Economic news bulletin No 34, April 2019 He added that the date of the next meeting in Geneva with WTO members has not yet been established.

“For the Azerbaijani government, the main aspect is the quality of negotiations, the compliance of the agreements reached with the criteria Economic News Bulletin for economic development, the receipt Embassy of the Republic of of benefits provided for countries in to the the status of a developing country” he Swiss Confederation and said. Principality of Liechtenstein Kramburgstrasse 10, 3006 Bern Azerbaijan is negotiating on four main tel: +41 31 350 50 44 directions - goods (tariffs on fax: +41 31 350 50 41 agricultural and industrial products), e-mail: [email protected] trade in services, legislation improvement (bringing it in line with Macroeconomics WTO requirements) and agriculture support (subsidization). Talks on Azerbaijan’s accession to WTO in progress In accordance with the suggestion of the WTO secretariat, currently, The Azerbaijani government has sent Azerbaijan continues negotiations on new proposals - the country's accession to the responses to organization on a bilateral basis. So questions of far, the meeting of the Azerbaijani WTO member delegation with the WTO working states within the group was accompanied by both framework of negotiations on joining bilateral negotiations with the the World Trade Organization (WTO), organization’s member countries and said Mahmud Mammadguliyev, multilateral negotiations on Deputy Foreign Minister of agriculture. Azerbaijan. Azerbaijan began negotiations with “At this stage, negotiations with WTO WTO member states in 2004. member countries are conducted Currently, the country is in the process through correspondence. They send us of negotiations with 13 countries. As their suggestions, and we reply,” of today, negotiations have been Mammadguliyev said. 1

Economic news bulletin No 34, April 2019 completed and protocols have in , the EU Delegation to been signed with Turkey, Oman, the Azerbaijan said. United Arab Emirates, Georgia and . Azerbaijan is at the stage Reportedly, the discussions are taking of signing protocols with and place with the Moldova. participation of the EU Azerbaijan has recently implemented delegation a number of reforms, including 12 headed by strategic roadmaps for economic Representative development; introduced changes in of the European Commission for the regulation of trade, in the system Trade Petros Sourmelis. The European of import customs tariffs; improved Council adopted a mandate for the trade and logistics infrastructure. It is European Commission and the high expected that the implementation of representative for foreign affairs and the road maps will serve as the basis security policy to negotiate, on behalf for the successful accession of of the EU and its member states, a Azerbaijan to the WTO. comprehensive agreement with Azerbaijan in November 2016. After receiving preliminary results from ongoing economic reforms in the The new agreement should replace the country, which is expected until 2020, 1996 partnership and cooperation intensification of negotiations and agreement and should better take completion of the process of account of the shared objectives and Azerbaijan’s accession to the WTO challenges the EU and Azerbaijan face will be possible. today.

It is noteworthy that Azerbaijan has The agreement will follow the had an observer status at WTO since principles endorsed in the 2015 review 1997. In July 1997, the Working of the European Neighborhood Policy Group on Azerbaijan under WTO and offer a renewed basis for political Secretary was established. dialogue and mutually beneficial cooperation between the EU and EU, Azerbaijan mull trade issues in Azerbaijan. new agreement Currently, bilateral relations between Discussions on trade issues as part of the EU and Azerbaijan are regulated a new partnership agreement between on the basis of an agreement on the EU and Azerbaijan are underway partnership and cooperation that was

2

Economic news bulletin No 34, April 2019 signed in 1996 and entered into force in 1999. At present, reconstruction work at the Azerbaijan thermal power plant The new agreement envisages the (TPP) in Mingachevir city is being compliance of Azerbaijan’s legislation conducted at the most advanced and procedures with the EU’s most technological level in accordance with important international trade norms the instructions of the head of state. and standards, which should lead to the improvement of Azerbaijani goods’ Azerenergy OJSC has stated that access to the EU markets. comprehensive reconstruction work has already been carried out at the Creation of a common aviation area is sixth unit of the eight-unit an initiative of the European Azerbaijan TPP, which is the Commission and aims to open and biggest thermal power plant in the integrate aviation markets. This will South Caucasus that meets 43 percent lead to new opportunities for of the country’s electricity demand. consumers and operators, and, most importantly, to high standards in terms As a result of the replacement of all of flight safety as well as air traffic elements of the commissioned seventh management. unit, its capacity was raised from 250 to 310 megawatts. Industry The message says that in general, the Reconstruction of South Caucasus' three-year Rehabilitation Action Plan biggest thermal power plant for the TPP envisages a full underway restoration of turbines, generators, relay protection systems, workshops, Throughout history, the power substations, 330- and 500-kilovolt industry of transmission lines and installation of a Azerbaijan has new fire-prevention system. been considered to be a Also, a new bridge and a road through dynamically developing one. The the Upper Karabakh Canal are being electric power industry, along with the built, and the fire-prevention system oil and gas industry, plays a leading of underground water supply is being role in the economy of the country. It restored. also occupies an important place in the social infrastructure. To date, there After the large-scale measures, the are no settlements in Azerbaijan that capacity of the Azerbaijan TPP will do not have access to electricity. increase by 380 megawatts to 2,000

