RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/SPEC/ARM/1/Rev.2
6 March 1998
(98-0890)
Working Party on the
Accession of ArmeniaOriginal:  English
DRAFT REPORT OF THE WORKING PARTY
ON THE ACCESSION OF ARMENIA
Revision
I. Introduction
1. At its meeting on 17 December 1993, the Council of Representatives established a Working
Party to examine the application of the Government of Armenia to accede to the General Agreementon Tariffs and Trade (GATT 1947) under Article XXXIII, and to submit to the Councilrecommendations which might include a draft Protocol of Accession.  In a communication dated31 January 1995 (WT/L/25), the Government of Armenia applied for accession to the AgreementEstablishing the World Trade Organization (WTO) pursuant to Article XII of the WTO Agreement.Following Armenia's application and having regard to the Decision adopted by the General Councilon 31 January 1995 (WT/GC/M/1),  the Working Party on the Accession of Armenia to theGATT 1947 was transformed into a WTO Accession Working Party.  The terms of reference of theWorking Party were also contained in document WT/L/25.
2. The Working Party met on 24 January and 23-24 September 1996, 14 May 1997 [and ...]
under the Chairmanship of H.E. Mr. D. Kenyon (Australia).
Information
3. The Working Party had before it, to serve as a basis for its discussions, a Memorandum on the
Foreign Trade Regime of Armeni a (WT/ACC/ARM/1), and the questions submitted by Members on
the Armenian foreign trade regime together with the replies of the Armenian authorities thereto
(WT/ACC/ARM/2 and Corr.1;  WT/ACC/ARM/5;  and WT/ACC/ARM/8).  In addition the
representative of Armenian made available to the Working Party the following material:
- Decree of the Government of the Republ ic of Armenia No. 40 of 13 February 1993,
"Additional Measures on State Regulation of International Economic Activities";WT/ACC/SPEC/ARM/1/Rev.2
Page 2
- Resolution No. 31 of 21 February 1995, "On Regulation Regarding the Establishment,
Registration, Licence and Suspension of Activities of Banks and Their Branches and
Agencies and Those of Foreign Banks Operating in the Republic of Armenia";
- Law on Amendments and Additions to the Republic of Armenia Law on the "Value-Added
Tax" of 10 December 1994;
- Law of the Republic of Armenia on Property Tax;- Law on Making Amendments in the Republic of Armenia Law on Excise Tax of
30 November 1994;
- Law on Pledge Collateral;
- Law on Bankruptcy of Enterprises and Individual Entrepreneurs of 15 June 1995;
- Law on Making Amendments in the Republic of Armenia Law on Corporation Tax of
19 December 1994;
- Draft Law on Standardization and Certification;- Law on Patents of 21 August 1993;
- Law on Income Tax of 8 February 1995;
- Law on Land Tax of 27 April 1994;
- Law on State Agrarian Inspections;
- Statute of the Peasant and Collective Peasant Farms of 22 January 1991;- The Land Code of 29 January 1991;
- Supreme Council Resolution on the Maximum Sizes of the Land Lots in Property of the
Peasant and Peasant Collective Farms;
- Resolution No. 581 of 16 December 1994, "O n Corroboration of the Temporary Regulations
for Auditing Activities in the Republic of Armenia";
- Government Decision of 17 January 1995, "On the Procedure of Granting Licences for
Importation and Exportation of Goods (Works , Services) in the Republic of Armenia";
- Government Resolution No. 67 of 8 February 1995, "On the State Procurement Order of 1995
of the Republic of Armenia";
- Government Resolution No. 4 of 19 August  1995, "On Confirmation of the Temporary
Regulations for Trademarks and Service Marks";
- Government Resolution No. 606 of 29 December 1994, "On Rates of the Excise Tax";
- Government Resolution No. 88 of 23 February 1994, "On the Order of Submitting Statistical
Reports Regarding the Importation and Exportation of Services in the Republic of Armenia";
- Council of Ministers Resolution No. 161 of 5 March 1991, "On the Order of Exercising
Diverse Types of Economic Activities on the Territory of the Republic of Armenia";
 - Decree of the Government of the Republ ic of Armenia No. 124 of 29 December 1995 On
Non-Tariff Regulation of the Commodities (Operations, Services) Import and Export in the
Republic of Armenia;
- Statement of the Central Bank of the Republic of Armenia on Joining to Article VIII of the
IMF Agreement.;
- The Law of the Republic of Armenia of 30 June 1996, "On Central Bank of Armenia";
- The Law of the Republic of Armenia of  30 June 1996, "On Banks and Banking";
- The Law of the Republic of Armenia of 10 June 1996, "On Bankruptcy of Banks";
- Decree of the Government of the Republic  of Armenia No. 124 of 29 December 1995, "On
Non-Tariff Regulation of the Commodities (Operations, Services) Import and Export in the
Republic of Armenia";
- Amendments to the Law, "On Privatization and Denationalization of State-Owned Enterprises
and Unfinished Construction Sites";
- List 2 of the Resolution of the Government of the Republic of Armenia No. 415 of 1995,"On
types of Activities that are Subject to Licensing in the Territory of the Republic of Armenia";WT/ACC/SPEC/ARM/1/Rev.2
Page 3
- Statute of the Ministry of Economy of the Re public of Armenia of 20 June 1996, "On Issuing
Inferences on Minimal Pricing of Exports of Products from Ferrous and Non-Ferrous Metals
not Produced in Armenia, as well as their Scrap";
- Statute of the Ministry of Health of the Republic of Armenia of 20 June 1996, "On Issuing
Inferences on Import and Export of Pharmaceuticals into and from the Republic of Armenia";
- Statute of the Ministry of Environment Protection and Mineral Resources of the Republic of
Armenia of 20 June 1996, "On Issuing Inferences on Export of Wild Animals and Plants
Included in the Red Book (Endangered Species Listing) of the Republic of Armenia";
- Statute of the Ministry of Agriculture and F ood of the Republic of Armenia of 20 June 1996
On Issuing Inferences on Import of Plant Protection Agents into the Republic of Armenia.
- Decree of the Ministry of Health of the Republic of Armenia, "On Regulation of
Pharmaceutical Activity and Ensuring the Quality of Drugs and Medical Facilities";
- Programme of the Government of the Republic of Armenia, "On Privatization of State
Enterprises and Unfinished Construction sites of the Republic of Armenia for 1996-1997";
and
- Amendment of 1 May 1996 to Annex N 1 to Decree of the Government of the Republic of
Armenia No. 615 of 6 December 1993, "On Determining the Customs Duties".
Introductory statements
4. In an introductory statement, the representative of Armenia said that since declaring
independence from the former Soviet Union in 1 991, Armenia had vigorously pursued free market
reforms within a democratic framework, notwithstanding acute political and economic difficulties.Economic decline had been reflected in sharp reductions in output, falling incomes, reduced tradeflows, severe shortages of energy, and scarcity of food and other consumer goods.
5. Despite this adversity, the Government had persevered with the economic reform programme,
placing particular emphasis on liberalization, stabilization, and economic restructuring.  Mostagricultural land was privatized shortly after independence and privatization in other sectors wasmoving ahead.  Demonopolization and deregulation had removed barriers to private sectorparticipation in all but a few areas of economic activity.  Price controls were only applied to a limitednumber of essential goods and services, and were being phased out.  Foreign investment wasencouraged.  On the macroeconomic side, stabilization policy was a government priority, given thechallenge of the difficult budgetary position, combined with the need to contain inflationary pressuresand maintain exchange rate stability.  The Govern ment had successfully brought monthly inflation
down to a single digit level, from the triple-digit levels prevailing at the end of 1993.  TheGovernment was strongly committed to securing a sound and stable macroeconomic framework forfuture economic growth and development.WT/ACC/SPEC/ARM/1/Rev.2
Page 4
6. Fuller integration into the world economy, and continuing diversification of Armenia's
economic relations with other countries, were central planks of the Government's reform efforts.  TheGovernment of Armenia believed that these objectives could only be attained through open tradepolicies that emphasized specialization on the basis of international comparative advantage.  It was forthis reason that the Government of Armenia attached priority to its accession to the World TradeOrganization, and wished to complete negotiations for membership at the earliest opportunity.
7. The Working Party welcomed Armenia's application for accession to the Agreement
Establishing the WTO.  Several members of the Working Party acknowledged that Armenia hadundergone a rapid process concerning reform and trade liberalization which, notwithstanding internaland external difficulties, appeared to be succeeding in permitting economic growth.  These membersexpressed support for Armenia's integration into the multilateral trading system and indicated theirreadiness to pursue the negotiations in earnest.
II. Economic Policies
- Foreign exchange and payments
8. In response to questions from members of the Working Party concerning Armenia’s foreign
exchange reserves and the convertibility of the Dram, the representative of Armenia stated that grossofficial reserves made up US$ 225.7 million as of 28 October 1997 and covered about 2.8 months ofimports. Gross official reserves had risen from 0.7 months of import cover in 1994 to 2.3 months in1996 and were planned to rise to 3.3 months of import cover by the end of 1997. On 29 May 1997,Armenia had accepted the Article VIII of the International Monetary Fund's Agreement and theobligations implied by Sections 2, 3 and 4 thereof and has committed to refrain from imposingrestrictions on carrying out payments and transfers, and from engaging in discriminatory currencyarrangements or multiple currency practices without IMF approval. According to the ResolutionNo. 141 "On Foreign Exchange Regulation and Administration of Control", there were no restrictionson current account operations.  After being licensed by the Central Bank natural persons and legalentities were allowed to act as foreign exchange dealers. The Central Bank of Armenia (CBA)determined the daily exchange rate as a midpoint of the previous day’s buying and selling operationsin foreign exchange market (the participants of fo reign exchange market are those dealing with over-
the-counter market, stock exchanges, foreign exchan ge bureaus, etc.).  Foreign exchange dealers and
banks were free to establish their own exchange rates for transactions.  Non-resident banks could beauthorized to participate in the domestic foreign ex change market on conditions equal to those set forWT/ACC/SPEC/ARM/1/Rev.2
Page 5
resident banks.  Legal entities and natural persons, residents and non-residents of Armenia could open
and hold their current accounts in foreign banks without any restrictions. Residents of Armenia couldimplement operations related to movement of capital without any restrictions unless otherwisespecified by CBA. Non-residents could implement operations related to movement of capitalaccording to the "Law on Foreign Investments" of the Republic of Armenia.  All bilateral clearingarrangements based on barter had been eliminated.
- Income Tax
9. The representative of Armenia stated that according to the Law on  Income Tax, the personal
income tax was determined by how many multiples of the minimum wage an individual’s incomeequalled.  The minimum wage was set by the deci sion of the Government of Armenia.  Incomes
below two times the minimum wage were tax-exempt. For incomes from two up to ten times greaterthan the minimum wage, the tax rate was 12 per cent, for multiples of the minimum wage between tenand twenty times the rate was 18 per cent, for multi ples from twenty to forty times the rate was
25 per cent, and for multiples above forty times the rate was 30 per cent.  Exemptions from incometax were receipts from the sale of private property, any income received by pensioners, invalids,veterans, and handicapped individuals, social security recipients, alimony payments, students’stipends, and military service pay.
- Land Tax
10. The representative of Armenia added that the system for levying income tax in the
agricultural sector was different.  Private farmers paid a fixed share of their income, currently set at15 per cent.  In the event of adverse agricultural circumstances, the Government by consent of theNational Assembly of Armenia, may reduce these liabilities, or exempt farmers altogether fromtaxation.  In response to questions from Working Party members, the representative of Armenia saidthat no differentiation was made between enterprise s on the basis of ownership in relation to taxation
in the agricultural sector. Both State farms and private farms paid the same taxes, which wasestablished at the rate of 15 per cent of calculated net income determined by the cadastre value of theland.  The different system of taxation for the agricultural sector reflected the desire to impose a lessertax burden on the sector.  As long as farmers did not derive more than 25 per cent of their incomefrom non-agricultural sources, they were exempted from income tax. In accordance with the Law onPeasant and Collective Farms, farmers in mountainous, remote or abandoned countryside areas maybe granted tax relief.  At present, tax exemptions  were being granted to farmers in certain border
areas.WT/ACC/SPEC/ARM/1/Rev.2
Page 6
- Profit Tax
11. The representative of Armenia stated that the enterprise profit tax was imposed on all juridical
persons operating in Armenia, including foreign enterprises. Corporate taxes were charged at the samerates as personal income taxes - 12 per cent, 18 per cent, 25 per cent, and 30 per cent.  The possibilityof establishing a single corporate tax rate was under consideration.  Dividend income from companydividends paid out of after-tax profits were not taxed.  New enterprises, excluding State enterprises,were exempted from profit tax for the first two years of their operation. Joint ventures may be able tosecure additional tax credits for a period of seven years, depending on the share of foreign capital inthe statutory fund of the enterprise.  Tax holidays were granted to promote entrepreneurship andbusiness activity in the country.  The credits were set at 50 per cent if foreign capital comprises half ormore of total share capital and is not less than US$100,000, and at 30 per cent if foreign capitalaccounts for 30 per cent to 50 per cent of the total (with a minimum investment of US$40,000 toUS$100,000).  On 30 September 1997 the National Assembly of Armenia adopted the new Law onProfit Tax, which would enter into force on 1 January 1998. Under this Law, the profit tax wasimposed on residents and non-residents. Residents would be considered the juridical persons andentities without status of a juridical person established (State registered) in Armenia. Non-residentswould be the juridical persons and entities without status of a juridical person established in foreign
countries , as well as the international organizations and juridical persons and entities without statusof a juridical person established by these organizations abroad. For the residents the profit tax wouldbe charged on taxable profit obtained in Armenia and abroad. For non-residents the profit tax wouldbe charged on taxable profit obtained from Armenian sources. The amount of profit tax charged ontaxable profit would be determined according to the following table:
Taxable profit Profit tax
Less than 7 million Drams 15 per cent of taxable profit
More than 7 million Drams 1.05 million Drams added to 25 per cent of the
amount of profit exceeding 7 million Drams
The amount of the profit tax, charged on the income from organizing and running gambling and
lottery games, would be equal to 70 per cent of the profit obtained. In addition, the tax charged onincome obtained by non-residents from the Armenian sources would be levied according to thefollowing rates:WT/ACC/SPEC/ARM/1/Rev.2
Page 7
Type of Income: Rate (%)
Dividends; interests 15
Insurance offsets received in a result of insurance; incomes received from shipment
(freight)5
Royalties; income received from property rent; property value  increment and other
passive incomes (except incomes received from shipment (freight)), as well as
incomes received from other Armenian sources20
The taxpayer entities engaged in production of agricultural products would be exempted from the
profit tax payments, charged on income obtained  after realization of  agricultural products. Besides,the profit tax exemptions would be granted to the following Armenian institutions registered in the
Tax Inspectorate:
- public and religious organizations; Armenian political parties;
- condominiums; non-profit organizations, established and operated exclusively for religious,
benevolent, scientific, educational purposes, as well as for testing for public security,environmental protection, development and propaganda of literature, protection of consumerrights, promotion and organization of non- professional sports, and human, women’s,
children’s and old people’s rights protection purposes, in case if any  part of the income ofthese organizations was not distributed among their members or other persons and was usedsolely for statutory purposes;
- libraries, museums, secondary schools, boarding schools, old people’s and children’s homes,
in case if any part of the income of these organizations was not distributed among theirmembers or other persons and was used solely for the statutory purposes.
If after 1 January 1998, the actual share of the foreign investor in the statutory fund of the resident
enterprises with foreign investments is at least 500 million Drams the amount of the profit tax leviedwould be reduced by:
- 100 per cent of the profit tax amount for the two years following the investment year;
- 50 per cent of the profit tax amount  for the period from the third up to the tenth years
following the investment year.
In case of termination of the taxpayer’s activities in the period of privileges, the amount of the profit
tax for this period would be calculated at the full rate for the whole period of activities.WT/ACC/SPEC/ARM/1/Rev.2
Page 8
- Property tax
12. The representative of Armenia added that by the adoption of the Law on Property Tax the
fixed assets tax was replaced by the property tax.  The tax applied to: (i) the assets of all enterprises asdefined in the Law on Enterprises and Entrepreneurial Activities, unless particular assets were thesubject of a specific exemption by the Government;  (ii) houses and other dwellings in Armeniabelonging to citizens and non-citizens, or leased by them; (iii) cattle; and (iv) certain vehicles.  Arange of assets and persons exempted from the tax is indicated in Article 9 and Article 10 of the Law.Particularly, all newly formed enterprises were exempted from taxation during the first year after theirregistration.  The property used for agricultural production purposes was also exempted from taxation.
13. The representative of Armenia stated that in accordance with the Law on Property Tax, the
property tax for juridical  persons was determined as 0.2 - 0.8 per cent of the average annual value ofthe taxable property, and for natural persons – 0.2 per cent of the property value exceeding the amountof 850 times the minimum monthly wage (0.2 per cent of the amount exceeding the non taxable partof the calculated value of buildings).
