RESTRICTED  
  
WT/ACC/SPEC/KAZ/6/Rev.12/Add.1  
 
10 July 2014  
(14-3963)  Page: 1/9  
Working Party on the Accession of Kazakhstan  Original: English  
 
ACCESSION OF KAZAKHSTAN 
ADDITIONAL QUESTIONS AND REPLIES 
Addendum 
 The following submission, dated 12 February 2014,  is being circulated at the request of the 
Delegation of the Republic of Kazakhstan.  
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 WT/ACC/SPEC/KAZ/6/Rev.12/Add.1 
 
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  Questions and Comments on docume nts WT/ACC/SPEC/KAZ/6/Rev.12, 
JOB/ACC/36/Rev.5 and JOB/ACC/37/Rev.3. 
Question 1  Supporting Table DS:5:  We note that the method of calculation of the market price 
support has to be in the line with paragraph 8, Annex 3 of the Agreement on Agriculture. 
Taking into account this fact, we would lik e Kazakhstan to provide the following data: 
- Actual volume of purchases of plant and animal products (separately for each 
 product of Supporting Table DS:5, column 1) by "KazAgroProduct" agency in the 
 base period 2010-2012, as well as inform  about government decisions, regulations 
 and decrees that determin e the level of prices for which the agency has been 
 authorised by the Government to purchase products specified in the Supporting  
 Table 5; 
 - Actual budget allocations for the purchase of meat of cattle, pigs, poultry, sheep, 
 horses, milk powder, butter, wool, for the period 2010-2012 in each year and for 
 each product separately; and,   
- Data source about the external reference price and information how it was 
 calculated.  
We also think that the source of information on the acceptable volume of production, 
which is subject to admi nistered prices with regard to administered prices, the external 
reference price and its calculation must be shown in column 9 of Supporting Table DS:5. 
In column 6 (Eligible production) of the Su pporting Table DS:5 the unit of measure is 
indicated in tenge/tonne (KZT/tonne), bu t it is necessary to indicate it in 
tonne/cattle-head, because actual volume in this circumstance measures in tonne and 
total number of cattle-head (horses, sheep's and goats). 
Moreover, we found differences between the da ta of stock of horses and data of the 
Statistics Agency of the Republic of Kazakhstan. 
We also found some inaccuracy in the external reference price.  For example, for the 
calculation of the internal reference price fo r bovine meat, Kazakhstan used the cost of 
1 bovine meat import tonne in 2012 at the rate  of US$2,520 per tonne.  At the same time 
taking into account the data of the Internat ional Centre of Trade,  Kazakhstan imported 
bovine meat in the rate of about US$3,044 per tonne last year. 
Therefore, we can estimate the volume of ma rket price support in the reference period - 
which is the main instrument in agricult ural policy support of the Republic of 
Kazakhstan - only after we rece ive all data mentioned above. 
Answer:  
Methodology used by Kazakhstan to calculate market price support is in compliance with 
paragraph 8 of Annex 3 of the WTO Agreement on Agriculture (furthermore - AoA).  
- First, the volumes of agricultural products procured by the government agents to support 
agricultural producers are not announced. Second, no quality requirements based on grades, 
packaging and etc. are established for such procurements.  In case when none of the above 
is applicable, total production is assumed to be eligible to receive the administered price. Therefore, "eligible production" reported in the ST DS:5 equals the total production volume 
of each agricultural product
1. This is not applicable to wheat acquired for State reserve in 
the announced volume of 500,000 MT. 
                                               