3

Economic news bulletin No 34, April 2019 megawatts and the reliable and stable generation. In January-March 219, operation of the power plant will be Azerbaijan produced goods and ensured. services worth 552.2 million manats ($324.9 million) in production, Touching upon electric power distribution and supply of electricity, industry, it should be pointed out that gas and steam. the construction of the Shimal-2 power plant with a capacity of 400 This makes 3.2 percent increase megawatts is nearing completion. Test compared to work is carried out every week at the the same plant together with the specialists period last from Mitsubishi. The Shimal-2 power year, plant will be commissioned this according to summer. The launch of the 400- the State Statistics Committee. Cost of megawaat Shimal-2 power plant is products produced in water supply, expected to become an important wastewater treatment and processing event in the history of power industry sector increased by 9.3 percent to 71.9 of the country. Azerbaijan fully million manats ($42.3 million). In the provides itself with electricity and past three months, the total electricity even exports it in large quantities. The production in Azerbaijan amounted to process of rehabilitation and 6,340.5 million kWh, which is 3.5 reconstruction of existing power units percent more than in the reporting has been launched around the country. period of last year.

Azerbaijan’s electricity production Compared to the same period of last amounted to 22.52 billion kilowatt- year, production at hydro power plants hours in 2018, thus showing an decreased by 11 percent to 295 increase of 3.4 percent compared to million kWh, while energy generation 2017. Electricity exports to , at thermal power plants increased by Georgia, Iran and Turkey increased by 4.1 percent to stand at the level of 175 million kilowatt-hours or 14.2 5,778.8 million kWh. In January- percent. March of this year, 31.8 million kilowatt-hours of wind power was Country increases wind power generated in Azerbaijan, which is 8.4 production times more than in the three months of 2018. During this period, solar power Aiming to lessen its dependency on production increased by 10.8 percent hydrocarbons, Azerbaijan, as many and amounted to 8.2 million kWh. other energy-rich states, now looking for alternative ways of energy

4

Economic news bulletin No 34, April 2019 The favorable geographic location and be 15 percent by 2020, 25-30 percent climatic conditions allow the by 2025 and 35-40 percent by 2030. widespread use of environmentally According to the report, wind power friendly alternative energy sources in maintains 59.2 percent (15,000 MW) Azerbaijan. share in total potential for renewable energy. It is followed by solar power- Aiming to lessen its dependency on 31.6 percent (8,000 MW), biomass 3.5 oil, Azerbaijan carries out a number of percent (900 MW), geothermal 3.1 measures for further development of percent (800 MW), and hydropower alternative energy sector. 2.6 percent (650 MW).

There are plans to implement a Agriculture number of projects totaling $2.3 billion in alternative energy. The Azerbaijani winery eyes to increase projects include a plant for production exports to Europe of biofuels (pellet fuels) in the Sabirabad district, construction of Increasing local exports further wind power plants in the Pirallahi promotes district, an agro-energy residential Azerbaijani complex in the Samukh district and products others. abroad as well as strengthens Construction of two wind power farms the non-oil worth $800 million and $408.9 sector in the county's economy. Aspi million in the Pirallahi district, as well Agro LLC producing wine in as a wind power farm worth $377.7 Azerbaijan’s Gabala city intends to million in the Khizi district are the export its products to more countries, biggest projects planned for Aygun Atayeva, Chief Sales Manager, implementation. said. "Presently, the company’s products are sold domestically and According to the Market Analysis exported to the EU countries," she Azerbaijan 2019, expansion of said. "The products under Savalan renewable electricity generation is brand are supplied to several estimated at 430 MW in 2018-2020, European countries and our goal is to 840 MW in 2021-2025, 925 in 2026- further popularize Azerbaijani 2030. products to promote the Made in Azerbaijan brand on the European However, the share of renewables in continent." total power generation is expected to

