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Akbar Novruz

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Agdam sat deserted for almost three decades, completely looted of any material of value, its houses standing as mere skeletons, its streets empty. The ‘before and after’ photos may be rather surprising even among the usual shocking images of post-conflict rebuilding, but they provide a good way of gauging how far things have come since 2020. At present, the Agdam Industrial Park houses 32 companies with a total investment of 145.8 million manats (85 million USD), providing about 1,000 jobs and, according to the latest news, producing safety shoes with trademark registration in all 27 countries of the EU. That last point may not seem very impressive on its own, but it’s important as an indicator of the kind of industrial park that Agdam hopes to be.

The only company from the park currently manufacturing specialized work shoes at its Agdam production unit since 2024, BAFCO Invest LLC has also become the first firm to register an EU trademark. Such an act of law means obtaining brand exclusivity on a single market basis, being able to participate in European government tenders, and establishing the necessary condition for an export business plan - legal protection of the brand name in a court of law. The company's range of products is specialized footwear that complies with EN ISO 20345 and similar international norms and is aimed at the European market, estimated to be worth approximately €4.5 billion a year, with the rate of growth amounting to around 4%, caused by the development of construction industry, legislation on work safety in industries and the necessity of investing in physical infrastructure following the pandemic period. The market of PPE, of which work footwear is a large part, is one of the most heavily regulated, yet demand-oriented markets in the world. In 2025 alone, 34% of all Azerbaijani non-oil exports originated from Izia-managed industrial zones, with exports valued at 1.2 billion manats (approx. 705 million USD). This represents a 13.4% increase year-on-year.

Potential market for Agdam Industrial Park: What can it offer to the EU?

The product range at the Agdam Industrial Park is not limited to what one would expect from a company involved only in reconstruction activities. Its residents have engaged in manufacturing equipment for ventilation and firefighting, metals and metalwork, building materials, roof insulation, pipes, electrical transmission installations, railway signaling installations, wallpapers, and safety shoes. A number of products mentioned above are well aligned with the European Union’s single market and not just on account of their niche value. Signaling installations for railways come into strong demand as the region undergoes an upgrade of railway transport within the framework of the Trans-European Transport Network project. Building materials, especially those meeting European quality standards under EN 13501 fire classes, are consistently scarce throughout Central and Eastern European countries, hindering investment in their reconstruction.

In addition to all of the above-mentioned benefits, the EU market offers a vast range of promising possibilities in various product categories related to the industrial prospects of Aghdam. Specifically, the safety and work footwear market already amounts to approximately €4.5 billion per annum and has been steadily increasing by about four percent each year due to high demands related to industries requiring labor-intensive workforces. Another sector of considerable importance is wallpaper and other decorative surface coatings, which amount to €2.1 billion per year and are slowly growing after the pandemic-related stagnation period, which indicates increased activity in construction and interior design. As for infrastructure-related products, railway signaling systems currently account for €6.8 billion and keep growing due to investment into the creation of new trans-European transportation networks. Moreover, the heating, ventilation, and air conditioning component manufacturing industry worth approximately €14 billion per year, is rapidly developing thanks to increasingly stringent energy-efficiency requirements. Finally, such broad categories as construction materials and roof covering are estimated at more than €45 billion and have proven their popularity within Central and Eastern European countries.

There is an equivalent set of EU regulations for every item produced in Agdam, which needs to be satisfied for the goods to enter into the market without obstruction. Compliance with CE marking, EN standards, rail equipment TSI regulations, and personal protective equipment (PPE) compliance cannot be considered mere requirements for export; they are essential conditions for accessing the EU market. EU trademark registration by BAFCO is a condition precedent for doing business in the EU market, but not a sufficient condition.

Now let us move forward to the bottom line...

At present, Azerbaijan enjoys the Generalized Scheme of Preferences (GSP) of the EU, an arrangement under which preferential or duty-free access to two-thirds of EU tariff lines is available to eligible developing countries. This is theoretically supposed to place Agdam's producers at a lower cost base compared with their counterparts in countries that do not have this privilege. But then again, the GSP alone is simply not enough, as it only lowers tariff rates without addressing the need for compliance. A company from Azerbaijan would still require its PPE footwear to be EN ISO certified even when exporting to Germany, but at least they will not be subject to the additional 4.3% duty.

The larger problem is that the negotiations between Azerbaijan and the EU are ongoing without a full trade agreement having been signed. Talks regarding an update to the bilateral economic arrangement began in 2017 but are on pause as of February 2022. While the EU continues to be Azerbaijan's most important trading partner, responsible for 41.2% of Azerbaijan's international trade volume and 63.3% of its exported goods, the basis of this trade partnership is entirely reliant upon hydrocarbons. As such, these goods do not require any trade agreements because the energy market determines the price, while the terms of sale are agreed upon through supply arrangements. On the other hand, the lack of a trade agreement makes it impossible to mutually recognize the results of conformity assessment, accumulate benefits with Georgian or Turkish goods via the Agdam industrial area, and initiate any regulatory dialogue.

BAFCO’s choice of EU trademark application may have been well timed, not accidentally, because a new window of opportunity was recently opened for further bilateral cooperation. Namely, on 16 April, Yalchin Rafiyev, Azerbaijan’s deputy foreign minister, had a meeting with Audrone Perkauskiene, deputy director at the European External Action Service in Brussels. They held talks concerning the negotiation of the new EU-Azerbaijan partnership agreement and the Partnership Priorities document. The next round of talks will take place in Baku early in June. As far as these talks are concerned, it seems obvious that their essence will be mostly political and energy-oriented (gas supply, the Middle Corridor, and South Caucasus peace). However, this is exactly the platform via which trade facilitation measures can be included in the future.

The Czech prime minister's visit to Azerbaijan on 27 April, which included a 50-company business delegation and ČEZ's pursuit of a long-term gas contract, adds a further dimension. Babiš specifically pointed out the desire of ŠKODA Transportation to form a joint venture manufacturing company in Azerbaijan. The produce-in-Azerbaijan-and-export-to-EU route could be the way in which Agdam manufacturers can overcome the issue of EU certification without having to bear all the expenses involved in getting independently certified for the EU market. Having a Czech partner in a joint venture not only provides capital and access to the EU market but also brings with it the experience of EU certifications. It would be profitable for Czech firms to manufacture goods at the industrial park, whose tax and customs exemptions saved residents 42 million manats in 2025 alone.

There is one aspect of the Agdam exporting narrative that does not belong in the realm of economics but merits mentioning nonetheless. While the "Made in Karabakh" trademark, alongside the "Made in Azerbaijan" trademark, has been cultivated by AZPROMO starting from 2024 and was one of the first trademarks received by inhabitants of Agdam Industrial Park, it has a distinct geopolitical value that its creators could neither desire nor evade. For potential customers from Europe who come from certain markets, the fact that the goods originate in Karabakh might well serve as an added value: rebuilding-associated sourcing, economic normalization after the conflict, and legitimate green zone certification.

In short, our aspiration is that this certification will not only prove to be sustainable in the long run but will also extend its benefits to other parks beyond just the Agdam industrial park. We envision a future where various parks can achieve similar recognition, leading to a broader impact within the region. Ultimately, breaking free from the persistent stereotype of being merely an "oil country" requires a concerted effort towards diversification and innovation in production. By investing in a variety of sectors and fostering diverse economic activities, we can cultivate a more resilient and dynamic economy that transcends the limitations imposed by our current identity.