RESTRICTED
WORLD TRADE WT/ACC/ARM/1
10April 1995
ORGANIZATION(95-0879)
Working Party onAccession ofArmenia Original: English
ACCESSION OFARMENIA
Memorandum onForeign Trade Régime
Inacommunication dated 31January 1995 (WT/L/25), theGovernment ofArmenia applied
foraccession under Article XIIoftheAgreement establishing theWorld Trade Organization (WTO).
Following Armenia 'sapplication and having regard totheDecision adopted bythe
General Council on31January 1995 (WT/GC/M/1), theWorking Party ontheAccession ofArmenia
totheGATT 1947 wastransformed intoaWTO Accession Working Party. Theterms ofreference
oftheWorking Party arealsocontained indocument WT/L/25.
Inaccordance with procedures (WT/ACC/1), theSecretariat iscirculating theattached
Memorandum onForeign Trade Régime received from theGovernment ofArmenia. Members of
theWorkingPartywishingtosubmitquestionsontheMemorandumareinvitedtodosoby26May1995
fortransmission totheArmenian authorities.WT/ACC/ARM/1
Page 2
CONTENTS
Page
I. INTRODUCTION 6
II. ECONOMY AND FOREIGN TRADE
2.1 Economy
2.1.1 Background 6
2.1.2 Current economic situation 7
2.1.3 Economic policy 8
2.2 Foreign trade
2.2.1 Trade flows bycommodity composition 9
2.2.2 Trade flows byorigin anddestination 9
2.2.3 Trade balance 9
III. FOREIGN TRADE RÉGIME
3.1 Import regulation
3.1.1 Thecustoms tariff 10
3.1.2 Import charges andfees 10
3.1.3 Tariff preferences 10
3.1.4 Taxrégime 10
3.1.5 Non-tariff measures, quotas andlicensing 13
3.1.6 Customs valuation 13
3.1.7 Customs formalities 13
3.1.8 Rules oforigin 13
3.1.9 Standards andcertification 14
3.1.10 Sanitary andphytosanitary measures 14
3.2 Export regulation
3.2.1 Export taxrégime 14
3.2.2 Export licensing system 14
3.3.3 Other measures 15
3.3 Export incentives 15
3.4 Regulations regarding trade intransit 15WT/ACC/ARM/1
Page 3
IV. OTHER POLICIES AFFECTING FOREIGN TRADE
4.1 Industrial policy 15
4.2 Agricultural policy 16
4.3 Financial, budgetary andfiscal policy 16
4.4 Foreign exchange andpayments system, relations with International Monetary
Fund 17
4.5 Foreign investment policy 17
4.6 Government procurement 18
4.7 Privatization andstate trading enterprises 18
4.8 Price controls 19
4.9 Free trade zones 19
4.10 Trade inservices
4.10.1 Overview ofpolicies affecting trade inservices 19
4.10.2 Thebanking sector 20
4.10.3 Theinsurance sector 20
4.10.4 Thetelecommunications sector 21
4.11 Protection ofintellectual property rights 21
4.11.1 Industrial property protection 21
4.11.2 Trade marks, service marks andappellations oforigin 22
4.11.3 Copyright protection 22
4.11.4 Participation ininternational intellectual property agreements 22
V. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC RELATIONS WITH THIRD
COUNTRIES
5.1 Bilateral trade relations andintegration agreements 22
5.1.1 Plurilateral orregional agreements 22
5.1.2 Bilateral freetrade agreements andtrade andeconomic cooperation
agreements with CIScountries 23
5.1.3 Bilateral clearing arrangements 24
5.1.4 Bilateral trade andcooperation agreements 24
5.1.5 Other non-trade bilateral agreements 25
5.2 Multilateral economic cooperation 25WT/ACC/ARM/1
Page 4
VI. LAWS AND LEGAL ACTS
6.1 Laws andlegal actsoninternational trade andtrade-related matters 25
VII. STATISTICS AND PUBLICATIONS
7.1 Government statistics andpublications 27WT/ACC/ARM/1
Page 5
ANNEXES
Page
Annex 1: Listoftrade agreements with third countries 29
Annex 2: Statistical data
Main economic indicators 30
Foreign trade statistics 32WT/ACC/ARM/1
Page 6
I. INTRODUCTION
Since declaring independence from theformer Soviet Union in1991, Armenia hasvigorously
pursued freemarket reforms within ademocratic framework, notwithstanding theacute political and
economic difficulties thathave beset thecountry inrecent years. Among thefactors thathave contributed
tothesedifficultiesarethedevastatingearthquakein1988,theeconomicblockadeimposeduponArmenia
asaresult ofarmed conflict between theRepublic ofAzerbaijan andtheenclave ofNagoro-Karabakh,
thechoking offofArmenia 'smajor northern trade route because ofcivil conflict inGeorgia, andthe
considerable economic dislocation associated with thedisintegration oftheSoviet Union. Economic
decline hasbeen reflected insharp reductions inoutput, falling incomes, reduced trade flows, severe
shortages ofenergy, andscarcity offood andother consumer goods.
Despite thisadversity, theGovernment haspersevered with theeconomic reform program,
placingparticularemphasisonliberalization,stabilization,andeconomicrestructuring.Mostagricultural
land wasprivatized shortly after independence andprivatization inother sectors ismoving ahead.
Demonopolization andderegulation have removed barriers toprivate sector participation inallbut
afewareas ofeconomic activity. Price controls only apply toalimited number ofessential goods
andservices, andarebeing phased out.Onthemacroeconomic side, stabilization policy isagovernment
priority, given thechallenge ofthedifficult budgetary position, combined with theneed tocontain
inflationary pressures andmaintain exchange ratestability. TheGovernment hasachieved some success
initsstabilization efforts, recently bringing themonthly inflation ratedown tosingle digits, from the
triple-digit levels prevailing attheendof1993. TheGovernment isstrongly committed tosecuring
asound andstable macroeconomic framework forfuture economic growth anddevelopment.
Fullerintegrationintotheworldeconomy,andcontinuingdiversificationofArmenia'seconomic
relations with other countries, arecentral planks oftheGovernment 'sreform efforts. TheGovernment
believes that these objectives canonly beattained through open trade policies that emphasize
specialization onthebasis ofinternational comparative advantage. Itisforthisreason thatthe
Government ofArmenia attaches priority toitsaccession totheWorld Trade Organization, andwishes
tocomplete negotiations formembership attheearliest opportunity.
Thepresent Memorandum contains detailed information onArmenia 'seconomy andforeign
trade andtrade-related policies. Itisintended tofacilitate thedeliberations oftheWorking Party on
Armenia 'saccession. TheGovernment ofArmenia stands ready toprovide anyadditional information
requested bygovernments represented intheWorking Party.
II. ECONOMY AND FOREIGN TRADE
2.1 Economy
2.1.1 Background
Located intheTranscaucaus, theterritory ofArmenia comprises 29,740 square kilometres.
Itissurrounded byGeorgia tothenorth, Turkey tothewest, Azerbaijan totheeastandsouthwest,
andIrantothesouth. Thelength ofthecountry inasouth-easterly direction is400kilometres and
theborder extends for1,422 kilometres. Armenia issituated 145kilometres from theBlack Sea,
175kilometres from theCaspian Lake, 750kilometres from theMediterranean and almost
1,000 kilometres from thePersian Gulf.
Thecapital ofArmenia, Yerevan, liesontheHrazdan River, andishome toabout one-third
ofthecountry 'spopulation of3.7million people. Another third ofthepopulation lives around Yerevan.WT/ACC/ARM/1
Page 7
Other important centres ofpopulation include thetowns ofGyumri (pop. 210,400) andVanadzor
(pop. 174,800). Inall,there are37towns inArmenia. Ethnic Armenians account forabout 95percent
ofthepopulation, with theremaining 5percentcomprising mostly Curds, Yezidis, Russians, Jews,
Assyrians andGreeks. Thepopulation ofArmenia ishighly educated. Ninety percentofthepopulation
isliterate, ofwhich some 45percent hastenyears ofbasic education combined with atechnical
education, andafurther 13percent hasahigher education degree.
Alarge partofthecountry ismountainous, with dozens ofstreams andrivers andmountain
lakes. Lake Sevan isoneofthelargest mountain lakes intheworld, covering 1,400 square kilometres.
About one-third ofthecountry ispasture land, while 12percentisforest andwoodland andafurther
18percentisarid. Permanent crops only cover 3percentofallland. Armenia hasmodest deposits
ofcopper, zinc, aluminum, molybdenum, precious metals, oilandnatural gas. Thecountry depends
overwhelmingly, however, onimported energy products tofueltheeconomy.
Oftheemployed population totalling some 1.5million, one-third areengaged inagriculture,
one-quarter inindustry, andafurther 20percentorsoinconstruction, transport, communications,
hotelsandcatering,anddistribution.Agricultureaccountedforapproximately59percentofnetmaterial
product in1993, followed byindustry (32percent), construction (5percent), distribution andcatering
(3percent), andtransport andcommunications (1percent). Thelargest agricultural sector invalue
termsiscropproduction(includingvegetableandgrapeproduction),followedbycattlebreeding,poultry
farming, anddairy production. Themain items ofoutput inthemanufacturing sector have traditionally
included machinery, rubber andrubber products, textiles andcarpets, footwear, canned food, wine
andbrandy, andcement. Production ofmany ofthese items hasbeen severely curtailed recently,
however, onaccount ofenergy shortages andtransport difficulties. Alleviation ofthese problems could
lead toarapid resumption ofhigher production levels inmost oftheindustries mentioned above.
2.1.2 Current economic situation
TheArmenian economy hascontracted sharply over thelastfewyears, although with some
signs ofimprovement in1994. Four main factors account forthedeterioration. First, thesudden
anddramatic disruption oftraditional economic tieswithin theformer Soviet Union severely undermined
traditionalproductionandexchangerelations,andusheredinaperiodofacutemacroeconomicinstability.
Second, theeconomic blockade andcivil strife inGeorgia hasexacerbated thedisruption. Third, even
without these external shocks, anycountry attempting tomake thetransition from central planning
toamarket-based economic system isbound toexperience dislocation, andArmenia hasbeen no
exception. Fourth, Armenia 'sdependency onexternal energy sources, andthedifficulty ofacquiring
fuel, hasalsomade asignificant contribution totheshrinkage oftheeconomy.
