International Trade Centre, Tajikistan

Маркази тиҷорати байналмилалӣ, лоиҳаҳо дар Ҷумҳурии Тоҷикистон

“WTO Accession by itself does not make a country rich or poor”

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Radio Liberty’s interview with SECO Deputy Head Mr. Nicolas Guigas:

Q: – The Government of Switzerland is considered as one of the main supporters of Tajikistan accession to WTO. Please, tell us, what this support was consisted of and what is your aim of supporting Tajikistan in WTO accession?

A: – It is true that Switzerland, through the State Secretariat for Economic Affairs (Ministry of Economy), has been the main supporter of Tajikistan accession to WTO. Switzerland has supported Tajikistan’s internal reforms and capacity to negotiate its accession under the best economic conditions for Tajikistan since 2001 through two programs:

a)  A first program focused on WTO policy advice and capacity building transfer implemented first by UNITAR from 2001 to 2004 and then, since 2005, by IDEAS Centre. This program was extended for the last time in 2010 and ended in June 2011 and then implemented by the International Trade Centre till Tajikistan accession to the WTO.

b)   A second program related to trade promotion policies in the agro industrial and textile sectors has been implemented since 2002 by the International Trade Centre (ITC). Within this program one major focus has been the assistance in establishing a National Notification Authority (NNA) and the National Enquiry Points (NEPs) related to Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary Measures (SPS).

Several external and internal evaluation/assessments of these programmes were undertaken and key recommendations showed that assistance on legislative aspects of the accession process, support provided for the multilateral and bilateral processes of negotiation were still very required.

Q: – Some experts believe that WTO accession will negatively impact to Tajikistan weak economy, i.e, results in the rise of prices and affects to vulnerable population of Tajikistan decreasing their purchase potential. How real are their prognoses? Is there any experience of countries similar to Tajikistan to negate these predictions?

A: – WTO accession aims at creating a conducive environment for economic development. WTO Accession by itself does not make a country rich or poor. An aim from WTO accession is to create long-term changes for the whole economy, not only for the short-term. The accession to WTO gives also the opportunity to an acceding country to apply a legislative set of rules in full compliance with international law which facilitates trade and investment opportunities. A study[1] of the effect of Vietnam’s WTO membership, for example, has found that new opportunities since WTO accession are institutional and policy reforms, the establishment of favourable investment and business environment, competitiveness improvement, commodity and service export market expansion. According to many economic experts, Vietnam’s economic position three-years after WTO accession, has improved.

Countries need to grow their way out of poverty, and open trade provides a way to accelerate this. WTO membership is a means of achieving better and fairer non-discriminatory access to foreign markets.

Q: –  The world known corporations, brands, banks will access to Tajikistan market after the country’s accession to WTO. Don’t you think, it will result in bankruptcy of Tajik companies and banks and they will lose even the local market and customers?

A: – Liberalization of trade in services, especially in infrastructure services such as telecommunications, finances, logistics, etc. accompanied by appropriate pro-competition regulations is an important quarter for attracting foreign direct investments into these sectors.  The service sector reforms triggered in the process of WTO Accession therefore results in enhancing the overall economic efficiency which helps in enhancing export competitiveness of agriculture and industrial sectors as well. Therefore, Tajikistan should be better off from domestic policy reforms undertaken in the run up to the WTO membership.

Tajikistan has ensured, during the negotiating process, that liberalisation is carefully calibrated to the needs of Tajikistan’s stage of economic development.

In the area of banking services, for example, Tajikistan’s commitment contains a number of important reservations that will, on the one hand, encourage foreign banks to participate in the Tajik market and on the other hand will protect Tajikistan’s interests. Cross-border services (ie without commercial presence) will be allowed only 8 years after accession, while foreign direct branches will be allowed only after 5 years. This should give the domestic industry a significant adjustment period. In addition, commercial presence for foreign banks will only be allowed through joint stock companies, with a maximum capital participation of 51%. This should afford protection for national banks. In addition, opening up of the banking sector will not result in a loss of prudential regulation as all WTO Members are quite rightly allowed to regulate for prudential reasons without infringing WTO rules.

For most other services sectors, foreign service suppliers may only enter the market through the establishment of a Tajikistan legal entity. This will ensure that any domestic regulation relating to particular services sectors will apply to such companies. For some sectors that are seen as more sensitive, such as construction, retail and certain auxiliary transport services, limitations have been made requiring a percentage of the labour force to be Tajik nationals.

Market opening does not mean that services will be completely deregulated. All WTO Members retain the right to regulate to achieve national policy objectives, and service companies expect regulation that promotes fair and effective competition while safeguarding national interests.  For example, in retail services, the market will only be opened up to allow the establishment of foreign large retail stores. Tajikistan would still be able to regulate the sector, eg through town planning by restricting location, and/or by limiting trading hours, in order to protect small scale Tajik retailers.

Q: – WTO Director-General Pascal Lamy said accession to the WTO will provide an open, transparent and non-discriminatory environment for trade in Tajikistan. What does mean “non-discriminatory trade”?

A: – “Non-discrimination” refers to the key WTO principle that WTO Members do not discriminate between one another – known as most-favoured nation (MFN) treatment. If a WTO Member opens its market to another Member, it opens its market to all WTO Members. While this means that Tajikistan’s WTO commitments are applicable to all WTO Members, it also means that other WTO Members have extended their market opening to Tajikistan. Tajikistan should therefore see more predictability and fairness in application of and other barriers to Tajik goods and services.

Q: – Won’t the WTO membership negatively impact to Tajikistan agricultural sector? As some countries had experience of negative impact from WTO membership to their agricultural sector.

A: – The Government of Tajikistan has very carefully negotiated commitments on agriculture to avoid any negative impact from WTO membership to the agricultural sector.

There won’t be any significant change to import tariffs on agriculture products on acceding to WTO. Moreover, Tajikistan will have enough policy space to support its agriculture sector for  the benefit of small farmers.

[1] Central Institute for Economic and Management, Center of Information and Documentation , Vietnam after Three Years of WTO Membership,

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