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Should Azerbaijan join World Trade Organization?

The World Trade Organization (WTO) came into being in 1995. It is the only global international organization dealing with the rules of trade between nations. The goal of World Trade Organization (WTO) is to ensure that trade flows as smoothly, predictably and freely as possible. It settles trade disputes between its members and supports the needs of developing countries. The organization has 164 member countries; however, Azerbaijan is not a member country. 

 

Before analyzing the consequences of the survey, let’s investigate the benefits of joining WTO. As an advantage WTO membership will permit Azerbaijan to fully exploit its economic capabilities and potential and to effectively develop internationally competitive non- oil sectors of the economy. Through the being a member, Azerbaijan will be a much more attractive country for Foreign Direct Investment (FDI) which will directly boost the economic and social growth in the country, as well as, the lowering the unemployment rate. As a WTO Member, Azerbaijani services and products will be provided guarantees in the form of automatic Most – Favored – Nation and national treatment in the markets of WTO member countries; thus, leading to new opportunities for Azerbaijani products and a significant likely increase in Azerbaijani exports. Other benefits of the WTO system include (i) greater and broader access for Azerbaijani consumers (including government, producers, and the general public) to a wide variety of high quality products and services at a competitive prices; (ii) modernization and stabilization of policy, legal, regulatory and institutional framework in Azerbaijan; and (iii) facilitation of potential free trade arrangements between Azerbaijan and other WTO members and implementation of the neighborhood policy framework with Europe. WTO accession will further Azerbaijan’s objective in completing its transition to an open market economy.

 

In the case of analysis of survey outcomes in the LinkedIn account of EKVITA, just less than a quarter of the people, who participated in the poll, voted for “NO” which claims that Azerbaijan should not join WTO. Nevertheless, more than 75% of them find the advantages of these institutions outweighed the disadvantages. According to the ultimate outcome, the majority of our audience considers that being a non-member of WTO keeps Azerbaijan back for several trades, moreover, entails delay of the agreements.

 

 

 

As a regard of the survey results these majority people voted for “YES” should consider that besides real benefits, WTO access will involve some real losses as well, something that should be both acknowledged and addressed.  Among these are:

  • adaptation regress as a result of the production of non-competitive goods and provision of services;
  • reduced receipts from customs duties;
  • increased expenses for patents for technology imports;
  • government spending to compensate for local industries driven out of business by foreign competition;
  • societal adjustments of expenditure patterns given new flows of imports; and 
  • reduced efficiency of investments because of changes in the relative efficiency of domestic and foreign producers given reduced customs duties. 

If WTO accession is to be a success, Azerbaijan must promote the development of the economy with an eye on the consequences of that accession.  We must not forget that WTO accession is not so much a goal as a means to achieving broader goals. Having become members, we can increase our integration into the world economy, achieve more liberalization in foreign trade, and simplify customs supervision procedures, among other things.  The negative aspects of joining WTO would undermine the several sectors in developing level, meanwhile, the abundant opportunities of acquiring membership may ignite the economy of Azerbaijan

Then, why Azerbaijan is still not a member country of WTO?

The WTO Accession for the countries as Azerbaijan is a political issue and the term of the accession process depends on the political will of the political guidance. Also, to get accession to WTO and be eligible to the status of membership, Azerbaijan is supposed to amend the legislation; reform to improve the transparency in business operations, emphasize the significance of intellectual property rights, investment adjustments, as well as, the barrier to sanitary and phytosanitary measure. The economic advantages of the WTO accession for member countries may not be displayed within a short term, but longer time. It means that the aforementioned process requires more time for forming the new institutions in the country which cause a prolonged procedure.

For more information on issues related WTO, you can click on our articles about the activities implemented and results achieved by EU-funded project “Support and Strengthening Capacity of the WTO Department of the Ministry of Economy of the Republic of Azerbaijan in the WTO Accession Negotiations” which EKVITA is also a consortium member. For a brief background the project has assisted the Government of Azerbaijan in improvement of the trade related legislation and its compliance with WTO rules and the best international practices.

The Authors : Turkan Yariyeva and Naila Mammadova

25 Jan, 2021