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From Isolation to Integration: Uzbekistan's WTO Accession Journey.

Abdulaziz Abdurazakov, Javokhir Toirov

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International Law, Business and Political Science Journal ISSN-L 3235-9799 E-ISSN 3235-9799 IF(Impact Factor) 13.24 https://journallaw.totalh.net/ Volume: 11. Issue 12 November 2025 1 From Isolation to Integration: Uzbekistan’s WTO Accession Journey. Abdulaziz Abdurazakov Lecturer of Cyber Law Department at Tashkent State University of Law Javokhir Toirov Head of Project Implementation Prospects Assessment Department, MIIT Abstract: Uzbekistan is striving to secure membership in the World Trade Organization (WTO) after what has become one of the longest accession processes in the organization’s history. The prolonged negotiations stemmed largely from former President Islam Karimov’s inward-looking and interventionist economic policies, while the renewed momentum since 2016 reflects President Shavkat Mirziyoyev’s outward-oriented reform agenda. The prospects of accession—and its potential value—ultimately depend on the government’s commitment to genuine economic transformation. Should Uzbekistan successfully shift from reliance on resource exports and heavily protected manufacturing toward a more diversified, competitive economy, WTO membership could bring significant benefits. Conversely, if structural reforms remain limited, accession will likely be delayed and its advantages minimal. This paper traces the trajectory of Uzbekistan’s accession bid since its 1994 application, situates it within the evolution of the WTO itself, and evaluates the current status of negotiations, key challenges to completion, and the potential costs and benefits of membership. Introduction The World Trade Organization stands as the cornerstone of the modern global trading system, governing approximately 98% of world trade through its 166 member states. For countries outside this framework, accession represents not merely a diplomatic milestone but a fundamental choice about economic orientation and integration into global value chains. Uzbekistan's WTO accession journey, spanning three decades since its initial 1994 application, offers a compelling case study of how domestic political economy considerations can shape—and reshape—a nation's approach to trade liberalization and international economic integration. The importance of understanding Uzbekistan's prolonged accession process extends beyond the country's borders. As one of the longest WTO accession negotiations in the organization's history, it illuminates the complex interplay between domestic reform imperatives and international institutional requirements. For Uzbekistan, a landlocked Central Asian nation of more than 38 million people with substantial natural resource endowments and a legacy of Soviet-era industrial policy, WTO membership carries profound implications. The country faces the classic developmental dilemma: whether to maintain protective barriers that shield domestic industries from foreign competition or embrace trade liberalization that promises efficiency gains but threatens established International Law, Business and Political Science Journal ISSN-L 3235-9799 E-ISSN 3235-9799 IF(Impact Factor) 13.24 https://journallaw.totalh.net/ Volume: 11. Issue 12 November 2025 2 interests and employment in protected sectors. This tension between short-term adjustment costs and long-term developmental benefits lies at the heart of Uzbekistan's hesitant march toward WTO accession. Existing research on WTO accession has identified several key patterns and challenges faced by transitional economies. Rose (2004) famously questioned whether WTO membership significantly increases trade, finding surprisingly weak evidence of a "WTO effect" on trade volumes, though subsequent studies by Subramanian and Wei (2007) revealed that this effect is concentrated among developed countries with strong institutional capacity. Tang and Wei (2009) demonstrated that the accession process itself can serve as a credible commitment device for domestic reforms, potentially more valuable than membership per se. Studies of Central Asian economies' integration into global trade systems (Pomfret, 2019; Raballand, 2003) have highlighted the particular challenges faced by landlocked countries with underdeveloped infrastructure and heavy reliance on natural resource exports. Research on infant industry protection (Melitz, 2003; Harrison and Rodríguez-Clare, 2010) suggests that while temporary protection can theoretically facilitate industrial development, in practice such policies often become