What opportunities does GSP + provide for the textile industry of Uzbekistan?
04/12/2020 20:50
What opportunities does GSP + provide for the textile industry of Uzbekistan?
04/12/2020 20:50
Tashkent, Uzbekistan (UzDaily.com) -- The textile industry of Uzbekistan is one of the fastest growing sectors of the country’s economy. The industry takes leading positions in attracting foreign investment, creating new enterprises, providing employment, and exporting products. And also, it is considered one of the strategically important directions in the development of the national economy of the country.
The industry has undergone significant changes in recent years. In particular, thanks to significant support from the Government, the industry managed to bring the internal processing of cotton fiber to 100%, significantly increase the share of exports of products with high added value.
Today, products are exported to over 50 countries around the world. If in 2016 the export of textiles varied in the region of US$1.1 billion, then by 2020 it reached the level of US$2.1 billion. The main consumers of Uzbek textile products are the CIS countries, China, and Turkey.
In order to diversify the export of textile products to the countries of the European Union, together with the Ministry of Foreign Affairs and the Ministry of Investment and Foreign Trade, bilateral negotiations are constantly being held with potential buyers and trade networks. One of the important factors in increasing the export of textiles is considered the GSP + regime, in which Uzbek textile products can seriously compete with other textile countries.
So, in 2017, Uzbekistan ratified the "textile protocol" with the EU, according to this protocol, when exporting goods from the textile industry of Uzbekistan to the countries of the European Union, a significant reduction in customs duties is envisaged. If earlier Uzbek textiles were subject to customs duties at the rate of 17% upon entry to the customs territory of the EU, now the payments have dropped to 6%.
Until now, Uzbekistan has used the GSP regime, which allows exporting 3,000 goods to the EU without customs duties and 3,200 items at reduced rates. Under the GSP status, customs rates for textile products from Uzbekistan ranged from 4 to 12%.
The essence of the GSP (Generalized System of Preferences) consisted in reducing or abolishing tariff rates for certain types of goods produced in developing countries and imported by developing countries into developed countries.
At the same time, in relation to the GSP, each WTO member granting preferences sets its own criteria that the beneficiary countries must meet. This scheme is convenient for both developed countries and those receiving preferences.
The next stage was the task of assigning Uzbekistan the status of a beneficiary of the GSP + system. Association "Uztekstilprom" was one of the initiators of joining the GSP + system. On an ongoing basis, work was carried out with representatives of the European Commission, meetings with the assistance of the Ministry of Foreign Affairs and the MIFT, in particular, negotiations were held with the Commissioner for Central Asian countries Peter Burian.
In order to obtain this status, Uzbekistan has done a great deal of work within the framework of compliance with 27 basic international conventions on human and labor rights, including the elimination of child and forced labor in the cotton harvest, environmental protection and good governance, listed in Annex VIII to the Rules GSP.
A visit of the Uzbek delegation to Brussels was organized. As a result of which, the European side stated and welcomed the completion of ratification by Uzbekistan of all 27 international conventions and agreements necessary to obtain the status of a beneficiary of the Generalized System of Preferences GSP +, and confirmed its readiness to assist in the preparation of the application of the Uzbek side for obtaining this status and all kinds of support to Uzbek suppliers in entering the markets of the EU countries.
What opportunities does GSP + provide for the textile industry of Uzbekistan?
On 30 November, the European Commission made an early decision on the application of the Republic of Uzbekistan for obtaining the status of the beneficiary of the Generalized System of Preferences Plus - "GSP +".
After the adoption of the decision, Uzbek producers and exporters will be able to start using unilateral tariff preferences when exporting their goods to the European market. At the same time, the number of commodity items that Uzbek producers will be able to export to the EU countries will grow to 6200.
According to experts, under the GSP + preferential trade regime, the expected export volume of textile products at the initial stage will be US$300 million, with a subsequent increase to US$1.2 billion by 2025.
At present, Uzbekistan exports over US$2.1 billion textile products. Most of the exported products go to the market of the CIS countries, Turkey and China. And only US$60 million falls on the EU countries.
Exports to the EU countries at the end of 2019 amounted to US$56.7 million, in January-October of this year reached US$62.5 million. We expect that the interest of European countries in cooperation will soon increase, since with the receipt of the GSP + status, Uzbek textile products will increase their competitiveness.
Obtaining the status of the beneficiary of "GSP +" by our country will create a solid foundation for domestic manufacturers-exporters of textile products, which will subsequently allow for sustainable growth and diversification of the range of export products (all yarn producers and manufacturers of finished products will win, since TN VED codes are included in the list), which will also serve the dynamic development of mutually beneficial trade relations with the countries of the European Union in the textile industry.
Potential partners include brands such as H&M, ZARA, Pimkie, Fred Perry, PULL & BEAR, Bershka, Stradivarius, Mango and many other companies. Domestic textile enterprises are ready to cooperate in the implementation of sewing orders of world brands.
At the moment, the Uztekstilprom Association, together with European international organizations, is working to improve the quality of products. Particular attention is paid to the implementation of European standards, which will subsequently serve to increase the export of textiles to the EU market. For example, for the comprehensive promotion of domestic textiles, together with the German community GIZ, the international consulting company Gherzi, work is underway to develop a promotion strategy.
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