Facing COVID-19 crunch, Uzbekistan seeks end to cotton boycott
The government of Uzbekistan has called for the lifting of a decade-long boycott of Uzbek cotton, citing recent progress in human rights reforms and also the economic crisis caused by the COVID-19 global pandemic.
Last Thursday, labor minister Nozim Khusanov issued an open letter addressed to the leaders of the Cotton Campaign, a coalition of activist groups and business associations that have since 2007 coordinated a broad boycott of Uzbek cotton, which includes over 300 of the world’s largest apparel and furniture manufacturers and retailers.
The global boycott was imposed over the use of forced and child labor in the Uzbek cotton harvest, one of the world’s largest seasonal labor mobilizations. Last year, 1.75 million Uzbeks worked during the Cotton Harvest. Of this total, estimates suggest that 102,000 people were forced to partake in the harvest last year, down from 448,000 in 2015.
Following the significant reduction in the use of forced labor, the International Labour Organization (ILO), which has been providing technical assistance to support the Uzbek government’s reform efforts, concluded that “systematic forced labour did not occur” and that “systemic child labour is no longer used during the cotton harvest in Uzbekistan.”
Khusanov’s letter notes the constructive dialogue that has taken place between the Cotton Campaign and the Uzbek government since 2017, when President Shavkat Mirziyoyev launched an ambitious effort to reform the country’s cotton sector in order to attract investment and expand export potential—goals that necessitated addressing the concerns of human rights campaigners both within Uzbekistan and abroad.
Responding to the open letter, the Cotton Campaign’s leadership has welcomed the “challenge” set forth by Khusanov and has indicated that the coalition is developing a “develop a framework to encourage responsible sourcing,” as a precursor to any rollback of the boycott. The Cotton Campaign’s leadership did not offer any timeframe for the launch of its proposed framework.
From the Uzbek perspective, time is of the essence. Khusanov’s letter points to the mounting economic impact of the COVID-19 crisis—since the country's lockdown began, according to figures outlined by the ministry, nearly 150,000 citizens have lost their jobs and more than 200,000 Uzbeks have fallen below the poverty line.
Describing the decision to lift the boycott as “pivotal” during a time of economic crisis, the open letter suggests notes such a the economic wellbeing of the 200,000 Uzbeks who work in the textile industry, whose earnings in turn support the livelihoods of more than 1 million people.
The present economic crisis is exposing long-term underdevelopment of the cotton and textile industry in Uzbekistan. Looking to data for the period between 2002 and 2018, growth in Uzbek cotton imports has lagged growth in overall imports by seven key trading partners: China, the European Union, Japan, South Korea, Russia, the United States, and Turkey.
In those countries where the overall value of imports from Uzbekistan grew in this period—China, Russia, and Turkey—growth in cotton exports was equivalent to just 23 percent, 65 percent, and 35 percent of total growth.
For those countries where the overall value of Uzbek imports fell—the EU, South Korea, the United States, and Turkey—growth in cotton imports fell more precipitously than overall imports. The only exception is Japan, where overally imports are just 7 percent of their 2002 total.
This analysis suggests is that Uzbekistan has been unable to develop its cotton exports in line with exports of other goods. But more importantly, Uzbekistan has failed to grow its cotton exports in line with global demand.
Between 2002 and 2018, global cotton exports doubled—rising from just over $24 billion to just under $58 billion. Had Uzbek cotton exports grown at the equivalent annual rate—8.6 percent—Uzbekistan would have earned a further $20.5 billion in export revenue, equivalent to 103 percent of actual revenues from the sale of cotton in that period.
These figures lend credence to the Minister Khusanov’s claim in the open letter than “the end of the cotton boycott could double overall exports of Uzbek textiles—growth that would create much-needed jobs.” While a sudden doubling of cotton exports may be unlikely, the value of textile exports is a small fraction of the cotton totals, a reflection not only that Uzbekistan has struggled to add value in its supply chains, but also that for those textiles which are available for export, sales may grow quickly from a low base in the manner of “catch-up effect.”
While it is difficult to quantify the specific economic impact of the boycott, it is notable that the composition of Uzbek exports began to change in 2007-2009. This period corresponds to the founding of the Cotton Campaign and greater attention to the issue of forced and child labor in Uzbekistan, the emergence of China as a global trade leader, the consolidation of Russia’s early 2000s economic recovery, and, at the end of this period, the impact of the global financial crisis in depressing manufacturing activity, especially in advanced economies like Europe and the United States.
Global cotton exports fell 20 percent between 2008 and 2009. The state-dominated nature of Uzbekistan’s cotton industry and the geographic isolation of the country, which contributed to making Uzbek cotton among the most expensive on the market, left Uzbekistan vulnerable to this exogenous shock. Uzbek exports fell a staggering 41 percent between 2008 and 2009. The divergence in fortunes between global exports and Uzbek exports only widened over the following decade.
In particular, the failure to sustain cotton exports to the European Union resulted in a significant loss of export revenue for Uzbekistan. Part of the decline in Uzbek exports to the EU is due to the fact that outsourcing of apparel manufacturing led to a reduction in overall cotton demand among EU manufacturers. However, had Uzbek cotton exports to the EU simply remained in line with global cotton exports to the EU between 2002 and 2018, Uzbekistan would have generated a further $1.8 billion in revenue during that period.
To whatever extent the Uzbekistan’s exports to might have otherwise recovered after this tumultuous period within the global cotton market, the Cotton Campaign’s boycott created an ongoing impediment. In this regard, the boycott serves as a remarkable case study in effective activist-led economic coercion. But boycotts can only be considered truly succesful when they are lifted. For Uzbekistan’s policymakers, the question remains when that will be.
Photo: UNDP
