PRESIDENTIAL DECREE ON AZERBAIJAN’S FOREIGN TRADE

 

SOURCE:  U.S.COMMERCIAL OFFICE, BAKU, AZERBAIJAN, December 1999

A DECEMBER 1996 PRESIDENTIAL DECREE ESTABLISHES THE FRAMEWORK FOR REGULATION OFAZERBAIJANI FOREIGN TRADE, REPLACING EARLIER LAWS AND REGULATIONS. THE DECREEADDRESSES FOUR KEY AREAS OF TRADE REGULATION: 

1)    IMPORT: ADVANCE PAYMENTS FOR IMPORTED GOODS AND SERVICES AREPROHIBITED AND IRREVOCABLE LETTERS OF CREDIT ARE ESTABLISHED AS THE MAJORPAYMENT INSTRUMENT; 

2)    EXPORT: CONTRACTS ARE AUTHORIZED ONLY UPON ADVANCE PAYMENT OROPENING OF AN IRREVOCABLE LETTER OF CREDIT; 

3)    BARTER TRADE: MUST BE COMPLETED WITHIN 90 DAYS; AND 

4)    CONTROLLED/LICENSED GOODS:  THE DECREE SPECIFIES THOSE GOODS REQUIRING ADDITIONALLICENSING. 

UNDER THE TERMS OF THE DECEMBER 17, 1996 PRESIDENTIAL DECREE "ON FURTHERDEVELOPMENT OF FOREIGN TRADE REGULATION," ALL FOREIGN TRADE OPERATIONS AREALLOWED UNLESS SPECIFICALLY ADDRESSED IN THE TEXT OF THE DECREE.  THE MAJOR RESTRICTIONS ESTABLISHED BYTHE DECREE ARE OUTLINED BELOW.  INADOPTINGTHESE PRINCIPLES, THE GOVERNMENT OF AZERBAIJAN LIBERALIZED FOREIGN TRADE ANDPROVIDED A BETTER ENVIRONMENT FOR ITS CONDUCT. THE DECREE REPLACED ALL FORMERGOVERNMENT REGULATIONS AND INSTRUCTIONS CONCERNING FOREIGN TRADE OPERATIONS. 

 

# IMPORT OPERATIONS 

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ALL IMPORT OPERATIONS NOT REQUIRING SPECIAL LICENSING(LISTED IN PARAGRAPH 9 OF THE DECREE) OR USE OF STATE GUARANTEES WILL BEIMPLEMENTED THROUGH A FILING PROCEDURE WITH LOCAL CUSTOMS AGENCIES.  THE DECREE SUBJECTS IMPORTERS TO THEMINISTRY OF FOREIGN ECONOMIC RELATIONS (MER) GENERAL IMPORT PRICE REGULATIONWHICH ESTABLISHES MAXIMUM AND MINIMUM PRICES FOR MANY IMPORTED GOODS. MER. MUSTAPPROVE IMPORT CONTRACTS AT PRICES OUTSIDE MER.'S LIMITS. FOR IMPORTERSPURCHASING GOODS AND SERVICES BASED ON CONSIGNMENT AGREEMENTS, THE PRINCIPLESALLOW CONVERSION OF LOCAL CURRENCY INTO HARD CURRENCY AT LOCAL CURRENCYEXCHANGES AND SUBSEQUENT PAYMENT TO THE CONSIGNOR. 

 

AZERBAIJANI COMPANIES ARE PROHIBITED FROM MAKING ADVANCEPAYMENTS TO FOREIGN PARTNERS FOR IMPORT OF GOODS OR SERVICES.  U.S. COMPANIES EXPORTING TO AZERBAIJANSHOULD REQUIRE THE BUYER TO OPEN A LETTER OF CREDIT AS A PAYMENT INSTRUMENT.MER CAN AUTHORIZE ADVANCE PAYMENTS FOR EXCEPTIONAL CASES WHICH ARE NOT DEFINEDIN THE TEXT OF THE DECREE. 

 

# EXPORT OPERATIONS 

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THE DECREE ESTABLISHES A LIST OF GOODS ALLOWED FOR DIRECTEXPORT ONLY, ON CASH TERMS WITH CREDIT AND CONSIGNMENT AGREEMENTSPROHIBITED.  ITEMS LISTED AREPETROLEUM AND PETROLEUM PRODUCTS, ELECTRICAL ENERGY, NON-FERROUS METALS, ANDRAW COTTON.  FOR  UNLISTED GOODS, AN ENTITY MAY ENGAGE INEXPORT ON A CREDIT OR CONSIGNMENT BASIS AFTER FILING A CONTRACT WITH MER OR THELOCAL CUSTOMSAGENCY.  A FIRM THIRTY PERCENT ORMORE OWNED BY THE STATE SUBMITS ITS EXPORT CONTRACTS TO MER. FORREGISTRATION;  OTHER BUSINESSENTITIES MAY FILE WITH LOCAL CUSTOMS AGENCIES.  FOR CONSIGNMENT EXPORT CONTRACTS, EXPORTERS, BOTHSTATE-OWNED AND PRIVATE, ARE REQUIRED TO COMPLETE SALES, INCLUDING COLLECTIONOF ALL DEBTS, WITHIN 180 DAYS OR RECOVER ALL OF THE EXPORTED PRODUCT. HOWEVER,IF A STATE-OWNED FIRM PRODUCES THE CONSIGNED GOODS AND A NON-STATE FIRM EXPORTSTHEM, THE EXPORTER MUST PAY THE CONTRACT VALUE OF THE EXPORT TO THE PRODUCINGFIRM BEFORE EXPORT CAN OCCUR. 