National income declined byalmost 60percent in1991 and1992, byafurther 15percent
in1993, butincreased in1994. Apositive growth rateof5percentisforecast for1995. Agricultural
output hasfallen bylessthan theaverage fortheeconomy, andeven rose following theprivatization
ofland ownership, thus increasing theshare ofagriculture intotal production. Industrial output
contracted bysome 50percentin1992 and14percentin1993. Real wages fellby60percentin
1992 andby46percent in1993. Inflation averaged 26percent permonth from January to
October 1993, andexploded inNovember andDecember ofthatyear. ByJune 1994, however, inflation
wasdown toamonthly rateof9percent. Thegovernment budget deficit was38percent ofGDP
in1992, rose to48percentin1993, andthen fellback to24percentin1994, following significant
expenditure reductions bytheGovernment.
Armenia ’strade relations within theformer Soviet Union were strongly influenced bythe
country ’ssmall size, itsmining sector, anditsrelatively industrialized production base, aswell asby
heavy dependence onimported industrial rawmaterials andenergy. Thehigh degree ofintegrationWT/ACC/ARM/1
Page 8
within theSoviet system thatthese characteristics implied forArmenia made thecountry particularly
vulnerable tothecollapse ofthatsystem. Inthese circumstances, itwasessential inthefirstinstance
tofindways ofmaintaining some continuity intrade flows. TheGovernment isproceeding with efforts
toreduce theroleofthepublic sector inArmenia ’sexternal trade, butprogress inthisendeavour has
beenfrustratedtoadegreebytransportdifficulties,theeconomicblockade,shortcomingsinthepayments
system, andtheneed toguarantee aminimum level ofenergy security. Forthisreason, in1994
approximately 47percentofthecountry ’sexports and25percentofimports took place onthebasis
ofbilateral clearing (barter) arrangements among countries oftheFormer Soviet Union. Itshould
bestressed, however, thatasprivate sector producers andtraders acquire adequate access tothemeans
oftransport andtoaproperly functioning payments system, theroleofthestate willbecorrespondingly
reduced. TheGovernment maintains nopolicies aimed atdiscouraging thedevelopment ofprivate
sector trade. Onthecontrary, theGovernment wishes toseeprivate sector trade flourish.
Reduced overall economic activity inthelate1980s andearly 1990s wasnaturally reflected
insmaller trade flows. Continuing adownward trend, imports fellby9percentinU.S. dollar terms
in1993,andexportsby38percent.Involumeterms,importsfellbyconsiderablymorethan9percent,
onaccount oflarge increases inenergy prices. Exports, ontheother hand, didnotcontract involume
terms byasmuch asthe38percentdollar figure might suggest. Thecurrent account deficit fellto
U.S.$ 28million in1993, from U.S.$ 55.7 million in1992. However, thiswaslargely duetoincreased
transfers byway ofcommodity andtechnical assistance in1993. Thetrade balance deteriorated in
1993, registering anegative balance ofU.S.$ 147.9 million, compared toU.S.$ 51.2 million in1992.
Theservices balance, ontheother hand, wasnegative atU.S.$ 111.3 million in1992, butwasonly
U.S.$ -59.2 in1993. Thestatistical data for1994 show azero current account balance, following
official transfers (grants) ofU.S.$ 239.4 million. The trade balance for1994 was negative at
U.S.$ 189.8 million, andtheservices balance atU.S.$ 85.6 million. Thecurrent account balance
isexpected todeteriorate somewhat in1995, inthecontext ofincreased imports, stagnant exports,
andreduced official transfers ofcommodity assistance.
2.1.3 Economic policy
Armenia ’seconomic policy priorities over thenext fewyears include: (i)theattainment of
macroeconomic stability; (ii)thestimulation ofmarket-based competition through continuing
privatization, liberalization ofprices andthetrade andforeign exchange régimes, thedismantling of
state trading andinterstate clearing arrangements, andtheelimination ofobstacles toprivate sector
development; (iii)themaintenance ofstrict financial policy, including through theelimination of
subsidies toenterprises; (iv)reform ofthebanking sector; and(v)thedevelopment ofappropriately
targeted social safety netprograms toprotect themost vulnerable sections ofsociety.
Among theGovernment ’sshort-term stabilization objectives arethereduction ofthemonthly
inflation rateto1percentbytheendof1995, theestablishment offoreign exchange reserves atthe
level of1.7months ofimports bytheendof1995, andtheremoval ofdistortions affecting interest
rates andexchange rates. Onthefiscal front, theGovernment aims toreduce thefiscal deficit to
12percentofGDP bytheendof1995, further rationalize thetaxsystem, toimprove taxcollection,
andtoreduce subsidies onbread andother consumer goods. Inthemonetary sphere, minimum interest
rates were phased out,allowing rates tobefully determined bythemarket. Charges oncashwithdrawals
from bank accounts willbeeliminated by1December 1995 andthedifference between thecash and
non-cash exchange ratereflects thetransaction costs .TheCentral Bank willimprove itscapacity to
supervisethecommercialbankingsector,onthebasisofbetterprudentialregulations.Multipleexchange
ratearrangements have been eliminated, andtheexport surrender requirement wasreduced from
50percent to30percent by1January 1995 andwillbeeliminated bymid-1995.WT/ACC/ARM/1
Page 9
Armenia hasestablished anopen trade régime. There arenoquantitative restrictions ontrade,
tariffs have been setatvery lowlevels, export taxes have been eliminated, andtheexchange raterégime
isabout tobefully liberalized. Thispolicy orientation isfully consonant withthemarket-based approach
adopted byArmenia foritsfuture economic development.
2.2 Foreign trade
2.2.1 Trade flows bycommodity composition
Armenia'sexportsduringthelastthreeyearshavebeendominatedmainlybygoldandjewellery,
non-precious metals andminerals, andmachinery. In1994, gold andjewellery accounted for
approximately 33.4 percent oftotal exports, non-precious metals andminerals for13.6 percent,
machinery andequipment for16.8 percent, andfoodstuffs for5.5percent. Other light manufactures,
including some textiles products, accounted forthebalance.
Food andenergy have come todominate theimport billinrecent years, aseffective demand
forindustrial rawmaterials hasbeen squeezed bytheeconomic crisis. In1994, wheat andfuelimports
accounted forapproximately 37percentofthetotalimport bill,andother foodandagricultural products
for23percent.
2.2.2 Trade flows byorigin anddestination
Former Soviet Union (FSU) countries continue toaccount forasubstantial partofArmenia 's
imports andexports, with Russia andTurkmenistan byfarthemost important FSU countries oforigin
anddestination. Imports from FSU amounted toabout 51percentoftotal imports in1994, ofwhich
Turkmenistan andRussia accounted for36percent and52percent respectively. Other sources of
imports within FSU included Ukraine, Belarus, Georgia andLithuania. Ofthenon-FSU countries
from which Armenia wasimporting in1993, Iranwasbyfarthemost important commercial source.
Relatively small quantities ofcommercial imports came from theUnited States andWestern Europe,
butthese were themain origins ofhumanitarian aid.
Ontheexports side, Turkmenistan andRussia accounted forapproximately 46percentand
49percent respectively ofArmenia ’sexports toFSU countries in1994, with Ukraine, Belarus and
Georgia accounting fortherest. The FSU countries together accounted forsome 70percent of
Armenia’sexportsin1994.Non-FSUdestinationsforArmenia’sexportsin1994includedIran,Belgium
andGermany.
2.2.3 Trade balance
Armenia ’soverall trade deficit amounted tosome US$ 189.8 million in1994, representing
about 40percentofimports and68percentofexports. Onaregional basis, however, thetrade deficit
with FSU countries wascomparatively small, atlessthan US$ 58.2 million. Thebulk ofthedeficit
isaccounted forbyhumanitarian aid,granted principally bytheUnited States andtheEuropean Union.WT/ACC/ARM/1
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III. FOREIGN TRADE RÉGIME
3.1 Import regulations
3.1.1 Thecustoms tariff
Alawontariffs andaCustoms Code, approved byParliament inAugust 1993, provides
legislative authority forsetting tariffs anddealing with customs matters. Decree No.615issued by
theGovernment inDecember 1993 introduced newcustoms duties, andthese were further modified
byDecree No.224issued inMay 1994 andbyDecree No.39issued inJanuary 1995. Armenia has
used theHarmonized System ofTariff classification since 1991.
Customs tariffs areexpressed inadvalorem terms andlevied onc.i.f. values. Only 132items
have been identified inArmenia ’stariff schedule. There arefive tariff rates -zero, 5percent,
10percent, 30percent, and50percent. More thannine-tenths ofthetariff schedule comprises rates
ofzero (86items) or10percent(36items). Only fiveitems incur a30percentrate(certain luxury
foods, certain confectionery, furclothing, furs, andgaming machines) andtwoitems (caviar andpet
foods) a50percentrate. After taking account oftariff exemptions (e.g. forhumanitarian supplies)
andzero-rateditems,theweightedaveragetariffisstillwellbelow5percent,andtariffrevenueaccounts
forabout 2percent oftheGovernment 'stotal taxcollections in1994.
Tariff exemptions aregranted inrespect ofthefollowing: essential equipment imported by
foreign enterprises andjoint ventures (with atleast 30percentforeign ownership), vehicles imported
forgovernment use, humanitarian supplies, foreign currency andbonds, prosthetic andorthopaedic
equipment, goods imported forduty-free shops, livestock, meat, fish, shellfish, milk andmilk products,
vegetables, coffee, tea,spices, fruits, animal andplant fatsandoils, sugar andcandies, mineral fuel
andbitumens, leather, silk, wool, cotton andother textile threads, synthetic thread, glass andnon-
decorative glass products, aluminum, lead, zinc, pewter andobjects made ofthese metals, tractors,
flying apparatus, goods intransit, temporary imports, andanyother instances foreseen ininternational
agreements, including freetrade agreements. Individuals areentitled toexport ortoimport newgoods
uptoavalue ofonethousand U.S. dollars.
3.1.2 Import charges andfees
Acustoms feeof0.15 percent ischarged onthetariff-inclusive value ofimports. Nofee
ischarged ondeliveries under credits totheArmenian Government, clearing operations made onthe
basis ofinternational agreements, temporary imports, imports ofrawmaterials forconstruction under
bilateral inter-republican contracts, goods imported directly through thestate budget, andhumanitarian
aid. Noother import charges orfeesarelevied.
3.1.3 Tariff preferences
Tariff preferences aregranted byArmenia inthecontext oftheTreaty ofEconomic Union
among members oftheCommonwealth ofIndependent States (CIS) andthesupplementary freetrade
agreements signed with several ofthese states inorder togivespecificity tothecommitments contained
intheCISagreement. These arrangements aredescribed more fully inSection 5.1below.
