Azerbaijan, Baku, April 22/Trend, I. Khalilova/
The next meeting of CIS experts involved in the preparation of a draft free trade zone (FTZ) agreement will be held in Moscow next week, the Government of Azerbaijan reported on Friday. The working group's meeting will also be attended by an Azerbaijani delegation consisting of representatives of the Ministry of Economic Development.
The draft document had been developed by the Ministry of Economic Development of the Russian Federation and submitted for consideration to the CIS Executive Committee at the end of 2008. Since then, a special working group held a series of negotiations examining and taking into account proposals and remarks of concerned states. This February, the working group took the decision to consider the text of articles of the draft agreement and several attachments to it agreed. The draft document, specified in accordance with submitted proposals, was approved at a meeting of the CIS Economic Council's Committee for Economic Issues in March 2011.
The drafted document envisions the formation of common agreement basis meeting modern requirements, with the purpose of full-scale liberalization of trade within the CIS area. The new agreement envisages minimization of import duty-related withdrawals from the free trade mode. Under to-be agreement, export duties shall be fixed and, once the agreement enters into force, negotiations over phase-to-phase cancellation of export duties shall be commenced.
The draft free trade agreement, after it is approved by the Economic Council, is to be submitted for consideration to the next meeting of the CIS Council of heads of states.
At a meeting of the Economic Council in Yalta, Ukraine on April 15, the participants focused at the issue of the free trade zone draft agreement that was submitted to finalization.
There are currently a 1994 Free Trade Agreement (amended in 1999) and some 100 bilateral agreements in effect in the CIS area. The majority of these documents contradict one another and the requirements of the World Trade Organization.
At the discussions, Azerbaijan tries to make every effort to stand for its interests and position.
"By the moment, Azerbaijan has reserved a position (of joining the agreement) until consensus over all issues related to examination of the draft agreement is found", a source with the Government reported.
Azerbaijan aims at building a civil transit market and that's why the Government thinks no free trade mode withdrawals are needed in both export and import operations.
Such position of Azerbaijan - to act as an observer - is explainable exactly by the country's disagreement with Russia's proposal, which envisions cancellation of all import duties but fixation of export duties rates in CIS trade. Given that Russia's fuel and energy sector is strong the country refuses to cancel export duties. Azerbaijan has already been exporting its energy to CIS countries (gas to Russia, crude oil to Ukraine and Belarus, and petroleum products to Central Asia) and thus stands for its position with future plans in consideration (the opportunity of building a gas pipeline over the Caspian bottom is under examination with Turkmenistan and assumes gas export from Azerbaijan to other countries on this pipeline). The project of construction of a Trans-Caspian gas pipeline, which will link Turkmenistan to Azerbaijan and allow exporting their energy to European markets via the territory of Turkey is considered a very promising one. This direction is usually associated with gas pipeline project Nabucco, assets of which have increased substantially since US and Western oil and gas companies entered the Turkmen market.
The new FTZ Agreement envisions the adoption of a separate document with its oil and gas export-related terms to be developed with provisos, like that in the 1994 Agreement.
Currently, Azerbaijan is not a monopolist in the sphere of export of non-oil goods so any possible withdrawals unlikely will hinder the volume of Azerbaijani non-oil goods' export to CIS states.
In accordance with the existing FTZ bilateral agreements, the structure of Azerbaijan's export is practically free of any withdrawal except for the two items - tobacco and denatured alcohol - with Russia and Kazakhstan. In this connection, the Government of Azerbaijan still prefers assessing the FTZ Agreement preparation situation as a detached onlooker.
Inter alia, Azerbaijan is very much interested in transit issues to become able to increase the volume of its turnover of goods in future. At the sidelines of the FTZ negotiations, Ukraine and Belarus try to stand for the transit terms as much as possible and receive backing from the Azerbaijani side.