His Excellency Minister Arman Shakkaliyev, Minister of Trade and Integration of Kazakhstan,
Her Excellency Ambassador Zhanar Aitzhan,
Excellencies, Representatives from Central Asia and Azerbaijan,
Excellencies, representatives of developments banks and international organizations,
It is a great pleasure to be here in Almaty for the Second Central Asia Trade Policy Forum.
I would like to thank the government of Kazakhstan for hosting this event. This Forum provides a valuable platform for discussions on systemic issues and practical considerations related to the WTO through the regional lens of Central Asia. These exchanges are timely and much needed. The region, as a whole, has been seeking to position itself as an attractive economic hub in the context of shifting geopolitical dynamics. And what better place to reflect on these issues than here in Almaty, in the “heart” of Central Asia?
Long-distance trade played a major role in the cultural, religious, and artistic exchanges that became synonymous with this region in antiquity. In ways still very recognizable today, the trade routes of the Silk Road for centuries served to transfer raw materials, foodstuffs, and luxury goods from areas with surpluses to others where they were in short supply. More recently, with the fading of old, ideological battle lines and the establishment of new transportation links, Central Asia has become a distinct geographic and economic entity, and trade promises to once again become a driver of growth, employment, and development across the region.
While this is my first trip to Central Asia as Director-General of the WTO, it is not my first time here. I last toured nearly every country in the region as Managing Director of Operations of the World Bank in 2011 when countries were recovering from the impact of the global financial crisis. Back then, the only country from the region that had joined the WTO was the Kyrgyz Republic. One of the key messages I conveyed was the importance of strengthening institutions, against the background of heightened uncertainty and volatility.
Thirteen years on, while the socio-economic backdrop has improved, the region is having to deal with a new set of challenges – climate change, conflict, lingering pandemic aftershocks, economic slowdown, inflation, food insecurity and monetary tightening. The impact of this “polycrisis” has been magnified by growing global geopolitical tensions, which have a particular resonance in the region.
What’s different today is that the countries of the region are placing a pronounced emphasis on greater global and regional integration and are seeking to rebalance their intra-regional relationships with increased trade and connectivity. In this context, the WTO offers a reliable platform for economic cooperation and a variety of valuable tools. Let me elaborate on three areas: (i) WTO Accessions; (ii) Trade Facilitation; and (iii) the “Future of Trade”.
First on Accessions. The more countries are bound by the same set of international rules, the more they tend to trade among themselves, especially in a region where intra-regional trade is below its potential.
Central Asia is of great significance to the WTO and a key missing piece in the global multilateral trading system. On balance, the accession experience from the region has been rather positive. Tajikistan and Kazakhstan followed the Kyrgyz Republic’s early lead and became fully-fledged WTO members in 2013 and 2015 respectively.Already within the first five years of joining the WTO, these countries, on average, experienced 14% growth in merchandise exports and 41% increase in the value of inward FDI stocks. They also increased their participation in global value chains by 12%.
At present, Uzbekistan, Turkmenistan, and Azerbaijan are actively pursuing WTO membership negotiations at varying stages and speeds. I am excited to see their renewed engagement and the good progress registered so far.
Uzbekistan resumed its process in 2020 after a 15-year break and has been very active since. Negotiations intensified, in particular last year. Just two weeks ago, the 8th Working Party meeting took place in Geneva and underscored Uzbekistan’s strong political commitment to advance in the process. I will be visiting Tashkent tomorrow to discuss Uzbekistan’s accession negotiations.
Turkmenistan officially started its accession process in 2022, following a 2-year period of observership. In September 2023, I met with President Berdimuhamedov to discuss the relevance of WTO membership for Turkmenistan. I know that Turkmenistan has been working intensively with the Secretariat on the technical front, to kickstart the process. I hope that all necessary documents will be ready soon.
In July last year, Azerbaijan reactivated its accession process with a first meeting of its Working Party in 6 years. This meeting injected fresh momentum into this long-running accession (27 years). I will visit Baku on Thursday this week. WTO accession will be high on my agenda in my meetings with senior government figures.
One of the benefits of having both recently acceded members and acceding countries in the same region is that you can learn from both the positive and negative experiences you have had. I hope this Forum will provide an opportunity for frank discussions on how best to navigate the accession process. And what better way to learn than with those who walked the same path, dealing with a similar set of challenges?
I am also glad that this forum provides me an opportunity to thank Kazakhstan for its remarkable contributions to the multilateral trading system exemplified by its successful co-hosting of our 12th Ministerial Conference in 2022 in Geneva, which delivered multilateral outcomes beyond all expectations. Here allow me to thank by name the MC12 chair, His Excellency Timur Suleimenov, who now heads Kazakhstan’s central bank, as well as our moderator today – Kazakhstan’s wonderful former ambassador to the WTO, Her Excellency Zhanar Aitzhan, who has just relinquished her duties in Geneva. MC12 was originally supposed to be held in Astana. That could not happen because of the COVID-19 pandemic, but I do hope that a future WTO Ministerial Conference will be held in Central Asia.
