According to a study by the Center for Economic Research and Reform (CERR) at the beginning of the year, if Uzbekistan joins the EAEU, transport costs for the Uzbek economy will decrease, but domestic air carriers will face a stiff competition. What this membership of EAEU will change in Uzbekistan? In this context, we will bring the analysis of expert Muhsinjon Kholmukhamedov.
Uzbekistan was granted an observer status during a meeting of the Supreme Eurasian Economic Council on December 11. Commenting on Uzbekistan's new status in the EAEU, Muhsinjon Kholmukhamedov, an expert at the Center for Economic Research and Reforms, said Uzbekistan benefits from developing transport and logistics activities, joining EAEU transport corridors.
Quoting from the speech of the President of the Republic of Uzbekistan Shavkat Mirziyoyev at the Supreme Eurasian Economic Council on 11 December, he said: " The transport communications and infrastructure of Uzbekistan and the EAEU member states are deeply integrated and closely interconnected. Development of coordinated approaches in the field of transport and transit, more active operation of transport corridors will significantly improve their competitiveness and strength"
According to a study by the Center for Economic Research and Reform (CERR) at the beginning of the year, if Uzbekistan joins the EAEU, transport costs for the Uzbek economy will reduce, but domestic air carriers will face a stiff competition.
What this membership of EAEU will change in Uzbekistan?
First, as an observer in the EAEU, Uzbekistan will have the opportunity to work more closely with the Eurasian Economic Commission and its working bodies and to implement a broader cooperation agenda. It will also create conditions for taking full advantage of trade and economic cooperation with the countries of the Union and deepening cooperation, which will give our country observer status.
Second, the EAEU member states are the main trading partners and close neighbors of Uzbekistan. Therefore, the status of an observer status allows the country to participate in discussions on various topics in a timely manner, make decisions and implement the necessary changes in economic policy.
Third, a permanent channel will be created to facilitate communication with all member states to discuss existing issues.
Fourth, we have the opportunity to establish more constructive communication with the EAEU member states in order to expand trade, investment and technological cooperation.
In general, participation in the Council as an observer provides us with valuable information about the integration processes, achievements, challenges and development prospects of the Union.
At the same time, Uzbekistan's status as an observer state in the EAEU should not be seen as a separate phenomenon. This status indicates the intention to deepen mutually beneficial cooperation with the integrative organization.
Once we have observer status, we can become more active participants in the EAEU - at the level of heads of state, business, experts, especially we can participate in macroeconomic policy discussions.
In January-November 2020, Uzbekistan's foreign trade with the EAEU amounted to $ 8.7 billion, which accounted for about 26.5% of Uzbekistan's foreign trade turnover. The total volume of exports to the Union countries consisted of $ 2,868.9 million (Russia - $ 1,323.4 million, Kazakhstan - $ 818.8 million, Kyrgyzstan - $ 685.7 million, Belarus - $ 37.7 million, Armenia $ 3.3 million, the volume of imports made up $ 5,880.0 million (Russia - $ 3,746.0 million, Kazakhstan - $ 1,801.7 million, Kyrgyzstan - $ 130.6 million, Belarus - 199, $ 7 million, Armenia $ 2.0 million).
Analysis of Uzbekistan's relations with the EAEU
In January-November 2020, the share of EAEU countries in the total volume of foreign trade cargo of Uzbekistan reach to 55% (18.2 million tons), of which 14.8% (2.6 million tons) were export cargo, and 85, 2% (15.6 million tons) were import cargo.
Compared to the same period in 2019, the total freight traffic with the EAEU countries increased by 18.3%, of which the volume of export cargo by 14.4% (Russia + 11%, Kazakhstan + 20%, Armenia + 9%, Kyrgyzstan + 0.1%, Belarus -9%), the volume of imports by 19% (Russia + 24.4%, Kazakhstan + 20.3%, Armenia + 57.1%, Kyrgyzstan -4.4 %, Belarus + 40.0%).
In January-November 2020, a total of 33.2 million tons of cargo was transported by the EAEU countries. Specifically, railway transport - 20.8 million tons (+ 22.5% compared to 2019), road transport - 3.5 million tons (-0.9% compared to 2019), air transport - 1, 1 thousand tons (-20.2% compared to 2019).
According to the conducted analysis, once Uzbekistan achieve the full membership of the EAEU, the following will be implemented:
- simplification of mutual trade procedures;
- an elimination in export customs duties;
- an increase in the country's foreign trade turnover;
- a decrease in freight costs;
- new transit flows;
- a expansion of fruit and vegetable exports;
- a reduction in the share of transport costs in export and import;
- an increased efficiency of vehicle use;
- an improvement in delivery time and the quality of passenger service;
- the access to the Eurasian Union to the transport corridors will accelerate the construction of railways in Kyrgyzstan and Afghanistan, increase the capacity of the EAEU countries to transport goods to China, India, Pakistan and Afghanistan;
“Integration of logistics center of Uzbekistan into major logistics and distribution center of the EAEU countries will increase our opportunities to export the goods, especially fruits and vegetables.
Prepared by Muhsinjon Kholmukhamedov for Daryo.uz
Bobojanov Shakhrukh translation
Leading Research Specialist
Center Economic Research and Reforms