WORLD TRADE  
ORGANIZATION  WT/TPR/M/170 
13 December 2006 
 (06-5956) 
Trade Policy Review Body 
9 and 11 October 2006  
 
 
 
TRADE POLICY REVIEW 
 
KYRGYZ REPUBLIC 
 
Minutes of Meeting  
 
Chairperson:  H.E. Mrs. Claudia Uribe (Colombia)  
 
   Page 
 
I.
 INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE REPRESENTATIVE OF THE KYRGYZ 
REPUBLIC 4 
III. STATEMENT BY THE DISCUSSANT 6  
IV. STATEMENTS BY MEMBERS 8  
V. REPLIES BY THE REPRESENTATIVE OF THE KYRGYZ REPUBLIC AND 
ADDITIONAL COMMENTS 13  
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 20  
 
 
Note:   Advance written questions by WTO Me mbers and the replies provided by the Kyrgyz 
Republic are reproduced in document WT/TPR/M /170/Add.1 and will be available online at 
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm. WT/TPR/M/170 
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The first Trade Policy Review of the Kyrgyz Republic was held on 9 and 11 October 2006.  
The Chairperson H.E. Mrs. Claudia Uribe (Colombi a) welcomed the Kyrgyz delegation headed by 
Mr. Sabyrbek Moldokulov (First Deputy Minister-p ermanent Secretary, Ministry of Industry, Trade 
and Tourism) and the discussant H.E. Dr. Manzoor  Ahmad (Pakistan), who would speak in his 
personal capacity.  In accordance with established pro cedures, he had made available in advance an 
outline of the main issues he in tended to raise (WT/TPR/D/146). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
meeting’s procedures.  The Report by the Kyrgyz Republic was contained in document 
WT/TPR/G/170 and that of the Secretariat in document WT/TPR/S/170.  As indicated in 
WT/TPR/6/Rev.1, the Member under review should provide written answers, by the start of the 
meeting, to questions submitted at least two week s in advance, and to the extent possible to 
subsequent questions before the second session (WT/ TPR/6/Rev.1).  Answers to remaining questions 
should be provided in writing within one month. 
3. Switzerland, Japan, and the United States had s ubmitted written questions at least two weeks 
in advance and these had been transmitted to the Ky rgyz delegation.  Copies of these questions and of 
the answers provided were available at the meeti ng.  Other advanced written questions submitted by 
the European Communities;  Canada;  Turkey;  Brazil; Colombia;  and Singapore had also been 
relayed to the Kyrgyz delegation, and  copies of these questions and of the answers were also made 
available at the meeting.  All advance questions a nd the replies provided by the Kyrgyz delegation are 
contained in WT/TPR/M/170/Add.1. 
4. The Chairperson noted the impressive progress since the Kyrgyz Republic's economic and 
political transition.  GDP had grown almost unabated in recent years, averaging 4% since 2000.  A broad range of reforms, including fa rm privatization, financial sector liberalization, price deregulation 
and significant privatization, had supported the development of a market economy and helped the 
Kyrgyz Republic overcome a number of setbacks, such as the Asian and Russian economic crises of 
the late 1990s.  In particular, macroeconomic, trad e, and other structural reforms introduced in the 
early 1990s had been to some extent locked in  by its WTO accession in 1998, although structural 
reforms had remained incomplete partly due to impl ementation constraints.  Both reports underlined 
the importance of foreign trade to the Kyrgyz economy, with exports and imports accounting for 28% and 46% of GDP, respectively, in 2005.  Gold r eceipts made up around 40% of exports but with gold 
production trending downwards, caution was needed as export diversification was crucial for lasting 
growth and poverty reduction.  Continuing structural  reforms should help diversify the economy into 
manufacturing and services and decrease its rather vul nerable reliance on gold, and to a lesser extent, 
on agriculture. 
5. The reports also revealed that the Kyrgyz Republic had one of the region's most open trade 
and investment regimes, based on the Government's  belief that such liberalization would improve 
economic efficiency and promote export diversifica tion.  Significant liberalization had occurred in 
several areas, notably in tariffs, non-tariff measur es and government procurement, and progress made 
in standards and privatization.  The reports d escribed the Government’s pursuit of regional trade 
arrangements in the form of bilateral and regiona l FTAs mainly with former Soviet states, which 
raised questions about their transparency.  They al so showed that the improved law on investment had 
strengthened the investment regime, which, together  with an enhanced business climate and restored 
confidence in public institutions, would be necessary for sustainable growth. 
 WT/TPR/M/170 
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF THE KYRGYZ 
REPUBLIC 
6. The representative of the Kyrgyz Republic
 stated that WTO accession in December 1998 had 
directly contributed to the economy’s reforms and flexible reorientation.  The macroeconomy had 
been generally stable during the review period.  From 1998 to 2005, annual GDP averaged 3.7% and 
inflation fell from 16.8% to 4.9%.  State budget re venue increased from 18% to 20.3% of GDP.  It 
had increased over threefold in nominal terms.  The budget deficit was cut from 9.5% in 1998 to 4.4% 
of GDP in 2005.  Foreign trade turnover rose from Soms 1.075 billion in 1998 to 1.8 billion in 2005.  At the same time, the industrial sector’s GDP sh are fell from 25% to 16%.  This negative result 
largely reflected the fact that some large enterpri ses, which were subject to risks, for instance gold 
mining,  which accounted for over 40% of industrial produc tion and 30% of exports, had also stopped 
production periodically due to technical breakdowns.  Successful reforms in agriculture, generation of 
a land market, credit development, introduction of high technologies, and increased crop acreage had 
helped provide stability;  on average, annual growth was 3.4%.  Foreign direct investment had risen 
substantially to US$210 million in 2005, main ly from Germany, the United Kingdom, Canada, 
Turkey, the United States, Cyprus and Portugal.   
7. Political events in March 2005 had affected th e economy.  Nevertheless, the Government had 
taken measures to meet the State’s social pledges.  Real GDP growth for the first eight months of 2006 was 3.5% (6.6% without gold mining).  In flation was 1.8% in December 2005, and the 
consumer price index remained lower than in neig hbouring countries.  In January-July 2006, the state 
budget revenue was Soms 12.1 billion, or 23.8% of  GDP.  During the first eight months of 2006, 
industrial growth declined due to gold extraction problems;  excluding gold, where there were some 
extraction problems, industrial production grew by 9%.  To help develop national independent 
industries, seven new enterprises were introduced, an d are expected to increase growth by end 2006.  
Dynamic real growth of 1.8% had occurred in the services sector, due especially to the construction 
boom.  During the first six months of 2006, foreign direct investment was US$139.2 million, twice as 
much as in the previous year.  Foreign trade tu rnover in 2006 amounted to US$1.352 billion and had 
developed significantly since WTO accession.  The Kyrgyz Republic now traded with 105 states, 
90 of which were WTO Members.  Kyrgyz exports received MFN treatment in all WTO Members.  The switching in source of imported inputs and equipment from mainly CIS countries to WTO Members had provided a wider range of  choice and better quality goods.   
8. Around half of the Kyrgyz Republic’s trade turnover was with the CIS  countries and the new 
regional economic community.  Trade with these countries was free from customs duties, which 
helped Kyrgyz exports compete in CIS markets.  The Kyrgyz Republic also cooperated actively in the 
Eurasian Economic Community of Belarus, Russia,  Kazakhstan, Tajikistan, and Uzbekistan.  The 
major trading partners among its original partners  were Russia (28% of overall trade turnover), 
Kazakhstan (16%), Uzbekistan (4%), and, among WT O Members, the United Arab Emirates (10%), 
China (7%) and the United States (4%).  The Kyrgyz Republic exported mainly precious metals, 
mineral resources, fuel and energy resources, food an d agricultural products, el ectrical equipment, and 
chemical products to 72 countries.  It imported from 100 countries, mainly mineral resources (one-third of imports), chemicals, food and agriculture products, machinery and e quipment, metals, ferrous 
and non-ferrous metals, pulp and pa per products, and motor vehicles.   The Kyrgyz Republic had a 
negative trade balance in services:  this decr eased from US$170 million in 1998 to US$49 million in 
2005, during which time service exports rose fourfold to US$255 million.   
9. Since 1998, the Kyrgyz Republic had liberalized its foreign trade regime in accordance with 
WTO accession commitments.  It did not apply customs limitations or duties and other restrictions on 
exports and imports.  State and private companie s could undertake import and export activities, except 
for certain goods that were subject to export or import licensing.  The overa ll average customs rate 
was 4.8% and a zero customs rate covered 46.6% of all tariff lines.  Applied tariff rates were below 
bound levels.  The average bound rate for agricultura l products was 12.2% and the applied rate was  WT/TPR/M/170 
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8.1%.  For industrial goods, the rates were 6.5% and 4.1%, respectively.  Export production depended 
directly on imported inputs.   Licensing was not directed at limiting exports or imports, but to secure 
national security.  The Kyrgyz Republic had not u sed anti-dumping measures and did not limit access 
to its market.  The tourism sector, a state prio rity, was expected to grow to US$100 million by 
end 2006.  IPR protection assisted Kyrgyz arts a nd innovations.  Basic IPR documents were adopted 
in 1992 while acceding to the WTO.   Since accession, the Kyrgyz Republic had adopted a revised 
Customs Code and Law on Investment, and was work ing on decentralization and privatization.  
Parliament had approved the privatization progra mme for 2006 and 2007 in June 2006.  To develop 
competition and business activity, laws had been adopt ed to eliminate barriers to developing private 
enterprises.  Procedures for issuing necessary documen ts were simplified, and the number of licensed 
activities was reduced from 100 to 30 types.  Reduci ng income tax and profit tax rates to 10%  had 
stimulated medium and small size enterprises; their activities, number, and employment had risen by 4%, 7.1% and 5.5%, respectively. 
10. Under its national strategy to fight corruption through law enforcement and other measures, 
the Kyrgyz Republic had adopted a number of la ws and regulations and created a national anti-
corruption agency.  This had reduced  corruption levels.  In 2005, salaries were raised by 50% for law 
enforcement officials, by 15%, in education and hea lth and by 30% in culture.  Social support to low 
income families had also increased.  The Kyrgyz Republic supported the launch of the new round of 
multilateral negotiations.  The priority objective of the Kyrgyz Republic was to be competitive and 
better integrated into the world economy, with high er living standards based on trade and investment 
that would contribute to sustainable growth.  It s WTO membership was also a priority, and the 
Kyrgyz Government was working hard to implement its accession commitments. WT/TPR/M/170 
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III. STATEMENT BY THE DISCUSSANT 
11. The discussant
 (H.E. Dr. Manzoor Ahmad) structured his comments under the three topics of 
the economic environment, trade policies, and sectoral policies. 
12. On the economic environment, the discussant not ed that as the first CIS country to accede to 
the WTO, in 1998, the Kyrgyz Republic had experi enced a mainly stable macroeconomy, except in 
2002 and 2005.  GDP growth had averaged about 4% annually, inflation had fallen from 18.7% to 
5.7%, state revenue had increased from 18% of GD P to 20.3%, and the budget deficit had decreased 
from 9.4% of GDP to 4.4%.  The national curre ncy (Som), which had depreciated since its 
introduction in 1993, had began to appreciate against the U.S. dollar from 2001.  During trade and other structural reforms, which commenced in 1991,  the country had faced severe hardships;  real 
GDP between 1991 and 1995 has fallen on average by almost 50%.  Despite some "stop go" policy 
measures, the trend had been to continue reform s, with due dividends occurring since 1996 through 
improved growth.  WTO accession had locked in earlier reforms, initiated since 1993, and had required new WTO obligations to be implemented rapidly. 
13. Some salient features of reforms were improve ments in the budgetary system, introduction of 
mid-term forecasting of financing requirements, ex panding responsibilities and control of ministries, 
agencies, and regions in public expenditure manage ment, and achieving greater transparency in the 
use of budgetary funds.  Improving tax revenue co llection, which rose from 11.7% of GDP in 2000 to 
20.2% in 2005, while controlling expenditure also helped the reform process. A recent IMF report had 
highly commended the Kyrgyz Republic for succe ssfully implementing all quantitative performance 
criteria for end 2005.  In order to accelerate soci al, political, and economic reforms, the Government 
had adopted a National Poverty Reduction Strate gy (NPRS) in 2003, as well as the IMF 
Memorandum on Economic Policy for 2005-2007. 
14. Despite these positive signs, a number of factor s needed to be continuously monitored and 
improved.  Inflation, although relatively low, was rising.  The shadow economy was large, estimated 
at around one half of the GDP.  External public debt  of US$2 billion in 2005 had fallen to 82% of 
GDP but remained a heavy burden, and opportuniti es for external financing of large investment 
projects had to be balanced against the need to avoid another cycle of excessive borrowing.  The 
current policy of not taking on loans with a gran t element of below 45% protected against excessive 
borrowing. According to the Economist Intelligence Unit, reforms were needed to improve the tax 
system, strengthen corporate governance, fight corrup tion, and ease the level of regulation, in order to 
mobilize the domestic and foreign investment required. 
15. The Kyrgyz Republic had one of the most open tr ade and investment regimes in the region.  
The 2006 Index of Economic Freedom categorized it as a mostly free economy, ranking overall 71 out of 157 countries, the same as Thailand and just be low Malaysia.  Liberalization and diversification 
has been fast paced since WTO accession.  The simple average applied MFN tariff rate had been 