3.1.4 Taxrégime
Armenia hascompletely overhauled itstaxsystem since 1992, aspartoftheGovernment 's
overall policy ofeconomic transformation towards amarket economy. Inaddition toimport duties,
Armenia hastwoother indirect taxes thatfallonimports -avalue-added taxandanexcise tax-butWT/ACC/ARM/1
Page 11
these twotaxes alsofallondomestic production. Direct taxes include personal income tax,anenterprise
profits tax,landtax,andastate enterprises fixed assets, citizens ’buildings andtransportation devices
tax. Other taxes, which raise very modest sums ofrevenue andonly apply domestically, include a
fewstate andlocal taxes andfees, some professional operating fees, andanenvironment taxonpollution
andnatural resource use.
Thevalue-addedtax(VAT)islegislatedundertheLawonValueAddedTax,whichwasapproved
byParliament inJuly1993 andamended inDecember 1994. TheVAT waslevied previously through
aPresidential Decree, promulgated inJanuary 1992. TheVAT ischarged onimports anddomestic
output attherateof20percent. Imports from theFSU arezero-rated. Exports outside theFSU are
alsozero-rated, while exports toFSU countries paythetax. Taxcredits areavailable onVAT paid
inother states oftheFSU, andonamortizable assets. Goods andservices exempted from VAT include
urban electrical transport, medicines anddrugs, rents, insurance reinsurance andbanking activities,
certain kinds ofentertainment, products andservices imported ashumanitarian aidandforcharitable
purposes, bread, milk, yogurt, children 'sfood, clothing, andfootwear, butter, sugar, margarine, wheat,
cheese, milk, andvegetable oils. Goods subject toprice controls (seebelow) arealsoexempted, except
forcigarettes. ThefulllistofVAT exemptions isprovided intheLaw onValue Added Tax.
Thelawonexcise taxes wasadopted byParliament inJune 1992 andamended in1993 and
1994. Like VAT, thetaxiscollected onimports bythecustoms authorities, andonlocal production
bytheTaxInspectorate. Noexcise taxes arelevied onimports from within theFSU oronexports
toanydestination. Taxes onexcisable items arethesame onimports anddomestic goods.
Code ofthegood in
accordance with the
official registerName ofproduct group Rates (%)
1 2 3
22.08,22.09 Wine andvodka
products50
22.03,22.04,
22.05Beer, grape wine and
wine syrup25
24.02 Tobacco production 25
1 2 3
71.13,71.14,
71.15,71.16,
71.17Jewellery, fancy
jewellery25
43
42.03Furs. forproducts
(with theexception of
sheep furused in
uniforms forworkers
andsoldiers) and
apparel made ofleather25
40.11,40.12 Tyres 25
Porcelain andcrystal 25
57.02 Handmade carpets 25WT/ACC/ARM/1
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Thedifferentials indicated intheabove listing willdisappear induecourse, astheGovernment
hasdecided tounify taxrates onimports andequivalent domestic goods.
Thelawonpersonal income taxwaspromulgated inSoviet times, butmodified byaPresidential
Decree inJanuary 1992 andbyaGovernment Decree inMay 1992. Personal taxrates have been unified
with therates oftheenterprise profits tax(seebelow). Personal income taxislevied onthebasis of
themultiple oftheminimum wage thatanindividual ’sincome reflects, andminimum wages areset
byPresidential Decree. Incomes oftwotimes theminimum wage orlessaretax-exempt. Taxbrackets
arethen defined interms ofmultiples oftenabove theminimum wage. Thus, foranincome from
twouptotentimes greater than theminimum wage, thetaxrateis12percent, formultiples ofthe
minimum wage between tenandtwenty times therateis18percent, formultiples from twenty toforty
times therateis25percent, andformultiples above forty times therateis30percent. Inaddition
tothetaxexemption forincomes atorbelow theminimum wage, other exempted categories or
individuals include receipts from sales ofprivate property, income from business activity during the
firsttwoyears ofoperation, anyincome received bypensioners, invalids, veterans, andhandicapped
individuals, social security recipients, alimony payments, students ’stipends, andmilitary service pay.
InJanuary 1995, theParliament passed alaw“OnIncome Tax”thatwill beimplemented from
1April 1995.
Thesystem forlevying income taxintheagricultural sector isdifferent. Private farmers pay
afixed share oftheir income, currently setat15percent. Thefewremaining state farms payafixed
share oftheir profits. Intheevent ofadverse agricultural circumstances, theGovernment mayreduce
these liabilities, orexempt farmers altogether from taxation.
TheenterpriseprofitstaxwaslegislatedinDecember1991andmadeeffectivefrom1April1992.
Various amendments were introduced inJulyandDecember 1992. Alljuridical persons operating in
Armenia, including foreign enterprises, areliable totheenterprise profits tax. Dividends arepaid
outofafter-tax profits, soindividuals arenottaxed ondividend income. New enterprises, excluding
state enterprises, areexempted from profits taxforthefirsttwoyears oftheir operation. Joint ventures
may beable tosecure additional taxcredits foraperiod ofseven years, depending ontheshare of
foreign capital intheenterprise. These credits aresetat50percentifforeign capital comprises half
ormore oftotal share capital andisnotlessthan US$ 100,000, andat30percentifforeign capital
accounts for30percent to50percent ofthetotal (with aminimum investment ofUS$ 40,000 to
US$ 100,000). Exemptions arealso foreseen, inter alia, inrespect ofprofits attributable tothe
production ofgoods deemed ofnational importance, certain re-investment andre-tooling expenditures,
research anddevelopment expenditures (on50percentofexpenditures), expenditure onenvironmental
protection (on30percentofexpenditure), profits used tocover losses ofjoint ventures with foreign
participation andforeign enterprises during theprevious fiveyears, andanyenterprise carrying out
reconstruction activity intheearthquake region.
Aspreviously noted, corporate taxes arecharged atthesame rates aspersonal income
taxes -12percent, 18percent, 25percent and30percent. Thestandard rates schedule forall
enterprises, whether local orforeign, are12percent forannual profits ofupto72,000 drams,
18percentforthenextbracket upto144,000 drams, 25percentforthebracket upto216,000 drams,
and30percentformore than216,000 drams. Banks andinsurance companies paya45percentrate.
Thepossibility ofestablishing asingle corporate taxrateisunder consideration.
Thestate enterprise fixed asset tax,introduced inJanuary 1992, aimed toensure thatstate
enterprises would beliable forsome minimum amount oftax.Theaverage rateofthistaxis4percent.
Thetaxbase waschanged dramatically in1993, through arevaluation ofassets byamultiple offifty.
InJanuary 1995, theParliament passed alaw“OnProperty Tax”.Fortheenterprises covered byWT/ACC/ARM/1
Page 13
thislaw, thefixed asset taxwillbereplaced bytheproperty tax,andforindividuals thetaxwillbe
levied onproperty valued atmore than 850times theminimum wage.
3.1.5 Non-tariff measures, quotas andlicensing
Policies relating tonon-tariff measures arespelled outinDecree No.17ofJanuary 1995, which
replaced Decree No.520(October 1993) andDecree No.615(December 1993). Most imports are
freeofanyprohibitions, quotas orlicensing requirements. Theonlyrestrictions imposed areforhealth,
security, environmental reasons. Theitems affected areallkinds ofweapons, components used in
theproduction ofweapons, explosives, nuclear materials, poisons, narcotics, strong psychotropic
substances, devices foruseinopium smoking, andpornographic material.
Most imports arealsofreeofanylicensing requirements. Theonly exceptions areinrespect
ofmedicines (HSheadings 05.10, 12.11, 29.38, 29.41, 30.03, 30.04, and30.13.02), whose importation
must beauthorized bytheMinistry ofHealth, andagricultural chemicals (HSheading 38.08), which
areimported under authorization bytheMinistry ofAgriculture. These licensing arrangements are
notadministered inarestrictive fashion, except inthesense ofprotecting health andtheenvironment.
DecreeNo.17,whichspellsoutthelicensingregulationsonimportsandexports,statesinitsparagraph8
thatthelicensing order does notapply toimports ofrawmaterials fortheproduction ofcommodities
byenterprises with atleast 30percent offoreign share capital.
Armenia does not,atpresent, have anyanti-dumping orcountervailing duty legislation, nor
hasasafeguards mechanism been developed. Ifanyofthese policy instruments areintroduced inthe
future, thiswillbedone inamanner fully consistent with therelevant WTO provisions.
3.1.6 Customs valuation
Armenia uses thetransaction value method ofcustoms valuation. The customs valuation
regulations contained inaGovernment Order attached toDecree No.615(December 1993) arefully
basedontheprovisionsofGATT1994AgreementofImplementationofArticleVII.TheOrderforesees
thesame sixmethods ofvaluation laidoutintheGATT 1994 agreement, andstipulates thatthefirst
method (transaction value) should generally beused. Other methods canonly beused sequentially,
when avaluation method higher inthehierarchy cannot beapplied. Armenia isamember oftheWorld
Customs Organization (formerly theCustoms Cooperation Council).
3.1.7 Customs formalities
Inorder toimport, importers must provide aproforma invoice oracontract indicating the
specifications,quantityandvalueofthegoodstobeimported.Bothimportedanddomesticallyproduced
tobacco and spirits require certificates ofquality issued bythenational certification body,
ArmStateStandard (except where mutual recognition agreements areinplace -seebelow). Acertificate
oforigin isrequired forimports from FSU countries with whom Armenia hasestablished preferential
trading arrangements. Asindicated inSection 3.1.5 above, import licences arealsorequired incertain
instances. Allimporters must complete acustoms declaration form prior toimportation.
3.1.8 Rules oforigin
The rules oforigin applied byArmenia follow theprincipals stated byGATT (Decree
No.615-December 1993). Origin rules aredefined interms ofwholly originating products, achange
intariff heading, process criteria, andthevalue-added criterion. Thechoice ofapproach fordetermining
origin depends ontheproduct concerned andanyrelevant international agreement inrespect ofwhich
origin rules arebeing applied. However, with theexception ofwholly originating products, thechangeWT/ACC/ARM/1
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intariff heading criterion (at4-digit level intheHSclassification) isused unless analternative is
stipulated. Thecustoms authorities areentitled torequire origin certificates inrespect of:(i)goods
subject toquantitative limitation; (ii)imports under preferential trading arrangements; (iii)forthe
protection oftheenvironment, public health andsafety andnational security; and(iv)insituations
where theauthorities consider thatinadequate information astoorigin hasbeen supplied. Certificates
oforigin must besigned bysuppliers andverified bytherelevant national certifying body. InArmenia ’s
own case, certificates oforigin areverified byArmexpertiza, anentity established under theauspices
oftheArmenian Chamber ofCommerce.
