Kyrgyzstan’s Accession to Customs Union: Opportunities and Threats for Kyrgyz – Uzbek Bilateral Trade

Abstract

Preferential trade agreements have become an important tool in boosting the trade, advancing economic cooperation between countries and enhancing the welfare of people. This is well used in post-Soviet area, where the Customs Union of Russia-Kazakhstan-Belarus (CU RKB) and the Free Trade Zone within the Commonwealth of Independent States (FTZ CIS) reshape the landscape of intra-and inter-state trade. Formerly obsolete FTZ CIS is going to revive to improve trade relations between its members. At present time, Kyrgyzstan takes steps towards accession to CU RKB with its Common External Tariff and trade regulations, while having bilateral agreements on free trade regime with number of countries, including Uzbekistan. Besides, the trade between Kyrgyzstan and Uzbekistan is stipulated by their landlockedness, adjacency and saved economic ties from soviet past. Consequently, Kyrgyzstan’s accession to CU RKB will have influence on trade relations with Uzbekistan, accompanied with its opportunities and threats. In this regard, this study discusses whether measures taken by the governments of both countries will promote or discourage the bilateral trade in case of Kyrgyzstan’s accession to CU RKB. Finally, this paper also contains policy recommendations on measures to be taken by governments of both countries to improve trade, that’s why it may contribute to future studies on related topics.