BACKGROUND: All five Central Asian States belong to various regional cooperation and integration schemes such as the CIS, Eurasian Economic Community, Central Asian Cooperation Organization, Common Economic Space, Economic Co-operation Organization, Shanghai Cooperation Organization, etc. In most cases, these schemes include ambitious trade liberalization components such as the creation of free trade areas with the elimination of tariff barriers among members or customs unions with the adoption of common external tariffs. At the same time, Central Asian states are making their new international borders more effective with the strengthening of customs controls, and raising numerous technical and administrative obstacles to trade in goods and services, the movement of people and transit. Besides, as indicated by Transparency International, those who are engaged in international trade operations with these countries often report the poor quality of governance and very high corruption in customs bodies and central administration. Such a context implies tremendous legal and informal costs for border crossing, and the higher these costs, the less trade, business and economic growth. According to the United Nations Conference on Trade and Development (UNCTAD), border related trade transaction costs (corresponding to finance, customs, business information, transport & telecom) may reach 7-10% of the value of traded goods, a high ratio indeed. The national economies of Central Asia do not also seem very complementary, which limits the scope for a regional division of labour, specialization and economic integration. In fact, taking into account actual resource endowments (mainly raw materials, primary products, oil and gas) and so-called \"revealed comparative advantages\", it is essential to export to the rich markets of the West and, for that purpose, joining WTO is quite important. The Kyrgyz Republic is the only Central Asian country that is a member of WTO, since 20 December 1998. Kazakhstan, Tajikistan and Uzbekistan are engaged in complex and sometimes difficult negotiations for becoming members. There are signs that Turkmenistan might be interested in applying for WTO membership. For these reasons, it is important to take into account WTO rules on regional integration arrangements. For WTO members, regional trade agreements are permitted under specific conditions spelled in at least two sets of rules. The first one corresponds to paragraphs 4 to 10 of the General Agreement on Tariffs and Trade (GATT) Article XXIV, as clarified in the “Understanding on the Interpretation of Article XXIV of the GATT 1994”, and addresses the formation of free trade areas and customs unions for trade in goods. The second one is specified in Article V of the General Agreement on Trade in Services (GATS). Overall, WTO rules underscore that regional trade agreements should not result in higher trade protection against the rest of the world, i.e. non-member countries.

IMPLICATIONS: Joining WTO is imperative for fruitful integration in the global economy, attracting foreign direct investments, diversifying the economic base, boosting exports, fostering economic growth and development, and enhancing the welfare of populations characterized by very low incomes and widespread poverty. The rather large number of regional integration schemes, in this context, may raise legitimate doubts about their credibility and mutual compatibility; they could eventually delay WTO accession and make membership more complicated. Nevertheless, regional trade and further integration in the world economy can be fostered with the adoption of so-called \"trade facilitation measures\". Such measures can be imposed unilaterally or on a bilateral basis. Trade Facilitation is often defined as \"the simplification and harmonization of international trade procedures\" with trade procedures being the \"activities, practices and formalities involved in collecting, presenting, communicating and processing data required for the movement of goods in international trade\". This definition encompasses import and export procedures (e.g. customs or licensing procedures), transport formalities, payments, insurance and other financial requirements. Work in the area has been carried out by international organisations. De facto, the United Nations Economic Commission for Europe (UNECE) plays a major role as the organisation that has developed standards for trade facilitation for more than 40 years with: the UN Layout Key for trade documents, guidelines for national trade facilitation bodies, codes for locations (LOCODE), trade data elements (UN/TDED), the only global standard for electronic data interchange (UN/EDIFACT) as well as key–expertise on trade facilitation. The World Bank and the European Bank for Reconstruction and Development (EBRD) are also involved in trade facilitation activities. The adoption and the implementation of standard trade facilitation measures must be integrated in a strategy that includes other elements such as investing in equipment and infrastructure to accelerate the processing of formalities, training staff, recruiting qualified personnel and enhancing ethical standards within the framework of anti-corruption strategies. Such a strategy shall make the trade system much more transparent, contribute to higher levels of customs duties collection and enhance national and global security.

CONCLUSIONS: There is a need for leaders and policy-makers in Central Asia to reassess their participation in an excessive number of regional economic integration schemes, taking into account the possibility of mutual incompatibility, low effectiveness and seemingly poor outcomes and prospects. In the calculus of leaders, the limited benefits of these regional integration schemes versus the long-term implications of WTO membership on trade, investments, growth and welfare is bound to eventually become obvious. From a very practical perspective, the way ahead is to grant priority to the adoption and effective implementation of trade facilitation strategies and measures and, for that purpose, it is critical to secure adequate technical assistance that is provided by international organizations. It should also be made clear that trade facilitation measures may conflict with very powerful vested interests that benefit from the lack of transparency of the trade system.

AUTHOR’S BIO: Dr. Daniel Linotte earned his D.Phil. at Oxford University. He is currently Senior Economic Adviser to the OSCE. He worked for international organisations (UNIDO, UNECE, UNCTAD, OECD, Council of Europe, etc) and technical assistance agencies. He spent three years in Georgia as a chief economist, advising on WTO matters. The views expressed in this article are those of the author only and do not necessarily reflect an OSCE official position.