3.1.9 Standards andcertification
Armenia isintheprocess ofdeveloping itsstandards system. ANational Certification System
exists whose primary purpose istoprotect consumers andtheenvironment, andtopromote thequality
reputationofArmenianproductsinforeignmarkets.TheNationalCertificationBody,ArmStateStandard,
isresponsible fordefining standards andaccrediting standards certification bodies andlaboratories
within theframework oftheNational Certification System. Compulsory standards exist forarange
offoodstuffs, electrical goods, alcoholic andnon-alcoholic beverages, tobacco products, andchildren ’s
clothes. ArmStateStandard iscooperating with standards organizations inother countries andisan
observer intheInternational Standards Organization. Asnecessary, standards willbeadapted to
international norms, andnew standards arebased onISO 9000. Work isalso proceeding onthe
development ofanArmenian Certificate ofQuality, which willbegranted toproducers who comply
with specified standards. New legislation isbeing drafted toreplace thepre-independence statute.
Drafts oflaws “OnStandardization andCertification ”and“OnProvision ofUnified Measures ”are
under active consideration.
ArmStateStandard hassigned cooperation agreements with counterpart bodies intheRussian
Federation,Ukraine,Belarus,GeorgiaandTurkmenistan.TheseareAgreementsonProductCertificates,
Quality Promotion Systems, Certification Bodies andMutual Recognition ofAccredited Testing
Laboratories. Thepurpose ofthese agreements istoharmonize standards andprocedures, andtoallow
formutual recognition oftesting andcertification. Asimilar agreement hasbeen signed between
ArmStateStandard andtheStandards Institute oftheIslamic Republic ofIran.
3.1.10 Sanitary andphytosanitary measures
Armenia hasnotdeveloped anyseparate policies orprovisions relating tosanitary and
phytosanitary measures. Any matters arising inthisfield aredealt with byArmStateStandard within
theframework oftheNational Certification System. IfArmenia decides toadopt separate machinery
orpolicies, thiswillbedone infullconformity with theAgreement onApplication ofSanitary and
Phytosanitary Measures.
3.2 Export regulations
3.2.1 Export taxrégime
Armenia imposes noexport taxes onanyproduct.
3.2.2 Export licensing system
Export licences arerequired fortextiles (totheEuropean Union only), formedicines, andfor
certain liveanimals andplants. Theexport licences ontextiles arerequired pursuant toanagreement
with theEuropean Union, butnorestrictions onthese exports arecurrently inplace. Thelicences
formedicines, liveanimals andplants aregenerally notrestrictive -rather, they aretoensure publicWT/ACC/ARM/1
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health andsafety. Enterprises with foreign participation ofatleast 30percentofshare capital are
exempted from export licensing requirements, except those relating totextile exports totheEuropean
Union.Exportprohibitionsapplytousedmachinery,weapons,componentsformanufacturingweapons,
explosives, nuclear materials, certain works ofartofnational orhistoric interest, poisons, narcotics,
strong psychotropic substances, devices foropium smoking, andconfidential information whose
dissemination could hurtthenational interest. Allother products maybefreely exported from Armenia.
3.2.3 Other measures
Inorder toprevent exports atartificially lowprices, ortheunder-invoicing ofexports, the
Ministry oftheEconomy establishes alistof“minimum ”prices each month foralistofselected
commodities. With effect from 1January 1995, thislistonly covered ferrous andnon-ferrous metals.
Ifanexporter declares thevalue ofcommodities destined forexport atlessthantheminimum established
price, anamount equal tothedifference ispayable before theexportation isauthorized. Theminimum
prices formost ofthecontrolled items areestablished with reference toquotations ontheLondon Metal
Exchange, lessadiscount of20-30 percent.
3.3 Export incentives
Armenia does notoffer anyexport incentives orexport subsidies ofanykind atthepresent
time. Norhave anyduty drawback ortemporary admission arrangements been developed inrespect
ofdutiable imports used inexport production. TheGovernment believes thatexport expansion isvital
toArmenia ’sfuture economic viability. Forthisreason, consideration isbeing given tovarious ways
ofstimulating exports, particularly through promotional activities. TheGovernment doesnot,however,
intend torelyonexport subsidies aspartofanexport expansion program.
3.4 Regulations regarding trade intransit
Armeniapermitsunimpededandtax-freetransitofgoodsthroughitsterritory,withtheexception
ofthose goods whose importation isprohibited (Decree No.615-December 1993). These items are
weapons, components used intheproduction ofweapons, explosives, nuclear materials, poisons,
narcotics, strong psychotropic substances, devices foruseinopium smoking, andpornographic material.
These items would onlybeabletotransit Armenian territory withtheexplicit consent oftheGovernment
ofArmenia. Transit goods remain under customs supervision while they areonArmenian territory.
Armenia isparty toaplurilateral agreement ontransit trade within theframework oftheCISTreaty
onEconomic Union. This agreement provides thatsignatories should nottaxorimpede transit trade
through their territories. Armenia hasalsosigned abilateral agreement onthissubject with Georgia.
Similar agreements with IranandtheUkraine areunder consideration.
IV. OTHER POLICIES AFFECTING FOREIGN TRADE
4.1 Industrial policy
Armenia ’sindustrial policy aims toensure more efficient useofdomestic resources within
amarket-oriented framework. Acentral policy objective affecting industry isprivatization (see
Section 4.7), which hassofaronly touched asmall share ofthemanufacturing sector. Itisestimated
thatapproximately 95percent ofindustrial output stillemanates from thepublic sector. Pending
completion oftheprivatization program, theGovernment isobliging state-owned enterprises tooperate
according tomarket principles. Since thebeginning of1995, almost nodirect subsidies have been
granted toindustry. This isinsharp contrast toprevious years, when direct subsidies were provided
onafairly large scale viaconcessionary credits tofirms.WT/ACC/ARM/1
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Theonly beneficiaries ofdirect subsidies in1995 willbethefirms engaged intheproduction
ofstrategic (military) equipment, forwhom subsidies aretobegranted forfurther construction and
theequipping ofplant. Thebeneficiary firms donotexport their products. Indirect subsidies are
notoriously difficult tomeasure, butanysuch subsidies that might arise asaresult ofclearing
arrangements (seeSection 5.1)aredisappearing because ofthecontraction (and eventual elimination)
ofinter-governmental clearing contracts. Moreover, procurement viastate orders (Section 4.6), which
could alsoentail indirect subsidies, isbeing replaced bycompetitive tendering procedures.
Inaddition tothecontinuing reform ofpolicies thatmight indirectly confer subsidies on
industries, theGovernment alsomaintains asubstantially deregulated business environment which,
combined with open investment policies, means that there areeffectively nobarriers tomarket
contestability -firms arefreetoenter andexitsectors onthebasis oftheir ownmarket-based decisions.
Additionalmeasuresdesignedtosafeguardandstrengthenthisbusinessenvironmentaretheestablishment
ofanti-monopoly andbankruptcy laws. Therelevant statutes areunder preparation.
4.2 Agricultural policy
Asinthecase ofindustry, theGovernment ofArmenia does notmaintain state planning of
anykind intheagricultural sector. Thesituation intheagricultural sector isalsosimilar toindustry
inrespect ofsubsidies. Thepastpractice ofsupplying concessionary credits hasbeen discontinued,
andfarmers nolonger receive anydirect subsidies. Indirect subsidies arealsominimal, with electricity
supply prices perhaps representing themost significant remaining element. Incontrast totheslow
pace inindustry, Armenia hasprivatized almost 90percentofagricultural land, andmade land titles
freely transferable.
Asfarasinputs areconcerned, twolarge state enterprises aredominant suppliers ofagricultural
services andinputs such asseeds andfertilizers. These enterprises have recently been transformed
intostock companies inpreparation forprivatization. Theenterprises accept payment inkind onthe
basis ofpre-negotiated contracts, andthey arerequired tobeself-financing. There isnothing tostop
other suppliers entering themarket. Nevertheless, thepredominance ofthese firms, together with the
factthatthey receive atleast some ofthepayment fortheir services inkind, means thatcompetition
remains somewhat constrained inboth input andoutput markets. TheGovernment regards thisasa
transientphenomenon,sincetheconditionsareexpectedtodevelopinwhichmorefirmsbecomeinvolved
inthese activities. Moreover, thestate-owned enterprises involved aredueforprivatization. ALaw
onAgricultural Policy isbeing prepared. Among other things, itwillconfine theroleoftheGovernment
inthesector totheprovision oftraining, technical support, andextension services.
4.3 Financial, budgetary andfiscal policy
Theprimary emphasis ofeconomic policy inArmenia over thenext fewyears willbeupon
macroeconomic stabilization andstructural adjustment, inorder tocreate favourable conditions for
sustained growth. The Government isacutely aware that itwill take some years toregain
pre-independence output andincome levels, butisconfident thatthepainful stabilization andstructural
adjustment process theeconomy isnow undergoing willestablish thepreconditions foraprosperous,
market-oriented economy.
Intheimmediate post-independence period, aseries ofcircumstances ledtohyper-inflation
andacute economic instability. Membership oftheruble areauntil late1993 denied theGovernment
theability tocontrol monetary expansion. Inthelasttwomonths of1993, consumer prices increased
by900percent. Atthesame time, andinorder toensure some continuity ineconomic activity, the
Government expanded credit toenterprises andcreated abudget deficit thatwasgreater than onehalf
ofnational income. This situation fedthespiralling inflation. Once thedram wasintroduced attheWT/ACC/ARM/1
Page 17
endof1993, theGovernment wasabletolaunch astabilization plan. Inthecircumstances oflate1993,
considerable discipline wasrequired inthefiscal andmonetary sphere.
Onthefiscal side, theGovernment reduced expenditures drastically in1994, cutting thedeficit
to24percentofGDP, from its1993 level of57percent. TheGovernment aims tobring thedeficit
down to12percentofnational income in1995. Amajor contribution tolower government expenditure
issubsidy reduction, both inrespect ofproduction andconsumption. InDecember 1994, forexample,
theGovernment tookthepolitically difficult stepofvirtually eliminating theconsumer subsidy onbread,
which caused theprice ofbread toincrease eleven-fold. Other areas ofgovernment expenditure, such
asdefence andwages, willalsobetightly controlled. Ontheincome sideofthegovernment ’saccounts,
revenue willbeenhanced through reduced exemptions andimproved collection.
Monetary policy isfocusing upon theestablishment ofmarket-determined interest rates. The
refinancerateoftheCentralBankofArmeniaistobedeterminedthroughcredit,anddirectedrefinancing
isbeing phased out. Theinterest rateminima imposed atcredit auctions arealso being removed.