- State ownership and privatization
14. In response to requests for information concerning the privatization of State owned assets, the
representative of Armenia noted that a Privatization Programme was adopted in January 1994.  Allnatural and legal persons are entitled to participate in the privatization programme.  That programmeenvisaged that privatization would take three years, with one third of State-owned productive assetsbeing privatized each year.  Those targets proved over-ambitious, and privatization was now expectedto continue at least until the end of 1997. At the beginning of the programme (1994-1995), the Stateowned an estimated 5,000 small enterprises and about 2,000 medium- to large-scale enterprises thatwere planned to be privatized. The target of the 1996-97 programme was the privatization of4,927 entities (including small enterprises), of which 347 are in industry, 183 in transportation, 112 inconstruction, 16 in telecommunications, 432 in agriculture, 7 in the material and technical (logistic)supply sector, 1820 in the distribution sector, 763 in the household services sector, 194 in the public
utilities sector, 485 in the social sector, 5 in automobile maintenance sector, 46 in the natural depositssector, and 122 enterprises and 395 unfinished units of housing construction in the YerevanMunicipality. By the middle of September 1997, 1,177 medium and large enterprises and 5,301 smallWT/ACC/SPEC/ARM/1/Rev.2
Page 9
enterprises had been privatized.  The table below represented more detailed information on process of
the privatization in Armenia from 1994 to 1997.  The representative of Armenia further noted that thesale of some of the 10 large State-owned firms to foreign investors through international tender werein process with the participation of a foreign compan y.  International tenders, supposed to be finished
by November 1997, had been suspended partly due to the increasing interest of foreign investors inthose firms. The situation by November 1997 was as follows:
(i) Nairit Research Production plant had to be privatized through international tender
(Resolution 197, 24 June 1997)
(ii) Plant Sapphire (the State share - 65 per cent) was included in the 1996-1997 privatization
programme
(iii) Yerevan Cabel Company had been privatized(iv) Gyumry Socks factory had been privatized(v) Zangezur Copper - Molybdenum Enterprise was not subject to privatization(vi) Yerevan Automobile Production plant had been privatized(vii) Yerevan Jewellery plant was included in the 1996-1997 privatization programme.(viii) Armenmotor Company (the State share - 70 per cent) was included in the 1996-1997
privatization programme
(ix) Yerevan Electrolamp plant was to be privatized through international tender (Resolution 202,
24 June 1997)
(x) Armelectromachine plant was included in the 1996-1997 privatization programme.
The following State-owned large firms also were subject to sale through international tender: Yerevan
Shoe factory "Araks", "Mars" factory, "Hotel s Armenia 1,2", "Ani" and "Dvin", Yerevan Brandy
plant, "Rubin" factory in Vanadzor, Fibre Chemical  factory in Vanadzor.  Information on the Progress
of the Privatization of State Enterprises by 15 September 1997:WT/ACC/SPEC/ARM/1/Rev.2
Page 10Open stock
companiesClosed stock
companiesSale of assets to
the lesseeAuctions Tenders International
tendersCompanies
dissolvedIn
1997Total Unfinished
construction
sites
Evaluations made 586 1,702 175
Government’s decision 1,206 152 137 23 41 16 4 583 1,579 474
Total: of which 1,137 152 137 23 38 16 1,503 31
Privatization in process 15 14 9 5 16 59
Privatization suspended 230 22 8 7 217 267 23
Privatization finished 892 116 128 15 26 325 1,177 8
Total: of which 1,137 152 23 38 1,503 31
Industry 321 41 4 2 368
Agriculture 323 35 9 3 370
City construction 130 5 12 147
Culture 26 7 33
Trade and services 37 6 2 45
Transportation 19 10 29
Communication 10 2 12
Health 0 5 5
Others 20 5 9 34
Evaluations made Privatized 1994-1997 Privatized through auction Subject to sale through auction
Small  enterprises 7223 5301 188 573
Paid
(thousand drams)
Totalof which by certificates by drams Number of certificates paid of which in 1997 by
certificates(thousand drams)
by drams
Medium to large enterprises 35,082,916.4 34,893,460 189,456.4 1,744,673 7,978,180 1,929.4
Unfinished construction site 89,568 88,800 768 4,440 73,820 748
 Small  enterprises 19,156,172.7 18,959,980 196,192.7 985,478 5,732,900 30,666.4
Total 54,328,657.1 53,942,240 386,417.1 2,734,591 13,784,900 33,343.8WT/ACC/SPEC/ARM/1/Rev.2
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15. The representative of Armenia added that the Government continued to seek ways of
accelerating the privatization programme.  The time limit had been shortened to one month for theinitiation of second stage and third stage actions for enterprises, which had not been sold in previousattempts.  In addition, mandatory liquidation follow ed for any enterprises that thereafter remained
unsold.  The Government was now entitled to sell a portion of enterprises for money alone (ratherthan money and vouchers).  The Government had greater flexibility in developing methods forprivatizing more complex entities, such as utilities.  The responsibilities and structure of thePrivatization Commission have been streamlined, and information publication requirementssimplified.  The centralized share registry has also been made operational.
16. In response to a further question, the representative of Armenia stated that Armenia had
privatized almost 90 per cent of agricultural land and made land titles freely transferable.  The smallshare of land still in State hands is reserve land and land used for certain kinds of agricultural supportactivities described in paragraphs 101-103 below.  The Government of Armenia did not have atimetable for the privatization of agricultural land still in State hands.
17. The representative of Armenia confirmed that to ensure full transparency and to keep WTO
members informed of its progress in the reform of its transforming economic and trade regime,Armenia would provide annual reports to WTO Members on developments in its programme ofprivatization along the lines of the information provided to the Working Party, and on the other issuesrelated to its economic reforms as relevant to its obligations under the WTO.  The Working Party tooknote of this commitment.
- Investment regime
18. The representative of Armenia stated that the 1994 Law on Foreign Investments regulated
Armenia’s policies towards foreign investment.  The Law was designed to attract investment from
foreign sources.  It provided guarantees against nationalization and provided that confiscation couldonly take place following a judicial decision.  In the unlikely event of confiscation, full compensationwould be payable.  Foreign investors were indemnified against damages resulting from illegal actionsby Government, or from the improper performance by Government of its obligations (as determinedin a Court of Law).  The Law also guaranteed in vestors the right to repatriate profits and assets
without hindrance.  In the event that foreign investment legislation was changed after an investmenthas occurred, the investor concerned was entitled to an exemption from any less favourable provisionsduring a five-year period.WT/ACC/SPEC/ARM/1/Rev.2
Page 12
19. The representative of Armenia further noted that after 1 January 1998 the following measures
will modify the profit tax levied for foreign investors.  If the share of foreign investors in the statutoryfund is at least 500 million drams, the profit tax of enterprises with foreign investments will bereduced by:
- 100 per cent of the profit tax amount for the 2 years following the year of investment;
- 50 per cent of the profit tax amount from the third to the tenth  years following the year of
investment.
In case of termination of the enterprises with foreign investments in the period of these 10 years, the
profit tax for the privileged period would be calculated at full amount for the whole period of theiractivity.  Enterprises with any foreign ownership had been entitled to indefinite duty-free treatment on
all their imports of capital equipment and recurrent inputs.  According to the Decree No. 124 theprivileges for foreign investors on the licensing of the products for import and export activities wereexempted, and the following procedure established: the non-tariff regulations of the unified system ofexport and import of goods and services was extended to all economic entities of the Republic ofArmenia, irrespective of the form of ownership and the place of registration.  Foreign investors werefree to choose their own insurers.  No investment performance requirements are maintained.  Therewere no requirements for foreign investors to expo rt a certain amount of product, and the Government
did not intend to introduce any such requirements. Foreign investors received full national treatment.
20. The representative of Armenia stated that any restrictions on investment were generally
applied on a non-discriminatory basis as between national and foreign investors.  By the Constitutionof the Republic of Armenia the foreign citizens and persons without citizenship did not have the rightto own land.
- Pricing policies
21. In response to requests for an update on the progress of price reform, the representative of
Armenia stated that since 1995, almost all government-mandated price controls had been removed.The only domestic prices that were still subject to control were those for irrigation, urban electricaltransport, electricity, hot water, gas, heating, sewage services, garbage collection, rent in State-ownedhousing, and telephone services.  Those prices were still subject to control because State-ownedenterprises were the exclusive or dominant suppliers.  All administered prices were adjusted on aregular basis to maintain their real value.  The only remaining direct price control was on flour(through the setting of maximum profit margins for flour mills).  Minimum export prices were inWT/ACC/SPEC/ARM/1/Rev.2
Page 13
place for ferrous and non-ferrous metal scrap, but only for the purpose of calculating the corporate tax
liabilities of enterprises dealing in these scrap metals.
22. The representative of Armenia added that subsidies on bread, municipal electric transport and
garbage collection, and cross-subsidies on water and sewerage had been eliminated.  The subsidies ondistrict heating and hot water (the only remaining consumer subsidies) were under review.  In the caseof district heating, which less than one-third of households actually receive, the issue of provision oftargeted heating subsidies to vulnerable groups would be resolved as part of the overall reform ofsocial assistance.
23. The representative of Armenia confirmed that as of the date of accession price controls on
products and services in Armenia have been eliminated with the exception of those listed inparagraphs 21 and 22 of this report, and that in the application of such controls, and any that areintroduced or re-introduced in the future, Armeni a will apply such measures in a WTO-consistent
fashion, and take account of the interests of exporting WTO members as provided for in Article III:9
of the GATT 1994. He also confirmed that the goods and services listed in paragraph 21 and 22 hadbeen published in the Government’s official newspaper and any products subject to State pricecontrols in the future, including any changes in the initial list reported at the time of accession, wouldbe published in the official newspaper.  The Working Party took note of this commitment.
III. Framework for Making and Enforcing Policies
- Powers of executive, legislative and judiciary, administration of policies on
WTO-related issues
24. The representative of Armenia said that the executive branch of Government in the Republic
of Armenia comprises the President of the Republic, the Prime Minister and Ministers.  The President
of the Republic is the highest executive authority.  The President of the Republic appointed the PrimeMinister.  The members of the Government were appointed by the President of the Republic uponrecommendation of the Prime Minister.   The Prime Minister was responsible for the day-to-dayrunning of the Government, and presides over the Ca binet.  The President of the Republic was elected
by popular vote every five years.  With the except ion of fiscal matters, the President was empowered
to issue decrees and orders  without the authorization of Parliament.  Resolutions were generallysigned by the Prime Minister and the responsible Minister, and may require presidential approval.Administrative orders were signed by Ministers.  According to the new Constitution of the Republicof Armenia, adopted in 1995, the National Assembly  adopted laws submitted for its approval by the
Executive Branch of Government.  Such laws enter in to force after ratification by the President of the
Republic.  This procedure applied to all legislative amendments, including those relating to theestablishment or alteration of tariffs and taxes.WT/ACC/SPEC/ARM/1/Rev.2
Page 14
25. The representative of Armenia also said that the legislature of the Republic of Armenia is the
National Assembly, or Parliament, which comprises 131 deputies.  Deputies were elected by popular
vote every four years.  The National Assembly, under the authority and guidance of its Chairman, wasresponsible for approving all laws and inter-governmental agreements.
26. The representative of Armenia said that in conformity with the Constitution of the Republic
of Armenia, the judiciary was independent of the executive and legislative branches.  The Courts of
general competence were the Courts of First Instance, the Review Courts and the Court of AppealsThe guarantor of the independence of judicial b odies was the President of the Republic, who was
Head of the Council of Justice.  The Minister of Justice and the Procurator General were the DeputyHeads.  The Constitutional Court, comprising nine  members, was responsible, among other things, for
ensuring the constitutionality of decisions of the National Assembly, decrees of the President,Resolutions of the Government, and treaties entered into by the Republic of Armenia.
27. The representative of Armenia said that the Constitution of the Republic of Armenia contains
transitional provisions, which were currently in force, pending the establishment of the judicial systemdefined by the Constitution.  The new system provides for the creation of economic courts, but thesedid not exist under the present arrangements.  According to the present arrangements, all economicdisputes between legal persons of the Republic of Armenia and those of other countries, including theCIS, were referred to the State arbitration court and appealed to the arbiter, whose decision was final.Disputes between legal persons and individual citizens were referred to people's courts and may beappealed to the Supreme Court of the Republic of Armenia.  The latter's verdict may be appealed atthe Plenary Session of the Supreme Court, which makes the final decision.  Neither the existingprovisional arrangements, nor the permanent arrangements set out in the Constitution, contemplatedifferential treatment between CIS and non-CIS legal persons.  At the same time the respectiveCommittees of the National Assembly, as well as the interested ministries and agencies of theGovernment of the Republic of Armenia were elaborating the Codes and Laws necessary for theimplementation of the judiciary system.  The bulk of these provisions were scheduled to be adoptedby the end of the first half of 1998.  Economic litigation in particular shall be handled through theCriminal Procedure and the Civil Procedure Codes under preparation.
28. The representative of Armenia added that according to the changes in the structure of the
Government in mid 1997, the Ministry of the Industry and Trade had primary responsibility in mostWT/ACC/SPEC/ARM/1/Rev.2
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aspects of policy affecting international trade in goods and services.  The Ministry of Finance and
Economy had overall responsibility for fiscal policy, but decisions on tariffs were made together withthe Ministry of Industry and Trade.  When the implementation of the fiscal policy required theintroduction of amendments in the laws in effect or the adoption of new laws, the Government of theRepublic of Armenia must submit the relevant legislative proposal to the National Assembly, for itsapproval.  The Central Bank was responsible for monetary policy, exchange rate policy and thebanking system.  Within the structure of the Ministry of Industry and Trade the Armenian PatentOffice was responsible for industrial property protection matters, and the Armenian NationalCopyright Agency for copyright protection.
29. The representative of Armenia said that in matters of policy affecting trade in goods and
services, the Central Government retained full authority.  Local administration bodies had nojurisdiction whatsoever in establishing taxes or regulations pertaining to goods and services. Withinthe framework of the process of Armenia's accession to the WTO, the obligations assumed by theGovernment of the Republic of Armenia were subject to implementation throughout the Republic ofArmenia. Under the new Constitution, the Constitutional Court was required to ensure compliance ofthe provisions of the WTO Agreement, as an international treaty, with the Constitution of theRepublic of Armenia.  If norms were provided in these treaties other than those provided by the lawsof the Republic, then the norms provided in the treaty shall prevail.  International treaties that
contradicted the Constitution may be ratified after making a corresponding amendment to theConstitution.
30. The representative of Armenia confirmed that following signature and ratification of
accession all WTO Agreements would directly have the authority of law within the Republic ofArmenia and the laws and legislative instruments necessary for the application of these provisionswould be adopted as provided in the Protocol of  Accession.  The Working Party took note of these
commitments.
IV. Policies Affecting Trade in Goods
- Market Access Negotiations
31. Armenia undertook negotiations on market access in goods with interested members of the
Working Party.  The Schedule of Concessions and Commitments resulting from those negotiations isAnnex I to the Appendix of the Draft Protocol of Accession of Armenia.WT/ACC/SPEC/ARM/1/Rev.2
Page 16
- Registration requirements
32. The representative of Armenia informed the Working Party that with certain exceptions
necessary to safeguard human, animal and plant health and the environment, the former Statemonopoly in foreign trade in Armenia was abolished in 1989,and was replaced by a registrationrequirement for the conduct of such activity.  Enterp rises or private entrepreneurs engaging in trading
(including importation) were required to be registered in the State Register of Enterprises.  By aDecree of the President of the Republic of Armenia of 4 January 1992 entitled On Foreign EconomicActivity, all enterprises or branches, subsidiaries and representations thereof registered and operatingin the territory of Armenia, regardless of their form of ownership, were granted the right to conductforeign economic activity without any additional re gistration requirements.  The State registration of
enterprises and private entrepreneurs in the Republic of Armenia, as well as the procedure andconditions for the use of information provided through the registration process were defined in theLaw on State Register of Enterprises of 2 September 1993.  The founder(s) of an enterprise, inaccordance to Article 12 of the Law on State Register of Enterprises, should submit to a local divisionof the State Register of Enterprises the following documents: the application of the person(s) foundingthe enterprise, the founding documents drawn up in compliance with the legislation of the Republic ofArmenia, and if needed, the licence to engage in the type of activity in question, to which effect anentry is made in the record log.  Upon the verification of submitted documents the informationrequired by Article 11 of the same law was entered on a State registration card and forwarded to thecentral body of the State Register for the purpose of uniform codification, granting of State registernumber and issuing a certificate of State registration.  In the case when any alterations and additionswere made in the founding instruments of the enterprise, it was necessary to undergo current Stateregistration, which required submission of relevant documents concerning changes.  Natural personswere permitted to import limited quantities of items into Armenia for personal use withoutregistration, although for a sale thereof they must be registered as sole entrepreneurs.  Individual
entrepreneurs could conduct business operations following registration in accordance with Article 4 ofthe Law on State Register of Enterprises. In order to conduct economic activity in the territory of theRepublic of Armenia the importer was required to establish branches, subsidiaries, representations orcreate joint ventures registered in the State register of the Republic of Armenia.  No registration wasrequired in Armenia for any enterprise operating from outside the national territory as an exporter toArmenia.
