Abstract

Central Asia serves as a bridge for the EU that links to China, Afghanistan and the Middle East. This region is also an important source for EU’s energy imports. The most exported products from Central Asia to EU are crude oil, gas, metals and fibres. EU exports machinery and transportation equipment and other manufacturing industry products to Central Asia, which is equivalent to half of trade volume of regional exports. The Generalized Preferences System (GPS) provides four other Central Asian countries except Kazakhstan, benefit from easy access to the EU market. The aim of this study is to find out bilateral foreign trade relations between EU and Central Asian countries. For this reason, the yearly data from 1998 (based on the WTO membership of Kyrgyzstan) to 2017 is analysed using the SVAR method. The purpose is to determine the effects of imported and exported products among the regions on each other. According to the empirical data obtained, crude oil and gas are the most internal variables while machinery and transportation industry equipment are the most external variables. Therefore, the EU's import dependence on energy is the main reason for the trade relations with Central Asia. Central Asian countries are dependent on the EU in the context of medium-level technology products.

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