RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/KAZ/37/Add.2
19 November 2002
(02-6413)
Working Party on the
Accession of KazakhstanOriginal:  English
ACCESSION OF KAZAKHSTAN
Additional Questions and Replies
Addendum
The Ministry of the Economy and Trade of the Republic of Kazakhstan has submitted the
following replies to the additional questions submitted by Members.  The replies are reproduced
hereunder.
_______________WT/ACC/KAZ/37/Add.2
Page 2
Questions 5, 6 and 8 of WT/ACC/KAZ/37/Add.1
Question 1
Members attach a lot of importance to the WTO just ification of existing regulations.  It would
therefore be extremely useful that informat ion be submitted about the WTO rationale of
current measures, as asked in questions 5, 6 and 8 of WT/ACC/KAZ/37/Add.1.
Answer:
On 5 December 1998 the Government of the Republic of Kazakhstan adopted the Resolution
No. 1243 "On Enforcement of Limitations on Import and Export of Certain Goods".  In accordance
with this resolution, a quota of 3000 tons has been set on imports of open-die forged grinding balls
(HS Codes: 7325 91 000, 7325 99, 7325 99 990, 7326 11 000, 7326 19, 7326 19 100, 7326 19 900).
The introduction of this limitation was caused by the necessity to revive the production capacity of
domestic enterprises, which stood idle due to uncontrollable import of these goods from abroad.There were three large enterprises and a number of smaller enterprises and mining companies that
produced grinding balls in Kazakhstan.  The research had shown that the production capacity of
domestic enterprises allowed the production of 1.5-2 times the demand for grinding goods by
domestic consumers.  The measures undertaken by the Government as a result rendered significant
support to the main manufacturers of these goods.  Production of grinding goods in 1999 incomparison with 1998 has increased by 3.9 times and in addition provided more job positions.
This measure is provisional and expires on 31 December 2002.
On 14 November 2000 the Government of Kazakhstan has adopted the Resolution No. 1713
"On Measures for Regulation of Secondary Non-Ferrous and Ferrous Metals" with the view of
regulating the market of ferrous and non-ferrous metals scrap and waste and provision of rawmaterials to the domestic producers of copper-based goods.  This resolution contains provisions of
export licensing of ferrous and non-ferrous metals scrap and waste and application of export duty to
copper and raw aluminium scrap and waste.
The analysis of export of these products has shown the increase in the volume of exported
ferrous and non-ferrous metals scrap and waste due to the insufficient control of the origins of theprocured scrap and waste products, leading to increase in theft of parts and components, wires and
cables containing nonferrous metals.
The establishment of export duty rates for copper and raw aluminium scrap and waste
allowed to prevent the loss of state income resulting from export price understating.  It also reduced
the number of theft cases and limited the export of raw material from the Republic.  The increase in
consumption of these products on the domestic market caused growth in the processing of ferrous and
non-ferrous metallurgy.
The undertaken measures led to the reduction in the number of theft cases and, as a result the
Government of Kazakhstan adopted Resolution N o. 894 of 19 August 2002 "On Amendments to the
Government Resolution of 30 June 1997 No. 1037" which cancels the export licensing of ferrous and
non-ferrous metals scrap and waste.
As we understand, this measure is in conformity  with the WTO rules a nd disciplines (Article
XI of GATT 1994).WT/ACC/KAZ/37/Add.2
Page 3
Question 8 of WT/ACC/KAZ/37
Question 2
More precise information about the provision of the new draft Customs Code concerning
customs fees for customs clearance would be welcomed.  In particular, Members would
appreciate to have a timetable with specific da tes for implementation of measures to bring the
0.2 customs fee into conformity with Article VIII of GATT.
Answer:
The draft Customs Code of the Republic of Kazakhstan (the Code), having the status of the
law, which incorporates and systematizes the principles of law regulating relations in the field of
customs, has been developed.  Today, the Code has been submitted the Parliament of the Republic of
Kazakhstan for consideration.
In accordance with this Code, the costs to the customs authorities for performing specified
actions will serve as the basis for calculating the amounts of customs fees.  This procedure is in
conformity with Article VIII of GATT 1994.  As shown in WT/ACC/KAZ/14, Kazakhstan plans,
while preserving ad valorem  rates, to apply the minimum and maximum cost of direct and indirect
expenses so that the fees do not exceed the cost of customs clearance of imported goods.
Direct expenses include the expenses directly related to customs clearance of imported goods.
Indirect expenses include the expenses for conduction of all kinds of customs activity, including
customs clearance of import.  Only direct expenses for customs clearance of import are used for the
determination of the minimum fees.  Time spent by the employee for carrying out customs
procedures, and average expenses for each employee, are used.  The maximum fees are determined by
using direct and indirect expenses.  Sixty per cent of the total expenses for the employee are taken intoaccount as well as all other expenses for customs clearance.
