Effect of potential free trade zone between Turkey and Customs Union on Kazakhstan

25 july 2014, 14:35
Effect of potential free trade zone between Turkey and Customs Union on Kazakhstan - ©Reuters

Recent statements about Turkey's willingness to establish a free trade zone with the Customs Union have given experts food for thought, Tengrinews reports.

Senior analyst at the Agency for Research on ROI (AIPS) Talgat Musabekov believes that a free trade zone between Turkey and the Customs Union (CU) will benefit Kazakhstan.

"In my opinion, Turkey initiating establishment of a free trade zone with the CU is a positive signal for Kazakhstan. Both because of the potential to expand the market for Kazakhstani exporters and because it would shift the vectors and centers of power in the free trade zone with Russia and Belarus. Presence of a powerful player like Turkey that is economically more comparable to Russia than Kazakhstan, would provide Kazakhstan with more space for maneuvering in negotiations," Musabekov said.

The analyst added that Kazakhstan would be able to sell chemical industry products, mostly fertilizers, in addition to its natural resources. "A significant part of our imports from Turkey is building materials, so there may be a few possibilities there for Kazakhstani producers, too. I am sure that new transport and logistics systems between Turkey and the Western Siberian region of Russia have great prospects," he said.

Leading analyst of Wild Bear Capital Victor Neustroev believes that the free trade area will allow Russia and Kazakhstan to supply food products to Turkey, particularly wheat, as well as possibly cars and equipment.

However, there are those who believe that the deal will primarily benefit Turkey. For example, senior analyst of Alpari Anna Bodrova stressed the fact that Turkey voiced its willingness to establish a free trade zone with the CU, but not to join the Union. “The basis of Turkish exports is light industry products, such as clothing, textiles, carpets and more. Together, all this export accounts for about 12% of its GDP. (...) This situation is neutral for the CU. There is no shortage of our own textiles. However, the CU countries can turn the situation to their advantage by making a deal to sell energy to Turkey at special prices," Bodrova said. She added that Kazakhstan and Russia could supply spare parts and rare earth metals to Turkey.

Unlike all the views above, the analyst of the investment holding company Finam Anatoly Vakulenko does not focus on cost-benefit analysis of the potential trade zone. He thinks that Turkey's statements in this respect are mostly rhetorical and are called to scare Europeans. "Turkey has long and unsuccessfully been trying to join the EU, but the Europeans have just promised jam tomorrow to their Turkish partners. CU stands out as an alternative of a sort, and the Turks are using it to scare the Europeans,” he said.

Reporting by Azhar Ashirova, writing by Dinara Urazova, editing by Tatyana Kuzmina

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