Opening Remarks
Thank you, Chair. Excellencies, ladies, and gentlemen,
Good morning. It is a great pleasure to join you today for this conference on Azerbaijan’s accession to the World Trade Organization.
Allow me to begin by expressing my deepest gratitude to Professor Adalat Jalal Muradov, Rector of the Azerbaijan State University of Economics, for hosting us so graciously. I would also like to acknowledge the distinguished representatives from the Government of Azerbaijan, the private sector, and academia for their participation. We also have the pleasure to have with us Ambassador Alparslan Acarsoy, Permanent Representative of Türkiye to the WTO and Chairperson of the Working Party on the Accession of Azerbaijan.
I am delighted to be in Baku at the invitation of the Government of Azerbaijan. It is clear that Azerbaijan is thinking seriously about WTO Membership again. Azerbaijan reactivated its accession process at the WTO last July with the first meeting of its accession Working Party in 6 years. This meeting, chaired by Ambassador Acarsoy, injected fresh momentum into a process that was initiated 27 years ago.
Becoming a WTO Member is not easy. The accession process is an active negotiation between existing WTO Members and the acceding government to determine the specific terms of entry. Applicants are required to make significant structural reforms, from reducing tariffs and non-tariff barriers, to phasing out export subsidies, altering how state-owned enterprises operate, publishing trade-related decrees, and establishing independent tribunals to review administrative action.
Reforms like these can be politically difficult. Nevertheless, analysis suggests that accession — and the reforms that go with it — pay substantial economic dividends.
WTO economists have demonstrated that members that went through the post-1995 accession process that Azerbaijan is undergoing — and the demanding reform commitments that came with it — registered substantially higher post-membership growth rates, and saw much more capital investment, than members who acceeded before 1995. They estimate that economies acceding to the WTO grew, on average, 1.5 percentage points faster than they would have without undertaking the reforms and commitments associated with accession.
The WTO membership process also contributes to significant improvements in the business environment. Countries that joined the WTO between 2004 and 2014 saw major progress in areas such as starting a business, getting credit, and trading across borders(1). On average, these countries improved their business regulations substantially, making it easier for local businesses to thrive. Accession-related reforms improve the business climate and reduce the costs of doing business, while contributing to levelling the playing field for all economic actors, including small and medium-sized enterprises.
Such findings are corroborated by real-world examples:
Officials from neighbouring Kazakhstan suggest that the services market access commitments they undertook as part of their WTO accession complemented their investment promotion policies to attract increased foreign direct investment into non-extractive sectors of the economy. This helped drive both job creation and economic diversification after Kazakhstan became a WTO member in late 2015. Foreign direct investment in Kazakhstan’s information and communication technology sector increased at an annual average rate of close to 18% between 2017 and 2023, contributing to a marked reduction in telecommunications prices and an increase in digital access. In fact, one estimate suggests that Kazakhstan has the second lowest average price for broadband in the world.
During Lao PDR’s accession process — another landlocked WTO Member, though much further away from here — it simplified and automated its border clearance procedures, in addition to making them more transparent through an online portal. The changes contributed to substantial decreases in time to import and export.
Stories like these abound. Analysis of countries that have gone through the accession process indicates that they tend to experience faster output and trade growth and receive more foreign direct investment. Participation in global value chains has also tended to accelerate in the years after accession.
We have every reason to believe that Azerbaijan will benefit similarly. A recent study by the Asian Development Bank(2), commissioned by Azerbaijan’s Ministry of Economy, showed that WTO accession could be associated with 9% gains in real GDP and even a 30-40% increase in tariff revenue — as increased trade volumes more than offset lower import duties. Inward FDI is projected to increase by as much as 95%, helping to support trade diversification and boost participation in global value chains. Moreover, accession is projected to support a 6% increase in real wage growth, indicating important gains for people in the labor market. The analysis also suggests that sectors like electrical machinery, agriculture, fishing, and food and beverages would be poised for substantial growth.
It is probably no coincidence that Azerbaijan is once again thinking about WTO accession, as it seeks to position itself as an attractive economic hub in a shifting geopolitical and economic context. Azerbaijan’s strategic location at the crossroads of the North-South and East-West trade corridors provides a unique advantage. However, to fully seize this potential, Azerbaijan will have to combine investments in hard infrastructure with investments in soft infrastructure – what we might think of as “trade policy connectivity”. The WTO Trade Facilitation Agreement contributes to such connectivity by encouraging measures like the harmonization of customs and transit procedures. With WTO accession, Azerbaijan would implement core reforms in this area. Full implementation of the WTO’s Trade Facilitation Agreement is projected to reduce trade costs by as much as 14.3%(3), according to WTO estimates. Such reductions are particularly beneficial for landlocked economies like Azerbaijan.
Broadening our lens beyond border logistics, Azerbaijan can use WTO accession as a tool to modernize and diversify its oil-and-gas reliant economy.
Let me conclude by saying that the journey to WTO accession is a collaborative effort that requires the concerted action of the government, private sector, academia, and partner institutions. Conferences like this one can make a substantive contribution to the overall endeavour. The WTO Secretariat stands ready to provide the assistance and support necessary to facilitate this journey.
Thank you for your attention, and I look forward to our discussions today.
Closing Remarks
Excellencies, as I observed earlier, Azerbaijan initiated its WTO accession process 27 years ago. Over that time, it has invested significant resources in WTO accession. The groundwork has been laid.
Since Azerbaijan filed its initial letter of application in June 1997, some 33 economies — big and small — have gone through the accession process and have emerged as active Members of the Organization. Two more new Members — Comoros and Timor-Leste — will be added in the coming months, following the signing of their Accession Protocols in February.
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