Uzbekistan hopes to finalize its accession to the World Commerce Group in 2026, bringing to an in depth a 31-year effort that envisions an open, aggressive, and resilient financial system.
Following the WTO’s Common Council assembly on February 18-19, Uzbekistan’s chief WTO negotiator Azizbek Urunov said that the WTO’s director common had “kindly proposed to give attention to Uzbekistan, Bosnia and Herzegovina, in addition to Ethiopia’s accessions as a goal for” the 14th Ministerial Convention scheduled to happen in Cameroon in March 2026.
Neighboring Central Asian international locations – Kazakhstan, Kyrgyzstan, and Tajikistan – turned WTO members way back. Kyrgyzstan was the primary to gain membership, not solely in Central Asia but additionally among the many Commonwealth of Unbiased States (CIS), becoming a member of in 1998. Remarkably, Bishkek accomplished the accession course of in simply two years after its preliminary utility.
Though Uzbekistan applied for WTO membership in 1994, its bid was suspended in 2005 earlier than being revived in 2020.
In 2023, President Shavkat Mirziyoyev introduced the nation’s plan to double the amount of products exports by 2026 and called accession to the WTO “the one means” to attain this aim. Critical efforts to speed up the accession course of started with the appointment in 2023 of Urunov as particular consultant of the president of Uzbekistan on WTO points.
Tashkent has aimed to finalize the accession course of by 2026, a deadline that looms only a 12 months away.
In December 2024, Mirziyoyev mentioned that the nation was coming into “the ultimate stage” of this course of and referred to as the accession “a considerate and far-sighted alternative, and an integral a part of the reforms.”
If Tashkent succeeds in its efforts, Uzbekistan will develop into the ninth CIS nation to hitch the group.
Uzbekistan has been shifting towards financial liberalization by aligning its tariffs and duties with WTO requirements, signaling a transfer away from protectionism. As of January 2025, for instance, numerous corporations working within the fields of metallurgy, chemistry, power and telecommunications lost their particular rights. Beginning in July 2026, UzGasTrade will now not have unique rights as the only operator for pure fuel exports and imports. Equally, Uzenergosotish, established in 2023 to handle the centralized buy and sale of electrical energy inside Uzbekistan, will lose its monopoly on the electrical energy commerce.
“Any further, nobody can have unique rights – whether or not it’s a state-owned strategic enterprise, a non-public firm, or a overseas investor. Everybody within the financial system should function underneath equal situations,” said Mirziyoyev in a 2024 assembly with native entrepreneurs, emphasizing the significance of becoming a member of the WTO.
Saida Mirziyoyeva, the president’s daughter and first assistant, has overseen the interdepartmental fee working with the WTO and the negotiating group liable for the WTO accession. In January, she famous in a Telegram put up that 20 items of laws had been handed to reinforce the transparency of enterprise practices and competitors.
WTO membership will arguably open doorways for Uzbekistan’s financial system, facilitating elevated commerce, attracting overseas funding and technological know-how, and enhancing productiveness.
“All WTO members have the precise to conduct bilateral negotiations with any nation that joins the group. Nevertheless, in follow, not everybody does this,” Urunov explained final 12 months as Uzbekistan signed market entry protocols with Japan, Israel, and the Dominican Republic and finalized negotiations with Thailand, as an end result of the thirteenth WTO Ministerial Convention held in Abu Dhabi.
“The variety of international locations concerned with bilateral commerce will depend on the financial system of the nation that joined the WTO and its commerce relations with different member states. For instance, African international locations have virtually no commerce relations with Uzbekistan and usually are not exhibiting a lot curiosity,” he mentioned.
From a theoretical perspective, Uzbekistan’s transition towards financial liberalization is predicted to result in a pointy improve in overseas direct funding (FDI), a larger number of items with a better share of high-quality services and products, stronger competitors, in addition to a short-term improve in market provide, increasing shopper decisions.
Whereas financial idea means that WTO accession ought to result in a surge in FDI, the fact may be fairly totally different. FDI influx velocity is more likely to be reasonable within the medium time period, which signifies that a wholesome aggressive atmosphere and an elevated share of high-quality items and companies will rely closely on the precise quantity of investments. A number of components contribute to this cautious outlook. Many traders stay hesitant about Central Asia as a consequence of financial and non-economic dangers, like corruption. Even if Uzbekistan has improved in lots of rankings over the previous couple of years, progress is just not assured to be linear into the long run and by some metrics, Uzbekistan has skilled a backslide. This will affect an investor’s choice to spend money on the nation.
Traders, whether or not people or corporations, allocate obtainable funds to promising initiatives. With a number of alternatives throughout totally different international locations, they naturally prioritize these which can be extra worthwhile, sustainable, and low-risk in the long term.
Along with market evaluation, due diligence performs a vital function, as traders should assess monetary and operational dangers earlier than buying enterprise stakes. One other problem is expertise acquisition, as securing certified professionals stays a key concern for overseas corporations. Lastly, large-scale investments usually require top-level approvals inside investor organizations, including one other layer of complexity to Uzbekistan’s funding local weather.
