NO NEED FOR RUSH

The focus of international diplomacy is Geneva, Switzerland, where the Azerbaijani government begins in late June the next round of bilateral talks on joining the World Trade Organization (WTO). It is clear that should this country join the WTO, it will get easy access to new markets. At the same time, if products offered to those markets fail to meet certain requirements, they will simply not be allowed in there. If Azerbaijani goods are discriminated against, special WTO mechanisms to remove them could be used. 

In order to protect local producers, the Azerbaijani delegation will be defending their country's position as a developing one for a week in the negotiating process.

Defend own guys

At the same time, agricultural exporters should be thinking not only about the European market, but also about new areas, for example, the markets of the Arab countries, the head of the negotiating group on Azerbaijan's accession to the WTO, Deputy Foreign Minister Mahmud Mammadquliyev believes.

These countries are very interested in developing agricultural cooperation, because they have almost no suitable land: up to 90 to 95 per cent of agricultural products consumed in the Arab countries is imported. In Europe, the situation is completely different, and it will be much more difficult for Azerbaijani producers to find their niche in the European market, the deputy minister believes.

Although the WTO does provide easy access to the markets of other countries, it, however, also opens up its own market to foreign producers, which may have an impact on the process of economic diversification. In the accession process, there are also other problems, in agriculture, in particular, regarding subsidies and bilateral negotiations on imports of certain agricultural products. "We want to protect local producers, but our partners insist that we decrease existing tariffs on those products," Mammadquliyev said.

At the beginning of this year, President Ilham Aliyev said that one of the main reasons Azerbaijan was in no rush to join the WTO was protection of local producers and of the Azerbaijani market. "First of all, we need to create conditions for our farmers and companies. If we open up our market and let poor-quality and cheap foreign products in, local production will die and farmers will incur losses. It is for this reason that we are not going for it. Today, too, I want to say that we will become a WTO member. We will become a WTO member when export-oriented products prevail in Azerbaijan's agriculture and industry. However, in that period we will see whether they will be inviting us with the same insistence or not," said the head of state. He pointed out that Azerbaijan is becoming a rich country.

The expanding list of WTO member countries that are negotiating with Azerbaijan confirms this.

List growing

Among the countries that have expressed willingness to hold talks with Azerbaijan, there are now also Malaysia, the Dominican Republic, and Honduras. A total of at least seven to eight sets of bilateral talks are expected during the week, including with the USA, China, Brazil, and Canada.

Azerbaijan started negotiations in 2004. In addition to the countries listed, it is currently in bilateral WTO accession negotiations with Japan, Ecuador, Sri Lanka, the European Union, Norway, India, South Korea, the Taiwan Province of China, and Switzerland.

Negotiations have been completed and protocols have been signed with Turkey, Oman, the UAE, Georgia and Kyrgyzstan. With China and Moldova, the country is at the stage of signing protocols.

Discussions on goods and services will be held with the current negotiators this time round, and the Azerbaijani customs service again intends to defend keeping the high tariff rates on the imports of various goods after joining the WTO. In particular, the State Customs Committee suggests that the bound tariff is maintained at a level beneficial for the country - 20 to 25 per cent, depending on the type of goods imported. The bound tariff is the maximum rate of a customs duty which is levied on a certain commodity, is recorded in the country's commitments within the WTO and cannot be changed by the importing country unilaterally. At the same time, the head of the main financial-tariff and currency regulation at the State Customs Committee, Mirqasim Vahabov, says that agriculture is an area sensitive to tariff regulation.

The volumes of the agro-industrial complex's output of a number of commodities are already equal to the volumes of imports. Therefore, to protect local producers it is important to keep the tariffs at the highest level possible, because imports gradually decrease as agricultural output grows, Vahabov believes.

In the negotiating process, different countries offer different maximum levels of import tariffs on product types they are interested in. Certainly, each of the foreign partners is interested in making sure that their producers get access to new markets. This is not only about agricultural products but industrial products and also services as well.

In order to promote and protect their domestic market, during negotiations each country has to apply caution regarding concessions. Some countries (Uzbekistan, Georgia) made commitments on concessions that they failed to honour. Therefore, you should not make commitments that may eventually jeopardize your own economy.

Table of change

Also, the Azerbaijani government has prepared a new table on the country's agro-industrial complex over the past three years (2011-13). The table includes changes to legislation, state regulation, applicable subsidies, etc. As Mammadquliyev said, work to finalize these proposals is currently under way, and the country will send them to the WTO secretariat after consultations with experts in Geneva.

The organization continues to insist on the elimination of tax breaks for Azerbaijani agricultural producers in the belief that this affects prices and distorts competition in the market. The Azerbaijani government has exempted agricultural producers from taxes, except the land tax, until 2019. Without these tax holidays, agricultural prices would have risen, which could have led to a rise in inflation. Therefore, this kind of assistance should be continued in the future.

In present-day circumstances, when the share of the agricultural sector in GDP was only 5.3 per cent in 2013, agriculture should be given as much support as possible so it can develop. In addition to applying tax holidays, the government has since 2007 provided subsidies to farmers to the tune of 50 per cent of the cost of fuel and mineral fertilizers they purchase. Therefore, given that the country's agriculture is in a great need of support, Azerbaijan refuses to join the WTO as a developed country - something that the United States insists on especially and which will limit access to subsidies within 5 per cent of agricultural output. As a developing country, it will be able to receive subsidies and government support within 10 per cent.

According to the deputy minister, another key thing for Azerbaijan to do is prepare answers to questions from WTO member countries, without which there cannot be a meeting with the working group. This process is expected to be completed by early September. Accordingly, in late October - early November it will be possible to hold a meeting with the WTO working group, as well as multilateral talks on support for agriculture.