Trade Potential of Uzbekistan and the European Union



For the past couple of years, the European Union has become increasingly interested in Uzbekistan, specifically as a trading partner. As a result of this, the European Union has been aiding Uzbekistan in its development towards an economically stable, prosperous, and democratic country.


Historical Development of the Relations


The first official cooperation between the European Union and Uzbekistan took place in 1992 with the Memorandum of mutual understanding between the Government of the Republic of Uzbekistan and the Commission of the European Communities (CEC)".


Then, a few years later, the Partnership and Co-operation Agreement (PCA) became the basis of the further cooperation between the two, which governed the trade and economic relations. The agreement establishes an MFN (Most-favoured-nation) treatment as for a number of issues such as custom duties. This was beneficial for Uzbekistan, which both exports and imports a number of goods and services to and from the European Union in a number of different categories, such as pharmaceutical products.


In 2019, the NGO "Europe-Uzbekistan Association for Economic Cooperation” was launched. This organization aims for the strengthening economic ties between Uzbekistan and the European Union. According to the organization itself, the organization was created “in order to assist the European business community in establishing and strengthening business, investment and trade cooperation ties with Uzbekistan”.


Lastly, in the beginning of 2021, Uzbekistan joined the GSP+, or also known as the “Special Incentive Arrangement for Sustainable Development and Good Governance”. This will allow for cheaper trade due to, for example, a lowering of tariffs. The programme is furthermore intended to support developing countries, although in order to qualify, they must have ratified a number of international human rights conventions.


Importance of the Relations


Establishing a solid trade relationship with Uzbekistan is important for the European Union for a number of reasons. Firstly, it is of geostrategic importance (due to its location at the heart of Central Asia). Because of this, the country could serve to bring the Eurasian continent and its varying economies together. For example, the country has ties with China and Russia, which are both important players in the world economy. Considering that the European Union is one of the top trade-partners of Central Asia, the location of Uzbekistan makes it a good choice for European businesses.

Secondly, the Gross Domestic Product (GDP) of Uzbekistan has been growing these past years and will likely continue to do so in the future. This indicates that its economy is strengthening. Furthermore, trade and the GDP tend to be related, and an increase in one will most likely lead to an increase in the other.


Lastly, Uzbekistan could become an energy partner of the European Union in the future. This is particularly relevant due to the monopoly of Russia over gas export routes.


Furthermore, it is important to acknowledge that Uzbekistan is currently moving towards a democracy, especially under Mirziyoyev, the president of Uzbekistan. He has been aiming towards the reshaping of the domestic political landscape. The fact that the country joined the Human Rights Council of the UN as a member also indicates the changing nature of the country.


However, Uzbekistan still relies on support from the European Union. For example, in June 2021, the European Union provided 11 million Euros for support of agriculture and rural livelihoods in Uzbekistan. This allows the country to implement strategic reforms which benefit the agri-food sector as well as the rural livelihoods.


Both financial and political support from the European Union will promote sustainability, innovation, technology, and research. Improvement in these areas will lead to prosperity for Uzbekistan as well as the European Union, as a trading partner.


Areas of Cooperation


There are a number of key areas of cooperation between the European Union and Uzbekistan. Firstly, sustainable development, which will lead to, for example, poverty reduction and rural development. Secondly, economic cooperation, which mainly concerns trade. Uzbekistan imports a number of goods such as chemical products, machines & equipment, and industrial construction from the European Union. Whereas the European Union mainly imports clothing and textiles, agricultural goods, and products as well as chemical products. Thirdly, education. This could lead to a more positive perception of the European Union by the citizens. And lastly, Security, such as border management.


Conclusion


It can thus be concluded that establishing solid trade relations between the European Union and Uzbekistan is beneficial for both parties due to a number of reasons. Specifically, the growing GPD and its location make Uzbekistan an attractive trade partner for the European Union, and their trade relations will extent to a number of areas including chemical products.


For more information about business with Uzbekistan contact Boy Frank, representative for The Netherlands of the Chamber of Commerce and Industry of the Republic of Uzbekistan: Boy.b.frank@gmail.com

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