33. The representative of Armenia confirmed that the former State monopoly in foreign trade in
Armenia had been abolished and that no restrictions on the right of foreign and domestic individualsand enterprises to import and export goods and services within Armenia’s customs territory existed,except as provided for in WTO Agreements; that in dividuals and firms were not restricted in theirWT/ACC/SPEC/ARM/1/Rev.2
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ability to import or export based on their registered scope of business; and that the objective and non-
discriminatory criteria for registration of companies in Armenia were generally applicable andpublished officially and generally available to traders for their review.  The Working Party took noteof these commitments.
- Customs tariff
34. The representative of Armenia stated th at the Law on Customs Tariffs  approved by
Parliament in August 1993, provided legislative authority for setting tariffs and dealing with customsmatters.  Decree No. 615 issued by the Government in December 1993 introduced new customsduties, and these were further modified by Decr ee No. 224 issued in May 1994 and by Decree No. 39
issued in January 1995. According to the new Constitution of the Republic of Armenia, adopted in1995, the alterations to the Tariff were required to be approved by the National Assembly uponpresentation of the Parliamentary Permanent Financial Credit, Budgetary and Economic Commission.The Law on Customs Tariffs Rates, adopted by the National Assembly in April 1997, introduced thenew list of customs duties, which were now in operation. The latest rectification of the Law onCustoms Tariffs was accomplished by the adoption of the Law on Amendments to the Law onCustoms Tariffs in September 1997.  Armenia had been using the Harmonized System of Commodity
Classification since 1991.
35. The representative of Armenia said that customs tariffs were expressed in ad valorem terms
and levied on c.i.f. values.  At present, 195 items were specified in Armenia’s tariff schedule,reflecting the fact that majority of product categories identified at the two-digit level of theHarmonized System carried the same rate of duty.  In response to questions from Working Partymembers concerning the possibility of disaggregating the tariff to the four or greater digit level, therepresentative of Armenia stated that as a result of ongoing disaggregation the former number of132 items had been increased up to the present number of 195.  The representative of Armenia furtheradded that if it proved necessary the Government of Armenia would continue disaggregating its tariffschedule from its present level. After adoption of the new Law on Customs  Tariffs Rates the previoussystem of five tariff rates was terminated and only two tariff rates remained - zero and 10 per cent.More than fifty per cent of the items in the tariff schedule were subject to duty rate of zero (98 items)with remaining 97 items subject to 10 per cent dut y rate. After taking account of tariff exemptions
(e.g. for humanitarian supplies, etc.) together with zero-rated items, the weighted average tariff was
below 5 per cent.  Tariff revenue was projected to account for about 10.7 per cent of the Government'stotal tax collections and about 7.4 per cent of the total budget revenue in 1998.WT/ACC/SPEC/ARM/1/Rev.2
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36. The representative of Armenia stated that the rates of customs duty would not be increased
beyond levels bound in Armenia’s WTO Schedule of Concessions, which is annexed to the Protocol
of Accession of Armenia.  The Working Party took note of this commitment.
- Other duties and charges levied on imports
37. The representative of Armenia informed the Working Party that there were no other duties
and charges levied on imports except the fees for services rendered by Customs agencies described inparagraphs 40-43 below. [The representative of Armenia stated that Armenia would bind all dutiesand charges, other than ordinary customs duties, at zero in Armenia's WTO Schedule of Concessions,annexed to the Protocol of Accession of Armenia.]
- Tariff rate quotas
38. The representative of Armenia stated that Armenia did not apply tariff rate quotas.  The
representative of Armenia confirmed that his Government had no plans to introduce tariff rate quotas.
- Tariff exemptions
39. The representative of Armenia stated that all tariff exemptions other than those granted in the
context of free trade area agreements were granted on a MFN basis . Such exemptions were granted inrespect of the following:
- essential equipment imported by foreign ente rprises and joint ventures (with at least
30 per cent foreign ownership) and designated for a supplement of enterprises’ statutoryfunds;
- goods in transit through Armenian territory;- trucks and vehicles, regularly operating as freight and passenger carriers through the
Armenian territory, as well as fuel, food, tools and other minor items necessary for temporaryuse to perform these operations;
 - foreign exchange, bonds and other securities;- humanitarian supplies;- specific goods temporarily imported to the Armenian territory and further exported without
being processed, such as fair and exposition exhibits, commodity patterns and package,professional equipment of temporary visitors, advertising materials, live animals, etc.;
- prosthetic and orthopaedic equipment and spare parts thereof;WT/ACC/SPEC/ARM/1/Rev.2
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- goods imported to duty-free shops or to bonded warehouses for subsequent exportation from
the Armenian customs territory;
- goods and articles, imported at expense of credits, received by the Republic of Armenia;
- any other instances foreseen in international agreements, including free trade agreements;
- Customs fees and charges for services rendered
40. Some members of the Working Party stated the ad valorem  customs fee levied by Armenia on
imports was inconsistent with the provisions of the WTO, in particular, Article VIII of theGATT 1994.  They also noted that a transition pe riod to bring the fee into conformity with
Article VIII was not appropriate.  Armenia should conform with the requirements of Article VIII from
the date of its accession, and from that time the proceeds of the fee should only be used for theoperation of customs clearance facilities and total annual revenues from the fee should not exceed thecost of customs clearance of the imported goods.  Following accession, information on the method ofcalculation of the fee and the cost of provision of customs clearance facilities should be provided toWTO Members upon request.
41. In response to questions from Working Part y Members about Armenia's system of customs
fees, the representative of Armenia stated that a customs fee of 0.15 per cent was charged on importedgoods.  The 0.15 per cent tax was calculated on the c.i.f. value plus applicable customs duty.  Nocustoms fee was charged on importation by the Armenian Government on clearing operations madeon the basis of international agreements, on temporary imports, on imports of raw materials forconstruction under bilateral inter-republican contracts, on goods imported directly through the Statebudget, and on humanitarian aid.  Imports subject to clearing arrangements under inter-republicancontracts signed with countries of the Former Soviet Union (FSU) had previously been exempted
from the customs fee, but this exemption had been discontinued, and FSU countries were no longerexempted from the customs fee.  No other import charges or fees were levied.  Under an amendmentto Decree No. 615 of 6 December 1993, which entered into force on 1 May 1996, the customs user feewas increased from 0.15 per cent to 0.3 per cent.  In 1995, approximately US$1 million was collectedas customs charges.  This revenue was used for the development of the customs administration inArmenia.  Resolution 282 concerning the endorsement of the Statute of the reserve fund of theCustoms Department, outlined how the fees levied were disbursed (being one of the sources of theformation of the reserve fund): 70 per cent of the m oneys in the reserve fund were allocated for and
spent on the creation and strengthening of the material and technical basis of the system, with theobjective of improving and developing the customs domain; 25 per cent of the moneys in the reservefund were allocated for and spent on the payroll of the employees of the customs service, providingWT/ACC/SPEC/ARM/1/Rev.2
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them with material incentives and improving their social conditions; 5 per cent of the moneys in the
reserve fund were allocated to the fund of the head of the Customs Department, which he/she uses forcontingency expenses within his/her jurisdiction.  The Government of the Republic of Armeniaadopted the Law on the Implementation of the Amendments and the Supplements to the Law onCustoms Tariffs of 18 August 1993, which entered into force on 19 September 1997. Under this Lawthe customs user fee was charged on declared goods of an amount equal to 0.3 per cent of the customsvalue, but no more than 600, 000 Drams (about US$1,200).  The customs fee was not charged onimportations made under credits given to the Arme nian Government, on humanitarian aid, as well as
for benevolent purposes. On 1 January 1999 the customs fee would be brought into conformity withthe provisions of Article VIII of the GATT 1994.
42. Some members of the Working Party questioned  whether the 0.3 per cent fee was consistent
with the requirements of Article VIII of the GATT 1994, in particular, whether the fee represented thecost of the services rendered. While agreeing that such payments are incompatible with Article VIII ofthe WTO Agreement, the representative of Armenia said that the present customs fee was based onthe necessity to improve the conditions of the customs service.  Armenia needed a certain period oftime (up to the end of 1998) to ensure the complete conformity of the customs fee with the WTOprovisions.
43. The representative of Armenia confirmed that Armenia would, from the date of accession,
revise its customs fee, currently 0.3 percent ad valorem , with a maximum fee level of 600,000 Drams
(about US$1,200).  In this regard, Armenia would implement a minimum and maximum fee level that
would ensure that the fee collected would  approximate the cost of the customs services rendered inprocessing imports.  The fee would also be applied to exports and to import purchases by theGovernment of Armenia.  Proceeds from application of the fee would only be used to fund import and
export processing and to process trade subject to the fee.  Total annual revenues from the fee wouldnot exceed the cost of the customs services provided.  Following accession, information on themethod of calculation of the fee and the cost of pr ovision of customs processing would be provided to
WTO Members upon request.  The Working Party took note of these commitments.
- Application of internal taxes to imports
44. The representative of Armenia informed the Working Party that Armenia's tax system had
been completely overhauled since 1992, as part of the Government's overall policy of economicWT/ACC/SPEC/ARM/1/Rev.2
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transformation towards a market economy.  On 14 April 1997 the National Assembly of the Republic
of Armenia adopted the new Law on Taxes. Under th is Law the taxes, applied in Armenia, were as
follows:
- value added tax;
-e x c i s e  t a x ;- profit tax;- income tax;- property tax;- land tax.
In particular, two indirect taxes were imposed on imports and domestic production in Armenia - the
value added tax, charged on the turnover of goods and services, and the excise tax on realization ofcertain goods.  The direct taxes included the profit tax levied on the profit of juridical persons, theincome tax – on the income of natural persons, the property tax – on the certain types of property andthe land tax imposed on the land owners described in paragraphs 9-13 above.
- Value Added Tax
45. The representative of Armenia informed that the Value Added Tax (VAT) was imposed
pursuant to the new Law on Value Added Tax, which entered into force on 1 July 1997. This Lawensured conformity of levying VAT on imported goods with the MFN principles and provided for:
- countries;
- principle of taxing of imports at the customs border;- introduction of a dedicated system of registration of VAT payers;- introduction of a system of tax bills.
The VAT was charged on imports and domestic output at the rate of 20 per cent.  In the full value of
the taxable turnover of goods and services (including 20 per cent rate) the amount of the value addedtax was determined on 16.67 per cent of the calculation rate.  The value added tax was not calculatedand levied by customs bodies on goods imported to Armenia with zero customs tariff determined bythe Law on Customs Tariff Rates.  The items exempted from VAT included: the urban electricaltransport, tuition for education in secondary schools, professional and higher educational institutions(Universities, Institutes, etc.); realization of children's food; scientific research work; realization of theveterinary drugs and chemicals used in production of agricultural products; realization of domesticallyproduced agricultural products; insurance, reinsurance and banking activities;  products and servicesWT/ACC/SPEC/ARM/1/Rev.2
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imported as humanitarian aid as well as for charitable purposes.  In addition, zero-rate tax was applied
to: the taxable turnover of goods exported outside  of the customs territory of Armenia; the goods
determined for official usage by diplomatic and consular representations or by equated with themother international, intergovernmental organizations, as well as goods and services acquired by theseorganizations on the territory of Armenia; transit of foreign loads through the territory of Armenia;construction and relevant (designing, research, etc.) works fulfilled at the expense of the resources ofArmenian Diaspora communities, foreign countries, foreign and international intergovernmental and
non-governmental (public) and religious organizations in the scope of humanitarian aid andbenevolent or other social programmes.  The full list of VAT exemptions was provided to theWorking Party in the Law on Value Added Tax.
-E x c i s e  T a x
46. In response to the questions concerning excise tax the representative of Armenia added, that
the Law on Excise Tax imposed excise tax on domestic and imported goods.  Like the VAT, theexcise tax was collected on imports by the customs authorities, and on local production by the TaxInspectorate.  The National Asse mbly of Armenia adopted the new Law on Excise Tax, which entered
into force on 1 July 1997. According to this Law,  the excise tax was charged on the following goods
produced/realized in the Republic of Armenia or im ported to the Republic of Armenia by natural and
juridical persons and entities without status of a juridical person: caviar, beer, grape wine, strongalcohol,  tobacco products, gasoline, diesel fuel, natural leather garments, fur and furskin articles(excluding workers' and military semi-coats made of sheep furskin), glass crystal and china, jewelleryand passenger vehicles. For the goods produced in Armenia the turnover of the realization of thegoods, based on the realization prices (without  excise and value added taxes) was the subject oftaxation.  The excise tax charged on domestically produced goods was calculated and paid by theenterprise or the individual entrepreneur producing/realizing the goods in question during ten workingdays following the realization of goods. For the goods imported to Armenia the customs value of thegoods (without value added taxes and customs tariffs) was the subject of taxation.  The excise taxescharged on imported goods were levied by the customs bodies in ten days after importation.
47. The excise taxes were as follows:
HS number Product description Ad valorem tax
1604 30 100 Caviar 200
2203 Beer 50WT/ACC/SPEC/ARM/1/Rev.2
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HS number Product description Ad valorem tax
2204 - 2206 Grape wine 50
2207;  2208 Strong alcohol 125
2402 Tobacco products 100
2710 00 270 Gasoline 35
2710 00 290
0 320
0 00 340
0 00 360
0 00 690 Diesel fuel 10
4203 Natural leather garments 25
4301 -  4303 Fur and  articles of furskin:  of
which:
430310 300 workers’ and military semi-coats
made of sheep furskin25
06911
7013 312Glass crystal and china 25
7113 - 7117 Jewellery 15
8703 Passenger vehicles 15
48. The representative of Armenia stated that the Armenian Government recognized that it was a
violation of the national treatment principle for excise taxes on domestic products to be lower than onimports of the same or a like product.  Therefor e, on 1 January 1997 Armenia equalized excise taxes
on domestic goods and imports of the same or like products as part of the accession commitments (seethe table in paragraph 47 above).
49. Some members of the Working Party noted that the non-application of these taxes to imports
from FSU States may be seen to give rise to di scrimination against products from non-FSU countries..
The representative of Armenia stated that Armenia had  switched to the destination principle oftaxation with respect to imports from all sources.  Armenia was therefore attempting to persuade its
CIS trading partners of the desirability of charging these taxes at destination and not origin.
50. The representative of Armenia confirmed that, from the date of accession, Armenia would
apply its domestic taxes, including value-added and excise taxes, in a non-discriminatory mannerconsistent with Articles I and III of the GATT 1994.  In this regard, in accordance with the new Lawson VAT and on Excise tax, these taxes were applied at an equal rate on domestic and imported goodsand Armenia applied the destination principle to value-added and excise taxes with respect to importsfrom all sources.  In addition, the method of application of all indirect taxes applied to imports wouldWT/ACC/SPEC/ARM/1/Rev.2
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be published and readily available to importers, exporters, and domestic producers.  The Working
Party took note of these commitments.
- Non-tariff measures and import licensing
51. The representative of Armenia stated that pursuant to the Resolution No. 124,
29 December 1995, which regulates non-tariff measures in Armenia,  most imports were free of anyprohibitions or quotas. The import restrictions were imposed for health, security, and environmentalreasons. The items affected were all kinds of weapons, military technique and the consumablesnecessary for its production, technologies, equipment and locators of nuclear materials (includingheating materials), special non - nuclear materials and services related to it, ionizing radiation sources,the importation of which was carried out through authorization issued by the Government of theRepublic of Armenia.
52. The representative of Armenia stated that according to the Resolution No. 124 the following
imports are subject to licensing:
HS number
Pharmaceutical products, medicines 13.02, 29.38, 29.41, 30.03, 30.04;
Agricultural chemicals 38.08
53. In response to questions concerning the importation of pharmaceutical products and
medicines, the representative of Armenia stated that these have to be authorized by the Ministry of
Health of the Republic of Armenia. The importation of "agricultural chemicals (HS 38.08)" isrequired to be authorized by the Ministry of Agriculture and Food. The by-law on issuingauthorization for importing and exporting pharmaceuticals, stipulated that:
- authorizations for importation of pharmaceuticals were issued by the Pharmaceutical
Inspection of the Ministry of Health of the Republic of Armenia, and authorizations for
importation of agricultural chemicals were issued by the Ministry of Agriculture and Food,respectively;
- the authorizations were for single use only;
- to issue an authorization the following documents and conditions were required:
(a) the licence for commercial activities  involving pharmaceutical products in the
Republic of Armenia (Resolutions 161/415 and 36). The Resolutions stipulated thatthe production and wholesale and retail trade in pharmaceutical products and medicalWT/ACC/SPEC/ARM/1/Rev.2
Page 25
utensils were subject to State licensing in the Republic of Armenia. Resolution 36
stipulated that:
- pharmaceutical and medical activities were subject to licensing in the
Republic of Armenia;
- licensing was carried out by the Ministry of Health;- licences were issued for a period of 5 years.Licences for wholesale and retail trade in pharmaceutical products and medical
utensils were issued by the State Licensing  Committee of the Ministry of Health.  The
procedures for issuing licences were approved by the Resolution 188.  The samelicensing (including importation of pharmaceuticals and chemicals) proceduresapplied to individuals who have received  medical and pharmaceutical education in
foreign countries. And in the case of the existence of international agreements signedby the Republic of Armenia the procedures specified in the agreement applied(Resolution 188, 24 July 1996).  Foreign specialists invited to implement programmesof international and intergovernmental agreements were not subject to licensing.
