ALIGNMENT OF CUSTOMS DUTIES WITH TARIFF ESCALATION PRINCIPLES IN THE CUSTOMS SYSTEM OF UZBEKISTAN: INTERNATIONAL EXPERIENCE AND PRACTICAL RECOMMENDATIONS

INTERNATIONAL JOURNAL OF SCIENTIFIC RESEARCHERS ISSN: 3030-332X Impact factor: 8,293 Volume 14, issue 1, Oktober 2025 https://wordlyknowledge.uz/index.php/IJSR worldly knowledge Index: google scholar, research gate, research bib, zenodo, open aire. https://scholar.google.com/scholar?hl=ru&as_sdt=0%2C5&q=wosjournals.com&btnG https://www.researchgate.net/profile/Worldly-Knowledge https://journalseeker.researchbib.com/view/issn/3030-332X 3 3 ALIGNMENT OF CUSTOMS DUTIES WITH TARIFF ESCALATION PRINCIPLES IN THE CUSTOMS SYSTEM OF UZBEKISTAN: INTERNATIONAL EXPERIENCE AND PRACTICAL RECOMMENDATIONS Sirochev Mekhroj Bobirovich, Lecturer, Department of Customs Payments, Customs Institute email:[email protected] Dilshodov Muhammadjon Dilshod ugli, 4th Year Cadet, Customs Institute email:[email protected] Abstract: This research article analyzes the process of harmonizing tariff policy with international standards and tariff escalation principles in the customs system of Uzbekistan. Drawing upon global best practices and approaches employed by developed countries, the study examines the impact of existing tariffs on export-import operations. Furthermore, recommendations are provided for improving national customs policy and enhancing the investment climate. Keywords: Tariff escalation, raw materials, semi-finished products, positive tariff escalation, negative tariff escalation, customs tariff policy, World Trade Organization (WTO), General Agreement on Tariffs and Trade (GATT) The customs system constitutes an integral component of the national economy, playing a crucial role in regulating international trade relations, protecting domestic industries, and ensuring state budget stability. Particularly in the context of intensifying globalization processes and increasing international trade volumes, the development of effective customs policy mechanisms has become a pressing issue. Within the framework of Uzbekistan's economic modernization and increased participation in international trade, aligning customs duties with tariff escalation principles and improving national customs policy based on international standards represents a critical objective. This serves not only to enhance the competitiveness of the national economy but also to strengthen the country's integration into the global economic system. This article examines the issue of compliance with tariff escalation principles in Uzbekistan's customs system through the lens of international experience, analysis of existing national legislation, and effective practical recommendations. The content of the article aims to create a scientific foundation for strategic decision-making directed toward modernizing the national customs system and enhancing economic competitiveness. Tariff Escalation Principles and Their Essence Tariff escalation principles constitute a systematic approach to incrementally increasing customs duties according to the production stages of goods. In international practice, this is regarded as an essential instrument for enhancing the competitiveness of domestic producers INTERNATIONAL JOURNAL OF SCIENTIFIC RESEARCHERS ISSN: 3030-332X Impact factor: 8,293 Volume 14, issue 1, Oktober 2025 https://wordlyknowledge.uz/index.php/IJSR worldly knowledge Index: google scholar, research gate, research bib, zenodo, open aire. https://scholar.google.com/scholar?hl=ru&as_sdt=0%2C5&q=wosjournals.com&btnG https://www.researchgate.net/profile/Worldly-Knowledge https://journalseeker.researchbib.com/view/issn/3030-332X 4 4 and protecting the internal market. This approach creates favorable conditions for ensuring economic stability and developing local industries. Tariff escalation is divided into two types: 1. Positive tariff escalation – characterized by low duty rates for raw materials, moderate rates for semi-finished products, and high rates for finished goods. 