Since mid-1994, interest rates have been strongly positive. Financial sector reform isalsoapriority
oftheGovernment, inorder toensure anefficient allocation offinancial resources andagreater
mobilizationofsavings.Thefinancialsectorhasdevelopedsignificantlysinceindependence.Inaddition
tofivelarge former state banks, some 50private commercial banks have been established. Laws have
been introduced toregulate thebanking system, andprudential control ofthebanking sector hasbeen
strengthened through increased capital andreserve requirements, aswell asimproved supervisory
capabilities intheCentral Bank. TheGovernment willcontinue topress these reforms andmonitor
developments inthefinancial sector carefully, particularly asfinancial constraints upon indebted
enterprises tighten along with greater macroeconomic policy stringency onthepartoftheGovernment.
4.4 Foreign exchange andpayments system, relations with theInternational Monetary Fund
Exchange rates inArmenia areestablished through aforeign exchange auction thattakes place
twice aweek. The auction establishes four different exchange rates -cash/cash, cash/non-cash,
non-cash/cash, and non-cash/non cash. The vast majority oftransactions attheauctions are
non-cash/non-cash. Inaverage a2percentfeeislevied onlocal currency cash withdrawals, which
reflects tothebanks transaction cost. This inpartexplains thedifference between cash andnon-cash
exchange rates. Upuntil theendof1994, Armenia maintained a50percentsurrender requirement
inrespect ofexport receipts. Asfrom 1January 1995, thesurrender requirement wasreduced to
30percent, anditwillbeeliminated altogether during thecourse of1995.
ArmeniahasbeenamemberoftheInternationalMonetaryFundsince1992.Armeniamaintains
anexchange restriction arising from theCentral Bank ofArmenia ’ssystem ofcorrespondent accounts
with central banks ofsome FSU countries. This restriction isjustified under Article XIV (the
“grandfather ”provision). Inaddition, Armenia hasanexchange restriction, under Article VIII, arising
from abilateral payments agreement with another IMF member. None ofthese arrangements have
asignificant effect ontrade. Armenia hasnegotiated aSystemic Transformation Facility with theIMF,
which may becomplemented byaStand-by Arrangement.
4.5 Foreign investment policy
Armenia ’spolicies towards foreign investment aresetoutinthe1994 Law onForeign
Investments. TheLaw defines aliberal policy, designed toattract investment from foreign sources.
Itprovides aguarantee against nationalization, andagainst confiscation, except inextreme circumstances
andupon ajudicial decision. Intheunlikely event ofconfiscation, fullcompensation would beapplied.
Foreign investors areindemnified against damages resulting from illegal actions byGovernment, or
theimproper performance byGovernment ofitsobligations (asdetermined inacourt oflaw). TheWT/ACC/ARM/1
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Law alsoguarantees investors theright torepatriate profits andassets without hindrance. Intheevent
thatforeign investment legislation ischanged after aninvestment hasoccurred, theinvestor concerned
isentitled toanexemption from anylessfavourable provisions during afive-year period. Noinvestment
performancerequirementsaremaintained,andforeigninvestorsreceivefullnationaltreatment(orbetter).
Forforeign enterprises orjoint ventures comprising atleast 30percent ofinvested capital,
allprofits arefreeoftaxes fortwoyears, andafter thatprofits taxischarged at70percent ofthe
fullrate. Forenterprises with atleast 50percentforeign ownership, profits taxes arecharged atonly
50percentofthefullrateafter theinitial grace period. Enterprises with anyforeign ownership at
allareentitled toindefinite duty-free treatment onalltheir imports ofcapital equipment andrecurrent
inputs andareexempted from anyexport taxes (none areapplied currently inArmenia). Inaddition,
foreign enterprises (defined asthose with atleast 30percentforeign ownership) arealsoentitled to
certain exemptions from import andexport licensing requirements (seeSections 3.1.5 and3.2.2 above).
4.6 Government procurement
When government entities wish toprocure goods, theymaydosoeither through anentity called
Armcontract, which isunder theMinistry ofMaterial Resources, ordirectly. These purchases, which
aregiven effect through State Orders, arefinanced directly from thebudget, andonly involve the
acquisition ofgoods andservices bygovernment entities fortheir ownconsumption (i.e.notforresale
oruseasinputs intoproduction). Inthepast, these arrangements have sometimes involved implicit
subsidy elements forthesuppliers concerned, since prices under State Orders have notnecessarily
corresponded tomarket prices. Asmarkets develop, however, andmore competition occurs, both
among Armenian enterprises andwith imports, subsidized procurement isbecoming alessfrequent
occurrence.
With effect from 1995, theState Orders inexcess ofUS$ 50,000 willbesubject tocompetitive
tender. Thetenders willbeadministered bytheministries anddepartments concerned, orbytheir
representatives. Procurement decisions following theevaluation ofbids require approval from the
Ministry oftheEconomy, which isalsoapre-requisite oftheprovision offunds forprocurement by
theMinistry ofFinance.
4.7 Privatization andstate trading enterprises
Theprivatization ofeconomic activity inArmenia isacentral plank ofthestructural reform
process. Asastarting point, aLaw onEnterprises andEntrepreneurial Activities wasintroduced in
1992. This lawdefines theconduct ofeconomic activity interms ofnatural persons (businessmen)
andjuridical persons (businesses), andthedifferent forms thatsuch enterprises cantake. Thelaw
alsodefines therights andobligations ofenterprises, aswell asgovernment guarantees inrespect of
theright totrade (dobusiness).
Theprivatization program began in1991, with agricultural land. Bytheendof1993, some
87percent ofland hadbeen privatized, andbyearly 1994, theownership ofland could also be
transferred through sale. Over 700state andcollective farms (outofatotal of800) have been broken
upinto300,000 private farms. In1991/2, 335small commercial enterprises were alsoprivatized.
Owing toaninadequate legal framework forprivatization andsome opposition totheprogram, the
privatization effort came toavirtual haltforabout twoyears. However, aLaw onPrivatization and
Denationalization ofState Enterprises andUnfinished Construction wasapproved in1992, andatthe
beginning of1994, Parliament approved aprogram fortheprivatization of4,700 firms, ofwhich 2,500
were small-scale enterprises. This represents some 35percentoftheproductive assets owned bythe
state, andtheGovernment aims tocomplete thetransfer ofmost ofthese assets toprivate hands byWT/ACC/ARM/1
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theendof1997. Certain strategic enterprises willremain inthepublic sector, including some ofthose
involved inthemining, armaments, energy andmetallurgical sectors.
Themodalities forprivatization envisage thedistribution ofvouchers tothepublic toavalue
of30percentofassets tobeprivatized, thetransfer of20percentoftheshares oflarge enterprises
toemployees, andthedisposal ofenterprises though auction forcash andvouchers. TheGovernment
iscommitted toanacceleration oftheprivatization program inorder tomeet themedium-term target
mentioned above forthedivestiture bythepublic sector ofalmost allproductive assets. Aspartof
thiseffort, anti-monopoly andinsolvency laws arebeing drawn up,inorder toensure anappropriate
environment forprivate sector activity.
Until theprivatization program hasbeen completed, theGovernment seeks toensure thatthe
many enterprises remaining inthepublic sector arefully accountable totherigors ofthemarket. Thus,
theGovernment does notgrant special rights orprivileges toenterprises. Industries inthese sectors
make their purchasing andselling decisions inamanner consistent with theprinciple ofnon-
discrimination. Inallother sectors ofeconomic activity, thegovernment seeks toensure thatbarriers
donotexist totheentry andexitofenterprises.
4.8 Price controls
Thetransition oftheArmenian economy from asystem inwhich allprices were administered
tooneinwhich market forces determine prices isalmost complete. Price controls remain onurban
electrical transport, electricity, natural gas, water, sewage services, house rent, garbage collection,
telephone services, airfreight forstate needs, saltandmedicines. Many ofthese items arestillsupplied
exclusively bythestate, which partially explains whyprices arecontrolled. With effect from July 1995
theGovernment willcontrol theprices ofthementioned products, excluding theairfreight forstate
needs andmedicines, interms ofprofit margins (onacost-plus basis).
Asnotedabove,thelargeconsumersubsidyonbreadwasremovedon1December1994,leading
toaneleven-fold increase oftheprice ofthiscommodity. Theprice ofbread hasalsobeen de-controlled.
Thegovernment iskeeping itsprice control policies under continuous review, with theintention of
de-controlling prices ifthecontrols arenolonger warranted because ofmonopoly supply, subsidies,
orsocial welfare considerations.
4.9 Free trade zones
Armenia does notmaintain anyfreetrade zones inwhich special duty privileges ofanykind
aregranted. Armenia has,however, established aFrontier Trade Area intheMeghri Region, onthe
border with Iran. Thezone wasestablished topromote trade between Armenia andIran. Under the
arrangement, Armenian enterprises areencouraged toestablish apresence intheborder areaandIranian
enterprises areencouraged todothesame ontheir sideofthefrontier. Forty citizens from each country
areentitled toenter each other ’szones inorder toexplore business andtrading opportunities, butno
special customs régime orprivileged duty treatment isassociated with anyexchanges agreed onthe
basis ofthese contacts.
4.10 Trade inservices
4.10.1 Overview ofpolicies affecting trade inservices
Asinmany economies, especially those ofdeveloping countries andcountries intransition,
only limited information isavailable onservices sectors andontrade inservices. One consequence
ofthissituation isthatmany service industries remain largely unregulated, particularly inrelation toWT/ACC/ARM/1
Page 20
thedistinction between foreign anddomestic supply. Aspolicies aredeveloped, thesituation described
below may change. TheGovernment iscurrently engaged inefforts toimprove theinformation base
onthissector, andwillsupply such information tointerested parties assoon asitbecomes available.
Several areas oftrade andtrade-related policies described inthisMemorandum areofgeneral relevance
totheservices sector.
Asfarascross-border supply ofservices isconcerned, neither numerical quotas noreconomics
needs tests exist inrespect ofimports. TheGovernment does notmaintain anymonopoly orexclusive
supplier rights inservices thatcould betraded across thefrontier. Notaxes arecharged oncross-border
trade, norrestrictions imposed upon access todistribution networks (such astelecommunications).
Inregard toconsumption ofservices byArmenian nationals andresidents intheterritory of
Armenia ’strading partners, there arelikewise norestrictions. Nationals andindividuals may travel
freely outside Armenia, andintheprocess contract foreign services should they sowish.
