The government will ask the Eurasian Economic Union (EEU) to continue to waive its hefty tariffs for used cars imported to Armenia in increasingly large numbers, Economic Development Minister Tigran Khachatrian said on Friday.
Armenia had to replace its traditionally liberal trade regime with more protectionist policies pursued by the EEU member states when it joined the Russian-led trade bloc in 2015. It was allowed to temporarily exempt around 800 types of goods, including key foodstuffs and fuel, from higher customs duties set by Russia, Belarus and Kazakhstan.
Import duties collected from these products are due to be raised to the EEU levels by 2020, meaning that they would become more expensive in Armenia. The tariff increase will be particularly sharp for second-hand cars imported from beyond the EEU.
Armenian car imports have grown rapidly in the last few years amid strong demand from not only local residents but also buyers from Russian and Kazakhstan, where such vehicles are more expensive because of the higher EEU tariffs.
This growth seems to be accelerating further in anticipation of the expiry in January 2020 of the trade preference enjoyed by Armenia. The Armenpress news agency quoted the chief of the Armenian customs service, Shushanik Nersisian, as saying that 9,481 cars were imported the country in April this year, sharply up from 4,324 cars in April 2018.
Khachatrian said the Armenia government hopes to secure a full or partial extension of the tariff waiver. “There has been no official application [to the EEU] yet,” he told a news conference. “But it’s a process that has to be launched and discussions regarding it are now in progress.”
The minister cautioned that getting the other EEU member states to agree to such an extension will not be easy. “If the [planned] renegotiation was only about Armenia’s internal market, its outcome would probably more predictable,” he said. “But as we know, this situation where customs duties on imported cars are lower here than in any other EEU member state leads people to register cars here and sell them there.”
“That is now visible,” Khachatrian went on. “In some cities of those states the number of cars with Armenian license plates is now so large that their citizens are wondering why these [import] taxes are collected in Armenia but not in their countries. Why? Because those duties are lower in Armenia. Now, as you can imagine, we have to argue during negotiations why this should remain the case.”