(b) Imported or exported pharmaceutical products and agricultural chemicals must be
registered in the Republic of Armenia.  The registration of pharmaceutical productsand medical utensils was performed in the Republic of Armenia according toProvisions on the registration of pharmaceutical products and medical utensils in theRepublic of Armenia and the Protocol of registration of pharmaceutical products andmedical utensils in the Republic of Armenia approved by the PharmaceuticalDepartment of the Ministry of Health.
(c) There must be conformity of the quality of imported or exported pharmaceutical
products to the quality standards accepted in the Republic of Armenia.  In this respectResolutions 417 and 205 regulated the procedures of importation and exportation ofproducts subject to obligatory certification.
(d) Imported and exported pharmaceuticals must be good for use for at least two-thirds of
the period of their validity.
54. The representative of Armenia further stated that any person, firms and institutions wishing to
apply for an import licence may do so provided they are registered as a juridical person or a soleentrepreneur undertaking a business activity in Armenia. Registration as a juridical person or soleWT/ACC/SPEC/ARM/1/Rev.2
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entrepreneur was an automatic procedure, subject to no restrictions.  Licences applications were
required to be determined within fifteen days of receipt of an application.  In response to questionsfrom some members regarding whether licences could be issued more quickly, the representative ofArmenia stated that since the fifteen day stipula tion was a maximum period, in practice licences could
be obtained within a shorter time period.  If goods arrived without a licence, they could only becleared through customs upon production of the necessary import licence.
55. The representative of Armenia said that requests for authorization could be refused and issued
authorizations could be suspended if (a) ther e was incorrect information in the presented
documents, (b) the period of validity of the pharmaceutical products was exceeded, (c) theproduction serial numbers of imported pharmaceuticals did not correspond with the submittedquality certificates, (d) the imported pharmaceuticals were not registered in Armenia.Unjustified delays and refusal to issue authorization, as well suspending and cancelling issuedcertificates, could give rise to judicial procedures within 30 days after the refusal orsuspension.
56. The representative of Armenia added that to receive an authorization for importation of
pharmaceutical products the following documents were required: an application form, a certificaterelating to the acquisition of the pharmaceutical products, a licence to trade in pharmaceuticalproducts in Armenia, a certificate of quality issued by the producer.  To issue an authorization, anamount, equivalent to the minimum salary fixed by  the legislation of the Republic of Armenia was
collected and paid into the State budget.
57. The representative of Armenia further noted that authorizations were issued for the period
necessary to carry out the engagements, but no longer than one year.  The validity of an authorizationcould be extended upon the substantiated request of an applicant.  The body issuing the authorizationcould suspend its validity or cancel it.  Licences were not transferable among importers.
58. The representative of Armenia confirmed that, from the date of accession, Armenia would
eliminate and would not introduce, re-introduce or apply quantitative restrictions on imports or othernon-tariff measures such as licensing, quotas, bans, permits, prior authorization requirements,licensing requirements, and other restrictions having equivalent effect that cannot be justified underthe provisions of the WTO Agreement.  He further confirmed that the legal authority of theGovernment of Armenia to suspend imports and exports or to apply licensing requirements that couldbe used to suspend, ban, or otherwise restrict the quantity of trade would be applied from the date ofaccession in conformity with the requirements of the WTO, in particular Articles XI, XII, XVIII,WT/ACC/SPEC/ARM/1/Rev.2
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XIX, XX, and XXI of the GATT 1994, and the Mu ltilateral Trade Agreements on Agriculture,
Sanitary and Phytosanitary Measures, Import Licensing Procedures, Safeguards and TechnicalBarriers to Trade.  In this regard he also stated that the same kind of requirements contained inResolution No. 124, 29 December 1995 relating to imports  would be equally applied to imports andto the purchase or sale of similar domestic products.  Any exemptions from those requirements wouldbe equally applied to imports and the output of domestic firms.  The Working Party took note of thesecommitments.
- Minimum import prices
59. The representative of Armenia noted that Armenia did not maintain a system of minimum
import prices.
-C u s t o m s  V a l u a t i o n
60. Some members of the Working Party referred to the Agreement on Customs Valuation and to
certain inconsistencies of the Customs Regulations of Armenia in respect of customs valuation.  TheseMembers requested more detailed explanations with regard to the implementation by Armenia ofspecific provisions of the Customs Valuation Agreement, in particular Articles 7, 8, 10, 11 and 12thereof.
61. The representative of Armenia informed the Working Party that Armenia's system of customs
valuation was based on the transaction value.  The Armenian regulations relating to customs valuationwere contained in the Government Order attached to Decree No. 615, 6 December 1993 and wereentirely based on the provisions of the WTO Agreement on the Customs Valuation.  At the same timethe Armenian regulations for establishing the customs value were also reflected in the Law onCustoms Tariffs of 18 August 1993.  The latter did not contradict the provisions of the WTOAgreement on the Customs Valuation.  The Regulation Order provided for the same six methods ofvaluation laid out in the Agreement on Implementation of  Article VII of the GATT 1994, andstipulated that the first method (transaction value)  should generally be used.  Armenia was a member
of the World Customs Organization.  He added that Decree No. 615 contained many detailedprovisions relating to the valuation of goods by the Customs.  In response to questions from somemembers of the Working Party concerning Armenia's sales between related persons, the representativeof Armenia stated that the fact that sales took place between related persons would not, of itself,prevent use of the transaction value, unless it was determined that the declared invoice value did notrepresent the price actually paid or payable for goods.  Paragraph 8 of Decree No. 615 permittedimporters to seek a written explanation of any rejection by the customs authorities of a declaredWT/ACC/SPEC/ARM/1/Rev.2
Page 28
invoice value as the price actually paid or payable in respect of an import transaction between related
parties.  In response to questions concerning the obligation contained in Article 1.2(b) of theAgreement on Implementation of Article VII of th e GATT 1994, the representative of Armenia stated
that Decree No. 615 did not contain a provision giving effect to Article 1.2(b) of the Agreement onImplementation of Article VII of the GATT 1994.  In response to further questions he stated thatDecree No. 615 provided that damaged goods were valued taking into account the effects of the
damage, and duties were charged on the assessed value.  No duties were payable on lost goods.  Inresponse to further questions, the representative of Armenia stated that no provision had been made inDecree No. 615 for the reversal of the order of application of the valuation methods specified in
Articles 5 and 6 of the WTO customs valuation agreement.  Paragraph 24 of Decree No. 615 providedfor the circumstances envisaged in Article 5.2 of the WTO customs valuation agreement.  There wereno cases so far in which the provisions of Article 5.2 have been implemented. Article 6.2 of theAgreement, dealing with access to information possessed by residents of other countries in the contextof determining computed values had not been implemented by Decree No. 615.
62. The representative of Armenia said that in relation to Article 7 of the Customs Valuation
Agreement, paragraphs 27 and 28 of Decree No. 615 provided for the determination of customsvalues when none of the other five methods available can be applied.  Paragraph 27 of DecreeNo. 615 required that the customs authorities make available relevant information when the value wasdetermined by any method other than one of the five available.  In relation to the prohibitions found inArticle 7.2, paragraph 28 of Decree No. 615 stated that neither retail prices in the domestic market,nor the prices of locally produced goods, nor export prices to third countries, nor any other pricedetermined at will or on an inexact basis, may be used for customs valuation purposes when none ofthe five available valuation methods are applicable.  In response to concerns raised by some membersof the Working Party that Decree No. 615 was insufficiently precise, the representative of Armeniastated that paragraph 28 of Decree No. 615 referring to the determination of prices at will or on aninexact basis is intended to rule out the use of minimum customs values, arbitrary or fictitious values,or computed values not using the provisions of  the Agreement.  The Government of Armenia
recognized, however, that Decree No. 615 lacks specificity in certain key areas, and was committed toremedying this situation.
63. The representative of Armenia said that in relation to Article 8 of the Customs Valuation
Agreement, paragraph 12 of Decree No. 615 required that the transaction value applied for customsduty purposes should include all the additional costs referred to in Article 8.2 of the WTO CustomsValuation Agreement.  In response to questions concerning the rate of exchange applied by theCustoms, the representative of Armenia stated that the exchange rate used was derived from the dailyforeign exchange auctions held by the Central Bank of Armenia.  The Central Bank announcedexchange rates daily and these rates are published in the press, as required by Article 9.1 of theWT/ACC/SPEC/ARM/1/Rev.2
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Customs Valuation Agreement.  Confidentiality, was assured by paragraph 5 of Decree No. 615.  In
response to questions concerning the mechanisms for protection of confidential information, the
representative of Armenia stated that paragraph 5 of Decree No. 615 provided that confidentialinformation shall only be used for customs purposes and not divulged to third parties except by priorconsent.  This met the obligation contained in Article 10 of the Customs Valuation Agreement.
64. In response to requests for a detailed description of the  process for review of customs
valuation decisions, the representative of Armenia said that in relation to Article 11 of the CustomsValuation Agreement, paragraph 9 of Decree No. 615 provided for administrative appeal of a customsdecision to a higher customs authority.  Legal persons (firms or sole entrepreneurs) could makejudicial appeals to a special arbitration authority in cases involving valuation decisions.  Thatarbitration was binding. The special arbitration authority was the same as the national courts.  Specialeconomic courts will come into existence as the provisions of the new Constitution are implementedIn cases involving any matter other than valuation, legal persons could appeal to the civil courts.Natural persons could only make appeals to the civil courts.
65. The representative of Armenia said that as required by Article 12 of the Customs Valuation
Agreement, relevant national laws, regulations, decisions and rulings were published in the Bulletin ofDecrees of the Government of Armenia or in the Manual of the Supreme Council of the Republic ofArmenia.  In relation to the obligation contained in Article 13 (last sentence) of the CustomsValuation Agreement, when the customs value of goods cannot be immediately determined, importerswere entitled to remove their goods from customs control upon payment of provisional duties basedon the assessment of the customs authorities.  The importer then had three months in which tochallenge the assessment.  Alternatively, an importer could provisionally clear goods against a bankguarantee valid for one month.  If a valuation issue was not settled within one month, a further two-month period was provided for an importer to challenge an assessment, against provisional paymentof the assessment made by the customs authorities.  The duty assessment, whether adjusted or notfrom the original assessment of the customs author ities, became final after the three-month period.
Paragraph 8 of Decree No. 615 provides that an importer is entitled, within seven days of a writtenrequest, to receive a written explanation of a valuation decision of the customs authorities.  Theinterpretative notes of the WTO Agreement on Customs Valuation had not been systematicallyincluded in Decree No. 615.
66. Following questions and comments from Working Party members reflecting concerns about
the need for improvements to Decree No. 615, the representative of Armenia stated that DecreeNo. 615 would be revised prior to accession to address the concerns expressed by Working Partymembers and that the provisions of the WTO Ag reement on the Implementation of Article VII ofWT/ACC/SPEC/ARM/1/Rev.2
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GATT 1994 would be adopted as an integral pa rt of Armenia’s national law upon Armenia’s
accession.  All relevant laws would be in full conformity with the  requirements of the Agreement onImplementation of Article VII of the GATT 1994 at  the time of accession.  In particular, the
interpretive notes of the Agreement would be fully incorporated in Armenia’s customs valuation laws,and the Decision of 24 September 1984 on the Valuation of Carrier Media Bearing Software for DataProcessing Equipment" would be adopted to ensure that valuation of software was based on the valueof the media.  The Working Party took note of these commitments.
- Other customs formalities
- Rules of origin
67. The representative of Armenia stated that the rules of origin applied by Armenia followed the
principles stated in the Agreement on Rules of Origin.  Origin rules were defined in terms of whollyoriginating products,  a change in the tariff classification of the good, processing criteria, and thevalue-added criterion.  The choice of approach for determining origin depended on the productconcerned and any relevant international agreement in respect of which origin rules were beingapplied.  However, with the exception of wholly originating products, the change in tariff headingcriterion (at 4-digit level in the HS classification) was used unless an alternative was stipulated.According to the procedure of determination of the c ountry of origin attached to the Resolution of the
Government 615, the country of origin was considered to be the country where the entire product hasbeen manufactured or where it had undergone sufficient processing.  The following goods wereconsidered to be entirely produced in a country:
- minerals mined in the territory of a country or inside its territorial waters;- plant produce grown or harvested in the territory of a country;
- animals born or bred in the territory of a country;
- products received from the animals born or bred in the territory of a country;- product of hunting, fishing or sea operations in the territory of a country;
- product of the high seas operations, that is produced in the high seas by vessels belonging to
the country or leased by it;
- secondary raw materials or the waste resulting from the production and other activities carried
out in the territory of a country;
- product of high technologies received in the open space on spaceships belonging to the
country or leased by it;WT/ACC/SPEC/ARM/1/Rev.2
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- goods produced in the country in question, that have been exclusively produced in accordance
with the points above.
In case when two or more countries have participated in the production of a product, the origin of the
goods is determined based on the criteria of sufficient processing. The following were the criteria for
the sufficient processing of goods:
- any alteration in the first four digits in the position of the classification of a product (the
product description code) that has occurred as a result of processing the product;
- implementation of production or technological operations that were either sufficient or
insufficient to consider the product as originating from the country where such operations
have taken place;
- ad valorem rule - the alteration in the value of the product, when the proportion of the added
value or the value of the materials used exceeded a certain measure of the price of the
product
Moreover, the following were considered as not meeting the requirement of the criteria on sufficient
processing:
- operations geared towards the preservation of the product during its storage or
transportation;
- operations of preparation of the goods for sale or transportation (taking apart, consolidation,
sorting, repackaging of the products);
- simple assembly operations;- merging, smelting of the parts (components) of products without lending them such features
as would essentially differ from the initial components.
The customs authorities were entitled to require orig in certificates in respect of: (i) goods subject to
quantitative limitation; the change in tariff;  (ii) imports under preferential trading arrangements;  (iii)
for the protection of the environment, public health and safety and national security; and (iv) insituations where the authorities consider that inadequate information as to origin has been supplied.Certificates of origin must be signed by suppliers and verified by the relevant national certifyingbody.  The evaluation with respect to the origin of imported goods was carried out by theArmExpertise subsidiary of the Chamber of Commerce of Armenia.  In case of doubt as to the originof goods imported into the Republic of Armenia the Customs referred to the ArmExpertise, whichexamined the product, the waybills and the certificates of origin of the product and passes a decisionon the origin of the product. At the same time, according to Point 2 of the directive No. 478MV of26 April 1996 of the head of the Customs Directorate of the Republic of Armenia, in case of absenceWT/ACC/SPEC/ARM/1/Rev.2
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of the above-mentioned certificate, the certificates issued SARM or by the ArmExpertise subsidiary
of the Chamber of Commerce of Armenia were accepted as documents confirming the origin of theproduct.  In accordance with the legislation of the Republic of Armenia currently in effect, importershad the right to appeal controversial issues to a superior customs authority. The administrative andjudicial obligations with respect to this procedure applied to all entities.
68. The representative of Armenia stated that the Government of Armenia would bring all its
laws and regulations into full conformity with the requirements of the Agreement on Rules of Originand would act in full conformity with the provisions of that Agreement from the date of its accessionto WTO.  The Working Party took note of this commitment.
- Pre-shipment inspection
69. In response to questions, the representative of Armenia stated that Armenia did not at
present employ the services of any pre-shipment inspection companies.
70. The representative of Armenia stated that if any pre-shipment inspection system was
introduced in the future it would be applied in conformity with the requirements of the Agreement onPre-shipment Inspection.  The Working Party took note of this commitment.
- Anti-dumping, countervailing and safeguards regimes
71. In response to questions, the representative of Armenia stated that Armenia did not, at
present, have an anti-dumping, countervailing or safeguards regime.  The representative of Armeniaconfirmed that, from the date of accession, Armenia would not apply measures for safeguard,anti-dumping, or countervailing duty purposes if conforming legislation to apply such measures
consistent with the provisions of the WTO Agr eement on Safeguards, Anti-dumping, and Subsidies
and Countervailing Measures was not in effect in Armenia.  The Working Party took note of thiscommitment.
- Export regulations
- Export restrictions and export licensing system
72. The representative of Armenia stated that the Resolution No. 124, 29 December 1995 on
Non-Tariff Regulation of the Commodities (Operations, Services) Import and Export in the Republicof Armenia regulated Armenia’s export licensing regime.  Export licences were required for textiles(to the European Communities only), for medicines, and for certain live animals and plants.  TheWT/ACC/SPEC/ARM/1/Rev.2
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export licences on textiles were required pursuant to an agreement with the European Communities,
but no restrictions on these exports were currently in place.  The licences for medicines, live animalsand plants were generally not restrictive - rather, they were designed to ensure public health andsafety.  The exportation and importation of weapons, military technique and the consumablesnecessary for its production, technologies equipment and locators of nuclear materials (includingheating materials), special non - nuclear materials and services related to it, ionizing radiation sourceswere carried out through authorization issued by the Government of the Republic of Armenia.  Allother products may be freely exported from Armenia.  The system applied to exports to alldestinations, except in the case of the licensing requ irement for exports of textiles and clothing to the
European Communities.  The licensing requirements were not intended to restrict the quantity orvalue of exports.  Rather, they were intended to protect the national interest and human, animal orplant life or health, and the environment.  The representative of Armenia stated that the Governmentdid not consider that at this time, a better way existed of achieving these objectives.