Kazakhstan has also showed continued leadership on accession related issues, working with its friends in the WTO’s Group of Article XII Members to put forward an “Accession Reform” proposal which is aimed at enhancing existing procedures, promoting transparency, and strengthening the Secretariat’s support – especially to capacity- and resource-constrained acceding governments. I believe that this proposal could make a meaningful contribution to Members’ broader efforts to improve the functioning of the WTO. It would of course help support the ongoing accession efforts of all countries in this region and beyond. I met with the group of acceding governments in April and heard several concerns and suggestions which overlap with your proposal. I am concerned about the length of the accession process.Second, let me focus on Trade Facilitation. For a region where all countries are landlocked (and Uzbekistan is doubly-landlocked), the WTO Trade Facilitation Agreement (TFA) can advance the region’s sustainable connectivity agenda. Simplifying border procedures and lowering trade costs would help strengthen trade and transport links between Europe and Asia, including along the Middle Corridor, which has received increasing attention as countries aim to diversify trade routes, seek new partners, energy sources, and supply chains.
The geopolitical and strategic significance of Central Asia and the Middle Corridor has attracted huge investment and political support. The volume of goods moved along the Corridor has grown significantly. Trade along the Corridor grew nearly ten-fold in the space of three years, from 350,000 tons in 2020 to 3.2 million tons in 2022, according to the Trans-Caspian International Transport Route Association – impressive growth even when discounting for the pandemic’s impact in 2020. The World Bank estimates that with the right investments, transport times between Khorgos on China’s border with Kazakhstan and the Romanian Black Sea port of Constanta could be nearly halved from 48 days in 2022 to 24 days in 2030, by which time it forecasts that freight volumes could reach 11 million tons.
However, to fully seize this potential, the region will have to combine investments in hard infrastructure with investments in soft infrastructure – what we might think of as “trade policy connectivity”. The WTO Trade Facilitation Agreement contributes to such connectivity by encouraging measures like the harmonization of customs and transit procedures.
By cutting red tape, trade facilitation can certainly go a long way towards scaling up the benefits of regional integration and boosting regional trade. According to a recent study by the UN, full implementation of TFA measures could decrease trade costs by more than 11% for the countries in this region. Add in the implementation of “digital” trade facilitation measures to enable the seamless electronic exchange of trade data and documents across borders, and trade costs can be reduced by more than 20%.
Lower trade costs in the region have ramifications that go beyond transcontinental transportation – they could help bring the Central Asian economies from the margins to the mainstream of global networks for the production of goods and services. As President Tokayev noted while citing the proliferation of railway, logistics, and pipeline projects across Eurasia, and I quote: “The global map of commodity flows is dramatically changing, creating a growing demand for new supply chains to be established in the region.”
This goes to the heart of what we at the WTO are promoting under the rubric ‘re-globalization.’ If Central Asia can leverage better connectivity to attract investment and integrate into regional and global supply chains, it would be good for growth and job creation in the region. And to the extent that re-globalizing Central Asia reduces the concentration in some products and geographies that the pandemic exposed as a vulnerability, it would help make global supply networks, and the wider global economy, more resilient to shocks.
This vision brings me to the third area where the WTO can contribute to the region. I often say that the “Future of Trade” is services, it is digital, and it is green – and that it must be socially inclusive.
I particularly want to highlight digitally-delivered services here, because while countries in this region are landlocked, they need not be digitally locked. Cross-border trade in services delivered over computer networks is the fastest growing segment in global trade – – quadrupling in value since 2005 to reach $4.25 trillion last year. –Trade in such services, which range from streaming video to computer services provided remotely, has become a major driver of trade, growth, and job opportunities.
That said, the digital divide is real, which is why the WTO has been partnering with the World Bank to build hard and soft digital infrastructure in several African countries, with the aim of enabling them to participate more effectively in digital trade. There could be scope to do similar work in Central Asia.
I’m proud to say that WTO members – including from this region – have been responding to these 21st century commercial realities.
Our new disciplines on Services Domestic Regulation promise to substantially lower services trade costs springing from licensing requirements, qualification procedures, and other regulatory issues. The rules, which have the potential to reduce trade costs by as much as $125 billion worldwide, have already been implemented by 45 members.
125 of our Members, who represent three-quarters of the WTO membership, have reached an agreement on Investment Facilitation for Development, which promises to attract investment into those countries.
Discussions are also continuing in other areas, notably e-commerce; various environmental initiatives; Micro, Small and Medium Enterprises (MSMEs); and trade and gender.
I commend Kazakhstan for its active participation in these endeavours and encourage other Members and acceding governments alike to follow discussions in these initiatives, which I believe can aid your domestic reform efforts and help you learn from others. Participation is about exercising your rights in the rules-based multilateral trading system as well as shaping the development of future rules.
Let me end with an important message for those of you who are already WTO Members. As you know, two years ago at MC12, WTO members reached an agreement on curbing a wide range of harmful fisheries subsidies – the first WTO agreement with environmental sustainability at its heart. To come into force, this Agreement needs to be ratified by 2/3rds of WTO Members. We are already well on our way and 76 Members have now deposited their instruments of ratification. But every ratification counts and getting to 110 is squarely in members’ hands. I appeal especially to the countries of Central Asia.
Let me stop here. I am eager to hear your views on the role you see for the WTO in this region, in particular in the context of regional and global economic integration. I would be particularly interested in your views on the functioning of the WTO, including the accession process, the role of the Secretariat, and the types of assistance it could provide to best support your participation in the WTO.
Thank you.
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