Reforms and openness policy carried out under the leadership of the President of the Republic of Uzbekistan Shavkat Mirziyoyev, initially set one of its key goals to fully integrate the country into the global economy.

Reforms and openness policy carried out under the leadership of the President of the Republic of Uzbekistan Shavkat Mirziyoyev, initially set one of its key goals to fully integrate the country into the global economy.

Large-scale activities have been implemented over the past three years. Uzbekistan received a sovereign credit rating from the big three Fitch Rating, Standard & Poor’s and Moody’s, entered the international Eurobond market, increased its position in the World Bank’s Doing Business rating, entering the top 20 countries for 2020 with the greatest progress in improving the business climate.

Resumption of Uzbekistan’s accession process to the World Trade Organization (WTO), which is the leading structure for regulating global trade became an important event. Membership in this organization is the most important indicator of the level of involvement and integration of the country in the global economy.

Uzbekistan’s accession into the WTO is welcomed and supported by such important global economy players as the United States, the European Union and China. Russia, one of the largest trade and investment partners of Uzbekistan, also expressed its support. All this creates favorable opportunities for the effective accession of Uzbekistan into the WTO and obtaining favorable conditions for the national business in global trade.

Intensification of the process of Uzbekistan’s accession to the WTO necessitates a more thorough analysis of the full range of assessments and opinions, including through a wide dialogue of national experts with foreign ones, in order to more fully take into account all possible risks and expected dividends. Such an inter-expert dialogue is actively conducted in the country, as evidenced by Uzbekistan – Korean scientific and practical workshop held recently in Tashkent on “Economic evaluation of Uzbekistan’s accession to the WTO”.

The event was organized by the Institute for Strategic and Regional Studies under the President of the Republic of Uzbekistan (ISRS) in cooperation with Korea Institute for International Economic Policy (KIEP), which is one of the leading think tanks of the Republic of Korea.

According to the agreements reached following the visit of the President of the Republic of Uzbekistan to the Republic of Korea in 2017, KIEP was chosen as one of the partners in the study of consequences of Uzbekistan’s accession to the WTO.

The main theme of the workshop became the discussion of research results on the impact of Uzbekistan’s accession to the WTO on the country’s agricultural sector. As the Deputy Director of ISRS Sanjar Valiyev noted, “it is not by chance that the main theme of the workshop was assessing the prospects for development of such a strategic industry as agriculture, after the country’s accession to the WTO. This industry plays a vital role for Uzbekistan, as its products make up 32 percent of GDP and provide employment for 8.9 million people, or 27 percent of the country’s population”.

Taking this into account, a comprehensive discussion was held on the results of a study of the trade liberalization impact within the WTO on the agricultural sector of Uzbekistan.

Issues of preparation, selection of a strategy and technique for negotiations on Uzbekistan’s accession to the WTO were discussed at the event.

Experts at the workshop answered journalists’ questions about the pros and cons for Uzbekistan from joining the WTO.

Director General for International Trade Affairs of the Ministry of Trade, Industry and Energy Sung-gil Chang emphasized the fact that accession to the WTO is an independent choice of Uzbekistan, and the Republic of Korea provides only technical assistance in its successful accession into this organization. He noted that the country’s accession to the WTO, of course, requires effective efforts of the government, sectoral agencies and scientific structures, since it will affect 95 percent of the economy. “In general, good incentives for economic development can be expected, but some unforeseen results should not be excluded”, said Mr. Sung-gil Chang.

In turn, KIEP Senior Research Fellow Jin Kyo Suh noted that in case of entry into the WTO, Uzbekistan can achieve significant success in trade within the organization due to the fact that WTO members are provided with customs and tax benefits. For example, every WTO member country can introduce tariffs on Uzbek goods in any amount, but after Uzbekistan enters the organization, they will not be able to do this. That is, with the entry into the WTO, Uzbekistan will have the opportunity to pay less customs taxes or not pay at all to trading partners – members of the organization.

At the same time, the Korean expert recommended not to rush and rely on detailed calculations in all areas of the national economy when conducting negotiations, because unforeseen difficulties often arise when opening the market and combining the rules.

As an example, he cited the story of the Republic of Korea’s accession to the WTO: “At one time, agriculture was a vulnerable sphere in Korea. If the industry was hastily opened, we would be among the losers. In this regard, at the initial stage, we opened our borders only in the industrial sphere”. Uzbekistan, according to Jin Kyo Suh, based on the internal situation and the country’s capabilities, will have to find a middle ground. “The most important thing for Uzbekistan is to come to an agreement beneficial for itself and its interests. One can’t rush into negotiations, but their completion also shouldn’t slow down, because in this case one can lose many markets”, he said.

Professor of Hanyang University Hongyul Han also positively assessed the possible results of Uzbekistan’s entry into the WTO. He emphasized that Uzbekistan is the most attractive market in Central Asia with great consumer demand, and after joining the WTO, trade will receive a new impetus. Taking into account the study on agriculture, Professor Hongyul Han proposed protecting the position of this industry as much as possible, taking into account the rather high concentration of the low-income family in rural areas. The future agrarian policy of Uzbekistan will largely depend on the results of negotiations on the WTO Agreement on Agriculture.