Establishment rights, orcommercial presence, isguaranteed through theLaw onForeign
Investments described inSection 4.5. This lawdoes notdistinguish between goods andservices
suppliers, andprovides ready access toservice suppliers within theframework ofArmenia ’slaws as
they apply toallinvestors. Asinthesphere ofgoods, certain sectors areexclusively inthepublic
domain, including certain public utilities (such assewage) andenergy supply (such aselectricity).
Inthese cases, however, foreign investors receive fullnational treatment. Also important here isthe
Law onEnterprises andEntrepreneurial Activities, referred toinSection 4.7,which defines thetrading
rights ofenterprises. These trading rights arenotsubject toanysectoral restrictions andapply equally
toactivities inthespheres ofgoods andservices production.
Naturalpersons(asopposedtojuridicalpersonsorincorporatedenterprises)alsoenjoyrelatively
freeaccess totheArmenian market. Allindividuals, whether intra-corporate transferees orindividual
business persons, must acquire avisatoenter Armenia. These visas areissued inanon-restrictive
manner upon theissuing ofaletter ofinvitation bytherelevant governmental ornon-governmental
entity, endorsed bytheMinistry ofForeign Affairs. Professionals wishing toexercise their profession
inArmenia must beapproved andregistered.
4.10.2 TheBanking Sector
TheCentral Bank ofArmenia isresponsible forregulating thebanking system inArmenia,
asprovided forinthelaw“OntheCentral Bank oftheRepublic ofArmenia. ”Initsroleasregulator,
theCentral Bank licences commercial banks toperform banking services, andthebanks aresubject
tothelaw“Onthebanks andbanking activities intheRepublic ofArmenia. ”Subject tosatisfying
criteria relating tothesatisfactory performance ofbanking services, theCentral Bank maintains aliberal
policytowardstheprovisionofbankinglicences.Amongthepreconditionsforestablishingacommercial
bank isaminimum capital investment ofUS$ 100,000, andcertain reserve requirements. Some fifty
commercial banks arecurrently licensed tooperate inArmenia. Inaccordance withtheLaw onForeign
Investments andtheLaw onEnterprises andEntrepreneurial Activities, foreign banks aresubject to
aregulatory régime atleast asfavourable asthatfacing local banks.
4.10.3 Theinsurance sector
Prior toindependence, insurance wasobligatory andwasprovided bythestate insurance
company. This system nolonger operates, andtheinsurance system isnowregulated bytheMinistry
ofFinance. Thelegal framework forinsurance activities isnotyetfully developed, andadraft law
onthesubject isunder consideration. Temporary regulations areinplace pending theadoption of
thenew law. TheMinistry ofFinance licences insurance providers tooperate intheRepublic ofWT/ACC/ARM/1
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Armenia, andsome 65private andstate companies arecurrently registered. Foreign andlocal insurance
companies aregiven equal treatment. Among theservices provided bythese companies arelife
insurance, property insurance, accident insurance, andinsurance against certain medical andfinancial
risks.Thenatureandconditionsofinsuranceandinsurancepremiumsaredeterminedfreelybyinsurance
companies andtheir clients. Under thenew law, theGovernment intends tostipulate certain kinds
ofobligatory insurance.
4.10.4 Thetelecommunications sector
TheArmeniantelecommunicationssectorisrelativelysmall,comprisingsome537,000telephone
numbers and1,600 telegram numbers (including telex). There areapproximately 6,700 intercity
communication lines. Thetelecommunications system isowned bythestate. Agreements have been
signed with anumber oftelecommunications companies andorganizations, including AT&T, British
Telecom andPTT ofFrance. TheGovernment iscurrently undertaking aprogram torehabilitate,
re-equip andmodernize Armenia ’stelecommunications system.
4.11 Protection ofintellectual property rights
Theintellectual property right system intheformer Soviet Union wasreluctant torecognize
therights ofindividuals. Industrial property rights were expressed through thesystem ofinventors ’
certificates, which hadlittle todowith property rights. Thecopyright system, ontheother hand,
established strict political control inthefield ofcreation, dissemination andprotection ofliterary and
artistic works intheinterest ofthe“socialist community. ”Armenia isintheprocess oftransforming
thisheritage intoasystem thatresponds totheconditions andrequirements ofamarket economy.
Afirst stepinthisdirection wastheestablishment in1992 oftheArmenian Patent Office.
Since December 1992, ithasbeen possible tofileapplications forpatents inrespect ofinventions,
andasfrom August 1993, toregister utility models andindustrial designs. During 1993-4, theArmenian
Patent Office received some 400applications forinventions from Armenians andover 100applications
from foreigners. Ifanapplicant isnotanational ofArmenia andisnotdomiciled inArmenia, hemust
conduct hisaffairs through apatent attorney registered with theArmenian Patent Office.
4.11.1 Industrial property protection
TheLaw onPatents wasadopted inAugust 1993. Under thelaw, patents aregranted for
inventions,utilitymodelsandindustrialdesigns.Thetermofpatentprotectionis20yearsforinventions,
15years forutility models, and10years forindustrial designs. These periods arecounted from the
dateoffiling. Patents aregranted subject totherequirements thattheobject ofthepatent isnew, that
itissuitableforindustrialapplication,andthatnoconflictariseswithrespecttopublicorderandsecurity,
good morals andlaw. Where apatentee fails toexploit thepatented object within four years from
thedatethepatent wassecured, anyparty interested intheuseoftheinvention, utility model orindustrial
design concerned may request thatacompulsory licence beissued. Asfaraspatents forinventions
areconcerned, thelawprovides fortheso-called “differed examination ”forathree-year period. A
fullexamination ofapatent application iscarried outasaruleonly upon request andpayment ofa
feebytheapplicant oranyother interested party.
Theowner ofapatent forinvention oranindustrial design patent granted bythePatent Office
oftheSoviet Union andstillinforce mayfilewith theArmenian Patent Office foranArmenian patent
atanytime during thevalidity oftheinventor ’scertificate orindustrial design certificate, butsuch
filing must occur before 30June 1995. Some idea ofthepotential volume ofsuch filings isgiven
bythefactthatintheten-year period to1990, residents ofArmenia registered 6,000 inventions with
thePatent Office oftheSoviet Union.WT/ACC/ARM/1
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4.11.2 Trade marks, service marks andappellations oforigin
Adraft Law onTrade Marks, Service Marks andAppellations ofOrigin iscurrently under
consideration intheArmenian Parliament. Theprovisions oftheproposed statute arefully consistent
withinternational norms inthisarea. Adistinctive feature ofthestatute isthelegal equality itestablishes
between trade marks andservice marks. During 1993-4, theArmenian Patent Office received some
3,000 applications fortrade marks, service marks andappellations oforigin from foreign applicants.
Registration ofthese applications willbegin after theadoption ofthedraft law, which isexpected in
early 1995.
4.11.3 Copyright protection
In1973 theArmenian branch oftheMoscow Copyright Agency wasestablished inYerevan.
Itsaimwastoprotect therights ofArmenian andforeign authors, tocollect andpayroyalties, tocollect
andtransmit deductions totheliterary, musical andjournalists ’funds, andtoactasintermediary between
legal andnatural persons andorganizations abroad. This agency wasclosed in1993 andreplaced by
theNational Copyright Agency, whose functions arevery similar. More than 2,000 authors, theatre
andconcert organizations areregistered with theagency. Adraft Copyright Law iscurrently before
Parliament. Thedraft isconsistent with international norms oncopyright andneighbouring rights.
4.11.3 Participation ininternational intellectual property agreements
On22April 1993, Armenia deposited adeclaration ofcontinued application oftheConvention
Establishing theWorld Intellectual Property Organization (WIPO). On17May 1994, Armenia also
deposited adeclaration ofcontinued application ofthe:
-Paris Convention fortheProtection ofIndustrial Property;
-Madrid Agreement Concerning theInternational Registration ofMarks;
-Patent Cooperation Treaty.
V. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC RELATIONS WITH THIRD
COUNTRIES
5.1 Bilateral trade relations andintegration agreements
Armenia hasdeveloped anetwork ofplurilateral andbilateral trade agreements with various
countries. Anumber ofthese arrangements areshort-term innature, designed torespond toparticular
needs asthey have arisen. Other agreements areviewed asmore durable, representing theArmenian
Government ’sperception ofthedirections inwhich future trade relations should develop. Asamember
oftheWorld Trade Organization, Armenia willkeep itsbilateral andregional trade agreements under
review, notonly toensure legal consistency, butalsothecoherence ofArmenia ’strade relations within
abroad multilateral framework. Distinctions canbemade between Armenia ’splurilateral orregional
agreements, bilateral free trade agreements, bilateral clearing arrangements, bilateral trade and
cooperation agreements, andother non-trade bilateral agreements. Each kindofagreement isexplained
below.
5.1.1 Plurilateral orregional agreements
TheTreaty ofEconomic Union isaframework agreement signed bynine Heads ofState of
theCommonwealth ofIndependent States (CIS) in1993 (Azerbaijan, Armenia, Belarus, Kazakhstan,
Kyrgyzstan, Moldova, Russia, Tajikistan, andUzbekistan). Thetreaty commits signatories totheWT/ACC/ARM/1
Page 23
eventual establishment ofacustoms union andcommon market among CIScountries. Other economic
andfinancial components oftheCIStreaty relate toapayments union, cooperation oninvestment,
industrial cooperation, andanagreement oncustoms procedures. Thetreaty setsoutquite specific
commitments inmany ofthese areas (aswellasoncultural, scientific, anddefence matters). Butbecause
thetreatyisessentiallyanevolvingframeworkdocument,itdoesnot“operationalize”thesecommitments.
Instead, thespecifics ofpreferential trading relationships aredefined inbilateral freetrade agreements
andinclearing agreements.
Armenia isalsoamember oftheBlack SeaEconomic Cooperation (BSEC) Organization, along
with tenother countries (Albania, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia,
Turkey andUkraine). This agreement covers anumber offields, including economic cooperation and
trade, investment, scientific andtechnical cooperation, theestablishment ofaBSEC Bank, and
cooperation ontransport andcommunications. The agreement does notmake anyprovision for
preferential trade, although itenvisages thepossibility offreetrade zones inthefuture. More generally,
theorganization seeks tocement relations among neighbouring countries through cooperation insuch
areas astransport, international payments andindustrial development.
AsfarastheEuropean Union isconcerned, Armenia hasnotyetsigned aneconomic cooperation
agreement, buthopes todosointhefuture. Inthemeanwhile, the1989 Trade andCooperation
Agreement between theEuropean Union andtheSoviet Union defines Armenia ’sbilateral relations
with theEuropean Union. Once again, thisagreement does notprovide foranytrade preferences.
