EU OKs Free Trade Talks With Armenia

The European Union has given the final green light for the launch of official negotiations with Armenia on a far-reaching free trade agreement that should significantly deepen the country’s integration with the 27-nation bloc.

The EU’s executive European Commission announced late on Monday that EU member-states have authorized it to negotiate a Deep and Comprehensive free Trade Area (DCFTA) with Armenia. “The parties will now engage in preparations for the first negotiating round to take place soon in 2012,” the commission said in a statement.

“The opening of free trade negotiations mark a turning point in our trade relations with Armenia. We are entering a new phase that will bring our economic ties to a new level of depth and ambition,” EU Trade Commissioner Karel De Gucht was quoted as saying.

“This is a further sign of the strengthening of our political and economic ties,” EU Enlargement Commissioner Stefan Fuele said for his part.

The creation of the DCFTA will be part of an “association agreement” which is already being negotiated by Brussels and Yerevan within the framework of the EU’s Eastern Partnership program. The program offers six former Soviet republics, including all three South Caucasus states, closer ties with the bloc in return for political and economic reforms.

That the DCFTA talks will be launched soon was announced by the Armenian Foreign Ministry late last month. The ministry said they will get underway in late March as part of the next round of broader Armenia-EU association negotiations to be held in Yerevan.

The DCFTA envisages not only mutual lifting of all trade barriers but also harmonization of Armenian economic laws and regulations with those existing in the EU. The European Commission emphasized this fact in its statement.

“Armenia needs to continue its work towards reaching a stable, transparent and predictable economic environment,” the statement said. “This is essential to attract foreign direct investment inflows, leading to job creation and long-term growth. The most important gains for Armenia lie therefore behind the border, in regulatory reforms, and as such will impact on its long-term development perspective.”

The European Commission had made the start of the free trade talks conditional on the elimination of a controversial mechanism for import valuation applied by Armenia’s customs service. It has also pressed Yerevan to stop discriminating against importers of alcoholic beverages.

Visiting Brussels in December, Prime Minister Tigran Sarkisian told De Gucht and Fuele that his government has complied with these preconditions and expects them to speed up the start of the DCFTA talks.

The EU statement spoke of “substantial reforms” carried out by the authorities in Yerevan but made no specific mention of the Armenian customs administration. It pointed instead to “the fields of technical regulations, sanitary and phytosanitary measures and the protection of intellectual property.”

The EU has been Armenia’s largest trading partner for the past decade. Official Armenian statistics show trade with the EU rising by 16 percent to about $1.8 billion and accounting for almost one-third of the country’s overall foreign trade last year.

“The free trade area is expected to diversify and strengthen Armenia’s export capacity and effectively open the way to access the EU market of 500 million consumers,” the European Commission said.

Armenia already enjoys a preferential trading regime with EU states through the EU’s Generalized System of Preferences (GSP+) for some developing nations. The arrangement has entitled Armenian companies to selling virtually all products in the European market with significant discounts on import duty or no duty at all. According to the Armenian Ministry of Economy, GSP+ covered 96 percent of Armenian exports to the EU in 2010.