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Washington Looks To Strengthen Ties With Kazakhstan Markets

By Nazrin Gadimova December 28, 2017

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Kazakhstan is Central Asia’s wealthiest economy, generating over 57 percent of the region’s gross domestic product, which stands at $128 billion, according to US government statistics.

Though the global economy is still experiencing ripple effects from the 2015 global drop in oil prices, the United States and Kazakhstan remain strong partners when it comes to trade and economy.

“As far as possible, we are strengthening our trade relations and try to promote Kazakhstan’s exit to other markets [that are] beyond the borders of Central Asia,” said Mark Linscott, Assistant U.S. Trade Representative for South and Central Asian Affairs, during his visit to Kazakhstan from December 11-13 and as reported by Kapital.

Linscott was in Kazakhstan for a meeting to discuss the U.S.–Central Asia Trade and Investment Framework Agreement (TIFA). Launched in 2004 by Kazakhstan, Turkmenistan, Kyrgyzstan, Tajikistan and Uzbekistan, TIFA also includes neighboring Afghanistan. Together these five countries work to promote trade and opportunities with the U.S. market.

Washington sees Kazakhstan, one of the world’s largest countries and the most developed in Central Asia, as a promising market for business though they are thousands of miles apart.

Kazakhstan is Central Asia’s wealthiest economy, generating over 57 percent of the region’s gross domestic product, which stands at $128 billion, according to US government statistics. As the world’s tenth largest crude oil exporter that also holds the 15th largest proved natural gas reserves, the country’s wealth is primarily derived from hydrocarbons.

The economy is still reliant on its hydrocarbons to generate state revenues, and officials in Astana are aware that it is not sustainable given fluctuations in the global prices of oil and gas.

Agriculture has been identified as a priority area that Kazakhstan is keen on strengthening, along with its manufacturing, tourism and technology sectors, to shift some of the economic burden away from energy.

With 20 million hectares (49 million acres) of land suitable for farming out of a total area of about one million square miles, Kazakhstan ranks the third largest agricultural producer in the Commonwealth of Independent States region, after Russia and Ukraine.

U.S. farm exports to Kazakhstan include mostly heavy machinery, such as grain harvesting combines, reapers, sprayers, tractors, seeders, cultivators, and grain drying and cleaning equipment. The state of North Dakota alone exports more than 50,000 Black Angus and Hereford cattle to Kazakhstan annually.

Trade between the two countries has grown steadily since the mid-2000s, reaching $1.9 billion in 2016, with US exports to Kazakhstan amounted to $1.1 billion and Kazakhstan goods exported to the US worth $742 million. Kazakhstan has supplied the US with non-renewable energy resources, including oil and oil products, iron, steel, uranium, and tantalum.

In 2017, trade turnover between the two countries is expected to hit $1.66 billion.

Chevron was the first American company to make inroads into Kazakhstan, in 1993. The U.S. is now involved in 17 sectors of the Kazakhstani economy, worth several billions of dollars and including energy, agriculture, insurance and infrastructure.

According to data provided by Kazakshtan’s National Bank, in the first half of 2017 the total gross inflow of foreign direct investment into the country amounted to $10.4 billion, while the U.S. entered the top list of its foreign investors, bringing in nearly $2.3 billion. Throughout the period from 2005-2013, the U.S. investments in Kazakhstan amounted to nearly $31 billion, according to the US State Department.

Since 2012, Washington and Astana have been working within a framework called the Strategic Partnership Dialogue, to create favorable conditions for the development of investment and trade ties.

In 2015, Kazakhstan entered into the World Trade Organization, offering foreign investors easier access to its land, financial incentives, and opportunities for privatizing some of its state-owned enterprises.