Azernews.Az

Admission to the World Trade Organization could bring down interest rates and tariffs in Azerbaijan, an international expert told a seminar on the country’s WTO accession in Baku on Tuesday.
Farhat Yovakim Farhat said accession to the organization would mostly affect the services, banking, insurance and communications sectors, and have a relative impact on agriculture. In the backdrop of ongoing competition in the domestic market, prices are expected to go down in Azerbaijan. For instance, prices of butter could be halved, while those for bananas could decrease by up to 30%. Also, interest rates charged by banks would be reduced to 10%.
Farhat believes monopolies and companies working inefficiently could be hit the hardest by WTO admission. The main risks, however, concern potential reductions in employment levels, the ICT sector and producers that rely on imported raw materials.
Farhat said that, as part of the US Agency for International Development (USAID) program on supporting trade and investment reform in Azerbaijan, a project has been developed in cooperation with government agencies. Under the project, projections have been drawn up while taking into consideration a reduction of duties and tariffs by up to 50% after Azerbaijan’s WTO admission. "According to the projections, within two years after the WTO accession, non-oil sector production is to increase 2.4%, and the demand for imported goods resulting from the reduction of duties is predicted to rise by about 8%. Furthermore, the tax rate charged for Azerbaijani goods abroad will be lowered to 9% from the current 13%. Sales of domestic producers are expected to go down 1%, but increased exports will raise the GDP by 1%. Interest rates of banks are expected to decrease by around 5%, which will boost entrepreneurship, said Farhat.
According to him, with WTO admission every country determines its "sensitive products" to protect the domestic economy.
"During the discussions Azerbaijan submitted about 70 such products, with most of them being agricultural goods. WTO members disagree with this.
"Under WTO practices, 10 types of goods are accepted at most. Countries are able to take due action if problems emerge with production, imports and exports of those goods, which are vital for their economies."
According to Yovakim, the countries that Baku is negotiating with are mainly calling for a reduction of customs duties in Azerbaijan.
Elkhan Mikayilov, an official of the USAID trade and investment reform program, said WTO membership would reduce the role of monopolies and state-run enterprises in the Azerbaijani economy. He went to elaborate on other possibilities.
"This would lead to a decrease in inflation. The domestic market would be regulated by the rules of trade. Also, with WTO membership drastic changes would occur in the area of standardization. Thus, domestic standards would have to be brought into compliance with member states’ standards."
Mikayilov said the Azerbaijani government was pursuing a cautious policy with regard to WTO admission, which is the right choice from several viewpoints. "The main argument here is that, upon admission to the organization, the domestic market’s becoming dependent on foreign markets would be prevented."
Mikayilov noted, further, that the Azerbaijani government has done 60% of the work required for WTO accession, "but the most challenging 40% remains." He added that the process of Azerbaijan’s admission could be finalized in two to three years "if the government puts forth political will."
The WTO, which was established in 1995, comprises 153 countries. 28 other countries are currently in the process of admission. Azerbaijan has had the status of observer in the organization since 1997.*