These hurdles counsel that whereas WTO accession might open new financial alternatives, the anticipated transformation might take longer than anticipated to eventuate.
New enterprise incorporation by way of FDI sometimes takes one to 3 years.
As Uzbekistan enters the ultimate stretch towards WTO accession, native producers face a closing alternative to enhance their standing earlier than the world involves compete in Uzbekistan. Native corporations might want to construct shopper belief by bettering the standard of their services and products. In any other case, they danger dropping their market place to extra skilled overseas corporations and traders that provide superior merchandise.
It’s anticipated that main worldwide corporations will implement numerous pricing methods when coming into the Uzbek market. Some might use penetration pricing – that’s, the setting of low costs initially to rapidly achieve market share – whereas others might go for perceived high quality pricing – setting excessive costs to create a premium model picture. Worth discrimination may be utilized, with totally different costs set for a similar product in numerous markets, equivalent to peak versus off-peak rail fares. Moreover, corporations might use going fee pricing by aligning their costs with rivals, or value skimming, the place a brand new product is launched at a excessive value earlier than progressively reducing. Captive product pricing is one other attainable strategy, requiring clients to buy two associated merchandise collectively, equivalent to printers and ink cartridges.
Alongside these strategies, different pricing methods will seemingly be employed as overseas companies search to achieve a aggressive foothold in Uzbekistan’s evolving market.
Whereas Uzbekistan’s WTO accession will introduce a larger number of items at aggressive costs to native shoppers, it should additionally give overseas markets simpler entry to Uzbek merchandise, significantly agricultural items. This elevated demand may drive up meals costs for native shoppers. Nevertheless, the federal government has coverage instruments to guard home pursuits. As an example, when potato costs surged in Kazakhstan as a consequence of excessive exterior demand, the federal government imposed a six-month export ban, clarifying that “this measure doesn’t apply to EAEU member states, though exports on this route shall be monitored.”
Within the lengthy run, WTO accession is predicted to have a constructive affect on the nation’s commerce stability in addition to different constructive outcomes.
For instance, joining the WTO might result in a discount in Uzbekistan’s unemployment fee. In keeping with official figures, 5.8 percent of Uzbekistan’s working-age inhabitants is unemployed. At present, virtually 15 million of Uzbekistan’s 37.5 million individuals are thought-about employed, with 48 p.c working within the formal sector, 38 p.c within the casual sector, and the remaining 13 p.c or 1.9 million working overseas as a part of labor migration.
Uzbekistan’s giant and rising inhabitants will present overseas traders with a prepared, comparatively low-cost, workforce. Tons of of 1000’s of individuals enter the job market every year in Uzbekistan. After which there are the practically 2 million who’re engaged in labor migration who may arguably be attracted again to Uzbekistan for jobs at house. As well as, Uzbekistan’s rising shopper market of over 37.5 million folks, with a mean age of 29, makes the nation a sexy funding vacation spot.
Since Uzbekistan is a double landlocked nation, it is going to be extra helpful for traders to determine factories and crops inside Uzbekistan to cut back logistics prices, relatively than exporting these items into the nation. By doing so, they would cut back logistics bills, import duties, and different prices. Furthermore, opening a manufacturing facility means hiring native employees, which in flip helps decrease the unemployment fee.
Nevertheless, the creation of latest positions doesn’t essentially translate to native employees filling them, as a scarcity of specialists may end in many native staff occupying junior or, at greatest, mid-level positions, with senior roles being taken by foreigners.
Harmonization commerce tariffs amongst WTO members will permit small companies in Uzbekistan to profit from imports and exports within the quick run, probably enhancing the prosperity of native producers. Nevertheless, failing to spend money on bettering services or products high quality may result in the demise of those enterprise constructions in the long term. Firms which can be in a position to survive in a aggressive market will increase, whereas these that aren’t in a position to will fail.
Market saturation shall be accompanied by a rise in provide, and the market will try to determine extra democratic costs for merchandise. Nevertheless, a decline within the profitability fee of small enterprise entities will hinder their means to rapidly reinvest funds into enterprise growth.
The share of exports is predicted to exceed present ranges. A rise in exports will contribute to the strengthening of the native forex, resulting in its revaluation, which is unfavorable for exporters however helpful for importers.
With all these dangers and potential advantages, Uzbekistan’s WTO accession might be a turning level in constructing a stronger financial system. Many years of protectionist insurance policies that when helped native corporations thrive are actually being dismantled, leaving some companies not solely skeptical about the advantages of WTO membership but additionally pissed off over dropping their particular privileges. Nevertheless, if Uzbekistan efficiently implements key reforms and attracts strategic investments, its 31-year effort to hitch the WTO might lastly repay — paving the way in which for a extra open, aggressive, and resilient financial system.