5

Economic news bulletin No 34, April 2019 Atayeva added that the steps towards the restoration of company needs the state support for vineyards and in the more sustainable propaganda of its country was the Law on Winemaking wine outside the country. adopted in 2001.

The chief sales manager stressed that To ensure sustainable development of presently, small volumes are supplied winemaking in the country, increase to Europe, but these supplies are the interest in wine production and stable. exports, the State Program on the development of wine growing in "Every year the company produces a 2018-2025 was approved in May 2018, million bottles of wine, while a certain which will facilitate the development part of this volume accounts for of wine tourism and increase loans export to Europe," Atayeva said. allocated to the wine industry in Established in 2007, Aspi Agro LLC Azerbaijan. The State Program uses the experience of Italian envisages that the export of wine from specialists in the wine production. Azerbaijan should increase fivefold by Modern Italian equipment produced 2025. by Della-Toffola company is used in the company. Winery occupies one of Azerbaijan plans to develop the first the most important places in the food wine tourist route in the history of the industry of Azerbaijan. The country is country by mid-2019. A new highly famous for its high quality specialized tourist route will pass varieties. The five major wine- through the wineries of the Absheron, growing regions of Azerbaijan are Ismayilli, , Gabala, Sheki and , Ismayilli, Gabala, Ganja regions. and Tovuz. Local grape varieties include White Shani, Derbendi, Nail, Tourism experts intend to pave the Bayan Shirey, Gamashara, Ganja Pink, route in such a way that within a few Bendi, , Black Shani, Zeynabi, days, foreigners would be taken from Misgali, Khindogni, Agdam one region to another, giving them the Kechiamjayi, Tebrizi and Marandi. opportunity to visit wineries where the legendary Azerbaijani alcoholic The share of Azerbaijan in the wine beverages are produced. In addition, production in the former Soviet Union tourists will get the opportunity to was always high. Nevertheless, the personally taste wine drinks. Anti-Alcohol Campaign in 1985 Azerbaijan also intends to connect it caused the destruction of the with the famous route, vineyards of more than 130,000 paving the way for tourists from Sheki hectares in Azerbaijan. One of the first to Kakheti, a Georgian region.

6

Economic news bulletin No 34, April 2019 Venlo in the Limburg Province of the Currently, about 40 winemaking Netherlands, which is considered one enterprises operate in Azerbaijan of the transport and logistics hubs of producing natural wine, sparkling Europe. Port of Baku, the province of wine, liqueur, brandy, vodka, ethyl Limburg and Dutch companies have alcohol, cognac, etc. Most of signed a memorandum of producers target Russian and understanding on cooperation. European markets as well as new markets for Azerbaijani wine, such as Memorandum envisages cooperation China. In addition, Azerbaijani wine with the Cabooter Group, SMART houses operate in foreign countries to Logistics Center, the Limburg promote national brands and their Developme export. The first wine house of nt and Azerbaijan was opened in China in Investment 2018. Company, Greenport Recently, local wine products have Venlo, KLG Europe, Northern been featured at Prowein 2019 Limburg Development Council, international exhibition in Germany, the Azerbaijan-Netherlands Business the world's leading trade fair for wine Hub and the Fontys University of and spirits. As a result of the Applied Sciences. discussions, Absheron Wine Company has already reached a preliminary After the signing ceremony, Director agreement on exporting its products to General of Baku International Sea Germany. Moreover, Naiqin Co- Trade Port, Taleh Ziyadov, noted that Tovuz Baltiya and Aspi Agro these agreements will help attract companies held talks on exporting Dutch and European companies to the their products to Germany, France and Port of Baku. the Netherlands, while Sharg Ulduzu and Agro-Azerinvest - to Norway, The sides also reached a preliminary Germany and China. agreement with the logistics companies operating in Venlo for the Transport first test container transportation along the Venlo-Istanbul-Baku-China route Baku Port starts cooperation with in May this year. Europe's leading logistics hub At the same time, in order to expand The Baku International Sea Trade Port bilateral trade relations, discussions has begun cooperation with were held on the opening of the companies operating in the city of

7

Economic news bulletin No 34, April 2019 European representative office of the million tons) accounted for transit Baku Port in Venlo. cargo.