73. The representative of Armenia noted that Armenia’s export licensing system closely
paralleled the import licensing system.  As on the import side, pharmaceuticals and rare animals andplants were subject to non-restrictive licensing, designed to protect health and the environment.Export licensing procedures for pharmaceutical products were the same as import licensingprocedures, and were regulated by the same Resolutions.  In addition, exports of textiles and clothingto the European Communities were subject to licensing under a bilateral agreement with theEuropean Communities, and licences are also required for exports of rare objects or artifactsconsidered part of the national patrimony.  The licensing of textile and clothing exports to theEuropean Communities allowed these items to be monitored, but they are not currently subject torestrictions of any kind.
74. The representative of Armenia said that Armenia maintained export licensing requirements on
the following items:
HS number
Pharmaceutical products 05.10; 12.11; 13.02; 29.38; 29.41;
Raw materials for pharmaceutical production 30.00
Textiles and clothing to European Communities
Objects considered part of the national patrimony
Rare wild animals and plants included in the Red
Book of the Republic of ArmeniaWT/ACC/SPEC/ARM/1/Rev.2
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The Red Book of the Republic of Armenia identifies approximately one hundred rare animals and
birds, and 390 rare plants in respect of which licences would be required and whose exportation maybe controlled.
75. The representative of Armenia stated that according to the Resolution No. 124 the exportation
of pharmaceutical products and medicines, have to be authorized by the Ministry of Health of theRepublic of Armenia.  The exportation of rare wild  animals and plants included in the Red Book of
the Republic of Armenia was carried out through authorization issued by the Ministry of Nature andEnvironment.  Exports of objects considered of interest to the national patrimony must be authorizedby the Ministry of Culture.  In the case of textile and clothing exports to the European Communities,the Ministry of Industry and Trade had exclusive responsibility for issuing export licences.  Requestsfor authorization could be refused and issued authorizations could be suspended if (a) there wasincorrect information in the presented documents, (b) the period of validity of the pharmaceutical
products was exceeded, (c) the production serial numbers of imported pharmaceuticals did notcorrespond with the submitted quality certificates, (d) the imported pharmaceuticals were notregistered in Armenia.  The Ministry of Industry and Trade may deny an export licence to anapplicant in respect of exports to the European Communities if exports of the items concerned were toexceed a certain quantitative limitation. Since this has not occurred so far, Armenia has not developedany mechanisms for administering export quotas.
76. The representative of Armenia said that any persons, firms and institutions wishing to apply
for an export licence may do so provided they are registered as a juridical person or a soleentrepreneur undertaking a business activity in Armenia.  As in the case of the importation ofpharmaceutical products, to receive an authorization for exportation of pharmaceutical products thefollowing documents were are required: an application form, a certificate relating to the acquisition ofthe pharmaceutical products, a licence to trade in pharmaceutical products in Armenia, a certificate ofquality issued by the producer.  Authorizations are issued within 15 days from the date of theapplication.  Since the fifteen-day stipulation is a maximum period, in practice licences may beobtained within a shorter period.  An export licence will generally not be granted immediately uponrequest, but in practice the necessary procedures may be completed within a day or two.  The fee foran export licence is equal to the month’s minimum salary in the republic of Armenia.  Licences arenot transferable among exporters.  A licence applicat ion and/or an exportation could be made at any
time during the year.  Authorizations are issued for the period necessary to carry out the engagements,but no longer than one year.  The validity of an  authorization can be extended upon the substantiated
request of an applicant.  The body issuing the authorization can suspend its validity or cancel it.Unjustified delays and refusal to issue authorization, as well suspending and cancelling issuedcertificates, can give rise to judicial procedures.WT/ACC/SPEC/ARM/1/Rev.2
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77. The representative of Armenia stated that any export licensing requirements or other export
restrictions would applied be in conformity with WTO requirements.  The Working Party took note ofthis commitment.
- Other measures
78. The representative of Armenia noted that in order to prevent exports at artificially low prices,
or the under-invoicing of exports, the Resolution 124 established a list of minimum prices each
quarter for a list of selected commodities as a reference base for tax purposes.  With effect from29 December 1995, this list only covered ferrous and non-ferrous metals (HS 72.00, 72.04,74.0-74.14. 75. 76.0-76.14, 78.80, 81.0, 81.13).  According to Resolution 124 commodities of thementioned list could be exported at prices less than the minimum established prices. However, thecorporate tax liabilities of firms that export ferrous and non-ferrous metals and scrap were calculatedon the basis of these reference prices if the declared export price is below the reference amount.  Inthis case the exporter was required also to present the certificate of conformity of the Agency ofStandardization Measurement and Certification (S ARM).  The Customs Bodies of the Republic of
Armenia must inform the Tax Inspectorate about the transaction within a month.
- Export subsidies
79. The representative of Armenia stated that Armenia did not offer any export incentives or
export subsidies of any kind at the present ti me, nor did Armenia have any duty drawback or
temporary admission arrangements in respect of dutiable imports used in export production.  TheGovernment believed that export expansion was vital to Armenia’s future economic viability.  For thisreason, consideration was being given to various ways of stimulating exports, particularly throughpromotional activities.  The Government did not, however, intend to rely on export subsidies as partof an export expansion programme.
80. The representative of Armenia confirmed that the Government did not maintain subsidies
which met the definition of a prohibited subsidy, within the meaning of Article 3 of the Agreement onSubsidies and Countervailing Measures, and did not seek transitions to provide for the progressiveelimination of such measures within a fixed period of time.  The Working Party took note of thiscommitment.WT/ACC/SPEC/ARM/1/Rev.2
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- Internal policies affecting trade in goods
- Industrial policy, including subsidies
81. The representative of Armenia stated that Armenia’s industrial policy aimed to ensure more
efficient use of domestic resources within a market-oriented framework.  A central policy objectiveaffecting industry was privatization.  Approximately 30 per cent of all enterprises in Armenia arepublicly owned, while 70 per cent are non-public.  He stated that the Government estimated thatapproximately 95 per cent of industrial output  emanated from the public sector.  In response toquestions the representative of Armenia stated that pending completion of the privatizationprogramme, the Government required State-owned enterprises to operate according to marketprinciples.  Enterprises in Armenia were required to acquire their inputs on the open market.  Mostfirms had not yet put proper market-economy accounting systems into use, but they were developingthem.  In response to requests for information concerning the payment of direct subsidies, therepresentative of Armenia stated that since the beginning of 1995, almost no direct subsidies had beengranted to industry.  In previous years direct subsidies had been provided on a fairly large scale viaconcessionary credits to firms.  He further noted that the Government in general did not retainproduction subsidies in the industrial sector, and no indirect subsidies were applied on water andelectricity supplies in the agricultural sector.
82. The representative of Armenia said that the only beneficiaries of direct subsidies in 1995 were
the firms engaged in the production of strategic (military) equipment, for whom subsidies are to begranted for further construction and the equipping of plant.  The beneficiary firms do not export theirproducts.  Any remaining indirect subsidies that might arise as a result of clearing arrangements weredisappearing because of the contraction (and eventual elimination) of inter-governmental clearingcontracts.  Moreover, procurement via State orders, which could also entail indirect subsidies, wasbeing replaced by competitive tendering procedures.
83. The representative of Armenia further added that because the continuing reform of policies
might indirectly confer subsidies on industries, the Government also maintained a substantiallyderegulated business environment which, when combined with the Government's open investmentpolicies, meant that there were effectively no barriers to market contestability.  Firms were free toenter and exit sectors on the basis of their own market-based decisions.  Additional measures designedto safeguard and strengthen this business environment were the establishment of anti-monopoly andbankruptcy laws.  The  Law on the Bankruptcy of Banks  and the Law on the Bankruptcy and
Financial Recovery of Juridical Persons, of Enterprises Without the Status of a Juridical Person, andof Entrepreneurs entered into force respectively on 1 October 1996 and on 1 March 1997.  Therelevant statutes were under preparation.WT/ACC/SPEC/ARM/1/Rev.2
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84. The representative of Armenia stated that th e Government of Armenia would ensure that its
subsidy regime was in full conformity with the Agreement on Subsidies and Countervailing Measuresfrom the date of its accession to the WTO.  The Working Party took note of this commitment.
- Technical Barriers to Trade/Sanitary and Phytosanitary Measures
85. The representative of Armenia noted that, after the declaration of independence, Armenia
took steps to establish and develop its nati onal systems of standardization, metrology and
certification. Relevant laws regulating those systems are the Law on Standardization and Certificationand the Law on Uniformity of Measurements accepted by the National Assembly on 30 April 1997.The two laws incorporated the core principles of the WTO TBT Agreement.  The Law onStandardization and Certification provided the legal basis in the Republic of Armenia for thestandardization as well as certification of products, services, labour (processes) and quality systems.This would be mandatory for the bodies of State governance, as well as for enterprises, institutionsand private entrepreneurs and would define the means for the protection of interests of consumers andthe State through the elaboration and application of normative documents on standardization.  It alsodefined the rights, obligations and responsibility of the participants in the certification process.  TheLaw on Uniformity of Measurements defined the legal basis for ensuring the uniformity ofmeasurements, regulated the relations of the bodies of State governance with enterprises, institutionsand private entrepreneurs on issues relating to the production and issuance of measurementinstruments, and the use and repairs thereof.  It was directed at protecting the rights and rightfulinterests of consumers and the State from the negative impact of inaccurate results of measurements.The Department for Standardization, Metrology and Certification (SARM) was denoted ascoordinator of standardization, metrological and certif ication activities in Armenia, and its rights and
obligations were defined by the Law on Standardization and Certification and the Law on Uniformityof Measurements.  Being the national body in charge of the administration related to standardization,certification and metrology in Armenia its responsibilities included the creation and administration ofnational standardization and certification systems; the adoption of national standards andclassifications; the application of international standards; the publication of official information in thefields of standardization and certification; accreditation of certification bodies and testing laboratories;dealing with appeals and disputes on certification matters, etc. SARM was in the structure of theMinistry of Industry and Trade.  SARM was  presid ed over by the State Chief Inspector, whose rights
and obligations were contained in Article 27 of the Law on Standardization and Certification and
Article 24 of the Law on Uniformity of Measurements.  SARM is a collegial body that takes decisionsby majority vote.WT/ACC/SPEC/ARM/1/Rev.2
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86. The representative of Armenia added that the National Standardization System was
established with a mission to provide:
- the safety of the products, labour (processes) and services for the natural environment, human
life, health and property;
- the technical and informative compatibility and interchangeability;- the conformity of quality of the product, labour and services with the development level of
science, technique and technology;
- uniformity of measurements;- preserving of all types of resources;- the security of economic objects, in the event of occurrence of technical and other disasters
and emergencies;
- the defense of the country and the readiness for mobilization.
The main provisions of that system and its proc edures for preparation, adoption  and application of
Armenian standards were established by national basic standards of AST 1 series. About210 Armenian standards had been developed by the technical committees and adopted by SARMsince 1993. The great part of the standards applied in Armenia were international and regionalstandards.  More than 18,000 interState standards of CIS countries were included in the national fundof standards.  860 international standards have been accepted in Armenia at present and 30 per cent ofnational standards would be aligned to international standards by 2000. For the preparation, adoptionand application of standards, SARM followed the TBT Code of Standards Good Practice and will signit from the date of Armenia’s accession to WTO. SARM was cooperating with standardsorganizations in other countries and is a member of the International Organization for Standardizationfrom 1 January 1997. Presently SARM is member of ISO, CAC, EASC which enables Armenia toparticipate through technical committees in the elaboration of international and regional standards andto apply these standards in Armenia.  The only en quiry point operating in Armenia and the only body
responsible for notifications was SARM, which would implement the obligations established inaccordance with Article 10 of  TBT. Besides the publication of a monthly journal (Hayast), whichprovides current information on issues relating to standards and certifications. SARM used theINTERNET communication system for notification.  A new resolution of the Government was being
prepared for the clarification of rights and responsibilities of SARM as an enquiry point.
87. The representative of Armenia further added that the National Certification System was
established according to the Law on Standardization and Certification taking into consideration theinternational experience in the field of certification, particularly ISO/IEC Guides 7, 22, 23, 25, 27, 28,WT/ACC/SPEC/ARM/1/Rev.2
Page 39
58, 60, 65  and European standards of EN 45000 series.  The objectives of certification were as
follows:
- creation of conditions for activities of the economic entities  in  the internal market of the
Republic of Armenia, as well as in the international economic, scientific- technicalcooperation and international trade;
- support of consumers in right selection of products, labour, services and in access of
objective information about them;
- control over the safety of products, labour, services for the natural environment, the human
life, health and property;
- conformation of the product, labour, services with the quality characteristics claimed by the
producer;
- protection of consumers’ rights.
The accreditation of certification bodies and testing laboratories in Armenia were operated by SARM.
The provisions on national certification system, the criteria and procedures for accreditation andcertification were established by national standards of AST 5 series.  About a dozen certificationbodies and a hundred testing laboratories were accredited.  The accredited certification bodies wereoperating product certification national programme that had its own certificate and mark ofconformity, product certification procedure, register of certificates and procedure for dealing withappeals that were established by Armenian standards.  The conformity assessment procedures appliedin Armenia corresponded to international criteria and TBT Articles 5-9.
88. In response to questions concerning to mandatory certification, the representative of Armenia
stated that Armenia applied manufacturer’s decl aration supported by post-market surveillance
procedures, as well as internationally accepted pre-market certification, which concerned to theproducts subject to mandatory certification.  Both certification mechanisms were fixed in the Law onStandardization and Certification.  Mandatory certification activities were coordinated by SARM andconducted by certification bodies and testing laboratories accredited by it according to the Law onStandardization and Certification and regulated by Resolutions 417, 205, 136, which proceeded fromthe law and introduced the list of products subject to mandatory certification in the Republic ofArmenia taking into consideration the necessity of the control over the safety of products, labour,services for the natural environment, the human life, health and property, as well as the protection ofconsumers’ rights.  Presently this is the full list of  products subject to pre-market certification.  Theseproducts were selected taking into consideration the reports received from the inspection bodies, thetoxins received from the Ministry of Agriculture , Sanitary-Anti-epidemiological State Centre, fromWT/ACC/SPEC/ARM/1/Rev.2
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media, consumers and data from Statistics Department.  The drafts of these Resolutions were
submitted for discussion and comments to the relevant ministries, major enterprises and traders, otherinstitutions that displayed an interest in it.  Requirements for products covered by mandatorycertification in Armenia were kept to a minimum.  The standards of the products included in the list ofResolution 205 were voluntary.  Compulsory were only the requirements concerning to safety, healthand the protection of the environment.  Mandatory certification procedures applied were the same forboth imported and domestic products.  Certificates we re issued for product types or batches based on
testing of samples, analysis of production system, quality system certification or declaration ofsupplier depending on the scheme of certification.  Only internationally accepted certificationschemes were fixed by AST 5.3.  Unlike to most of CIS countries, certification activities in Armenia
due to the Law on Standardization and Certification were regulated by the only authorized body -SARM, so avoiding overlap of requirements set by different regulatory bodies. SARM had signed
cooperation agreements on mutual recognition of conformity assessment with appropriate bodies ofseveral countries such as Russian Federation, Ukraine, Belarus, Georgia, Turkmenistan, Kazakstan,Moldova, Kyrgyz Republic, Tadjikistan, Uzbekistan and Iran.  These were Agreements on MutualRecognition of Conformity Assessment Results.   SARM was carrying out negotiations with
appropriate bodies of other countries, particularly with Bulgaria, China, Romania and theUnited States,  to sign similar agreements on cooperation.
89. The representative of Armenia added that SARM cooperated with the Ministries of Health
and Agriculture in matters relating to sanitary and phytosanitary measures.  Having the objective toprotect human health, safety and environment, the Government of Armenia had introduced the list of
goods, some of which fall in the scope of SPS Agreement, subject to mandatory certification(Resolution 417 of 06 September 1994, and its amendments Resolutions 205 of 5 July 1996 and136 of 17 May 1997) which was evidence for the fact that Armenia had started the process ofelaboration of Sanitary and Phytosanitary Measures. In 1996, the National Assembly adopted the Lawon State Agrarian Inspections.  The law defined the legal, economic and organisation principles ofState Agrarian Inspections in the Republic of Armenia. Articles 6 and 7 of the Law, particularlyoutlined the activities of the State Inspection for Agriculture, concerning cultivation of lands, use offertilizers, the struggle against plant diseases, insects and weeds, transportation of toxic substancesand mineral fertilizers, conditions of conservation and annihilation, as well as livestock breeding withrespect to veterinary services.  The latter dealt with the protection of population from diseasescommon to man and animals, the prevention and erad ication of contagious and non-contagious animal
diseases, transportation, conservation, use and annihilation of veterinary medicaments anddisinfectants.  For the implementation of the Law on State Agrarian Inspections, draft laws on
Phytoprotection and Veterinary Medicine had been worked out. The Law on Phytoprotection definedthe legal, economic and organisation principles of the State Service of Phytoprotection of theRepublic of Armenia, and regulated relations between farms, enterprises, organizations andWT/ACC/SPEC/ARM/1/Rev.2
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individuals within the territory of the Republic of Armenia.  The Law on Veterinary Medicine defined
the legal, economic and organisation principles of the State Service of Veterinary Medicine of theRepublic of Armenia, fixed the regulation for the prevention of diseases of animals, for the protectionof population from diseases common to man and animals, and for providing the population withquality products according to veterinary and sanitary conditions.  The law regulated relations betweenthe State body in charge of veterinary medicine and enterprises, organizations, entrepreneurs, andindividuals on the territory of the Republic of Armenia.
