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WE HAVE WHAT WE HAVE - ARMENIA'S SECOND PRESIDENT ON CUSTOMS UNION INTEGRATION PERSPECTIVES
16:10 * 24.02.14
In an interview with 2rd.am website, Armenia's ex-president Robert
Kocharyan addressed the possible impact of the Customs Union accession
on Armenia.
According to him, any haste in this process of conciliating interests
may have unfavorable consequences. Armenia should not have agreed to
initialing an Association Agreement with the European Union in company
with the GUAM member-states. It made the process take on additional
geopolitical overtones.
Mr Kocharyan, what's your opinion of Armenia's decision to join the
Russian-Belarusian-Kazakh Customs Union?
This is a subject of paramount important. But to understand it we
have to make a comparative analysis of approaches to the customs
policy in Russia and Armenia after the USSR's collapse.
About Russia first:
Russia inherited the USSR's enormous industrial potential -
practically all the economic sectors, with a strong emphasis on the
military-industrial complex. But that potential was not integrated
with the world economy, with greater part of it focused on the
domestic market and the former socialist camp. Oil and gas exports
constituted 65% of the USSR's exports. To protect its industry from
more competitive imports, Russia applied high customs duties, and
its domestic market enabled the industry to continue operating. The
application of export duties and quotas to energy carriers enabled
the government to keep the domestic prices, which would keep Russia's
economy fairly competitive. By the way, that allowed Russia to avoid
an economic collapse similar to that in Armenia in the early 1990s.
Now that Russia has joined the World Trade Organization (WTO), it
is gradually revising its foreign trade rules for full integration
with the world economy. It implies some short-term problems, but
long-term benefits.
About Armenia:
We inherited serious industrial potential oriented to the USSR market,
which had ceased to exist by that time. The domestic market for the
industry was insignificant. The absence of a common border and railway
communication with Russia thwarted all efforts to resume cooperation.
The sad situation in a number of economic sectors in Russia in
the mid-1990s was not at all a reason for optimism. After the
USSR's collapse, a significant part of Armenia's industry turned
export-oriented and lost the traditional markets and partners. So
applying customs duties to many industries, except for agriculture
and processing, did not make any sense. Other instruments for
protection could be applied. On top of all, Armenia's blockade and
higher transportation costs for practically all the products. So,
in the mid-1990s, Armenia's government liberalized foreign trade and
Armenia joined the WTO in 2003 to speed up its integration with the
world economy.
Thus, Armenia and Russia had developed different approaches to the
customs policies for quite a long time. And those approaches laid the
basis of our country's customs legislation. And because the Customs
Union's approaches lies upon the Russian Federation's Customs Code, a
question arises as to what problem Armenia is solving for its economy
by raising the customs duties to the Russian level, and whether it
will manage to revise its approaches without shocks.
I don't share the officials' optimism in this respect, because the
economy bears an inert character, and its re-adaptation will take a
long time. Certain forms of business will, in all likelihood, improve
their positions, while other will die. We need an in-depth analysis,
open to business to forecast all the possible impacts on all types
of goods on the CU countries' markets. Businessmen and farmers must
know what branches [of economy] a likely to create difficulties for
them and vice versa - where they can increase their chances. It will
also hel[ banks and credit organizations to manage their financial
resources in a more effective manner and with less risks.
Besides, the European Union will, in all likelihood, revise the GSP+
system with Armenia, as the EU countries' ambassadors also hint the
issue. Questions will arise also with regard to the change of customs
duties with the WTO, which we are unlikely to avoid. That will lead
to the implementation of reciprocal measure. As to how it will impact
Armenia's econo,y and the attractiveness of our countries long-term
investments, it's hard to predict that now.
Another question which has been raised is the increase in the prices
of products imported from countries beyond the CU borders. Considering
the dominance of such products on the consumer market and the trade
deficit level in Armenia, zedeql zith essentiql volumes here. The
formula is very simple; once you raise the customs duty, the prices
of goods increase in shops. Or the goods are exchanged with equivalent
products from the Customs Union, if they are at all produced there at
all. The Belarusian meat and dairy products, for instance, may sell
for a cheaper price in Armenia, and so will our wine and brandy in
Belarus. As to how the competition will affect our cattle-breeding,
that's a matter of time. The prices for the household equipment,
electronics and machines imported from those countries will go up in
part if no corresponding exceptions are made. Everything is possible to
calculate and predicts, and those calculations have to be accessible
to public. The essential increase in prices can be restrained only
through the introduction of an extensive exception list and through a
harmonization of the gradual decrease with the customs duties. And that
depends on the outcomes of the talks with all the CU member states,
which will mutually propose their requirements.
