12-3573 JOB/ACC/31                   4 July 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 
  
 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 
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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) had estab lished a requirement for subsurface users to 
use domestically produced goods and services provi ded 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.  A ccording to the Article 78 of the Law No. 291-I, 
a tender organizer granted a putative 20 percent reduc tion in the price of any bid submitted by local 
producers of goods2 and services.  Tender procedures had to ta ke place in Kazakhstan.  Both national 
and 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. 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, wh ich remained subject to the payment of VAT .  
                                                      
 1 The term "Services" includes both  services and works as those te rms are used in Law No. 291-I. 
2 In accordance with subparagraph 59) of Article 1 of Law No. 291-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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  3. In accordance with Article 50 of the Law Law No. 291-I, the tender offers for obtaining rights 
to use subsoil for exploration, extracti on, combined exploration and extraction, inter alia,  had to 
contain the following proposals:  (i) obligations regarding Kazakhstani cont ent in personnel, which 
had to increase to the extent of implementation of tr ainings thereof; (ii) obligations 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.  
4. 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 Kaza khstan on technical regulations.  Currently, 
204 contracts on crude hydrocarbons had been signed , which contained commitments on the part of 
investors to give preferences to local goods and services.  Among these contracts, 12 (5.9 per cent) 
had been concluded without specifying any partic ular percentage terms and 192 (94.1 per cent)  
contracts specified percentage terms. 
5. 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 
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. 
6. Some Members of the Working Party considered the requirement to use domestically 
produced products in the oil sector inconsistent with the WTO TRIMs Agreement.  These Members of 
the Working Party added that this requirement also  appeared to constitute prohibited export subsidies 
under Article 3.1 of the WTO SCM Agreement.  These Members of the Working Party asked 
Kazakhstan to provide further justification for th is measure, as well as to present a programme for 
bringing existing legislation, in particular th e local content provisions of Law No. 291-I, into JOB/ACC/31 
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  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 of the Working Party sought a 
commitment from Kazakhstan that, from the date of  WTO accession, it would not maintain measures 
that would be in conflict with the WTO TRIMs Agreement. 
7. 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 rele vant national legislation.  In Kazakhstan, in accordance with the 
"Rules on Concluding the Agreement on Industria l Assembly of Motor Vehicles approved by 
Order of the Deputy Prime Minister and Minister  of Industry and Trade", No. 113 of 11 June 2010 
(hereinafter:  Order No. 113), in order to opera te under the industrial assembly regime and be 
qualified for preferential tariffs or tariff exempti ons for imports of parts and components used in 
assembling of motor vehicles, juridical pers ons had to meet the following conditions: 
 (1) a planned production capacity of not l ess than 25,000 units per year and, certain 
production activities taking place in Kaza khstan (e.g., stamping and painting); 
 (2) to have productive assets of at least 2 billion tenge as of the agreement signing date;  
 (3) to have an obligation in a period not exceeding 84 months from signing date of the 
agreement: 
  - to launch the industrial assembly of at least one model of the motor vehicles 
  of heading 8703 HS CU; 
  - to import car parts originating from countries not party to the Customs Union 
   under the positions of the Unified Cust oms 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, taking into  
   account the cost of the body, being classified in heading 8707 HS CU. 
8. 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, specialized in assemb ly of agricultural machinery, "SAUR" JSC, 
"SaryarkaAvtoProm" LLP and "AziaAvto" JSC, specialized in assembly of automobiles.  
The agreements were signed in 2010 for a term of 8 years with the possibility of further extension.  
9. [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,  JOB/ACC/31 
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  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 app lied under Law No. 291-I ,  as described in paragraphs [1-4] 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 [7-9], 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 
confirmed that all WTO-inconsistent measures app lied pursuant to Law No. 291-I and Order No. 113, 
including requirements for preferential tariffs or tariff exemptions, would be eliminated by [xxxx].  
The representative of Kazakhstan confirmed that K azakhstan would engage in  consultations with 
interested WTO Members no later than 1 July 2016 regarding WTO consistent measures that could be 
applied and notify WTO Members of any measures pl anned to replace WTO-inconsistent measures at 
least six months prior to the adoption of such ne w measures.  The representative of Kazakhstan also 
confirmed that from the date of accession, Kazakhs tan would not conclude any new agreements or 
contracts with investors in any sector that  contained provisions in consistent with the 
WTO Agreement, including the WTO Agreement on Trade-Related Investment Measures.  
The Working Party took no te of these commitments.]  
 
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