almost halved since 1999, from 8.7% to 4.9%.  Tari ff rates exceeded 10% only for 7% of lines, with 
few tariff peaks and limited tariff escalation.  Perh aps the only negative aspect was that some applied 
tariff rates exceeded bound levels.  Despite low tariffs , smuggling was said to be substantial, possibly 
because of cumbersome customs procedures.  An automated customs processing system was already 
in progress and should considerably reduce proces sing times.  A comprehensive plan to tackle 
corruption, adopted in 2004, was a move in the right direction. 
16. The country was excessively dependant on prim ary products, which accounted for some three 
quarters of its exports.  Gold in particular account ed for over one third of exports.  Other exports 
included oil and oil products, non- metallic mineral products, cotton, electricity, machinery, sugar, 
fruit, and vegetables. Major imports included fuels,  machinery, transport equipment, iron and steel 
and pharmaceuticals.  The direction of trade had cha nged substantially in the last five years.  The 
Kyrgyz Republic exported to over 72 countries, and while exports to  CIS countries still accounted for  WT/TPR/M/170 
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about 45% of total exports, those to the EU 25 had fallen from 37% to 3.7% in 2005.  The UAE 
market now accounted for 25% of Kyrgyz exports, mo stly of gold.  Similarly, exports to Switzerland 
had increased from 6.8% to 9.7%, primarily because of  gold.  The Kyrgyz Republic was also open to 
business with almost all regions, and imports came from over 100 countries.  Almost one third of imports consisted of minerals, fuel and energy res ources, chemicals, cars, electrical items, etc. Being 
land locked, its international trade competitiven ess depended upon neighbour ing transit facilities, 
especially in Uzbekistan and Kazakhstan.  Its expor ts sometimes faced considerable impediments in 
the form of high entry and transit fees for Kyrg yz trucks.  Services trade was low but increasing 
rapidly. Since 1998, services exports had risen fo ur-fold to US$255.5 million, and imports had 
increased by 69% to US$305 million.  The key servi ce sectors were wholesale and retail trade, and 
transport and communications. 
17. The Kyrgyz Republic maintained no foreign in vestment restrictions.  According to the 
government report, foreign investors could own 100% of property in all sectors.  However, according 
to the Economist Intelligence Unit, legal entities and foreign corporations could not purchase land.  
Investors were guaranteed freedom to repatriate cap ital, dividends, and revenue .  In addition, foreign 
employees of overseas enterprises were automatically granted visas, work, and residence permits.   
18. The Government was continuing to develop m odern intellectual property protection. The 
Kyrgyz Republic had acceded to the World Intell ectual Property Organization (WIPO), in 1994, and 
to other major related international treaties. Howe ver, some independent observers believed that the 
legal system did not protect private property sufficiently. 
19. The composition of the Kyrgyz Republic’s GDP had changed substantially since its transition 
from a centrally planned to a market-based economy.  The services sector now accounted for over half 
of GDP, while agriculture’s share had fallen from about 45% to 34%.  The share of manufacturing 
varied from 12% to 19%, depending on gold processi ng levels.  Except for gol d, industrial production 
mainly involved low value-added activities.  Howeve r, a new industrial development programme was 
being developed to focus on achieving sustainable annual growth of 5-7% th rough diversification and 
increased domestic processing.  Agriculture policy was based on raising rural incomes and achieving 
food security by 2010.  This was being achieve d through market-based reforms, including price 
deregulation and removal of subsidies.  Howe ver, poorly developed marketing chains and 
infrastructure, farmers’ limited access to credit,  and low mechanization kept productivity low by 
international standards.  Moreover, agri-processing remained weak and only 15% of farm output was 
processed.  Limited availability of arable land was another constraining factor  but irrigated land was 
programmed to rise by 10% by 2010 th rough better use of water resources. 
20. The energy sector, which accounted for about 5% of GDP, was still dominated by state-
owned entities. While the Kyrgyz Republic had larg e energy resources, especially in hydro, it relied 
on imported oil, gas and coal.  The Government was attempting to attract foreign investment in hydro-
generation to boost electricity exports, presently the second largest export.   
21. The Kyrgyz Republic had made comprehensive liberalizing commitments for services during 
WTO accession.  Bank privatization was fairly ad vanced.  Foreign bank ownership was relatively 
high, at over 60%.  Similarly the telecommunications  market had been liberalized in line with WTO 
commitments when Kyrgyztelecom’s monopoly on international and long-distance calls was removed.  However, it was not yet fully privatized.  Transport services, other than road, were heavily 
regulated:  the national air carrier and railways were  still state-owned;  a new national airline was, 
however, being established. 
22. Although the Kyrgyz Republic faced major challenges of high poverty rates and 
unemployment, the discussant was confident that, wi th its almost 100% literacy rate, open economy, 
rich mineral and energy resources, lots of tourism potential and fast paced reforms, it would soon be 
able to overcome them and quickly cl imb the economic development ladder. WT/TPR/M/170 
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IV. STATEMENTS BY MEMBERS 
23. Members commended the Kyrgyz Republic for being the first CIS country to accede to the 
WTO in 1998, and for its focus on meeting accession commitments.  They acknowledged that it had 
one of the most liberal trade and investment regime s in the region, and that openness together with 
structural reforms had contributed to its impr essive economic performance, underpinned by macro-
economic stability and growth.   
24. The representative of Switzerland
 referred to the priority given to the Kyrgyz Republic under 
Swiss development cooperation since 1992. It was Sw itzerland’s most important aid destination in 
Central Asia, accounting for CHF 55 million in 2005, with increasing involvement in macroeconomic 
support, infrastructure financing, private sector development and trade promotion.  The Convention 
on the Avoidance of Double Taxation (June 200 2) and the Agreement on the Promotion and 
Reciprocal Protection of Investments (Apr il 2003) provided a good framework for further 
strengthening bilateral economic relations.  Switzerland attached great importance to the further 
consolidation of the favourable Kyrgyz institu tional trade and investment framework.  While 
macroeconomic stability and the political crisis in 2005 had yielded a mixed picture, growth 
continued to be strong, based on structural reform s.  However, political uncertainties, weak public 
finances, and bottlenecks in the business climate lim ited private sector development and investment.  
Switzerland encouraged the Kyrgyz Government to strengthen public finances by completing tax 
reforms, and to improve the business climate.  
25. Through the ITC's trade promotion programme , Switzerland supported export development as 
well as the elaboration of the National Export Stra tegy formulated in 2004, which was not adopted 
due to political changes in 2005.  It also supporte d export diversification by helping agri-processing 
enterprises to raise competitiveness, tourism deve lopment by assisting the establishment of the 
Destination Marketing Organisation, and was providing assistance to improve the business 
environment. This could increase foreign investment  and strengthen the role of exports in promoting 
economic growth, employment and poverty reduction.   
26. The Kyrgyz Republic was evolving as an active Member in many areas of the current 
negotiations.  It could play a major role in co aching and advising its neighbours on WTO accession.  
Switzerland was concerned by the possible uncer tainty generated by Kyrgyz' regional trade 
agreements due to their complexity and lack of pr oper implementation.  It believed that the remaining 
natural and authorized monopolies could be reduced  and competition policy strengthened to improve 
the business environment.  
27. The representative of Japan  referred to the Kyrgyz Repub lic’s democratization and much 
earlier introduction of a market economy than other fo rmer Soviet republics.  Japan appreciated these 
efforts, but had raised a numbe r of questions, including on custom s law, the action plan on illegal 
imports, and bad loans.  Japan hoped that the Ky rgyz Republic would overcome the difficulties of 
economic reforms to become a stable  and predictable trading partner. 
28. The representative of the United States  was pleased that the Kyrgyz Republic had continued 
with economic reforms begun with independence and strengthened by WTO accession.  Recent 
noteworthy achievements included controlling infl ation, a successful privatization programme, 
currency stabilization, and significant GDP growth.  It had also made commendable efforts to diversify the economy from excessive dependence on mineral resources.  However, further steps 
could be taken to improve its trad e regime and create an open and predictable climate for foreign trade 
and investment. 
29. Foreign companies faced transparency difficulties from, for example, unpredictable 
enforcement of tax laws, uncl ear public procurement policies,  and problems with government 
inspections and licensing procedures.  The United St ates would welcome Kyrgyz efforts to make the  WT/TPR/M/170 
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procedures more transparent for foreign firms, and to  meet its accession pledge to join the Agreement 
on Government Procurement.  International organizations and businesses continue to report 
widespread corruption in the Kyrgyz Republic.  Frequent, expensive and unnecessary inspections by 
various state agencies empowered to collect on the s pot fines have been reported.  Many laws also 
contradict the 1997 basic licensing law, requiring co untless business licences and permits.  Ministries 
and agencies have broad powers over these licenses and permits, which appears to present ample 
opportunity for corruption.  The United States was in terested in hearing of any steps being taken to 
address this situation.  Doing business in the Kyrgyz  Republic was also complicated by an inefficient 
judiciary that depended excessively on executive bran ch administrative rulings and guidance.  There 
were credible complaints of judicial corruption, where gifts were necessary to secure a fair ruling.  
The United States was interested to learn about the steps being taken to strengthen judiciary 
independence and consistency.  Also, while the Kyrgyz Republic had a legislative framework for 
intellectual property protection, the United States would welcome any information on the 
implementation of enforcement provisions, particular ly with regard to judicial decisions involving 
infringement claims, reported cases of border seizu res of counterfeit and pirated goods, as well as 
prosecutions of intellectual property crime and sentences. 
30. The Kyrgyz Republic had met the threshold crite ria for participation in the United States’ 
major aid programme, the Millennium Challenge Acc ount, in November 2005.  This demonstrated its 
commitment to improving performance.  The progra m was designed to help the Kyrgyz Government 
combat corruption by addressing policy weaknesses in the judicial and law enforcement sectors.  The 
United States welcomed government efforts to c ontinue improving its trade regime, including 
implementing privatization plans (particularly in the energy and telecommunications sectors), taking 
concrete steps to reign in corruption, and bringi ng its technical regulations and SPS requirements into 
international conformity.  While much remained to  be done, the Kyrgyz Republic took seriously its 
goal of developing the economy so as to attract foreign trade and investment.   
31. The representative of the European Communities  referred to the Kyrgyz Republic's 
commitment to its development plan and active pr omotion of growth and development measures.  
GDP growth had attained an upward trend, althou gh it declined in 2005 due mainly to political 
instability.  Trade policies and measures played an  important role in ensuring continued growth, 
poverty reduction, and sustainable development.  Economic activity remained concentrated in 
agriculture, hydropower and mining, which are vulnera ble to external shocks such as adverse weather 
conditions and natural disasters.  In 2004, gold fro m the Kumtor mine accounted for 39.2% of total 
exports, a clear reflection of the Kyrgyz Republic’s dependence on a single commodity and the 
pressing need to diversify.  It was also largel y dependent on a few energy suppliers.  The EC 
understood that strategic documents for export and industrial development we re under preparation and 
requested further information on these development strategies. 
32. The Kyrgyz Republic faced challenges in  implementing its ambitious accession 
commitments.  Further efforts were required, fo r example, in customs procedures and technical 
barriers to trade.  Continued domestic reform wa s crucial to further improve the Kyrgyz trading 
environment.  Strengthening areas such as trade fa cilitation, competition policy, and private sector 
reform in transport, finance, and telecommunica tions would benefit the economy.  Reforms flanked 
by further steps to attract direct investment, including market opening to foreign service providers, would assist Kyrgyz economic development directly, and indirectly assist in further diversifying 
exports.  Further development of the procurement market would also be beneficial.  The Kyrgyz 
Republic would have to find the right balance be tween economic and social  development.  Trade 
policy should contribute to more sustainable producti on patterns.  However, restructuring would need 
to be managed carefully, focusing on decent jobs  and assisting workers during labour market 
adjustment.  Size required the Kyrgyz Republic to  pursue development through regional trade, and 
this would eventually become easier once all its  neighbours became WTO Members.  Complementary 
to the WTO, the EC and the Kyrgyz Republic were  pursuing a bilateral partnership.  Technical WT/TPR/M/170 
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Assistance was clearly need ed:  the EC was about to launch a Tr ade Needs Assessment to identify the 
main trade constraints and difficulties in implementing WTO agreements.
 