1 Please see paragraph 120 of the Appellate Body Report in WT/DS161/AB/R. WT/ACC/SPEC/KAZ/6/Rev.12/Add.1 
 
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  Regarding purchase prices, as specified in the document WT/ACC/SPEC/KAZ/6.Rev.8/Add.1, 
producers sell wheat to the State resources/rese rve at prices established by the Government 
based on the proposal from KazAgroMarketi ng, agency responsible for providing price 
information, marketing and consultancy services for the Government.  KazAgroMarketing, in 
its turn, determines purchase price on the basis of current market price and cost of 
production analysis as well as evaluation of producers' margin.  Such procurement is carried out by the "Food Contract Corporation" (FCC). 
Wheat is also procured by the FCC under the procurement programme to support domestic 
agricultural producers.  Such procurement is also made at prices determined by KazAgroMarketing on the basis of the analysis on the cost of production and evaluation of 
producers' margin.  
State procurement of livestock products is made at prices determined by the Commission on 
Pricing Policy of "KazAgroProduct".  When se tting the purchase price, the Commission takes 
into account that such price shall cover the cost of production and include a profit margin. 
Paragraph 8 of Annex 3 of the AoA does not require data on actual budget allocations for 
each year and for each product line separately.  
- "External reference price" for each agricultural product is based on data of customs value of 
exported and imported products provided by th e Statistics on Foreign Trade.  In accordance 
with the WTO requirements, it is based on ex port value for the basic agricultural product 
concerned when Kazakhstan is a net export ing country and import value for the basic 
agricultural product concerned when Kazakhstan is a net importing country in the year in 
question.  
It should be noted that Kazakhstan calculated its market price support using annual external 
reference prices alternatively to the fixed external reference prices as it was the case for 
other acceding members.  At the same time, once Kazakhstan becomes a WTO Member, 
future market price support calculations will be  based on the fixed external reference price.  
The detailed information with regard to methodology used to calculate external reference 
price is described below using data on bovine meat.  
The source of information for total volume of production for each product line (quantity eligible to 
receive the administered price) indicated in the column named "data source" of the ST DS:5 as the Agency of Statistics of Kazakhstan. 
Prior to the last submission, Kazakhstan had been providing method used for calculation of 
external reference price in the Annex 1 to the AG STs.  For technical reasons, this Annex was not 
attached to the last submission of AGSTs.  Kazakhstan takes account of this comment and will 
provide the requested information as an attachment to the tables for the next submission.  
Regarding column 6 (eligible production), Kazakhstan takes account of this comment and will 
make the necessary amendments in the table. 
According to the most recent data generated by Agency of Statistics of Kazakhstan, the total 
number of horses throughout the base period of 2010-2012 was as follows: 
Year Total number of horses, heads 
2010 1 528 341 
2011 1 607 455 
2012 1 686 241 
 
Kazakhstan takes account of this comment and will make the necessary amendments in the table. 
Method used for calculation of "external reference pr ice" for fresh bovine meat  is described below:  
                                                                                                                                               
 WT/ACC/SPEC/KAZ/6/Rev.12/Add.1 
 
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  The Government through its agent "KazAgroProduct" implements state procurement of livestock 
products, including fresh meat directly from agricultural producers.  
Taking into account that Kazakhstan is a net importer of meat, "external reference price" was 
based on import prices. For the reason that Kazakhstan mainly imports frozen meat, the total 
volume of country's imports of fresh (chilled) meat is negligible.  Therefore, "external reference 
price" for fresh meat was calculated using a price difference between frozen and chilled meats as follows: 
External reference price = price difference * average import price of frozen meat 
As normally fresh meat is more expensive than its frozen equivalent, price difference was 
calculated as follows: 
Price difference = average import price of chilled meat / average import price of frozen meat 
Taking into account that practically there were no imports of chilled meat to Kazakhstan, price 
difference was calculated using import data of the Russian Federation.   
Table 1.  Russian Federations' impo rt prices of fresh (chilled) meat 
HS Code Product Year Import price, 
US$/tonne 
020130 Fresh or chilled boneless bovine meat 2010 5,063 
2011 6,165 
2012 6,391 
Source:  tradestatistics.com 
Table 2.  Russian Federations' import prices of frozen meat 
HS Code Product Year Import price, 
US$/tonne 
020230  Frozen boneless bovine meat 
 2010 3,430 
2011 3,859 
2012 4,422 
Source:  tradestatistics.com 
Table 3.  Calculation of price difference 
Products Year  
Bovine meat 
 2010 5,063 / 3,430 = 1.48 
2011 6,165 / 3,859 = 1.6 
2012 6,391 / 4,422 = 1.45 
Note:  Data from Tables 1 and 2 
Table 4.  Calculation of Kazakhstan's external reference price for chilled meat: 
Products Year Import price of frozen meat, 
KZT/tonne Calculation of import price for 
chilled meat, KZT/tonne 
Bovine meat 
 2010 285,676 285,676 * 1.48 = 422,800.5 
2011 369,589 369,589 * 1.6 = 591,342.4 
2012 375,819 375,819 * 1.45 = 544,938 
Source: Kazakhstan's Customs St atistics on Fo reign Trade. WT/ACC/SPEC/KAZ/6/Rev.12/Add.1 
 
