Five Emerging Trade Trends in Central Asian Connectivity
Title: Central Asia Focuses on Regional Trade Connectivity for Sustainable Growth
Introduction:
The Astana International Forum, held on June 8-9, highlighted the increasing significance of trade connectivity in Central Asia and its role in global trade. Central Asian countries are prioritizing regional trade cooperation to ensure independent and sustainable growth. With a vibrant market of over 76 million people and no marine borders, these countries are strategically positioned to promote regional cooperation and trade. This article explores the key trends driving regional trade growth in Central Asia and the measures taken to enhance trade connectivity in the region.
Intra-Regional Trade on the Rise:
Over the past two decades, Central Asian countries have made remarkable progress, with substantial growth potential. The region’s GDP has expanded at an average annual rate of 6.2%, reaching $347 billion. Foreign trade turnover has risen sevenfold since 2000, with the Central Asian countries’ foreign product trade worth nearly $190 billion in 2022. Kazakhstan leads the region as the trade champion, accounting for 80% of the total volume of mutual trade. The intra-regional trade has increased by 73.4% from 2018 to 2022, reaching $10 billion. Kazakhstan’s biggest trading partner in Central Asia is Uzbekistan, with bilateral trade reaching approximately $5 billion in 2022. Kazakhstan aims to further strengthen its trade relations with Uzbekistan and the Kyrgyz Republic, targeting trade volumes of up to $10 billion and $2 billion, respectively, in the medium term.
Focus on Paperless Trade and Digitalization:
Kazakhstan is at the forefront of the movement towards paperless trade, which acts as a catalyst for faster trade growth. The ratification process for the Framework Agreement on Facilitating Cross-Border Paperless Trade in the Asia-Pacific Region has already begun, thanks to a joint study conducted by Kazakhstan, Uzbekistan, and the Kyrgyz Republic in 2021. This study resulted in specific recommendations on the technical and legal feasibility of paperless cross-border trade. In addition, the Central Asian governments signed a regional legal instrument in April 2023, facilitating information exchange and consultations among National Committees for Trade Facilitation, supported by the German Agency for International Cooperation. The Central Asia Gateway trade information portal, launched in May 2023, consolidates trade facilitation information from all the region’s countries to strengthen regional trade relations with international partners.
Integration into Global Trade:
Central Asian countries are actively advocating for regional and global trade liberalization. All countries participate in regional trade within the Commonwealth of Independent States, while Kazakhstan and the Kyrgyz Republic are members of the Eurasian Economic Union. Over recent years, three countries in the region have become members of the World Trade Organization (WTO), and Uzbekistan and Turkmenistan are currently negotiating membership. WTO accession has prompted internal trade reforms, improved market access, and reduced barriers within the region.
Enhancing Trade and Transport Connectivity:
The intensification of regionalization processes in Central Asia has necessitated the development of transportation corridors and improved cross-border collaboration. Efforts to promote interregional cooperation include the establishment of the Central Asia International Center for Cross-Border Cooperation on the Kazakhstan-Uzbekistan border and the Kyrgyz-Kazakh industrial, trade, and logistics complex near checkpoints Ak-Tilek and Karasu. Similar programs are being implemented in other Central Asian countries. Kazakhstan, with its strategic access to Caucasian and European markets through the Caspian ports of Aktau and Kuryk, holds immense transit potential. The country is investing in the development of economic corridors, transport hubs, and the digitization of transit procedures to facilitate international trade.
Institutionalizing Export Promotion:
Enhancing export infrastructure is a priority for all Central Asian countries, with each nation focused on improving existing infrastructure or establishing new export support institutions. Projects like the USAID Central Asia Trade Program aim to boost trade potential through increased cooperation and knowledge exchange among export promotion institutions. Central Asian export agencies have also embarked on knowledge-sharing trips to countries like Kazakhstan to learn from their expertise in export development and promotion. In 2023, Uzbekistan hosted Central Asian export promotion organizations for knowledge exchange and skills development in conducting foreign trade activities in the region.
Conclusion:
Central Asian countries recognize the importance of regional trade connectivity for sustainable economic growth. With a focus on intra-regional trade, paperless trade facilitation, integration into global trade, improved trade and transport connectivity, and institutionalizing export promotion, Central Asian nations are making significant strides towards enhancing regional trade cooperation. These efforts will not only strengthen economic ties within the region but also contribute to overall global trade integration.