33. The representative of Canada  commended the Kyrgyz Republic on efforts to integrate its 
transitional economy into the multilateral trading sy stem.  Despite economic hardship and domestic 
crises, it had committed strongly to trade liberalization and to rules-based trade:  it was encouraged to 
continue implementing the necessary economic and struct ural reforms needed to reap the full benefits 
of the multilateral trading system.  Canada unde rstood the unique challenges this posed for the 
Kyrgyz Republic given that, except for China, its neighbours were not yet WTO members.  The overall effect of WTO membership on the econo my had been positive.  Certain economic and 
structural issues needed to be addressed to ach ieve sustainable growth from greater trade and 
investment. 
34. Encouraged by the Kyrgyz Republic’s efforts to  stabilize its economy, Canadian investment 
had risen substantially to become the fourth largest  source of foreign direct investment in 2005.  
Canadian companies had major interests in the mini ng sector.  Positive changes had been made to the 
investment regime following the 2003 Law on I nvestments, particularly guaranteeing national 
treatment to foreign investors, and the general rem oval of foreign equity limits as well as restrictions 
on investment activities.  However, a recent Kyrgyz  decree to restrict business visas for foreign 
specialists and entrepreneurs could adversely affect  foreign investment.  Canada sought clarification 
on the country’s migration policy for foreign professionals.    
35. There had been changes in the Kyrgyz Republ ic’s trade regime that bode well for an 
expanded and more diversified bilateral trade relationship.  These included further tariff 
rationalization, with the average applied MFN rate re duced;  liberalization of trade in services, such 
that they were the largest contributor to GDP; efforts to harmonize standards and SPS measures with 
international ones; and ongoing negotiations to join the plurilateral agreements on Government 
Procurement and Trade in Civil Aircraft.  Cana da urged the Kyrgyz Government to resist 
protectionism such as raising tariffs to achie ve greater economic diversity by supporting the 
development of value-added sectors.  A number of challenges, if not timely and effectively addressed, 
could seriously hinder trade a nd investment.  These including
 excessive government intervention and 
lack of transparency in busin ess licensing and registration procedur es; high corruption indicators; and 
the prevalence of a shadow economy.  The Kyrgyz  Government recognized the serious negative 
ramifications these problems had on business and investment, and was making efforts to implement strategies to deal with them.  Canada encourag ed it to adopt WTO-compliant policies that would 
allow the economy to benefit fully from the multilateral trading system.  
36. The representative of Turkey  noted the Kyrgyz Republic’s impressive progress in its 
transition from a centrally planned to a market-b ased economy since independence in 1991.  This 
included speedy implementation of political and ec onomic reforms that had brought encouraging 
results.  Successful farm privatization, financial sector liberalization and the transformation of laws 
and regulations to meet the needs of a mark et economy had significantly changed the economic 
structure.  The Kyrgyz Republic was working towa rds stronger enforcement of reforms to improve the 
economic environment;  a more favourable business cl imate with stronger legal institutions, reduced 
red tape, easier administrative procedures, and less state ownership would attract greater foreign investment and improve Kyrgyz competitiveness.  The Kyrgyz Republic had become a staunch 
supporter of the multilateral trading system.  It had bound all tariffs, generally  at a 10% ceiling rate, 
and other import charges and agricultural export subs idies at zero.  Once its technical capacity had 
been developed further, it would integrate more d eeply into the world economy.  Bilateral economic 
and trade relations had increased following a declin e in 1998-99 due to the Asian Crisis.  Turkish 
investors accounted for 12% of Kyrgyz FDI in 2006.
 
