The Platform

Eurasian Economic Commission

On December 11, 2020, the Eurasian Economic Union (EAEU) granted Uzbekistan observer status for five years. Uzbekistan has yet to decide on acceptance of full member status. The acceptance of full member status is an essential yet controversial decision for Uzbekistan to take. A senior government official has said that Uzbekistan is weighing the pros and cons of accession. The EAEU is a treaty that regulates the free movement of capital, labor, and goods, as well as regionally coordinated, uniform policy-making mechanisms.

In a video conference in December of last year, Shavkat Mirziyoyev, Uzbekistan’s president, emphasized the importance of the enlargement of foreign markets for Uzbekistan and presented key areas where his country will benefit from EAEU membership.

First, Mirziyoyev mentioned joint efforts on decreasing the trade distortions by gradually eliminating customs tariffs and other non-tariff barriers to trade, and emphasized infrastructure and transportation between EAEU states. The accession of Uzbekistan is geographically significant to the EAEU as it is the only country that borders all Central Asian countries. Hence, accession will accelerate the establishment of new economic corridors and regional clusters that would bring down the cost of transportation. The Center for Economic Research and Reform estimated a $20 million dollar decrease in annual fuel-related expenses and a 15% increase in exports to member states.

Unemployment in Uzbekistan is another driving force for EAEU membership. Mirziyoyev highlighted the importance of the common labor market that the EAEU provides for member states, which implies that upon accession, employment procedures for Uzbek migrants in Russia and Kazakhstan will be eased.

The political and economic dominance of Russia is considered an external threat. The EAEU is a Russian-dominated regional agreement, where the economic and political power between Russia and other EAEU states is unequal. According to Farkhod Tolipov, the director of the Caravan of Knowledge, a think tank, Uzbekistan has seen enough cases of Russian power manipulation and it should not “repeat history,” or it will be “a second USSR.” The EAEU countries are also serving as marginal land for Russia; it is creating so-called buffer zones in periods of economic and political sanctions from the U.S. Moreover, EAEU accession may hinder a much bigger goal: WTO membership. Uzbekistan had started the accession process to the WTO back in 1994, yet still cannot fully comply with WTO requirements. Acceding to the Russia-led EAEU seems like a counterbalance to WTO accession, and might cause a lengthier accession period. However, 4 out of 5 members of the EAEU are already full members of the WTO.

Internal opposition is also seen as a strong disincentive in accession to the EAEU. The presence of powerful interest groups that hold major shares in manufacturing industries precludes accession. Under the EAEU, tariffs and non-tariff barriers are strongly regulated, and the domestic manufacturing industries of Uzbekistan might face severe competition. Manufacturing industries in Uzbekistan are not ready for a market where conditions are equal for all actors.

Shavkat Mirziyoyev recently said that “If a production of high quality, competitive and exportable goods is one problem, finding a marketplace for that good is another much bigger problem,” and implied that joining the EAEU is essential, otherwise Uzbekistan will be isolated. Mirziyoyev’s standpoint was supported by a senior government official, who said, “Uzbekistan needs a wider marketplace as Russia, Kazakhstan, and Kyrgyzstan.”

The sense of being isolated comes from the pressure that Uzbekistan officials felt; the majority of its trading partners are now part of the EAEU. The trading block sets uniform standards and licensing, and each member complies with them, while Uzbekistan products are out of compliance. For some time, there will be Russian superiority, but that is a matter of time because the EAEU as a trading block is diversifying. On November 4, 2019, Dmitry Medvedev, Russia’s former prime minister, announced that Vietnam, China, and Singapore signed free trade agreements. Apart from them, Indonesia, the Philippines, Thailand, and Brunei have expressed interest in signing multilateral free trade agreements.

Salokhiddin Nasriddinov is an Economics student at Tokyo International University. He previously worked for the African Finance and Economic Association, and currently works for the Institute for International Strategy as a research assistant.