BUSINESS AS USUAL AT UZBEK COTTON FAIR

UNCLAS TASHKENT 001547 SIPDIS AMEMBASSY ANKARA FOR AG COUNSELOR E.O. 12958: N/A TAGS: ECON SOCI UZ SUBJECT: BUSINESS AS USUAL AT UZBEK COTTON FAIR ¶1. (SBU) SUMMARY. The Fifth International Uzbek Cotton Fair took place in Tashkent on October 14-15, 2009. This event showcased Uzbekistan as a leading producer and exporter of quality cotton and highlighted recent efforts by the Government of Uzbekistan to strengthen its internal textile industry. Notable was the absence of any concern by buyers over the boycott of Uzbek cotton by American and European customers because of child labor concerns. The Dubai Cotton Center also had a strong presence at the conference as it seeks to increase its role in the Central Asian cotton supply chain. END SUMMARY. ¶2. (U) Uzbekistan, the world's third largest exporter and sixth largest producer of cotton, hosted its Fifth International Uzbek Cotton Fair in Tashkent from October 14 through 15. The fair is an annual event organized by the Uzbek Ministry for Foreign Economic Relations Investment and Trade (MFERIT) for representatives of cotton companies to learn qualitative characteristics of Uzbek cotton and negotiate for its export. Uzbekistan is one of the few countries that continues to sponsor an actual fair for cotton sales; other countries rely solely on world commodity exchanges to facilitate sales. Despite a worldwide decline in cotton demand for the 09/10 season, attendance was level with last year. Some 300 companies and 500 industry representatives from 34 countries attended the various events. ¶3. (U) First Deputy Prime Minister Rustam Azimov opened the conference, placing great emphasis on increased Asian demand for Uzbek cotton and the Government of Uzbekistan's (GOU) goal of becoming a textile power in the region. Uzbekistan is currently a major supplier to Asia, accounting for 60% of cotton imports by Bangladesh and for about 10% of imports by China (Mainland). Azimov exuded confidence in Uzbekistan's overall economy and the cotton industry, despite the recent world financial crisis and falling cotton demand. Azimov announced that Uzbekistan's Gross Domestic Product (GDP) increased by eight percent for the nine month period ending September 2009. Industrial output increased by 9.1% during the same period while total fixed capital investment climbed up by 28%. Uzbekistan's foreign trade came to 2.3 billion rubles. ¶4. (U) Azimov also reiterated the GOU's commitment to improving its textile industry through investments in ginning capacity, transportation infrastructure, scientific research into seed quality, and foreign joint ventures. Azimov announced that domestic cotton consumption for 2009 will reach 300,000 tons, up from 250,000 tons in 2008. This increase is smaller than previously expected by the GOU, which had sought to increase the 2009 volume of domestic consumption as much as 50% through modernization and technical improvement of existing enterprises. ¶5. (U) Director Ramaurthui of the Dubai Cotton Center (DCC) updated the attendees on the successful export of 20,000 tons of Uzbek cotton through its exchange and storage facilities. Currently, most Uzbek cotton is transported by buyers via rail to the Iranian port of Bandar Abbas. At last year's fair, the DCC, a trading arm and a fully-owned subsidiary of the Dubai Multi Commodities Centre (DMCC),signed an import memorandum of understanding with Uzprommashimpeks (UPM),one of the three cotton exporters under MERFIT, to act as a redistribution center and trading post for cotton from Uzbekistan en route to Asia. The DCC began operations in April 2009 and now has capacity to handle 200,000 tons per year. ¶6. (SBU) International concern about the Uzbek use of child labor in the cotton industry appears to have had little impact on fair attendees. There was no talk of boycotts by European and Western firms, and negotiations seemed brisk. Terry Townsend, Executive Director of the International Cotton Advisory Committee, later shared with Ambassador Norland that child labor concerns were "not even discussed in a whisper over coffee." Most attendees were asleep before protests against the use of child labor started in front of the Uzbek Embassy in Washington DC on October 14. BUTCHER