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  Question 2  
Supporting Table DS:6:  As far as we know, agricultural producers in Kazakhstan are 
paid direct budgetary payments per tonne of  marketed livestock products which cover 
milk, beef and veal, pig meat, sheep meat, po ultry meat, eggs and other products (wool, 
horse meat, fermented horse milk and fermen ted camel milk).  The amount of payment 
is established on the basis of the estima ted cost of compound feed required for 
production of livestock products (limited to 45% of that cost) and other costs.  
Moreover, the amount of payment establishe d by Government decision per tonne of 
specific production. 
We would like Kazakhstan to indicate this support measure in the Supporting Table DS:6 
and exclude it from the Supporting Table DS:9  if this payments was indicated there. 
Answer:  
First, the programme "partial compensation of feedstuff cost" does not differentiate subsidies for 
agricultural products by types of products.  
Second, the programme is administered at the republican and local levels.  Due to the reason that 
there is no unified system of data collection, Kazakhstan faces challenges with obtaining data 
disaggregated by types of agricultural products fr om local authorities.  Therefore, based on WTO 
accession precedent and due to the limitations of data collection, the programme is reported as 
non-product-specific support available to agricultural producers in general. 
Question 3  Documents JOB/ACC/36/Rev.5:  According to  the requirements of the Agreement on 
Agriculture in the frame of Doha Round Ne gotiations, we would like Kazakhstan to 
reduce domestic support on agriculture. 
In this regard, we proposes that Kazakhst an will use the tiered reduction formula 
provided by the Revised Draft Modalities for Agriculture (document TN/AG/W/4/Rev.4 
dated 6 December 2008), according to paragraphs 3(c), 8, 9. 
Taking into account that Kazakhstan is a member of Customs Union and the Customs 
Union in the process of preparing the common commitments, we propose that 
Kazakhstan take the same commitments as the Russian Federation for reduce domestic support on agriculture:  
- De minimis  level of 5% 
- Reduction period of 5 years 
- Rate of reduction of 51% 
Moreover, we propose Kazakhstan to determine the Aggregate Measurement Support in 
the national currency of Kazakhstan – tenge (KZT). 
Answer:  
1. The Doha Round requirements, which are still under negotiations, are only applicable to the 
WTO Members and do not apply to acceding countries.  
Furthermore, very recently-acceded Members, incl uding Ukraine, are not required to undertake 
reduction commitments beyond their accession commitments according to paragraph 9 of the Revised Draft Modalities for Agriculture (TN/AG/W/4/Rev.4 as of 6 December 2008 or TN/AG/26 as 
of 21 April 2011). 
Taking above into account, Kazakhstan is not re ady to accept proposed reduction formula.   
2. Agriculture is a key sector of Kazakhstan and it plays a significant role in economic and 
social development as nearly a half of country's population resides in rural areas.  Agriculture WT/ACC/SPEC/KAZ/6/Rev.12/Add.1 
 
