Thousands of Armenian traders importing second-hand cars will face ruin if Armenia adopts much higher customs duties levied in the Russian-led Customs Union, an association representing them claimed on Wednesday.
Armenia will be obliged, after joining the trade bloc this year, to bring its trade legislation into conformity with the more protectionist policies pursued by its three member states: Russia, Belarus and Kazakhstan. Cars imported from third countries are among thousands of goods subject to higher Customs Union duties.
This fact is prompting serious concern from the Armenian Union of Car Importers, which claims to represent some 7,000 individual retailers specializing in inexpensive second-hand vehicles mostly manufactured in Europe, the United States and Japan. They account for the bulk of car sales in the South Caucasus state.
The business association estimates that their prices will triple if the Customs Union tariffs, essentially aimed at protecting Russia’s domestic auto industry, are enforced in Armenia as well. “Cars that are 10 to 15 years old and currently sell for $5,000-$5,500 [in the local market] would cost $15,000,” its chairman, Tigran Hovannisian warned at a news conference. With few Armenians able to afford such a price, this would force thousands of traders out of business, he said.
Hovannisian insisted that for a host of reasons they cannot switch to Russian-made cars or Western cars assembled in Russia, which will be exempt from import duties and therefore become cheaper in the Armenian market.
Members of the small business group echoed Hovannisian’s concerns. “If the import duties rise, who will buy my cars? How will I support my family?” one of them, Henrik Hayrapetian, told RFE/RL’s Armenian service (Azatutyun.am).
According to Hovannisian, the Union of Car Importers has appealed to the Armenian government to ensure that the Russian duties do not apply the Armenian car market at least in the interim.
The government said late last month that it is already seeking such exemptions for as many as 850 types of imported goods. It is not clear if vehicles and other transport equipment are among them. Also, officials admitted that Yerevan will not necessarily succeed in securing such concessions from the Customs Union.
The Armenian Union of Employers, another business association, has similarly expressed serious concern over the fallout from membership of a trade alliance which Moscow plans to transform into a Eurasian Economic Union next year. It fears that retail prices of imported meat, dairy products, wheat, cooking oil, sugar, potatoes and other vegetables will rise by up to 15 percent.
Economy Minister Vahram Avanesian acknowledged last week that Customs Union membership will trigger price hikes. But he insisted that the overall consumer price index will likely rise by only 1.5 percentage points.