Azerbaijan and WTO: How to stand pressures by world trade?

Analysis Materials 30 April 2007 12:05 (UTC +04:00)

Much can be spoken of the negative sides of Azerbaijan's entrance to the World Trade Organization (WTO), while the advantages of this step are much promising.

On the other hand, at the present time the national economy of Azerbaijan does not stand ready to join the WTO. The key threat is that the appearance of the qualitative and cheap foreign products in the internal market may bump off the local production. In order to prevent this case, it needs to bring the level of the host production into conformity with international standards. In this case, Azerbaijan will contain a special interest for the direct investment allocations, which provides a possibility to create new markets of commodities and services.

It is impossible to ignore the efforts of the host manufacturers to achieve successes in this regard, but the State-level problems at with regards to quality standards present difficulties for the development of the domestic production necessary for the internal market. For instance, to protect the health of the EU citizens, the Food Standards Agency (FSA) which functions under the European Union (EU) holds monitoring periodically and prepare so-called 'list of high-hazardous products', which always includes Azerbaijani products. It deals with at least 11 products made from hazelnut. Continuing this case closes the doors of Azerbaijan to the world market.

The absence of the etalon center in Azerbaijan, independent laboratories and severe control on the quality of the products presents difficulties for the Country. There is no unified body in Azerbaijan taking responsibility for the inconformity of the quality standards and presence of poor foreign products in the market. For instance, presently the State Agency for Standardization, Metrology and Patent takes responsibility for the production enterprises, the office created under the Ministry of Economic Development holds monitoring in the trade network and the Ministry of Health issues hygienic certificates for the quality of the products. In Europe the certification procedure is in private hands. Each year the companies present reports to the State body with regards to the number of the issued certificates. And the State only controls. In Azerbaijan the State is not prepared to strand away from the certification procedure because there are not such private companies.

Another problem is that after Azerbaijan's entrance to the WTO, its market will be open for the import of commodities from nearly 150 WTO member-countries. In addition, Azerbaijan has not been insured against low-quality imports into the Country. Together with the strengthening of the control on the quality of local production, it needs to raise the technical requirements for the imported products. According to the experts, such practice is applied in the countries of Western Europe and the USA. The import tariffs in those countries are not high, but due to the technical requirements, it is very difficult to export products to those markets. Armenia and Georgia's entrance to the WTO before Azerbaijan does not protect their consumers from low-quality products. China is the most obvious sample for the absence of WTO policy on consumer protection. This

Before entrance to the WTO, the Government of Azerbaijan should have exactly formed and announced policy to protect both consumers and manufacturers. Azerbaijan has already presented the proposals to the WTO Secretariat regarding the maximal range of the customs tariffs which will be applied for the imported agricultural and industrial products.

In addition, a law draft on technical regulation has been presented for the consideration. These may be applied within the period from 5 to 10 years after joining the WTO to protect internal investments and producers. The maximum tariffs for agricultural products have been suggested at the level of 50-80% and at an average of 23%. Unlike the agrarian sector, the tariffs for the industrial products are more liberal and the maximum customs tariffs are offered at a level of 30-50% and at an average of up to 15%.

Presently Azerbaijan expects confirmation of the 5th stage of the negotiations between the working group of the Country and WTO Secretariat regarding Azerbaijan's full-right membership to the organization. Earlier the 5th stage was rejected due to the low quality of the responses made by the Azerbaijani side to the questions of the WTO member-countries. At present multilateral negotiations of the WTO regarding liberalization of world trade ( Doha round) hold back the 5th stage of talks. All countries seek to complete negotiations within two months and progress in this supposes that the negotiations will be completed successfully. For this reason the next stage of the talks between Azerbaijan and WTO members has been postponed from May to the second part of June. However, the WTO Secretariat has not confirmed the exact date yet.

Azerbaijan will not participate in the negotiations of the Doha round, as the country has been represented in the WTO as a monitor since 1997. The purpose of negotiations is to liquidate export subsidies in developed countries and to decrease import taxes in countries under development. The agricultural manufacturers of Azerbaijan have the subsidies at the level of 14-18% of the gross volume of agricultural products.

The WTO was created in 1995 and brings together 148 member-countries and 30 observant-countries including Azerbaijan since 1997. Azerbaijan is a only country in South Caucasus that has not joined the WTO. Georgia joined the WTO in 2000 and Armenia in 2003. It needs to pass 13 stage to join the organization. Presently Azerbaijan is at the eighth stage - talks. The WTO has officially highlighted its readiness to support Azerbaijan's entrance to WTO in the near future. The key conditions to join the WTO are to improve the legislative base, liberalize the trade, eliminate tariff and non-tariff barriers, develop competition climate, raise the quality of the production, apply modern standards. It is very important that Azerbaijan joint the WTO as its sterling partner, but not as a raw appendage.