2. Negative tariff escalation – conversely, features high duties for raw materials and low rates for finished products. This can increase import dependence and negatively impact local industrial development. Tariff wedge formula: TW=T−t Where: TW – Tariff wedge T– duty rate for finished products, t– duty rate for raw materials. Consequently: TW > 0 – indicates positive tariff escalation; TW < 0 – indicates negative tariff escalation; TW = 0 – indicates tariff parity (equal nominal rates). The Role of Tariff Escalation Principles in the Customs System The concept of tariff escalation occupies a significant position in international trade theory and practice. Based on this principle, customs duties are increased according to production stages and the level of value addition. The objective is to balance competition between imported and domestic products while simultaneously stimulating domestic industrial development. In this system, raw materials are subject to low duties, with tariff rates increasing proportionally to the degree of product processing. This enables support throughout all stages of the production chain. Tariff escalation also serves as an important instrument in implementing industrial policy, playing a crucial role in developing import substitution production, enhancing export potential, and achieving economic independence. However, effective implementation of tariff escalation principles requires highly coordinated customs authority operations, a comprehensive and precise legislative framework, and ensured compliance with international trade norms. INTERNATIONAL JOURNAL OF SCIENTIFIC RESEARCHERS ISSN: 3030-332X Impact factor: 8,293 Volume 14, issue 1, Oktober 2025 https://wordlyknowledge.uz/index.php/IJSR worldly knowledge Index: google scholar, research gate, research bib, zenodo, open aire. https://scholar.google.com/scholar?hl=ru&as_sdt=0%2C5&q=wosjournals.com&btnG https://www.researchgate.net/profile/Worldly-Knowledge https://journalseeker.researchbib.com/view/issn/3030-332X 5 5 Current Situation in Uzbekistan's Customs System The customs system of the Republic of Uzbekistan has undergone rapid development in recent years, transitioning to a modernization phase. As the country's integration into the global economic system intensifies, a series of reforms are being implemented to improve customs policy and establish a system compliant with international standards. Within the framework of the “Development Strategy of New Uzbekistan for 2022-2026” specific objectives have been established for expanding international economic cooperation and optimizing the customs-tariff system. According to Article 290 of the Customs Code of Uzbekistan, customs duties include import, export, special, anti-dumping, compensatory, and seasonal duties. Import customs duties are regulated by Presidential decree. Since 1997, export duty rates had been reduced to zero. However, from July 1, 2025, export customs duties were introduced for 86 types of goods. Import Duty Rates Are Established Based on the Following Criteria: 0-5% – for raw materials and products of social significance not produced in the republic; 10–15 % – for products not produced domestically but failing to fully satisfy existing demand; 20–30 % – for goods whose local production has been established and are exported. Existing Challenges: 1. Inconsistencies in normative-legal documentation; 2. Insufficient methodological foundations in tariff policy formulation; 3. Declining share of customs duties in total budget revenue; 4. High tariff rates leading to violations and informal economic activities. International Experience and Application of Tariff Escalation Standards developed by the World Trade Organization (WTO) and World Customs Organization (WCO) serve as fundamental mechanisms regulating tariff escalation. In developed and developing countries, the following rates are observed: 0–5 % — raw materials, 5–10 % — semi-finished products, >10 % — finished products. INTERNATIONAL JOURNAL OF SCIENTIFIC RESEARCHERS ISSN: 3030-332X Impact factor: 8,293 Volume 14, issue 1, Oktober 2025 https://wordlyknowledge.uz/index.php/IJSR worldly knowledge Index: google scholar, research gate, research bib, zenodo, open aire. https://scholar.google.com/scholar?hl=ru&as_sdt=0%2C5&q=wosjournals.com&btnG https://www.researchgate.net/profile/Worldly-Knowledge https://journalseeker.researchbib.com/view/issn/3030-332X 6 6 Uzbekistan's average arithmetic rate for import tariffs is 8%, while in developed countries it is 5.6%, and in developing countries 20-40%. Examples: In Japan, the