In his presentation addressed to the AmCham members consisting of local and foreign entrepreneurs Ambassador Stiprais covered various issues of the bilateral trade and investment relations, told about EU-funded projects implemented in Uzbekistan with the aim to develop capacity of managers of local SMEs and export capacity of farmer households in different regions of the country. The Ambassador also updated the meeting participants on investment opportunities in the EU Member States.
Ambassador Stiprais started his speech from explaining a legal basis for the bilateral trade and investment cooperation. They are governed by the Partnership and Cooperation Agreement (PCA) between the EU and Uzbekistan signed in 1996. The agreement provides for the EU and Uzbekistan to grant each other most-favoured-nation treatment concerning: custom duties and charges applied to imports and exports; direct and indirect taxes applied to imported goods; rules relating to sale, purchase, transport, distribution and use of goods on the domestic market.
Uzbekistan benefits from the EU's Generalised System of Preferences (GSP), which grants developing countries non-reciprocal access to the European market. The GSP is designed to encourage growth in developing countries. It ensures that Uzbek exporters pay lower or no duties on some or all of the products they sell to the EU.
The Head of the EU Delegation noted that the EU is Uzbekistan’s fourth largest trade partner after China, Russia and Kazakhstan. 12% of the country’s total trade balance shaped thanks to exchange in goods between the country and EU Member States. In 2015 (statistical data on EU trade with the world for 2016, including with Uzbekistan, will be release by Eurostat only in the spring this year) bilateral trade reached EUR 1,793 mln. Uzbekistan’s import from various EU Member States was worth EUR 1,546 mln, while export to these countries allowed it earning EUR 246 mln. Germany is the biggest trade partner of Uzbekistan among EU Member States. Its trade with Uzbekistan was worth round EUR 440 mln in 2015.
The top-three product groupings, which Uzbekistan imported from EU Member States, were machinery and transport equipment (EUR 608 mln), chemicals and related products (EUR 421, of which pharmaceutical was EUR 278 mln), as well as food and live animals (EUR 123 mln). Meanwhile, the country mostly exported to the EU agricultural products (EUR 23 mln), textiles and closing (EUR 35 mln), chemicals, raw materials and minerals (EUR 177 mln).
The both sides admit that the current level of trade is unsatisfactory, and they take efforts to increase it, Ambassador Stiprais said. In order to improve situation in this area the EU and Uzbekistan apply several instruments, stimulating trade and investment relations.
Firstly, the sides hold regular and frank dialogue on business related matters under existing institutional mechanisms provided by the PCA. Namely, EU-Uzbekistan Sub-committee on Economy, Trade and Investment, involving Uzbekistan and the European Commission's officials, who regularly meet in Tashkent and Brussels. They discuss business opportunities and removing of barriers for bilateral trade and investment. The next meeting of the Committee will be held in Uzbekistan in February.
In addition, at the moment the sides are also discussing an opportunity of establishing a Business and Investment Council. Besides officials it will involve both Uzbek entrepreneurs and representatives of EU firms and companies. This body will facilitate their dialogue and enhance bilateral business links.
Secondly, the EU stimulates export of Uzbekistan's key products by removing barriers for their access to the European markets. Namely, in December 2016 the European Parliament approved the Textile Protocol to the PCA. The document is designed to improve trade in cotton and textile products through decrease of customs duties for imported goods from this grouping from Uzbekistan, making easy their trade in the territory of the EU for Uzbek manufacturers.
Thirdly, one more instrument stimulating the bilateral trade are EU-funded projects implemented in Uzbekistan. The EU provides millions of euros of financial assistance to Uzbekistan every year, primarily aimed at promoting economic development.
For the period 2014-2020, financial aid for Uzbekistan amounts to €168 million, which represents a 124 % increase compared to the 2007-2013 period. EU development assistance for Uzbekistan between 2014 and 2020 is concentrated on rural development. Goals include poverty reduction and wealth creation in rural communities, the improvement of quality of life, living standards and food security of people residing in isolated or sparsely populated areas, and the protection of natural resources.
This rural aid goes beyond the traditional focus on agriculture as it supports income- and employment-generating investments in village infrastructure, local cooperatives, family farms and micro and small-sized enterprises. Rural development interventions may also include sustainable energy, improvement of water, sanitation and irrigation systems in rural areas and measures to increase resilience to climate change and natural or man-made disasters.
It's expected that one of outcomes of the above mentioned projects will be development of capacity of local farmers, who in the light of increased productivity will be able to export their agricultural products to the neighbouring states, such as Kazakhstan, Russia, China and South Korea. Moreover, vegetables and fruit produced in Uzbekistan might be exported to European markets too. It will become possible taking in account their compliance with technical, phytosanitary and ecological requirements and rules set in the EU. That will also be reached thanks to the above mentioned projects.
Another project mentioned by Ambassador Stiprais focused on investing in strengthening of the human capital across local managerial community. The EU-funded project called “Management Training Programme (MTP) – Capacity Building for SME Management” is one of the most successful initiatives supported by the EU Delegation and implemented in 2013-2017 in Uzbekistan. The objective of the project was to increase number of qualified and competent entrepreneurs and managers capable to effectively start up and manage local SMEs and ensure their sustainable development in a long term perspective. To achieve this goal the project undertook specific activities to train local managers and experts through internships in EU Member States.
During the project, cycle around 152 Uzbek participants, selected on competitive basis out of around 600 applicants, had an opportunity to undergo 2-4 weeks internships in companies and organizations in 20 EU Member States, including 126 managers / entrepreneurs from SMEs and 26 experts from local business support organizations. The top-six industries interns came from were agriculture, food, construction materials and closing production, consulting, transportation and logistics. They represented around 67% of all project beneficiaries. In terms of popular destinations for internships led companies and organizations from Italy, Latvia, the Netherlands, Greece and Germany.
During training and internships in EU companies, Uzbek managers were able to share experience with their EU colleagues, learn about modern management methods, and get acquainted with European business culture. Uzbek companies have had the chance to build up a network with new EU business partners, including through signing bilateral contracts and establishing joint ventures, and increase their competitiveness and business performance.
Ambassador Stiprais encouraged Uzbek entrepreneurs to invest in Europe. The EU is one of the biggest markets in the world granting access to population of more than 500 mln, providing free movement of individuals, goods, services and capital within the borders of 28 Member States. It remains to be one of the most attractive destinations for FDI thanks to creating conditions conducive for doing business. The 2017 World Bank Ranking on Ease of Doing of Business confirms this. Among the first 30 states in this rating, offering the best conditions for entrepreneurs, 16 are EU Member States, with Denmark ranked 3 and Slovenia ranked 30 along with 14 others in between.
At the end of his presentation, Ambassador Stiprais answered questions asked by the meeting participants. For instance, about the EU future after the Brexit, access of Uzbek students to European universities, visa issues and measures taken by European authorities to control movement of international visitors in the Schengen area and so on.