EU Statement at the Trade Policy Review of the Republic of Tajikistan, 6 December 2021
On behalf of the EU, I would first like to welcome the Delegation of Tajikistan, led by H.E. Mr. Zavkizoda Zavki Amin, Minister of economic development and trade. I would also like to thank the WTO Secretariat and the Tajik Government for their reports and the respective updates since the postponement from the last year due to the outbreak of the COVID-19 pandemic. Let me extend our appreciation to the Discussant, H.E. Mr. Taeho Lee (Republic of Korea) for his remarks.
I would like to begin by noting that this is Tajikistan’s first Trade Policy Review since joining the WTO in 2013. We share a strong commitment to the WTO, and we look forward to further working together to strengthen the rules-based multilateral trading system.
We regret that MC12 could not go ahead as foreseen between 30 November and 3 December. We nonetheless consider that the postponement was the right decision given the worsening epidemiological situation, and also in order to safeguard the inclusivity of the negotiating process. The EU agrees that the current momentum should be sustained in all areas and would like to encourage Tajikistan to actively engage. The EU would in particular urge Tajikistan to consider joining the initiative services domestic regulation, which was successfully concluded on 2 December.
Tajikistan was the second country in Central Asia to join the WTO, after Kyrgyzstan and before Kazakhstan. Since joining the WTO in 2013, Tajikistan has confirmed the dynamic growth trend that was already observed the years prior, and GDP growth averaged 7.0% over the 2013-2018 period. Moreover, it has benefited from an impressive increase in trade with exports having doubled from 527 million dollars in 2014 to 1.06 billion dollars in 2019 and we consider that there is still room for increasing trade flows with the EU and other WTO Members.
The EU aims to update its Partnership and Cooperation Agreement with Tajikistan and the envisaged Agreement (EPCA) should boost political dialogue as well as economic and trade cooperation between our two sides.
As mentioned in the Secretariat Report Tajikistan benefits from various generalised systems of preferences, including the standard EU GSP scheme, which gives preferential access of exports from Tajikistan to the EU market. Tajikistan has recently taken steps to join the EU’s Special Incentive Arrangement for Sustainable Development and Good Governance (GSP+), which can act as a positive political and economic signal to the international community and business that the country is binding itself to international law and continuous, transparent monitoring. The EU also welcomes Tajikistan’s interest in applying for GSP+, as a means to support sustainable economic recovery and boost trade, as well as effective implementation of international human and labour rights standards. We stand ready to support Tajikistan throughout this process, including through further technical discussions on the issues raised.
As highlighted in the Secretariat's Report, the authorities have launched various reform initiatives aimed at improving the business climate, including the streamlining of business registration procedures through the one-stop-shop system for investors, strengthening land tenure and reducing the burden of licensing and inspections. The EU welcomes these reforms, which have contributed to a gradual increase in the number of small and medium-sized enterprises (SMEs) as well as the share of the private sector in the economy.
However, although these reforms are clearly well oriented, a lot of work remains to be done as the obstacles for entrepreneurship, investment and private businesses in general remain quite high. These include a lack of clarity in the specific FDI legislation as eligibility conditions for investment incentives are not fully specified; difficulties for investors to access land, a heavy tax burden, especially for SMEs, and discretionary enforcement of licensing, tax and pricing regulations. Also, the number of SOEs remains considerable, and some still have market dominance, particularly in the telecommunications, transport, and energy sectors. Accession to the WTO Agreement on Government Procurement and an opening of strategic sectors to foreign investors would also help improve the business and investment climate in Tajikistan. We would also like to remind the importance of notifying draft technical regulations as required by the TBT Agreement.
Various improvements to customs procedures were made during the review period, for example among others, in July 2019 Tajikistan ratified the WTO Trade Facilitation Agreement and provided for the creation of the Coordination Committee on Facilitation of Trade Procedures, and the Tajikistan Trade Facilitation Committee. However, despite of these improvements Tajikistan still ranks low in the World Bank's indicators on trading across borders, at 148th out of 190 economies in 2019.
In conclusion, WTO membership does not improve business climate by itself, but is rather a tool that must be complemented by ongoing internal reform. The EU therefore encourages Tajikistan to proceed with its positive engagement with the multilateral trading system, and to further concretise its initiatives that will improve its business and investment climate, including with a view to attract capital necessary for the development of Tajikistan’s potential in the area of renewable energies.
On behalf of the EU, I wish the delegation of Tajikistan the utmost success during its first Trade Policy Review. Thank you.