High uncertainty of crisis in international trade
Azerbaijan ranks the 70th of 121 possible places in ranking of the World Economic Forum (WEF), reflecting the factors that facilitate the free flow of goods across national borders and to destination. Singapore and Hong Kong occupied the top two positions in the Enabling Trade Index ranking. Azerbaijan left Ukraine, Kazakhstan, Kyrgyzstan, Russia and Tajikistan behind among CIS countries.
The Global Enabling Trade Report, calculated by WEF, is based on several factors. These factors include access to domestic and foreign markets, administrative infrastructure at the border, the efficiency of customs work and others.
Azerbaijan has a favorable business climate. So the country with an index of 4.68 held the 46-th place. The situation is well with access to the domestic market (the 52-th place, the index - 4.07). According to the World Bank and IFC, Azerbaijan was announced a country-reformer N1 in 2009. It was connected with great changes to improve the business climate and facilitate the business terms.
Transferring from five-stage customs procedure to the single-stage, introducing "single window" principle in the customs checkpoints in Azerbaijan played a significant role in the trade sphere in Azerbaijan. It makes it possible to conduct registration and provide customs declarations only by one inspector, which will increase his/her personal responsibility and will substantially reduce the time of realization of customs procedures, will contribute to reduction in the expenditure of participants in the external economic activity, and also will make possible to increase interest in the sector of entrepreneurship and will enlarge the possibilities of business development.
The cargos in transit through border that were formerly checked by the State Border Service, State Sanitary Control, State Veterinary Service, Sanitary department of the Ministry of Health, and also by the employees of the Ministry of Transport and Interior Ministry now pass only customs inspection. This made it possible to reduce the period of checking in the checkpoints from two-three days, depending on cargo, to the maximum of 20 minutes.
The need for simplification in the international commercial procedures arose in connection with an increase in foreign trade, increase in the demand for the high-speed deliveries and contemporary logistic chains, development of international trade, wide use of container transportation.
Increasing capacities of the state borders is of great importance for the state, since important part of Azerbaijan is a trade route - the Silk Road and the transport corridor North-South of Azerbaijan. As a participant of the international transport corridor and taking necessary measures aimed at improving and enhancing the efficiency of transport connections, the country promotes the growth of transit traffic, increases the efficiency of reserve capacity of the national freight transport system, encouraging their reproduction and improvement.
Currently Azerbaijan has 27 checkpoints, including nine on border with Iran, four - Turkey, eight - Georgia, and six - Russia. Foreign trade turnover of the Republic and the number of countries participating in the processes of exporting and importing with Azerbaijan increase every year.
According to the WEF, development of trade in the country is hampered on the category 'customs efficiency'. Therefore the country has held the 103-th palce (index -2.91), though the maximum rate of import customs duties in the country hits 15 percent.
However, Azerbaijan does not see any need to support national production in using protectionist policy. Currently there are enough normative-legal acts to ensure development of domestic production, and in general, economic development in Azerbaijan. Azerbaijan is not wiling to take this action because such a policy, on the one hand, promotes development of national production and protection of domestic producer, but on the other hand, can lead to stagnation in the economy, strengthening of monopolies and reduction of national goods competitiveness.
Today, the State Customs Committee of Azerbaijan continues measures in accordance with the requirements of the World Trade Organization, but significant reductions in tariffs, which must be carried out under such agreements, could create some difficulties for local producers. Therefore, in the reduction of customs tariffs, the State Customs Committee proposed transferring from a multi-differentiated tariff system to three-tier in order to protect domestic production.
Since 2001 the rates of 0, 0.5, 1, 3, 5, 10 and 15 percent have been functioning in Azerbaijan. As a result of reclassification, only rates of 0, 5 and 15 percent will remain. Large part of goods (raw materials and equipment) will be taxed at zero rate, and even the products which today are charged with customs duty of 0.5 percent. This is applied to the product groups (in particular, 84th and 85th group), which according to the order by the Cabinet of Ministers, are subject to VAT at zero rate during their import. They account for approximately 10-15 percent of imported goods in the Republic.
However, high uncertainty of crisis development does not give confidence that countries-leaders of rating will not change its principles of openness. Many countries have used protectionism. If this process gets out of control, the whole world trade will collapse. It will inevitably lead to the second Great Depression.
High wave of the global financial crisis has affected trade. The centers of the world economy - the U.S., Europe, Japan - are already in under trade recession. In February, exports from Japan fell to record 49.4 percent compared with the corresponding period in 2008. Imports to Japan in February fell by 43 percent. Foreign trade turnover in Russia in January 2009 decreased by 40.2 percent compared with January 2008, in Ukraine reduction was 34.5 percent, in Kazakhstan - 40 percent.