37. The representative of Brazil  noted that recent trade policy developments and practices 
reflected the Kyrgyz Republic’s WTO accession.  In  pursuing more integration into the world  WT/TPR/M/170 
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economy it had not forgotten the least developed c ountries and provided them with tariff preference 
margins of 100%;  Brazil hoped that it might extend th is preferential system to developing countries.  
Agriculture still contributed over 30% of Kyrgyz GDP .  The country aimed to raise rural incomes and 
achieve food security by 2010.  It was important  that government policy measures to achieve these 
goals did not encourage trade distorting practices th at artificially raised food prices or protected 
against imports from other WTO members.  The a doption of the Eurasian tariff structure could 
adversely affect Kyrgyz multilateral commitments.  The list of sensitive goods it submitted under the 
EAEC included many products in which Brazil was extremely compe titive, such as poultry, coffee, 
crude soybean oils, meat, sugar, paper and paper pr oduct fabrics, iron and steel, and Brazil wished to 
see greater liberalization in these products.  The Ky rgyz Republic had made considerable efforts to 
adopt international intellectual property protection,  including subscribing to practically all WIPO 
treaties, and committing to TRIPS implementation.   However, it had enc ountered implementation 
difficulties, and Brazil agreed that IP protection must  reflect the economy’s stat us, such as the stage of 
market transition, the lim ited financial possibilities of IP objects, the poorly developed infrastructure 
in relevant areas, and the absence of IP traditions and legal culture.  Brazil was pleased the Kyrgyz 
Republic supported the 2003 WTO decision on TRIPS and public health. 
38. The representative of Colombia  noted that since independence in 1991 the Kyrgyz Republic 
had deepened reforms directed at democratizing the political system, establishing a market economy, 
and liberalizing external trade.  Its economic transition had advanced substantially.  Land and 
important public enterprises had been privatized, prices and the financial sy stem deregulated, and a 
legal framework established for the market economy.   The main Kyrgyz trade policy objectives were 
to open the economy and to integrate more into th e world market.  The main trade policy tool, the 
tariff, averaged 4.9% and 7.7%, respectively, on  an applied and bound MFN basis.  The Kyrgyz 
Republic was negotiating joining the plurilateral ag reements on Government Procurement and Civil 
Aircraft.  The economic transition had seriously impacted its predominantly agricultural economic 
structure;  it now depended on services.  Manufacturi ng growth had been low.  The Kyrgyz Republic 
needed to promote export diversification incor porating added value to promote employment and 
sustained growth. 
39. Recent obstacles had included the unfavourable ec onomic situation (a dramatic reduction in 
gold production and an adverse climate for agriculture ) and the 2005 political crisis.  This had delayed 
reforms in the banking, insurance, telecommunicati ons, electricity, and transport sectors.  Competition 
policy was also deficient, and cumbersome procedures for technical standards had affected 
transparency and economic efficiency.  Any slippa ge in moving to a market economy might affect 
competitiveness and consumer prices , which would reduce incomes. 
40. The representative of Singapore  noted that during 2000-05, annual GDP growth had averaged 
4% in the Kyrgyz Republic, and was projected to be 5% in 2006.  Services accounted for 51.1% of GDP in 2005 (up from 43.1% in 2001), and contribute d substantially to growth .  Inflation and budget 
deficits had been reduced.  Almost all tariff lines were bound at a low average rate of 7.7%, and little 
tariff dispersion or escalation existed.  It had elim inated discriminatory excise duties and was applying 
customs valuation provisions.  Singapore shared its belief that a liberal trade regime improved 
economic efficiency and promoted export diversifi cation.  Government had an important role in 
attracting foreign direct investment and creating a business-friendly environment.  According to the 
Secretariat report, the Kyrgyz business climate were  not conducive to private economic activity, and 
administrative barriers to doing business imposed s ubstantial delays and a dded costs.  Singapore 
sought information on any measures being taken to im prove the business climate.  It appreciated the 
Kyrgyz Republic’s participation in  the WTO negotiations and ongoing efforts to liberalize;  continued 
support for the WTO would help it achieve its macroeconomic goals. 
41. The representative of Pakistan
 as a co-signatory of the ECO Trade Agreement expected 
bilateral trade to expand once this regional prefer ential arrangement became operational.  The Kyrgyz 
Republic, despite being land-locked and located in a relatively low-income region, had significantly WT/TPR/M/170 
Page 12  
 