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  employs almost one third of the working population and is critical to addressing poverty and food 
security related challenges.  One of the principal objectives of the Government is to boost agricultural sector as part of the strategy for economic diversification.  
While the Government had started to implement market economy reforms in the agricultural 
sector after becoming a sovereign state and posi tive results have already been achieved, the 
sector still remains under-developed.  For example, livestock production faces a number of constraints, such as large percentage of cattle (over 80%) concentrated in small households, low 
levels of breeding stock, poor compound feed pr oduction, outdated breeding methods and etc.  
Regarding crops, Kazakhstan is located in an  area of risky farming, where dry and sharp 
continental climate prevails.  As a result, over the past few years, dry lands have accounted for about 86% of the country's total area.  Currently, the area of irrigated lands in Kazakhstan is 
1.5 times lower than the levels of 1991.  About 800 thousands hectares are not used due to high 
concentration of salts in the soil, deterioration of the irrigation and drainage systems, shortage of 
water resources and lack of financial resources and modern equipment.  
In addition, Kazakhstan's agriculture faces structural challenges, such as the domination of 
resource poor producers in agricultural production (app. 90% of AG producers are small farms and households), the weak integration of domestic food chains, and difficult access to external 
markets.  
Therefore, the requested amount of subsidies pr ovided in the recent Domestic Support package 
will enable Kazakhstan to implement effectively measures stipulated in the Government Programme "Agribusiness 2020" designed to address current challenges in the agricultural sector. 
3. Current total AMS is determined in both national currency and US dollars terms.  At the 
same time, recognizing the potential problems related to exchange rate fluctuations of national currency, total AMS commitment level will be fixed in US dollars.   
Furthermore, there is no rule for acceding countries to express its domestic support commitments 
in national currency. 
The experience of recently acceded countries that have joined the WTO since 1995 shows, that 
among countries, which undertook its domestic support commitments in foreign currency (i.e. 
US dollar and euro), are Bulgaria, Panama, Croatia, Lithuania, Armenia, Macedonia, Montenegro, Russia and Tajikistan.  
Question 4  
Documents JOB/ACC/36/Rev.5:  Could Kazakhstan  please explain how it plans to reduce 
AMS from the proposed initial bound total of US$2.3 billion from the date of accession to 
the proposed Final Bound Total AMS of US$2 billion in 2021? 
a. Are there plans to eliminate certain programmes?  If so, which ones? 
b. Are there plans to reduce expenditures  under certain programmes?  If so, which 
ones? 
Kazakhstan's latest revised proposal contai ns the following commitment:  "From the 
date of Kazakhstan's accession through 31 De cember 2020, the sum of product-specific 
AMS will not exceed 50% of the total AMS commitment level."  In 2012 the sum of 
Kazakhstan's product-specific AMS was a pproximately US$2.473 billion.  (In the same 
year, the sum of non-product-specific AMS wa s approximately US$0.768 billion, which is 
below the proposed de minimis  threshold of 8.5%).
2  In other words, in 2012 the sum of 
product-specific AMS accounted for more th an 100% of Kazakhstan's proposed initial 
bound total AMS.  Could Kazakhstan please  explain how it intends to modify the 
structure of its agricultural support prog rammes to meet this proposed commitment? 
                                               
