OPINIO

Uzbekistan’s Zero Duties Policy on Imports Opens New Opportunities for Food Suppliers

Wheat Flour Other Value Added Fruits Other Cheese Fresh Pear Fresh Apple Grains, Cereal & Legumes Uzbekistan

Trade4go

Apr 14th, 2023

Original content

On March 23, 2023 the President of Uzbekistan Shavkat Mirziyoyev signed a Decree on the Introduction until January 1, 2024 of zero customs duties on imports of 36 types of food products, including fresh fruits and vegetables, grain products and processed foods. The Uzbek Government’s Zero Duties Policy on Food Imports was aimed to ensure price stability in consumer markets in Uzbekistan. This means that foreign companies can export their products to the country without paying any additional fees or taxes, making it easier for them to enter the market and compete with local companies. The following policy already gives visible progress after a couple of weeks since its adoption in late March. Wholesale prices for 24 types out of 36 types of goods imported shows a downward trend. Fresh fruits and processed foods imports from Poland, France and Italy are expected in the upcoming months.

This policy is usually introduced to promote trade and economic growth by increasing the availability of foreign goods and services, improving access to international markets, and stimulating competition in the domestic market. By reducing the cost of imported goods, it can also make them more affordable for consumers, which can improve their quality of life and support local businesses that rely on imported materials or products.

Table 1: Food products imports that are subject to zero customs duty rates in Uzbekistan until January 1, 2024

No	HS Code	Name of Product
1	0203, 0208, 0209	Fresh, chilled or frozen pig meat; other meat and edible meat by-products; pork fat, separated from lean meat, and poultry fat, not rendered or otherwise extracted, salted, in brine, dried or smoked
2	0403	Yogurt, buttermilk, curdled milk and cream, kefir and other fermented or fermented milk and cream, whether or not condensed, whether or not containing added sugar or other sweetening matter, whether or not flavored, whether or not containing added fruit , nuts or cocoa
3	0406	Cheese and cottage cheese
4	0408	Bird eggs without shells and egg yolks, fresh, dried, steamed or boiled, shaped, frozen or otherwise preserved, whether or not containing added sugar or other sweetening matter
5	0703	Onions, shallots, garlic, leeks and other bulbous vegetables, fresh or chilled
6	0705	Lettuce (Lactuca sativa) and chicory (Cichorium spp.), fresh or chilled
7	0713	Legume vegetables, dried, seeded or unpeeled, split or not split
8	0804	Dates, figs, pineapples, avocados, guava, mango and mangosteen or garcinia, fresh or dried
9	0808	Apples, pears and quince, fresh
10	0810	Other fruits, fresh
11	1102	Flour from cereals, other than wheat or wheat-rye
12	1103	Cereals, wholemeal flour and cereal granules
13	1105	Fine and coarse flour, powder, flakes, potato granules
14	1106	Flour and meal and powder of dried leguminous vegetables of heading 0713, of the heart of sago palm, of roots or tubers of heading 0714 or of products of Chapter 08
15	1108	starch, inulin
16	1513	Coconut (copra), palm kernel or babassu oil and their fractions, whether or not refined, but not chemically modified
17	1602	Other prepared or preserved meat, meat offal, blood or insect products
18	1604	Ready or canned fish; sturgeon caviar and its substitutes made from fish eggs
19	1703	Molasses resulting from the extraction or refining of sugar
20	1704	Sugar confectionery (including white chocolate) not containing cocoa
21	1806	Chocolate and other food preparations containing cocoa
22	1902	Pasta, whether or not cooked, whether or not stuffed (of meat or other products), or otherwise prepared or uncooked, such as spaghetti, macaroni, noodles, lasagne, gnocchi, ravioli, cannelloni; couscous, cooked or uncooked
23	1905	Bread, flour confectionery, cakes, biscuits and other bakery and flour confectionery products, whether or not containing cocoa; wafer plates, empty capsules suitable for pharmaceutical use, wafer sealable wafers, rice paper and similar products
24	2004	Other vegetables, prepared or preserved without the addition of vinegar or acetic acid, frozen
25	2005	Other vegetables, prepared or preserved, not containing vinegar or acetic acid, not frozen
26	2007	Processed vegetables, fruits, nuts or other parts of plants, jams, fruit jellies, marmalades, fruit or nut puree, fruit or nut paste, obtained by heat treatment, including with added sugar or other sweetening matter
27	2008	Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or alcohol, not elsewhere specified or included
28	2101	Extracts, essences and concentrates of coffee, tea or mate or Paraguayan tea, and preparations based on them or based on coffee, tea or mate or Paraguayan tea; roasted chicory and other roasted coffee substitutes and extracts, essences and concentrates thereof
29	2103	Products for the preparation of sauces and ready-made sauces; flavoring additives and seasonings mixed; mustard powder and prepared mustard
30	2104	Soups and broths and preparations for their preparation; homogenized composite prepared food products

