RESTRICTED
WORLD TRADE WT/ACC/SPEC/ARM/1
26March 1997
ORGANIZATION(97-1219)
WORKING PARTY ONTHE ACCESSION OFARMENIA
ELEMENTS OFADRAFT REPORT
I. Introduction
1. Atitsmeeting on17December 1993, theCouncil ofRepresentatives established aWorking
Party toexamine theapplication oftheGovernment ofArmenia toaccede totheGeneral Agreement
onTariffsandTrade(GATT1947)underArticleXXXIII,andtosubmittotheCouncilrecommendations
which might include adraft Protocol ofAccession. Inacommunication dated
31January 1995 (WT/L/25), theGovernment ofArmenia applied foraccession totheAgreement
Establishing theWorld Trade Organization (WTO) pursuant toArticle XIIoftheWTO Agreement.
Following Armenia 'sapplication andhaving regard totheDecision adopted bytheGeneral Council
on31January 1995 (WT/GC/M/1), theWorking Party ontheAccession ofArmenia totheGATT 1947
wastransformed intoaWTO Accession Working Party. Theterms ofreference oftheWorking Party
were alsocontained indocument WT/L/25.
2. TheWorking Party meton...under theChairmanship ofH.E. Mr.D.Kenyon (Australia).
Information
3. TheWorking Party hadbefore it,toserve asabasis foritsdiscussions, aMemorandum on
theForeign Trade Regime ofArmenia (WT/ACC/ARM/1), andthequestions submitted byMembers
ontheArmenian foreign trade regime together withthereplies oftheArmenian authorities thereto
(WT/ACC/ARM/2 andCorr.1; andWT/ACC/ARM/5). Inaddition therepresentative ofArmenian
made available totheWorking Party thefollowing material:
- DecreeoftheGovernmentoftheRepublicofArmeniaNo.40of13February1993,"Additional
Measures onState Regulation ofInternational Economic Activities";
- Resolution No.31of21February 1995, "OnRegulation Regarding theEstablishment,
Registration, Licence andSuspension ofActivities ofBanks andTheir Branches andAgencies
andThose ofForeign Banks Operating intheRepublic ofArmenia";
- LawonAmendments andAdditions totheRepublic ofArmenia Lawonthe"Value-Added
Tax" of10December 1994;
- LawoftheRepublic ofArmenia onProperty Tax;WT/ACC/SPEC/ARM/1
Page2
- Law onMaking Amendments intheRepublic ofArmenia Law onExcise Taxof
30November 1994;
- LawonPledge Collateral;
- LawonBankruptcy ofEnterprises andIndividual Entrepreneurs of15June1995;
- LawonMaking Amendments intheRepublic ofArmenia LawonCorporation Taxof
19December 1994;
- Draft LawonStandardization andCertification;
- LawonPatents of21August 1993;
- LawonIncome Taxof8February 1995;
- LawonLand Taxof27April 1994;
- LawonState Agrarian Inspections;
- Statute ofthePeasant andCollective Peasant Farms of22January 1991;
- TheLand Code of29January 1991;
- Supreme Council Resolution ontheMaximum SizesoftheLandLotsinProperty ofthePeasant
andPeasant Collective Farms;
- Resolution No.581of16December 1994, "OnCorroboration oftheTemporary Regulations
forAuditing Activities intheRepublic ofArmenia";
- Government Decision of17January 1995, "OntheProcedure ofGranting Licences for
Importation andExportation ofGoods (Works, Services) intheRepublic ofArmenia";
- Government Resolution No.67of8February 1995, "OntheStateProcurement Order of1995
oftheRepublic ofArmenia";
- Government Resolution No.4of19August 1995, "OnConfirmation oftheTemporary
Regulations forTrademarks andService Marks";
- Government Resolution No.606of29December 1994, "OnRates oftheExcise Tax";
- Government Resolution No.88of23February 1994, "OntheOrder ofSubmitting Statistical
Reports Regarding theImportation andExportation ofServices intheRepublic ofArmenia";
- CouncilofMinistersResolutionNo.161of5March1991,"OntheOrderofExercisingDiverse
Types ofEconomic Activities ontheTerritory oftheRepublic ofArmenia";
- Decree oftheGovernment oftheRepublic ofArmenia No.124of29December 1995 On
Non-Tariff Regulation oftheCommodities (Operations, Services) Import andExport inthe
Republic ofArmenia;
- Statement oftheCentral Bank oftheRepublic ofArmenia onJoining toArticle VIIIofthe
IMFAgreement;
- TheLawoftheRepublic ofArmenia of30June1996, "OnCentral Bank ofArmenia";
- TheLawoftheRepublic ofArmenia of30June1996, "OnBanks andBanking";
- TheLawoftheRepublic ofArmenia of10June1996, "OnBankruptcy ofBanks";
- Decree oftheGovernment oftheRepublic ofArmenia No.124of29December 1995, "On
Non-Tariff Regulation oftheCommodities (Operations, Services) Import andExport inthe
Republic ofArmenia";
- Amendments totheLaw, "OnPrivatization andDenationalization ofState-Owned Enterprises
andUnfinished Construction Sites";
- List2oftheResolution oftheGovernment oftheRepublic ofArmenia No.415of1995,"On
Types ofActivities thatareSubject toLicensing intheTerritory oftheRepublic ofArmenia";
- Statute oftheMinistry ofEconomy oftheRepublic ofArmenia of20June1996, "OnIssuing
Inferences onMinimal Pricing ofExports ofProducts fromFerrous andNon-Ferrous Metals
NotProduced inArmenia, AsWellAsTheir Scrap";
- Statute oftheMinistry ofHealth oftheRepublic ofArmenia of20June1996, "OnIssuing
Inferences onImport andExport ofPharmaceuticals intoandfromtheRepublic ofArmenia";
- Statute oftheMinistry ofEnvironment Protection andMineral Resources oftheRepublic of
Armenia of20June1996, "OnIssuing Inferences onExport ofWild Animals andPlants
Included intheRedBook (Endangered Species Listing) oftheRepublic ofArmenia";WT/ACC/SPEC/ARM/1
Page3
- Statute oftheMinistry ofAgriculture andFood oftheRepublic ofArmenia of20June1996
OnIssuing Inferences onImport ofPlant Protection Agents intotheRepublic ofArmenia.
