...

Weekly actual topics in Azerbaijan (august 19-22)

Analysis Materials 25 August 2014 17:47 (UTC +04:00)

Azerbaijan to explore Georgian European integration's impact on foreign trade relations

Georgia's Association Agreement with the EU, which is to come into force on September 1, 2014, as well as a section on deep and comprehensive free trade area, will not lead to the suspension of the free trade agreement between this country and Azerbaijan.

Azerbaijani government told Trend Aug. 18 that for Georgia, as well as, for Moldova to become an EU associate member, it is necessary to solve many problems in the legal field.

"Georgian colleagues noted that they daily receive over 200 normative documents in English, which need to be translated, and then it is needed to align the national legislation with them, to synthesize them with local laws and unify, in order to make them work," a source in the government said.

"And who knows how long this work will take?" the source added.

Therefore, Georgia for now needs to adapt, and some steps can be taken in the future along with the country's becoming a full associate member of the EU, the source stressed.

"Prior to that, I believe it is premature to talk about termination of the free trade agreement between Azerbaijan and Georgia," he added.

Meanwhile, Georgia's Foreign Ministry appealed to Azerbaijan's Economy and Industry Ministry to study this issue.

"Any changes are possible in the foreign trade relations with Azerbaijan with the signing of the Georgia-EU agreement," another source in the government said.

"These may also be technical barriers, and issues related to product quality," the source noted.

He said that therefore, it is necessary to work on this issue, to study Georgia's Deep and Comprehensive Free Trade Agreement, and "to check what requirements are indicated there, because Georgia will have a common market with the EU."

"In this regard [with the creation of a common market] Europe may demand that products imported from third countries should not to go to European markets through Georgia," the source stressed.

He underscored that in this context, there is a problem that needs to be addressed, and Azerbaijani experts have to carefully study the terms of the free trade agreement (FTA).

Georgian Foreign Ministry said the temporary introduction of the Association Agreement's specific provisions will start on September 1, 2014, under the accepted EU procedures, in accordance with the agreement's article 431.

Meanwhile, about 80 percent of the agreement will come into force, including a component of the comprehensive free trade area.

The provisions of the agreement on partnership and cooperation between Georgia and the EU, approved on April 22, 1996, will continue to operate simultaneously during the period of a partial and provisional implementation of the Georgia-EU agreement, which has not finally entered into force.

Despite this, the Russian Economic Development Ministry has already developed a draft decree of the supreme government on the suspension of the Georgia-Russia agreement on the free trade.

Azerbaijan is still the second largest trading partner of Georgia, the first largest being Turkey.

Georgian National Statistics Office (GeoStat) said the trade turnover between Georgia and Azerbaijan in H1, 2014 was $584.3 million (10.7 percent of Georgia's total foreign trade operations).

This is 3.7 percent less than the same period of last year. For comparison, in January-June, 2013 the trade turnover between the two countries stood at $605.98 million.

Throughout the reporting period, Azerbaijan remained as the largest export market for Georgia, with a 20.4 percent specific gravity in the country's total exports.

During this period, Georgia exported to Azerbaijan goods and services worth $290.2 million, which is 12.8 percent less than in H1, 2013.

At the same time, the goods and services worth $294.1 million (7.3 percent of total imports of Georgia) were imported from Azerbaijan. This figure is 7.65 percent more than the figures for last year.

Trade surplus between Azerbaijan and Georgia was $41.1 million.

Medical care in Azerbaijan via insurance requires minimum 250 AZN

The optimum amount of annual coverage under the contract of compulsory health insurance (CHI) in Azerbaijan is 250 AZN.
This sum will be enough to get appropriate free medical care under the insurance policy, says an expert in the field of insurance Hayal Mammadkhanly.

"At the moment within the frameworks of preparation for the introduction of the concept of mandatory health insurance in Azerbaijan various options are being worked out and the predicted amount of coverage is 50-60 AZN," he said.
"However due to such a payment for an insurance policy people can't get adequate health care at the expense of insurance", said Mammadkhanly.

Although the law "On Medical Insurance" in Azerbaijan was adopted in 1999, the compulsory health insurance in the country has not yet been applied. It is expected that the new system will be introduced in Azerbaijan in 2015.

In accordance with the law, a mandatory form of health insurance is an integral part of the state social insurance and ensures the provision of medicines and medical care to the population.

According to experts, the use of compulsory health insurance will lower costs for health services by approximately two times.
For the introduction of this type of insurance, the appropriate fee for the insurance policy must be determined, the infrastructure prepared, the connection of all the insurance companies to the system ensured, training in all health facilities provided, a single registry of patients created.

"That's a very difficult and time-consuming process", said the expert.

He said that this requires a large amount of technical work, reformation of the health care financing system, of the wage system in medical institutions. Furthermore, extensive methodological work in terms of descriptions of various diseases, the cost of services and so on must be carried out, Mammadkhanly added.

He went on to add that extended list of diseases usually falls on the mandatory medical insurance.

Common diseases, with the exception of chronic diseases and critical illness for which treatment is provided by the State, and other serious illnesses could be included here, he said.

"In this case, cosmetic and plastic surgery, treatment for HIV infection are also considered exceptions," Mammadkhanly added. "List of drugs also covers almost all diseases included in the compulsory health insurance. This does not exclude the possibility of the application of 10-15 percent of the franchise."
Although the use of the franchise reduces the cost of the policy which results in a lower premium, the insurance company gets profit in the sense that the cost of leaving of the insurance representative and the costs of conducting papers exceed the amount of damage, he said.

Thus, it is expected that the introduction of compulsory health insurance alongside with the recovery of the financial market will improve the quality of health care services and lead to a major restructuring of the insurance market, he added. This will affect both the size of the market and its structure, said the expert.

Mammadkhanly went on to add that CHI can also make a good stimulus for the development of voluntary health insurance. For example, someone will be able to purchase additional coverage not included in the package of the CHI, he noted.

Although all health facilities for the same services will be paid in the same amount, there are clinics where the same services will be more expensive and then patients who wish to be treated in these clinics will have to pay more, he added.

At present, voluntary health insurance is one of the most unprofitable ones, and many companies refuse to provide these services. However the loss ratio of 95 percent of this type of insurance is considered normal in the international experience.
During January-July 2014 the share of health insurance fell on 45.8 million AZN (24.3 percent of the fees for non-life insurance) with payments of 27.3 million AZN (37.3 percent). According to market participants, the increased premium for this type of insurance is related with the fact that now hospitals buy more expensive equipment, which in its turn leads to the provision of more expensive services.

There are 28 insurance companies in Azerbaijan.

Latest

Latest