rationalized tariffs, deregulated prices, privatized farms, and liberalized the financial sector, thereby 
creating a legal framework conducive for a market economy.  Gold mining, the major export-oriented manufacturing sector, received special treatment in terms of export regulations.  The mainly subsistence agriculture sector needed added atte ntion to improve rural infrastructure and farm-to-
market linkages.  The Kyrgyz foreign investment re gime offered a range of incentives with no foreign 
equity limits, except in air transport and production of alcoholic beverages.  However, while making 
significant progress, the Kyrgyz Republic needed to implement further reforms to maximize benefits 
from WTO membership. 
42. The representative of Chinese Taipei
 believed that further structural reforms and integration 
into the world economy should help improve Ky rgyz economy efficiency.  While the Kyrgyz 
Republic had made substantial e fforts to strengthen trade and investment regimes, further 
improvements were required to maintain growth.  Such priorities were likely to be in reducing 
poverty, enhancing the manufacturing and services sect ors, other structural reforms, and increasing 
productivity and administrative efficiency.  WT/TPR/M/170 
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V. REPLIES BY THE REPRESENTATIVE OF THE KYRGYZ REPUBLIC AND 
ADDITIONAL COMMENTS 
43. The representative of the Kyrgyz Republic  structured his replies, as requested by the 
Secretariat, under the three themes of the economic e nvironment, trade policies, and sectoral policies. 
(i) Economic environment 
44. In response to questions raised by Turkey, th e EU, Switzerland, and some other delegations 
on economic environment and export development, th e Kyrgyz representative referred to the draft 
programme for export development and import re placement.  He hoped it would be sent for 
government approval no later then end-October 2006 .  The programme was aimed at improving the 
quality of Kyrgyz goods, and promoting export divers ification, especially into high-value products.  
Measures included reimbursement of VAT on exports, introduction of export insurance, simplification 
of import and export procedures, attainment of "single window" customs procedures, harmonization 
of technical regulations with international st andards, and establishing an independent body for 
accreditation purposes and helping organizations to  introduce international standards.     
45. Attracting foreign direct investment, produci ng high value added goods, and privatization of 
state property were important.  The Kyrgyz Govern ment had no specific plans to expand exports and 
would not introduce import restrictions.  The Govern ment had stimulated imports by eliminating VAT 
on technological equipment used for domestic pur poses. The investment development strategy was 
contained in the concept paper on the "Strategy of the Development of the Country for 2006-2010", which consisted of Kyrgyz commitments under various international agreements and other initiatives.  
The international community had supported the Ky rgyz Republic in its pursuit of democracy, 
economic development, and social prosperity.  Th is strategy would implement policies to establish 
institutions, infrastructure, and mechanisms conducive to competitiveness in domestic and 
international markets. 
46. The Government’s priorities were to e nhance economic potential (focusing on energy, 
mining, agriculture, industrial processing, tourism, and transport), fight corruption, improve state 
management, political reform, decentralization, and judi cial reform.  In the social sphere, health and 
education were top priorities, as well as enabling the population to access minimum living standards. 
47. Opening of the country’s investment climate had progressed in the areas of business 
licensing, employment, property registration, and investor protection, as acknowledged by 
international institutions, including the World Bank.   The Kyrgyz Government was continuing to 
deregulate the economy and to improve business free dom.  Reforms to further reduce the tax burden 
and make the system more transparent were core  elements of overall refo rms:  parliament was 
currently reviewing a revised tax c ode.  Government control and inspec tions were also being reviewed 
and the procedures of state agencies examined.  A new licensing law to be adopted would provide an exhaustive list of licensing requirements.  The outdated system on standards was being improved, 
based on updated legislation on technical regulations.  
48. Reforms would improve the work of judges and the judiciary to help fight corruption.  
Legislation on the status of judges was planned.  Some functions, such as the issuance of warrants, 
would be transferred from the prosecutor's o ffice, which would delineate powers between the 
executive and judiciary.  Time frames for cour t investigations would be reduced, and cases 
automatically distributed among judges.  The public would be able to access court decisions via the 
Internet, and a jury system would be in troduced in criminal court proceeding. 
49. In reply to questions on regional trade agre ements from Turkey, Switzerland, and Brazil, 
representative stated that trade agreements with CI S member states had provided for free-trade zones 
and creation of a customs union.  No agreements co ntradicted each other and there were no negative WT/TPR/M/170 
Page 14  
 