- Decree oftheMinistry ofHealth oftheRepublic ofArmenia, "OnRegulation ofPharmaceutical
Activity andEnsuring theQuality ofDrugs andMedical Facilities";
- Programme oftheGovernment oftheRepublic ofArmenia, "OnPrivatization ofState
Enterprises andUnfinished Construction sitesoftheRepublic ofArmenia for1996-1997";
and
- Amendment of1May1996 toAnnex No.1toDecree oftheGovernment oftheRepublic of
Armenia No.615of6December 1993, "OnDetermining theCustoms Duties".
Introductory statements
4. Inanintroductorystatement,therepresentativeofArmeniasaidthatsincedeclaringindependence
fromtheformer Soviet Union in1991, Armenia hadvigorously pursued freemarket reforms within
ademocratic framework, notwithstanding acute political andeconomic difficulties. Economic decline
hadbeenreflected insharp reductions inoutput, falling incomes, reduced tradeflows, severe shortages
ofenergy, andscarcity offoodandother consumer goods.
5. Despite thisadversity, theGovernment hadpersevered withtheeconomic reform programme,
placingparticularemphasisonliberalization,stabilization,andeconomicrestructuring.Mostagricultural
landwasprivatized shortly afterindependence andprivatization inother sectors wasmoving ahead.
Demonopolization andderegulation hadremoved barriers toprivate sector participation inallbuta
fewareas ofeconomic activity. Price controls wereonlyapplied toalimited number ofessential goods
andservices, andwerebeing phased out.Foreign investment wasencouraged. Onthemacroeconomic
side, stabilization policy wasagovernment priority, given thechallenge ofthedifficult budgetary
position, combined withtheneedtocontain inflationary pressures andmaintain exchange ratestability.
TheGovernment hadsuccessfully brought monthly inflation down toasingle digitlevel, fromthetriple-
digitlevels prevailing attheendof1993. TheGovernment wasstrongly committed tosecuring asound
andstable macroeconomic framework forfuture economic growth anddevelopment.
6. Fullerintegrationintotheworldeconomy,andcontinuingdiversificationofArmenia'seconomic
relations withothercountries, werecentral planks oftheGovernment 'sreform efforts. TheGovernment
ofArmenia believed thatthese objectives could onlybeattained through open trade policies that
emphasized specialization onthebasisofinternational comparative advantage. Itwasforthisreason
thattheGovernment ofArmenia attached priority toitsaccession totheWorld Trade Organization,
andwished tocomplete negotiations formembership attheearliest opportunity.WT/ACC/SPEC/ARM/1
Page4
7. TheWorkingPartywelcomedArmenia'sapplicationforaccessiontotheAgreementEstablishing
theWTO. Several members oftheWorking Party acknowledged thatArmenia hadundergone arapid
process concerning reform andtrade liberalization which, notwithstanding internal andexternal
difficulties,appearedtobesucceedinginpermittingeconomicgrowth.Thesemembersexpressedsupport
forArmenia 'sintegration intothemultilateral trading system andindicated theirreadiness topursue
thenegotiations inearnest.
II. Economic Policies
- Foreign exchange andpayments
8. Inresponse toquestions from members oftheWorking Party concerning Armenia 'sforeign
currency reserves andtheconvertibility ofthedram, therepresentative ofArmenia noted thatforeign
exchange reserves hadrisenfrom0.7months ofimport cover in1994to1.5months in1995, andwere
projected toriseto2.3months ofimport cover bytheendof1996. Allforeign currency surrender
requirements hadbeeneliminated andthedram wasfreely convertible. There were norestrictions
ontheholding offoreign currency accounts. Allbilateral clearing arrangements based onbarter had
beeneliminated.
- State ownership andprivatization
9. Inresponse torequests forinformation concerning theprivatization ofStateowned assets, the
representative ofArmenia noted thataPrivatization Programme wasadopted inJanuary 1994. All
natural andlegalpersons areentitled toparticipate intheprivatization programme. Thatprogramme
envisaged thatprivatization would takethree years, withonethirdofState-owned productive assets
being privatized eachyear. Those targets proved over-ambitious, andprivatization wasnowexpected
tocontinue atleastuntiltheendof1997. Atthebeginning oftheprogramme, theState owned an
estimated 5,000 small enterprises andabout 2,000 medium- tolarge-scale enterprises. Privatization
ofsmall-scale enterprises waswellunder way. Bythebeginning ofMarch 1996, 2187small enterprises
hadbeenprivatized. Privatization ofmedium- tolarge-scale enterprises wasalsowellunder way,
although theambitious end-1995 target of900enterprises privatized willbeachievable onlyin1996.
Bythebeginning ofMarch 1996, 365enterprises hadbeenoffered forsale. Thetarget ofthe1996-97
programme wastheprivatization of3809 entities, ofwhich 195areinindustry, 22intransportation,
82inconstruction, 3intelecommunications, 70inagriculture, 3inthematerial andtechnical (logistic)
supply sector, 1763 inthedistribution sector, 760inthehousehold services sector, 191inthepublicWT/ACC/SPEC/ARM/1
Page5
utilities sector, 236inthesocial sector, 5inautomobile maintenance, 16inthenatural deposits sector,
and66enterprises and395unfinished units ofhousing construction intheYerevan Municipality.
10. TherepresentativeofArmeniaaddedthattheGovernmentcontinuedtoseekwaysofaccelerating
theprivatization programme. Thetimelimithadbeenshortened toonemonth fortheinitiation of
second-stage andthird-stage actions forenterprises which hadnotbeensoldinprevious attempts.
Inaddition, mandatory liquidation followed foranyenterprises thatthereafter remained unsold. The
Government wasnowentitled tosellaportion ofenterprises formoney alone (rather thanmoney and
vouchers). TheGovernment hadgreater flexibility indeveloping methods forprivatizing morecomplex
entities, suchasutilities. Theresponsibilities andstructure ofthePrivatization Commission havebeen
streamlined, andinformation publication requirements simplified. Thecentralized share registry has
alsobeenmade operational.
11. Inresponsetoafurtherquestion,therepresentativeofArmeniastatedthatArmeniahadprivatized
almost 90percentofagricultural landandmade landtitles freely transferable. Thesmall share of
landstillinStatehands isreserve landandlandusedforcertain kinds ofagricultural support activities
described inparagraph ...below. TheGovernment ofArmenia didnothave atimetable forthe
privatization ofagricultural landstillinState hands.
- Pricing policies
12. Inresponse torequests foranupdate ontheprogress ofprice reform, therepresentative of
Armenia stated thatsince 1995, almost allgovernment-mandated price controls hadbeenremoved.