2 As reported in Supporting Table DS:4 of document WT/ACC/SPEC/KAZ/6/Rev.12. WT/ACC/SPEC/KAZ/6/Rev.12/Add.1 
 
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  a. Are there plans to reduce the scope of  or eliminate certain product-specific 
programmes?  If so, which ones? 
b. Are there plans to increase the scope of  existing non-product-specific programmes 
or to introduce new programmes of this nature? 
Answer:  
First, the reduction of AMS from initial to the final bound level will be made through cuts of 
spending under the product-specific support.   
Second, the sum of product-specific AMS is based on market price support programmes involving 
state procurement of agricultural products directly from agricultural producers.  Therefore, to meet 
the proposed commitment, Kazakhstan is planning to introduce changes into the state procurements in the way that the use of such pr ocurements will be mini mal and will not exceed 
total product-specific AMS threshold of 50%.  
Third, Kazakhstan is planning to increase expenditures under existing non-product-specific 
programmes throughout the period of 2014-2020.  It is expected that the sum of such support will 
double from its current volume and according to forecast will exceed de minimis  threshold of 
8.5%.  Therefore, Kazakhstan expects that another 50% share of the total AMS commitment level will be fully utilized during the requested tran sition period.  Starting from 2020, the sum of 
non-product-specific support is expected to be below de minimis  limit.  
Question 5  We note the OECD's Review of Kazakhstan's Agriculture Policies (2013) which refers to 
the decline in agriculture's share of GDP from 34% in 1990 to 5% in 2011.  
Kazakhstan's Producer Support Estimate (the PSE) averaged US$1.36 billion in 
2009-2011, one-tenth of gross receipts of ag riculture producers, and that market 
support, payments based on output and paym ents based on variable inputs accounted 
for 82% of the total PSE.  These types of su pport are considered amongst the most trade 
distorting.   
We further note, the OECD has recommended Kazakhstan needs to strengthen policies 
that support the long-term competitiveness of  the sector, in particular it highlights, 
water and land management, plant and animal health and safety systems, information, 
research, education and knowledge dissem ination.  Subject to the fundamental 
requirements, these would be considered "Green Box" programmes under WTO 
domestic support disciplines.   
However, we continue to observe Kazakh stan's policies during the Base Years 
(2010-2012) are focused primarily on produc t specific AMS.  Under the new proposal 
(JOB/ACC/36/Rev.5), Kazakhstan plans to re-orient programmes to more 
non-product-specific AMS but without any pa rticular targets on projected growth in 
Green Box spending.  We would encourage Kaza khstan to consider further how it might 
support its agriculture sector through Green Box measures.   
(i) Would Kazakhstan contemplate target s for increases in Green Box spending? 
(ii) We would ask that Kazakhstan includ e specific language in the Working Party 
Report to reflect the importance of Gr een Box use, along the following lines: 
"While recognizing the possibility of havi ng recourse to non-exempt measures 
under the WTO Agreement on Agricultur e, Kazakhstan while determining its 
support requirements and le vel of commitments, will give  particular emphasize to 
the use of measures of Annex 2 in order to achieve the desired reform objectives 
pursued under the Agribusiness 2020 plan.  The Working Party took note of this commitment." WT/ACC/SPEC/KAZ/6/Rev.12/Add.1 
 
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  Answer:  
(i) First, Kazakhstan is planning to examine best international practices on re-oriantation of 
existing support measures from Amber Box towards Green Box, as well as to introduce new Green Box support measures, which will allow Kazakhstan to address current challenges in the 
development of the agricultural sector. 
Second, in the course of implementation of the programme "Agribusiness 2020", the share of 
Green Box support in the total financing of the se ctor is planned to be increased.  The main 
emphasis will be placed on the policies supporting long-term competitiveness of the sector.  
The programme pursues the following specific objectives: - Improvement of access to key inputs and services for agricultural producers in the following 
spheres:  crop production, livestock developm ent, grain storage facilities, water supply 
services, financial services, investments projects, educational services, agricultural research 
and consulting services; 
- Improvement of phytosanitary and veterinary safety systems;   
- Development of water supply systems; 
- Enhancement of the fertilizer and grading efficiency and improvement of information 
services; 
- Development of organic farming. 
Agriculture research: The following measures are identified as key priorities for implementation: - upgrading national agricultural science system to the new international level, focusing on 
integration into the world scientific system and adequate interaction of scientific institutes 
with agricultural producers; 
- attraction of talented and skilled professionals into scientific research work; 
- modernization of agricultural scientific institutions; and, 
- increase in financing of agricultural research . Starting from 2015, it is planned to increase 
the annual funding of agricultural research to 1 percent of the GVAP, in 2011 this figure 
made 0.1%. It is expected that by 2020 the share of spending for research and 
development (R&D) will be increased up to 2% of GVAP. 
Water supply systems: As regards to development of water supply syst ems, in order to implement the development 
programme of distant livestock farming, the pastur es will be provided wi th watering sources. 
Furthermore, due to drought risk, land users and livestock producers heavily depend on artificial 
water systems. In order to solve the existing pr oblems, the programme envisages construction of 
irrigation systems for distant livestock farming. In particular, the following measures are expected 
to be carried out: 
- development of the legal framework on use of water supply systems for distant livestock 
farming; 
- examination of hydro-geological and soil conditions of the relevant pastures; and, 
- construction of water supply systems for distant farming. 
(ii) Kazakhstan is ready to undertake the pr oposed commitment language with the following 
changes: 
"While recognizing the possibility of having reco urse to the non-exempt measures under the WTO 
Agreement on Agriculture, Kazakhstan while determining its support requirements and level of commitments, will would give place particular emphasis to on the use of measures of Annex 2  in 
order to  that could  achieve the desired reform objectives pursued under the Agribusiness 2020 
plan b y  K a z a k h s t a n  i n  t h e  field of agriculture .  The Working Party took note of this 
commitment ." WT/ACC/SPEC/KAZ/6/Rev.12/Add.1 
 
