THE ECONOMIC PARTNERSHIP COMMISSION:CHANGE IN FORMATS AND PRIORITIES

Azerbaijani-US cooperation has recently been experiencing important changes which testify to the move of bilateral trade, economic and investment cooperation to a higher and qualitatively new level. Precisely within this context should one view the results of the first meeting of the joint Azerbaijani-US Economic Partnership Commission (EPC) held in Baku on 7 February. Certainly, the point is not only the change of the institutional framework of dialogue (the EPC replaced a working group that had been operating) and the unprecedented high level of the representation of the sides at the first meeting but the nature of issues raised and new approaches to their resolution too (both sides were represented there by the heads of leading ministries and departments - Finance Minister S. Sharifov is the Azerbaijani co-chairman of the EPC, while US Assistant Secretary of State for Economic and Business Affairs D. Sullivan is the US co-chairman).

The establishment of the EPC symbolises an increased interest on the part of Baku and Washington in developing fundamentally new approaches to issues of bilateral cooperation. It should be noted in this relation that trade between the two countries increased in 2006 in comparison with 2005, amounting to 290m dollars. Azerbaijani imports grew by 40 per cent (198m), while exports by 113 per cent (92m). These figures certainly cannot completely satisfy the sides. The situation is far better in the area of investment - although not Azerbaijan's leading trade partner, the USA continues to be one of the largest investors in the Azerbaijani economy.

Incidentally, some experts stress that the driving force that has caused the change in the format of dialogue are the efforts of the new US ambassador to Baku, Anne Derse, who quite actively started working towards the development of trade-economic and investment  cooperation between the two countries.

Ensuring the sustainable development of our country and its successful transition to a market economy, fair and effective use of oil incomes and preserving Azerbaijan's important role as the main producer of energy resources and a connecting link in the East-West energy corridor topped the agenda of the first meeting of the EPC. In its dialogue with our country the USA traditionally attaches major importance to macroeconomic policy and development. A special emphasis is placed on the positive role of the State Oil Fund (SOFAR) in ensuring the long-term sustainable development of the Azerbaijani economy. In this context it is important to note that the first meting of the EPC resulted in the signing of an agreement between the US Trade and Development Agency and SOFAR on the allocation of a grant for the further institutional development of the fund (the grant is worth 0.8m dollars).

The problem of improving the trade and investment climate in Azerbaijan occupied a noticeable place in the work of the first meeting of the commission. The sides noted the major importance of this issue form the point of view of the development of the non-energy sector of the Azerbaijani economy. Regarding this issue, the USA calls on Azerbaijan to intensify in 2007 its efforts to implement the conditions required for joining the WTO and to speed up the adoption of a number of laws aimed at improving the investment climate in the country. Improving the transparency of law-making in Azerbaijan and the development of the national legislative system and the legal framework of the Milli Majlis was also looked into in this context.

Cooperation in the area of telecommunications and information technologies was another priority topic of the discussions held. Both sides recognize that this sector may play an important role in the diversification of the national economy. As is known, the USA and Azerbaijan signed a memorandum of mutual understanding in this area in September 2006. As a follow-up to this document, agreement was reached at the first meeting of the EPC to set up a permanent working group to monitor cooperation in the telecommunications and information technologies sector.

The development of trade is impossible without the effective and transparent operation of the customs service. The sides signed an inter-government agreement aimed at developing cooperation in this area and improving the transparency and effectiveness of the operation of the customs service. In order to stimulate commercial ties between the countries, the US side also expressed its readiness to send to our country a high-ranking trade-related delegation to look into opportunities for attracting US companies to Azerbaijan, implementing new trade projects, and improving the market conditions for opening a gateway for US goods and services to the Azerbaijani market. Following this visit, the US Department of Commerce intends to hold a number of presentations in Azerbaijan dedicated to our country's trade and investment opportunities.

The most important feature and a very promising result of the first meeting of the EPC was a new approach of the sides to the funding of joint projects. In particular, agreement was reached that the governments of both countries would jointly finance the implementation of programmes for the technical support of projects that will represent common interest. To this effect, it is planned to set up a permanent working group for joint funding which is to develop mechanisms and set deadlines and the extent of the sides' involvement in projects. The first recommendations from this group are to be submitted to the governments no later than 30 June 2007.

Along with the afore-said agreements, the working meeting of the EPC also resulted in the signing of five memoranda of mutual understanding in such areas as cooperation in developing the treasury, the implementation of a project on state investment policy, the reforming of the health care system, the development of the system of emergency medical services, and project for improving the effectiveness of parliament's work.

Overall, the new format of dialogue and cooperation between Azerbaijan and the USA is a reflection of actual positive quantitative and qualitative changes in the relations between our countries. The agreements reached at the recent meeting of the EPC reflect the operation of two interrelated tendencies. The USA aspires to strengthen its economic and investment presence in our country, while the Azerbaijani government is set to use this interest on the part of the USA in the interests of ensuring the sustainable development of the national economy, primarily its non-oil sector, and improving its effectiveness.