Theonlydomestic prices thatwere stillsubject tocontrol were those forirrigation, urban electrical
transport, electricity, hotwater, gas,heating, sewage services, garbage collection, rentinState-owned
housing, andtelephone services. Those prices were stillsubject tocontrol because State-owned
enterprises weretheexclusive ordominant suppliers. Alladministered prices wereadjusted onaregular
basis tomaintain theirrealvalue. Theonlyremaining direct price control wasonflour (through the
setting ofmaximum profit margins forflourmills). Minimum export prices wereinplace forferrous
andnon-ferrous metal scrap, butonlyforthepurpose ofcalculating thecorporate taxliabilities of
enterprises dealing inthese scrap metals.
13. Therepresentative ofArmenia added thatsubsidies onbread, municipal electric transport and
garbage collection, andcross-subsidies onwater andsewerage hadbeeneliminated. Thesubsidies
ondistrict heating andhotwater (theonlyremaining consumer subsidies) wereunder review. IntheWT/ACC/SPEC/ARM/1
Page6
caseofdistrict heating, which lessthanone-third ofhouseholds actually receive, theissueofprovision
oftargeted heating subsidies tovulnerable groups would beresolved aspartoftheoverall reform
ofsocial assistance.
14. Some members oftheWorking Party requested thattheGovernment ofArmenia enter a
commitment thatasofthedateofaccession totheWTO, theonlypricecontrols ongoods andservices
inforce inArmenia would bethose listed inAnnex ...totheProtocol ofAccession. Some members
oftheWorking Party alsorequested thattheGovernment ofArmenia enteracommitment thatallprice
controls inforce atthedateofitsaccession, oranyprice controls introduced inthefuture would be
applied consistently withtherequirements oftheWTO Agreement. Inaddition, anyapplication of
price controls would takeaccount oftheobligation inArticle III.9oftheGATT 1994, andthatthe
Government ofArmenia would publish thegoods andservices subject toprice controls initsofficial
newspaper.
III. Framework ForMaking andEnforcing Policies
- Powers ofexecutive, legislative andjudiciary, administration ofpolicies onWTO related
issues
15. Therepresentative ofArmenia saidthattheexecutive branch ofGovernment intheRepublic
ofArmenia comprises thePresident oftheRepublic, thePrime Minister andMinisters. ThePresident
oftheRepublic isthehighest executive authority. ThePrime Minister isappointed bythePresident
oftheRepublic. ThePrime Minister recommended theappointment ofMinisters, which must be
approved bythePresident. ThePrime Minister wasresponsible fortheday-to-day running ofthe
government, andpresides overtheCabinet. ThePresident oftheRepublic waselected bypopular
voteevery fiveyears. With theexception offiscal matters, thePresident wasempowered tomake
andsigndecrees without theauthorization ofParliament. Resolutions were generally signed bythe
Prime Minister andtheresponsible Minister, andmayrequire presidential approval. Administrative
Orders weresigned byMinisters. AnyDecree orResolution withfiscal implications, suchaschanges
intariff rates, must beapproved bytheParliamentary Permanent Financial Credit, Budgetary and
Economic Commission, which ispresided overbyaMember ofParliament.
16. Therepresentative ofArmenia alsosaidthatthelegislature oftheRepublic ofArmenia isthe
National Assembly, orParliament, which comprised 190deputies. Deputies wereelected bypopular
voteevery fouryears. TheNational Assembly, under theauthority andguidance ofitsChairman,
wasresponsible forapproving alllawsandinter-governmental agreements.WT/ACC/SPEC/ARM/1
Page7
17. Therepresentative ofArmenia saidthatinconformity withtheConstitution oftheRepublic
ofArmenia, thejudiciary wasindependent oftheexecutive andlegislative branches. TheCourts of
general competence aretheTribunal Courts offirstinstance, thereview courts andtheSupreme Court.
Appeals areheard bytheSupreme Court, andtheSupreme Court alsoacted asaCourt oforiginal
jurisdiction incertain matters. Theguarantor oftheindependence ofjudicial bodies wasthePresident
oftheRepublic, whowasHead oftheCouncil ofJustice. TheMinister ofJustice andtheProcurator
General weretheDeputy Heads. TheConstitutional Court, comprising ninemembers, wasresponsible,
among other things, forensuring theconstitutionality ofdecisions oftheNational Assembly, decrees
ofthePresident, resolutions oftheGovernment, andtreaties entered intobytheRepublic ofArmenia.
18. Therepresentative ofArmenia saidthatasystem ofStatearbitration oreconomic Courts existed
inparallel tothenational Courts system. Disputes under thissystem were resolved onaninformal
basisthrough binding arbitration. Thejurisdiction oftheeconomic Courts covered disputes between
juridical persons intheRepublic ofArmenia, although when adispute involved aforeigner fromoutside
theCommonwealth ofIndependent States (juridical ornatural person) thecasewasheard inthenational
Courts andnotintheeconomic Courts system.
19. TherepresentativeofArmeniaaddedthattheMinistryoftheEconomyhadprimaryresponsibility
inmostaspects ofpolicy affecting international tradeingoods andservices. TheMinistry ofFinance
hadoverall responsibility forfiscal policy, buttariffs wereproposed bytheMinistry oftheEconomy.
Allfiscal policy mustbeapproved bytheParliamentary Permanent Financial Credit, Budgetary and
Economic Commission. TheCentral Bank wasresponsible formonetary policy, exchange ratepolicy
andthebanking system. TheArmenian Patent Office wasresponsible forindustrial property protection
matters, andtheArmenian National Copyright Agency forcopyright protection.
20. TherepresentativeofArmeniasaidthatinmattersofpolicyaffectingtradeingoodsandservices,
thecentral government retained fullauthority. Inthiscontext, therepresentative ofArmenia noted
thatfollowing signature andratification oftheWTO Agreement, theWTO Agreement would become
domestic lawinArmenia andwould havepriority overallother domestic laws.WT/ACC/SPEC/ARM/1
Page8
IV. Policies Affecting Trade inGoods
- Market Access Negotiations
21. Armenia undertook negotiations onmarket access ingoods withinterested members ofthe
Working Party. TheSchedule ofConcessions andCommitments resulting from those negotiations
isAnnex ItotheAppendix oftheDraft Protocol ofAccession ofArmenia.
- Import regulations
22. TherepresentativeofArmeniainformedtheWorkingPartythatwithcertainexceptionsnecessary
tosafeguard human, animal andplant health andtheenvironment, anyperson could engage inthe
importation ofgoods intoArmenia. Enterprises orsoleentrepreneurs engaging intrading must be
registered intheState Register ofenterprises.
