The Quagmire of Trade Facilitation in Central Asia: Settled or Unsettled

The trade performance of Central Asia demonstrated a remarkable capacity to withstand recent economic disruptions. Nevertheless, the region’s dependence on a narrow range of export commodities and a confined selection of trading partners exposes it to significant economic risks. As a result, Central Asian nations are prioritising improved connectivity to more effectively engage with global value chains, address geographical challenges, and increase trade. Facilitating trade is crucial for achieving these goals by reducing costs associated with trade and fostering integration. Nevertheless, Central Asia faces significant challenges, and although there have been remarkable progressions in recent years, it remains behind other regions concerning trade facilitation indicators (TFIs). This study, grounded in the OECD trade facilitation indicators (TFIs), aims to support governments in refining border procedures, reducing trade costs, augmenting trade flows, and optimising the benefits of international trade. It seeks to pinpoint areas for intervention and assess the potential impacts of trade facilitation reforms. The report assesses the performance of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan based on the OECD’s TFI metrics, highlights notable challenges, and presents recommendations for improvement. The countries of Central Asia have made significant progress in trade facilitation, evidenced by improvements in their performance on the OECD trade facilitation indicators (TFIs) in 2022. Uzbekistan has achieved the most notable relative performance improvement since 2019, while Kazakhstan has distinguished itself with the highest absolute increase in TFI score, making it the leading performer in the region. Challenges persist due to a lack of effective information transmission, limited digitalisation and automation, and suboptimal collaboration among agencies. Governments have improved the distribution of information; however, additional initiatives are necessary, particularly in the standardisation and accessibility of trade-related regulations. There is an opportunity to improve the provision of comprehensive and easily understandable information regarding penalty clauses, appeal processes, court rulings, and trade agreements. This involves the digital accessibility of trade-related legislation, particularly emphasising the need for aligning the prior dissemination of regulations before their enactment—a shortcoming observed in Tajikistan and Uzbekistan. Kyrgyzstan, Tajikistan, and Uzbekistan face challenges in the digitisation and automation of their trade processes. Notwithstanding the progress made in this domain, there remains a pressing necessity to enhance electronic data exchange, refine pre-arrival processing, and establish comprehensive national online trading single windows. The research suggests that Central Asia requires a concerted effort among local and international border agencies to enhance coordination, prioritise engagement with the private sector, and allocate trade facilitation resources and information effectively. This encompasses sophisticated decision-making processes, user-friendly customs websites, and transparency in trade regulations. Central Asian economies should prioritise the reduction of unnecessary paper and electronic clearance processes by promoting digitalisation efforts. This includes harmonising customs documentation, implementing electronic payment systems, and standardising e-customs frameworks. To improve regional coordination and collaboration, governments need to empower customs agents for targeted border agency controls, establish steering committees, and develop domestic frameworks that promote inter-agency coordination. This should particularly include staff exchanges and training programmes aimed at enhancing interoperability among border agencies.