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  Question 6  
We welcome Kazakhstan's revised proposal on  domestic support and export subsidies 
(JOB/ACC/36/Rev.5).  We consider this prop osal continues to improve of Kazakhstan's 
previous proposals.  We note the proposal to reduce total AMS from US$2.3 billion to 
US$2.0 billion during the transition  period to 31 December 2020.   
- On what basis did Kazakhstan reduce its AMS by 0.3 billion, to US$2 billion?  Which 
specific programmes would be reduced/eliminated in order to fulfil this reduction?  
We understand under the Agribusiness 2020  plan US$21 billion is planned to be 
spent over eight years, this includes 80%  from the national budget, this would 
equate to approximately, US$2.1 billion per annum  in total for all programmes 
(including Green Box).  How does this reconcile with the US$2 billion FBT AMS? 
Answer:  
Kazakhstan would like to note that US$21 billion, which is planned to be spent over 8 years in total 
for all programmes, will not be allocated in equal annual installments, and therefore annual spending will vary from one year to another.  For example, it is expected that in 2020 budget 
spending in total financing of the sector will be equal to approximately US$3 billion and the share 
o f  A m b e r  B o x  s p e n d i n g  w i l l  b e  l a r g e r  t h a n  o f  G r e e n  B o x .   D u e  t o  t h i s ,  K a z a k h s t a n  r e q u e s t s  
US$2 billion FBT AMS. 
Question 7  
We note that under the new proposal (JOB /ACC/36/Rev.5) that product-specific AMS 
would not exceed 50% of the total AMS.   In 2012, product specific AMS was 
US$2.4 billion whereas non product- specific AMS was US$0.7 billion. 
- Grateful if Kazakhstan could explain how it intends to transform its spending in 
order to meet this target, which produc t specific programmes would be reduced, 
which non-product specific pr ogrammes would be increased? 
Answer:  
First, the reduction of AMS from initial to the final bound level will be made through cuts of 
spending under the product-specific support.   
Second, the sum of product-specific AMS is based on market price support programmes involving 
state procurement of agricultural products directly from agricultural producers.  Therefore, to meet 
the proposed commitment, Kazakhstan is planning to introduce changes into the state procurements in the way that the use of such pr ocurements will be mini mal and will not exceed 
total product-specific AMS threshold of 50%.  
Third, Kazakhstan is planning to increase expenditures under existing non-product-specific 
programmes throughout the period of 2014-2020.  It is expected that the sum of such support will 
double from its current volume and according to forecast will exceed de minimis  threshold of 
8.5%.  Therefore, Kazakhstan expects that another 50% share of the total AMS commitment level 
will be fully utilized during the requested tran sition period. Starting from 2020, the sum of 
non-product-specific support is expected to be below de minimis  limit. 
 
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