ITC recognised for supporting Tajikistan in WTO accession preparations

The meeting was the inaugural session of the public-private dialogue on “Making the Most of WTO Accession: Financial Services Negotiations and Liberalization”, where participants commended ITC for its role in Tajikistan’s accession process.

In the World Economic Forum’s 2012 Trade Enabling Report for “Efficiency of the financial market” Tajikistan scored a poor 2.7 out of a maximum score of 7, ranking 109th out of 132 countries. Tajikistan’s exporters identified “Access to trade finance” as the sixth most problematic factor for exporting in a 2011 survey carried out by the World Economic Forum. The event attempted to help Tajikistan address these problems.

At the meeting, Mr. Dodarjon Zoirov, Head of the Foreign Economic Relations Department at Tajikistan’s Ministry of Economy and Development and Trade, praised ITC for its assistance in Tajikistan’s accession process and said he looked forward to ITC’s continuing role in the accession and the post-accession phase to ensure smooth and orderly implementation. He stressed the importance of ITC’s support, which has contributed to positively advancing the process of negotiation, and also acknowledged the importance of keeping the private sector informed of any developments.

The event, which was followed by a training session on “Getting Prepared for Competitive Financial Services: International Regulations and Practices”, was organized as part of the programme to implement WTO provisions and raise business awareness of WTO accession. This initiative builds on a series of activities which have been implemented through the Trade Cooperation Programme for Tajikistan, funded by the Swiss Government. The overall objective is to build the confidence of all stakeholders, particularly the private sector, in the WTO accession process, with a focus on services, the understanding of its implications and the dialogue between all stakeholders.

Maximizing gains from liberalization

Key speakers gave participants an overview of the potential benefits that financial sector liberalization can bring, the types of regulations that governments need to introduce to optimize gains from liberalization and the process of negotiating financial services in the context of WTO accession. Examples were provided of commitments made by and experiences of countries which have recently gone through the accession process. Stakeholders also discussed Tajikistan’s financial service liberalization commitments and whether it could contribute to creating an enabling environment for competitive and readily available financial services.

A one-day training session, attended by 40 representatives from the banking sector, gave participants a sound understanding of the good practices in financial sector regulation as well as international best practices on how to finance exports.

Mr. Juan Marchetti, Division on Services, WTO, explained to participants how financial development can increase economic growth and contribute to the alleviation of poverty. However, in order to maximise the benefits of financial services, Tajikistan needs to address the fragility of the intermediation functions of its banks, the risks stemming from the information asymmetry between the banks and their borrowers, as well as the impact of a potential failure of banks on the rest of the economy. These risks need to be taken into consideration when designing the policy and regulatory framework in Tajikistan, participants agreed.

The increasing role of foreign banks in all economies, as well as their motivations to break into new markets, was also discussed. Foreign banks can improve the efficiency of financial services within a country, due to increased competition, but the benefits in terms of access to trade finance also depend on factors such as the regulation of products offered by banks. It was suggested that regulators need to be vigilant about the origin of banks as, in some circumstances, foreign banks can create instability.

Preparing the business community for WTO accession

The ITC implemented component of the accession programme focuses on strengthening knowledge of the opportunities and challenges of WTO accession to advance negotiation capacities in the services sector area and to improve the understanding of all parties of the business implications of WTO membership. The objective is to prepare the business community to reap the benefits and smoothly adjust to the post-WTO accession environment.

The activities have been planned and implemented in close cooperation with Tajikistan’s Ministry of Economy and Development and Trade, with input from the Chamber of Commerce and Industry SMEs Association.

The programme began with a training session on “WTO Accessions and their Business Implications - Lessons from Other Countries”, held in April this year. It focussed on the WTO accession process, its perceived benefits and challenges, the lessons learned from other countries, the implications of accession for businesses and an update on the accession status of Tajikistan.

The programme then moved into the services area, with a training session on “Making the Most of WTO Accession: Services Negotiations and Liberalization”, held in May. The session provided background information on negotiating WTO accession service commitments, discussed the preparation of a Services Schedule for Accession, key insights from countries which have recently acceded and the implications of specific commitments. This was followed by a session aimed at fostering public-private dialogue between Tajikistan’s Ministry of Economy and Development and Trade and the private sector on Tajikistan’s services negotiations.

The latest programme activities concentrate on financial services and the implications for both the private sector and the government that greater liberalization and pro-competitive reform are likely to bring as Tajikistan accedes to the WTO.

Further programme in the next few years will include how to improve quality management and regulatory infrastructure, two key elements in the WTO accession process.