12-4955  JOB/ACC/31/Rev.1           17 September 2012 
 
 
Working Party on the          Original:  English  
Accession of Kazakhstan  
 
 
WORKING PARTY ON THE ACCESSION OF 
KAZAKHSTAN TO THE WTO 
 
Submission by the Republic of Kazakhstan 
 
Revision 
  The following submission is being circulated to Members of the Working Party, at the request of the Delegation of the Republic of Kazakhstan.    
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 JOB/ACC/31/Rev.1 
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  - Trade-Related Investment Measures (TRIMs)  
1. The representative of Kazakhstan confirmed that  Law No. 291-I "On Subsurface and its Use" 
of 24 June, 2010 (hereinafter:  Law No. 291-I),  which had replaced Law No. 2828 "On Subsurface 
and its Use" of 27 January 1996, had establishe d a requirement for subsurface users to use 
domestically produced goods and services provided that they met the requirements of project 
documentation and legislation of the Republic of Kazakhstan.  In accordance with Article 77 of 
Law No. 291-I, the purchase of goods and services1 for conducting subsurface operations could be 
carried out by one of the following methods:  (1) open tender; (2) price offers request; (3) from a 
single source; (4) through the electronic procuremen t system; or (5) through commodity exchanges.  
In a tender process, the winner of competitive bid was determined on the basis of the lowest price in 
accordance with paragraph 62 of Article 3 of R esolution of the Governme nt No. 1139 "On Approval 
of Rules for Purchases of Goods, Works and Se rvices in Performance of the Subsurface Use 
Operations" of 28 November 2007.  Preferences were  granted to local producers of goods and services 
only when they fully met all the requirements of  the bidding process and submitted documents that 
confirmed the local origin of goods and services.  Th e representative of Kazakhstan clarified that local 
content in goods was defined as a percentage value of domestic materials and inputs used in the value 
of finished goods produced on the territory of Kaza khstan.  In order to prove the local content in a 
good, a producer had to present certificate "CT- KZ" issued by the Chamber of Commerce of 
Kazakhstan.  According to the Article 78 of the Law No. 291-I, a tender organizer granted a putative 
20 per cent reduction in the price of any bid submitted by local producers of goods2 and services.  
Tender procedures had to take place in Kazakhstan.  Both national a nd foreign investors were equally 
entitled to participate in the bidding process.  In her view, such provisions were non-discriminatory 
and introduced an opportunity  for imported goods and services. 
2. In response to a question on the changes intr oduced by Law No. 291-I, the representative of 
Kazakhstan said that inter alia  the Law "On Subsurface and its U se" of 2010 incorporated all the 
provisions relating to local content requirements c ontained in Law No. 2828 "On Subsurface and its 
Use" of 27 January 1996.  In addition, clarification was provided on the definitions of local content in 
                                                      
 1 The term "services" includes both  services and works as those te rms are used in Law No. 291-I. 
2 In accordance with sub-paragrap h 59) of Article 1 of Law No. 2 91-I Kazakhstan producer of goods 
means citizens of the Republic of K azakhstan and/or legal entities of the Re public of Kazakhstan that produce 
goods of Kazakhstan origin.  The goods of Kazakhstan's origin are determined according to the Rules on Determining the Country of Origin of Goods, Drafting and Issuing Expertise Acts  on Origin of Goods and 
Issuing a Certificate of Origin of Goods adopted by the Resolution of the Government of the Republic of 
Kazakhstan No. 1647 of 22 October 2009.  
 
