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MAGNETIC KAZAKHSTAN
by Eric Bruder

Kazakhstan, still a very new U.S. trading partner, was one of the world's fastest
growing markets for U.S. exports last year, and is rapidly becoming a magnet for
U.S. capital investment.  Starting from a very low level, total U.S. exports to
Kazakhstan increased by almost 100 percent last year over 1993.  With the
highest per capita income in Central Asia, a strong industrial and agricultural base,
low import duties, and one of the most stable political environments in the Newly
Independent States (NIS) of the former Soviet Union, Kazakhstan has attracted
large numbers of U.S. companies.

U.S. exports to Kazakhstan in  1994 were worth more than $130 million. Of this
total, exports of manufactured goods accounted for $112 million, making
Kazakhstan the second- largest export destination in the NIS for U.S. manufactured
goods.  Civil engineering plant and equipment  led U.S. exports, with a volume of
$29 million.  Exports of aircraft and parts were worth $21 million, and
food-processing machinery totaled $8 million.  Other significant U.S. exports to
Kazakhstan include precision instruments, process control equipment, computers,
motor vehicles, and telecommunications equipment. 

CUSTOMS DUTIES INCREASE BUT STILL AMONG THE LOWEST

The Kazakhstan Government announced a new import tariff schedule in January
which raised the average tariff to approximately 15 percent, with extremes ranging
between 5 and 50 percent.  In addition to import duties, the Kazakhstan
Government imposes a 20 percent value-added tax on most imported goods, as
well as a significant excise tax (from 25 percent on carpets to 160 percent on
some alcoholic beverages) on a small number of luxury items.  Customs procedures
can be burdensome and special documentation is required but customs duties are
still generally among the lowest in the NIS, particularly for manufactured goods. 

The  Kazakhstan Government eliminated import duties on most consumer goods in
April of last year, with the exception of alcohol, cars, furniture, carpets, leather,
and some luxury goods (for more information on specific Kazakhstan import
requirements, call Flashfax at (202) 482-3145, and order documents  # 6466 and
6467).

U.S. INVESTMENT REACHES NEW HIGHS

U.S. investment in Kazakhstan was roughly $1.3 billion at the end of 1994.  Most
investment is in energy, mining, and agribusiness industries.  The new foreign
investment law, which went into effect in January 1995, expands the rights of
foreign investors established by the 1990 foreign investment law.  The new
statute provides foreign investors a universal  regime of national treatment,
grandfathers all foreign investments for 10 years, protects foreign investors against
expropriation, and guarantees profit repatriation. 

Kazakhstan's economy is geared to the production of raw materials, both
agricultural and mineral, for shipment to Russia.  Kazakhstan's huge hydrocarbon
reserves have already attracted much foreign attention, but  the country  is also a
major world producer of copper, chromium, iron ore, magnesium, lead, zinc, silver,
and uranium.  Kazakhstan has significant reserves of coal, gold, molybdenum, and
other minerals, as well.  The country's large agricultural sector is centered around
grain and livestock, and  Kazakhstan  is the only NIS country with an exportable
grain surplus.  

While Kazakhstan is a prolific producer of raw materials, its manufacturing base
requires modernization.  In the past, the country  relied on Russia for most finished
products.  Today, it is building its own industrial base and creating new trading
relationships with the West.  These changes are creating new opportunities for
U.S. companies, and have already led to the dramatic increase in U.S. exports to
Kazakhstan.

INAUGURAL U.S.-KAZAKHSTAN BDC MEETING

Together with Kazakhstan Prime Minister Akezhan Kazhegeldin, Commerce
Secretary Ronald H. Brown presided over the inaugural meeting of the
U.S.-Kazakhstan Business Development Committee on on March 20.  The meeting
set out areas of cooperation, focusing on practical problems hindering the
development of bilateral trade and investment.  "The United States welcomes the
bold steps that Kazakhstan has taken since its independence toward
comprehensive economic reform and stabilization," Secretary Brown said.  "We
will work with Kazakhstan to support the rapid expansion of trade and investment
between our countries, increasing jobs and prosperity for both countries."  
Secretary Brown and Prime Minister Kazhegeldin also signed four commercial
agreements regarding the future tasks of the BDC, cooperation on standards and
metrology, exchange of market information - involving specifically BISNIS, SABIT,
and the ABC program - and cooperation in the oil and gas sector.
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