consequences.  The Kyrgyz Republic planned to jo in the EAEC common customs tariff, but only after 
other signatories became WTO Members, when it would review the common tariff. 
50. As to the Kyrgyz Republic’s integration into the global economy, raised by Brazil, it traded 
with over 100 countries and trade had risen by 1. 8% since its WTO accession.  Investment had 
increased 1.5-fold.  Other areas for improvement were services (telecommunications, tourism, and 
transportation), and the Government planned steps to enhance business activity of SMEs. 
51. The Kyrgyz representative stressed that the Government would implement its declared 
strategy efficiently, and noted that his delegation was frank in pinpointing problems the country faced, 
such as corruption and methods to address it. 
(ii) Trade policies 
52. In response to questions from the EU, Switzerla nd, and Japan on technical assistance needs, 
customs clearance fees, and the prevention of illegal imports, the representative noted that his country 
belonged to the World Customs Organization and ha d signed resolutions to introduce standards and 
security frameworks.  Within the EAEC, customs policy was based on the Kyoto Convention.  On-
going customs improvements included development of  automation systems to clear goods, upgrade of 
customs facilities, and be tter customs legislation and personnel.  The 0.15 % of the import value levy 
to raise customs fees should not exceed the appr oximate cost of services rendered by Customs.  
Customs officials had calculated minimum and maximu m rates, but those applied at the time of WTO 
accession were now outdated.  A Working Group ha d been established to update the rates by end-
2006.  The Government had approved measures to combat corruption in 2006-07.  The web-based 
hotline was opened to allow public submission of complaints against customs officers, and the 
Government had informed the public  about investigations into illegal acts by customs officials;  guilty 
officers would be fired.  An increase of 134% in customs collections, to US$192 million for the first 
nine months of 2006 over the same period in 2005, signified success against corruption.  The 
Government had adopted measures to prevent illega l imports, including procedures to deal with 
illegal importation and creating a list of illegal imports  subject to excise duties, such as fuel and 
lubricants, tobacco and alcohol, drugs and precious metals as well as food products. Some 27 criminal 
cases were investigated. 
53. On the discrepancy between bound and applied tariff rates raised by Switzerland, Japan, 
Turkey, the United States, and Columbia, the Kyr gyz Republic had unintentionally made mistakes on 
33 tariff lines.  Proposed amendments to the Customs Law to correct this situation would hopefully be 
approved soon by Parliament.  Import duties included ad valorem  rates, non-ad valorem  rates 
(12 tariff items) and combined rates (133 items).  The Kyrgyz Republic applied non-ad valorem  rates 
in accordance with its commitments, and applied only the ad valorem  equivalent of combined rates to 
secure transparency.  It would notify applied tari ff rates for 2004-06 inclusive to the WTO by end-
2006.  Seasonal duties were not applied in 2006 but  existed in 2002-03 for wheat and flour imported 
from two non-WTO partners, Russia and Kazakhstan.  Draft amendments to the Customs Tariff, fully 
WTO compliant, would change rates on certain (1,000) items to boost exports.  These included raw 
materials, inputs, capital, including transport a nd technology equipment not produced domestically.  
In reply to Brazil’s question, certificates on rules of  origin were issued by the Kyrgyz Chamber of 
Commerce.  
54. The Kyrgyz representative noted, in reply to questions from Columbia on import quotas and 
licensing for tobacco and from the United States on import licensing notifications, that the Kyrgyz 
law on licensing of 18 January 2001 had abolished li censing for export of tobacco leaf and fermented 
tobacco.  While tobacco was still included in the list of licensed imports it was not licensed and 
imports were unlimited.  The Government’s WTO no tifications in accordance with the Article 7.3 of 
the Agreement on Import Licensing Procedures had b een sent in September 2006.  In response to the 
EC question on anti-dumping measures, the Kyrgyz representative noted that domestic anti-dumping  WT/TPR/M/170 
 Page 15 
 
 
legislation provided the legal basis for such measu res and for the conduct of investigations.  The 
Kyrgyz Republic complied fully with Article VI of the GATT 1994. 
55. Replying to EC and Swiss questions on the Kyrgyz Republic's accession to the Agreement on 
Government Procurement, electronic purchases, a nd benefits for local producers, the representative 
indicated that the Government was continuing re forms following the adoption of the 1997 law, and a 
second revision in 2004 based on recommendations from the EU and the World Bank.  About 60% of 
the government procurement legislation had been ch anged, including on the participation of entities in 
auctions and sale of state property.  The 20% marg in of preference for local companies was based on 
their huge costs.  Subcontractors also benefited fro m these rules, which encouraged local contractors 
to participate in tenders.  The Kyrgyz Republic woul d intensify efforts to join the GPA, subject to 
planned changes in the legislation based on interna tional rules.  The State Agency on Government 
Procurement and Material Reserves had legal powers in this area.  During investigations, possible 
measures included bans, annulling awards to entiti es, and stopping contracts from being awarded;  
and government officials could be fined (Article 413 of the Law on Government Procurement).  The 
government procurement market share was 84% of the national budget, 10% of total oblast  (region) 
budgets, and 6% at the regional level.  Tender a nnouncements must be published in the media and 
special government bulletins (Article 16), and pre qualification procedures followed (Article 9).  
Procurement was a government priority.  Draft rule s on electronic procurement had been elaborated 
but significant financial resources were needed to implement them;  Soms 2 million had been 
allocated for this purpose in 2007, and technical assistance was expected from the EC.  The Kyrgyz 
Republic was intending to notify all state trading enterprises to the WTO by end-2006. 
56. On EC and U.S. questions concerning tec hnical regulations, accreditation, SPS, enquiry 
points, and standards, the representative noted that  new legislation on technical regulations provided 
the legal basis for voluntary standards.  A trans itional period until 2009 was set for manufacturing, 
processing, storage, transportation, sale, and equipment for public utilities.  The law limited technical regulations to production activities and processes that affected human health and the environment.  
The Government believed such regulations, whic h would be reviewed every five years, met 
international requirements.  Se lf-declaration was accepted as th e main means to assess product 
compatibility, and voluntary accreditation was only used to confirm compliance with technical regulations. 
57. The discussant
 mentioned that the Kyrgyz Government’s acceptance of the last WCO version 
of the Kyoto Convention placed it far ahead of some  other WTO Members.  He noted that the 0.15% 
customs charge for clearance could be unfair for bulk goods, thus penalizing traders with large 
consignments.  The charge had to be commensur ate with the services rendered not simply a 
percentage of the import value.  He welcomed the Government’s decision to review the application of 
this fee, and indicated that Members would like the system changed.  While the Kyrgyz Government’s 
emphasis on fighting corruption through changes in laws and regulations a nd punishment of corrupt 
officials was important, the number of steps involved and the need for several signatures, would in 
turn lead to high corruption.  In his view, th e solution was to introduce a "single window" system, 
increase transparency of rules and regulations, and automate customs procedures.  He noted 
favourably that the Kyrgyz Republic would correct  mistakes where applied tariffs exceeded bound 
levels by end 2006.  While tobacco was licensed, in reality it was unaffected by the measures;  
although the Kyrgyz Government was trying to fo llow recommendations on government procurement 
from international organizations, such as the Wo rld Bank, preference margins to domestic producers 
restricted foreign participation. 
58. The representative of the Kyrgyz Republic  stated that the 0.15% customs fee did result in a 
higher charge for larger consignments, and that th e Working Group had been established to look into 
this problem.  The Kyrgyz Customs Code specified that the amount of the fee must not exceed the 
cost of the services rendered.  Prior to WT O accession, WTO officers had estimated minimum 
(Soms 135) and maximum (Soms 150) rates which, given exchange rates at the time, set the WT/TPR/M/170 
Page 16  
 