United States, and European Union countries, tariff escalation averages approximately 17% For cocoa beans, the tariff is 0%, but for chocolate it exceeds 20%. Tariff escalation is also observed for leather, wood, rubber and other products. Formula for Determining Tariff Escalation: g – effective protection rate for final products; t – nominal tariff rate for final products; a – ratio of imported product value to final product value (percentage of final product that is imported); t – nominal tariff rate for imported products; The principle of tariff escalation manifests in the policy of applying low import customs duty rates for imported raw materials, semi-finished products, and components, while applying higher import duty rates for finished products. This, in turn, ensures the provision of necessary resources (required raw materials and supplies) to the country and stimulates the development of domestic manufacturing industries by creating certain restrictions on the importation of finished products and highly processed goods. № Country Raw materials(%) Semi-finished Products(%) Finished products(%) 1 USA 1,8 6,1 7,0 2 Canada 2,6 6,6 8,1 3 European Union 1,6 6,2 7,0 4 Finland 0,5 11,7 12,0 5 Austria 1,9 7,3 9,1 6 Norvway 0,9 5,4 7,8 7 Sweden 0,4 5,1 5,1 8 Switzerland 1,5 2,8 3,0 INTERNATIONAL JOURNAL OF SCIENTIFIC RESEARCHERS ISSN: 3030-332X Impact factor: 8,293 Volume 14, issue 1, Oktober 2025 https://wordlyknowledge.uz/index.php/IJSR worldly knowledge Index: google scholar, research gate, research bib, zenodo, open aire. https://scholar.google.com/scholar?hl=ru&as_sdt=0%2C5&q=wosjournals.com&btnG https://www.researchgate.net/profile/Worldly-Knowledge https://journalseeker.researchbib.com/view/issn/3030-332X 7 7 Recommendations 1. Establish import customs duty rates based on tariff escalation principles: Drawing from developed country practices, it is necessary to implement a system of establishing import customs duty rates according to the degree of product processing – appropriately for raw materials, semi-finished products, and finished goods – based on tariff escalation principles. 2. Transition to a unified approach in selecting tariff rates within the GATT framework: Within the context of World Trade Organization membership and based on General Agreement on Tariffs and Trade (GATT) requirements, it is proposed to transition to the practice of selecting a single type of tariff rate – either specific or ad valorem – in implementing customs payments. This procedure ensures compliance with international norms and simplifies customs processes. 3. Implement a differential tariff system aimed at supporting domestic producers: To enhance the competitiveness of local producers, implementation of a differential customs rate system is recommended. Specifically, enterprises producing high value-added products can be supported through provision of tax preferences, subsidies, and other economic incentive measures. 4. Review0%rates: Importdagi 0 % bojxona stavkalarini bosqichma-bosqich 1–5 % oraliqda qayta belgilash orqali sun’iy narx buzilishlarining oldini olish, shuningdek, import qilinayotgan tovarlar orqali mamlakatdan ortiqcha valyuta chiqib ketishini kamaytirish zarur. References 1. Decrees and resolutions of the President of the Republic of Uzbekistan Shavkat Mirziyoyev on economic reforms, 2017-2024. 2. Official website of the State Customs Committee of the Republic of Uzbekistan – www.customs.uz 3. World Trade Organization (WTO) official website. Customs policy and tariff escalation. https://www.wto.org 4. Global Trade and Customs Journal. (2021). “Tariff Escalation and Its Impact on Developing Economies.” 5. Krugman P., Obstfeld M. International Economics: Theory and Policy. – Pearson, 2018. 6. Bagwell K., Staiger R.W. The Economics of the World Trading System. – MIT Press, 2010. 7. Information on practical activities of customs authorities. Reports of the State Customs Committee of Uzbekistan. – 2020-2024. 8. Collection of scientific articles of Tashkent State University of Economics: "Issues of modernization of national customs policy." – Tashkent, 2023. 9. GATT (General Agreement on Tariffs and Trade) documents and recommendations. 10. World Bank. (2022). “Customs and Trade Facilitation in Emerging Markets.” 9 Japan 1,4 6,3 6,4