KAZAKHSTAN: SECRETARY JOHANNS' JANUARY 11 MEETING

UNCLAS SECTION 01 OF 02 ALMATY 000215 SIPDIS SENSITIVE E.O. 190356: N/A TAGS: OVIP PREL ECON ETRD KZ ECONOMIC SUBJECT: KAZAKHSTAN: SECRETARY JOHANNS' JANUARY 11 MEETING WITH DEPUTY PRIME MINISTER AND MINISTER OF INDUSTRY AND TRADE MYNBAYEV ¶1. (U) Participants in Secretary Johanns' January 11 Meeting with Kazakhstani Deputy Prime Minister and Minister of Industry and Trade Mynbayev in Astana: U.S. Secretary Mike Johanns SIPDIS Mrs. Stephanie Johanns Ambassador John Ordway Undersecretary of State for Economic, Business, and Agricultural Affairs Josette Shiner Undersecretary of Treasury for International Affairs Timothy Adams Deputy Assistant Secretary of State for European and Eurasian Affairs Matthew Bryza Jim Loveland (Embassy Notetaker) KAZAKHSTAN Deputy Prime Minister and Minister of Industry and Trade, Sauat Mynbayev Vice-Minister of Industry and Trade, Zhanar Aitzhanova Vice-Minister of Agriculture, Liliya Musina Vice-Minister of Finance, Gani Uzbekov Advisor to the Minister of Industry and Trade, Dinara Shaymardanova Head Specialist of the Ministry of Industry and Trade, Aray Kasabekova ¶2. (SBU) Summary: During a January 11 meeting with Secretary of Agriculture Johanns, Minister of Industry and SIPDIS Trade Mynbayev provided an overview of outstanding issues relating to Kazakhstan's Working Party negotiations on WTO accession. Secretary Johanns complimented Mynbayev on his perseverance in the negotiations, and promised to inform the U.S. Trade Representative of Kazakhstan's keen interest in moving the accession process forward. End Summary. Mybayev: WTO Negotiations at "Critical Stage" -------------- ¶3. (SBU) Mynbayev offered a positive assessment of Kazakhstan's economy, noting that the country enjoyed 9% GDP growth, stable microeconomic indicators, and satisfactory balance of payments. The principal topic to discuss, of course, was the WTO accession process. "The negotiations have reached a critical stage," he told Secretary Johanns, "especially regarding agricultural SIPDIS issues." ¶4. (SBU) The Secretary commented on Nazarbayev's decisive victory, remarking that, as a politician who had run many times for office, he had never won by as large a margin. However, the Secretary continued, there has been fair criticism of the election. We only ask that you make improvements and "continue on the path of democracy." The Secretary then turned to the issue of WTO accession, asking SIPDIS Mynbayev to summarize the outstanding issues. Tariffs and Safeguards -------------- ¶5. (SBU) Mynbayev replied that the remaining issues fell into two primary categories: agricultural subsidies, and tariffs and safeguards. In terms of tariffs and safeguards, he said, the GOK had a good idea of what the negotiating countries wanted. However, the preliminary proposals were very broad; the GOK would like the U.S. to focus on issues that were "commercially significant." It would be better, he said, "to come to agreement on the specific issues that are important to you." State Subsidies to Agriculture -------------- ¶6. (SBU) Mynbayev then turned to the issue of state support for agriculture. We understand that the U.S. is working toward a worldwide reduction of subsidies, he said. He then described factors which motivated GOK subsidization of agriculture: long, difficult winters; export paths "blocked by Russia" and hindered by Kazakhstan's lack of an outlet to the sea; and Russia's discriminatory railway tariffs. 40% of the Kazakhstani population works in agriculture, Mynbayev told the Secretary, in conditions of low productivity. Thus, "it takes time" to reduce the levels of state subsidies. The total amount of state support, he said, was 9% of gross agricultural product, and very small in absolute terms - only $650 million. "This is a sensitive area for us," Mynbayev concluded. "Our situation is not comparable to that of European countries." Labor Migration, Transport Tariffs, and Telecom -------------- -- ¶7. (SBU) Mynbayev then explained the GOK's position on a series of WTO-related issues. On labor migration, he noted that the GOK still relied on a system of quotas. The GOK's visa mechanism, he said, was "weak," and not "streamlined" as in Western countries. "We have a lot to learn," he concluded. "But we are doing it regardless of the WTO negotiations." ¶8. (SBU) Addressing the issue of railway transport, Mynbayev acknowledged that "we require much greater transparency," and noted that the GOK was in the process of analyzing how to lower railway tariffs. Similarly, the government had "taken some steps" to lower pipeline tariffs. The telecommunication sector was a concern: the GOK would like to retain 50% capital ownership, he said, for national security considerations. "WTO Plus" Issues -------------- ¶9. (SBU) Mynbayev noted that Kazakhstan had undertaken numerous sector-specific WTO-plus initiatives. While the GOK had adopted "most" of the items, "we would like flexibility on the part of your negotiators." "We would like to set several aside," he concluded, and work toward less than 100% compliance. Phyto-Sanitary Barriers -------------- ¶10. (SBU) Turning to Sanitary and Phyto-Sanitary Barriers (SPS),Mynbayev began by saying that "our negotiators will confirm that we've accomplished a lot." The GOK planned further amendments to the customs laws, and was "trying to accelerate the process." In the first six months of next year, he said, the GOK hoped to introduce 10 new laws to parliament. ¶11. (SBU) Secretary Johanns concluded the meeting by telling Mynbayev that he appreciated his perseverance. The Secretary added that he worked with the USTR on an ongoing SIPDIS basis, and would "sit down with the Trade Representative and reassert your significant interest in moving forward on this." ¶12. (U) Secretary Johanns did not have the opportunity to clear this cable. ASQUINO