Tashkent, Uzbekistan (UzDaily.com) -- Uzbekistan’s accession to the World Trade Organization is a lengthy process.

Goal 97 of the Development Strategy of the new Uzbekistan for 2022-2026 also notes the special role of studying the impact of Uzbekistan’s membership in the WTO on the national economy.

Uzbekistan’s membership in the WTO can lay the foundation for improving economic ties with other countries, increasing trade, improving external competitiveness, while simultaneously accelerating the process of transition to market relations.

However, there is also a risk that tariff cuts after the country’s accession to the WTO could harm vulnerable sectors of domestic production.

The study used a simplified computable general equilibrium (CGE) model, a class of economic models that use actual economic data to assess the response of an economy to changes in policy, technology, or other external factors.

In the study, as a basic condition for joining the WTO, it is assumed that tariffs in Uzbekistan will be reduced to the level of Kazakhstan as a WTO member (approximation of the average tariff level to 5.7% from the current 7.4%).

According to the results of the analysis, it was revealed:

• an increase in exports by 0.06% and a decrease in the domestic supply of goods by 0.03% due to an increase in the attractiveness of exports as a result of lower domestic prices, which is also determined by lower tariffs;

• an increase in imports by 0.06% and a decrease in demand for domestic goods by 0.03% due to lower prices for imported products caused by lower tariffs;

• reduction of total savings by 0.35% due to the reduction of state budget revenues;

• decrease in the level of investments by 0.16% due to the decrease in the volume of savings;

• an increase in consumption by 0.11%, caused by a decrease in domestic prices.

Based on the initial results of the model, it can be argued that at the first stage, Uzbekistan’s accession to the WTO, and, as a result, the reduction in customs duties will lead to a certain decrease in demand for domestic products.

This, in turn, will provoke the need to improve the efficiency of domestic companies, otherwise exit from the market of inefficient companies unable to withstand price competition with foreign companies.

To ensure a smooth transition to new conditions, Uzbekistan is recommended to create new incentives for national enterprises to gradually prepare them for the conditions of external competition.

The gradual reduction of tariffs with the access of foreign companies to the market of Uzbekistan will be a signal for domestic producers:

- optimize the production process;

- improve quality by improving the technological and personnel base;

- to revise the pricing policy of the enterprise and more systematically study the tastes and preferences of consumers.

Also, an effective mechanism could be the introduction of the practice of annual assessment of the readiness index of large companies for the conditions of joining the WTO.

And also, the effects of the abolition of subsidy procedures are not considered at this stage of the study.