Groovy Kind of Customs Union: Kazakhstan v Russia

♠ Posted by Emmanuel in , at 5/01/2015 01:30:00 AM
Screw Russia, "Buy Kazakh."
We haven't had a trade-related post in quite some time now, so I have one for you right here. And what a story it is! In fact, it's my early candidate for 2015's dumb-but-true story in a year not exactly lacking for logically-challenged events. With apologies to Phil Collins, ever heard of an internally discriminatory free trade agreement? Neither have I--until now. It seems Kazakhstan has been heavily promoting a "buy Kazakh" drive immediately after a customs union with Russia came into effect at the start of the year.
Shelves in supermarkets across the ex-Soviet republic of Kazakhstan teem with bright signs championing locally-produced goods over Russian alternatives.The push to buy local is part of the government's "Made in Kazakhstan" initiative to support domestic producers struggling to match cheap imports from neighbouring Russia, which have enjoyed the competitive benefits of the sanction-battered ruble's dramatic slide in value.

The campaign was launched despite Kazakhstan and Russia having entered the Eurasian Economic Union earlier this year -- the trade bloc backed by both countries' authoritarian presidents. The blue "KZ" labels of the Buy Kazakh campaign appear to be achieving their objective with some patriotic shoppers...

Authorities in Astana have recently slapped bans on fuel and foods -- from chocolate to pork products -- imported from its strategic Russian partner, citing alleged sanitary breaches [...] Following complaints by Kazakh confectionery giant Rakhat that its sales have plummeted 20-30 percent this year due to Russian competitors selling their products up to 60 percent cheaper, Astana moved to bolster the company's fortunes this month by banning Russian chocolate.

Prohibitions are also roiling fuel products after Kazakhstan suspended imports for 45 days on March 5, citing a domestic surplus. Last week the Kazakh government renewed restrictions on Russian diesel imports, with local refiners standing to benefit as farmers prepare for the spring sowing season.
Not to be outdone in "liberalizing trade," the Russians have been blocking their Kazakh counterparts with trade barriers of their own as both sides deny that anything is amiss:
Moscow has responded with tit-for-tat measures as both government seek to protect affected businesses.

Officials in both countries deny problems in bilateral relations, with Putin's spokesman Dmitry Peskov recently calling talk of a trade war an "exaggeration". Kazakhstan's Deputy Economy Minister Kairbek Uskenbaev said the bans concerned "specific companies," and would not damage the country's "most friendly" relations with Russia.
With "free trade agreement partners" like these, who needs protectionism?