RESTRICTED  
  
WT/ACC/SPEC/KAZ/6/Rev.9/Add.1  
 
13 May 2013  
(13-2475)  Page: 1/4  
Working Party on the  
Accession of Kazakhstan  Original: English  
 
ACCESSION OF KAZAKHSTAN 
ADDITIONAL QUESTIONS AND REPLIES 
Addendum 
 The following submission, dated 6 May 2013, is being circulated at the request of the 
Delegation of the Republic of Kazakhstan. 
 
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 WT/ACC/SPEC/KAZ/6/Rev.9/Add.1 
 
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  Question 1 
In response to the answer given to Question 14 of WT/ACC/SPEC/KAZ/6/Rev.8/Add.1 
regarding the creation of public stockholdi ng for food security purposes, Kazakhstan 
stated that " the Government annually procures wheat from agricultural producers to the 
state grain reserve in order to  implement its annual renewal".   
 
The italicized text above contradicts our unde rstanding based on bilateral consultations.  
We had understood that reserves are not ne cessarily renewed or allocated annually.  
Therefore, we request some further clarifications.    - Can Kazakhstan please confirm wh ether the Law No. 143 "On Grain" of 
19 January 2001 is implemented in an identical manner to what is described?  
In other words, can Kazakhstan please confirm that 500,000 tonnes of wheat are 
actually procured annually and solel y for purposes of food security?  
 
Answer: 
Kazakhstan confirms that the Law No. 143 "On Gr ain" of 19 January 2001 is implemented in an 
identical manner to what was described in the previous document. In particular, Kazakhstan 
confirms that State reserve for food security purp oses is renewed on an annual basis in the volume 
of 500,000 metric tonnes of wheat, which, acco rding to the Government Resolution No. 34 
"On Approval of Volumes for the State Grain Resour ces" of 13 January 2006, is procured solely for 
food security purposes.  
 Question 2 
Also with regard to the response to Ques tion 14 of WT/ACC/SPEC/KAZ/6/Rev.8/Add.1, 
a Member noted that wheat in state reserves is not purchased directly from producers, 
but rather transferred from state resources . It is also noted in the response in 
paragraph 4 of the response to Question 4 by another Member that "procurements for… 
the state reserve are carried out through state resources".  Further, in the consolidated document (JOB/ACC/12/Rev.4) on page 19 no tes the that "the difference between the 
purchase price of wheat procured into th e State reserve and the external price was 
calculated in Supporting Table DS:5".   
- Does the process of determining purchase prices described on page 19 relate only 
to the procurement price for State resources (i.e., price support)? 
 
- If so, how is the procurement price for State reserves determined? 
- Please explain whether the Food Cont ract Corporation (FCC) procures wheat 
 directly from producers for the State Grain reserves. 
- If so, what price do these producers receive?  
- If not, does this imply wheat procur ed for State resources are purchased by 
FCC at two different prices?  
- Noting Supporting Table DS:5, there are two procurement prices which can differ 
 from one another and from year to year .  Assuming producers can sell at either 
 price, what incentive is provided to  producers to sell at the lower price? 
- For example, if there is a mandate to  purchase 500,000 tonnes every year for 
food security and the procurement pric e is below the general support price 
(i.e., 2007) then why would a producer be  willing to sell at the lower price?  
Answer: 
As specified in the document WT/ACC/SPEC/KAZ/6/Rev.8/Add.1, grain acquired for State reserve 
in the volume of 500,000 MT is initially transf erred to State resources and then from State WT/ACC/SPEC/KAZ/6/Rev.9/Add.1 
 
