By Tural Heybatov
Economic cooperation in Central Asia has taken a significant step forward with the introduction of a free trade regime between Uzbekistan and Turkmenistan. Effective from February 25, this agreement reflects the growing commitment of both nations to fostering stronger economic ties, eliminating trade barriers, and promoting cross-border investments. By reducing customs duties and facilitating easier trade, the new regime is expected to drive economic growth, benefiting businesses and consumers in both countries.
With trade between Uzbekistan and Turkmenistan already experiencing steady growth, the implementation of this free trade agreement comes at a strategic moment. Beyond the immediate benefits of tariff removal, the agreement sets the stage for long-term economic collaboration, including the development of the "Khorezm - Dashoguz" Free Trade Zone. This initiative underscores the broader vision of both governments to create a more interconnected and dynamic trade environment in Central Asia.
Photo credit: kabar.kg
Uzbekistan and Turkmenistan Introduce Free Trade Regime: Prospects and Benefits
As of February 25, a free trade regime has come into effect between Uzbekistan and Turkmenistan, marking a significant step in strengthening economic relations between the two countries. This development not only eliminates customs barriers but also opens new opportunities for increased trade turnover and investment. The decision to abolish tariffs reflects the commitment of Tashkent and Ashgabat to deeper economic cooperation, which could serve as a model for other countries in the region.
Simplification of Trade Procedures and Elimination of Tariffs
Under the new agreement, customs duties on a wide range of goods produced in both countries have been abolished. In particular, Turkmenistan will no longer impose a 100% duty on imported Uzbek cement, 50% on textiles, furniture, and glassware, 15% on water heaters, and 10% on plastic and polypropylene products. Tariffs on food products have also been lifted, including sausages and meat products ($2 per kg) and cottonseed oil ($1 per kg). Similar concessions will apply to Turkmen imports into Uzbekistan.
These measures will significantly reduce the cost of goods in both markets and stimulate export growth. Uzbekistan’s Ministry of Investments, Industry, and Trade (MIIT) emphasizes that the free trade regime will contribute to an increase in bilateral trade volumes and the development of economic cooperation. Moreover, the removal of trade barriers will enable businesses to adapt more quickly to market changes and enhance the competitiveness of goods in the regional market.
Trade Turnover Dynamics
In 2024, the trade turnover between Uzbekistan and Turkmenistan amounted to $1.14 billion, an increase of 5.5% compared to the previous year. This indicates a steady expansion of economic ties and deeper cooperation in various sectors, including energy, manufacturing, and agriculture. Turkmenistan traditionally exports oil, petroleum products, gas, electricity, and chemical products to Uzbekistan, while Uzbekistan supplies Turkmenistan with agricultural machinery, textiles, construction materials, and food products.
Experts note that trade and economic partnership between Uzbekistan and Turkmenistan is of strategic importance, as both countries seek to diversify their economies and develop new markets. Given Uzbekistan’s focus on expanding exports to neighboring countries and Turkmenistan’s active development of foreign economic relations, the free trade agreement presents additional opportunities for both nations.
The "Khorezm - Dashoguz" Free Trade Zone
One of the key joint projects is the creation of a free trade zone (FTZ) in the Shavat district of the Khorezm region in Uzbekistan. The agreement on its establishment was signed back in 2021, and in 2022, Presidents Shavkat Mirziyoyev and Serdar Berdimuhamedov reaffirmed their commitment to the project by participating in the groundbreaking ceremony for the "Khorezm - Dashoguz" border trade zone.
Photo: Uzbek president's office
This zone is being created for a period of 30 years with the possibility of extension. Under the "free customs zone" regime, only goods produced in Uzbekistan and Turkmenistan will be permitted for sale. Turkmen citizens and foreigners visiting Uzbekistan will be able to stay in the zone without a visa for up to 15 days, and access will be provided through designated border checkpoints.
The establishment of this FTZ will not only boost trade turnover between the two countries but also promote the development of logistics and industrial production in border areas. Additionally, the FTZ will attract investment and support the growth of small and medium-sized enterprises, particularly in the trade, agricultural processing, and consumer goods manufacturing sectors.
Strategic Importance of Cooperation
Uzbekistan and Turkmenistan are demonstrating their commitment to strengthening economic ties by utilizing the free trade mechanism as a tool for expanding their partnership. Both nations possess substantial natural resources and developing industries, making their cooperation mutually beneficial.
The introduction of a free trade regime also contributes to strengthening economic integration in Central Asia, creating conditions for more active interaction between countries in the region. Analysts suggest that if the trend toward reducing trade barriers continues, it could eventually lead to the formation of a unified economic space in Central Asia in the long term.
Amid global economic instability, Uzbekistan and Turkmenistan are showing their willingness to adapt to new challenges by developing trade and deepening cooperation. New trade initiatives reinforce bilateral relations and lay the foundation for more stable and predictable economic interactions between the two nations. Furthermore, the deepening of trade ties could lead to new joint projects in areas such as logistics, industrial production, and energy, enhancing economic integration and ensuring sustainable growth over the long term.
