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Home / Politics / Umida Haknazar: "Uzbekistan's accession to th...

Umida Haknazar: "Uzbekistan's accession to the WTO will create great opportunities for production development, expansion and export growth"

Uzbekistan resumes negotiations on accession to the World Trade Organization (WTO). In this regard, an independent expert, a lawyer on WTO issues Umida Haknazar answered the questions of Biznes-daily correspondent Oydin Latipova.

- Please tell us about the main goals and objectives of the WTO?

- The World Trade Organization is a world platform where trading countries have the opportunity to conduct trade negotiations and resolve trade disputes among themselves. Now 164 countries have already joined the WTO; almost the whole world. If the UN is a global platform for regulating political relations between countries, the WTO is a platform for regulating trade relations between countries. However, unlike the UN and other international organizations, in addition to the rules and procedures by which member countries commit to international trade, the WTO also has a mechanism for resolving disputes, which provides for the effective resolution of trade disputes and the application of these rules. The main principles of the WTO are the rules of non-discrimination and fair competition. When fair competition rules are violated, there are distortions in the trade. The rules and principles of trade adopted by all member countries serve as a guarantee of predictability in trade and the creation of a favorable investment environment and fair competition. Many developing and least developed countries have the opportunity, on an equal footing with developed countries, to participate in trade negotiations and address development issues. All this contributes to economic development and the growth of the welfare of countries.

- Recently, the international expert on the WTO, Jovan Jekic, held meetings and seminars for representatives of relevant ministries, departments and commercial structures. During the discussions, the international expert also spoke about erroneous ideas about WTO membership. How do you feel about this?

- Yes, I agree that there are indeed a lot of fallacies and misconceptions about the activities of the WTO. First of all, this is due to insufficient information, ignorance of WTO rules and the way it works, as well as a variety of stereotypes that do not have a relationship to reality. So, a common misconception is the opinion that when joining the WTO, the country will automatically reduce all import duties and immediately begin a huge flow of imported products, which will simply destroy local producers. 

This, of course, is not so. Linking tariffs at a certain level is, first of all, the result of negotiations. After the incoming country gives the initial version of its tariff proposals, the negotiations are going on at a bilateral level and are already being conducted on very specific commodity items that are of interest to the negotiating country. For some commodity items, tariffs can be linked at a higher level than they were applied before negotiations. So, for example, Kyrgyzstan when joining the WTO was able to raise the level of a bundle for the import of textiles to 18% of the previously applied 10%. And the same situation on many commodity positions, which Kyrgyzstan considered "sensitive." So this is such a big myth that is not true. Distributed not by experts, but by people who are used to thinking on the principle of "I heard the ringing - I do not know where it is".

Another myth is that agriculture will perish on entry, as subsidies are banned. Subsidies are really forbidden for industrial goods, and then for those subsidies that belong to the so-called "red basket", i.e. those that are due to export. Subsidies for the development of science and research, education are allowed and encouraged. But with respect to agricultural products, there is no such prohibition at all. The amount of subsidies is simply limited by the percentage of GDP. For developed countries subsidies up to 5% of GDP are allowed, and for developing countries up to 10% of GDP. In the countries of our region, particularly in Uzbekistan, agricultural subsidies have never been applied, equal to 10% or even 5% of GDP. We have never dreamed of such a thing. For example, Tajikistan managed to consolidate the level of agricultural subsidies to 8% of GDP. This means that Tajikistan can subsidize its agriculture to 2 billion US dollars. There were no such subsidies in Tajikistan's agriculture in the entire history of Tajikistan. The same applies to Uzbekistan. We do not know at what level the negotiating group from Uzbekistan will be able to consolidate the level of agricultural support. But even if it is not 10%, you should not get very upset. Even 5% is already huge funds, which never stood out in Uzbekistan. Uzbek farmers often pay a lower price to Uzbek farmers.

But subsidy in the understanding of the WTO is when the state pays its farmer a difference with the world market price, in case the latter goes down. That is, in fact, he buys from his farmer products at a price higher than the market price. Who understands the situation in the agricultural sector in Uzbekistan, should also understand that we have never had such subsidies and, most likely, will not.

Another myth is that the WTO is a club for rich countries, and the poor and small countries are how poor they are. Of course, a poor country can also remain poor, in this sense the WTO is not a charitable organization, not a financial institution or a donor that provides financial support. But this is already a matter of economic development, which depends not only on WTO membership, but also on many other factors, economic, political, social, etc. But the fact that each member has an equal voice, and decisions are made on the basis of consensus is a fact. Indeed, even a small country can block the decision of the governing bodies of the WTO, which it considers contradictory to its interests. Thus, even the voice of a very small and poor country can be decisive.

- International expert Jovan Jekic has repeatedly talked about so-called "sensitive products". Please tell us what it means?