Source: Lex.uz (open legislative data portal)

Removing import taxes on a number of food products in Uzbekistan has an impact on the food & agricultural commodities market, consumers and overall economy of the country. According to the Center for Economic Research and Reforms (CERR), the elimination of customs taxes on specific categories of imported food products will have two effects. The import costs for those kinds of goods are anticipated to drop by more than 1%, and the population's leftover extra money will encourage the expansion of demand in the economy. The CERR predicts that the elimination of customs taxes on specific categories of imported foods will have two effects. First, when customs fees are decreased, imported goods become less expensive and as a result, their consumption rises. This is known as the exchange effect. Second, because imported items are more expensive, trade likewise shifts in a different direction. Traditionally, Uzbekistan's trade partners are CIS countries, with whom the country has Free Trade Agreements (FTA). But recently neighboring regions with Uzbekistan like Eastern Europe, Middle East, India and China are becoming closer trade partners.

Industry experts state that the zeroing of tariffs on imported food items will provide targeted help to the most socially disadvantaged groups of the population and boost spending of families in the bottom 20-30 percent income group. For example, when looking at consumption in a single household, the study shows that listed imported foods in the President Decree generally account for most of the income of low or middle-income households. Removing customs taxes for imported food products makes necessary nutrients more affordable to a wider group of people. General consumers, especially lower income households, enjoy this policy at the end. It does not negatively affect domestic producers of similar products which are exempted from customs taxes. As can be seen in Table 1, most of the products listed there are imported products. Even if they produce the goods domestically, they still can not meet the market demand. Overall, the current policy benefits a lot of consumers and it also boosts healthy competition in the market.

The CERR predicts that the removal of customs charges on listed imported food products (see Table 1) will result in a rise in imports of beef and meat products of approximately US$4.8 million, cheese products of US$900,000, nuts of US$1.3 million, apples and pears by US$ 1.9 million, US$1.6 million for fresh fruit, US$4.7 million for chocolate, and US$1.2 million for candy.

The data shows that 24 out of the 36 types of commodities imported using customs privileges saw a fall in wholesale costs within a few weeks following the implementation of zero tax policy. This was particularly evident in the consumption of dates (16%), apples, quinces, and pears (42%), canned fish (50%) and mineral water (40%) as well as white chocolate (24%). Experts anticipate that the price drop will also apply to retail sales.

According to Korzinka, one of the biggest supermarket chains in Uzbekistan, since customs duties on 36 types of goods have been removed, prices in their supermarkets decreased by 32%. Many food products including fresh fruits prices went down. Dates became cheaper during the holy month of Ramadan. Fresh fruit prices went down on average 20-25%. A total number of preferred food times reached 60-70 products which are excluded from customs duties.

The reduction in food imports from Russia, Moldova, Kazakhstan, Belarus, and Ukraine was predicted based on an analysis of the effect on trade flows. Meanwhile, it's anticipated that imports from the EU will rise. Polish, French, and Italian imports will increase the most among the EU nations. India, China, and Turkey are the other nations that are most clearly benefiting from overall good trade benefits.