During the multilateral negotiations in the framework of WTO accession, the monetary and fiscal policy of the Republic of Azerbaijan, the privatization of state-owned enterprises, the state policy affecting trade in goods and services, and aspects of the country's foreign trade regime in general are discussed.
In the framework of these negotiations, answers on Members’ questions, plan on improvement of Legislation, schedule on domestic support in agriculture (ACC/4), schedule on trade related aspects of Intellectual property (ACC/8), interpreting schedule on Technical barriers to trade and Sanitary-Phytosanitary issues (ACC/9) are discussed and clarity is made on topics of interest to Member countries. Answers to Members’ questions gave an opportunity to get a more complete understanding of the trading regime of Azerbaijan. As proof of this, the number of questions has been decreasing over time.
The dynamics of the process of accession to the WTO shows that each successive country takes more extensive commitments in comparison with the previous country. This is due to an increase in the requests of the Member countries in relation to the candidate countries. However, exceptions are possible and this is due to the effective tactics and strategy of negotiations of each country.
The latest multilateral negotiations were held in Geneva on July 28, 2017 (14th Working Party meeting). At the meeting, participants were informed about latest socio-economic indicators of the country, promotion of domestic production, diversification of commodity and geographical structure of export and reforms to increase non-oil export, Strategic Roadmaps and other programs adopted for the short, medium and long period. During the meeting, replies to the Members’ questions after 13th meeting were discussed. At the same time, questions on chapters of draft Working Party Report were asked by Members and answered by the Azerbaijani delegation. Here, the main issue for Azerbaijan is the bringing the national legislation into conformity with commitments taken in plan in accordance with the WTO rules (Action Plan approved by the Decree of the President of the Republic of Azerbaijan of August 2, 2006). Azerbaijan already submitted the document with above-mentioned commitments to the WTO Secretariat. Currently, the concern of Members at the multilateral negotiations is related to the slowdown in the work done to improve the legislation. Member countries asked Azerbaijan to accelerate the process of adoption of new legislative acts.
Issues concerning domestic support in agriculture are also discussed in the framework of plurilateral negotiations. The last round of discussions took place in Geneva on July 27, 2017. At the meeting, Azerbaijan requested from the Members of Working Party the access to the following flexibilities:
- 10% de minimis (from the value of production in agricultural sector)
- Access to 1 billion USD Aggregate Measurement of Support (value of subsidies from all sources)
- Additional support for the restoration of agricultural land in the occupied territories of Azerbaijan (Daglig Karabakh and surrounding area) once those territories are liberated
- Access to subsidies in accordance with Article 6.2 of the Agreement on Agriculture
The first version of ACC/4 was prepared on the basis of 1999-2001 years and submitted to the WTO Secretariat in 2004. The latest version of ACC/4 schedule was prepared on the basis of 2014-2016 data and discussed at the meeting in 2017. During the reported period, Azerbaijan did not apply export subsidies. Member countries mentioned the high level of Azerbaijan’s request on domestic support in agriculture, as well as stressed the importance of reducing agricultural subsidies (elimination of value added tax related discrimination and tax exemptions, non-application of export subsidies in future, etc.).
Bilateral negotiations are conducted with WTO Members on goods and services. Each Member can negotiate market access flexibilities on goods and services that are of interest to it. In accordance with the WTO rules, when negotiating with several member countries on the same goods and services, the membership protocol will apply the most liberal version for those goods and services to all member countries.
Azerbaijan is conducting negotiations on goods on the basis of HS 2007. There are 97 groups and 10130 lines in the goods’ schedule. Currently, the average applied tariffs on goods is 8,77% (considering the ad valorem rate of specific tariffs as 15%). The average of “bound” tariffs (proposed highest levels) in the schedule submitted to the WTO is 11,52% (considering the ad valorem rate of specific tarifs as 30%). In the process of preparation of proposals, high tariff rates are determined for those goods which are important and priority for Azerbaijan’s economy. At the same time, Azerbaijan is considering the reducing of tariff rates for other goods and, thus maintain the average tariff balance. Negotiations on goods are conducted with respect to:
- Agricultural goods
- Non-agricultural goods
- Sectoral initiatives
During the latest round of bilateral negotiations, meetings with the European Union, the United States, Russia, Brazil, Japan, Thailand, India and Switzerland were held. Bilateral negotiations on goods cover different areas, including issue of joining the paper, pharmaceuticals and civil aircraft sectoral agreements, as well as joining to expanded Information Technology Agreement. At the same time, Members requested Azerbaijan to reduce bound tariffs for all groups of goods (except sensitive goods) to the applied level and the list of sensitive goods in general. Members also requested Azerbaijan to reduce the transition periods to 2-3 years. Azerbaijan is conducting negotiations on goods nomenclature on the basis of Members’ requests.
Azerbaijan is conducting services negotiations on the basis of ACC/5 document submitted to the WTO. Azerbaijan is negotiating commitments under the 11 services sectors out of 12, and 113 subsectors out of 116. Services negotiations are conducted with the European Union, the United States, Russia, Japan, Norway, Canada, India, Saudi Arabia, Chinese Taipei and South Korea. Negotiations are held, mainly, on quota issues for foreign labour force, ownership of land for foreigners, postal, scientific and research, education, financial (insurance and banking), transport (maritime and air), mining, energy, and hospital services. There are also discussions on issuance of work permits primarily for consecutive 3 years period, and elimination of quota system for foreign labour force. Along with this, there are requests on implementation of the mechanism of obtaining of work permit and approval of the quota system on the basis of transparency principle, as well as in conformity with international requirements.