New EU trade benefits for Armenia are more political than economic in nature – Armenian expert (EXCLUSIVE)

YEREVAN, September 3. /ARKA/. The new EU trade benefits for Armenia are more political than economic in nature, Tatul Manasaryan, Doctor of Economics and head of the Alternative research center, told the ARKA news agency in an interview.

The EU Council supported the European Commission's proposal for temporary trade liberalization with Armenia, providing for the abolition of duties on approximately 80% of Armenian exports to the EU, with the possibility of introducing protective measures for the European market.

The expert recalled that, as of January 1, 2022, Armenia ceased to benefit from the GSP and GSP+ systems. This occurred after the country was classified by the World Bank as an upper-middle-income country for a specified period and ceased to meet the program's criteria.

"If the European Union is so concerned about Armenia, the Armenian economy, or increasing exports, then why didn't this whole story begin with the abolition of the GSP+ system?" the expert noted. According to him, in recent years, Armenia has brought a number of goods intended for export into compliance with European requirements and is already present in the EU market. He believes that the reasons for granting preferential treatment at the current stage are primarily political in nature and cannot be solely economic.

Manasaryan criticized the pace of Armenia's implementation of its obligations under the Comprehensive and Enhanced Partnership Agreement (CEPA) with the EU, stating that, in his opinion, a significant portion of the agreement's objectives remain unfulfilled.

The CEPA was signed on November 24, 2017, came into provisional application on June 1, 2018, and entered into full force on March 1, 2021. The EU and Armenia continue to implement the agreement, with both parties noting both the progress achieved and the remaining challenges. In particular, Manasaryan mentioned the issue of rebranding Armenian cognac, stating that this process, in his opinion, has been significantly delayed. He also mentioned other issues envisaged by cooperation with the EU, including the future of the Metsamor Nuclear Power Plant.

Moreover, the Armenian Ministry of Economy previously reported that "Armenian Brandy" had been chosen as the preferred new product designation, and that a two-year program to promote the new name and improve quality control mechanisms has been implemented since November 2024.

Noting the slow pace of implementation of many issues, the expert attributes the EU's decision to liberalize trade to the Russian factor.

"In my opinion, the European Union's decision also has political underpinnings. The Russian factor is present here, and it is likely the primary factor," the expert noted.

According to him, amid the emerging problems with the supply of Armenian products to the Russian market, the EU has announced measures to support Armenia and expand access for Armenian products to the European market. "We're talking about €50 million in aid, which, in my opinion, is incommensurate with the potential damage suffered by Armenian export producers. Armenia's agricultural exports to Russia alone amount to $700 million, while total trade turnover has exceeded $2.5 billion. This means that the deterioration of Armenian-Russian relations could cause significant damage not only to Armenia's export capacity but also to the economy as a whole," Manasaryan emphasized.

On June 4, the European Commission announced an immediate financial support package for Armenia totaling over €50 million. Its size was subsequently adjusted to €52 million: €34 million was transferred on June 19, and an additional €18 million was announced as the final portion of the package.

According to Manasaryan, the amount of this support is insufficient to cope with the scale of Armenia's potential economic losses in the event of prolonged restrictions on access to the Russian market.

The expert also recalled the EU's previously announced plans to mobilize investment for Armenia within the framework of the Economic and Investment Plan.

This involves the possibility of mobilizing up to €2.6 billion in public and private investment, rather than directly providing this amount to Armenia in the form of financial assistance or a grant.

According to Manasaryan, the EU's current trade preferences should be considered in a broader geopolitical context.

"Now, when they say that Armenia will be granted certain preferences, this was expected. These will be available to goods that must meet fairly strict European market requirements. As long as these requirements are met, much can change," the expert said.

Manasaryan believes that the political factor in EU decisions is linked, among other things, to broader competition for influence in the region and Russia's changing role in the South Caucasus.

He also pointed to the EU's own internal economic and political problems, which, in his opinion, limit the possibilities for further enlargement. According to Manaseryan, the European Union has its own problems, and it's unlikely Armenia will have the opportunity to join the EU even within the next decade or two.

Regarding restrictions on the supply of Armenian products to Russia

Since the end of May, Russia has been gradually introducing restrictions on the supply of certain products from Armenia, citing violations of phytosanitary requirements. The restrictions include flowers, mineral water, certain beverages and alcoholic beverages, vegetables, fruits, berries, grapes, potatoes, dried fruits, and later, live fish and fish products, as well as dairy products.

The restrictions also include a ban on the transit of products of Armenian origin through Russia to other EAEU countries.