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