EURASIAN INTEGRATION IS VERY ATTRACTIVE FOR ARMENIA

In an exclusive interview with ARKA news agency Viktor Spassky, the
director of the Integration Development Department of the Eurasian
Economic Commission, speaks about Armenia's Eurasian integration
process, economic advantages and risks stemming from its decision to
join the Customs Union and to refuse to initial an association and
deep and comprehensive free trade area agreements with the EU.

ARKA - Mr. Spassky, Armenian deputy foreign minister Shavarsh Kocharyan
said recently that Yerevan would be ready sign the agreement on
joining the Customs Union until early next February. Do you think
Armenia will be able to accomplish all the procedures by that time
and become one of the founders of the Eurasian Economic Union ?

V. Spassky - I would not like to speak about an exact time because
Armenia will have to go through a set of procedures as stated by the
heads of Russia, Kazakhstan and Belarus at their latest meeting in
Minsk on 24th of October. Armenia and these three countries signed
a memorandum defining the form of interaction and as far as I know
everything goes according to the schedule. The presidents decided
also that at the next meeting of the Eurasian Economic Commission's
board a task force should set up with representatives from Belarus.

Kazakhstan, Russia and Armenia to draft a "road map" for Armenia's
accession and once it is ready, it should be implemented as quickly
as possible, but the pace also depends on the Armenian side that
should approve the entire regulatory framework. Some documents must
be ratified by the parliament, others by the government and president.

So, it is necessary to determine the number of documents to which
Armenia will join. It is a common and concrete work. First and foremost
, it is Armenia's parliament that will have to do a serious amount
of work.

ARKA - What kind of documents do you mean?

V. Spassky - I would divide the documents that needs to be
conceptualized into two categories -one part should be incorporated
into the bloc's agreement, which must be signed by May 1, 2014, and
the second part are regulations that are connected with the Customs
Code and international agreements. There is some specificity for
Armenia and once this work is done we can talk about real accession.

ARKA - What are the benefits and risks for Armenia stemming from its
membership in the Customs Union.

V. Spassky - When talking about any economic integration process, it
is necessary to consider all options. The first option - Armenia joins
the Customs Union and the Common Economic Space. We must see which
are the benefits for Armenia in this case. Under the second option
Armenia joins another integration alliance. Then, we need to compare
both options. This will allow analyzing and adopting the most feasible
solutions that meet the aspirations of the Republic of Armenia. I am
absolutely convinced that the first option is the best for Armenia -
it really is a very interesting integration project, the first post-
Soviet integration bloc in which absolutely all are equal. All the
decisions are accepted at the highest level by consensus. The Eurasian
Economic Commission has much in common with the European Commission,
because the latter has gained serious experience. The commission takes
into account the interests of all members regardless of their size,
GDP and population number.

The highest level of the commission is made of three vice-premiers,
who also adopt decisions by consensus. If someone is against no
decisions are made. There is the permanent body -the board, composed
of nine ministers - three from each country. Decisions are taken
by 2/3 majority. A board's decision may be revised by the supreme
body - the Council that also adopts decisions by consensus. I want to
emphasize that in this sense our commission differs from the European
Commission. Therefore, in this respect the interests of Armenia will
not be infringed in any way. Armenia will be a full member of the
Customs Union, which has a total of 170 million inhabitants, while
Armenia only 3.5 million

ARKA - But if Armenia had chosen the Association Agreement with the EU?

V. Spassky -An EU-associated member country has no rights, it has
only obligations. Therefore, unlike the Customs Union, it is an
asymmetric form of interaction. Frankly, I'm not familiar with the
details of Armenia's associated membership documents, but am well aware
of Ukraine's which were published a long time ago and anyone could
explore them. I have been engaged in foreign economic affairs for 40
years, but I have never seen such an unequal international agreement .

Of course, decisions are made by sovereign states. But most importantly
we are talking about economic integration and the Customs Union,
the Eurasian Economic Space and the Eurasian Economic Union , on
which we are currently working on are all purely economic projects.

They have no politics-related issues' they have only specific economic
issues and the representatives of Armenia must understand what the
membership gives economically.

ARKA - And what are the advantages of Customs Union's membership?