entrenched and fail to produce internationally competitive industries. Meanwhile, the literature on strategic trade policy and optimal tariffs (Brander and Spencer, 1985; Bagwell and Staiger, 1999) indicates that these arguments, while theoretically sound for large economies with market power, rarely justify protectionism for small, developing nations. Uzbekistan's case has received limited scholarly attention relative to its theoretical significance, with most existing work focusing on either the Soviet legacy (Pomfret, 2000) or the post-2016 reform period without systematically analyzing the economic rationales underlying the country's shifting approach to WTO accession. This paper addresses a critical research question: What explains the dramatic shift in Uzbekistan's approach to WTO accession, and how do traditional arguments against trade liberalization—including domestic market failures, distributional concerns, infant industry protection, strategic trade policy considerations—weigh against the comparative advantage gains that membership might offer? By examining Uzbekistan's three-decade accession journey through the lens of both protectionist rationales and liberal trade theory, this study seeks to determine whether the country's historical reluctance was economically justified or primarily reflected political economy considerations, and whether current reform momentum represents a genuine commitment to economic transformation or merely tactical positioning. The analysis traces the trajectory from President Karimov's inwardlooking economic policy policies through President Mirziyoyev's liberalization agenda, evaluating the substantive progress in negotiations, remaining obstacles to completion, and the realistic costs and benefits that accession would entail for an economy still heavily dependent on commodity exports and protected manufacturing sectors. Ultimately, this research contributes to broader debates about the appropriate pace and sequencing of trade liberalization for transitional economies, the effectiveness of WTO conditionality in International Law, Business and Political Science Journal ISSN-L 3235-9799 E-ISSN 3235-9799 IF(Impact Factor) 13.24 https://journallaw.totalh.net/ Volume: 11. Issue 12 November 2025 3 driving domestic reforms, and the conditions under which international institutional integration delivers on its promised benefits. A very brief history of GATT/WTO System. When the proposed International Trade Organization (ITO) was stillborn after World War 2, in part because of opposition in the US Senate, the GATT metamorphosed from just a trade agreement into an international organization that administered the agreement and provided the forum where nations could promote trade liberalization(Hollis, 2022). The GATT continued to play that role as an institution until WTO came into being in January 1995. The GATT agreement was incorporated into the WTO framework as an important trade agreement with key principles and provisions. The purpose of GATT was to promote trade liberalization through the elimination of both tariff barriers and nontariff barriers (such as quotas or other quantitative trade restriction). Members had four fundamental obligations. Upon joining the GATT, members undertook to (1) apply trade barriers on a nondiscriminatory basis; (2) limit tariffs on items at the levels set forth in the GATT tariff schedules; (3) refrain from circumvention trade concessions through the use of other barriers to trade; and (4) settle trade conflicts via consultation and a special dispute resolution process. Central to nondiscrimination are two principles: most-favored nation treatment, and the national treatment obligation. The GATT agreement starts with an unconditional mostfavored-nation provision. “Any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties.”(GATT,1994). In short, it prohibits discrimination between goods from different foreign countries. As for the national treatment obligation, the principle prohibits discrimination between goods that are domestically produced and those that are imported. According to the report of the first Warwick Commision, there are four key functions of the WTO: (1) reducing discrimination and furthering market-access opportunities in international commerce. The successes of the GATT/WTO system are exemplified in the progressive liberalization of tariffs since 1947 and the near-universal membership of the WTO today. The entry requirements faced by new WTO Members are stringent; mirroring the significant recent broadening of the multilateral trading system’s substantive remit. Yet the fact that .. countries have nonetheless chosen to meet