90. The representative of Armenia stated that all relevant laws relating to Technical Barriers to
Trade and Sanitary and Phytosanitary Measures would be brought into conformity with therequirements of the Agreements on Technical Barriers to Trade and Sanitary and PhytosanitaryMeasures by the date of Armenia's accession to the WTO without recourse to any transition period.The Working Party took note of these commitments.
- Trade-Related Investment Measures (TRIMs)
91. The representative of Armenia stated that Armenia did not maintain measures that were not in
conformity with the Agreement on Trade-Related Investment Measures and would therefore not seeka transition for the progressive elimination of such measures within a fixed period of time.  TheWorking Party took note of this commitment.
- State Trading Enterprises
92. In response to questions the representative of Armenia stated that the State monopoly over
foreign trade of the Former Soviet Union was abolished in 1989, and was replaced by a registrationrequirement for the conduct of such activity.  By a decree of the President of the Republic of4 January 1992 entitled On Foreign Economic Activity, all enterprises registered and operating in theterritory of Armenia, regardless of their form of ownership, had the right to conduct foreign economicactivity, and are not subject to any additional registration requirements.
93. Some members of the Working Party noted that  certain telecoms enterprises were engaged in
State-trading pursuant to Article XVII of the GATT 1994.  In response to requests for information onenterprises engaged in State trading in the Republic of Armenia, the representative of Armenia statedthat based on the definition of State-trading set out in the Interpretation of Article XVII of the GeneralAgreement on Tariffs and Trade 1994, Armenia maintained two State trading enterprises in thetelecommunications sector. Basic international telecommunication services and wire-based andWT/ACC/SPEC/ARM/1/Rev.2
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cellular services in Yerevan have been reserved to Armentel, a joint venture between the Government
of Armenia and a foreign private supplier, in exchange for commitments by Armentel to developArmenia’s telecommunications infrastructure. International value-added services have been reservedto Infocom, closed joint-stock company with the State involvement, also in exchange for
infrastructure development.
94. The representative of Armenia stated however that Resolution 161 of March 1991, as
amended by Resolution 415 of June 1995, reserved certain activities exclusively to the State andrequired that certain other activities were licensed by the authorities.  List 1 attached to Resolution161 identified eight types of activities that were reserved exclusively for the State.  These were: (i) thesale and purchase of weapons, armaments, narcotics, explosives, radioactive materials and otherstrong substances; (ii) the production and repair of weapons, armaments and explosives; (iii) thepreparation of drugs, narcotics, poisonous and strongly acting substances; (vii) the issuing of moneyand preparation of State medals; and storage, preservation and utilization of gold and other preciousmetals and substances of military significance.  A ll these reserved activities involved the State in the
exercise of its unique responsibilities, including the preservation of national security, public order,and the health and safety of the population.  List 2 of Resolution 415 indicated those activities thatrequired prior authorization and the body responsible for providing the authorization.  As with theitems on List 1, few involved manufacturing activity.  All the items on list 2 were controlled forsimilar reasons to those items in List 1.  Licensing of economic activities included under List 2 is non-restrictive in the sense that licensing decisions are not motivated by trade protection considerations.In response to questions from Working Party members,  the representative of Armenia stated that the
coverage of these reservation powers was under revi ew.  No State monopoly existed in respect of the
production of pharmaceuticals.  However, both State and private enterprises required licences fromthe Ministry of Health in order to produce pharmaceuticals.
95. In response to questions whether Armenia intended to report its State monopoly of natural gas
distribution under Article XVII, the representative of Armenia replied that Armgas had not been
granted exclusive or special rights or privileges in the market for natural gas distribution.  Armgaswas State-owned and the Government had determined that this enterprise would be the onlyState-owned enterprise to distribute gas.  But this does not prevent any other entity with majorityprivate ownership from purchasing gas or from involvement in gas distribution.  In light of thissituation, the Government of Ar menia did not believe it was required to notify Armgas under
Article XVII.
96. The representative of Armenia said that no State or private enterprises operating in Armenia
had exclusive or special rights or privileges granted by the Government of Armenia to conductinternational trade in goods or services except those mentioned in paragraph 91.  However, he notedthat a low-interest loan had been granted to the State enterprise Hayhatsahatik (ArmCereal) inWT/ACC/SPEC/ARM/1/Rev.2
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February 1996 to acquire and stockpile wheat from the European Communities Counterpart joint
assistance wheat fund.
97. The representative of Armenia confirmed that his Government would apply its laws and
regulations governing the trading activities of State-owned enterprises and other enterprises withspecial or exclusive privileges and would otherwise act in full conformity with the provisions of theWTO Agreements, in particular Article XVII of the GATT 1994 and the Understanding on thatArticle; and Article VIII of the GATS.  The Working Party took note of these commitments.
- Free zones, special economic zones
98. The representative of Armenia stated that Armenia did not maintain any free trade zones in
which special duty privileges of any kind were granted.  Armenia had, however, established a FrontierTrade Area in the Meghri Region, on the border with Iran.  The zone was established to promote tradebetween Armenia and Iran.  Under the arrangement, Armenian enterprises were encouraged toestablish a presence in the border area and Iranian enterprises were encouraged to do the same on theirside of the frontier.  Forty citizens from each country were entitled to enter each other’s zones in orderto explore business and trading opportunities, but no special customs regime or privileged dutytreatment was associated with any exchanges agreed on the basis of these contacts.
- Government procurement
99. The representative of Armenia informed the Working Party that government procurement in
Armenia was governed by Government Resolution number 67 if 8 February 1995 "On the StateProcurement Order of the Republic of Armenia".  Pursuant to that Resolution, when governmententities wished to procure goods, they could do so either through any procurement agent or directlyfrom the marketplace on their own behalf.  Under th e new approach to procurement introduced in that
Resolution,  no procurement entity, either State owned or private, enjoyed special rights or privileges.All interested parties could participate in proc urement activities under the common rules.  These
purchases, which were given effect through State Or ders, were financed directly from the budget, and
involved the acquisition of goods and services by government entities for their own consumption (i.e.not for resale or use as inputs into production).  In the past, these arrangements had sometimesinvolved implicit subsidy elements for the suppliers concerned, since prices under State Orders hadnot necessarily corresponded to market prices.  As markets developed, however, and morecompetition occurred, both among Armenian enterprises and with imports, subsidized procurementwas becoming a less frequent occurrence.WT/ACC/SPEC/ARM/1/Rev.2
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100. The representative of Armenia said that with effect from 1995,  State Orders in excess of
US$50,000 for items including:  electric energy, various health services training and education,geological exploration, televisi on broadcasting, water supplies and sewerage were subject to
competitive tender.  In response to questions, the representative of Armenia stated that tenderannouncements are made in official periodicals of the Government of  Armenia.  The main criteria for
selecting bids included the prices, the quality of the products or services offered, operational,technical and service characteristics, national security requirements, terms and conditions of payment,and terms and conditions of delivery.  Foreign enterprises received equal treatment to Armenianenterprises.  The tenders were administered by the Ministries and Departments concerned, or by theirrepresentatives.  The representative of Armenia informed the Working Party that currently the Law onGovernment Procurement was under preparation in the Ministry of Finance and Economy (recentlyformed upon the structural changes of the Government of Armenia). Pursuant to this Law, agovernmental authority regulating the field and supervising all kinds of State procurement would beestablished.  Stringent criteria would be set governing qualification, tendering, bidding, evaluation,performance and appeal procedures.  The provisions of the Law on Government Procurement of theRepublic of Armenia would be in conformity w ith the WTO Agreement on Government Procurement,
in particular the national treatment and non-discrimination principles would be guaranteed consistentwith the Article III of the Agreement on Government Procurement.  The adoption of the Law wasprojected prior to the date of Armenia’s accession to the WTO.
101. In response to questions from members of the Working Party, the representative of Armenia
stated that the Government of Armenia had decide d to commence negotiations to join the Agreement
on Government Procurement from the date of accession.  In this connection, Armenia would requestobserver status in the Committee on Government Procurement prior to accession to the WTO andwould submit an entity offer within 3 months of accession to the WTO.  The Working Party took noteof these commitments.
-T r a n s i t
102. The representative of Armenia stated that Armenia permitted the unimpeded and tax-free
transit of goods through its territory, with the exception of those goods whose importation is
prohibited, i.e. weapons, components used in the production of weapons, explosives, nuclearmaterials, poisons, narcotics, strong psychotropic substances, devices for use in opium smoking, andpornographic material.  These items would only be able to transit Armenian territory with the explicitconsent of the Government of Armenia.  Transit goods remain under customs supervision while theyare on Armenian territory.  Armenia was party to a plurilateral agreement on transit trade within theframework of the CIS Treaty on Economic Union.  This agreement provided that signatories shouldWT/ACC/SPEC/ARM/1/Rev.2
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not tax or impede transit trade through their territories.  Armenia has also signed a bilateral agreement
on this subject with Georgia.  Similar agreements with Iran and the Ukraine are under consideration.
- Agricultural policy
103. The representative of Armenia said that as in the case of industry, the Government of
Armenia does not maintain State pla nning of any kind in the agricultural sector.  The past practice of
supplying concessionary credits has been discontinued. Indirect subsidies such as charging onlyvariable costs on water and electricity supplies from farmers, and granting tax exemptions forproducers of basic agricultural products were the main means of support provided by the governmentin the agricultural sector.  The support provided to agricultural producers was aimed to assist farmersto overcome structural and operational difficulties during the transition toward the market orientedeconomy.  In contrast to the slow pace in industry, Armenia has privatized almost 90 per cent ofagricultural land, and made land titles freely transferable.  Agricultural support tables were beingprepared using the 1994 - 1996 period as the base period for the calculations of the aggregatemeasurement of support which would be used to  specify Armenia’s domestic support commitments.
104. The representative of Armenia added that as far as inputs were concerned, two large State
enterprises,  Hayagrospasarkum  (Armagroservice) and  Hayberriutyun  (ArmProsperity) were
dominant suppliers of agricultural services and inputs such as seeds and fertilizers.  In 1996,66 per cent of each of these enterprises had been privatized while 34 per cent had remainedState-owned in the form authorized by the Ministry of  Agriculture (holding).  Despite the fact that the
competition remained somewhat constrained in both input and output markets there was nothing tostop other suppliers from entering the market.  More new private enterprises have been entering themarket and increasing their market shares, particularly in the market of fertilizers.  This tendency wasexpected to be continued with the development of conditions of competition in the market.  He furtheradded that these enterprises had no exclusive or special rights or privileges granted by theGovernment of Armenia in the field in which they operated.
105. The representative of Armenia said that the Government of Armenia does not consider direct
subsidies as a part of the development programme of the agricultural sector Indirectly, however,
farmers have benefited from the Government’s policy of charging only variable costs on water andelectricity supplies, and of granting tax exemptions for producers of basic agricultural products.Variable cost pricing policies have applied to all users of electricity and water.  However, full costpricing (cost recovery pricing) was introduced for electricity in 1995, and for water during the course
of 1996.  Since then, no direct or indirect subsidies are provided to the agricultural sector.  The valueWT/ACC/SPEC/ARM/1/Rev.2
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of the indirect water and electricity subsidies to farm ers has not been calculated by the authorities.  In
addition, the Government supported  range of activities dedicated to reparation of irrigation network,to restructuring of financial and communication infrastructure, to training farmers in improvedagricultural techniques, to upgrading seed and livestock quality, to conducting pest and diseasecontrol, and to providing technical advice and extension services.  These measures fit with the greenbox of domestic support tables as far as the provided services were available to all farmers andinvolved budgetary outlays.
106. The representative of Armenia stated that  the Government of Armenia paid no export
subsidies on exports of agricultural products.  Acco rdingly the Government of Armenia would bind its
agricultural export subsidies at zero level in the relevant part of the Schedule of Concessions onGoods.  The Working Party took note of this commitment.
V. Trade Related Intellectual Property Rights (TRIPS)
107. The representative of Armenia stated that the first step in the direction of intellectual property
protection was the establishment of the Armenian Patent Office in 1992.  Since December 1992, it hasbeen possible to file applications for patents in respect of inventions, and as from August 1993, toregister utility models and industrial designs.  During 1993-96, the Armenian Patent Office received
695 applications for inventions from Armenians and 364 applications from foreigners.  An applicantnot a national of Armenia and not domiciled in Armenia must conduct his affairs through a patent
attorney registered with the Armenian Patent Office.
Industrial property protection
108. In response to requests for information concerning the intellectual property policy of the
Government of Armenia, the representative of Ar menia stated that the Government of Armenia was
currently engaged in a substantial programme of legislative reform.  During 1993-4, the ArmenianPatent Office received some 3,000 applications for trade marks, service marks and appellations oforigin. But reception of these applications for registration began after the issue of Resolution No. 4 of19 August, 1995, "On Confirmation of the Temporary Regulations for Trademarks and ServiceMarks" and Patent Office Order of 24 October 1995, "On reregistration of former Soviet Union valid
certificates for trade and service marks". In May 1997, the Armenian National Assembly adopted theLaw on Protection of Trade and Service Marks and Appellations of Origin, and the Law on Protectionof Trade Names.  The provisions of the adopted statutes were fully consistent with internationalWT/ACC/SPEC/ARM/1/Rev.2
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norms in this area.  A distinctive feature of the first of these Laws was the legal equality established
between trademarks and service marks.
- Responsible agencies for policy formulation and implementation
109. The representative of Armenia said that since September 1997, policy formulation in the field
of intellectual property including industrial property and copyright was the responsibility of theMinistry of Industry and Trade.  The policy implementation in the area of industrial property (patents,utility models, industrial designs, trademarks, trade names and appellations of origin) was theresponsibility of the Armenian Patent Office.  The Patent Office was responsible for approvingindustrial property right applications, maintaining the State Register of industrial property rights,issuing an official bulletin reflecting its decisions, and cooperating with foreign institutions andinternational organizations.  The Patent Office was also responsible for the regime coveringtrademarks.
- Participation in international intellectual property agreements
110. The representative of Armenia stated that on 22 April 1993, Armenia deposited a declaration
of continued application of the Convention Establishing the World Intellectual Property Organization(WIPO).  On 17 May 1994, Armenia also deposited a de claration of continued application of the Paris
Convention for the Protection of Industrial Property,  Madrid Agreement Concerning the International
Registration of Marks and the Patent Cooperation Treaty.
- Application of national and MFN treatment to foreign nationals
111. Some members of the  Working Party noted that although the representative of Armenia had
stated that foreigners enjoy national treatment in bo th civil and criminal procedures before the courts,
its replies to questions concerning administrative  review proceedings, dealing with the powers of
judicial branches of government, suggested that the jurisdiction of economic courts was not availableto foreigners from outside the CIS.  The representative of Armenia stated that all citizens enjoy equalrights under the law, for example, the Law on Patents provided that all foreigners enjoyed the samerights as nationals of Armenia in relation to all patent matters, including protection of patents andlegal remedies against infringement.  The above mentioned Law on Protection of Trade and ServiceMarks and Appellations of Origin, and the Law on Protection of Trade Names similarly envisaged fullnational and MFN treatment for foreigners.  This  was also the case in respect to the Law on
Copyright, and any future laws and regulations adopted in the sphere of intellectual propertyprotection.WT/ACC/SPEC/ARM/1/Rev.2
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- Fees and taxes
112. The representative of Armenia stated that fees were payable upon  filing of an application and
granting of a patent. Similar arrangements were in place for trademarks and service marks andcopyright.  All fees were set so as to be limited in amount to the approximate cost of services renderedand the granting and protection of intellectual property rights was not subject to taxation, as any fee iscollected on behalf of the budget.
- Substantive standards of protection, incl uding procedures for the acquisition and
maintenance of intellectual property rights
- Copyright protection
113. The representative of Armenia stated that the National Copyright Agency was established in
1993. More than 2,000 authors, theatre and concert organizations are registered with the agency underthe legislation of former Soviet Union.  As wa s mentioned above, intellectual property policy
formulation, including industrial property and copyri ght, was the responsibility of the Ministry of
Industry and Trade.  Copyright policy implementation was the responsibility of the NationalCopyright Agency, which registered copyrights, assi sted individuals to secure copyrights, provided
advisory services, and collected and paid royalties due to authors and their successors in title.
114. The representative of Armenia added that a draft Law on Copyright had been prepared in the
early 1990's and was submitted to the National Assembly for its consideration.  After examination ofthe proposed legislation, however, it was felt that its provisions were inadequate for a modern systemof copyright  protection.  The new version of the Law on Copyright had been therefore submitted forconsideration and was adopted in May 1996.  This Law on Copyright had been elaborated inaccordance with the provisions of the Bern Convention on this subject.  It provides protection for theproperty rights of computer programs and compilati ons of data, as well as for the neighbouring rights,
i.e., the rights of phonogram and videogram producers and broadcasting and television stations.