V. Spassky - Economic integration includes four freedoms - freedom
of movement of goods, services, capital and labor. For a proper
assessment we need to consider actions in each direction. Let's start
with clear things like the movement of goods. The statistics says that
in January-September this year Armenian exports increased by 10 %;
exports to Russia increased by 25%, while exports to EU dropped a
little. Armenian exports to the Customs Union member countries are
value-added products, while exports to EU are raw commodities with no
added value. Armenian exports to Russia, Belarus and Kazakhstan are
growing. Here is an example; Armenian exports to Kazakhstan are not
large, but they doubled in ten months because of no customs borders
within the bloc making shipment of goods easier. Armenian exports to
Customs Union are made seventy percent of food products, including
alcoholic beverages, which have all the grounds to grow.

ARKA - Could Armenia's membership in the Customs Union bring more
investments into its economy?

V. Spassky - If we look at real investments made so far in Armenia,
I mean direct investment, and then 42 % are from Russia. When all the
rules are exactly the same in Belarus, Kazakhstan, Russia and Armenia,
the Russian businesses will invest more money in enterprises in these
countries. For example, if money is invested into production of shoes,
and we know that Armenia has good tradition in this field, then it can
produce quality shoes not only for the Armenian market of 3.5 million
people, but for more than 170 million of the Customs Union. However,
investments may come not only from the territory of the Customs Union ,
but also from Armenian Diaspora.

ARKA - What can say about the situation in the labor market?

V. Spassky - Armenia's migrant labor force is important for Armenia
itself and Russia. This is a very serious matter, because being in
a single bloc, migration flows will receive such benefits, which
cannot be offered by any other trade bloc. For Armenia this is very
significant, because now 85% of remittances come from the territory
of the Russian Federation. This amount is 1.4 billion US dollars
annually, according to your official statistics. It's more than
Armenia's entire annual export. Most importantly, families here
getting this money ensure domestic demand. Part of that money is
invested into small and medium business.

Besides, Russia needs qualified labor force. Armenia boasts of skilled
construction labor force. There is also another freedom. When we
talk about the integration component, we mean the harmonization
of policies. For you, a coherent agricultural policy is of great
interest. In May in Astana the presidents addressed specific issues
of agro-industrial policy. In the case of Armenia's membership in the
Customs Union, it will participate in these matters and get involved
in joint projects. You will take your niche and work consistently in
this direction.

ARKA - In Armenia there is much talk about the lack of a common
border. This is the main argument of the opponents of the Eurasian
integration.

V. Spassky - You are right, but Armenia has no border either for
European integration. For example, Greece joined the EU without a
common land border.

ARKA - But Greece has sea.

V. Spassky - Well, here is another example. Let us remember the
West Berlin that was an integral part of the EU. If someone seeks
reservations - he will always find or invent the. Relatively speaking,
it is necessary to determine the mode of operation. Train containers
are sealed in Armenia and go through Georgia to Russia. Today we
have such a regime with Kaliningrad region separated from Russia
by Lithuania.

ARKA - What about possible preferences for Armenia because of absence
of common borders ? And very often there is talk about Armenia's
commitments to WTO.

V. Spassky - A good question. It is the question of yours and maybe
our risks. Armenia has a very liberal (customs) regime and it's
not bad. We also want to learn from you. But today Armenia employs
weighted average import tariff of 2.9 % - 3 %. After Russia joined
WTO last year we pledged to gradually reduce tariffs. Last year they
were 9.5%, we have dropped them now to 7.02 %, and the rate goes down.

This means after a while there will be no problems at all. Of course,
we are not interested in European goods coming to Russia through
Armenia with zero customs duty, and here we and the Armenian side
should look into how to resolve this issue so that such products
do not hit our market. On the other hand, we can ask the WTO to
review import duties on some items. After Ukraine saw that joining
WTO greatly reduced duties on imports it is going now to ask it to
review many of them upwards. The WTO has a mechanism to address these
issues. So we have to sit down and negotiate if there is a problem.

There are no unsolvable problems.

ARKA - What about Nagorno -Karabakh, which is in a single customs
area with Armenia?

V. Spassky - And could you tell me how this issue was to be
solved gad Armenia signed the EU association agreement? Hence,
this is a solvable issue too. As a person engaged in foreign
economic affairs for several decades I am confident that the
most unsolvable problems can be solved. -0 - - See more at:
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