Tashkent, Uzbekistan (UzDaily.com) -- The potential of trade, economic and investment cooperation between Uzbekistan and Azerbaijan is still far from being realized, Deputy Director of the Center for Economic Research and Reforms Mukhsinjon Kholmukhamedov noted in his speech at a video conference with the participation of leading analytical centers of Uzbekistan and the Center for Analysis of International Relations of Azerbaijan.

On 17 June, a video conference was held with the participation of experts from leading analytical centers of Uzbekistan and the Center for Analysis of International Relations of Azerbaijan on the topic: "Prospects for bilateral cooperation in the context of global instability."

Mukhsinjon Kholmukhamedov, Deputy Director of the Center for Economic Research and Reforms, made a speech at the video conference on the topic: “Uzbek-Azerbaijani mutual trade, investment and industrial cooperation: results, problems, promising directions for their development.”

The expert noted that Azerbaijan is an important trade and economic partner of Uzbekistan and mutual economic cooperation between the two countries has gained new momentum in recent years. Mutual trade between the countries is carried out in the free trade mode in accordance with the “Free Trade Agreement”, which was signed in Baku in 1996, i.e. in mutual trade, customs duties, taxes and fees having an equivalent effect, as well as quantitative restrictions on the export and / or import of goods that are produced in the territories of the two countries in accordance with the rules for determining the country of origin of goods, are not applied.

Over the past 5 years, the trade turnover between Uzbekistan and Azerbaijan has grown almost 7 times from US$17.1 million in 2016 to US$118.8 million in 2021. At the same time, exports have grown 5.8 times from US$13.1 million to US$75.9 million, and imports 10 times from US$4.0 million to US$42.9 million. In January-May 2022, compared to the same period of last year, the trade turnover between Uzbekistan and Azerbaijan increased by 49.1% and amounted to US$66 .4 million, exports grew by 70.7% to US$48.1 million, imports grew by 11.9% and amounted to US$18.3 million.

During the speech, it was noted that in 2021, in the structure of trade between Uzbekistan and Azerbaijan, the main commodity items were:

- for export: household appliances (air conditioners, televisions, refrigerators, electric stoves, etc.); copper wire and copper tubes; textile products and carpets; fruits and nuts; cars and services;

– by import: copper ores and concentrates; oil products; polymers; aluminum; plastic products; foodstuffs (mainly sugar); and services (mainly transport).

However, despite the growth trend in mutual trade, the volume of mutual trade remains modest. Thus, the share of Azerbaijan in the total trade turnover of Uzbekistan in 2021 amounted to only 0.3%, in total exports 0.5%, in total imports 0.2%. Approximately the same indicators are the shares of Uzbekistan in the total trade turnover of Azerbaijan.

The expert emphasized that the volume of mutual trade can be significantly increased by replacing imports from third countries of those products that both countries can trade with each other, given the complementarity of the economies of the two countries. Such cooperation becomes even more relevant in the context of global instability and disruption of the supply chains of necessary products.

Speaking about the prospects for investment cooperation, the expert noted that in the "Development Strategy of New Uzbekistan for 2022-2026" the goal was to increase the share of finished products and semi-finished products in the structure of exports by 3.3 times, as well as to expand the export of finished products to European countries within the EU’s general system of preferences GSP+.

Competitive goods produced on the territory of Uzbekistan, in particular goods of the textile, electrical industry, fruits and vegetables, including processed ones, with the appropriate certificate of conformity, can be delivered duty-free to the markets of the EU countries and the UK.

In this regard, when creating joint ventures on the territory of Uzbekistan with the participation of Azerbaijani capital for the production of competitive products, it will be possible to supply these products duty-free to the European market. At the same time, if Azerbaijan’s transport logistics is used to deliver goods to Europe, it is possible to significantly reduce transportation costs and, consequently, increase the competitiveness of exported products, Kholmukhamedov noted.

In May 2022, a delegation of the Food Safety Agency of Azerbaijan visited the Ministry of Agriculture of Uzbekistan. Issues of food security, exchange of experience and prospects for further cooperation were discussed. Cooperation has been established in the field of agriculture, in particular, seeds of some varieties of cotton grown in Uzbekistan have been transferred to Azerbaijan for testing in Azerbaijan. In turn, Azerbaijan is expected to receive seedlings of high-yielding hazelnut varieties.

To date, 243 enterprises have been created in Uzbekistan with the participation of Azerbaijani capital, of which 16 enterprises have been established since the beginning of this year. In addition, in September 2021, in Azerbaijan, in the city of Hajigabul, the grand opening of the production line of UzAuto Motors JSC and SamAvto JV LLC took place. 

The expert noted that a promising area of bilateral investment cooperation could be the joint implementation of projects:

- in the electrical industry, taking into account the production of aluminum in Azerbaijan, which is mainly exported in its raw form and can be used as a raw material for the production of electrical products;

- in the textile industry, taking into account the cultivation of cotton in Azerbaijan, which can serve as a raw material for the production of textile products (in 2021, Azerbaijan’s yarn exports amounted to US$58.1 million). In addition, there may be joint projects in the chemical and other industries.

Thus, the potential of trade, economic and investment cooperation between Uzbekistan and Azerbaijan is far from being realized, and taking into account the complementarity of our economies, there are great prospects for further expansion of mutually beneficial cooperation, M. Kholmukhamedov emphasized.