The end of June and the first half of July have been marked by approval of a number of decrees that on the face of it radically change the situation in the direction of the market liberalization and introduction of convertibility of the national currency. The fact that the situation seems to look like this is proven, for instance, by the fact of publication of an article "Uzbek Trade Revolution" in the newspaper "Commersant." However, one may ask what actually happened? Let us try to trace back the sequence in which the events were taking place one after another based on the texts of the decrees.

Thus, on June 24, 2000 the Cabinet of Ministers of Uzbekistan has approved the Decree "On the Measures on Improvement of Import and Realization of Imported Consumer Goods." In the decree it was stated that starting from July 1, 2000 oil, butter, sugar, and tea would be exempt from the excise tax when delivered to the customs’ territory of the Republic of Uzbekistan. It is necessary to note that starting from January 1, 1999 the excise tax rates on the above-mentioned goods were set in the amount of 20% of their customs value.

Then on June 29, 2000 there was passed a Decree of the Cabinet of Ministers of Uzbekistan "On the Measures of Development and Strengthening of the Non-Exchange Foreign Currency Market." In the decree it was stated that starting from July 1, 2000 there would be introduced the mechanism of sale of foreign currency at the non-exchange market. The decree authorized the following operations: (a) purchase by certain authorized banks from their customers of the available foreign currency resources on the contractual basis at the market rate based on the demand and supply of the foreign currency; (b) conversion of the Soum proceeds from the realization of the imported consumer goods for the enterprises, holders of the licenses of the Central bank of Uzbekistan, at the market rate that is based on the demand and supply of the foreign currency.

The decree also sets a certain number of restrictions related to the subjects of economic activities that intend to purchase foreign currency. Following is the main restriction: "the foreign currency purchased by the authorized banks at the request of their customers that has not been used within 7 working days should be obligatorily sold back." A little bit later on the press-service of the Central bank of Uzbekistan commented on that paragraph in the following way: "To ensure more effective usage of the foreign currency resources, they have reduced from 30 days to 7 days the period of time set for resale of the foreign currency that was converted at the internal market and that was not used in accordance with the stated purpose."

Following the approval of these two decrees, on June 30, 2000 there has been passed one more Decree "On Measures on Further Liberalization of the Foreign Currency Market and Increase of Foreign Currency Exchange Operations." In this decree it was stated that only the following four banks were given the right to perform trading operations with foreign currency cash: the National bank for Foreign Economic Activities, Uzpromstroybank, Asaka bank, and Uzzhilsberbank. Other commercial banks that have licenses giving them the right to perform foreign currency operations were authorized only to purchase foreign currency cash. They did not impose any restrictions on the four authorized banks with regard to the foreign currency exchange rate. The sale of foreign currency in exchange offices to the residents of Uzbekistan was limited to 300 US dollars. Still such a sale is allowed only in case when the residents present passports with entry visas of foreign countries s as well as avia or rail-way tickets.

Later on, on July 8, 2000 there was approved the Decree of the Cabinet of Ministers "On Measures on Increase of Decentralized Export of Fresh Fruit and Vegetables’ Products in Year 2000." The decree allowed individuals and legal entities, residents of the Republic of Uzbekistan, to export from the republic fresh fruit and vegetables’ products that they have produced themselves; they were allowed to do this without getting the appropriate permission from the Cabinet of Ministers of Karakalpakistan, Khokimiats of the regions, cities, and districts. At the same time there are two serious restrictions in the decree. Firstly, the production may be exported without such permissions only up till October 1, 2000. Secondly, the legal entities that are exporting fruit and vegetables’ products that were not produced by the entities themselves, will have to keep following the procedure established by the Cabinet of Ministers in its Decree issued on August 6, 1998, i.e. such legal entities will have to obtain permissions from the appropriate executive authority bodies.

And, finally, also on July 8, 2000 there has been published the Decree of the Cabinet of Ministers "On Additional Measures on Organization of Import by Individuals of Certain Types of Goods to the Republic of Uzbekistan." The text of this decree states that when individuals are importing to the republic flour, oil, and butter that were purchased for the purpose of commercial activities, the tax on goods imported by individuals (local merchants bringing their goods from abroad) should be imposed at the present rate of 50% from their customs value with usage of the set norms of duty free import. The customs import tax levied on goods imported by individuals equals to 0.2% of their customs value.

These are actually all the decrees related to liberalization of trade and conversion of the national currency. Are these decrees that much revolutionary as they have been described by the Russian press that is usually searching for sensations? Exempting oil, butter, sugar, and tea from excise tax, in our opinion, is the most serious measure among the others. This measure may decrease the internal prices for these goods by correspondent amount. However, the decrease in half of the customs tax that used to be equal to 0.2% of the customs value of goods seems not to lead to any substantial decrease in the prices at the internal market.

As for the export outside the republic of the fresh fruit and vegetables products, even without taking into consideration the established time period limitations, it is still necessary to consider the fact that the decree covers only the actual producers of these products. However, these producers, as a rule, are not exporting themselves their production outside Uzbekistan. As for the big trade-intermediary enterprises, they are not covered by this decree. As a result, they have to follow the former procedure. It is necessary to note that most likely as it used to be before it will not be difficult for such enterprises to obtain certificates of origin for the production at the appropriate expertise bodies of the Ministry of Foreign Economic Activities. That is why this decree actually changes only one paragraph: it frees the exporters of fresh fruit and vegetables production from the control of the local executive authority bodies (still it is done only for the period of 3 months).

The main idea of all the decrees on the currency circulation is that the state is trying to redirect the flows of the foreign currency cash received by the "black" market from population to the National bank of Uzbekistan. How realistic are these plans? Most likely, till the foreign currency exchange is one-sided, i.e. in the newly opened exchange offices it is possible to sell hard currency (US dollars or German marks), but it is practically impossible to do the opposite, i.e. to buy hard currency for Uzbek Soums, it is difficult to expect that the "black" market will disappear.

The events that took place in the first part of July show that the above is absolutely true with regard to the present situation. The "black" market is becoming the real competitor for the official exchange offices. Thus, already by the middle of July at the "black" market the rate of purchase of the US dollar was more than 700 Soums, whereas, in the exchange offices it stayed at the level of 675 Soums. Certainly, a certain part of the hard currency cash will be now got by the National bank of Uzbekistan. However, in general, the problem of the existence of the "black" market together with the "shadow" economy will not be solved by this. Thus, the "Uzbek Trade Revolution" is just a very big exaggeration that may be explained by the journalists’ imagination open to sensations.