72787 v1 World Trade Indicators 2009/10 Turkmenistan Trade Brief Trade Policy into consideration, it is apparent that Turkmen exports have good access to international markets, especially in Following its independence in 1991, Turkmenistan has comparison to its comparators. Turkmenistan’s opted for a gradual transformation from a planned to weighted average rest of the world tariff (including a market economy. Turkmenistan authorities have preferences) is 1.5 percent, lower than the regional and recently implemented several trade liberalizing income group averages of 2.1 and 2.9 percent, measures, such as reducing duty and excise taxes. respectively. Different from the majority of countries However, economic activity continues to be in the region, Turkmen agricultural products face a dominated by the public sector, and the trade system is more favorable trading environment (0.8 percent still relatively restrictive as all trade transactions have tariff) than non-agricultural products (1.5 percent to be registered with the Turkmen State Commodity tariff). An observer at the WTO, Turkmenistan signed Exchange. Nonetheless, based on its 5.1 percent a trade and investment framework agreement with the simple average of the MFN applied tariff in 2002, the United States on June 1, 2008.2 latest year for which internationally comparable tariff data is available, Turkmenistan had a regime more In January 2009, the Central Bank redenominated the open to trade than an average Europe and Central national currency, the manat, with the new manat Asia (ECA) (9.5 percent) or lower-middle-income equivalent to 5,000 old manat.3 This followed the (15.8 percent) country. Similar to the majority of depreciation of the Russian ruble against the U.S. countries in its comparator groups, Turkmenistan is dollar in the second part of 2008, which put more protective of its agricultural goods (12.8 percent Turkmenistan at a competitive disadvantage since tariff) than of its non-agricultural ones (3.9 percent Russia is its main trading partner and the weaker ruble tariff). Moreover, the 80.1 percent share of tariff lines meant that imports from Russia became cheaper while with zero MFN tariff in 2002 was by far the highest in exports to Russia became more expensive. the region, where the average was 14.7 percent. In response to the global crisis, Turkmenistan’s Behind the Border Constraints president signed a decree in October 2008 which The limited capacity of the existing natural gas allows the Ministry of Finance to establish a pipelines and lack of alternative natural gas export stabilization fund as a cushion against the impact of routes (two thirds of gas exports go to Russia’s the global slowdown.1 Gazprom) are constraining the country’s natural gas export potential and making exports vulnerable to External Environment disruptions. Despite the fact that freight forwarding, warehousing, and other logistics�related services have The simple average of the overall rest of the world been almost entirely privatized, major constraints to tariff (including preferences) faced by the country’s economic and export diversification include the poor exports is 9.8 percent. When its trade flows are taken development of telephone and Internet infrastructure as well as the gradual deterioration of the quality of education and basic health services. Public sector Unless otherwise indicated, all data are as of August 2009 management appears to be very fragmented and and are drawn from the World Trade Indicators 2009/10 nontransparent; the country ranked 197th (out of 203) Database. The database, Country Trade Briefs and on the World Bank’s 2007 Governance Overall Index, Trade-at-a-Glance Tables, are available at with a particularly low score on regulatory quality. http://www.worldbank.org/wti. If using information from this brief, please provide the Trade Outcomes following source citation: World Bank. 2010. “Turkmenistan Trade Brief.� World Trade Indicators Turkmenistan’s imports grew by 57 percent in 2009/10: Country Trade Briefs. Washington, DC: World nominal U.S. dollar terms in 2008. However, this was Bank. Available at http://www.worldbank.org/wti. more than offset by a 50 percent increase in exports, World Trade Indicators 2009/10 Turkmenistan Trade Brief resulting in a trade surplus of 50 percent of its GDP in 6. EIU, 2008, p. 22. 2008.4 The country’s largest exports are hydrocarbons, 7. World Bank, April 2009. accounting for about 90 percent of total exports.5 8. EIU, July 2009, p. 4. Cotton fibre used to be an important export good as well; however, its share in exports revenue has fallen from around 10 percent in the 1990s to only 1 References percent.6 Due to the fact that it is relatively insulated Ahsan, Nazmul. October 5, 2008. “US Scraps TIFA Draft, and thanks to its supply contract with Russia, the Sends New Proposal.� Bilaterals.org July 20, 2009. recent global crisis is not expected to have a big . exports should not be influenced by the fall in Asian Development Bank. 2009. Asian Development commodity prices, as the contract price for Outlook 2009: Rebalancing Asia’s Growth. Manila: Asian Turkmenistan’s gas exports is rising.7 According to Development Bank. Turkmenistan’s president, the country’s trade turnover Economist Intelligence Unit (EIU). 2008. Country Profile: increased by 76 percent in January and February of Turkmenistan. EIU. 2009, compared to the same period the year before. ____. July 2009. Country Report: Turkmenistan. EIU. However, the volume of exports has recently been influenced by the halt of almost all exports of gas to International Monetary Fund (IMF). May 11, 2009. Russia after a pipeline explosion in April 2009.8 “Crisis Virtually Halts Growth in Caucasus and Central Asia.� IMF Survey online. July 13, 2009. . World Bank. April 2009. “Country Brief 2009: Turk- 1. Asian Development Bank, 2009, p. 155. menistan.� World Bank, Washington, DC. July 03, 2. Ahsan, October 5, 2008. 2009. . 3. Asian Development Bank, 2009, p. 155. 4. EIU, July 2009, pp. 13, 25. 5. Asian Development Bank, 2009, p. 154.