Robert Kocharyan skeptical about economic advantages Armenia may have from its Customs Union membership

Robert Kocharyan skeptical about economic advantages Armenia may have from its Customs Union membership

YEREVAN, February 25. /ARKA/. Robert Kocahryan, the second president of Armenia, said in an interview posted on his website that unlike the country's present authorities, he is not optimistic about economic advantages from Armenia's membership in the Customs Union. 

In early September, Armenian President Serzh Sargsyan and his Russian counterpart, Vladimir Putin, made a joint statement, according to which Armenia has decided to join the Customs Union and to take part in formation of the Eurasian Union in the future.  The announcement came as Armenia was poised to sign the Association Agreement with the European Union aimed at making European Union’s ties with Ukraine, Armenia, Moldova and Georgia closer.

Kocharyan’s skepticism is grounded on the argument that economic developments are slow-response processes and precipitous twists are harmful to them.  

“People are building their businesses for years being guided by current rules, and time is needed to restructure them,” he said. «Some businesses will improve their positions, some will be affected and others will fail to survive. A deep and open analysis of Customs Union countries' markets on all groups of goods is needed to foresee possible consequences. Businessmen and farmers should know in what areas they may face problems and what areas are promising. This will also help banks and credit organizations in managing financial resources more effectively and with less risks.»

The former president said that Russian and Armenia, taking into account things in their economies, long years showed different approaches in customs policy, and these approaches have served as bases for the two countries’ customs codes.  

The Customs Union’s approaches are based on the Russia’s customs code, and question is for what reason Armenia should increase customs up to Russia’s levels whether Armenia will manage to reverse its approaches? 

Kocharyan also said that the European Union is likely to revise the system of preferences (GSP+) in trading with Armenia, and EU countries’ ambassadors are already giving appropriate hints. 

“Problems will appear also in the World Trade Organization when already decided customs duties are changed, and this change is unlikely to be avoided,” he said. «This will be followed by return measures to our goods. It is difficult to say how this will impact Armenia's economy and the country's long-term investment attractiveness.»

As another problem, Kocharyan pointed out the increase of prices for imports from the countries outside of the Customs Union. «Volumes will be considerable, given these goods' dominance at the consumer market and the level of Armenia's trade balance deficit,» he said. «Formula is simple here – if you increase customs, prices in stores rise, or these goods are replaced with similar from the Customs Union countries, if any. »

The former president argued that one way to curb a dramatic price hike in Armenia is to levy the current import duties on a huge list of goods and synchronize it gradually with stage-by-stage drop in import duties as part of Russia’s commitments to WTO. 

«And this depends on the results of negotiations with all those Customs Union member countries who will put forward return demands,» he said. «This is a time-consuming process of congruence of interests, and any hurry may cause undesirable consequences.»

“I deliberately refrain from speaking about the reputational losses from which Armenia’s accession to the Customs Union began and which puzzled our European partners… Russia’s reaction was quite predictable. So, we have what we have. I wish the accession to the Customs Union would be smooth, with minimum geopolitics and maximum respect for the long-term interests of the country’s economy. Any miscount can strike hard at Armenia’s people.” 

A roadmap to Armenia’s accession to the Customs Union was upheld on December 24, 2013 in Moscow at a session of the Supreme Eurasian Economic Council. 

On February 3, the Armenian government made public the roadmap. The 249-page document posted on the government’s website lists 262 administrative and legislative actions concerning 20 areas of government policy. --0----

16:48 25.02.2014

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