- Thecustoms tariff
23. Therepresentative ofArmenia stated thattheLawonTariffs andtheCustoms Code, approved
byParliament inAugust 1993, provides legislative authority forsetting tariffs anddealing withcustoms
matters. Alterations totheTariff were required tobeapproved bytheParliamentary Permanent
Financial Credit, Budgetary andEconomic Commission. Decree No.615issued bytheGovernment
inDecember 1993introduced newcustoms duties, andthesewerefurther modified byDecree No.224
issued inMay1994andbyDecree No.39issued inJanuary 1995. Armenia hadusedtheHarmonized
System ofCommodity Classification since 1991.
24. Therepresentative ofArmenia saidthatcustoms tariffs wereexpressed inadvalorem terms
andlevied onc.i.f.values. Only132items wereidentified inArmenia ’stariffschedule because nearly
allproduct categories identified atthetwo-digit levelontheHarmonized System carried thesame rate
ofduty. Inresponse toquestions from Working Party members concerning thepossibility of
disaggregating thetariff tothefourorgreater digitlevel, therepresentative ofArmenia responded
thatifitproved necessary theGovernment ofArmenia would disaggregate itstariff schedule from
itspresent twodigitHSlevel. There werefivetariffrates-zero, 5percent,10percent,30percent,
and50percent. More than90percentoftheitems inthetariff schedule weresubject todutyrates
ofzero(86items) or10percent(36items). Onlyfiveitems weresubject toa30percentrate(certain
luxury foods, certain confectionery, furclothing, furs,andgaming machines). Onlytwoluxury products
(caviar andpetfoods) were subject toa50percentrate. After taking account oftariff exemptionsWT/ACC/SPEC/ARM/1
Page9
(e.g. forhumanitarian supplies) andzero-rated items, theweighted average tariff waswellbelow
5percent. Tariff revenue accounted forabout 2percentoftheGovernment 'stotaltaxcollections
in1994. Tariff rateschanges were recommended bytheGovernment, butasafiscal measure, they
wererequiredtobeconfirmedbytheParliamentaryPermanentFinancialCredit,BudgetaryandEconomic
Commission.
25. FollowingnegotiationswithmembersoftheWorkingPartyandfurtheramendmentstoArmenia's
tariff, therepresentative ofArmenia informed theWorking Party thatthere werenowonlytworates
ofdutyapplied; zeroand10percent. Inparticular, theGovernment ofArmenia would impose a
ceiling tariff binding atauniform advalorem rateof15percentforbothindustrial andagricultural
products; andtobindatalevelof0percenttheimport tariff forthefollowing product groups:
agricultural equipment (CNcode: 8432-8434, ex8701.90) applied 0%,except 8701.90 -10%;
constructionequipment(CNcode:8425,8426,8428-8430,ex8431,8479.10,8701.30,8704.10)applied
0%,except 8701.30 -10%;
medical equipment (CNcode: 2844.40, 3822, 8419.20, ex8419.90, ex8543.80, 8713, 8714.20, 9018,
9019, 9021, 9022.11, 9022.19, 9022.21, ex9025.11, 9402) applied 0%,except 3822, ex8543.80,
8714.20 -10%;
pharmaceuticals (CNcode: 2936, 2937, 2939, 2941, 30)applied 0%;
paper (CNcode: 47,48)applied 0%;
steelandarticles ofsteel(CNcode: 7206.10, 7207-7229, 7301, 7302excluding 7302.30.00, 7303-7306,
ex7307.22, ex7307.92, 7308, 7312-7314,7317) applied 0%;
distilled spirits (CNcode: 2208.30) applied 10%;
non-ferrous metals (CNcode: 74-80) applied 0%ofwhich 7417, 7418, 7615, 7616 -10%;
scientific instruments (CNcode: 90011000-90015000, 90019040-90019060, 90019080, 90019090,
90021140,90021180Y,90021180Z,90021900,90022040,90022080,90029020,90029040,90029070,
90029090Y,90029090Z,90031100,90031900,90039000,90041000,90049000,9018.90,9023,9024,
902520, 90252040, 90252080, 902580, 90258010-90258050, 902590, 90259000, 9026, 90261020,
90261040, 90261060, 90262040, 90262080, 90268020, 90268040, 90268060, 90269020, 90269040,
90269060, 9027, 90271020, 90271040, 90271060, 90272040, 90272080, 90273040, 90273080,
90274000, 90275040, 90275080, 90278040, 90278080, 90279020, 90279040, 90279060, 90279080,
9028, 9030, 9030.39, 9031, 9032) applied 0%; and,
wood andarticles ofwood (CNcode: 44)applied 0%,except 4414, 4419, 4420, 4421 -10%;
26. Hefurther added thatforchemical products, according totheratesdetermined inthechemicals
harmonization list,Armenia 'sapplied tariffs werecurrently below theharmonization levels. TheratesWT/ACC/SPEC/ARM/1
Page10
would either remain thesame orwould befurther reduced. TheGovernment ofArmenia would also
bindimport tariffs forthefollowing product groups:
inorganic chemicals (CNcode: 28)-5.5% (applied 0%);
organic chemicals (CNcode: 2901-2902) -0%(applied 0%),(CNcode: 2903-2915 excluding 2905.43
and2905.44) -5.5% (applied 0%), (CNcode: 2916-2942) -6.5% (applied 0%);
pharmaceutical products (CNcode: 30)-0%(applied 0%);
fertilizers (CNcode: 31)-6.5% (applied 0%);
tanning anddyeing extracts (CNcode: 32)-6.5% (applied 0%);
essentialoilsandresinoids(CNcode:33excluding3301)-6.5%(applied0%,except3303-3306-10%);
soap, washing preparations, candles andsimilar articles (CNcode: 34)-6.5% (applied 10%, except
3401, 3402, 3406 -0%);
albuminoidal substances (CNcode: 35excluding 3501-3505) -6.5% (applied 0%);
explosives (CNcode: 36)-6.5% (applied 0%,except 3604 -10%);
photographic orcinematographic goods (CNcode: 37)-6.5% (applied 10%);
miscellaneous chemical products (CNcode: 38)-6.5% (applied 10%); and
plastics andarticles thereof (CNcode: 39)-6.5% (applied 0%,except 3924 -10%).