- Trademarks, including service marks
115. The representative of Armenia informed the Working Party that in May 1997, the Armenian
National Assembly adopted the Law on Protection of Trade and Service Marks and Appellations ofOrigin and the Law on Protection of Trade Names.  As mentioned earlier, a distinctive feature of thefirst of these Laws was the legal equality established between trademarks and service marks.  TheLaw set out the terms and conditions of trademark protection, the kinds of trademarks that may not beWT/ACC/SPEC/ARM/1/Rev.2
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registered, the procedures for registering trademarks, the rights of appeal against decisions relating to
trademarks, the circumstances in which trademarks may be used, and the documentary requirementsfor registering a trademark.  Trademark protection was is granted for 10 years, renewable forsuccessive periods of 10 years.  The provisions of the Law were in full conformity withArticles 15,16.1 and 17–21 of the TRIPS Agreement.  As regards the provisions of Article 16.2and 16.3 of the TRIPS Agreement concerning established trade and service marks, these were alsotaken into account in the adopted Law on Protection of Trade and Service Marks and Appellations ofOrigin (unlike the former Resolution No. 4 of 19 Augu st, 1995), and they would be detailed in further
elaborated regulations.
116. The representative of Armenia stated that the above-mentioned Law on Protection of Trade
and Service Marks and Appellations of Origin and the Law on Protection of Trade Names came intoforce in September 1997.
- Geographical indications, including appellations of origin
117. Some members of the Working Party asked how Armenia would protect geographical
indications under the Law on Protection of Trade and Service Marks and Appellations of Origin, andwhether that legislation would be in conformity with Articles 22 to 24 of the TRIPS Agreement.  Therepresentative of Armenia stated that geographical indications were not explicitly mentioned inResolution No 4 of 19 August, 1995, so the protection for this kind of property would not be provided
until the Law on Protection of Trade and Service Marks and Appellations of Origin became operative.The representative of Armenia stated that the prov isions of this adopted Law wherein conformity with
Articles 22 to 24 of the TRIPS Agreement.  The relevant provisions in the mentioned Law had beendeveloped in compliance with the provisions of the Paris Convention (Articles 1(2), 10, 10 ter, 10bis,
6quinquies  B.3), the Madrid Agreement on the Repression of False or Deceptive Indications of
Source on Goods (Articles 1(1), 1(2)), and the Lis bon Agreement for the Protection of Appellations of
Origin and their International Registration (Articles 2(1), 2(2), 3, 6).
- Industrial designs
118. The representative of Armenia stated that i ndustrial designs were protected under Article 7 of
the Law on Patents.  This Article was consistent with Articles 25 and 26 of the TRIPS Agreement.  Inresponse to requests for information concerning the specific protection for textile designs provided forin Article 25(2) of the TRIPS Agreement, the repres entative of Armenia stated that although textile
designs were not explicitly mentioned in Article 7 of the Law on Patents, they were neverthelesscovered under that provision.  There was also a similar reference in Article 2 (The Types of IndustrialWT/ACC/SPEC/ARM/1/Rev.2
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Design") and Article 5(d) (The Composition of Ap plication") of The Rules of Preparation and Filing
the Application of Industrial Design", adopted by Armenian Patent Office on 10 February 1994.
-P a t e n t s
119. The representative of Armenia stated that the Law on Patents was adopted in August 1993.
Under the law, patents are granted for inventions, utility models and industrial designs.  The term ofpatent protection is 20 years for inventions, 10 years for utility models, and 15 years for industrialdesigns.  These periods were counted from the date of filing.  Patents were granted subject torequirements that the object of the patent is new, involves an inventive step and is capable ofindustrial application, and that no conflict arose with respect to public order and security, good moralsand law.  Where a patentee fails to exploit the patented object within four years from the date thepatent was secured, any party interested in the use of the invention, utility model or industrial designmay request that a compulsory licence be issued.  As far as patents for inventions were concerned, theLaw provides for the so-called "deferred examination" for a three-year period.  A full examination ofa patent application was carried out as a rule only upon request and payment of a fee by the applicantor any other interested party.  Some members of  the Working Party asked whether Armenia’s Law on
Patents was in full conformity with Articles 27 to 34 of the TRIPS Agreement, and requested furtherinformation on the conformity of Armenia’s system of compulsory licensing.
120. The representative of Armenia stated that the Law on Patents was in conformity with
Articles 27 to 34 of the TRIPS Agreement, and am endments concerning compulsory licensing would
be made to the Law on Patents by the date of accession.  The Working Party took note of thiscommitment.
121. The representative of Armenia said that the owner of a security deed (patent or certificate) for
invention or industrial design granted by the Patent Office of the Soviet Union and still in force, couldfile with the Armenian Patent Office for an Armenian patent at any time during the validity period ofthe exclusive rights.  Further, an applicant who had filed an application before 8 December 1992, toobtain a security deed on an invention or an industrial design with the intention of obtainingprotection also in Armenia, and if the application was still pending with the Patent Office of theRussian Federation, had a right, before 30 December 1995, to file a request with the Armenian PatentOffice that the application be further processed under Armenian legislation.  In the ten-year period to1990, residents of Armenia registered 6,000 inventions  with the Patent Office of the Soviet Union.
The Law on Patents specified the nature of patentable material, the conditions for patentability, therights of patent holders, the conditions of compulsory licensing, the procedures for granting patents,and dispute settlement.WT/ACC/SPEC/ARM/1/Rev.2
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- Plant variety protection
122. The representative of Armenia stated that Armenia currently has no laws dealing with plant
variety protection. In response, some members of th e Working Party asked how it was proposed plant
varieties would be protected in the future. The representative of Armenia stated that legislation tocover the protection of plant varieties was being drafted. It was intended that this legislation wouldenter into force by the date of accession.  The Working Party took note of this commitment.
- Layout designs of integrated circuits
123. In response to questions concerning the system for protection of layout designs of integrated
circuits, the representative of Armenia stated that  Armenia did not yet have legislative protection for
this kind of intellectual property.  It was intended that legislation to cover layout designs of integratedcircuits would enter into force by the date of accession.  The Working Party took note of thiscommitment.
- Requirements on undisclosed information, including trade secrets and test data
124. In response to requests for information concerning the protection of trade secrets and
undisclosed information in Armenia, notably in view of Article 39 of the TRIPS Agreement, therepresentative of Armenia stated that Armenia had not yet developed provisions for the protection oftrade secrets and undisclosed information.  Legislation to cover the protection of undisclosedinformation was under preparation.  It was intended that this legislation would enter into force uponArmenia’s accession to the WTO.  The Working Party took note of this commitment.
- Measures to control abuse of intellectual property rights
125. In response to a question, the representative of Armenia stated that legislation regulating
unfair competition was still under preparation and will enter into force upon Armenia’s accession tothe WTO.  The Working Party took note of this commitment.
126. The representative of Armenia also stated that compulsory licensing was provided for under
the Law on Patents.  In cases involving national security, public order or emergencies, theGovernment could insist on compulsory licensing, provided the patent holder had not worked thepatent within four years of registration.  Article 16 of the Law on Patents stated that in the interests ofnational defence, maintenance of public order or in an extreme situation, the Government without theauthorization of the right holder, could permit a third party to use the subject matter of a patent,WT/ACC/SPEC/ARM/1/Rev.2
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obliging the latter to provide compensatory remune ration to the right holder.  Any dispute over the
amount of compensation had to be settled in the courts.  A compulsory licence could only be obtainedif a patent has not been used within four years and if the proposed user has made efforts to obtainauthorization from the right holder.  A licence could not be awarded to a third party if the owner of apatent could establish that the failure to use the patent was attributable to factors beyond the owner’scontrol. Similarly, under the adopted Law on Protection of Trade and Service Marks and Appellationsof Origin, at the request of any person trademark prot ection could be nullified by a court decision, if a
trademark has not been used within five years of the date of registration or preceding the date ofrequest for nullification .  A trademark owner has the right to defend the non-use of a trademark, andblock a decision to remove the property right if the reasons for not using the trademark were beyondthe control of the owner.
- Enforcement
- Civil judicial procedures and remedies
127. The representative of Armenia stated that civil court procedures were always available to deal
with legal matters relating to intellectual propert y protection.  The courts were empowered to order
the payment of damages and court expenses.  The other remedies envisioned in the TRIPS Agreementare also within the decision-making authority of Armenian courts.  In response to questionsconcerning foreigners' rights to enforce intellectual property rights, and whether the remedies,procedures and penalties were in conformity with Articles 42 to 49 of the TRIPS Agreement, therepresentative of Armenia stated that the civil courts in Armenia were fully empowered to provide theremedies referred to in the above mentioned Articles of the TRIPS Agreement.  Civil remedies couldnot be ordered as a result of administrative procedures.  Foreigners enjoyed the same rights asArmenian nationals in this area.  Remedies against criminal behaviour were available underArmenia’s courts and penal system.  Foreigners have the same access to these remedies as Armeniannationals.  The Government was considering the amendment of existing legislation and introductionof additional legislation containing remedies that were framed in more specific terms for theenforcement of intellectual property rights.  The missing provisions were expected to be included inthe Civil, Criminal and Procedure Codes, which were now under preparation by the relevantcommissions of the National Assembly and the Mini stry of Justice.  These Codes would be adopted
by 1 May 1999.  [The Working Party took note of these commitments.]
128. Some members of the Working Party asked whether Armenian judicial authorities had the
authority to order injunctions or provisional measures against infringement of intellectual propertyrights, as provided for in Articles 44 and 50 of the TRIPS Agreement, and whether administrativeWT/ACC/SPEC/ARM/1/Rev.2
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authorities enjoyed similar authority. In response the representative of Armenia stated that the judicial
authorities had the power to order injunctions or provisional measures.  Article 33 of the Law onPatents indicated the areas in which remedies may be sought through the courts in the area of patentprotection.  Article 45 of the La w on Protection of Trade and Service Marks and Appellations of
Origin provided similar provisions in the case of trademarks and service marks.
- Provisional measures
129. The representative of Armenia stated that the civil Courts also have the necessary authority to
take the provisional measures envisioned in Article 50 of the TRIPS Agreement.
 - Administrative procedures and remedies
130. The representative of Armenia stated that civil remedies could not be ordered as a result of
administrative procedures in Armenia.
- Special border measures
131. Members asked whether Armenia had a system of border enforcement against intellectual
property rights infringements in accordance with Articles 51 to 60 of the TRIPS Agreement.  Therepresentative of Armenia replied that although no explicit provisions had so far been developed inthis area, the judicial authorities were empowered to take the kinds of measures envisioned inArticles 51 to 60 of the TRIPS Agreement.  The procedures, sanctions and fines that were currentlylacking will be provided for in the above-mentioned new Civil, Criminal and Procedure Codes, whichwere now under preparation by the relevant commissions of the National Assembly and the Ministryof Justice.  According to the commitments unde rtaken by Armenia its legislation would be in
conformity with the WTO provisions by 1 May 1999.  [The Working Party took note of thesecommitments.]
- Criminal procedures
132. The representative of Armenia stated that at present Article 140 of the Criminal Code
provided, that infringement of copyright, publication (disclosure) of an invention before theapplication filing, appropriation of invention’s authorship, as well as coercion or inclusion intocollaboration of persons not participating in the creation of an invention, should be punished byimprisonment not to exceed two years or by a fine not to exceed 300 drams.  Article 157 of the sameCode stated that deceiving purchasers and customers should be punished by imprisonment not toWT/ACC/SPEC/ARM/1/Rev.2
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exceed two years or by a fine not to exceed 400 drams. In addition, as mentioned above, the missing
provisions were expected to be included in the new Criminal Code, which is now under preparationby the relevant commissions of the National Assembly and the Ministry of Justice.  The latter wouldbe in conformity with the provisions of Part III of the TRIPS Agreement.  The relevant legislation
would enter into force by 1 May 1999.  [The Working Party took note of these commitments.]
- Laws, decrees, regulations and other legal acts relating to the above.
133. Some members of the Working Party stated that since 1992, Armenia had had bilateral
commitments for the protection of intellectual property rights.  Armenia should accelerate itslegislative process to ensure the full implementation of the TRIPS Agreement from the date of itsaccession to the WTO.  In addition, some members of the Working Party requested clarification of thestatus of the draft Law on Trade Marks, Service Marks and Appellations of Origin in Parliament, andwhether the legislation was in full conformity with Articles 15 to 21 of the Agreement on Trade-Related Aspects of Intellectual Property Rights.  The representative of Armenia replied that onMay 1997, the Armenian National Assembly adopted the Law on Protection of Trade and ServiceMarks and Appellations of Origin and the Law on Protection of Trade Name which were in fullconformity with Articles 15 to 21 of the TRIPS Agreement, including the rights specified in
Article 16.
- Statistical data on applications for and grants of intellectual property rights, as well as
any statistical data on their enforcement
134. In response to requests for information concerning the numbers of patent applications filed in
Armenia, the representative of Armenia stated that during 1993-96, 1059 patent applications had been
filed with the Patent Office. In 544 cases a decision for granting a provisional patent was adopted,  in128 cases a patent was refused or the application was withdrawn, and 515 applications were underexamination.  During 1994-96, 15 applications for obtaining industrial design patents were filed,8 from foreigners, and each was granted a patent.  As regards trade and service marks and appellationsof origin, after adoption of the Law on National  Duty in September 1996, 1513 applications passed
the preliminary examination and 513 trade and service marks were registered by the Armenian PatentOffice.  Under the new legislation more than 1200 authors, theatre and concert  organizations wereregistered by the National Copyright Agency.
135. The representative of Armenia stated that th e Government of Armenia [would bring all other
relevant laws into conformity with the TRIPS Agreement by 1 May 1999.]  [The representative ofArmenia stated that the Government of Armenia would apply the provisions of the Agreement onWT/ACC/SPEC/ARM/1/Rev.2
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TRIPS no later than the date of its accession to the WTO, without recourse to any transitional period.]
[The Working Party took note of this commitment. ]
VI. Policies Affecting Trade in Services
- General
136. In response to questions, the representative of Armenia informed members of the Working
Party that Armenian laws and regulations, and th e policy framework did not generally distinguish
between trade in goods and trade in services.  The rights to trade were enshrined in the Law onEnterprises and Entrepreneurial Activities.  All enterprises must be registered and the register is opento public scrutiny.  These requirements apply to all juridical persons, whether they are corporations orsole entrepreneurs.
137. In reply to requests for an explanation of the Government of Armenia's understanding of the
different modes of supply, the representative of Armenia noted that in terms of the modes of supplyidentified in the General Agreement on Trade in Services (GATS), the Law on Enterprises andEntrepreneurial Activities was relevant for enterprises selling services across frontiers (mode 1), forservice supply through commercial presence (mode 3), and for natural persons who are independentservice suppliers (mode 4).  Consumption abroad (mode 3) was not covered in this context.  Armeniahad not developed any policies that restricted the consumption of services abroad.  Moreover,Armenian nationals and residents were at liberty to travel abroad and consume services within foreignjurisdictions if they so wish.
138. As far as commercial presence (mode 3) and natural persons who are independent service
suppliers (excluding that part of mode 4 dealing with employees of service suppliers) are concerned,the Law on Foreign Investments covered investment in both goods and services.  The law establishedthe legal framework for all types of investment invo lving foreign capital, including joint ventures and
wholly-owned enterprises and subsidiaries, whethe r the foreign investor is an individual or an
enterprise.  No restrictions were imposed on the temporary presence of natural persons in Armenia,whether as employees of foreign service suppliers or as independent suppliers of services.  In thelatter case, however, the service supplier would be required to register in Armenia as a business orsole entrepreneur.
139. Armenia's Schedule of Specific Commitments in  Services is reproduced in Part II of the
Annex to the Draft Protocol of Accession.WT/ACC/SPEC/ARM/1/Rev.2
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VII. Trade Agreements
140. Some members of the Working Party requested that Armenia provide detailed information on
the range of Free and Barter Trade Agreements to which Armenia was a party.  Other membersrequested information so that the Working Party could examine whether Armenia’s plurilateral andbilateral Free Trade Agreements were consistent with Article XXIV of the GATT 1994.  In responseto these requests, the representative of Armenia informed the Working Party that Armenia haddeveloped a network of plurilateral and bilateral trade agreements with various countries.  A numberof the arrangements were short-term in nature, designed to respond to particular needs, otheragreements were viewed as more durable, representing the Armenian Government’s perception of thedirections in which future trade relations should develop.  As a member of the World TradeOrganization, Armenia would  keep its bilateral and regional trade agreements under review, not onlyto ensure legal consistency, but also to ensure the coherence of Armenia’s trade relations with a broadmultilateral framework.