As part of the agreement reached with In the first quarter of 2019, the the Fontys University, Baku Port volume of cargo transportation via the specialists will be involved in training Baku International Sea Trade Port and practical experience for a six- exceeded 1.03 million tons. More than month period in Venlo. 861,000 tons or 83.1 percent of all cargo transportation volume Baku International Sea Trade Port was accounted for transit. commissioned in 2018. Its territory is 400 hectares. The port can Tourism simultaneously receive up to 12 ships. Beekeeping tourism to be created in The Baku Port in Azerbaijan’s Alat Azerbaijan settlement is expected to become one of the leading trade and logistics hubs Azerbaijan eyes to create favorable of Eurasia. The capacity of the port is conditions 15 million tons of cargo, including for the 100,000 containers per year. It’s going development to increase to 25 million tons of cargo, of including 500 000 TEU with beekeeping completion of the 2nd phase. tourism which allows visitors and guest of the In the future, it is planned to create a country to get acquainted with rich free economic zone in the surrounding beekeeping traditions. areas, including the territory of the port. Azerbaijan Beekeepers Association plans to implement a joint project with The port in Alat is a transportation UN Food and Agriculture hub linking the west (Turkey & EU), Organization (FAO) to establish south (Iran & India) and north beekeeping tourism in the country, the (Russia). In addition, the port's head of the Association Badraddin location is linked to existing highways Hasratov said. and railways, connecting the port to the inland regions of the country. He noted that the European Union In 2018, the total volume of cargo intends to provide financial support to transportation at all terminals of the the project to be implemented in Port of Baku was about 3.8 million summer. tons, of which 84.5 percent (3.2

8

Economic news bulletin No 34, April 2019 "Within the framework of the project, create even greater natural it is planned to carry out a number of opportunities for the expansion of works on the basis of a beekeeping beekeeping. farm in Gakh region. The essence of Presently, about 6,000 people are beekeeping tourism is to create engaged in beekeeping in Azerbaijan. conditions for tourists so that they can Annual honey production in the follow the process of producing honey republic is 3,000 tons, and honey and other beekeeping products," he consumption is 5,000 tons. Most of said. bee families are located in Zagatala (17,097), Astara (12,429), Gakh The rich climate of subtropics, the (9,125), Lerik (8,669) and Balakan riotous diversity of flora and the (8,581). valuable qualities of local bees - these are the favorable natural conditions of New methods will be implemented to Azerbaijan, which contributed to the increase honey production in maintenance of the centuries-old Azerbaijan. Productivity is expected tradition of beekeeping in to double as a result of the installation Transcaucasia. of mobile bee pavilions, which will be acquired for farmers in the framework During the excavation in the Azokh of the “Project to strengthen the Cave, where one of the most ancient competitiveness of agriculture”. The settlements of the primitive man was use of new methods will result in 28 discovered, a bowl with the bee instead of 15 kilograms of honey from depicted on it was found, which once each hive. again proves that beekeeping has deep roots in Azerbaijan. In 2018, 3,000 tons of honey were produced in Azerbaijan. Moreover, Honey is used in the treatment of 65-70 percent of the country's many diseases in folk medicine as population is provided with honey well as in our daily lives. produced in the country.

Currently, Azerbaijan is doing its best For this year, it is planned to increase to contribute to the rehabilitation and production to 5,000 tons of honey, further development of beekeeping by which is 66.7 percent more than last creating favorable conditions for year. beekeepers. The negotiations are underway with There are about 600 species of honey various countries to study the foreign plants in Azerbaijan, of which almost market. The association is more 200, as a source of nectar and pollen,

9

Economic news bulletin No 34, April 2019 focused on Arab countries such as the UAE, in particular Dubai and Kuwait. Last year, Azerbaijan exported 8.3 tons of honey worth $ 71,500, which is 1.8 tons more than in the previous year. In particular, 96.4 percent of exported honey accounted for Japan.

10