27. Concerning products related totradeincivilaircraft, therepresentative ofArmenia stated that
theGovernment ofArmenia would binditstariffs atalevelof0percentforthefollowing product
groups: 391721-391723, 391729, 391731, 391733, 391739, 391740, 400829, 400950, 401130,
401210, 401220, 401610, 401693, 401699, 401700, 450490, 482390, 681290, 681310, 681390,
700721, 730431, 730439, 730441, 730449, 730451, 730459, 730490, 730630, 730640, 730650,
730660, 731210, 731290, 732290, 732410, 732490, 732620, 741300, 760810, 760820, 810890,
830210, 830220, 830242, 830249, 830260, 830710, 830790, 840710, 840890, 840910, 841111,
841112, 841121, 841122, 841181, 841182, 841191, 841199, 841210, 841221, 841229, 841231,
841239, 841280, 841290, 841319, 841320, 841330, 841350, 841360, 841370, 841381, 841391,
841410, 841420, 841430, 841451, 841459, 841480, 841490, 841581-841583, 841590, 841810,
841830, 841840, 841861, 841869, 841950, 841981, 841990, 842119, 842121, 842123, 842129,
842131, 842139, 842410, 842511, 842519, 842531, 842539, 842542, 842549, 842699, 842810,
842820, 842833, 842839, 842890, 847110, 847120, 847191-847193, 847989, 847990, 848310,
848330, 848340, 848350, 848360, 848390, 848410, 848490, 850120, 850131-850134, 850140,
850151-850153, 850161-850163, 850211-850213, 850220, 850230, 850240, 850410,
850431-850433, 850440, 850450, 850710, 850720, 850730, 850740, 850780, 850790, 851031,
851110, 851120, 851130, 851140, 851150, 851180, 851680, 851810, 851821, 851822, 851829,
851830, 851840, 851850, 852090, 852110, 852290, 852510, 852520, 852610, 852691, 852692,WT/ACC/SPEC/ARM/1
Page11
852790, 852910, 852990, 853120, 853180, 853910, 854380, 854390, 854430, 880110, 880190,
880211, 880212, 880220, 880230, 880240, 880310, 880320, 880330, 880390, 880520, 900190,
900290, 901410, 901420, 901490, 902000, 902511, 902519, 902520, 902580, 902590, 902610,
902620,902680,902690,902910,902920,902990,903010,903020,903031,903039,903040,903081,
903089, 903090, 903180, 903190, 903210, 903220, 903281, 903289, 903290, 910400, 910990,
940110, 940320, 940370, 940510, 940560, 940592, 940599 (applied 0%,except 450490, 681290,
681390, 851031, 851810, 851821, 851822, 851829, 851830, 851840, 851850, 852090, 852110,
852290, 852790, 852910, 852990, 910400, 940110, 940320, 940370, 940510, 940560, 940592,
940599 -10%).
28. Therepresentative ofArmenia stated thattheratesofcustoms dutywould notbeincreased
beyond levels bound inArmenia 'sWTO Schedule ofConcessions which isannexed totheProtocol
ofAccession ofArmenia. TheWorking Party tooknoteofthatcommitment.
- Other duties andcharges levied onimports
29. Therepresentative ofArmenia informed theWorking Party thatthere were noother duties
andcharges levied onimports except thefeesforservices rendered byCustoms agencies described
inparagraphs ...below.
- Tariff ratequotas, tariff exemptions
30. Therepresentative ofArmenia stated thatArmenia didnotapply anyimport quotas, including
tariff ratequotas. Therepresentative ofArmenia confirmed thathisGovernment hadnoplans to
introduce import quotas, including tariff ratequotas. Ifanysuchquotas weretobeintroduced they
wouldbeconsistentwiththerelevantWTOprovisions,suchasArticlesXXandXXIoftheGATT1994.
Therepresentative ofArmenia confirmed thatArmenia would abide byArticle VIIIoftheGATT 1994
andbytheAgreement onImport Licensing Procedures inorder tosimplify procedures forimports
andexports.
31. Therepresentative ofArmenia saidthattariff exemptions were granted inrespect ofthe
following:essentialequipmentimportedbyforeignenterprisesandjointventures(withatleast30percent
foreign ownership), vehicles imported forGovernment use,humanitarian supplies, foreign currency
andbonds, prosthetic andorthopaedic equipment, goods imported forduty-free shops, livestock, meat,
fish,shellfish, milkandmilkproducts, vegetables, coffee, tea,spices, fruits, animal andplant fatsWT/ACC/SPEC/ARM/1
Page12
andoils,sugar andcandies, mineral fuelandbitumens, leather, silk,wool, cotton andother textile
threads, synthetic thread, glass andnon-decorative glass products, aluminum, lead,zinc,pewter and
objects made ofthese metals, tractors, flying apparatus, goods intransit, temporary imports, andany
other instances foreseen ininternational agreements, including freetradeagreements. Natural persons
wereentitled toaduty-free import allowance onnewgoods uptoavalue ofonethousand USdollars.
- Customs feesandcharges forservices rendered
32. Inresponse toquestions from Working Party members about Armenia 'ssystem ofcustoms
fees,therepresentative ofArmenia stated thatacustoms feeof0.15percentwascharged onimported
goods. The0.15percenttaxwascalculated onthec.i.f. value plusapplicable customs duty. No
customs feewascharged onimportations bytheArmenian Government, onclearing operations made
onthebasis ofinternational agreements, ontemporary imports, onimports ofrawmaterials for
construction under bilateral inter-republican contracts, ongoods imported directly through theState
budget, andonhumanitarian aid. Imports subject toclearing arrangements under inter-republican
contracts signed withcountries oftheFormer Soviet Union (FSU) hadpreviously beenexempted from
thecustoms fee,butthisexemption hadbeendiscontinued, andFSUcountries werenolonger exempted
from thecustoms fee.Noother import charges orfeesarelevied. Under anamendment toDecree
No.615of6December 1993, which entered intoforce on1May1996, thecustoms userfeewas
increased from0.15percentto0.3percent. In1995, approximately US$1 million wascollected as
customs charges. Thisrevenue wasusedforthedevelopment ofthecustoms administration inArmenia.
Among themain items ofexpenditure were construction andrepair offacilities andequipment
(US$480,000), computer procurement (US$82,500), procurement andmaintenance ofvehicles
(US$80,000), procurement ofuniforms (US$55,000), andremuneration (US$220,000).
