Dr. Bakhrom Mirkasimov and Dr. Zakirov Bekzod, Center for Policy Research & Outreach (CPRO) at Westminster International University in Tashkent, Uzbekistan.

The trade policy of Uzbekistan

Over the past few years, Uzbekistan has embarked on a major transition in its trade policy as the country prepares to integrate further with external markets. The government’s recent efforts involve three prongs: engaging in the WTO talks, pursuing bilateral FTAs and enhancing deeper cooperation with Central Asian countries^[1]. These efforts have intensified amid a shifting geopolitical environment that demands enhanced connectivity, regional discussions, and a revitalized dedication to economic integration.

WTO accession. The path towards WTO accession has led Uzbekistan to depart from its previous protectionist stance and move towards openness and economic integration. After the suspension of WTO accession talks for fifteen years, Uzbekistan restarted talks in 2020^[2]. This move is part of a broader economic reform agenda in Uzbekistan that aims to improve the business climate, ease regulatory barriers, and foster transparency in trade practices.

It is worth noting that WTO accession is considered by the government as a necessary step to harmonize Uzbekistan’s trade regime with globally accepted norms^[3]. Membership opens the way to uniform commercial practices, cuts red tape relevant to external trade, and helps expand its economic model beyond agriculture and hydrocarbons. To this end, the government intends to remove subsidies and exemptions that are given to encourage exports^[4]. With accession, investor confidence is expected to improve as the legislation sends a strong signal in favour of the rule of law, transparency and non-discrimination that would help attract foreign direct investment (FDI) in crucial areas like energy, infrastructure and agriculture^[5]. To this day, Uzbekistan has completed negotiations with 18 countries on joining the WTO, of which 14 countries have signed protocols on completing negotiations on market access.

Strategic FTAs. Alongside efforts to accede to the WTO, Uzbekistan has sought key FTAs as part of its broader economic reform program. These agreements, too, focus on facilitating greater integration into export markets and deeper connectivity with them^[6]. So far, Uzbekistan has established most-favored-nation (MFN) treaties with 47 countries^[7]. However, the FTAs Uzbekistan have signed fall short of true “deep agreements”.

Uzbekistan made significant progress in developing strong relations with the EU. In April 2021, the European Union accorded Uzbekistan beneficiary status within the General System of Preferences Plus (GSP+), waiving tariffs on 6,200 product lines on the condition that Uzbekistan implements twenty-seven international conventions related to human rights, labor rights, environmentalism and good governance^[8]. In addition, in 2022, Uzbekistan also concluded negotiations on an Enhanced Partnership and Cooperation Agreement (EPCA) with the EU. Complementing Uzbekistan’s GSP+ status, the EPCA aims to deliver an even deeper level of market access by addressing non-tariff barriers and bringing Uzbek products in line with EU standards on product quality, environmental sustainability and labor rights.

Looking to the East, the government of Uzbekistan has already been in talks with South Korea to discuss the feasibility of an FTA between the countries. Uzbekistan and South Korea announced plans to begin FTA negotiations following the completion of feasibility studies in November 2020. The deal is strategically important for Uzbekistan because South Korea is one of its major partners in technology, manufacturing and infrastructure development.

Regional cooperation on trade. In addition to the abovementioned changes, Uzbekistan has significantly shifted its trade policy towards neighboring Central Asian countries^[9]. The government has become more oriented toward building connections with its neighbors for further economic collaboration. This pragmatic foreign policy has led to the reopening of regional borders as well as new air, bus and rail routes. The trade turnover among Central Asian countries has risen since 2018, doubling from $5.7 billion to $11 billion within the last six years. The differences in trading regimes among countries gave rise to and revitalized cross-border regional efforts. This gained new momentum with the initiation of a Consultative meeting of Central Asian heads of state in 2018^[10]. Once mainly limited to political and security-related matters, the discourse in the meeting now encompasses economic integration, agreements on trade, and political and cultural cooperation.

Conclusion

The discussion so far gives some pointers as to the shape of Uzbek economic integration scenarios. We maintain that to maneuver through the intricacies of the global trading system effectively, Uzbekistan should pursue a hybrid approach which combines multilateralism with targeted regional and bilateral agreements. As the country is furthering its economic restructuring and international integration efforts, policymakers should leverage both the WTO accession and various new-generation FTAs to maintain a flexible and adaptive trade policy in a fast-changing economy. WTO accession will provide Uzbekistan with better access to global markets and more credibility in trade due to compliance with international rules/norms. At the same time, Uzbekistan will need to negotiate FTAs, particularly with key partners such as the EU and South Korea, to obtain preferential market access, diversify export routes and reach agreements in areas not covered by the WTO, such as e-commerce and digitalization.

Full report

Zakirov, B., Umirdinov, A. and Mirkasimov, B. (2024). WTO and FTAs: pathways for Uzbekistan’s economic integration. CPRO Policy Brief 2024-09. Available from: https://cpro.wiut.uz/cpro-policy-brief-2024-09 

^[1]Umirdinov, A., 2019. Внешнеторговая политика Узбекистана: настоящее и будущее [Foreign trade policy of Uzbekistan: present and future]. Available at: https://www.gazeta.uz/ru/2019/04/02/trade/

^[2]Pomfret, R., 2020. Uzbekistan and the world trade organization. Silk Road: A Journal of Eurasian Development, 2(1), pp.54-61.

^[3] Daryo.uz., 2024. WTO by 2026: unlocking global trade and Uzbekistan’s opportunities. [online] Daryo.uz. Available at: https://daryo.uz/en/l7mRevT4

^[4] Gazeta.uz., 2024. “Barcha uchun teng sharoitlar”. Qonunchilikni JST bitimlariga muvofiqlashtirish to’g’risidagi farmon haqida asosiy ma’lumotlar [“Equal conditions for all”. Main information about the decree on harmonizing legislation with WTO agreements]. Available at: https://www.gazeta.uz/oz/2024/06/04/wto/

^[5] Daryo.uz., 2024. WTO by 2026: unlocking global trade and Uzbekistan’s opportunities. [online] Daryo.uz. Available at: https://daryo.uz/en/l7mRevT4

^[6] Gazeta.uz., 2019. ‘Внешняя торговля Узбекистана: эволюция и перспективы’ [Foreign trade of Uzbekistan: evolution and prospects], Gazeta.uz, 2 April. Available at: https://www.gazeta.uz/ru/2019/04/02/trade/

^[7] Umirdinov, A., & Valijon, T. (2019). The Last Bastion of Protectionism in Central Asia: Uzbekistan’s Auto Industry in Post-WTO Accession. Trade, Law and Development, 11, 301.

^[8] EEAS., 2021. ‘Uzbekistan joins the European Union special agreement GSP+’, EEAS, 21 April. Available at: https://www.eeas.europa.eu/delegations/uzbekistan/uzbekistan-joins-european-union-special-agreement-gsp_en?s=233

^[9]UzDaily.uz., 2020. Central Asia – priority of foreign policy of Uzbekistan, Available at: https://www.uzdaily.uz/en/post/58469/

^[10]Kushkumbayev, S. and Nuriddenova, A., 2024. ‘Can Central Asia deepen multilateral cooperation without institutionalization?’, The Diplomat, Available at: https://thediplomat.com/2024/08/can-central-asia-deepen-multilateral-cooperation-without-institutionalization/