- Plurilateral or regional agreements
141. In response to further requests for information on Armenia's trade regional trade agreements,
the representative of Armenia stated that the Tr eaty of Economic Union was a framework agreement
signed by nine Heads of State of the Commonwealth  of Independent States (CIS) in 1993 (Azerbaijan,
Armenia, Belarus, Kazakstan, Kyrgyz Republic, Moldova, Russia, Tadjikistan, and Uzbekistan).  Thetreaty committed signatories to the eventual establishment of a customs union and common marketamong CIS countries.  Other economic and financial components of the CIS treaty related to apayments union, cooperation on investment, industr ial cooperation, and an agreement on customs
procedures.  The treaty set out quite specific commitments in many of these areas (as well as oncultural, scientific, and defence matters).  Because the treaty was essentially an evolving frameworkdocument, it did  not "operationalize" these commitments.  Instead, the specifics of preferentialtrading relationships were defined in bilateral free trade agreements and in clearing agreements.
142. Also in response to requests for further information, the representative of Armenia explained
that Armenia was also a member of the Black  Sea Economic Cooperation (BSEC) Organization,
along with ten other countries (Albania, Azerbaij an, Bulgaria, Georgia, Greece, Moldova, Romania,
Russia, Turkey and Ukraine).  This agreement covered a number of fields, including economiccooperation and trade, investment, scientific and technical cooperation, the establishment of a BSECBank, and cooperation on transport and communications.  The agreement did not make any provisionfor preferential trade, although it envisaged the possibility of free trade zones in the future.  MoreWT/ACC/SPEC/ARM/1/Rev.2
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generally, the organization seeks to cement relations among neighbouring countries through
cooperation in such areas as transport, international payments and industrial development.
143. Some members asked whether Armenia had concluded an economic cooperation agreement
with the European Communities.  The representativ e of Armenia confirmed that the Partnership and
Cooperation Agreement between the European Communities and Armenia had been signed on22 April, 1996, and the Interim Agreement on Trade and Trade Related Issues between theEuropean Communities and Armenia had been signed on 20 December, 1996.  The InterimAgreement would enter into force by the end of 1997, upon exchange of ratification instruments.  TheAgreement did not provide for any trade preferences.
- Bilateral free trade agreements and trade and economic cooperation agreements with
CIS countries
144. In response to questions of some members a bout Armenia's bilateral agreements with CIS
countries, the representative of Armenia stated that bilateral free trade agreements (FTAs) had beensigned with Georgia, Kyrgyz Republic, Moldova, Russian Federation, Tadjikistan, Turkmenistan andUkraine.  The initial bilateral free trade agreement had been authenticated with Kazakstan.  When the
free trade agreements were established and operationalized, tariffs were set up at zero level, and non-tariff restrictions were eliminated.  However, under the FTA with the Russia Federation, each partycould exempt from duty free treatment any export items subject to quotas, licences and export taxes.Since Armenia did not maintain any export restrictions (other than those generally applicable forpublic security, health and safety reasons), there was nothing on Armenia’s exception list under thefree trade agreement.  Russia maintained certain export restrictions which could be covered by the
exception provisions of the FTA, but in practice, these often did not apply because of the trade andeconomic cooperation agreements that Armenia also signed annually with Russia (see below).  Noexceptions to duty-free treatment for imports were contemplated in the Russian-Armenian free trade
agreement.  Within the period after signing of a bilateral Free Trade Agreement with Armenia (1992-1997), the Russia Federation had substantially liberalized its foreign trade (removed quotas, exporttaxes etc.).  Its legislation on tariff and non-tariff regulation of exports did not provide for a list ofspecific products.  This ensured the conformity of the FTA between Armenia and the RussianFederation with the WTO rules on free trade. The bilateral protocol, signed on 28 August 1997,confirmed the fact that substantial deviations from the free trade regime between Armenia and Russiawere eliminated.
145. The representative of Armenia further responded that the FTAs were an outgrowth of the
trade and economic cooperation agreements that Ar menia signed with CIS countries immediatelyWT/ACC/SPEC/ARM/1/Rev.2
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after independence, and which in many cases are still operational.  Most of these early agreements
were negotiated annually, they envisaged free trade and they included lists of products that the partiesagreed to trade with one another.  The purpose of these agreements was to try to ensure thatpre-existing trade links were not ruptured altogether in the disarray that followed the breakup of theSoviet Union.  The specificity of product-wise comm itments varied considerably, including as to the
identification of prices and quantities to be exchanged.  Particularly after 1992, product lists tended tobecome indicative, with no prior agreement on prices, and the commitments were only partiallyfulfilled.  In 1993, for example, product commitments under these agreements were met to the extentof 20-50 per cent, and figures for 1994 are expected to be even lower.
- Bilateral clearing arrangements
146. In response to requests for information in relation to Armenia's barter trade agreements with
other countries, the representative of Armenia stated that barter was the essence of the remainingclearing arrangements maintained by Armenia.  Barter was borne of necessity and was not a preferredpolicy.  Barter was deemed essential in the imme diate post-independence period, in order to preserve
the only trade links that Armenia had at that time, and was a feature of the trade and economiccooperation agreements described above.  Moreover, barter offers a modicum of energy security,which in that environment remained of paramount importance to the Government.  In addition,transport difficulties and a poorly functioning payments system had often made governmental supporta sine qua non  of doing business with FSU countries.  As these kinds of constraints were relaxed,
barter was expected to disappear.  The Governme nt was committed to eliminating barter arrangements
as soon as practicable and recognized that its role as trader or as intermediary in trade inhibited the
establishment of independent networks and contacts with foreign buyers by enterprises which was anessential determinant for exporting success.   He added that in 1995, the only barter arrangementswere those with Turkmenistan for gas, and with Russia for crude oil and mazout. The agreement withTurkmenistan involved the purchase of 2.2 billion cubic meters of gas at US$80 per thousand cubicmeters.  Payment for the gas was in both cash (US$30 per thousand cubic meters) and in counterpartproducts (US$50 per thousand cubic meters). Counte rpart products included such items as metals,
chemical products, machinery, products of light indus try, and products of food industries (including
brandy, wine, jams, and cigarette filters).  The clearing arrangements stated the quantities and pricesof goods guaranteed in exchange for the energy.  In the case of the 1995 Agreement withTurkmenistan, however, an additional list of products that might be exchanged had been included,  inorder to provide additional flexibility. The agreement with Russia involved  the purchase by Armeniaof 200,000 tons of mazout and 200,000 tons of crude oil under the contract.  The terms of thisagreement were more rigid than those for Turkmenistan, and the composition, quantity and prices ofWT/ACC/SPEC/ARM/1/Rev.2
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goods fixed in the contract negotiation were not subject to any change.  This latter feature is akin to
what a product list represents under a trade and cooperation agreement.  Thus, the final compositionof goods for exchange is established during the currency of the contract.
147. In response to requests for amount of trade fl ows arising from barter trade agreements,  the
representative of Armenia said that the 1993 clearing arrangements (which existed with Georgia, theRussian Federation and Turkmenistan, and included metals, paper wood products and industrial rawmaterials as well as energy) involved 74 per cent of total exports and 56 per cent of total imports.  Therespective figures in 1994 were 46 per cent for exports and 29 per cent for imports.  Domesticproducers were at liberty to choose whether or not to supply goods for the clearing arrangements.  Butin view of the difficulties many enterprises faced in overcoming transport and payments problemsrelating to exports, the Government generally encountered little difficulty in securing the necessarysupplies from local industries to fulfil the clearing contracts. As far as transport and paymentsproblems were being settled, the importance of barter trade gradually decreased and by late 1995deliveries under the clearing arrangements were abandoned in practice.  In response to requests forcurrent state of barter trade arrangements the representative of Armenia stated that in 1996 theGovernment announced its intention to cease the barter trade, and none of former barter arrangementswas recommenced. The Government of Armenia does  not envisage conducting barter or clearing
settlements in the future.
- Bilateral trade and cooperation agreements
148. The representative of Armenia also stated that trade and cooperation agreements had also
been signed with many non-CIS countries, including Argentina, Austria, Bulgaria, China, Estonia,Greece,  Hungary, India, Iran, Latvia, Lithuania, Poland, Romania, Syria, the United States andVietnam.  The possibility of such agreements with a number of other countries is under activeconsideration.  These agreements seek to strength en economic links, but do not contain any provisions
for preferential trade.
- Other non-trade bilateral agreements
149. The representative of Armenia noted that Armenia had also signed a series of other
agreements on investment and on customs relations.  The investment agreements sought to encourage
investment between the parties, primarily by guar anteeing national treatment, non-expropriation, and
unrestricted transfers of investment funds and returns from the investments.  Investment agreementshad been signed with Argentina, China, Greece, Kyrgyzstan, Ukraine, the United Kingdom, theUnited States and Vietnam.  Agreements on customs relations are intended to ensure cooperation andWT/ACC/SPEC/ARM/1/Rev.2
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smooth working relations between the customs services of the signatories.  Such agreements have
been signed with Georgia, Iran, Tadjikistan, Turkmenistan and Ukraine.
150. In response to further requests for clarification of the compatibility of Armenia's free trade
agreements with the CIS States with Article XX IV of the GATT 1994, the representative of Armenia
stated that within the framework of the 1994 Free-Trade Agreement among the countries of theCommonwealth of Independent States (CIS), Ar menia’s plurilateral and bilateral free-trade
agreements eliminated duties and other restrictive regulations on substantially all trade between theparties.  Armenia considered that these arrangements were consistent with Article XXIV of GATT1994.  It could be noted that  Armenia did not c onduct trade with all of the CIS countries, but in
respect of those countries with which Armenia did trade, Armenia imposed no taxes or barriers on itsimports and exports.  These agreements did not cover trade in services.
151. The representative of Armenia confirmed that Armenia would observe the provisions of the
WTO including Article XXIV of the GATT 1994 and Article V of the GATS in its trade agreements,and that it would ensure that the provisions of these WTO Agreement for notification, consultation,and other requirements concerning preferential tr ading systems, free trade areas, and customs unions
of which Armenia was a member were met from th e date of accession.  The Working Party took note
of these commitments.
- Plurilateral trade agreements
152. The representative of Armenia informed the Working Party that the Government of Armenia
had decided to accede to the Agreements on Government Procurement and Trade in Civil Aircraft.The Government of Armenia would also accede to the Information Technology Agreement.  TheWorking Party took note of these commitments.
VIII.  Transparency
Publication of Information
153. Some members of the Working Party requested that the Government of Armenia confirm that
from the date of accession, all laws, regulations, rulings, decrees or other measures related to trade ingoods or services will be published in its offici al publication for public re view at least two weeks
prior to implementation, unless a longer period is specified under the relevant WTO Agreement.  Therepresentative of Armenia confirmed that, from the date of accession, all laws, regulations, rulings,WT/ACC/SPEC/ARM/1/Rev.2
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decrees or other measures related to trade in goods or services would be published in its official
publication for public review at least ten working days prior to implementation, unless a longer periodis specified under the relevant WTO Agreement, that in accordance with Article X of the GATT 1994,the published measures would be accessible to traders prior to implementation, and that no law, rule,etc., related to trade would become effective prior to such publication.  The Working Party took noteof these commitments.
Notifications
154. The representative of Armenia said that at the latest upon accession to the WTO, Armenia
would submit all notifications (other than those required to be made on an ad hoc basis) required byan Agreement constituting part of the WTO Agreement.  Any regulations subsequently enacted byArmenia which gave effect to laws enacted to implement any Agreement constituting part of theWTO Agreement would also conform to the requirements of that Agreement.  The Working Partytook note of these commitments.
Conclusions
155. The Working Party took note of the explanati ons and statements of Armenia concerning its
foreign trade regime, as reflected in this repo rt. The Working Party took note of the commitments
given by Armenia in relation to certain specific matters, which are reproduced in paragraphs 17, 23,30, 33, 36, [37], 43, 50, 58, 66, 68, 70, 71, 77, 80, 84, 90, 91, 97, 101, 106, 120, 122, 123, 124, 125,[127], [131], [132], [135], 151, 152, 153 and 154 of this Report.  The Working Party took note that
these commitments had been incorporated in paragraph 2 of the Protocol of Accession of Armenia tothe WTO.
156. Having carried out the examination of the foreign trade regime of Armenia and in the light of
the explanations, commitments and concessions made by the representatives of Armenia, the WorkingParty reached the conclusion that, Armenia should be invited to accede to the Agreement Establishingthe WTO pursuant to the provisions of Article XII.  For this purpose the Working Party has preparedthe draft Decision and Protocol of Accession reprodu ced in the Appendix to this report,  and takes
note of Armenia's Schedule of Specific Commitments on Services (document ... ) and its Schedules ofConcessions and Commitments on Agriculture and Goods (document ... )  that are attached to theProtocol of Accession.  It is pr oposed that these texts be approved by the General Council when it
adopts the Report.  When the Decision is adopte d, the Protocol of Acces sion would be open for
acceptance by Armenia, which would become a Member thirty days after it accepts the said Protocol.WT/ACC/SPEC/ARM/1/Rev.2
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The Working Party agreed, therefore, that it had completed its work concerning the negotiations for
the accession of Armenia to the Agreement Establishing the WTO.WT/ACC/SPEC/ARM/1/Rev.2
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APPENDIX
ACCESSION OF ARMENIA
Draft Decision
The General Council,
Having regard to the results of the negotiations directed towards the accession of Armenia to
the Marrakesh Agreement Establishing the World Trade Organization and having prepared a Protocol
for the Accession of Armenia.
Decide, in accordance with Article XII of the Marrakesh Agreement Establishing the World
Trade Organization, that Armenia may accede to the Marrakesh Agreement Establishing the World
Trade Organization on the terms set out in the said Protocol.WT/ACC/SPEC/ARM/1/Rev.2
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PROTOCOL FOR THE ACCESSION OF ARMENIA TO THE
MARRAKESH AGREEMENT ESTABLISHING THE WORLD TRADE ORGANIZATION
DRAFT
The World Trade Organization (hereinafter referred to as the "WTO"), pursuant to the
approval of the General Council of the WTO accorded under Article XII of the Marrakesh AgreementEstablishing the World Trade Organization (hereinafter referred to as the "WTO Agreement"), and theGovernment of Armenia, (hereinafter referred to as "Armenia"),
Taking note of the Report of the Working Party on the Accession of Armenia to the WTO
Agreement in document ...  (hereinafter referred to as the "Working Party Report"),
Having regard to the results of the negotiations on the Accession of Armenia to the WTO,
Agree as follows:
Part I -  General
1. Upon entry into force of this Protocol, Armenia accedes to the WTO Agreement pursuant to
Article XII of that Agreement and thereby becomes a Member of the WTO.
2. The WTO Agreement to which Armenia accedes shall be the WTO Agreement as rectified,
amended or otherwise modified by such legal instru ments as may have entered into force before the
date of entry into force of this Protocol.  This Protocol, which shall comprise the commitmentsreferred to in paragraph 155 of the Working Pa rty Report (document WT/ACC/ARM/xx), shall be an
integral part of the WTO Agreement.
[3. Armenia will notify the Secretariat annually of the implementation of the phased
commitments with definitive dates referred to in paragraphs 155 of the Working Party Report, andwill identify any delays in implementati on together with the reasons therefore.]
4. Except as otherwise provided for in the para graphs referred to in paragraph 175 of the
Working Party Report, those obligations in the Mu ltilateral Trade Agreements annexed to the WTO
Agreement that are to be implemented over a period of time starting with the entry into force of thatWT/ACC/SPEC/ARM/1/Rev.2
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Agreement shall be implemented by Armenia as if it had accepted that Agreement on the date of its
entry into force.
5. Armenia may maintain a measure inconsistent with paragraph 1 of Article II of the GATS
provided that such a measure is recorded in the list of Article II Exemptions annexed to this Protocoland meets the conditions of the Annex to the GATS on Article II Exemptions.
Part II - Schedules
6. The Schedules annexed to this Protocol shall become the Schedule of Concessions and
Commitments annexed to the General Agreement on Tariffs and Trade 1994 (hereinafter referred toas the "GATT 1994") and the Schedule of Specific Commitments annexed to the General Agreementon Trade in Services (hereinafter referred to as "GATS") relating to Armenia.  The staging of theconcessions and commitments listed in the Schedules shall be implemented as specified in therelevant parts of the respective Schedules.
7. For the purpose of the reference in paragraph 6(a) of Article II of the GATT 1994 to the date
of that Agreement, the applicable date in respect of the Schedules of Concessions and Commitmentsannexed to this Protocol shall be the date of entry into force of this Protocol.
Part III - Final Provisions
8. This Protocol shall be open for acceptance, by signature or otherwis e, by Armenia until ...
9. This Protocol shall enter into force on the thirtieth day following the day upon which it shall
have been accepted by Armenia.
10. This Protocol shall be deposited with the Director-General of the WTO.  The Director-
General of the WTO shall promptly furnish a certified copy of this Protocol and a notification ofacceptance by Armenia  thereto pursuant to paragraph 8 to each Member of the WTO and to Armenia.
11. This Protocol shall be registered in accordance with the provisions of Article 102 of the
Charter of the United Nations.WT/ACC/SPEC/ARM/1/Rev.2
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Done at Geneva this .... day of .... one thousand nine hundred and ninety ..., in a single copy in
the English, French and Spanish languages, each text being authentic.WT/ACC/SPEC/ARM/1/Rev.2
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ANNEX I
SCHEDULE ...  - ARMENIA
Part I - Goods
Circulated in document ... .
Part II - Services
Circulated in document ... .
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