maximum charge for customs clearance at around  US$30.  The Government would notify the WTO 
soon on maximum rates as the Working Party’s wo rk progressed.  Concerning customs reforms, the 
Kyrgyz Government had followed an integrated ap proach to reducing corruption, including an ADB 
project on customs automation that involved US$7.7 million for modernizing customs.  The Government aimed to improve the customs service, intensify customs reforms, and promote trade and 
regional cooperation.  Improving overall economic activity and the re liability of customs officers, 
including better quality personnel, were priorities.  Customs procedures were targeted to conform with 
international practice.  Online declaration was also  part of the current customs reforms.  Local 
supplier preferences on government procurement were  needed because tenders-by foreign participants 
were usually VAT exempt (since they exported thei r goods), while Kyrgyz suppliers were not.  Thus, 
without the 20% preference they would be penalized vis-à-vis  foreign suppliers. 
59. The Government was reviewing the draft law on accreditation of bodies to evaluate standards 
conformity;  respective bodies and agencies would be  created in accordance wi th international norms. 
Businesses needing international standards could use them.  The problem in using international 
standards domestically was the high translation co sts and the expenses involved in adopting such 
standards to industrial processes.  The Kyrgyz G overnment had a programme to improve technical 
regulations, including firstly in transpor t, construction, health and agriculture. 
60. The ministries of Agriculture and Health were  responsible for SPS.  The requirements of SPS 
certificates and import certificates did not overlap;  the confusion probably reflected incorrect translation of the word "permission".  Transit through the Kyrgyz territory required an import certificate and import quarantine permission issued by the importing country;  the import quarantine 
permission was not a certificate.  Kyrgyz authorities would recognize certificates from other countries 
if they provided adequate protection.  Certain temporary SPS measures could be introduced if no 
sufficient justification was provided, but this would be done transparently. 
61. The Kyrgyz representative noted, in reply to Sw iss and U.S. questions on tax benefits and 
budget support, that VAT did not apply to agricultu ral products, gold, drugs, school books, baby food, 
special goods for the disabled, as well as insurance,  financial services, transport services, pensions, 
and humanitarian aid and means used for natural di sasters.  Entities operating in free economic zones 
(FEZs) could not sell fuel, alcohol or tobacco to entities outside the FEZ.  Consumer goods produced 
in FEZs with value added above 15% could not be sold within the Kyrgyz customs territory.  Exports 
from FEZs were quota-free unless exported to the Kyrgyz customs territory.  Licensing procedures required that the overall volume of exports shoul d not exceed 30% of the total volume of goods 
produced in the FEZ within any one year.  
62. On competition issues, raised by Turkey, the EC and Switzerland, a Presidential decree had 
established an independent agency on anti-monopol y policy and development of competition under 
the President’s administration.  The Kyrgyz Gove rnment believed this would make the anti-monopoly 
agency more independent.  In 2001, the agency ha d set the highest possible rates for sales of tobacco 
products and beans;  the share of the monopoly was se t at 20%.  Those measures has been abolished. 
The Law restricting monopolies (Article 7) regulated  competition where dominant companies existed.  
The agency could regulate their prices according to the Presidential decree.  This covered alcohol, 
services, and communications.  The number of monopolies allowed would fall as competition improved.  The Government was reviewing the new competition law. 
63. In reply to questions on intellectual propert y rights from the U.S., the EC, and Canada 
including on patents, licensing, parallel imports, and inventions, the Kyrgyz representative stated that 
work on IPR protection launched following WTO accession was based on the TRIPs Agreement.  The 
Kyrgyz Republic was a member of 22 internationa l IPR treaties and the Kyrgyz Republic had IPR 
agreements with Turkey and China.  Three domes tic laws covered IPR prot ection.  Certain border 
measures against criminal IPR infringements were envi saged to take effect in domestic courts.  IPR 
related policy was the responsibility of government ag ency;  the difficulty was that law enforcement  WT/TPR/M/170 
 Page 17 
 
 
was poor, and closer scrutiny of the work of various government agencies was needed.  An 
interagency commission led by the Prime Minister was to be created to combat IPR infringements.  The patents law, adopted in 1997, complied with the TRIPS provisions;  it dealt with mandatory 
licensing and abolition of the burden of proof un der Articles 31-34 of the TRIPS Agreement.  
Compulsory licensing was regulated by the law of 24 December 1998.  In the area of trade marks and 
GIs, special legislation protected trade marks and origin of goods.  IPR legislation on trade marks 
complied with Article 6 bis of the Paris Convenion on industrial property and Article 16 of TRIPS.  
No special Kyrgyz regulations covered parallel imports.  Standards on territorial origin were 
contained in the patents law, and copyright legi slation covered exhaustion of rights.  The term 
"parallel imports" was new to the Kyrgyz authorities and technical assistance was needed in this area.  
The Kyrgyz Republic acknowledged that there was inadequate enforcement of IPRs laws, and 
problems in the executive branch and the judiciary.  It needed technical assistance to train local judges 
in IPRs.  In the area of confidential (commercial) information, the Civil Code, Code of Adminstrative 
Accountability, and the Criminal Code comp lied fully with the TRIPS Agreement. 
64. As to the EC question on trade and environe mnt, the Kyrgyz representative noted that 
legislation introduced between 1999 and 2001 was aime d at protecting the environment, atmosperic 
conditions and biospheric reserves, wastes, etc.  Th ese laws were under review in accordance with the 
technical regulations law.  Newly proposed t echnical regulations would comprise environmental 
security concerns, especially in the transport and use of dangerous products.  The Kyrgyz Republic 
belonged to several inernational convent ions on envirnomental protection.   
65. The Kyrgyz Republic provided least develope d countries with duty-free access, but these 
imports amounted to only US$410, 000 in 2005.    
66. The representative of the United States
 asked whether the Kyrgyz Republic had established a 
TBT enquiry point, and was concerned that it had apparently made no such WTO notifications.   
67. The representative of the European Communities  sought clarification on whether there had 
been any seizures of illegally copied or countefeit good s and if so by the police, if they occurred at the 
border or in the market place, and whether relevant statistics were available.  
68. The representative of the Kyrgyz Republic  stated that the law enforcement agencies in 
cooperation with Customs and other agencies (Kyr gyzPatent) conducted raids against sellers of 
conterfeit goods.  Illegally copies were destroyed.   Annually, on April 26, a campaign was conducted 
to combat conterfeit products.  Statistics were di fficult to provide right away, and while there was a 
special agency worked on IPRs , it had started only recently.  
(iii) Sectoral policies 
69. In reply to Brazil’s question on food security, the Kyrgyz Government had not implemented 
the announced programme.  The situation was being monitored.  The Government did not subsidize 
agriculture, but made grants for agricultural purpo ses, including the creation of credit unions.  The 
Government's preference was for reform rather than relying excessively on licensing and import 
restrictions.  Production of vegetable oil was 9,100 tonnes in 2002, 11,000 tonnes in 2003, and almost 
15,000 tonnes in 2005.  No regulatory measures existed to stimulate production.  Manufacture of centrifugal pumps by one factory had shrunk due to  a break in economic ties with CIS partners.  
Production of roofing slate had grown sharply due  to domestic and export demand from neighoring 
countries, and the Kyrgyz Republic had started pro ducing more bricks, cement and glass in response 
to higher demand. 
70. The representative, in response to Canadian and EC questions, noted that mining required 
substantial investment, especially from abroad.  In recent years investment had risen from US$6 
million to US$51 million;  most was in gold.  The Ky rgyz Republic wanted increased investment in WT/TPR/M/170 
Page 18  
 
