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GSP +: what should be the business card of the textile industry of Uzbekistan

8 May 2021

On 7 May, a textile conference was held on the theme "New Uzbekistan - new textiles: the beneficiary of GSP + in the EU", dedicated to the development of the domestic textile industry and its further promotion in the EU market under the GSP + system.

This forum was organized by the Uztekstilprom Association in cooperation with GIZ, with the assistance of the Embassy of Uzbekistan in Belgium and the support of the Export Promotion Agency.

By a decision of the European Commission, on 10 April, a special system of preferences of the European Union for sustainable development and good governance (GSP +) entered into force for Uzbekistan, into which Uzbekistan was admitted as a beneficiary country under the General Scheme of Preferences (GSP). The use of the GSP + system implies additional opportunities to increase the export of textile products to the EU countries. At the end of 2020, products worth US million were exported. With the application of the system of general benefits (GSP +) in relation to Uzbek textile products, exports are expected to increase to US2.1 million in 2021, and US2.2 million by 2022.

To achieve the intended results, the Uztekstilprom Association, together with international organizations (GIZ, Gherzi) and industry enterprises, is developing a Strategy for promoting textile products to the EU market, in connection with which an international independent expert from Germany has been introduced in the Association, within the framework of the Global Program of the German Society for International cooperation of GIZ "Sustainable development and increase in added value in the cotton industry" and its component "Promotion of exports and development of a business incubator in the fashion industry."

The main speakers of the forum were the EU Ambassador to Uzbekistan Charlotte Adrian, First Deputy Minister of Investments and Foreign Trade Aziz Voitov, Chairman of the Uztekstilprom Association Ilkhom Khaydarov, Ambassador of Uzbekistan to Belgium Dilyor Khakimov, Deputy German Ambassador to Uzbekistan Christopher Fuchs, Head of the ILO project “Monitoring of the third side ”Jonas Astrup, head of the GSP Hub group Willem van der Guest, head of the representative office of the German Society for International Cooperation GIZ Yorka Pudelka, Amal Isamukhamedov - representative of the certification company Control Union, General Director of the exhibition company Iteca Nigora Khasanova.

The forum was organized in a hybrid form, thanks to which it was able to unite textile industry enterprises, entrepreneurs, traders from Uzbekistan, Germany, Italy, France, Belgium, Spain, Russia, Poland, Latvia, and the Netherlands on one platform.

As a bonus for all entrepreneurs wishing to increase sales and enter the EU market, a training was organized with the founder of the Fratelli Casa brand, Shahrukh Kayumov, "How to conquer the EU market?"

The speakers and participants of the forum noted that the presentation of the GSP + preferences by the European Commission to Uzbekistan is an achievement of the reforms carried out in Uzbekistan in recent years. Thanks to GSP +, Uzbekistan has the opportunity to increase the volume of exports to the EU several times, an increase in the flow of investments and trade exchange between the countries is expected. And 27 conventions, which were ratified by Uzbekistan under EU conditions for GSP + recipients, indicate that Uzbekistan will continue to continue reforms in the protection of human rights and freedoms, freedom of speech, gender equality, the elimination of all forms of forced labor, environmental protection and ecology.

It is worth noting that the denim manufacturer will benefit more than all other players, the rates for them are reduced from 17% to 0%. Today, Uzbekistan exports more than US.1 billion of textile products to 65 countries of the world, of which US million falls on the EU countries.

Until recently, Uzbekistan 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%. In 2020, exports were carried out to 16 EU member states. The main share of exports is yarn 49.1% (US US.5 million), fabric 21.9% (US US million), knitwear 16.7% (US US.6 million), garments 11% (2 US US million), hosiery 1.3% (US US###content###.3 million). The three leaders in the import of Uzbek textiles are Poland - 56% (US.4 million), Italy - 19.1% (US.3 million), Germany - 7.3% (US.0 million).

It is worth noting that under the GSP system, the main importers of the EU are Bangladesh, India, Vietnam, Indonesia, Pakistan, Cambodia, which are also major exporters of textiles in the world.

At the same time, according to the European Commission, the main products imported under the GSP system in 2018 are textiles and finished products.

Uzbekistan is the first country to receive GSP + status over the past 5 years and the ninth country after Armenia, Bolivia, Cape Verde, Kyrgyzstan, Mongolia, Pakistan, the Philippines and Sri Lanka to receive the status of a GSP + beneficiary.

The use of the GSP + system offers additional opportunities for increasing trade between the EU and Uzbekistan, since tariffs on a number of important export goods will be canceled, within the framework of GSP +, the number of commodity items that Uzbek producers will be able to export duty-free to the EU countries has grown to 6200. This is twice as much as before that, including all positions of textile products, which comprise more than 1000 positions, such groups as:

52-53 cotton yarn;

54-56 yarns, non-woven fibers;

57- carpets;

58-60 fabrics, textile materials, linen;

61-63 ready-made textiles, clothing;

The textile industry is one of the promising sectors of the economy of Uzbekistan, which is increasing its export potential by supplying finished products with high added value to foreign markets. The volumes and geography of export of textile products manufactured in Uzbekistan are increasing every year.

It should be noted that the main competitors in the EU market for Uzbekistan will be Pakistan, Sri Lanka, Mongolia, the share of textiles in the exports of these countries under the GSP + system is at least 80% of total exports. However, there are also larger players, such as Bangladesh, India, Vietnam, with which Uzbekistan will seriously compete for the market. The political and social situation in the country is also more important. Uzbekistan has every opportunity to increase the export of textiles several times, against the background of countries where strikes take place from time to time and conditions and labor protection are poorly assessed. According to experts, under the GSP + preferential trade regime, the expected volume of textile products until the end, the current one will be more than US0 million, with a subsequent increase to US.2 billion by 2025. Also, a tangible increase in the interest of investors and retailers is expected.

Competitive analysis made it possible to identify the following priority areas:

- Yarn and thread (for fabric manufacturers);

- Fabrics (for ready-to-wear manufacturers);

- Knitwear (for supermarket chains and clothing stores);

- Women’s, men’s and children’s clothing (for supermarket chains and clothing stores);

- Terry products (for supermarket chains, home shops and hotels).

Along with this, special attention will be paid to the quality of exported products. To conquer their poverty and compete with Bangladesh and other countries, it is necessary to pay great attention to the implementation of European standards and product certification, study of the requirements of chain companies, international brands, retailers, export documents, product labeling, safety, packaging, product quality established by European countries , which in the future will serve to increase, as well as without interruption in the supply of textile products to the EU market.