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  goods, services and workforce; two new terms had been introduced: "register of goods, works and 
services used in subsurface operations" and "unifo rm calculation method of local content in the 
procurement of goods, works and services by organi zations".  According to Article 63 of Law 
No. 291-I, a subsurface user was required to submit an annual procurement program and report on 
goods, works and services purchased for implementation of the investment contract.  
3. She also noted that, during the period of economic adversity in the early 1990s, in order to 
attract foreign direct investments and to develop Kazakhstan's unexplored oil fields, her Government 
had signed long-term (up to 40 years) investment contracts with major multinational oil companies, 
on terms which granted VAT and customs duty exemp tions for imported goods used in oil operations.  
Since the terms of signed investment contracts could not be changed retroactively (i.e., pursuant to a 
contract stability clause), the representative of Kazakhs tan stated that the provisions of Law No. 291-I 
were aimed at offsetting the discriminatory effects of those earlier investment contracts which created 
a disadvantage for domestically produced goods, whic h remained subject to the payment of VAT.  
4. In accordance with Article 50 of the Law No. 291 -I, the tender offers for obtaining rights to 
use subsoil for exploration, extraction,  combined exploration and extraction, inter alia , had to contain 
the following proposals:  (i) obligations regardi ng Kazakhstani content in personnel, which had to 
increase to the extent of implementation of traini ngs thereof; (ii) oblig ations on education of 
Kazakhstani personnel; and (iii) Kazakhstani content in purch asing goods, works, and services 
required for implementation of  the contract.  All these provisions had to be included into the 
subsurface use contracts. 
5. Pursuant to Article 69 of Law No. 291-I, contr acts were concluded for a period determined in 
the project documentation for carrying out extraction works and contained provisions for the possibility to extend their term.  These contracts we re required to contain commitments for investors 
to use domestically produced goods provided that th ey were compliant with the requirements in the 
project documentation and legislation of  Kazakhstan on technical regulations. 
6. The representative of Kazakhstan further noted th at local content provisions were established 
individually in each subsurface use contract, de pending on the specifics of the goods and services 
required for the implementation of a contract.  Amen dments were subject to negotiations between the 
authorised body and the subsurface user, and coul d be introduced on the basis of consensus between 
the parties. 
7. She added that Kazakhstan's industry was do minated by the extraction and processing of 
hydrocarbon and mineral products, the oil sector bei ng the most attractive for both foreign and local JOB/ACC/31/Rev.1 
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  investors.  Forecasts showed that the volume of foreign investments in oil production was 
continuously increasing, while other sectors of th e economy remained underdeveloped.  Hence, her 
Government had introduced the requirement to u se domestically produced products and services in 
order to:  (i) ensure the rational restructuring of  subsurface use; (ii) achieve sustainable economic 
development through economic diversification a nd reduction of the economy's high dependence on 
volatile world prices for exports of mineral resourc es; and (iii) create an environment conducive to 
development of processing industries and produc tion of high value-added goods and services.  
She emphasized the importance of the diversifica tion programme for the Kazakh economy, and added 
that providing support for development of processi ng industries was a priority for her Government. 
8. Some Members considered the requirement to u se domestically produced products in the oil 
sector inconsistent with the WTO TRIMs Agreement.  These Members added that this requirement 
also appeared to constitute prohibited expor t subsidies under Article 3.1 of the WTO SCM 
Agreement.  These Members asked Kazakhstan to provi de further justification for this measure, as 
well as to present a programme for bringing existing legislation, in particular the local content provisions of Law No. 291-I, into conformity with WTO requirements.  To assess the need for any 
transition period, a detailed action plan would, in  any case, need to be provided.  These Members 
sought a commitment from Kazakhstan that, from the date of WTO accession, it would not maintain 
measures that would be in conflic t with the WTO TRIMs Agreement. 
9. The Representative of Kazakhstan stated that th e legal basis for preferential tariffs or tariff 
exemptions for imports of parts and components used for assembling motor vehicles and parts and 
components thereof under "industrial assembly" regime was established by the CU Common External 
