Uzbekistan is pressing ahead with its long-standing goal of gaining membership in the World Trade Organization (WTO), an effort that aligns with the country’s broader economic reforms and liberalization agenda. This bid comes as the Central Asian nation undergoes a transformative shift under President Shavkat Mirziyoyev’s leadership. Membership in the WTO is seen as a key milestone that would enhance Uzbekistan’s access to global markets, attract foreign investment, and solidify the country’s commitment to open and competitive trade practices. With parliamentary elections approaching at the end of the month, Uzbekistan’s WTO accession effort is receiving renewed attention both domestically and internationally.
A Long-Standing Ambition
Uzbekistan’s pursuit of WTO membership dates back more than two decades, having first applied in 1994. However, progress on the application had stalled during the presidency of Islam Karimov, under whom Uzbekistan maintained a more insular and state-controlled economy. Since President Mirziyoyev assumed power in 2016, the country has dramatically shifted course, with renewed emphasis on market reforms and greater integration into the global economy.
In recent years, the Uzbek government has significantly ramped up its efforts to join the WTO. A series of bilateral and multilateral negotiations, involving over 20 WTO member states, are in progress. Uzbekistan held its fifth Working Party meeting in Geneva in June 2023, where it demonstrated its commitment to aligning domestic trade regulations with global standards. Following the session, Uzbekistan’s Deputy Minister of Investments and Foreign Trade, Badriddin Abidov, highlighted the country’s progress on reforming its legal frameworks, emphasizing trade liberalization as a cornerstone of its broader economic strategy.
Economic Liberalization and Trade Reforms
At the heart of Uzbekistan’s WTO ambitions is its ongoing economic liberalization. Since Mirziyoyev took office, the country has embarked on a series of reforms aimed at reducing the role of the state in the economy, attracting foreign investment, and fostering private enterprise. The liberalization of the national currency, the soum, in 2017 was a crucial step in this direction, signaling the government’s intent to abandon the tightly controlled economic policies of the past.
More recently, the government has focused on aligning its trade policies with international standards. These include the reduction of tariffs and the liberalization of import and export regulations. In particular, Uzbekistan has sought to modernize its trade policies in sectors such as agriculture, textiles, and energy—key pillars of the country’s economy. The liberalization of these sectors is expected to increase their competitiveness in global markets, a critical factor as the country moves closer to WTO accession.
According to Uzbekistan’s Ministry of Investments, Industry, and Trade, the country has also implemented reforms aimed at reducing bureaucratic red tape and increasing transparency in government procedures, particularly in customs regulation. These reforms are not only intended to facilitate easier trade but also to improve Uzbekistan’s overall business environment, which is a priority for both domestic and international investors.
Strategic Importance of WTO Membership
WTO membership is a strategic priority for Uzbekistan, offering several potential benefits that align with the country’s broader economic objectives. By joining the WTO, Uzbekistan would gain preferential access to global markets, an advantage that could significantly boost exports, particularly in its agricultural and textile sectors. These industries already account for a significant share of Uzbekistan’s GDP, and WTO membership would open up new opportunities for expansion into markets that adhere to WTO rules.
In addition, WTO membership would provide Uzbekistan with a more transparent and predictable trade environment, making it a more attractive destination for foreign direct investment (FDI). At present, Uzbekistan ranks among the fastest-growing recipients of FDI in Central Asia, thanks in large part to the government’s reforms. In 2022, the country saw a 9% increase in FDI inflows, amounting to $2.4 billion. By joining the WTO, Uzbekistan could build on this momentum, offering investors greater confidence in the country’s commitment to trade liberalization and regulatory transparency.
Furthermore, WTO membership would allow Uzbekistan to participate more actively in shaping global trade rules. As the country seeks to become a hub for trade and investment in Central Asia, being part of the WTO would enhance its influence and provide it with a platform to advocate for its interests in the global trade arena.
Challenges Ahead
Despite the progress made in recent years, Uzbekistan’s path to WTO membership is not without challenges. Aligning its trade and economic policies with the stringent requirements of WTO membership requires a continued focus on reform. This includes further reducing state control over key sectors of the economy, addressing intellectual property rights issues, and improving the regulatory environment for businesses. Additionally, Uzbekistan must navigate complex negotiations with existing WTO members, many of whom have their own trade interests to protect.
Another challenge lies in managing domestic expectations. While WTO membership promises long-term benefits, such as increased market access and FDI, it also necessitates structural changes that could disrupt certain industries in the short term. For instance, local industries that have historically been protected by state subsidies or tariffs may face increased competition once WTO rules are fully implemented. As a result, the government must carefully balance its push for liberalization with measures that protect vulnerable industries and workers during the transition.
Political Context: Parliamentary Elections and Reform Momentum
The drive to join the WTO comes at a crucial time in Uzbekistan’s political landscape, as parliamentary elections are scheduled for the end of October 2024. These elections will be a key test of President Mirziyoyev’s reform agenda, which has thus far enjoyed broad support but has also faced criticism from those who fear that rapid economic liberalization could lead to instability.
Mirziyoyev’s government has emphasized that the reforms are necessary to modernize Uzbekistan’s economy and position it as a competitive player on the global stage. WTO membership is seen as a cornerstone of this strategy, offering the country a pathway to deeper integration into the global economy. The outcome of the parliamentary elections could either reinforce or challenge the momentum behind these reforms.
Looking Ahead
Uzbekistan’s push for WTO membership reflects the country’s broader efforts to reform its economy and open up to the world. While challenges remain, the government’s commitment to liberalizing trade and improving the business environment is clear. With parliamentary elections looming, the pace and direction of these reforms will be under close scrutiny. If successful, WTO membership could mark a major milestone in Uzbekistan’s transformation into a modern, globally integrated economy, offering new opportunities for growth, investment, and trade.
As Uzbekistan moves closer to WTO accession, its progress will be closely watched by international investors, businesses, and policymakers alike, all of whom recognize the significant potential that greater integration into the global trading system could unlock for this rapidly evolving Central Asian nation.
