Expert. "Joining The Customs Union Without Common Borders Is Unprece


October 10 2013

Today, at “RA socio-economic development challenges: Europe or Russia”
seminar, economist Vahagn Ghazaryan presented the major differences
that exist between the Customs Union and the Deep and Comprehensive
Free Trade Agreements. “Aravot” asked Mr. Ghazaryan to present the
difference between these two alternatives for the readers in simple
and accessible language, without complicated terms (although now
it is clear in what direction our country is moving). According to
the expert, there is one major difference between the classical free
trade and classical customs union. “In case of the Customs Union, the
country provides its external economic border under the disposition
of the authorities of the Customs Union, which, in their turn, become
the primary decision-makers. And during the free trade, the country,
in addition to mutual trade, uses its external borders with all third
countries, and executes its economic policies based on its own economic
and other interests.” More specificity, and referring to our case, Deep
and Comprehensive Free Trade Agreement (DCFTA) and the Customs Union,
Mr. Ghazaryan said, “In case of DCFTA, we already had anticipated
quite serious financial support resources, which was to cover all the
field of our services to ensure the comparability of our economy to
European requirements and standards. In case of the Customs Union,
we do not have it, it is so vague and not clear as to what resources
we are going to conform the procedures our external borders to the CU
requirements.” At the seminar, in his speech, Mr. Ghazaryan noted that
there is no precedent in any of several Customs Unions existing in the
world, and that any member of these unions has a common border with
the Union. In his reply speech, the official of RA Ministry of Economy
Gagik Kocharyan tried to convince that there were serious research
and analysis to find ways to overcome these obstacles, and the issue,
essentially, was resolved. To the question of “Aravot” as to what
extent this explanation was acceptable for him, Mr. Ghazaryan replied,
“The explanations are acceptable under any circumstances, because they
contain something rational by themselves, but… What does Customs
Union mean? It means that your external border is a common border. In
our case, having no common border, you become enclosed, isolated… my
external border becomes a border of the Customs Union… eh!, it was my
border, why did I give it to him…” In addition, joining the Customs
Union without having a common border, this way or another, we are
not deprived from customs procedures, which is the objective of such
unions. “In fact, we do not get rid of the customs procedures, which
are necessary for the Customs Union, so that during transportation
of the product, it does not pass the procedures. The product is
transported from Vanadzor to Yerevan without customs procedures,
but in this case, it will pass these procedures, whether it is at the
border with Georgia, Iran, or by other territory. This means that the
Customs Union does not operate in its classical sense, which more
complicates, makes it almost impossible to get all advantages that
are possible for establishing a Customs Union.” Mr.

Ghazaryan also talked about the possible increase in customs duties,
“Customs duty will definitely rise with the third countries. They will
be zero with the CU countries, but we just have zero, we gain nothing
in this case. With other countries, we have a simplified procedure,
0 and 10. The CU member countries apply quite complicated procedure,
for example, for the import of fresh meat, the CU countries are charged
5 % customs duty, but in Armenia, it is 10%. It seems that it is lower,
but there is a “but” here, this 5 % is only in the case if it makes
not less than 8000 euro per ton of product. That is, eight euro per
kilo 5% would be only if a kilo of the product is 200 euro. But,
we import meat of 4 euro, in this case it is 200 %. In that case,
how advantageous it is to joining the Customs Union, in response to
our question, the expert smiled, “You are asking quite a complicated
question. In the economic field, I do not see any advantages, in the
political field, they maybe are any that I do not know.” And what
about the gas price, we asked, is it also uncertain? Mr. Ghazaryan
replied that the gas prices might fall for the population, but it is
a social issue, and not economic.


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