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Uzbekistan is Becoming one of The Important Partners of European Union


Tue 04 Jun 2024 | 09:40 AM
Bunyod Tillakhujaev
Bunyod Tillakhujaev
Bunyod Tillakhujaev, chief specialist of Development Strategy Center

By implementing joint projects in the areas of socio-economic development, education, the rule of law, border management, combating crime and environmental protection and others, Uzbekistan is gaining the status of an important partners of the EU.

It is especially worth emphasising that in recent years, as a result of the favourable conditions created in the country, the trade, economic and investment spheres between the parties have been developing rapidly.

The volume of trade between Uzbekistan and the European Union is steadily growing thanks to the GSP+ system of preferences, which provides privileged conditions for the export of goods from Uzbekistan to the EU area.

Thus, in recent years, there has been a noticeable growth in the trade and economic sphere. By the end of 2023, the EU accounted for almost a tenth (9.2 per cent) of Uzbekistan's total trade turnover, equivalent to $5.8 billion.

This figure is quite impressive when compared to figures from, for example, 2020, with a trade turnover between the two sides of $3.9 billion. The structure of Uzbekistan's exports to the EU is dominated by textiles, food products and agricultural raw materials, while imports from the EU are dominated by machinery and equipment, vehicles and chemical commodities.

Among member countries of the EU, Germany is a particularly important investment and trade-economic partner for Uzbekistan. As of January 2024, more than 100 joint projects worth more than 10 billion dollars are being implemented with partners from Germany. The total volume of German investments has increased 11 times since 2017. Over the past six years, the number of enterprises established in Uzbekistan with the participation of German capital has almost tripled, and as of April 2024, this figure has reached 220.

Another major trade and economic partner of Uzbekistan is France. According to the results of the first quarter of 2024, France and Germany are among the top ten countries with the largest trade turnover with Uzbekistan. Among EU countries, Lithuania, the Czech Republic, and Italy are among Uzbekistan's top ten trading partners.

Meanwhile, it is important to note that during the state visit of the President of Uzbekistan to Italy in June 2023, the countries signed a declaration on strategic partnership. A similar declaration was signed with Hungary in 2021.

Undoubtedly, the EU countries are of great importance for Uzbekistan, and the growing trade, economic and investment indicators serve the economic interests of our country.

Meanwhile, Uzbekistan has also become an increasingly important partner of the European Union in Central Asia (CA) in recent years. In April this year, the two sides signed a memorandum of understanding that launched a strategic partnership to develop sustainable value chains in critical raw materials such as copper, lithium, aluminium, titanium, platinum, graphite, nickel, cobalt and more which are of particular importance to the EU economy.

It is important to emphasise that in addition to bilateral ties, particular progress is currently being made in interregional cooperation, which is the most effective way of cooperation given the current geopolitical instability in the world, when this or that problem, especially in the field of security, must be solved together.

A key role in the development of interregional relations was played by integration processes in CA itself, which became possible thanks to Uzbekistan's good-neighbourly policy and reforms implemented since 2017.

An example of effective interregional co-operation is the Central Asia-European Union format, within the framework of which annual ministerial meetings are held. The last such meeting, on the sidelines of which the date of the First Formal EU-Central Asia Summit was discussed, was held in October 2023.

The first formal Central Asia-European Union summit is a milestone event that provides an opportunity of bringing the regional cooperation between Central Asia and the European Union to a new stage of development. This event, according to experts, is positioned as the main event in comparison to the previous "Central Asia-European Union" meetings.

It is known that the Summit will be held this year in the city of Samarkand, which indicates the EU's recognition of the policy pursued by Uzbekistan. It is noted that the event will bring together the top leadership of Central Asian countries and the European Union.

The participation of high-ranking EU officials at the summit testifies to the significance of the event. It is noted that during the event special attention will be paid to the issue of development of the Trans-Caspian International Transport Route (TITR), which is commonly referred to as the "Middle Corridor". The EU plans to invest about 10 billion US dollars for this purpose.

The development of this transport route, which is an alternative to the Northern Corridor, will allow to significantly restore and strengthen the world's logistics chains.

Thus, in this situation, the interest in the "Middle Corridor" is increasing. In addition, this trend is also driven by the situation in the Middle East, which directly affects shipping in the Bab-el-Mandeb Strait.

With appropriate policy decisions, the "Middle Corridor" will boost regional trade and improve connectivity between countries along the route. According to a World Bank report, the corridor can also ensure the sustainability and diversification of East-West routes, protecting countries and supply chains from geopolitical shocks.

At the same time, the Summit will probably discuss issues related to the Enhanced Partnership and Co-operation Agreement (EPCA) for Uzbekistan, Kyrgyzstan and Tajikistan. It is worth noting that the agreement with Uzbekistan has been initialled, in Kyrgyzstan preparations for signing the documents are underway, and with Tajikistan the EU is preparing to start negotiations. Accordingly, there is a possibility that a final decision will be taken on the signing of the EPCA between Uzbekistan and the EU, which will significantly expand the range of interaction in the areas of investment cooperation, trade in goods, services and intellectual property by incorporating the fundamental rules of the World Trade Organisation. Thus, the new agreement will not be considered a framework agreement, but will create a full-fledged mechanism of comprehensive interaction between Uzbekistan and the EU.

In addition, there is reason to believe that it will be extremely important at the Summit to discuss security issues in Central Asia against a background of geopolitical disagreements in the world. It can be assumed that Afghanistan and issues of regional stability and cooperation will also be on the agenda of the Summit.

In general, the development of Uzbekistan's relations with the EU will open up new opportunities for both sides. In particular, for the European side, the area Uzbekistan and Central Asian will provide possibilities for stabilising transport and logistics chains, as well as alternative access to critical raw materials. For Uzbekistan, the EU is important in terms of finding new external markets, focusing the world community's attention on water, climate and regional security issues, and diversifying foreign policy partners.