GOVERNMENT OF KAZAKHSTAN PROPOSES RESOLUTION OF CUSTOMS

UNCLAS SECTION 01 OF 02 ASTANA 002716

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR SCA/CEN - SUMAR

E.O. 12958: N/A
TAGS: ECON ETRD EINV EIND ENRG PGOV KTDB KZ
SUBJECT: GOVERNMENT OF KAZAKHSTAN PROPOSES RESOLUTION OF CUSTOMS
SHUTDOWN

Ref: A) Astana 2511

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1. (SBU) Summary. A new amendment to the Customs Code, enacted by
the Government of Kazakhstan (GOK) on July 26, mandates submission
of export declaration forms when bringing goods into the country
"for free circulation." When the new statute came into force on
August 21, it immediately stopped the entry into Kazakhstan of goods
originating from countries, which do not allow sharing of such
export declarations, particularly the U.S. and the European Union.
Embassy Astana has also been unable to bring in some shipments. In
response to repeated appeals by the Ambassador, Prime Minister
Masimov acknowledged the government's "mistake" but stated that
correcting it will require enactment of new legislation, which will
take time. In a meeting with Charge today, Vice Minister of Finance
outlined a short-term solution. End summary.

USG Aggressively Pushes for Resolution of Customs Shutdown
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2. (SBU) Post first became aware of the stoppage of U.S. goods at
the Kazakhstani customs due to difficulties in clearing diplomatic
shipments and raised the issue with the Customs Committee. Calls to
Post from U.S. companies soon followed. On September 5, Special
Representative for Commercial and Business Affairs J. Frank Mermoud
brought up the issue with Prime Minister Masimov, who described the
matter as being "within his competence" and stated that it should
soon be resolved. (ref A) The Ambassador has discussed the customs
shutdown with Masimov on three different occasions. On September
10, the Ambassador also sent a letter to Finance Minister Korzhova
(note: the Customs Committee operates under the aegis of the
Ministry of Finance. End note.),which stated that U.S. law
prevents sharing of customs declarations and asked for immediate
release of the goods held at the border.


3. (SBU) Speaking to the Ambassador, Masimov acknowledged that the
new law, initially "aimed at the Chinese," was a "mistake" and now
needs to be corrected with another legislative change. Masimov told
the Ambassador on September 23 that a government session this week
will draft a law for Parliament's consideration. However, Masimov
did not hazard a guess as to how long the process would take.
Chevron executives have told the Ambassador that the company's CEO
has raised the issue with Nazarbayev as a very urgent matter.
Nazarbayev, Chevron representatives added, appeared surprised.


4. (SBU) Post has also been working to resolve the non-release of
goods headed for the Embassy, a problem shared by many diplomatic
missions accredited in Kazakhstan. With Management Counselor's
active involvement, a letter was drafted and sent on behalf of
Astana's diplomatic corps by Deputy Foreign Minister Zhoshybayev.

Solution in Sight?
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5. (SBU) On September 27, Charge met with Vice Minister of Finance
Daulet Yergozhin. Yergozhin told Charge that draft legislation to
"fix" the problem caused by "a badly drafted law" is in the works
but may take "a couple of months" to enact. (Note: According to
other sources, draft legislation has now been given by the
government to Parliament. End note.) Yergozhin also said that the
problem can, in the meantime, be resolved by having the U.S. qualify
for an exemption. What is needed, Yergozhin stated, is for the U.S.
customs authorities to provide a letter, addressed to the Chairman
of the Kazakhstani Customs Committee and notarized by the
Kazakhstani Embassy in Washington, stating that it is illegal under
U.S. law to share export declaration forms. Yergozhin noted that
communication on this subject needs to occur between two customs
authorities due to the International Customs Union's requirements.
A copy of this letter, followed by the original, would be
acceptable. Yergozhin stated that U.S. goods would then be exempted
from the export declaration submission requirement "within 24
hours." Yergozhin also told Charge that the head of the Customs
Committee has now ordered Atyrau customs authorities to permit
Chevron's shipments to enter Kazakhstan. (Note: Chevron executives
had earlier told Charge that the company's slowdown of production
due to delays in receiving shipments is costing the GOK $6 million a
day in lost tax revenues. End note.)

Comment
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6. (SBU) Comment. Post has pushed hard for an end to the customs
shutdown. The Prime Minister is clearly aware of the problem and is
working to resolve it. He is seeking to enact legislation lifting
or limiting the export declaration requirement, but this will take
time. As that process takes place, we are seeking a short-term
solution to ensure that U.S. goods are permitted to enter
Kazakhstan. Charge's meeting today with Vice Minister of Finance

ASTANA 00002716 002.2 OF 002


provides hope that such a solution is possible. End comment.

MILAS