“The Economic Component of Armenia-EU Agreement: New Opportunities and Obstacles”
On October 13, the initialed Armenia-EU Comprehensive and Enhanced Partnership Agreement was published. The economic component of this document is of particular interest to the public, political and media circles. Now an attempt is made to clarify and understand what kind of reforms are expected in the economic sphere after the signing of the Armenia-EU comprehensive and enhanced partnership agreement, and in general, what economic impact the document will be.

A discussion entitled The Economic Component of Armenia-EU Agreement: New Opportunities and Obstacleswas held at Media Center on October 23, during which Vahagn Khachatryan, Economist, and Artak Manukyan, Chairman of National Center of Public Policy Research, presented their observations and comments.

Economist Vahagn Khachatryan says that this document may have a significant impact on the Armenian economy and may have no impact depending on the will of the Armenian authorities.

The latter also expresses an opinion that the current authorities are not ready to implement the provisions of the agreement but on the other hand, the European Union will not ignore the negative phenomena, as an example pointing out the steps taken against Moldova.

“The European Union is no longer the old European Union that will sign documents and direct funds, not paying attention to the implementation of the provisions of the document. They will be consistent.”

The economist also notes that it is still unclear how Armenia-EU and Armenia-EAEU compatibility will be implemented.

“The mechanisms for resolving these contradictions are unclear at least to me. There is a question that has not been answered yet. Here is a reference to the World Trade Organization for the solution of this issue, but we are aware that according to the agreement, the Eurasian Economic Union  should negotiate with the WTO.”

Artak Manukyan presented a study on Armenia-EU economic relations and the economic component of the agreement.

First, the expert pointed out that Armenia's second trading partner after Russia is the EU with 24 percent share and presented the dynamics of the EU-Armenia trade turnover over the recent years showing that there is stability in the sector and there are no sharp fluctuations.

Recording that there is a certain quantitative growth in these relations, the economist emphasizes at the same time that the qualitative growth is more important, representing Armenia-EU and vice versa imported and exported goods in percentage terms.

Manukyan says that the digital image of commodity turnover clearly shows that the Armenian market has a high concentration, where the share of four largest players is 95%.

“The European Union is a more diversified economy and their relationship with us is more diversified than ours. That is, we have low diversification issues.”

Referring to the content of the agreement, the expert cites a number of reasons, starting from not having a common border with the EU to the WTO membership obligations, concluding that the economic effect of the agreement is not large.

Artak Manukyan notes that the main problem of Armenia is the second stage of the institutional reforms related to the economic component.

“The second generation of institutional transformations is the effectiveness of institutions. And all the messages contained in the economic component are largely aimed at improving the efficiency of institutions.”

The economist also wonders what economic interests EU has to sign such an agreement with Armenia. There are two major reasons: to approach the Iranian market, which is not a member of WTO and to weaken Russia's influence in Armenia.

“Armenia can be ideal for the EU to bring economic relations closer to Iran,” Artak Manukyan said. The latter thinks that any economic integration at least initially affects the economy of a weakly developed country negatively but in the case of the EU, there is light at the end of the tunnel, it is not the case with EAEU where the future is vague.

In spite of all this, according to the expert, the agreement is a mutually beneficial transaction when both parties win (win-win).

Derenik Malkhasyan, editor/events coordinator at “Media Center”

To contact the author please send an email to derenikmalkhasian@gmail.com.

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