- Upon accession, negotiations are held with member countries on tariffs for goods and on obligations for access to the services market. There are sectors that are especially important, as they make a significant contribution to the economy or where there is a high level of employment. In such sectors, countries are trying to fix a higher protective tariff. And such sectors are called "sensitive", because changes can affect the economy, as they are of great importance, or cause of a reduction in the number of jobs. In Uzbekistan, it is possible to include agricultural products, fruits and vegetables to such products. They now have a 150% import tax (30% duty, 100% excise, 20% VAT and 0.2% customs clearance), which is very high. Most likely, upon accession, the member states will demand to reduce this tariff. For this, negotiations will be conducted. But it should be noted that we still do not have such industries for the production of finished products for added value, which have a significant contribution to GDP or where high employment. Now it is difficult to say which sectors are sensitive for Uzbekistan, because until now the country has not developed according to market mechanisms. The main contribution to the country's GDP is made by the commodity sector (cotton, gas, minerals, etc.). In terms of industrial goods, processed, or services, exports are minimal and the contribution to GDP is also insignificant. The main employment is in agriculture, but again this is due to the monopoly of cotton. Therefore, it remains to be reconsidered on which sectors to stake. Many high tariffs were assigned without any methodology. If the tariffs are revised, downgraded and streamlined, imports will come out of the shadows, and real revenues will go to the budget.

- Today Uzbekistan has the status of an observer in the WTO. What does this status give, and how will it contribute to WTO accession?

- When a country first applies to the WTO for accession, it is given the status of "observer." At the end of the negotiation process and after the protocol on accession is adopted, the country becomes a full member. As an observer, the country does not have rights as a member, but it is possible to attend various WTO events, negotiate, have access to the WTO database, but do not have the right to vote.

- What are the advantages of joining the WTO for Uzbekistan?

- To develop the economy, it is necessary to develop market mechanisms, opportunities for the private sector and export of products with added value, so that jobs will arise. All this requires systemic reforms within the country. For Uzbekistan, accession to the WTO will create great opportunities for the development of production, expansion and growth of exports, and will also provide a stable course for the continuation of market reforms. Institutional reforms in the field of technical regulation, customs administration, legislative framework in the sphere of service regulation will create opportunities to integrate more easily and quickly into the world process of production, scientific, technical and cultural development. This will contribute to the development of the business environment and competition. Accession to the WTO will mean that all discriminatory benefits and rules for individual enterprises will be abolished, which will help to reduce the level of corruption. The private sector will be able to develop according to honest rules. For example, in agriculture, if the monopoly of cotton is abolished, the farmer will be free to choose what to plant and sell at a market price. There will be new types of industries, which means new jobs. Accession to the WTO will allow participating in various international organizations and agreements, where new standards and rules for new types of products and services are being formed.

Participation in such organizations will allow our own scientific cadres to develop. We can produce products that can be exported to different countries, etc.

- One of the tasks is the organization of the negotiation process. Which aspects should you pay attention first?

- First of all, the negotiating group from Uzbekistan should include representatives of various ministries and departments that are relevant to issues that will be the subject of negotiations in the WTO. Also, the chief negotiator from the country will be appointed, often at the level of the minister or deputy minister of trade or economy, having the relevant competence. Negotiations will go according to tariffs (for the whole commodity nomenclature), services (for those sectors of services for which Uzbekistan wants to trade), on agricultural goods. First of all, the negotiating group should have an understanding that it is a question of systemic reforms in the economy, which are necessary for Uzbekistan. In the negotiations on goods, one can definitely expect that the member states will demand to completely eliminate discriminatory excise taxes on imports. This will be necessary to do. It will also be necessary to present a methodology for tariffs and reduce it to many positions. Negotiations on services can be more difficult. It makes no sense to restrict access to the information technology market, because information technologies are needed for the general development of all sectors. It is necessary to create a favorable investment environment, when investors will also bring their technologies and knowledge, share them. In the negotiation process, it is possible to set such a condition for investors.

In the services negotiation process, one should expect that member countries will require transparent procedures and rules in the financial and banking sector, including insurance. More significant land lease dates will require. Licensing of many types of services will need to be revised to ensure that the criteria for obtaining licenses become transparent, there are mechanisms for challenging the decision in case of unlawful deprivation of a license, etc. In the negotiation process one must proceed from the real situation, practical possibilities. It will be necessary to conduct widely educational seminars and trainings for officials of negotiators, as well as for business, the private sector, students, and the general public. It should be noted that in the process of accession and after significant role is played by technical assistance provided by various international institutions. Expert support is needed in the accession process, as well as in the process of introducing institutional reforms in the economy. It is important to skillfully use technical assistance and educate new national cadres - trade lawyers, economists and negotiators, who will subsequently implement the trade policy of the state within the WTO.

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