Չորեքշաբթի, նոյեմբերի 26, 2014 Ժամանակը Երեւանում 09:18

in English

Armenian Business Group Warns Of Customs Union Fallout

Armenia - Shoppers at a food supermarket in Yerevan.
Armenia - Shoppers at a food supermarket in Yerevan.
An Armenian business association has expressed serious concern over sizable increases in the prices of many goods that are expected to result from Armenia’s membership of the Customs Union of Russia, Belarus and Kazakhstan.

The Armenian government said on Thursday that it is mindful of the likely price hikes and is trying to minimize them in ongoing accession talks with the union’s executive body and three member states. According to Deputy Economy Minister Garegin Melkonian, Yerevan hopes that hundreds of goods will be exempt from the Russian-led bloc’s higher import duties.

The common duties apply to some 11,500 items imported to Russia, Belarus and Kazakhstan. More than 60 percent of them exceed corresponding tariffs set by Armenia, reflecting the latter’s traditionally liberal trade regime.

Gagik Makarian, chairman of the Armenian Union of Employers, warned on Wednesday that the Customs Union tariffs, if applied to Armenia, will push up the cost of many foodstuffs and consumer goods imported from the rest of the world. The landlocked South Caucasus country is heavily dependent on those imports.

Makarian estimated that retail prices of meat, dairy products, wheat, cooking oil, sugar, potatoes and other vegetables would rise by up to 15 percent. “The price of beef will rise by 5 percent … The price of fowl will rise by 15 percent,” he told journalists.

Makarian warned that many other essential goods would also be affected by similar price hikes. In particular, he said, the prices of non-Russian cars sold in Armenia would go up by at least 12 percent.

Makarian added that his business group will convey its concerns to the Ministry of Economy in a letter that will urge the government to seek tariff exemptions from the Customs Union. But he was skeptical about the likelihood of such concessions.

Deputy Minister Melkonian revealed, meanwhile, that the government has already asked the union to exempt as many as 850 items imported to Armenia from its protectionist trade policy. But he could not say whether Yerevan will succeed in clinching such sweeping concessions.

Melkonian expressed confidence, though, that Armenia will be allowed to continue taxing some imports with existing rates. “That there must be such a list [of goods] is not a matter of contention. Just how long that list will be depends on the outcome of the negotiations,” he told a news conference.

The government hopes to complete the accession process by May. Armenian officials insist that President Serzh Sarkisian’s unexpected decision to make Armenia part of the Customs Union will earn the country major economic benefits. Their statements to that effect have so far been short on specifics, however.

Critics say that Armenian membership of the union will not only push up consumer price inflation but also lower proceeds from import duties that account for a considerable share of Armenia’s state revenue. They also argue that the union’s tariffs are tailored to oil-rich Russia’s needs and economic interests.

Melkonian seemed to agree with the latter claim. “Yes, the Customs Union’s tariff system, namely the whole package of customs duty rates, is based on Russia’s package of customs duties,” he said.
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