This year, regular negotiations on Azerbaijan's membership in the World Trade Organization (WTO) will be held, reads the report "Business Environment in Azerbaijan 2021", presented at the recent Azerbaijan-EU business forum in Baku.

During the business forum in Baku, Economy Minister Mikayil Jabbarov was asked the relevant question. Answering the question, Jabbarov noted that the world trading system is moving from the traditional conjuncture to progress. Over the next decades, regionalization and globalization will be one of the key elements, he said, adding that the idea of ​​free trade will not become obsolete either, but values ​​may change. “Over the next decades, one of the key elements will be regionalization and globalization. This does not mean that the idea of ​​free trade will become obsolete. Values ​​may change. This does not mean that Azerbaijan or any other countries, being members of the WTO, will remain on the sidelines,” the minister said.

The minister noted that the reason why Azerbaijan is not a member of this organization is the country's institutional culture, traditions of compliance with standards, competition, free trade in goods and services.

Azerbaijan applied for WTO accession back in 1997 and then received observer status. However, over all these years, the negotiations failed to achieve mutually acceptable results. In accordance with the rules of the organization, the applicant country must first get the support of the majority of its members, of which there are 162 today.

Faktyoxla Lab. has tried to figure out what the complexity of the situation is.

Let's start with the fact that discussions about Azerbaijan's accession to the WTO have been going on for a long time. The gains and losses from accession can be measured in various ways, and the approach here is not limited to simply calculating the country's income. Azerbaijan has reasons not to hurry with its accession to the WTO. A number of countries neighboring Azerbaijan have joined the WTO and concluded an appropriate agreement with the European Union. And where did this lead their national economies? These countries have not received any serious investments in the real sector of the economy. Investments were and are fragmented: they are selective and directed to those areas that the EU needs.

President Ilham Aliyev has repeatedly stressed that, not rushing into the WTO, the state seeks to protect the interests of domestic producers: “At present, Azerbaijan has the highest quality products. When we fully provide ourselves in this area and when high-quality and competitive products form the majority in the processing industry of Azerbaijan, then I am sure we will be ready to join the World Trade Organization. If we do this today, our farmers will suffer losses, the production volume will be reduced, the Azerbaijani market will be replete with cheap and inferior products, and thus our economic development, in particular the development of agriculture, would not be at the proper level.”

In that case, of course, Azerbaijan’s cautious approach to this issue is very logical and justified.

Some critics accuse the Azerbaijani government of deliberately preventing the country from joining the WTO. But a noticeable increase in trade turnover, including with neighboring countries, gives reason to doubt this approach. Azerbaijan is successfully working both in bilateral and multilateral formats, especially in the energy and transport sectors.

According to experts, Azerbaijan has the right to subsidies from the WTO, and its upper limit can be up to 10% of the total agricultural production. Of course, this limit can be considered acceptable. However, it is doubtful that in the next few years Azerbaijan will receive a subsidy of this level from the state budget. Agriculture is the main occupation in Azerbaijan, and the fact that the majority of workers in this sector are engaged in economic activities for their own needs, and not for commercial purposes, suggests that the scale of this threat is large. In this case, it is known in advance that accession to the WTO will confront the agricultural sector of the country with most of the problems.

It must be understood that if Azerbaijan joins the WTO quickly and on the basis proposed by the European Union, then it is already possible to predict what negative consequences this step will entail for the non-oil sector and agriculture. By opening the borders for agricultural products from Europe, Azerbaijan may not only lose a significant export component of its economy, but even in the domestic consumer market, Azerbaijani products will be inferior to imported ones. Under these conditions, the policy of import substitution and the development of the non-oil sector, which is so much talked about in the country and around which fairly large projects are being developed, may eventually be called into question.

Currently, agricultural producers in Azerbaijan enjoy a significant amount of state subsidies and benefits. Existing preferences will be called into question if the rules of the World Trade Organization come into force, experts predict.

The WTO itself has been in crisis in recent years. In 2018, the US announced a possible withdrawal from the organization. And while the US is still there, ex-President Trump's stance has raised doubts among many WTO members. The trade war between the US and China creates a lot of problems. Many member countries have begun to impose duties on certain imported goods on their own and to sue each other. Let's remember the long-term dispute between Boeing and Airbus, scandals due to Russia's reduction of European pork imports and Ukraine's desire to revise duties on 350 types of goods, etc.

On the other hand, all the activities of the WTO contributed to the stratification of world trade, the world economy. That is, economically weak countries have become even weaker, and strong countries have further strengthened their competitive advantages. The activities of the WTO have led to an increase in the disproportion in international trade and the world economy as a whole.

Why did many countries seek to join the WTO? The fact is that outside the framework of the WTO, it became more and more difficult to reach the level of international trade, including receiving imports on some kind of preferential terms. Under the conditions of the world market, the refusal to join the WTO meant the need to strengthen the national real sector, and this is also not an easy task, especially for small countries. That is, such conditions were set that actually forced many countries to join the WTO in order to receive imports on more or less acceptable conditions. However, at the same time, the real sectors of the national economies weakened significantly. This happened in the vast majority of cases.

So, Azerbaijan believes that:

- Before joining the World Trade Organization, domestic producers, in particular, in the agricultural sector, must seriously strengthen.

- for most commodity groups, Azerbaijan needs to achieve import substitution;

- domestic business must learn to work in a competitive environment. The same applies to state-owned enterprises;

 - process of diversification of the non-oil sector of Azerbaijan should give its results and the priority sectors of the economy should demonstrate stable growth.

Considering all of the above, the cautious position of the Azerbaijani government on the issue of joining the WTO is adequate.