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

By Sami Jaber

Economic partnership between Uzbekistan and the Benelux countries has great potential. While this may highlight the underdeveloped nature of the relationship, it also signals the many prospects for increased cooperation, promising fruitful results.

According to His Excellency Dilyor Khakimov – Ambassador Extraordinary and Plenipotentiary of the Republic of Uzbekistan to the Benelux Countries – the trade balance between the union of three countries and Uzbekistan sat at 271.2 million US dollars in 2020. Of these, he says, “43.7 million were Uzbekistan’s exports to the Benelux, and 227.5 million were imports from the Benelux”.[1] Despite being promising, these figures remain relatively small when compared to trade between Uzbekistan and its other partners. The potential for growth thus becomes apparent.

Trade with the Benelux countries, however, is of particular importance for Uzbekistan. Indeed, the overall trade balance of the country with the European Union was of 2.3 billion euros in 2019, with Uzbekistan exporting 190 million euros worth of goods to the EU and importing 2.4 billion.[2] When comparing the trade balance of Uzbekistan with the Benelux countries and the EU as a whole, the importance of developing further economic ties with the countries forming the Benelux Union becomes visible. Indeed, while almost 25% of Uzbekistan’s exports to the EU are destined to the three Benelux countries, only approximately 10% of Uzbekistan’s EU imports come from these states. Belgium, the Netherlands, and Luxemburg thus appear as important polities to develop closer economic ties with, in order to stimulate the continued growth of Uzbekistan’s export sector.

Recently, a number of steps have been taken in the direction of further developing the economic relationship between Uzbekistan and the EU, and notably with the Benelux countries.

On the 9th of April 2021, Uzbekistan was accepted as one of the rare beneficiaries of the EU’s General System of Preferences Plus (GSP+). This programme – which serves as both an acknowledgement of a state’s sustainable development and good governance, as well as an incentive for further such developments – will reap major benefits for Uzbekistan’s economy. Significantly, accession to the status of a GSP+ beneficiary state grants Uzbekistan the complete removal of tariffs on two-thirds of all the commodities recognised by the EU. Previously, Uzbekistan could export 3 200 commodity items to the EU free of customs. This number has now skyrocketed to 6 200.[3] In unilaterally liberalising trade between the EU and Uzbekistan, the former paves the way for the latter’s extensive economic development in the region. Indeed, it is estimated that, in the textile industry alone Uzbek producers will be able to export an additional $300 million worth of goods annually to the EU.

In addition to the direct economic benefits to be reaped from this newly-negotiated trade regime, the political legitimacy granted by the recognition of Uzbekistan’s exemplary governance will inevitably provide economic gains to the country. In order to gain access to the EU’s GSP+ status, Uzbekistan had to demonstrate compliance with 27 international conventions concerning a range of issue-areas – from the protection of human rights and labour standards, to good governance and the preservation of the environment – which the European Commission clearly acknowledged by announcing its decision six months ahead of schedule.

Other international organisations – such as the International Labour Organisation (ILO) – have also recognised and proclaimed the progress made in Uzbekistan’s internal practices – notably in the oversight of working conditions in the cotton industry. This additional legitimacy granted by major organisations will provide renewed confidence in Uzbekistan’s exports, and represents a prospect to focus on while developing economic relations with the Benelux countries.

In sum, while the economic relationship between Uzbekistan and the Benelux countries remains currently in its initial stages, the potential for its development and recent steps towards that direction are increasingly commonplace.

[1] [2] [3]

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