Baku, Warsaw aim at consistent diversification of economic cooperation Review by Caliber.Az

In recent years, Azerbaijan has been diversifying trade by expanding the geography of its non-oil exports, including the promising markets of Eastern Europe. Azerbaijani-Polish business relations, which have been dynamically developing in the post-pandemic period, are very promising in this regard. Along with the growth of trade, the most important direction of cooperation is the expansion of the investment component, including the involvement of Polish companies in joint projects in the Karabakh region, Alat free economic zone, and other industrial and agricultural clusters. The new vectors of business cooperation were discussed in Baku during the 8th meeting of the Intergovernmental Commission (IGC) on economic cooperation between Azerbaijan and Poland held on February 16.

Azerbaijani-Polish business relations are unique despite the lack of the oil and gas factor, trade turnover between the two countries is growing dynamically, and this rise has been observed even in times of global crises. For example, in 2018, Polish-Azerbaijani trade turnover amounted to $94.6 million with an increase of 11.4 per cent, and these figures increased slightly in the pre-crisis year of 2019. Moreover, mutual trade was dynamic and reached $113.8 million even in 2020 despite the pandemic restrictions so negatively affecting trade operations with other countries. Trade growth is almost unchanged in 2021 (just over $111 million), and preliminary figures show that this momentum did not stall last year either.

"Azerbaijan and Poland have great potential to increase trade turnover," co-chair of the Azerbaijani-Polish Intergovernmental Commission, Emergency Situations Minister Kamaleddin Heydarov said on February 16. - On the initiative of Baku and Warsaw, various events aimed at developing bilateral economic cooperation are held periodically, a road map has been signed between the countries to expand business ties."

What is the phenomenon of cooperation between Baku and Warsaw, which has managed to build up trade and economic ties that are so resilient to external stresses? We owe this to a certain extent to friendly inter-state relations and frequent contacts at the intergovernmental level, as well as developed humanitarian ties and friendly relations between the Azerbaijani and Polish peoples, which also help maintain the high level of economic ties. On the other hand, it is the fruit of efforts of the Export and Investment Promotion Agency (AZPROMO) and other structural subdivisions of the Ministry of Economy of Azerbaijan, which during the last four years have managed to establish a number of effective mechanisms positively influencing bilateral trade with Poland. The most important step in this direction was the opening of the Azerbaijan Trade House in Warsaw in 2018, followed in 2020 by agreements to establish a systematic supply of Azerbaijani food and wine products to the Carrefour retail network in several Polish cities. As a result, the Polish market is now considered to be the largest in the EU for sales of Azerbaijani agricultural products, including hazelnuts, juices, jams, canned fruit, tea, narsharab, wine, and brandy. Moreover, the supply of fresh fruit and vegetable products - tomatoes, persimmons, pomegranates and pomegranate juice - to the Polish market has recently expanded, with the Azerbaijani Trade House in Warsaw playing the role of a hub promoting products under the 'Made in Azerbaijan' brand to the EU neighbouring countries of Poland.

The fruitful cooperation has only intensified with the signing of a cooperation agreement between AZPROMO and the Polish Investment and Trade Agency. So, in recent years, the dynamics of exports of Azerbaijani industrial products - aluminium rolled products, cables, petrochemicals, and trial supplies of textiles were established, and last August coloured sheet glass produced by the Sumgayit Technopark was added to the list.

Nevertheless, today the lion's share in mutual trade turnover is accounted for by imports from Poland - mainly agricultural machinery, industrial and medical equipment, food, as well as pharmaceutical and cosmetic goods. Overall, Poland ranks sixth among Azerbaijan's trading partners in the EU.

So far, mutual trade has been the key driver of business relations between the two friendly countries. Recently, however, there has been a steady trend in Azerbaijani-Polish relations towards joint investment and transport ventures, as outlined in the Strategic Economic Partnership Roadmap, signed by the two heads of state in Warsaw in 2017. This trend was once again confirmed by the results of yesterday's eighth meeting of the Azerbaijani-Polish IGC: Baku and Warsaw are aimed at consistent diversification of economic cooperation, including the implementation of joint undertakings of an industrial nature. In particular, the sides discussed the agenda of the second meeting of the Azerbaijani-Polish working group on transport and logistics, established within the IGC, scheduled for March of this year. The main objective of the transport forum will be the implementation of joint actions towards the activation of the transit potential of both countries and the promotion of cargo transportation via the Trans-Caspian International Transport Corridor (TITC). Here it is appropriate to note that Poland was one of the first EU countries to join the transport-logistics projects implemented by Azerbaijan connecting Europe and Asia, e.g. multimodal transport along the TTIM, which is already being used by PKP LHS of Poland.

Two other important directions for the expansion of mutual business ties envisage the involvement of Polish investors and contractor companies in the works on the revival of the liberated territories of Azerbaijan as well as the participation of Polish businesses in industrial, logistic, and other projects in the Alat zone. In this regard, a memorandum of intent on cooperation between the Alat Free Economic Zone and INVEST-PARK of Wałbrzych's Special Economic Zone has been signed. This is an important signal indicating an increase in the participation of Polish capital in projects being implemented in Azerbaijan.

So far, only about 20 companies with Polish capital are registered in Azerbaijan, mainly in the fields of services and consultancy, trade, and banking. But in the near future, their number will increase significantly - talks have recently been underway for Polish companies providing advanced solutions in waste management, renewable energy sources (RES), energy efficiency, agricultural production, and the restoration of cultural heritage in the Karabakh region to enter the Azerbaijani market. Polish companies with advanced experience in shipbuilding are making plans for joint ship production with Azerbaijan in the Garadagh Industrial Park, as well as other ventures in the country's industrial clusters. At the same time, opportunities for tourism cooperation, joint furniture production with Poland, etc. are being explored.

Another promising direction could be Polish-Azerbaijani business ties in the sphere of high technologies and the formation of a start-up ecosystem. Poland is ready to share its innovations and such cooperation is extremely useful for the Azerbaijani IT sector, given that at the beginning of this year the Polish market had more than 5000 innovative start-up companies. These ventures will be implemented as part of Baku and Warsaw's business ties within the Visegrad Group (Czech Republic, Hungary, Poland and Slovakia) initiatives. This includes the V4-Azerbaijan Tech Bridge project, which will link start-up innovations in Azerbaijan with EU countries and enable the integration of modern technological solutions into the innovation ecosystem currently being created in the country.