 thousand) for supply of agricultural producers under leasing procedures.  Agricultural 
producers were required to pay the price of harvesters in grain terms for a period of several years.    
 To settle the issue of payment for combine ha rvesters "Niva", the Corporation had to secure 
the purchase with the grain of state r eserves for a term of three years. WT/ACC/SPEC/KAZ/7/Add.1 
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  Also, in 1997 in pursuance of the Order of the Prime-Minister No. 316-p of 3 July 1996, the 
national joint-stock company "Ken Dala" purchased  from the join-stock company ‘Krasnoyarsk 
Combine Production Plant' (Russian Federation)  combine harvesters "Y enisei" (for a sum of 
US$16,762.3 thousand).  Combine harvesters have been leased to agricu ltural producers of the 
Republic of Kazakhstan against security of Oblast Akims under the following terms:  
- advance payment of 30 per cent of the price of a combine harvester effected by the 
Corporation using funds received from sales of national grain reserves, marketed subsequently in foreign markets;  
- the second share of 30 per cent of the price of a combine harvester paid in grain, using 
grain delivered by agricultural produ cers to  industrial granaries; and 
- the remaining 40 per cent of the price of a combine harvester paid using loans of 
commercial banks secured by national reserves of grain procured from agricultural producers. 
 The calculations include the overall costs of th e above agreements in terms of the national 
currency of the Republic of Kazakhstan.   
- 1998
   
 Given the remote position of major wholesale markets, low level of marketing development, 
and limited availability of financial resource, a large number of small and medium agricultural 
producers cannot market their grain independently a nd are compelled to sell it at a low price offered 
by traders, who virtually monopolized the local target markets.    
 To address this issue and to support sm all and medium businesses, the Republic of 
Kazakhstan has procured grain for renewal of the national grain reserves, bypassing numerous 
intermediary structures, at market prices.  
 In 1998 in accordance with the Resolution of the Government of the Republic of Kazakhstan 
No. 998 of 5 October 1998 the Corporation received funds for the procurement of grain and crop 
seeds in the domestic market.  The grain was purchased from small and medium agricultural 
producers ex-elevator, marketed later in full by th e Corporation in foreign markets.  The transaction 
included the amount of credit facilities received by the Corporation from the Foundation for Support 
of Small Businesses for grain procurement pur poses equal to US$98,248 thousand in the national 
currency of the Republic of Kazakhstan – KZT. 
 
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