Businesses sometimes fear negative effects when a country integrates into the world economy, but usually the move helps to unlock economic potential by stabilizing commerce through a transparent and predictable business environment. Explaining the effects therefore helps to demystify the process and shows business operators how to prepare themselves for the accession.
As Uzbekistan progresses with its negotiation to become a member of the World Trade Organization (WTO), private sector buy-in would be integral to ensure successful integration in the world economy. WTO membership will bring about significant changes to the country’s business operating environment and it is vital that the country’s business sector understands the effects and possible benefits that can be reaped from participating in the global economy.
Towards this aim, a second series of private-sector-directed trainings was organized in four regions in Uzbekistan by the International Trade Centre – this time on the WTO disciplines governing agriculture.
Important sector for Uzbekistan
The sector is an important one for Uzbekistan. It contributes almost a quarter of Uzbekistan’s gross domestic product (GDP), according to the Food and Agricultural Organization (FAO) and is also the biggest employer, with fully 28 per cent of the labour force working on farms. Moreover, by FAO measure, the sector is also more effective than any other in ameliorating poverty and inequality.
Agriculture is also strategically important for other WTO members because the sector has implications for countries’ food security. As such, agriculture is hived off under a separate agreement and has its own intricate rules, notably on subsidies. A separate set of requirements under the Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures is solely applicable to agriculture as it concerns the application of food safety and animal and plant health regulations.
The training, provided by an international WTO expert, took place from 11 to 18 January in the Khorezm, Kashkadarya and Samarkand regions as well as in Karakalpakstan. It commenced with an overview of the WTO’s history and contextualized the creation of the Agreement on Agriculture. The measures countries employ to protect their agricultural sectors against imports were explained. The most common are tariffs levied on imports. It is these duties that the WTO system originally aimed to cap and gradually reduce to bring down the cost of traded goods over time and ensure that they are applied in a fair manner that does not favour some trading partners over others.
The agriculture subsidy ‘boxes’ made easy
The WTO’s very arcane subsidy categories were unpacked. Called the ‘green box’, ‘amber box’ and ‘blue box’, these categories indicate which kind of subsidies are forbidden under WTO rules and which allowed.
Special and differential treatment was touched upon. Under this principle, it is ensured that developing countries have easier tariff reduction regimes for a softer transition than those set for the developed countries. This allows them to maintain higher levels of duties because of their sensitivities.
The training was attended by 90 participants from agricultural producer companies, agricultural export companies, as well as regional plant protection and quarantine administrations, and local governing administrations.
Subsequent modules will be presented in March and April and will cover other staple agreements. The SPS Agreement will come under the lens; non-tariff measures will be discussed – these so-called technical barriers to trade are covered under the TBT Agreement and include measures such as quotas, tariff-rate quotas, licensing requirements and other standards that countries deploy and may be deemed to hassle imports.
And, finally a module will be offered on compensatory measures available to Uzbekistan in case it faces up to subsidized imports or if it believes imports are dumped in its market. The latter are contained in the Anti-Dumping Agreement, while the former forms part of the Agreement on Subsidies and Counterveiling Measures.
The training was organized by the ITC with funding from the European Union under the Facilitating the process of Uzbekistan’s accession to the WTO project envelope. The five-year project supports Uzbekistan's development plans to modernize its economy by means of its WTO accession process. One of the key pillars of the project is to ensure that the private sector, including women’s business associations, are sufficiently familiarized with the effects WTO membership will have on them and how they can participate to benefit.