Azerbaijan and WTO: Negotiations for 12 years

Analysis Materials 24 August 2011 10:06 (UTC +04:00)

The process of negotiations on Azerbaijan's accession to the World Trade Organization (WTO) continues. Most of the issues have already been coordinated with its partners, intensive negotiations have been conducted at the bilateral and multilateral levels. However, at this moment it is difficult to call specific terms of Azerbaijan's joining the WTO.

The Center for Economic and Social Development considers Azerbaijan's accession to the WTO could happen as early as next year. Azerbaijan has achieved an agreement in bilateral negotiations with four countries. In particular, the common denominator was found in the negotiations with Turkey, Moldova, Georgia and the UAE. In addition, almost all questions have been coordinated in negotiations with Kyrgyzstan and Ukraine. But, in general, there are several problems that hinder Azerbaijan's entry to the WTO.

The stumbling-block in the bilateral talks between Azerbaijan and the WTO is the status, with which Azerbaijan will join the organization. WTO wishes to admit Azerbaijan to its membership as a developed country. The organization argues its intention that all the CIS countries have joined the WTO with this status. In addition, according to WTO, Azerbaijan is involved in several projects as a donor. Azerbaijan, in turn, intends to join the WTO as a developing country. In addition, the complexity is observed in the negotiations on tariffs.

On the other hand, in the bilateral negotiations, the sides can not to find a common agreement in subsidies allocated to the agricultural sector. Azerbaijan offers WTO to send to the agricultural sector the subsidies, which account for 10 percent of total production in the agricultural sector. But it seems the WTO is not interested in issuing such a volume of subsidies to Azerbaijan. The organization argues its decision by saying that in other CIS countries, the volume of subsidies allocated to the agricultural sector is lower than in Azerbaijan.

In general, according to experts, this year, agreements are expected to be signed with several more countries in the bilateral talks. At the moment, agreements are reached and the positions come closer with many countries, except the EU and U.S. But, in general, Azerbaijan's accession to the WTO in the near future seems unlikely. The World Trade Organization is currently not ready to accept Azerbaijan to its ranks.

In late October last year, Baku hosted a conference on "Azerbaijan's membership to the World Trade Organization: the International Experience." During the conference it was noted that Azerbaijan is at the stage of entry to a new stage of development, and along with the modernization of the economy, the country should ensure conformity of all spheres with the European standards, the transformation of Azerbaijan into a developed country.

Azerbaijan intends to intensify the process of joining the organization. After accession to WTO, Azerbaijan will become more attractive to foreign investment. Large foreign companies will consider the WTO membership as a kind of assurance that the basic standards of international business practices such as protection of rights to patents and intellectual property, as well as factors such as the inviolability of private property, an independent judiciary, transparent tax system are present in Republic.

Over recent period, Azerbaijan has brought more than 20 laws and regulations into conformity with the WTO requirements, and this process continues. Currently, Azerbaijan is negotiating with 10 countries to join the WTO. Today, Azerbaijan is negotiating with the United States, European Union, Switzerland, Norway and Japan.

Previously, from 25 to 29 July, within the visit of the Azerbaijani delegation to Geneva, bilateral talks were held on the conditions of membership to the WTO with the European Union, Ecuador, Switzerland, Brazil and China. The negotiations were attended by the representatives of the Ministry of Economic Development, Ministry of Agriculture, Ministry of Industry and Energy, the State Customs Committee. Azerbaijan has been negotiating for membership to the WTO since 1999. Bilateral negotiations are one of the conditions of the IX round of multilateral negotiations on WTO membership.

According to local experts, Azerbaijan seeks to join the WTO, but nobody assesses how this will affect the ability of the country's agriculture. The prices of all food products, especially vegetable oil will increase in the near period due to price hike of raw materials used to produce oils - corn, soybeans, olives. The rising in cost of these products is connected with a decrease in volume of production in the world. One of the reasons for the increase in the cost of food products in Azerbaijan is the lack of specialization of work in agriculture.

Farmers are forced to engage in cultivation, planting, harvesting, finance, transportation and sale of their products to the markets, which necessarily affects the quality and price of the final product. In addition, various dealers, government officials and employees of other organizations force them to sell their products at overprices. Allocated by the Ministry of Agriculture, the subsidies to farmers are insufficient. Farmers continue to use cheap and dangerous chemical fertilizers, buy genetically modified seeds in order to reduce the cost of their goods.

Azerbaijan 's readiness to join the WTO is a very important issue from the point of view of competitiveness. But in today's picture of production development in the country, reducing customs barriers in order to join WTO is fraught with the risks of sharp increase in imports.

Moments of violations of quality standards of the domestic products damage the prestige of the country and complicate its path to the WTO membership. It means the problems still exist and Azerbaijan has to conduct more series of negotiation processes and continuous work for compliance to WTO requirements.

In short, Azerbaijan should conform to the WTO principles, which are - the elimination of discrimination on trading partners (including citizens), ensure maximum freedom of trade (including by minimizing tariffs), consistency and predictability of actions, support for developing countries. The main purpose of activity is to ensure the conditions for competition in international trade.

Main advantages of accession to WTO

• Accelerating integration into global economy;
• Benefit from the privileges, which WTO member countries provide each other;
• Carrying out trading operations based on common rules established by the WTO;
• Assistance from various countries and international organizations in the country's ongoing economic reforms;
• Attracting more foreign investment into the country after introduction of WTO rules in the country;
• Opportunity to regulate trade disputes under the WTO mechanism