At present preliminary calculations of the mini mum and maximum cost of direct and indirect
expenses for clearance of one cargo customs declaration have been made, where the sum of expenses
for clearance of declarations depends on spent time for examination, specificity of official registration
of papers and other operations.
Upon entry into force of the Code on customs territory of the Republic of Kazakhstan,
customs fees for customs clearance will be set by the Government of Kazakhstan (in accordance with
paragraph 1 of Article 319 of the Code) on the basi s of the above-stated expenses of customs bodies.
Questions 13 and 15 of WT/ACC/KAZ/37 and 7 of WT/ACC/KAZ/37/Add.1
Question 3An update on the process of harmonization of excise duties on domestic and imported goods and
more precise information on the Plan of measures mentioned in response to question 2 ofdocument WT/ACC/KAZ/37/Add.1 would be welcomed  (i.e. date of adoption, content, etc.)
It would, in particular, be useful if information could be provided on measures envisaged to
eliminate the elements of discrimination against im ports in the application of excise duties.  How
will this be done?WT/ACC/KAZ/37/Add.2
Page 4
Answer:
At present the Republic of Kazakhstan is undertaking measures for a stage-by-stage
unification of excise duty rates for domestic and imported goods.  Thus, by the Government
Resolution No. 1108 of 11 October 2002 "On Amendments to the Resolution of the Government of
the Republic of Kazakhstan of 28 January 2000 No. 137", the excise duty rate on vodka produced inKazakhstan has increased from 40 to 100 tenge per litre.
Moreover, the draft Government Resolution "On Amendments to the Resolution of the
Government of the Republic of Kazakhstan of 28 January 2000, No. 137" is being prepared, which
stipulates an increase in excise duty rates for beer and tobacco produced in Kazakhstan.
It should be pointed out that the Government of the Republic of Kazakhstan has taken a
decision on the necessity to harmonise excise duties upon Kazakhstan's Accession to the WTO.
Question 9 of WT/ACC/KAZ/37 and Question 6 and Appendix 2 of WT/ACC/KAZ/37/Add.1
Question 4
Replies to these questions do not indicate whether licensing is automatic or non-automatic.
Precise information on this would be welcomed.
Answer:
The licensing system of Kazakhstan regulates imports and exports of a limited number of
goods (see Appendix 2 of WT/ACC/KAZ/37/ Аdd.1).  These are the goods to which licensing is
applied for the reasons of security, protection of human, animal and plant life and health.  Licensing
for these products is non-automatic.  The rules of the import licensing procedure of the goods (works,
services) in Kazakhstan are approved by the Government Resolution No. 1037 of 30 June 1997.
Import licensing is carried out by the Ministry of Industry and Trade of the Republic of
Kazakhstan with prior coordination with the corr esponding ministries, except licenses for the import
of ethyl alcohol and alcoholic products (except beer), which is carried out by the Ministry of Finance.
The validity of the license does not exceed 12 months, which can be prolonged at the request of the
applicant before the completion of contractual obligations, but by no more than one calendar year.
As we understand, this measure is in conformity with Article XXI of GATT 1994 and
Agreement on Import Licensing Procedures.
Question 10 of WT/ACC/KAZ/37 and Question 7 of WT/ACC/KAZ/37/Add.1
Question 5The reply to question 7 of WT/ACC/KAZ/37/Add.1 does not specify whether the new Law on
Customs Matters incorporates relevant provisions of the Customs Valuation Agreement,
including its Annex 1.  More details would be welcomed.
It would be useful for Members to have more precise information about the status of progress of
implementing regulations.WT/ACC/KAZ/37/Add.2
Page 5
Answer:
The draft Customs Code of the Republic of Kazakhstan (the Code), having the status of the
law, which incorporates and systematises the principles of law regulating relations in the field of
customs, has been developed.  Today, the Code has been submitted the Parliament of the Republic of
Kazakhstan for consideration.
The draft Code is based on the general principles of customs valuation of GATT (Article VII
of GATT), the Customs Valuation Agreement, including Annex 1.
In that regard there is no need for development of additional regulations, envisaging any
changes and amendments in the existing customs legislation.
In accordance with Article 332 of the Code, the customs valuation of goods imported to the
customs territory of Kazakhstan is based on the general principles of customs valuation under GATT,
the Customs Valuation Agreement, including Annex 1 and is of direct application.