 

NO EXPORT WILL BE ALLOWED WITHOUT EITHER FULL ADVANCE PAYMENTOR OPENING OF AN IRREVOCABLE LETTER OF CREDIT AT A DESIGNATED AZERBAIJANI RANKFOR THE FULL EXPORT VALUE UNLESS SPECIFIC INSTRUCTIONS ARE PROVIDED IN THE TEXTOP THE CONTRACT (CONSIGNMENT, BARTER, CREDIT EXPORTS). 

 

# BARTER OPERATIONS 

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TRADERS MAKING BARTER CONTRACTS MUST BOTH REGISTER THECONTRACTS WITH MER. AND FILE THEM WITH THEIR LOCAL CUSTOMS AGENCY.  THE PRINCIPLES ESTABLISH A 90-DAY TERMLIMIT FOR BARTER TRANSACTIONS.  IFA BARTER TRANSACTION IS NOT COMPLETED WITHIN THIS TIME LIMIT, THE AZERBAIJANIPARTY MUST INSURE RETURN OF THE RESOURCES IN MONETARY FORM TO A BANK INAZERBAIJAN IF THE PULL VALUE OF THE EXPORT IS NOT RETURNED TO AZERBAIJAN INMONETARY OR COMMODITY FORM WITHIN 90 DAYS, THE AZERBAIJANI PARTY WILL BE LIABLEAS A LEGAL ENTITY FOR CONCEALING INCOME PROM THE STATE IN ACCORDANCE WITH THELAWS OF AZERBAIJAN. 

 

# GOVERNMENT-CONTROLLED AND -LICENSED FOREIGN TRADE OPERATIONS 

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ATTACHED TO THE DECREE IS A LIST OF GOODS WHOSE EXPORT ORIMPORT MUST BE IMPLEMENTED EXCLUSIVELY THROUGH THE CABINET OF MINISTERS, I.E.AN OFFICIAL DECISION OF THE CABINET IS REQUIRED TO LEGALIZE THE CONTRACT. THISLIST INCLUDES ARMS, WEAPONS, MILITARY EQUIPMENT, AND RELATED PRODUCTS; NUCLEARMATERIAL, EQUIPMENT, TECHNOLOGY, SPECIAL NON-NUCLEAR MATERIAL, RADIOACTIVE SOURCES;NARCOTICS ANDCHEMICAL TOXINS; AND SOME TYPES OF SCIENTIFIC AND TECHNICAL INFORMATION RELATEDTO MILITARY PRODUCTION. 

 

ANOTHER LIST IDENTIFIES THOSE GOODS AND SERVICES WHICHREQUIRE MER APPROVAL AND REGISTRATION PRIOR TO ENTERING INTO A FOREIGN TRADE CONTRACT.  MER. WILL COORDINATE WITH THEAPPROPRIATE MINISTRIES AND STATE AGENCIES OF AZERBAIJAN IN MAKING ITSDECISION.  NO CREDIT OR CONSIGNMENTAGREEMENTS ARE ALLOWED FOR EXPORT OF THESE GOODS.  THE SPECIFIED GOODS AND SERVICES INCLUDE: STEPPE ANIMALS, WILDPLANTS, AND BONES FOUND IN ARCHEOLOGY RESEARCH; RAW MATERIAL FROM WILD PLANTSAND ANIMALS FOR PRODUCING MEDICINE, ANIMAL VENOM; ON-SHORE AND OFF-SHORETERRITORY OF AZERBAIJAN; INVENTIONS AND THE RESULTS OF SCIENTIFIC RESEARCH;WORKS OF ART, COLLECTIBLES; CHEMICALS FOR PLANT PROTECTION; MEDICINE FORVETERINARY USE AND RELATED BIOLOGICAL PRODUCTS; ALL MEDICINES AND MEDICALSUPPLIES; CONSTRUCTION AND RECONSTRUCTION SERVICES; LEASING OF FOREIGNTRANSPORTATION EQUIPMENT; INTERNATIONAL POSTAL AND COMMUNICATION SERVICES;LEGAL SERVICES. 

COMPANIES ENGAGED IN EXPORT AND IMPORT OF DRINKING SPIRITSAND ALCOHOLIC BEVERAGES, EXCEPT BEER, AND TOBACCO PRODUCTS SHOULD APPLY TO MERFOR A LICENSE. 

 

# REQUIRED DOCUMENTATION 

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U.S. COMPANIES EXPORTING TO AZERBAIJAN MUST SUBMITCERTIFICATES OF ORIGIN, QUALITY, AND IDENTITY FOR THE PRODUCT EXPORTED TOINSURE PROMPT PROCESSING OF THE TRADE AUTHORIZATION. THE DECREE ESTABLISHESTIME LIMITS FOR MER AND CUSTOMS ACTION. FOLLOWING DOCUMENT SUBMISSION, MER MUSTCOMPLETE THE REGISTRATION PROCEDURE FOR THE CONTRACT IN THREE DAYS AND THELOCAL CUSTOMS AGENCY MUST PROCESS THECUSTOMS AUTHORIZATION WITHIN TWENTY-FOUR HOURS.