33. Some members oftheWorking Party asked whether the0.3percentfeewasconsistent with
therequirements ofArticle VIIIoftheGATT 1994, inparticular, whether thefeerepresented the
costoftheservices rendered. Therepresentative ofArmenia replied thatinviewoftherequirement
inArticle VIIIofGATT 1994 thatfeesforservices rendered correspond tothecostoftheservices
rendered, andinview ofthepractical difficulties ofstructuring theArmenian customs feeinterms
ofactual costs incurred forrendering customs services, theGovernment ofArmenia haddetermined
thatthebestcourse ofaction would betobindthecustoms feeof0.3percentasan“extra dutyor
charge ”under Article II.1(b) intheschedule ofconcessions.WT/ACC/SPEC/ARM/1
Page13
34. Some members oftheWorking Party stated thatthecustoms feewasnotthetypeoffee
contemplated byArticle II.1(b), andthatthefeeshould either bebrought intoconformity with
Article VIIIorbeeliminated. Therepresentative ofArmenia stated thatArmenia would notseekto
bindthecustoms feeunder Article II.1(b). Rather, itwould introduce amaximum andminimum amount
payableonanygivenimportorexporttransaction,andtheneitherchargethatamount,orthe0.3percent
advalorem feeifthecalculated amount fellbetween theminimum andmaximum rates. Inthisfashion,
Armenia intended toensure thatthecustoms feeapproximates thecostofservices rendered. This
arrangement would beintroduced bytheendofthefirstquarter of1997. Therepresentative ofArmenia
requested atransition period offiveyears fromthedateofWTO accession tobring itscustoms user
feefullyintoconformity withArticle VIIIofGATT 1994. Thetransition period wasrequired sothat
Armenia could modernize itscustoms service, andusetherevenue collected fromthecustoms feeduring
thefive-year grace period forthispurpose.
35. Some members oftheWorking Party stated thatafiveyeartransition period tobring thefee
intoconformity withArticle VIIIwasnotappropriate. Armenia should conform withtherequirements
ofArticle VIIIfrom thedateofitsaccession, andfrom thattimetheproceeds ofthefeeshould only
beusedfortheoperation ofcustoms clearance facilities andtotalannual revenues fromthefeeshould
notexceed thecostofcustoms clearance oftheimported goods. Following accession, information
onthemethod ofcalculation ofthefeeandthecostofprovision ofcustoms clearance facilities should
beprovided toWTO Members upon request.
- Application ofinternal taxes toimports
36. Therepresentative ofArmenia informed theWorking Party thatArmenia 'staxsystem had
been completely overhauled since 1992, aspartoftheGovernment 'soverall policy ofeconomic
transformation towards amarket economy. Armenia hadtwoother indirect taxes which wereapplied
tobothimports anddomestic production -avalue-added taxandanexcise tax.Direct taxes included
personal income tax,anenterprise profits tax,landtax,andaStateenterprises fixed assets, citizens ’
buildingsandtransportationdevicestax.Othertaxes,whichraisedverymodestsumsofrevenueincluded
afewState andlocaltaxes andfees,some professional operating fees,andanenvironmental taxon
pollution andnatural resource use.WT/ACC/SPEC/ARM/1
Page14
- Value Added Tax
37. Therepresentative ofArmenia saidthatthevalue-added tax(VAT) wasimposed pursuant to
theLawonValue Added Tax. TheVAT wascharged onimports anddomestic output attherateof
20percent. Imports fromtheFSUwerezero-rated. Exports outside theFSUwerealsozero-rated,
while exports toFSUcountries were liable topaythetax.Inresponse toquestions concerning the
zero-rating ofVAT, therepresentative ofArmenia stated thatitapplied equally toimports and
domestically produced goods. Taxcredits were available onVAT paidinother States oftheFSU,
andonamortizable assets. Goods andservices exempted fromVATincluded urban electrical transport,
medicines anddrugs, rents, insurance reinsurance andbanking activities, certain kinds ofentertainment,
products andservices imported ashumanitarian aidandforcharitable purposes, bread, milk, yogurt,
children 'sfood, clothing, andfootwear, butter, sugar, margarine, wheat, cheese, milk, andvegetable
oils. Goods subject toprice controls werealsoexempted, except forcigarettes. ThefulllistofVAT
exemptions wasprovided totheWorking Party intheLawonValue Added Tax.
- Excise Tax
38. Inresponse toquestions concerning theexcise tax,therepresentative ofArmenia added that
theLawonExcise Taxes imposed excise taxondomestic andimported goods. LiketheVAT, the
taxwascollected onimports bythecustoms authorities, andonlocalproduction bytheTaxInspectorate.
Noexcise taxes werelevied onimports fromwithin theFSUoronexports toanydestination. Excise
taxeswereapplied onimports attheimport duty-inclusive pricebythecustoms authorities onthebasis
ofthecustoms value approved ordetermined forimport dutypurposes. Excise taxes werecollected
attheretail stageondomestically produced goods. Therepresentative ofArmenia saidthatthedutiable
value wastheretail price plustheamount ofexcise (i.e. cost+profit +excise).
39. Theexcise taxes were asfollows:
HSNumber Product Description Advalorem duty
ondomestic
productsAdvalorem
dutyon
imports
2208 10-2208 90
2209Strong alcohol 50 75
2203 00 Beer 50 75
2204 10-2204 30
2205 10-2205 90Grape wine 25 50
1604 30 Caviar 50 50WT/ACC/SPEC/ARM/1
Page15
HSNumber Product Description Advalorem duty
ondomestic
productsAdvalorem
dutyon
imports
2402 10-2402 90 Tobacco products 50 50
7113, 7114, 7115,
7116, 7117Jewellery 25 25
4301, 4302, 4303,
4304Furs, natural leather garments 25 25
8703 10-8703 90 Passenger vehicles 0 15
4011 10 Tires forpassenger vehicles 25 25
6911 10-6911 90
7013 31Glass crystal andchina 25 25
5702 10-5702 99 Hand-woven carpets 50 50
2710 00 Gasoline 25 25
40. Therepresentative ofArmenia stated thattheArmenian Government recognized thatit
wasaviolation ofthenational treatment principle forexcise taxes ondomestic products tobelower
thanonimports ofthesameoralikeproduct. Armenia would equalize excise taxesondomestic goods
andimports ofthesame orlikeproducts aspartoftheaccession commitments.
41. Some members oftheWorking Party noted thatthenon-application ofthese taxes toimports
fromFSUStates maybeseentogiverisetodiscrimination against products fromnon-FSU countries.