Journalists, during the conversation with experts, raised the theme of compatibility and priority for Uzbekistan of issues of accession to the WTO and the Eurasian Economic Union (EAEU), which includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia, which causes numerous disputes in Uzbekistan’s information and political area today.

As Deputy Director of ISRS Sanjar Valiyev noted, the discussions currently being held are often based on the principle of choosing the priority for Uzbekistan of the course towards WTO membership over membership in the EAEU and vice versa, however, such a statement of the question is fundamentally wrong. The expert believes that the imposition of such a scheme is unacceptable, since we are dealing with completely different types of organizations.

Moreover, as Valiyev noted, the WTO and the EAEU are largely complementary, this is also shown by the fact that out of the five EAEU member countries, four are members of the WTO, except Belarus, which is also conducting negotiations on accession to this trade organization and plans to complete in 2020. In addition, the WTO member is Moldova, an observer country in the EAEU.

Senior Researcher of the Information and Analytical Center for International Relations Babur Ziyamov also agrees with this point of view. He focused on the fact that membership in the WTO does not prevent a number of countries from actively cooperating with the EAEU within the framework of agreements on a free trade zone or conduct negotiations on its creation. Similar agreements with the EAEU have already been signed by WTO members Vietnam and Singapore.

In turn, the WTO member countries such as Egypt, Serbia, Israel and India are at the negotiation stage. According to Ziyamov, when discussing the issue of joining the WTO or the EAEU, it is necessary, first of all, to remember that the main thing for Uzbekistan in this matter is to create favorable conditions for citizens of the country to receive additional dividends from free trade and free movement of goods, services, capital and labor.

Director of “Mano” Research Initiatives Center Bakhtiyor Ergashev notes that Uzbekistan, within the framework of transition from an import-substituting to an export-oriented model of economic growth, implemented at a new stage in the country’s development, will undoubtedly strive for greater integration into the global economy. The logic of reforms itself requires this.

However, there is an understanding that this process should be deeply thought out and accurately calculated on the basis of econometric calculations by industry and by type of products. Joining the WTO is an introduction to the process of globalization of global trade. Joining the EAEU is a work within the framework of regionalization of trade and economic cooperation. Therefore, it is very important for Uzbekistan specialists to synchronize the negotiation positions in both directions in order to prevent the adoption of mutually exclusive requirements by partners.

In this work, it is important to ensure an accurate and deep understanding and account of the pace, formats and mechanisms of participation in this process. At the same time, for example, serious crisis events are taking place in the WTO itself, associated with a special view of the United States on the future of this organization. The EAEU also undergoes complex process of mutual lapping of the economies of the member countries of the organization, development and consolidation of the rules and procedures of mutual trade and trade with the third countries. And therefore, one can only agree with experts who insist on a cautious and pragmatic approach to the entry of Uzbekistan into these organizations.

At the same time, the Senior Researcher at the Center for Economic Research and Reforms Nodira Kurbanbayeva highlighted the fact that the EAEU is an international organization for regional economic integration, which ensures the freedom of movement of goods, services, capital and labor, and carries out a coordinated, consistent and single policy in economic sectors, while the WTO is an international organization created to liberalize international trade on a multilateral basis. At the same time, the basic agreements of the EAEU are identical to the WTO agreements, and they do not contradict each other; in many aspects of foreign trade liberalization, the rules of the two organizations repeat each other. The only nuance is that the EAEU acts on the basis of regional trade agreements (in this case, it is the Customs Union), and the WTO – on the basis of global multilateral agreements. WTO rules, in particular the provisions of the General Agreement on Tariffs and Trade (GATT) (Article 24), do not prevent members from creating customs unions or applying temporary agreements, the goal of which is formation of integration groups, on the condition that such agreements will contribute to development of free trade and will not lead to the creation of barriers to trade with participants in regional trade agreements.

The most important thing, according to the economist, regardless of participation in various international organizations or economic integration associations, Uzbekistan should, first of all, solve the existing systemic problems in agriculture and industry. And participation in the EAEU or the WTO is only part of the development process, which gives additional opportunities for the effective use of foreign trade liberalization and accelerating reforms.

In any case, the expert emphasized, the growth of economic competitiveness of Uzbekistan will largely depend on cooperation with the countries of the region and economic integration and participation in regional value chains. Therefore, for Uzbekistan, along with accession to the WTO, the priority should become the creation of a system of regional trade agreements and integration into regional value chains. Participation in the EAEU creates excellent opportunities for this.

Following the workshop, its participants agreed to prepare a joint report with recommendations on the agricultural sector of Uzbekistan, which will then be transmitted to interested ministries and agencies of the country. Issues of organizing specialized trainings for Uzbekistan’s negotiation team on the accession to the WTO were also discussed. In addition to the study, ISRS and KIEP agreed to further jointly study the impact of accession to the WTO on other key sectors of the country’s economy. As can be seen, the expert community of Uzbekistan intends to continue, on the basis of joint work and consultations with foreign partners, to assist the state authorities in obtaining the most favorable conditions for membership in the WTO and, possibly, in the EAEU.