In order to harmonize implementation regulations on applying the Article VII of GATT, the
Customs Valuation Agreement, including Annex 1, the Code includes the provision on determining
customs value of goods imported to the customs territory of Kazakhstan by consequential use of 6
methods:
− Method for Determining the Customs Value Based on the Transaction Value of Imported
Goods.  The customs value of goods imported into the customs territory of the Republic
of Kazakhstan shall be the price actually pa id or payable when sold for export to the
Republic of Kazakhstan;
− Method for Determining Customs Value Based on the Transaction Value of Identical
Goods.  When using the method for determinin g value based on the transaction value for
determining value based on the transaction value for determining the customs value of
goods, with identical goods as the basis, the transaction value of identical goods shall be
used;
− Method for Determining Customs Value Based on the Transaction Value of Similar
Goods.  When using the method for determinin g the value based on the transaction value
of similar goods as the basis for determining the customs value of the goods, a transaction
value of goods similar to those being imported shall be used;
− Method of Determining Customs Value Based on Deduction of Costs.  The customs value
of goods shall be determined based on the deduction of costs method when identical or
similar goods being valued are initially sold without changes in their original state;
− Method for Determining Customs Value Based on Composition of Costs.  When using
the composition of costs method as the basis for determining the customs value of goods,
the cost of goods calculated by computing shall be used;
− Reserve Method for Determining Customs Value.  The method is used when it is
impossible to determine customs value of goods by the methods described, and is used in
compliance with the principles and general provisions of the customs valuation of GATTand the Customs Valuation Agreement.
Question 10 of WT/ACC/KAZ/37/Add.1
Question 6Information on regional subsidies would be welcomed (see second part of the question).WT/ACC/KAZ/37/Add.2
Page 6
Answer:
The Law of the Republic of Kazakhstan "On the Budget System" envisages the allocation of
subventions to the regions.  These subventions are official transfers from the upper to lower level
budgets within the amounts approved by legislative acts or decisions of regional representative
bodies.
Export regulation (question 18 of WT/ACC/KAZ/37)
Question 7
Members would welcome information on the legal basis of the existing subsidies and specific
proposals for their elimination.  Members stresse d the importance of such information to help
discussions to move forward.
Answer:
The Law of the Republic of Kazakhstan "On State Support of Direct Investment" envisages
the state support of direct investment to the priority sectors of the economy.  The form of granting
privileges and preferences is as follows: grants in kind, exemption from the payment of land tax and
property tax for up to five years after signing the co ntract, exemption from the payment of income tax
for up to five years after receiving taxable income , but no more than eight years after signing the
contract, full or partial exemption from import duties for import of equipment, raw materials andmaterials, necessary for carrying out the investment project.
Tax preferences are granted depending on the amount invested in fixed assets and priority
sectors of the economy.  The exemption from import duties is granted in the case of absence of
production on the territory of Kazakhstan of such goods or their production in limited quantities,
which does not allow conducting activity in accordance with investment project.
The granting of privileges and preferences is done by signing the contract with the investor
and is regulated by the Decree of President of the Republic of Kazakhstan No. 349 of 6 March 2000
"On establishment of the rules of privileges and preferences granting upon signing of contract with
investors, which carry out investment activity in the priority sectors of the economy".  The privileges
and preferences are granted on national treatment basis.
Moreover, the Order of the Chairman of the Agency of the Republic of Kazakhstan for
Regulation of Natural Monopolies, Protection of Competition and Support of Small Business of
30 September 1999 No. 24-OD "On Establishing the Rules on Introduction and Cancellation of
Discount Coefficients to the Tariffs on Transportation by Railroad, Subject to State Regulation"
envisages granting natural monopolists discounts on tariffs.  These rules are developed in accordance
with the Laws of the Republic of Kazakhstan "On Transport in the Republic of Kazakhstan", "On
Natural Monopolies", "On Development of Competition and Limitation of Monopoly Activity" for thepurpose of establishing the unified system of introduction and cancellation of discount coefficients for
tariffs on transportation by railroad, subject to state regulation.
In accordance with this Order, discount coefficients are established to the tariffs on
transportation of products of some industry on the basis of economic efficiency of such measure for
the state, economic expediency for transport company and client.  The main criteria of expediency ofthe establishment of discount coefficients are: the maintenance of tax payments to the budget,
attraction of the new transport flows, increasing of the transport flows, possibility of using unutilised
or under-utilised sections, ecological danger  of byproduct of industrial production.WT/ACC/KAZ/37/Add.2
Page 7
The discount coefficients are applied under the condition that the client does not have debt
accounts receivable or if they are settled in accordance with the adopted schedule, and under the
condition of increasing (or maintaining) the volu me of transport flows in comparison with the
previous period.  The discount coefficients are established for definite period of time.  The criteria of
expediency of the cancellation of discount coefficients are economic inefficiency of furtherapplication of the discount coefficients for the state and (or) for the transport company or disparity
with the main criteria.
Also, in accordance with Article 222 Chapter 36 of the Law of the Republic of Kazakhstan
"On Taxes and Other Obligatory Payments to th e Budget" the turnover on exported goods, except
export of ferrous and nonferrous metals scrap, is subject to zero VAT.
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