them since 1995 suggests that they see benefits in joining the system. (2)Formulating rules for the conduct of international trade. The depth and range of rules on cross-border trade and investment have grown significantly over the 60-year life of the GATT/WTO. Parties to the agreement have not always agreed on the desirable content of the rules but nobody contests the value of multilateral rules in fostering certainty and predictability in trade and in helping to dilute the role of power in determining trade outcomes. (3)Promoting International Law, Business and Political Science Journal ISSN-L 3235-9799 E-ISSN 3235-9799 IF(Impact Factor) 13.24 https://journallaw.totalh.net/ Volume: 11. Issue 12 November 2025 4 transparency in national laws and regulations. Through its various agreements, the GATT/WTO has enhanced the transparency of commerce-related national laws and regulations through the requirement for Members to publish changes to their trade measures and notify any changes in rules. (4)Settling commercial disputes. The Dispute Settlement Understanding of the WTO has given an unprecedented enforceability to agreements. It is one of the most successful, and the busiest, state-to-state dispute settlement systems in the history of international law.(Warwick Comission, 2007). Simply put: the World Trade Organization deals with the rules of trade between nations at a global or near-global level. Uzbekistan’s WTO Accession Initial Application and Early Reform Period (1994-2016) Uzbekistan became the first Central Asian nation to seek World Trade Organization membership when it submitted its application in December 1994. The WTO established a Working Party on December 21, 1994, to review the application. During the initial phase of President Karimov's tenure (1994-1996), Uzbekistan implemented market-oriented reforms consistent with WTO accession objectives. This liberalization effort, however, proved ephemeral. When deteriorating terms of trade—particularly declining cotton prices—negatively impacted the country's export revenues, the government reversed course in 1996. It abandoned currency convertibility commitments and instituted an import substitution industrialization strategy. This policy framework, which became known as the "Uzbek model of development," employed differential exchange rate mechanisms: restricting foreign currency access for "non-essential" consumer goods while providing preferential conversion at overvalued official rates for "priority" imports such as capital equipment and socially significant products. The 1998 economic crisis affecting former Soviet states and Asian economies reinforced the government's protectionist orientation. Consequently, WTO accession ceased to be a policy priority, and negotiations entered a prolonged hiatus. The import substitution program effectively concentrated foreign trade control in government hands, with privileged firms receiving preferential currency conversion access. The substantial disparity between official and parallel market exchange rates created opportunities for rent-seeking behavior, as entities could arbitrage the spread by diverting converted foreign currency to black market transactions rather than utilizing it for legitimate imports. A brief period of renewed liberalization emerged in 2003 when authorities eliminated foreign exchange restrictions and implemented limited trade opening measures. This resulted in substantial expansion of both trade volumes and overall economic activity. WTO negotiations experienced temporary momentum during this window, with multiple International Law, Business and Political Science Journal ISSN-L 3235-9799 E-ISSN 3235-9799 IF(Impact Factor) 13.24 https://journallaw.totalh.net/ Volume: 11. Issue 12 November 2025 5 Working Party sessions convened. However, the 2007-2008 global financial crisis severely affected Uzbekistan's economy, prompting the government to re-impose exchange controls by restricting foreign currency transactions to state-authorized dealers exclusively. Despite external recommendations to integrate WTO accession into broader economic reform initiatives, authorities tightened exchange regulations. Following the Working Party's final session in October 2005, negotiations remained dormant. President Karimov pursued an inward-looking and interventionist development paradigm characterized by incrementalism and extensive state involvement in economic activity, perceiving limited benefit in WTO membership. Karimov, who held formal training in Soviet economics and previously directed Uzbekistan's central planning apparatus, served as the principal architect of the Uzbek developmental model. This