That's a process of coordinating interests, so haste may result to
undesired consequences.
Armenian News - Tert.am
16:10 * 24.02.14
In an interview with 2rd.am website, Armenia's ex-president Robert
Kocharyan addressed the possible impact of the Customs Union accession
on Armenia.
According to him, any haste in this process of conciliating interests
may have unfavorable consequences. Armenia should not have agreed to
initialing an Association Agreement with the European Union in company
with the GUAM member-states. It made the process take on additional
geopolitical overtones.
Mr Kocharyan, what's your opinion of Armenia's decision to join the
Russian-Belarusian-Kazakh Customs Union?
This is a subject of paramount important. But to understand it we
have to make a comparative analysis of approaches to the customs
policy in Russia and Armenia after the USSR's collapse.
About Russia first:
Russia inherited the USSR's enormous industrial potential -
practically all the economic sectors, with a strong emphasis on the
military-industrial complex. But that potential was not integrated
with the world economy, with greater part of it focused on the
domestic market and the former socialist camp. Oil and gas exports
constituted 65% of the USSR's exports. To protect its industry from
more competitive imports, Russia applied high customs duties, and
its domestic market enabled the industry to continue operating. The
application of export duties and quotas to energy carriers enabled
the government to keep the domestic prices, which would keep Russia's
economy fairly competitive. By the way, that allowed Russia to avoid
an economic collapse similar to that in Armenia in the early 1990s.
Now that Russia has joined the World Trade Organization (WTO), it
is gradually revising its foreign trade rules for full integration
with the world economy. It implies some short-term problems, but
long-term benefits.
About Armenia:
We inherited serious industrial potential oriented to the USSR market,
which had ceased to exist by that time. The domestic market for the
industry was insignificant. The absence of a common border and railway
communication with Russia thwarted all efforts to resume cooperation.
The sad situation in a number of economic sectors in Russia in
the mid-1990s was not at all a reason for optimism. After the
USSR's collapse, a significant part of Armenia's industry turned
export-oriented and lost the traditional markets and partners. So
applying customs duties to many industries, except for agriculture
and processing, did not make any sense. Other instruments for
protection could be applied. On top of all, Armenia's blockade and
higher transportation costs for practically all the products. So,
in the mid-1990s, Armenia's government liberalized foreign trade and
Armenia joined the WTO in 2003 to speed up its integration with the
world economy.
Thus, Armenia and Russia had developed different approaches to the
customs policies for quite a long time. And those approaches laid the
basis of our country's customs legislation. And because the Customs
Union's approaches lies upon the Russian Federation's Customs Code, a
question arises as to what problem Armenia is solving for its economy
by raising the customs duties to the Russian level, and whether it
will manage to revise its approaches without shocks.
I don't share the officials' optimism in this respect, because the
economy bears an inert character, and its re-adaptation will take a
long time. Certain forms of business will, in all likelihood, improve
their positions, while other will die. We need an in-depth analysis,
open to business to forecast all the possible impacts on all types
of goods on the CU countries' markets. Businessmen and farmers must
know what branches [of economy] a likely to create difficulties for
them and vice versa - where they can increase their chances. It will
also hel[ banks and credit organizations to manage their financial
resources in a more effective manner and with less risks.
Besides, the European Union will, in all likelihood, revise the GSP+
system with Armenia, as the EU countries' ambassadors also hint the
issue. Questions will arise also with regard to the change of customs
duties with the WTO, which we are unlikely to avoid. That will lead
to the implementation of reciprocal measure. As to how it will impact
Armenia's econo,y and the attractiveness of our countries long-term
investments, it's hard to predict that now.
Another question which has been raised is the increase in the prices
of products imported from countries beyond the CU borders. Considering
the dominance of such products on the consumer market and the trade
deficit level in Armenia, zedeql zith essentiql volumes here. The
formula is very simple; once you raise the customs duty, the prices
of goods increase in shops. Or the goods are exchanged with equivalent
products from the Customs Union, if they are at all produced there at
all. The Belarusian meat and dairy products, for instance, may sell
for a cheaper price in Armenia, and so will our wine and brandy in
Belarus. As to how the competition will affect our cattle-breeding,
that's a matter of time. The prices for the household equipment,
electronics and machines imported from those countries will go up in
part if no corresponding exceptions are made. Everything is possible to
calculate and predicts, and those calculations have to be accessible
to public. The essential increase in prices can be restrained only
through the introduction of an extensive exception list and through a
harmonization of the gradual decrease with the customs duties. And that
depends on the outcomes of the talks with all the CU member states,
which will mutually propose their requirements.
That's a process of coordinating interests, so haste may result to
undesired consequences.
Armenian News - Tert.am