According to some media reports, the European Union (EU) and Azerbaijan have different opinions about the new agreement. According to the publications, the parties could not agree on trade, energy, entry into a market, government procurement, promotion of local goods.
Report informs, the European Union has put forward demands to Azerbaijan that meets their own interests on many socially significant issues.
For example, the EU wants to limit government subsidies. Interestingly, Europe has long used subsidy mechanism to ensure its economic development and competitiveness of individual sectors. Even today, there are subsidies in number of sectors.
What will restriction of subsidies give Azerbaijan?
Restricting subsidies will have a major impact on key sectors of the country’s economy, in particular on agriculture. Farmers in Azerbaijan are exempt from paying taxes. There is a large number of subsidies for the promotion of the agricultural sector, ensuring competitive production, meeting domestic demand through local products and increasing export potential. This is one of the most important tools to ensure the further strengthening of the private sector, in particular, the already formed class of entrepreneurs. Given that about 40% of the population is engaged in agriculture, the elimination of tax incentives and subsidies can lead to economic difficulties and social problems. Incomes of farmers will be reduced, it will be unprofitable to engage in agriculture, as a result, employment in this area will decrease. All this should be considered for the interest and welfare of the citizens of the country. This is one of the main reasons why the negotiations have slowed and even, in the opinion of some experts, reached an impasse.