Tariff (CET) (as approved by the Decision of the Inter-State Council of EurAsEC No. 18 of 
27 November 2009 and put into effect through CU Commission Decision No. 130 of 27 November 2009) and in the re levant national legislation.  
10. In Kazakhstan, industrial assembly agreements were concluded in accordance with the "Rules 
on Concluding the Agreement on I ndustrial Assembly of Motor Vehicles approved by Order of the 
Deputy Prime Minister and Minister of Industry a nd Trade" No. 113 of 11 June 2010 (hereinafter:  
Order No. 113).  According to these rules, industr ial assembly of motor vehicles meant a system of 
serial production based on technological processes providing for project production capacity under 
two-shift operation of no less than 25,000 pieces per year and featuring the following technical operations:  JOB/ACC/31/Rev.1 
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  - welding, assembly and painting of the body; 
- installation of cabin equipment; - installation of a power train, steer ing mechanism, and exhaust system; 
- installation of electrical equipment, suspension components; - installation of exterior elements; and 
- conducting control tests of finished motor vehicles. 
11. Juridical persons that signed an agreement on industrial assembly qualified for preferential 
tariffs (from 0 to 5 per cent) on the import of parts and components used in the assembly of 
automobiles under tariff lines of the Unified Customs Tariff of the Customs Union "For the industrial 
assembly of motor vehicles under headings 8701-8 705, their components and assemblies" provided 
they met the following conditions: 
(1) to have productive assets of at least 2 b illion tenge as of the agreement signing date; and 
(2) to have an obligation in a period not ex ceeding 84 months from the signing date of the 
agreement: 
- to launch the industrial assembly of at least one model of the motor vehicles of CU 
HS heading 8703; 
- to import car parts originating from countries not party to the Customs Union under 
the positions of the Unified Customs Tariff of the Customs Union "For the Industrial Assembly of Motor Vehicles under Headings 8701-8705, their Components and Assemblies" in volume of no more than  70 per cent of the total value of the 
auto-components used in the production, ta king into account the cost of the body, 
being classified in CU HS heading 8707. 
12. To date four companies had concluded agreements on industrial assembly with the Ministry 
of Industry and New Technologies in accordance with Order No. 113.  These companies were 
"AgromashHolding" JSC, "SAUR" JSC, "Sarya rkaAvtoProm" LLP and "AziaAvto" JSC.  
The agreements were signed in 2010  for a term of 8 years with the possibility of further extension.  
In response to a Member's question, the represen tative of Kazakhstan clarified that Order No. 113 
provided only for the assembly of automobiles under CU HS heading 8703.  These Rules did not 
envisage industrial assembly of other types of  motor vehicles or agricultural machinery.  
13. [The representative of Kazakhstan confirmed that, from the date of the accession to the WTO,  
Kazakhstan would ensure that all laws, regulatio ns and other measures a pplied in Kazakhstan, 
whether adopted by Kazakhstan or the competent bodies of the CU, would be consistent with the 
provisions of the WTO Agreement, including th e WTO Agreement on Trade-Related Investment 
Measures, except for measures applied under Law No . 291-I, as described in paragraphs [1-8] and 
measures applied pursuant to the Rules on Concl uding the Agreement on Industrial Assembly of 
Motor Vehicles approved by the Order No.113, as descr ibed in paragraphs [9-12], and in accordance 
with investment agreements concluded prior to Kazakhstan' s accession to the WTO under the 
provisions of the Law No. 291-I and Order No. 113.  The representative of Kazakhstan further JOB/ACC/31/Rev.1 
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  confirmed that all WTO-incons istent measures applied pursuant to Law No. 291-I would be 
eliminated by [xxxx] and measures applied pursuant to Order No. 113, including requirements for 
preferential tariffs or tariff exemptions, would be  eliminated by [xxxx].  The representative of 
Kazakhstan confirmed that Kazakhsta n would engage in consultations  with interested WTO Members 
no later than 1 July 2016 regarding WTO consis tent measures that could be applied and notify 
WTO Members of any measures planned to replace WTO-inconsistent measures at least six months 
prior to the adoption of such new measures.  Upon c onsultation, transparency and fairness were to be 
ensured.  The representative of Kazakhstan also confirmed that from the date of accession, Kazakhstan would not conclude any new agreements or contracts with investors in any sector that 
contained provisions inconsistent with the WT O Agreement, including the WTO Agreement on 
Trade-Related Investment Measures.  The Wo rking Party took note of these commitments.] 
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