oil, gas, and other natural resources exploration.  The new law on subsoil deposits envisaged single or 
uniform procedures for licensing.  The project's life w ould be set for ten years provided that all parties 
complied with the new procedures.  The Govern ment had decided in August 2006 on the special 
measures to be underetaken to meet these initiatives. 
71. In response to Japan’s questions, the representa tive noted the positive developments in the 
banking sector.  Portfolio credits had grown rapidl y after the 1999-2000 financial crisis, by 43% in 
2003, 100% in 2004, 32% in 2005, and by 21% in  2006.  Telecommunication interconnection was 
based on network compatibility.  Such rules were  contained in the law on electric and postal 
communications.  The laws applied uniformly to all operators, and specified traffic rules.  
72. Regarding the Canadian questions  on tourism, the representative stated that ownership rights 
in residential areas were given temporarily for 49 year s.  Foreigners could own tourist infrastructure.  
Tourism was a government priority and such activit ies were not licensed;  the Government had no 
plans to introduce quality licensing.  The functions of the Ministry of Industry, Trade and Tourism were limited to policy elaboration and strategic pr ogramme development.  Due to serious financial 
constraints the Ministry’s activities had been limite d to distributing advertising material.  Tourism 
income was expected to rise to US$100 million in 2006 from US$70-75 million in previous years.  
Measures to attract foreign tourists included the introduction of a "no visa" regime and establishment 
of special tourism centres in other countries.   
73. The Kyrgyz Republic had made no specific WTO ob ligations in strategic services, such as 
energy distribution, postal services, and air and cargo transport. 
74. The discussant
 noted that Members seemed satisfied with the Kyrgyz achievements and pace 
of reforms. Some WTO notifications were missing.   He suggested that, given its experience the 
Kyrgyz Republic might be able to help  guide its neighbours to WTO accession.  
75. The representative of Canada  was interested in knowing the sc ope of intended revisions to the 
newly considered law on subsurface ores, th e current implementation timetable, and of any 
simplification procedures for obtaining ore explora tion and exploitation land.  Canada was also 
interested in learning what procedures could be simplified, and the criteria used to cancel licences 
collegially by specialized commission, especially wh ether foreign and local applicants were treated 
discriminatorily, and whether any appeal procedures existed.  
76. The representative of the United States  noted the Kyrgyz Republic's success in economic 
diversification and commended efforts to address co rruption.  However, concerns needed to be 
addressed included transparency of the trade regime , especially in tax laws, public procurement, 
licensing procedures, and government control.  The Un ited States welcomed its intention to join the 
GPA and further efforts on IPR enforcement.  It  would consider Kyrgyz requests for technical 
assistance in intellectual property and training.  The United States was concerned that the Kyrgyz 
Government had failed to establish an enquiry point  on TBT, and hoped that th is would be rectified 
quickly, as well as by the lack of WTO notifications.  She commended the Kyrgyz Republic for its 
liberal trading regime.  
77. The representative of the European Communities  asked for additional written answers on 
questions posed on postal services and measures to assess the quality of service providers, which had 
not been addressed fully.  The EC hoped that answers would be received later in writing.  
78. The representative of the Kyrgyz Republic  noted that all delegations had expressed 
satisfaction with the quality of work done by the Kyrgyz delegation.  Some problems facing the 
Kyrgyz Republic were unavoidable as it was a you ng country that had passed through the stages of 
economic development in fifteen years when other c ountries had had hundreds of years to reform their 
systems.  The Kyrgyz Republic had achieved signifi cant reform success.  It was a democratic and  WT/TPR/M/170 
 Page 19 
 
 
open country and would ta ke note of all recommendations and c oncerns expressed by delegations.  
The Kyrgyz Government was committed to complete  and continue reforms, and technical assistance 
would be welcomed, if offered.  Unanswered qu estions would be addressed later in written form. WT/TPR/M/170 
Page 20  
 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
79. This first Trade Policy Review of the Kyrgyz Republic has been thorough and informative 
and has given us a better understandi ng of its trade policies and practices,  of their evolution and of the 
challenges the Kyrgyz Republic faces.  The reports by  the Kyrgyz authorities and the Secretariat, as 
well as the detailed responses of the delegation of the Kyrgyz Republic to written questions, have 
provided a valuable resource for domestic reflection and for transparency within the WTO.  Our 
discussion has been stimulated by the full and im pressive engagement of the high-level Kyrgyz 
delegation as well as by the discussant's insightful contribution and the many thoughtful comments by 
Members.  
80. Members commended the Kyrgyz Republic for the positive developments in its transition to a 
market-oriented economy, including the conti nued process of economic reform, started with 
independence in 1991 and strengthened by WTO accessi on in 1998, and the considerable efforts to 
integrate its transitional economy into the multila teral trading system.  Members applauded the 
significant GDP growth of recent years, averagi ng 4% annually during 2000-05, and the achievements 
of curbing inflation, reducing budge t deficits, privatization, and currency stabilization.  These point to 
the strengthening of economic fundamentals in the Kyrgyz Republic.  
81. Members appreciated the Kyrgyz Republic's strong commitment to trade liberalization and 
the maintenance of one the most open trade and inv estment regimes in its region.  For example, the 
simple average applied MFN tariff is low at 4.9% and there is little tariff dispersion or escalation; however, in some cases, applied tariff rates exc eed bound levels.  The Kyrgyz Republic has also 
eliminated discriminatory excise taxes and has not taken any contingenc y protection measures. 
Members also noted the Kyrgyz Republic's e fforts to harmonize domestic standards and SPS 
measures with international ones. Members welcom ed the Kyrgyz Republic's participation in the 
DDA negotiations and its ongoing efforts to liberalize  further, for example, through the negotiations 
to join the plurilateral agreements on Government Procurement and Trade in Civil Aircraft.  Members 
appreciated the special challenges posed by the Kyrg yz Republic's land-locked status, which makes its 
trade competitiveness to some extent dependent on  the transit trade facilities of its neighbours. 
82. Members pointed out areas where the Kyrgyz Government could improve its trade and 
investment regime.  These include administrative barriers to doing business due to excessive government intervention and insufficient transpar ency in licensing procedures, problems with 
government inspections, and unclear public procur ement policies.  Some Members expressed their 
concern about pronounced corruption indicators, th e prevalence of smuggling and the existence of a 
shadow economy, and urged the Government to conti nue to develop and implement strategies to deal 
with such issues.  
83. Members commended the efforts of the Kyrgyz Republic to diversify its economy away from 
excessive reliance on mineral resources.  Members noted that agricultural policy is based on raising rural incomes and achieving food security by 2010  by means of market-based reforms.  They 
welcomed liberalization in the telecommunication sector and urged the Government to move ahead 
with privatization plans, especially in the energy and telecommunications sectors.  
84. Members appreciated the oral and written respon ses to their questions provided by the Kyrgyz 
delegation and look forward to receiving further responses as soon as possible. 
85. In conclusion, Members have shown a marked interest in the Kyrgyz Republic's trade and 
related policies.  In this context, I would encourag e the Kyrgyz Republic to proceed with its efforts to 
continue with its reform process and improve its tr ade and investment climate, which will permit its 
economy to benefit fully from the multilateral trad ing system.  At the same time, I encourage 
Members to assist the Kyrgyz Republic by providin g adequate technical assistance, including in trade 
capacity building, and by further opening their markets to Kyrgyz exports. 
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