IN FREE MODE

In the past two decades, global economic integration processes and the consequent simplification of trading regulations facilitated the dynamic development of the global goods and services market. According to the World Trade Organization (WTO), over this period, the pace of the growth of global trade averaged 5.3 per cent. However, in the post-crisis period, global trade faced a number of problems that led to a strengthening of state protectionism. In order to overcome negative feelings that have accumulated, WTO member states after long negotiations came to a landmark agreement in December 2013, which noticeably simplified global trade. A subsequent discussion of this very important topic has been held in Baku, where the first global conference titled "Trade Facilitation Post-Bali: Putting Policy into Practice" has ended recently.

The Bali package

What is so remarkable about the momentous Indonesia agreements achieved by the WTO members? The ninth WTO ministerial conference in Bali on 3-7 December 2013 ended with the signing of the first agreement in modern history on facilitating trade. Earlier, especially after 2001 when the agenda for the Doha Development Round was adopted, WTO member states had more than once tried to come to unity regarding regulating global trade. Serious disagreements between post-industrial and developing countries concerning subsidies, protection of individual sectors of the economy, non-tariff market regulators, etc impeded the formation of a stable foundation for global trade. After the global economic crisis of 2008, integration processes in trade ended up in an impasse altogether, largely because of the protectionist policies of industrially developed parts of the world which applied different direct and indirect mechanisms to support key industries. The so-called Bali package of agreements related to different areas of the work of the WTO in the field of multilateral regulation of trade was the long-awaited breakthrough in addressing the issue of formation of principles of universal free trade. In particular, negotiations on an agreement on trade facilitation, which provides for a simplification of customs clearance procedures, were completed.

According to the WTO, application of this agreement will lead to a growth in global trade worth of 1 trillion dollars regarding one package of agricultural agreements alone. These agreements provide for full transparency in the application of tariff quotas for imports of food, identify specific steps to reduce measures that distort competition in food markets, and primarily support developing markets and the least developed countries of the world.

On the whole, the global expert community is positive about the post-Bali development period of the global economy. According to the WTO, a 4.7-per-cent growth is forecast for global trade in the current year. The main drivers of the growth are said to be the strengthening of the US economy and the transition of the euro zone into a recovery phase. For comparison: in 2013, the growth rate of global trade was only 2.1 per cent, reaching 18.8 trillion dollars in absolute figures.

However, the implementation of the Bali agreement is a long and difficult path that requires the maximum coherence of the actions of national customs agencies and other state and supra-national departments that are involved in global trade. The global forum titled "Trade Facilitation Post-Bali: Putting Policy into Practice", which was held in Baku on 21-23 May at the initiative of the International Network of Customs Universities (INCU) and Azerbaijan's State Customs Committee, was devoted to aspects of simplifying foreign trade operations. More than 200 delegates representing 65 countries and 20 international customs-related organizations visited Baku to participate in the three-day conference. Among the participants in the forum there were three Nobel laureates in economics.

"The discussion in Baku of trade- and customs-related issues is a very timely move. Today, leading economic analysts and research centers focus mainly on three things: open borders, free trade and international competition. These are the main factors that help simplify and improve trade and customs work," said Thomas J. Sargent, a Nobel laureate in economic sciences and a professor of economic sciences at New York University, who participated in the conference.

The issues discussed in Baku are also important because after the adoption of the Bali agreements towards facilitation of global trade, significant changes are expected to happen in this field in the near future. The strengthening of globalization processes requires appropriate practical solutions by national customs agencies. "Today, control over foreign trade is a priority not only for customs agencies, but also for the states as a whole. Last year, a foreign trade agreement was signed on an Indonesian island, and it is therefore important to identify tasks - which the customs authorities of our countries are facing - to simplify international trade," said the chairman of Azerbaijan's State Customs Committee, Aydin Aliyev.

Electronization and transparency

Over the past few years, Azerbaijan's State Customs Committee (SCC) has done tremendous work to streamline national legislation and practice of border management in order to simplify cross-border trade. The extensive introduction of information technology, updating of legal acts, and, most importantly, the adoption in mid-2011 of a new Customs Code have made it possible to make serious changes to the country's foreign trade mechanism. Over the past three years, the SCC has significantly increased the use of information technology in registering and controlling the passage of cargoes across the border, as well as in standardizing and simplifying customs procedures. Customs clearance procedures regarding import and export operations are now carried out electronically within the "single window" system, and there is also one electronic register for declarations that customs agencies receive.

To intensify the fight against corruption and ensure transparency during customs clearance procedures, all customs duties regarding car imports are paid through POS terminals, plastic cards are used to make payments, the "electronic queue" system has been established, a chain of information kiosks is up and running, etc.

The logical conclusion of the e-customs project will be the forthcoming transition to a system whereby goods are electronically declared directly through the website of the SCC, and this will simplify customs clearance procedures even further.

Moreover, the committee plans to accept customs declarations at ASAN Service centres, the chairman of the State Customs Committee, Aydin Aliyev said. "We have already begun to ensure that State Customs Committee officials are present at ASAN centres. They will accept relevant documents. If a citizen has all necessary papers and can save his or her own time by submitting them for declaration through the ASAN Service, why not give them this kind of an opportunity? The existing infrastructure and the level that electronic registration is at in Azerbaijan make this possible," Aliyev said.

However, Azerbaijan can fully join the Bali agreements if a number of difficult issues are resolved in the negotiating process with the WTO which has lasted since 1997. As is known, the country expects to defend its right to a long grace period and receive some preferences for a number of sectors of the economy after it becomes a full member of this organization. Azerbaijan wants to join the WTO as a developing country and, therefore, get a 10-per-cent limit on subsidies in the agricultural sector, while the WTO only agrees to a 5-per-cent limit. Incidentally, the WTO insists on a complete elimination of tax breaks for farmers, in the belief that tax breaks affect farmers' selling prices and distort competition in the market. However, the Azerbaijani government is not going to abandon this practice.

"Azerbaijan is not in a hurry to join the WTO since in the foreground of the state's economic policy there is currently protection of the domestic market and support for local farmers and processing companies. However, if the market opens up completely, there will be an influx of cheap and often low-quality foreign products in the country, local output will sag under the wave of dumping, and farms will suffer huge losses," President Ilham Aliyev had said earlier.

In other words, this is a double-edged sword, and the advantage in this case is only with those points that will meet Azerbaijan's national and economic interests.