Therepresentative ofArmenia stated thatthese arrangements didnotviolate thenational treatment
principle. Inresponse tofurther questions, therepresentative ofArmenia stated thattheGovernment
ofArmenia recognized, however, thatthismixed application oftheorigin anddestination principles
with respect totaxes onthesame goods from different sources waslikely toinfringe the
most-favoured-nation (m.f.n.) principle. While itmaybepossible todefend thisdeparture fromm.f.n.
interms ofArticle XXIV ofGATT 1994, byvirtue oftheexistence offreetradeagreements withother
CIScountries, therepresentative ofArmenia stated thatArmenia wished toswitch tothedestination
principle oftaxation withrespect toimports from allsources. Armenia wastherefore attempting to
persuade itsCIStrading partners ofthedesirability ofcharging thesetaxesatdestination andnotorigin.
42. Therepresentative ofArmenia stated thatArmenia would apply thedestination principle instead
oftheorigin principle toVAT andexcise taxes fromthedateofaccession totheWTO. [TheWorking
Party tooknoteofthiscommitment.]WT/ACC/SPEC/ARM/1
Page16
- Income Tax
43. Therepresentative Armenia stated thattheLawonPersonal Income Taxunified personal tax
rateswiththeratesoftheenterprise profits tax.Personal income taxwasdetermined byhowmany
multiples oftheminimum wage anindividual ’sincome equalled. Minimum wages were setby
Presidential Decree. Incomes oftwotimes theminimum wage orlessweretax-exempt. Taxbrackets
werethendefined interms ofmultiples oftenabove theminimum wage. Thus, foranincome from
twouptotentimes greater thantheminimum wage, thetaxratewas12percent, formultiples of
theminimum wage between tenandtwenty times theratewas18percent,formultiples fromtwenty
toforty times theratewas25percent,andformultiples above fortytimes theratewas30percent.
Other exemptions fromincome taxwerereceipts fromthesaleofprivate property, anyincome received
bypensioners, invalids, veterans, andhandicapped individuals, social security recipients, alimony
payments, students ’stipends, andmilitary service pay.
44. Therepresentative ofArmenia added thatthesystem forlevying income taxintheagricultural
sector wasdifferent. Private farmers paidafixed share oftheirincome, currently setat15percent.
Thefewremaining Statefarms payafixed share oftheirprofits. Intheevent ofadverse agricultural
circumstances, theGovernment mayreduce theseliabilities, orexempt farmers altogether fromtaxation.
Inresponse toquestions from Working Party members, therepresentative ofArmenia saidthatno
differentiation wasmade between enterprises onthebasis ofownership inrelation totaxation inthe
agricultural sector. BothState farms andprivate farms paidthesame taxes, which isestablished at
therateof15percentofcalculated netincome determined bythecadastre value oftheland. The
different system oftaxation fortheagricultural sector reflected thedesire toimpose alesser taxburden
onthesector. Aslongasfarmers didnotderive more than25percentoftheirincomes from non-
agricultural sources, theywereexempt fromincome tax.Inaccordance withtheLawonPeasant and
Collective Farms, farmers inmountainous, remote orabandoned countryside areas maybegranted
taxrelief. Atpresent, taxexemptions arebeing granted tofarmers inborder areas affected bythe
conflict withAzerbaijan.
- Enterprise Profit Tax
45. Therepresentative ofArmenia stated thattheenterprise profits taxwasimposed onalljuridical
persons operating inArmenia, including foreign enterprises. Corporate taxeswerecharged atthesameWT/ACC/SPEC/ARM/1
Page17
ratesaspersonal income taxes -12percent,18percent,25percentand30percent. Thestandard
ratesschedule forallenterprises, whether localorforeign, andincluding banks andinsurance companies
were 12percentforannual profits ofupto72,000 drams, 18percentforthenextbracket upto
144,000 drams, 25percentforthebracket upto216,000 drams, and30percentformore than
216,000 drams. Thepossibility ofestablishing asingle corporate taxratewasunder consideration.
Dividend income fromcompany dividends paidoutofafter-tax profits werenottaxed. Newenterprises,
excluding Stateenterprises, wereexempted fromprofits taxforthefirsttwoyears oftheiroperation.
Jointventures maybeabletosecure additional taxcredits foraperiod ofseven years, depending on
theshare offoreign capital intheenterprise. Taxholidays weregranted topromote entrepreneurship
andbusiness activity inthecountry. Theexemption applied equally todomestic enterprises, joint
ventures andforeign enterprises. Thecredits weresetat50percentifforeign capital comprises half
ormore oftotalshare capital andisnotlessthanUS$100,000, andat30percentifforeign capital
accounts for30percentto50percentofthetotal(with aminimum investment ofUS$40,000 to
US$100,000).
46. Therepresentative ofArmenia added thattheLawonProperty Taxreplaced thefixed assets
tax. Thetaxapplied to:(i)theassets ofallenterprises asdefined intheLawonEnterprises and
Entrepreneurial Activities, unless particular assets arethesubject ofaspecific exemption bythe
Government; (ii)houses andother dwellings inArmenia belonging tocitizens andnon-citizens, or
leased bythem; (iii)cattle; and(iv)certain vehicles. Arange ofassets andpersons wereexempted
from thetax,asindicated inArticle 9andArticle 10oftheLaw. Exemptions were alsoforeseen,
interalia,certain re-investment andre-tooling expenditures, research anddevelopment expenditures
(on50percentofexpenditures),expenditureonenvironmentalprotection(on30percentofexpenditure),
profits usedtocover losses ofjointventures withforeign participation andforeign enterprises during
theprevious fiveyears, andanyenterprise carrying outreconstruction activity intheearthquake region.
47. Therepresentative ofArmenia stated thattheStateenterprise fixed assettaxaimed toensure
thatState enterprises would beliable forsome minimum amount oftax. Thetaxwasimposed by
thelaw“OnProperty Tax”.Fortheenterprises covered bythislaw,thefixedassettaxwillbereplaced
bytheproperty tax,andforindividuals thetaxwillbelevied onproperty valued atmore than850
times theminimum wage.WT/ACC/SPEC/ARM/1
Page18
- Non-tariff measures andimport licensing
48. Therepresentative ofArmenia stated thatpursuant toDecree No.17ofJanuary 1995, most
imports were freeofanyprohibitions orquotas. Theimport prohibitions were imposed forhealth,
security andenvironmental reasons. Theitems affected wereallkinds ofweapons, components used
intheproduction ofweapons, explosives, nuclear materials, poisons, narcotics, strong psychotropic
substances, devices foruseinopium smoking andpornographic material. TheGovernment hadno
plans toeliminate those restrictions.