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  resources to State reserve. As such, State resources represent "central pool" through which the 
Government acquires wheat for State reserve. Th erefore, the process of determining purchase 
price described for State resources is identical with regard to procurement for State reserve.   
The FCC procures wheat for State reserve directly from producers via State resources. Therefore, 
wheat is procured at one price, i.e. the price for State resources is the price for State reserve. As indicated in previous document, producers sell wheat to State resources/reserve at price 
established by the Government based on the prop osal from KazAgroMarketing. KazAgroMarketing, 
in its turn, determines purchase price on the basis of current market price and cost of production analysis and evaluation of producers' margin.   
As reported in the Supporting Table DS:5, ther e are two types of wheat procurement: one is 
procurement for "State reserve for food security purposes" and other "procurement to support agricultural producers". Assuming that procurement price for State reserve can be lower than 
procurement price to support agricultural producers, the Government provides advance payments 
scheme in relation to the procurement for State re serve. In particular, the advance payments are 
available during the spring/summer period for thos e producers, who are willing to sell their future 
harvest to State reserve for food security purpos es. Such incentive payments are used by farmers 
in producing their future harvest. The Government does not provide advance payments scheme with regard to the procurement to support agricultural producers.   
Question 3 
Noting the explanation provided by Kaza khstan in responses to Question 14 and 
Question 4 of WT/ACC/SPEC/KAZ/6/Rev.8/Add. 1, a Member understands that the state 
reserve disposes of stocks ei ther for food security purposes OR to the State Grain 
Resources free of charge.  Kazakhstan goes on  to state that the domestic selling prices 
for the stocks in the state resources (w here state reserves are disposed of) are 
determined by the State Commission for Econ omic Modernization and normally is less 
than current domestic market prices fo r the product and quality in question.  
This Member notes that paragraph 3 of A nnex 2 of the WTO Agreement on Agriculture 
states "sales from food security stocks shall be made at no less than the current 
domestic market price for the product and quality in question". 
- Kazakhstan's responses appear to be of  clear contradiction of paragraph 3 of 
 Annex 2 of the Agreement on Ag riculture. Please explain.  
In response to Question 14 of WT/ACC/SPEC /KAZ/6/Rev.8/Add.1, Kazakhstan states it 
sets the selling price for its exports based on  the domestic price plus transportation 
costs. However, the FCC is eligible to rece ive export subsidies. From our perspective, 
this is basically stating that the government writes itself a check to subsidize its exports 
of public stocks. This means that FCC can sell exports at international prices only 
because of the subsidy (on transportation cost s). This appears to have implications on 
Kazakhstan's ability to claim compliance with the provision of "sellin g at current market 
prices"?   
- If Kazakhstan's previous response was a ty po (i.e., should have read "no less than 
current market prices), please provide a more detailed explanation of how exactly 
the State Commission for Economic Modern ization determines the selling price?  
Please indicate how often this selling pric e is adjusted, what specific factors are 
used to determine the selling price, and why the selling price is not based on a 
more effective means of price di scovery (i.e., auctions, etc…). 
Answer: 
Kazakhstan confirms that the domestic selling price for the stocks in the state resources (where 
State reserve are disposed of) could be le ss than current domestic market price.  
 
Kazakhstan understands that its national food security program involving state procurement of grain and release of such at administered prices does not meet criteria of paragraph 3 of Annex 2 
(Green Box) of the WTO Agreement on Agriculture. The support is thus was included to the AMS WT/ACC/SPEC/KAZ/6/Rev.9/Add.1 
 
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  calculations in the ST DS:5 (Amber box) and is calculated using the difference between the 
purchase price and external reference price (market price support).  
 
Kazakhstan would like to clarify that budgetary outlays associated with accumulation of State 
reserve and storage costs (which are otherwise required to be excluded from the AMS calculations 
as per paragraph 8 of Annex 3)  are reported in the ST DS:1 (Green Box) for transparency 
purposes only. At the request of the WTO members such expenses could be excluded from the ST 
DS:1.  
 There was no typo in the previous response given by Kazakhstan. 
Question 4 
A Member notes that in Kazakhstan's response to Question 14 of 
WT/ACC/SPEC/KAZ/6/Rev.8/Add.1 that State gr ain reserves and State grain resources 
are both maintained by the FCC and the di sposal of state reserves is transacted 
automatically on a free of charge basis. This indicates that both stocks are held together 
and there is no physical difference or separation. 
 - Please confirm this understanding. 
A Member notes that these "on paper only" tr ansactions do not constitute the disposal 
of public stocks for food security purpose s by the government, but rather a transfer 
from one account to another (and at no cost).   These stocks that were acquired for state 
reserves (food security purposes) are co mingled with stocks procured for other 
purposes and become untraceable by the Gove rnment of Kazakhstan. These stocks can 
then be disposed of by the government for fr ee in the form of foreign food aid.   
- This appears to be a direct contradi ction to paragraph 3 of Annex 2 of the 
Agreement on Agriculture that states st ocks must be disposed of at current 
market prices and in a financially transparent manner. 
Answer: 
Kazakhstan confirms that both stocks are held together and there is no physical difference or 
separation between such stocks. For further information, please see answer to Question 3.   
Question 5 
A  M e m b e r  c o n t i n u e s  t o  b e l i e v e  t h a t  K a z a k h s t a n  s h o u l d  a c c e d e  t o  t h e  W T O  a s  a  
developed country.  With that in mind, foot note 5 of paragraph 3 of Annex 2 of the 
Agreement on Agricultures states that only  developing countries may notify a measure 
as public stockholding for food security purposes if the procurement price is at an 
administered price (i.e., not current market prices).   
- Could Kazakhstan please provide some clarif ication as to its position with regard to 
this issue? 
Answer: 
Budgetary outlays associated with accumulation of State reserve and storage costs (which are 
otherwise required to be excluded from the AMS calculations as per paragraph 8 of Annex 3)  are 
notified in the ST DS:1 for transparency purpos es only. At the request of the WTO members such 
expenses could be excluded from the ST DS: 1.   
 
 
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