Azerbaijan and WTO: pros and contras
Azerbaijan is not in a hurry to join the World Trade Organization and explains its position by that it is necessary to think of all pros and contras related to this step. As a matter of fact, in all post-Soviet countries, which have passed or have been passing not an easy process of joining the WTO over some latest years, benefit from the WTO membership is estimated in quite different ways. For some countries, say, Georgia, Armenia, Kyrgyzstan, etc. this is a matter of prestige as there is no real WTO effect on these countries but nevertheless, all neighbors know that a republic has become part of the process of economic globalization. But such country as Russia has been trying to become a WTO member state since 1993 as it thinks over the issue of joining the organization very thoroughly.
Azerbaijan is almost to the same extent cautious. There is quite a logical explanation: as has been stated, WTO membership gives the country, apart from trade advantages, a lot of "contra" moments.
Definitely, prices for goods and service in Azerbaijan will decrease after the country joins the WTO. From the point of impact related to the country's joining the WTO, there are three groups of impacts: impact on state budget revenues, impact on producers, and impact on consumers. From this point, the latter wins most of all. Certain problems for local producers are not denied, and such risks must be assessed to be avoided so the Government should stand for its position at the talks with WTO member states and with the very organization.
Risks are also inclusive of a sharp decrease of import tariffs, which will make domestically produced goods noncompetitive. However, the WTO membership will provide conditions to eliminate the existing bureaucratic barriers disturbing entrepreneurship in Azerbaijan.
In addition, decrease of interest rates of bank credits will become highly probable after Azerbaijan joins the WTO. But considering the fact that Azerbaijan's bank sector is only developing and thus can not really compete with Western partners, the Government should get fulfillment of the WTO requirements postponed for several years.
Proposals pertaining to the maximum limit of customs rates, which will be imposed on imported agricultural and industrial goods, should also meet national interests, and high tariffs should be offered for sectors, which may face problems in their further development.
The practice of countries with transitional economy joining the WTO illustrates that some customs rates may exceed the existing ones by two-three times. Particularly, it is necessary to apply customs tariff tied rates on those import goods, analogues of which are produced in the republic.
As initially proposed by the State Customs Committee, the maximum customs rate and the average customs rate on agricultural produces were 50 percent to 80 percent and 23 percent, respectively. As for tariffs for industrial goods, the rates are more liberal and equivalent to 30 percent to 50 percent and up to 15 percent, correspondingly.
Azerbaijan will have to stand for its customs tariff tied rates before such WTO member states as the United States and EU member states. The European Union, as one of the world's biggest exporter of agricultural produces, suggests reducing Azerbaijan-offered rates. As for some kinds of goods, it is proposed to decrease the rate to zero.
Import customs rate of 15 percent and 0-0.5 percent are applied on readymade industrial goods and on industrial raw materials, respectively, in Azerbaijan at the moment. No tariffs on industrial raw materials are applied at all in international practice; however, in connection with the supposed changes of Azerbaijan's tariff system - transition from a multi-step customs tariffs system to a few-step one - these rates will be decreased to zero.
Given that low-quality imported goods have lately emerged at the markets of some countries, including Azerbaijan, it is quite essential to observe quality standards under the import of goods to the country's market. For this reason, it is necessary to create border's regulation laboratories, which will identify elements of agricultural produces, and the composition of plasma of products imported to the country.
A "pro" moment of joining the WTO is that it provides sophistication of phyto-sanitary control; laboratory quality level check; and creation of information center to notify the WTO Secretariat of list of goods that meet the organization's requirements.
The WTO membership gives the country a lot of advantages. This is the pragmatic aim of joining the organization. Specific objectives of joining the WTO are as follows:
- Getting better, as compared to existing ones, nondiscriminatory conditions for local products' access to international markets;
- Access to international trade disputes solution mechanism;
- Creation of a more favorable climate for foreign investments through bringing the existing legal provisions in compliance with the WTO norms;
- Expansion of opportunities for native investors in WTO member states, particularly, in the bank sector;
- Creation of conditions to upgrade the quality and competitiveness of native produces as a result of expansion of flow of foreign goods, services, and investments to local market;
- Participation in development of international trade rules with respect to its national interests;
- Improvement of the international image of the country as a full participant of international trade;
The task of the WTO membership talks is to get best possible conditions of joining the WTO, i.e. get most of advantages and make least concessions in the field of reduction of tariffs.