framework operated on the premise that the state would maintain a directive role throughout the economic transition period. Under the stated objective of "safeguarding domestic industry," the administration imposed restrictive import tariffs, export quotas, and licensing requirements that effectively foreclosed foreign enterprise access to Uzbek markets. The automotive sector illustrates this approach: imported vehicles—including passenger cars, buses, and commercial trucks—faced substantial customs duties that varied according to manufacturing year, country of origin, and engine displacement, thereby providing protective barriers for the emerging domestic automotive industry. A New Hope Under President Shavkat Mirziyoyev's leadership since 2016, Uzbekistan has undergone a fundamental transformation in its economic development strategy, abandoning the protectionist "Uzbek model" in favor of comprehensive market liberalization and active pursuit of WTO membership. This policy reversal, characterized by currency convertibility, trade liberalization, and institutional reforms, represents not merely a technical adjustment to trade policy but a strategic reorientation toward economic openness and integration into the global trading system—a shift that reflects both domestic imperatives for sustainable development and recognition that WTO accession serves as both catalyst and anchor for irreversible economic reform. Mirziyoyev's administration initiated sweeping economic reforms almost immediately upon taking office. The September 2017 currency liberalization—which unified the official and black market exchange rates and established full convertibility of the Uzbek sum—represented the most significant policy departure from the Karimov era (World Bank, 2018). This reform eliminated the parallel exchange rate system that had fostered corruption and distorted economic incentives for over two decades. The government systematically dismantled trade barriers, reducing the number of goods subject to import licensing from over 40% of tariff lines to less than 5% by 2020 (OECD, 2019). Customs procedures were streamlined, and the "Uzbek Register" system—which International Law, Business and Political Science Journal ISSN-L 3235-9799 E-ISSN 3235-9799 IF(Impact Factor) 13.24 https://journallaw.totalh.net/ Volume: 11. Issue 12 November 2025 6 had restricted imports of consumer goods—was abolished in 2018 (European Bank for Reconstruction and Development, 2019). Mirziyoyev explicitly prioritized WTO membership in his Development Strategy for 2017-2021, marking the first time since the early 1990s that WTO accession appeared as a formal policy objective (Presidential Decree No. UP-4947, 2017). The Working Party, dormant since 2005, reconvened in July 2020, signaling renewed momentum in accession negotiations (WTO, 2020). The government's commitment was formalized through Presidential Decree No 181, signed on June 5, 2023, "On measures to accelerate the process of accession of the Republic of Uzbekistan to the World Trade Organization" (Presidential Decree No.181, 2023). This decree established a comprehensive institutional framework for managing the accession process, including:  Creation of a Government Commission on WTO Accession, chaired by the Deputy Prime Minister  Assignment of specific ministerial responsibilities for completing technical requirements  Establishment of timelines for legislative harmonization with WTO agreements  Allocation of budgetary resources for capacity building and technical assistance programs In a demonstration of high-level political commitment, President Mirziyoyev appointed Azizbek Urunov as a chief negotiator with primary responsibility for overseeing WTO accession negotiations in January 2023. Urunov, a career trade diplomat with extensive experience in multilateral negotiations and previous service in Uzbekistan's mission to the WTO in Geneva, brought specialized expertise to accelerate the technical and political dimensions of the accession process. His appointment signaled the government's recognition that successful WTO accession required dedicated leadership with deep knowledge of WTO protocols and international trade law (Ministry of Investment, Industry and Trade, 2023). Under Urunov's coordination, Uzbekistan intensified engagement with the WTO Secretariat, established bilateral working groups with key WTO members including the United States, European Union, China, and Japan, and accelerated the drafting of legal commitments required for accession. The appointment of a senior official specifically tasked with WTO accession represents an unprecedented level of bureaucratic prioritization