5.1.2 Bilateral freetrade agreements andtrade andeconomic cooperation agreements with CIS
countries
Bilateral freetrade agreements (FTAs) have been signed with Russia, Ukraine, Moldova,
Kyrgyzstan, andTajikistan. Except fortheagreement with Russia, none ofthese FTAs have been
“operationalized. ”This reflects thefactthattrade flows between Armenia andthecountries concerned
aresmall. Under theagreement with Russia, alistofexemptions from freetrade treatment isforeseen.
Exception listsmay alsobeestablished under theother FTAs iftrade flows ofanysignificance began
tooccur.
Under theFTA with Russia, each party mayexempt from duty freetreatment anyexport items
subject toquotas, licences andexport taxes. Since Armenia does notmaintain anyexport restrictions
(other thanthose mentioned inSection 3.2.2, which aregenerally applicable forpublic security, health
andsafety reasons), there isnothing onArmenia ’sexception listunder thefreetrade agreement. Russia
maintains certain export restrictions which could becovered bytheexception provisions oftheFTA,
butinpractice these often donotapply because ofthetrade andeconomic cooperation agreements
thatArmenia alsosigns annually with Russia (seebelow). Noexceptions toduty-free treatment for
imports arecontemplated intheRusso-Armenian freetrade agreement.
These FTAs areanoutgrowth ofthetrade andeconomic cooperation agreements thatArmenia
signed withCIScountries immediately after independence, andwhich inmany cases arestilloperational
(Annex 1).Most ofthese early agreements were negotiated annually, they envisaged freetrade (in
linewith theCISTreaty ofEconomic Union), andtheyincluded listsofproducts thattheparties agreed
totrade with oneanother. Thepurpose ofthese agreements wastotrytoensure thatpre-existing trade
links were notruptured altogether inthedisarray thatfollowed thebreakup oftheSoviet Union. The
specificity ofproduct-wise commitments varied considerably, including astotheidentification ofprices
andquantities tobeexchanged. Particularly after 1992, product lists tended tobecome indicative,
with noprior agreement onprices, andthecommitments were only partially fulfilled. In1993, for
example, product commitments under these agreements were mettotheextent of20-50 percent, and
figures for1994 areexpected tobeeven lower.WT/ACC/ARM/1
Page 24
Inthecase ofsome countries, Armenia hassigned both trade andeconomic cooperation
agreements andFTAs (Annex 1).This reflects theevolving nature oftrade relations intheregion.
Itisexpected thattheFTAs willincreasingly supersede thetrade andeconomic cooperation agreements,
andindicative product listswillgradually disappear altogether. Indeed, theonly trade andeconomic
cooperation agreement signed in1995 with aproduct lististheonewith Ukraine. Thereason for
having aproduct listinthiscase isthatthisguarantees duty-free treatment, which would otherwise
notapply, because Ukraine isnotasignatory oftheCISTreaty onEconomic Union.
5.1.3 Bilateral clearing arrangements
Barter istheessence oftheremaining clearing arrangements maintained byArmenia. Barter
isborne ofnecessity andisnotapreferred policy. Barter wasdeemed essential intheimmediate post-
independence period, inorder topreserve theonly trade links thatArmenia hadatthattime, andwas
afeature ofthetrade andeconomic cooperation agreements described above. Moreover, barter offers
amodicum ofenergy security, which inthecurrent environment remains ofparamount importance
totheGovernment. Also, transport difficulties andapoorly functioning payments system have often
made governmental support asinequanonofdoing business with FSU countries. Asthese kinds of
constraints arerelaxed, barter isexpected todisappear. Indeed, theGovernment iscommitted to
eliminating barter arrangements assoon asitispracticable todoso.TheGovernment recognizes that
itsroleastrader orasintermediary intrade inhibits theindependent development ofexport capacity
byenterprises, andtheestablishment ofnetworks andcontacts with foreign buyers thataresoessential
toexporting success.
In1995, theonly barter arrangements (called “clearing ”)thatwill remain arethose with
Turkmenistan forgas,andRussia foroilandmazout. Theagreement with Turkmenistan hasalready
been signed. Itinvolves thepurchase of2.2billion cubic meters ofgasat$80perthousand cubic
meters. Payment forthegaswillbeinboth cash ($30 perthousand cubic meters) andincounterpart
products ($50 perthousand cubic meters). Counterpart products include such items asmetals, chemical
products, machinery, products oflight industry, andproducts offood industries (including brandy,
wine, jams, andcigarette filters). Theclearing arrangements state thequantities andprices ofgoods
guaranteed inexchange fortheenergy. Inthecaseofthe1995 agreement with Turkmenistan, however,
anadditional listofproducts thatmight beexchanged hasbeen included, inorder toprovide additional
flexibility. This latter feature isakin towhat aproduct listrepresents under atrade andcooperation
agreement. Thus, thefinal composition ofgoods forexchange isestablished during thecurrency of
thecontract.
The1995 agreement with Russia involves thepurchase byArmenia of200,000 tonsofmazout
and200,000 tonsofoilunder thecontract. Theterms ofthisagreement aremore rigid than those for
Turkmenistan, andthecomposition, quantity andprices ofgoods fixed inthecontract negotiation are
notsubject toanychange. The1993 clearing arrangements (which existed with Russia, Turkmenistan
andGeorgia, andincluded metals, paper wood products andindustrial rawmaterials aswellasenergy)
involved 74percentoftotal exports and56percentoftotal imports. Therespective figures in1994
were 46percentforexports and29percentforimports. Domestic producers areatliberty tochoose
whether ornottosupply goods fortheclearing arrangements. Butinview ofthedifficulties many
enterprises faceinovercoming transport andpayments problems relating toexports, theGovernment
generally encounters little difficulty insecuring thenecessary supplies from local industries tofulfil
theclearing contracts.
5.1.4 Bilateral trade andcooperation agreements
Tradeandcooperationagreementshavealsobeensignedwithmanynon-CIScountries,including
Latvia, Lithuania, Estonia, Vietnam, China, Romania, Bulgaria, theUnited States, Argentina, Greece,WT/ACC/ARM/1
Page 25
Austria, Iran, Syria, India, Poland, andHungary. Thepossibility ofsuch agreements with anumber
ofother countries isunder active consideration. These agreements seek tostrengthen economic links,
butdonotcontain anyprovisions forpreferential trade.
5.1.5 Other non-trade bilateral agreements
Armenia hasalsosigned aseries ofother agreements oninvestment andoncustoms relations.
Theinvestment agreements seektoencourage investment between theparties, primarily byguaranteeing
national treatment, non-expropriation, andunrestricted transfers ofinvestment funds andreturns from
theinvestments. Investment agreements have been signed with Ukraine, Kyrgyzstan, Vietnam, China,
theUnited States, Argentina, Greece, andtheUnited Kingdom. Agreements oncustoms relations are
intended toensure cooperation andsmooth working relations between thecustoms services ofthe
signatories. Such agreements have been signed with Ukraine, Tajikistan, Turkmenistan, Georgia and
Iran.
5.2 Multilateral economic cooperation
Armenia isamember, inter alia,oftheUnited Nations, theInternational Monetary Fund, the
World Bank, The European Bank forReconstruction andDevelopment, theInternational Labour
Organization, andisanobserver totheGeneral Agreement onTariffs andTrade. Armenia isalso
amember oftheWorld Customs Organization (formerly Customs Cooperation Council) andanobserver
attheInternational Standards Organization.
VI. LAWS AND LEGAL ACTS1
I)Laws andLegal Acts Concerning Tariff andNon-Tariff Regulation ofForeign Trade
1. Decree oftheGovernment oftheRepublic ofArmenia No.519of13October 1993 On
Regulation ofForeign Trade andImprovement ofAccounting andMonitoring.
2. DecreeoftheGovernmentoftheRepublicofArmeniaNo.520of13October1993OnLicensing
andAllocation ofImport andExport ofCommodities (Jobs/Services).
3. Decree oftheGovernment oftheRepublic ofArmenia No.615of6December 1993 On
Determining Customs Duties .
a) Order Confirmed byDecree No.615 OnDefinition ofCountry ofOrigin for
Commodities.
b) Regulation Confirmed byDecree No.615OnTransmission ofGoods byCitizens into
theCustoms Territory ofArmenia.
c) Regulation Confirmed byDecree No.615OntheValuation ofGoods forCustoms duty
Purposes.
d) Annex toDecree No.615OnCustoms Duty Rates.
1Thetexts ofthese laws andlegal actsareavailable, intheEnglish language, forconsultation in
theSecretariat (room 2075).WT/ACC/ARM/1
Page 26
e) ListConfirmed byDecree No.615OfGoods Forbidden forExport.
4. Customs Code oftheRepublic ofArmenia (passed on27August 1993).
5. Law ofArmenia of18August 1993 OnCustoms Tariff Rates.
6. Decree oftheGovernment oftheRepublic ofArmenia No.17of17January 1995 OnLicensing
andAllocation ofImport andExport ofCommodities (Jobs/Services).
II)Laws andLegal Acts Concerning International Economic Activities andIntergovernmental
Agreements Signed bytheRepublic ofArmenia
7. Agreement between theGovernment oftheRepublic ofArmenia andtheGovernment ofthe
Republic ofGeorgia onGeneral Principles ofTransit Trade (signed on19May 1993).
8. Agreement between theGovernment oftheRepublic ofArmenia andtheGovernment ofthe
Islamic Republic ofIran OnFrontier Trade between theMeghri Region oftheRepublic of
Armenia andtheMarand Province oftheIslamic Republic ofIran (signed on31May 1994).
9. Agreement between theCIScountries ontheCreation ofaFree Trade Area (signed on
15April 1994).
10. Agreement onCreation oftheEconomic Alliance (adopted on24September 1993).
11. Agreement Between theGovernment oftheRepublic ofArmenia andtheGovernment ofthe
Russian Federation onFree Trade (signed in1992).
12. Agreement Between theGovernment oftheRepublic ofArmenia andtheGovernment ofthe
Russian Federation onTrade andEconomic Commercial Cooperation in1994.
13. Resolution oftheGovernment ofArmenia No.58of31January 1994 OnAccomplishment
oftheIntergovernmental Reciprocal Commodity Deliveries in1994.
14. Decree oftheGovernment oftheRepublic ofArmenia No.40of13February 1993 On
Additional Measures onState Regulation ofInternational Economic Activities. (Not available)
15. Resolution oftheGovernment oftheRepublic ofArmenia No.88of23February 1994 On
theOrderofSubmittingStatisticalReportsRegardingtheImportationandExportationofServices
intheRepublic ofArmenia.
a) Appendix totheResolution No.88Listofthose Services About theExportation and
Importation ofWhich Statistical Reports areRequired.
