Discussions regarding Uzbekistan's accession to the World Trade Organization (WTO) are regularly held both domestically and internationally. Public sentiment towards joining the organization can be described as mixed. Many fear that domestic producers will suffer and export opportunities will be limited.
Denis Sokolov, General Director of the consulting company Commonwealth Partnership, who previously worked at the Ministry of Agriculture of Russia and was involved in agricultural policy reforms for Russia's WTO accession, a process that took nearly 20 years, shared his views with "Gazeta.uz" on Uzbekistan's accession process, the changes for the population, and the impact on domestic producers.
— What is the essence of the WTO?
The World Trade Organization is an international organization that creates and regulates the rules of international trade. Founded in 1995, it replaced the General Agreement on Tariffs and Trade (GATT). The WTO includes 166 member states and covers about 98% of world trade.
The main goals of the WTO are to promote trade liberalization, settle trade disputes, and support economic growth by establishing transparent and predictable trade rules.
International trade is always subject to regulation. Some countries stimulate the export of surplus products, while others try to limit imports to support their domestic production. The WTO establishes general rules and principles for regulation. Many mistakenly believe that the WTO forces countries to abolish customs barriers; however, in reality, WTO principles require the elimination of administrative restrictions. Put simply, a WTO member country cannot prohibit everyone except one company from importing a product.
Furthermore, by joining the WTO, a country commits to gradually reducing tariff barriers, but it retains the right to impose temporary increased duties if the global economic situation changes.
— Why does Uzbekistan need to join the WTO?
In practice, WTO membership is a kind of certificate of conformity to international world trade standards. However, for Central Asia and Uzbekistan in particular, where market regulation practices do not have a long history, WTO membership provides certain guarantees against arbitrary economic decisions.
— How long can the WTO accession process take?
If the current economic policy is maintained, Uzbekistan's accession to the WTO is only a matter of time. The accession process involves negotiations and the adaptation of national legislation in accordance with WTO rules. Many countries have already successfully gone through this path.
Currently, Uzbekistan is actively working towards accession, and its application is under consideration. Accession negotiations began back in 1994 but were suspended and resumed in 2017. It is likely that the country will become a WTO member before the end of the decade. It is important to understand that by submitting an application for accession, a country already undertakes obligations to comply with WTO principles.
The WTO accession process can take anywhere from a few years to decades. For example, China joined the WTO after 15 years of negotiations, and Russia after 18 years. This is due to the need to adapt national legislation, conduct trade negotiations, and reach consensus among WTO members. The more complex the national regulatory system, the more difficult the adaptation process.
Approximately 20% of countries join the WTO within 5 years, 60% within 5-10 years, and the remaining ones take over 10 years. Countries with simpler regulatory systems and more specialized industrial structures join the WTO faster. The process is longer for countries that are already bound by numerous interstate agreements and participate in regional economic unions at the time of WTO accession. This is because in such cases, issues need to be coordinated with all parties.
— What requirements must a country meet to join the WTO?
A country joining the WTO must bring its trade and economic laws into conformity with the organization's international norms, including adherence to rules on tariffs, subsidies, intellectual property, and other aspects. For example, Uzbekistan will need to reduce tariff barriers, eliminate trade restrictions, and ensure the protection of intellectual property rights. Transparency and predictability of trade policy are also required.
— How will joining the WTO affect the country's economic development and its role on the international stage?
Joining the WTO will not have an immediate impact on the country's economy and its investment attractiveness, but it is an important element for integration into the global economy and participation in the capital market.
I believe that among the sectors that will benefit are processing industries, due to increased added value and depth of raw material processing within the country. To date, agriculture and industry have not participated sufficiently in the value chain, preferring to export raw materials rather than processed products and consumer goods.
For instance, the textile industry can increase its production and export volumes by reducing tariff barriers and improving access to raw materials and technologies.
— What will change for the average resident of the country, and will anything change?
For the average resident, WTO accession in the medium term will mean an improvement in the quality of goods and services due to increased competition and access to a wider range of products. New jobs may also emerge, and working conditions could improve. For example, lower tariffs on imported goods could lead to reduced prices and increased availability of quality goods for the population.
— Can joining the WTO destroy domestic producers?
Joining the WTO will not lead to the destruction of domestic producers, as the tools for protectionism remain in the hands of the government. The WTO merely requires these tools to be used transparently and reasonably.
It is also important to note that the WTO provides mechanisms for protecting domestic production, such as anti-dumping measures and measures to protect against subsidized exports from other countries.
— Can joining the WTO negatively affect the quality of agricultural products and oblige farmers to purchase imported seeds?
The WTO does not encourage the use of barriers in trade under the guise of sanitary norms, nor does it impose obligations to purchase imported seeds and breeding stock. This remains a free choice for entrepreneurs. Even now, Uzbekistan uses fruit tree saplings from Italy and other countries. WTO participation will allow for expanded processing and quality storage of products. It is no secret that a significant portion of fruit produce is lost in the country today. Therefore, the production of juices, concentrates, preserves, etc., will have a favorable effect on the economy.
— Will logistics become simpler upon joining the WTO?
Logistics may become simpler due to the implementation of international standards and procedures, leading to reduced trade barriers and accelerated turnover of goods. WTO accession involves reforms in customs administration, infrastructure improvements, and the adoption of modern technologies, which contribute to faster logistics processes and reduced costs.
For large companies, the problem is not so much the size of customs duties as the lack of transparency and complexity of import and export procedures, and the absence of "special importers" who enjoy import privileges. The existence of such privileges ostensibly aims to lower domestic market prices, but in practice, it reduces competition, as no one wants to operate in the same market with a company that does not pay duties.
— What is the country doing to join the organization?
The majority of the preparation involves working with regulatory documents and bureaucratic procedures, which do not hold broad public interest. The progress of this work can be gauged from the President's speeches at the Tashkent Investment Annual Forum. Additionally, members of the working group hold meetings with the expert community within the framework of international trade chambers, where they provide updates on the negotiation progress.
In summary, it can be said that WTO accession may significantly impact businesses of large corporations and natural monopolies that enjoy state preferences. However, such companies are part of the negotiation process, and there will be no surprises for them. The WTO provides for the possibility of a transition period, allowing companies to adapt their business models and processes to market liberalization.
For medium, small, and even large businesses already operating in a competitive environment, the WTO will bring benefits by facilitating access to technologies and export markets. It will be a window of opportunity that needs to be seized. It is not impossible that those who continue to operate in the old way will lose in the competitive struggle, not even to foreign companies, but to local, more efficient, and advanced companies.
For citizens, the range, quality, and accessibility of goods will gradually expand, and new jobs will open up. Trade liberalization will support the growth of household incomes.
The main thing to remember is that all these processes do not happen overnight. The WTO is merely a tool. Its effectiveness depends on the authorities, businesses, and experts in various sectors.
Source: Gazeta.uz
