Saturday, July 25, 2009

Armenia's Trade Partners and Free Trade Agreements

Early this year the World Trade Organization launched a Regional Trade Agreements (RTA) database. Armenia's profile lists the RTAs which are currently in force. Unfortunately, this list is not reflective of the trade patterns in recent years. The only countries Armenia has any RTA with are the countries of CIS (Kazakhstan, Moldova, Russia, Turkmenistan, Ukraine, Georgia, Kyrgyzstan). Some of these agreements are no longer relevant (i.e. little trade takes place).

Although Russia still remains the largest single destination for Armenian exports, the network of Armenia's trade partners has expanded significantly over the last decade to include European Union countries and the USA. The European Union, the country's largest trading block partner, has the most extensive network of preferential trade agreements (PTAs) of any WTO member. However, Armenia only qualifies to export its products under the EU's Generalised System of Preferences (GSP) which is a trade arrangement providing preferential access to the EU market to 176 developing countries and territories, in the form of reduced tariffs for their goods when entering the EU market. This stands in contrast to the free trade agreements that countries like Turkey and Moldova concluded bilaterally with the EU. The free trade agreements go beyond GSP preferences giving duty free access to the EU market.

The US Generalized System of Preferences (GSP) is a program designed to promote economic growth in the developing world by providing preferential duty-free entry for about 4,800 products from 131 designated beneficiary countries and territories. The number of product categories (at 8-digit level of Harmonized Tariff Schedule) exported from Armenia to the US has increased from 71 in 1997 to 174 in 2008. Over this time period, the GSP preferences were claimed on average for 64 percent of GSP eligible product categories of which 14 percent on average were partial claims. In value terms, the share of exports shipped to the US under GSP preferences has grown from 7 percent in 1997 to 34 percent in 2008.

So why do we not yet have a PTA with our top trade partners other than Russia? Is anyone aware of the state of negiotations with the EU or USA to conclude free trade agreements? Does anyone know the extent of the usage of the EU GSP preference program, to compare with the usage of the US GSP program as indicated above?