compared to the Karimov era, when WTO negotiations were handled intermittently without dedicated high-level oversight. The government established technical working groups across relevant ministries and engaged in capacity-building programs with the WTO Secretariat, UNCTAD, and bilateral International Law, Business and Political Science Journal ISSN-L 3235-9799 E-ISSN 3235-9799 IF(Impact Factor) 13.24 https://journallaw.totalh.net/ Volume: 11. Issue 12 November 2025 7 partners to align domestic legislation with WTO requirements (Ministry of Investments and Foreign Trade of Uzbekistan, 2021). By 2024, Uzbekistan had submitted its revised Memorandum on the Foreign Trade Regime and initiated bilateral market access negotiations with key WTO members. A critical component of Uzbekistan's WTO accession strategy under Mirziyoyev has been the comprehensive legal harmonization process—the systematic review, amendment, and adoption of domestic legislation to ensure compliance with WTO agreements and protocols. This process represents one of the most technically demanding aspects of accession and demonstrates the government's commitment to substantive rather than cosmetic reform. The harmonization process encompasses alignment with all core WTO agreements, including the General Agreement on Tariffs and Trade (GATT 1994), the General Agreement on Trade in Services (GATS), the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and various plurilateral agreements. The Government Commission established under the 2022 Presidential Decree created specialized inter-ministerial working groups for each major agreement, tasked with conducting "gap analyses" to identify inconsistencies between existing Uzbek legislation and WTO requirements (Presidential Decree No. UP-181, 2022). Key Areas of Legislative Reform: Uzbekistan adopted a new Customs Code in 2021 (Law No. ZRU-661, January 20, 2021) that incorporated WTO Customs Valuation Agreement principles, replacing the previous system that allowed arbitrary valuation by customs officials. The new code mandates transaction value as the primary basis for customs valuation and establishes an independent appeals mechanism for importers contesting customs decisions—a fundamental requirement under Article X of GATT 1994 (Customs Code of Uzbekistan, 2021). Also, The government has also implemented measures consistent with the WTO Trade Facilitation Agreement (TFA), including:  Establishment of a National Committee on Trade Facilitation in 2020 (Presidential Resolution No. PP-4611, 2020)  Introduction of a "single window" system for import/export documentation, reducing clearance times from an average of 15 days in 2016 to 3 days by 2023 (World Bank Doing Business Indicators, 2023)  Publication of all customs regulations and advance rulings in a centralized online portal, ensuring transparency as required under TFA Article 1 (State Customs Committee, 2023) Harmonization with the SPS Agreement has required fundamental reform of Uzbekistan's food safety and agricultural quarantine systems. New legislation adopted in 2022-2023 International Law, Business and Political Science Journal ISSN-L 3235-9799 E-ISSN 3235-9799 IF(Impact Factor) 13.24 https://journallaw.totalh.net/ Volume: 11. Issue 12 November 2025 8 includes:  Law "On Food Safety" (December 2022), establishing science-based risk assessment procedures aligned with Codex Alimentarius standards (Law No. ZRU788, 2022)  Restructuring of the State Veterinary and Phytosanitary Service to separate regulatory functions from inspection and certification, eliminating conflicts of interest (Presidential Resolution No. PP-292, 2023)  Creation of an SPS Enquiry Point as required under SPS Agreement Article 7, to respond to requests from trading partners regarding Uzbekistan's SPS measures (Ministry of Agriculture, 2023)  Notification procedures for new SPS measures, with comment periods for affected stakeholders—a requirement under SPS Agreement Article 7 (SPS National Notification Authority, 2024). Uzbekistan has developed new legislation and institutional capacity for WTO-consistent trade remedies:  Law "On Protection of Economic Competition and Restriction of Monopolistic Activity" (2020), incorporating provisions on anti-dumping and countervailing measures aligned with WTO Anti-Dumping Agreement and SCM Agreement (Law No. ZRU-634, 2020)  Establishment of the Competition Committee under the Ministry of Investment, Industry and Trade as the designated investigating authority for trade remedies (Presidential Resolution No. PP-4742, 2020)  Adoption of detailed procedural rules for trade remedy investigations, including transparency requirements, rights of