16. Decree oftheGovernment ofArmenia No.422 of12August 1993 OnProvision of
Intergovernmental Agreements Signed bytheRepublic ofArmenia in1994. (Not available)
III)Laws andLegal Acts Concerning Foreign Investments
17. Law ofArmenia of31July 1994 OnForeign Investments .
18. Decree oftheGovernment oftheRepublic ofArmenia No.474of17September 1993 On
theEstablishment oftheNational Financial-Investment Corporation. (Not available)WT/ACC/ARM/1
Page 27
19. Law ofArmenia OnEnterprises with Foreign Capital (draft -notavailable)
20. Resolution oftheGovernment oftheRepublic ofArmenia No.162of05March 1991 On
Confirmation oftheJoint-Stock Companies andLimited Liability Companies Regulations.
IV)Laws andLegal Acts Concerning Trade-Related Matters.
21. Law ofArmenia OnTaxes andDuties.
22. Law ofArmenia OnProfits Tax.
23. Law ofArmenia OnExcise Tax.
24. Law ofArmenia OnValue-Added Tax.
25. Law ofArmenia OnIncome Tax.
26. LawofArmenia OnPrivatization andDenationalization ofState Enterprises andUncompleted
Constructions.
27. Law ofArmenia OnCompetition andMonopolistic Activity (draft).
28. Law ofArmenia of14March 1992 OnEnterprises andEntrepreneurial Activities.
29. Law ofArmenia OnBankruptcy oftheEnterprise (draft).
30. Law ofArmenia of2September 1993. OnCurrency Regulations andExchange Controls.
31. Law ofArmenia of27April 1993. OnBanks andBanking Activities.
32. Law ofArmenia of27April 1993. OntheBank oftheRepublic ofArmenia.
33. Republic ofArmenia: Principles ofLegislation About Environmental Protection.
34. Resolution oftheGovernment oftheRepublic ofArmenia No.606of29December 1994 On
Rates oftheExcise Tax.
35. Rules oftheArrangement andPlacement oftheGovernment Order of1995.
VII. STATISTICS AND PUBLICATIONS
7.1 Government statistics andpublications
Prior toindependence, statistical information relevant toArmenia wasmaintained andprocessed
inMoscow bytheState Committee onStatistics oftheSoviet Union. Since then, government efforts
have focused onestablishing anindependent capability togenerate statistical information onatimely
andsystematic basis. Support forthese endeavours hasbeen received from theInternational Monetary
Fund andtheWorld Bank.WT/ACC/ARM/1
Page 28
Thefollowing statistical publications arecurrently available inArmenia:
- Monthly andquarterly statistical reports containing basic economic indicators and
information onindustry, agriculture, trade, public services, construction, andfinance.
(language: Armenian)
- Bulletin ontheEconomy oftheRepublic ofArmenia (1994) (language: Armenian)
- Statistical bulletin ontheProcess ofConstruction andRehabilitation intheCities and
Regions Affected bytheEarthquake (1994) (language: Armenian)
- Manual ontheEconomy oftheRepublic ofArmenia (annual) (languages: Armenian,
Russian)
- Manual onArmenia inFigures (annual) (language: Armenian)
- Macroeconomic Prospects (annual) (languages: Armenian, English, Russian)
Official Government notices, legislation andregulations arereproduced inthefollowing
publications:
- TheBulletin ofDecrees oftheGovernment oftheRepublic ofArmenia (monthly)
(language: Armenian)
- Manual oftheSupreme Council oftheRepublic ofArmenia (monthly) (language:
Armenian)WT/ACC/ARM/1
Page 29
ANNEX 1
Listoftrade agreements with third countries
State Agreements on
Trade and
Economic
CooperationFree Trade
AgreementsAgreements on
InvestmentAgreements on
Customs
Relations
Russia Annual agreement Signed 30/9/92
Ukraine Annual agreement Signed 7/10/94 Signed 7/10/94
10-year durationSigned 7/10/94
5-year duration
Belarus Indefinite
(since 1992)
Moldova Signed 24.12.93
Kazakhstan Annual agreement
Kyrgyzstan Four-year duration
to31/12/98Signed 4/7/94 Signed 4/7/94
15-year duration
Uzbekistan Annual agreement
Tajikistan Annual agreement Signed 2/3/94 Signed 2/3/94
Turkmenistan Five-year duration
to31/12/97Signed 24/8/94
Georgia Five-year duration
to31/12/97
Latvia Signed in1992
Lithuania Signed in1992
Estonia Signed in1992
Vietnam Signed 13/12/92 Signed 13/12/92
China Signed 8/1/92 Signed 2/7/92
Iran Signed 7/5/92 Signed 6/5/92
Romania Signed 4/10/91
Bulgaria Signed 25/3/94
United States Signed 2/4/92 Signed 2/4/92
Argentina Signed 3/5/94 Signed 3/5/94
Greece Signed 20/1/92 Signed 20/1/92
Austria Signed 26/4/94
United Kingdom Signed 5/5/93
Syria Signed 30/3/92
India Signed 5/4/93
Poland Signed 10/3/92
Hungary Signed 15/4/92WT/ACC/ARM/1
Page 30
ANNEX 2
Statistical data
Main economic indicators
Economic indicators 1991 1992 1993 1994
Real GDP Index (1991 =100) 100.0 47.1 40.1 40.1
Exchange rate (Period average dram/$) 1 9 285
Consumer Price Index (Jan. 1994 =100) 4.4 0.2 8.5 435.1
Wage index (state sector-Jan.1994= 100) 841 489 115
Consolidated Government Accounts 1993-94
(Million U.S. dollars)1993 1994
Total revenue andgrants 23.5 37.3
Total revenue 23.5 18.8
Taxrevenue 13.4 13.2
Value-added tax 5.0 3.6
Excises 1.2 0.6
Enterprise profits tax 4.5 5.7
Enterprise fixed assets tax 0.1 0.1
Personal income tax 1.6 2.4
Customs duties 1.1 0.4
Other taxes 0.2 0.4
Non-tax revenue 0.9 5.6
Grants ... 18.5
Total expenditure 79.7 61.2
Current expenditure 54.2 51.2
Wages 7.5 3.5
Subsidies (onbread, communal services, books) 11.4 20.3
Domestic interest due 0.4 0.2
External interest due 0.3 2.1
Pension andsocial safety net 7.0 4.7
Health andeducation 9.7 4.3
Other 17.9 16.1
Capital expenditure andnetlending 25.5 10.0
Overall deficit -56.1 -23.9WT/ACC/ARM/1
Page 31
Summary Balance ofPayments Current
Account
(Million U.S. dollars)1994
Current account 0.0
Current account excluding grants (-239.4)
Trade balance -189.8
Exports (fob) 196.8
Clearing (92.7)
Other (104.1)
Imports (fob) -386.6
Clearing (-94.7)
Other (-291.9)
Services balance -85.6
Non-financial services (net) -79.3
Nettransport (-26.5)
Netinterest -6.4
Official transfers 239.4
Commodity assistance 194.5
Food (146.7)
Other (47.8)
Technical assistance 44.9
Private transfers 36.0
Diaspora 36.0WT/ACC/ARM/1
Page 32
Foreign trade statistics
Balance ofForeign Trade with FSU Countries in1994
(Million U.S. dollars)
State Foreign Trade
TurnoverExport Import Trade Balance
Ofwhich
clearingOfwhich
clearingOfwhich
clearingOfwhich
clearing
Russia 169 52.2 67 27.1 102 25.2 -35 1.9
Turkmenistan 135.5 135.5 63.8 63.8 71.7 71.7 -7.9 -7.9
Georgia 19 0 2.5 0 16.5 0 -14 0
Ukraine 8.3 0 3.5 0 4.8 0 -1.3 0
Belarus 1.1 0 0.7 0 0.4 0 0.3 0
Lithuania 0.9 0 0.3 0 0.6 0 -0.3 0
TOTAL 333.8 187.7 137.8 90.9 196 96.9 -58.2 -6
Balance ofForeign Trade with non-FSU Countries in1994
(Million U.S. dollars)
State Foreign Trade
TurnoverExport Import Trade Balance
Ofwhich
humanitarian
aid
USA 89.5 0.4 89.1 82 -88.7
Iran 67 14 53 0 -39
Belgium 32.2 30.2 2.2 0 28
Germany 14.2 6 8.2 0.6 -2.2
France 10 0.5 9.5 7.5 -9
Netherlands 8.2 0.7 7.5 5.5 -6.8
Italy 8 0 8 0.3 -8
Switzerland 4.5 2.3 2.2 2.1 0.1
Cyprus 3.2 3 0.2 0 2.8
Poland 2.3 0.3 2 0 -1.7
United Kingdom 2 1.5 0.5 0 1
India 2 0 2 0 -2
China 1.6 0 1.6 0 -1.6
Yugoslavia 1.5 0 1.5 0 -1.5
United Arab Emirates 1.2 0.1 1.1 0 -1
Bulgaria 1.01 0.01 1 0 -0.99
South Korea 1.01 0.01 1 0 -0.99
TOTAL 249.4 59 190.6 98 -131.6Structure ofExport andImport in1994
(Million U.S. dollars)WT/ACC/ARM/1
Page 33Product Category Export Import
Ofwhich with
non-FSU countriesOfwhich with FSU
countriesOfwhich with
non-FSU countriesOfwhich with FSU
countries
Prepared foodstuffs, animal
andvegetable products11.1 0.1 11 162.6 140.3 22.3
Mineral products 16.3 15.2 1.1 156.1 20.5 135.6
Products ofthechemical and
allied industries11 0.3 10.7 7.8 4 3.8
Raw hides andskins, leather,
furskins andarticles thereof1.2 0.2 1 0.2 0.02 0.2
Wood andarticles ofwood 0.2 0.1 0.1 1.6 0.3 1.3
Textiles andtextile articles 13 0.2 12.8 5.9 4.3 1.6
Footwear, headgear, umbrellas 14 0.002 14 0.3 0.3 0.04
Articles ofstone, gypsum,
precious andsemi-precious
stones71 38 33 33.6 10.2 23.4
Base metals andarticles of
base metals10 4.3 5.7 3.6 1.6 2
Machinery andmechanical
appliances33 0.4 32.6 10.9 5.5 5.4
Instruments andapparatus 1 0.1 0.9 1.6 1.4 0.2
Other products 15 0.1 14.9 2.4 2.2 0.2
TOTAL 196.8 59 137.8 386.6 190.6 196