Developments and Prospects for Trade Between Uzbekistan and the Benelux Countries – July 2021

According to Uzbekistan’s latest State Statistics Committee report, the nation’s GDP has increased by 6.2% since the start of the year, while both imports and exports are on the rise. While exports have increased 12.3% to reach $7.1 billion, imports have risen by 14.3%, culminating at $11 billion. A host of other economic indicators such as industrial production and foreign trade turnover are all on the increase, showing the combined effect of Uzbekistan’s economy’s recovery from the COVID-19 pandemic, as well as the development of the nation’s economy.

Last month, Uzbekistan organised a major Summit aiming to consolidate regional connectivity between southern and central Asian states, which also promises new prosperous trading prospects with European partners. Thereby, the regions’ governments and their major trading partners such as China, Russia, and the United States, reaffirmed their commitment to establishing and improving common infrastructures and framework to guarantee an integrated development of south and central Asia. This will undoubtedly have a positive impact on foreign investments in Uzbekistan and the improvement of trade relations with European states, as the predictability gained, the accessibility demonstrated by the holding of this summit, and the commitments made speak for themselves as to the attractivity of trading with Uzbek partners. With Pakistan alone, Uzbekistan signed agreements amounting to $500 million aiming to promote trading infrastructure between the countries as well as further cooperation in related fields.

A concrete example of an infrastructure improvement which was discussed at last month’s summit and will hold substantial ramifications for Uzbekistan’s external trade relations is the construction of the Mazar-i-Sharif-Kabul-Peshawar railway line, connecting Uzbekistan to both Afghanistan and Pakistan. In so doing, Uzbekistan is effectively circumventing the hindrances posed by its land-locked status, gaining a rapid and reliable access to Pakistan’s seaports and, thereby, international maritime trade. Shipping times are thus expected to shorten dramatically between Uzbekistan and Europe, as goods now have a direct means of transportations from producers to consumers. With this reduction of shipping times also comes a significant expected reduction of transportation costs and distances, promising economic growth as well as reduced emissions of greenhouse gases.

The trade corridor reinforced by the Mazar-i-Sharif-Kabul-Peshawar railway line, as well as the broader cooperation between southern and central Asian states, has always been pivotal for international trade. A cornerstone of the Silk Roads, the trade potential and prospects of Uzbekistan and its surrounding region is now more promising than ever.

Uzbekistan’s export-driven agricultural sector will particularly benefit from improved connections with international trade partners, as the often relatively short shelf-life of certain such products has thus far presented somewhat of a hindrance to trade in agricultural goods with European partners. Now, with the promise of shorter transport times in better conditions, the prospect of increasing agricultural trade between Uzbekistan and EU member-states is foreseeable. Here, a major opportunity for Dutch partners presents itself. Indeed, with the hypothesised development of Uzbekistan’s agricultural sector, the Netherland’s leading expertise in agro-industrial business and technological solutions to the field’s problems could be of great interest to Uzbek producers. Such developments are already underway, notably with the European Union’s contribution of €11 million to support agriculture and rural livelihoods in Uzbekistan, showing the bloc’s recognition of the potential held by the Uzbek agricultural sector.

Other areas where the EU – and particularly the Benelux countries – could further their cooperation with Uzbekistan following recent developments include sustainable development and education. Indeed, these areas have been identified by experts as holding great potential for economic cooperation all the while having significant positive externalities on Uzbekistan’s people.

A final development this month has been the gathering of the US-led C5+1 forum. There, the United States, Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan further vowed to strengthen the trading infrastructure in the region. Significantly, the forum also agreed to implement measures to ensure security and stability in the region following turmoil in Afghanistan, which will further lead to predictability in relations with the region, thereby making trade with Uzbekistan increasingly attractive.

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