interested parties, and judicial review—core elements of WTO trade remedy agreements (Resolution of the Cabinet of Ministers No. 528, 2021)  Capacity building through UNCTAD technical assistance on conducting dumping margin calculations, subsidy investigations, and injury determinations consistent with WTO jurisprudence (UNCTAD Trade Remedies Programme, 2022-2024). By late 2024, Uzbekistan had completed legislative reviews across all 18 major WTO agreements, with implementing regulations adopted for most areas (WTO Working Party, 2024). Independent assessments by the WTO Secretariat and multilateral institutions indicate substantial progress: International Law, Business and Political Science Journal ISSN-L 3235-9799 E-ISSN 3235-9799 IF(Impact Factor) 13.24 https://journallaw.totalh.net/ Volume: 11. Issue 12 November 2025 9  The European Bank for Reconstruction and Development (EBRD) Legal Transition Programme rated Uzbekistan's WTO compliance at 7.5/10 in 2024, up from 3.2/10 in 2016—the most dramatic improvement among post-Soviet states (EBRD Legal Indicators, 2024)  The World Bank's Trade Restrictiveness Index for Uzbekistan declined from 18.4 in 2016 to 8.7 in 2024, reflecting reduced tariff and non-tariff barriers (World Bank Trade Indicators, 2024)  WTO Working Party members have acknowledged progress while identifying remaining concerns, particularly regarding full implementation of subsidy notification requirements and judicial enforcement capacity (Working Party Report, 2024). Risks and Opportunities. 1. Domestic Market Failures Paul Krugman and Maurice Obstfeld (2022) explain that when a domestic market fails to function efficiently, the “first-best” solution is to correct the market failure directly through targeted domestic policies. However, when such policies are politically or administratively infeasible, governments may use trade policy—such as tariffs, subsidies, or quotas—as a “second-best” intervention to offset the effects of those failures. For instance, if a country experiences high unemployment due to rigid wages, a temporary subsidy for labour-intensive industries may improve welfare more effectively than a tariff, which would distort consumer prices and trade flows. Thus, while trade protection may sometimes raise welfare in theory, it is rarely the most efficient solution in practice. Moreover, misdiagnosing the nature of market failure can lead to ineffective or even counterproductive trade policies (Krugman & Obstfeld, 2022). The implication is that trade liberalization should proceed only when domestic markets are sufficiently flexible and adaptive. Otherwise, liberalization may amplify existing inefficiencies instead of correcting them. 2. Distribution Uzbekistan's WTO accession creates a fundamental distribution problem. While total national wealth would increase through trade liberalization, this doesn't mean everyone benefits equally. The issue is straightforward: WTO membership will create clear winners and losers. International Law, Business and Political Science Journal ISSN-L 3235-9799 E-ISSN 3235-9799 IF(Impact Factor) 13.24 https://journallaw.totalh.net/ Volume: 11. Issue 12 November 2025 16 Committee. Tashkent: Cabinet of Ministers of the Republic of Uzbekistan. Presidential Resolution No. PP-292. (2023). On Restructuring the State Veterinary and Phytosanitary Service. Tashkent: Cabinet of Ministers of the Republic of Uzbekistan. Law No. ZRU-661. (2021). Customs Code of the Republic of Uzbekistan. Tashkent: Oliy Majlis of the Republic of Uzbekistan, January 20. Law No. ZRU-634. (2020). On Protection of Economic Competition and Restriction of Monopolistic Activity. Tashkent: Oliy Majlis of the Republic of Uzbekistan. Law No. ZRU-788. (2022). On Food Safety. Tashkent: Oliy Majlis of the Republic of Uzbekistan, December. Resolution of the Cabinet of Ministers No. 528. (2021). Detailed Procedural Rules for Trade Remedy Investigations. Tashkent: Cabinet of Ministers of the Republic of Uzbekistan. Customs Code of Uzbekistan. (2021). Tashkent: State Customs Committee. State Customs Committee. (2023). Online Portal for Customs Regulations and Advance Rulings. Tashkent: Government of Uzbekistan. Ministry of Investment, Industry and Trade. (2023). Appointment of Chief Negotiator for WTO Accession. Tashkent: Government of Uzbekistan, January. Ministry of Investments and Foreign Trade of Uzbekistan. (2021). Technical Working Groups for WTO Accession. Tashkent: Government of Uzbekistan. Ministry of Agriculture. (2023). Establishment of SPS Enquiry Point. Tashkent: Government of Uzbekistan. SPS National Notification Authority. (2024). 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