49. Therepresentative ofArmenia stated thatthefollowing imports were subject tolicensing:
HSnumber
Pharmaceutical products, medicines 05.10, 12.11, 29.38, 29.41, 30.03,
30.04, and30.13.02
Rawmaterials forpharmaceutical production 05.00; 12.11; 13.02; 29.38
Agricultural chemicals 38.08
Rarewildanimals andplants included inthe
RedBook oftheRepublic ofArmenia
TheRedBook oftheRepublic ofArmenia contained alistofrareanimals andplants. Anyrestrictions
imposed onthese items aremore likely toaffect exports from Armenia. TheRedBook identifies
approximately onehundred rareanimals andbirds, and390rareplants, inrespect ofwhich licences
would berequired.
50. Inresponse toquestions concerning theimportation ofpharmaceutical products andmedicines,
therepresentative ofArmenia stated thatthese imports hadtobeauthorized bytheMinistry ofHealth.
Theimportation ofagricultural chemicals (HSheading 38.08) wasrequired tobeauthorized bythe
Ministry ofAgriculture. TheMinistry ofEconomy issued licences fortheimportation ofrarewild
animals andplants listed intheRedBook onthebasisofarecommendation oftheMinistry ofNature
andEnvironment. Those licensing arrangements werenotadministered inarestrictive fashion, they
wereadministered toprotect health andtheenvironment. Hefurther noted thatDecree No.17,which
speltoutthelicensing regulations onimports andexports, provided inparagraph 8thatthelicensing
requirement didnotapply toenterprises withatleast30percentforeign capital thatengaged intheWT/ACC/SPEC/ARM/1
Page19
importation ofrawmaterials fortheproduction ofcommodities. Headded thattherewasnostatutory
requirement toapply alicensing regime. Thedesignation ofproducts subject tolicence wasatthe
discretion oftheExecutive toremove oradditems from thelistofthose subject tolicensing.
51. Therepresentative ofArmenia further stated thatanyperson, firms andinstitutions wishing
toapply foranimport licence maydosoprovided theyareregistered asajuridical person orasole
entrepreneur undertaking abusiness activity inArmenia. Registration asajuridical person orsole
entrepreneur wasanautomatic procedure, subject tonorestrictions. Licences applications wererequired
tobedetermined within tendaysofreceipt ofanapplication. Inresponse toquestions from some
members regarding whether licences could beissued morequickly, therepresentative ofArmenia stated
thatsince theten-day stipulation wasamaximum period, inpractice licences could beobtained within
ashorter timeperiod. Ifgoods arrived without alicence, theycould onlybecleared through customs
upon production ofthenecessary import licence.
52. Therepresentative ofArmenia saidthatalicence would bewithheld ifaproposed importation
involved aproduct notincluded ontheapproved listmaintained bytheMinistry ofHealth. Thesame
considerations apply inthecaseoflicence approvals granted bytheMinistry ofAgriculture. Inaddition,
paragraph 9ofDecision No.17stipulated thatanimport licence maybedenied where animportation
would: (i)becontrary toanintergovernmental agreement; (ii)result inunfair competition asdefined
under Armenian legislation; (iii)bebased onincorrect information; or(iv)involve anyother case,
asdefined inthelegislation ofArmenia. Points (ii)and(iv)above havenotbeenusedasgrounds for
denying alicence, sincenounderlying legislation requiring suchactions hasbeendeveloped. Importers
wereentitled tomake representations totherespective licensing authorities uponrejection ofanimport
licence. Importers werealsoentitled tomake representations through thecourts iftheyaredissatisfied
withanadministrative decision involving refusal togrant alicence.
53. Therepresentative ofArmenia added thataprospective importer ofaproduct subject tolicensing
wasrequired tosubmit animport licence application form, together withacertificate oforigin, a
proforma invoice orother agreement indicating thenature oftheproduct, itsprice andtheterms and
conditions oftheproposed transaction, andacertificate ofquality. Import clearance oflicensed imports
required theoriginal copy oftheimport licence, acertificate oforigin, andthefinalinvoice. An
administrative charge waspayable foranimport licence, which inmid-1995 was540Drams
(approximately US$1.30).WT/ACC/SPEC/ARM/1
Page20
54. TherepresentativeofArmeniafurthernotedthatnodepositoradvancewaspayableuponissuance
ofimport licences. Nolimitations existinrelation totheperiod oftheyearduring which alicence
application and/or animportation maybemade. Theperiod ofvalidity ofalicence isamaximum
ofoneyear. Licences maybere-issued afterthisperiod, butnotextended. Ifalicence isissued for
lessthanthemaximum period ofoneyear, thensuchalicence canbeextended automatically upto
themaximumpermittedperiod.Nopenaltiesexistforthenon-utilizationoflicences.However,licences
were nottransferable among importers.
55. Therepresentative ofArmenia added thatforeign exchange wasautomatically provided for
goods tobeimported. Animport licence doesnothavetobepresented inorder toobtain foreign
exchange. Foreign exchange isalways available tocover licences issued, unless foreign exchange
isingeneral shortsupply. This, however, isunlikely tooccur inviewofArmenia ’sliberalized foreign
exchange markets. Noformalities needtobefulfilled inorder toobtain foreign exchange.
- Minimum import prices
56. Therepresentative ofArmenia noted thatArmenia didnotmaintain asystem ofminimum import
prices.
- Customs valuation
57. Some members oftheWorking Party referred totheAgreement onCustoms Valuation and
tocertain inconsistencies oftheCustoms Regulations ofArmenia inrespect ofcustoms valuation.
These members requested more detailed explanations withregard totheimplementation byArmenia
ofspecific provisions oftheCustoms Valuation Agreement, inparticular Articles 7,8,10,11and12
thereof.
58. Therepresentative ofArmenia informed theWorking Party thatArmenia 'ssystem ofcustoms
valuation wasbased onthetransaction value. TheCustoms Valuation Regulations were contained
inaGovernment Order attached toDecree No.615(December 1993). TheRegulations wereconsistent
withtheprovisions oftheAgreement onImplementation ofArticle VIIoftheGATT 1994. The
Regulation Order provided forthesame sixmethods ofvaluation laidoutintheAgreement on
Implementation ofArticle VIIoftheGATT 1994, andstipulated thatthefirstmethod (transactionWT/ACC/SPEC/ARM/1
Page21
value) should generally beused. Armenia wasamember oftheWorld Customs Organization. He
added thatDecree No.615contained many detailed provisions relating tothevaluation ofgoods by
theCustoms. Inresponse toquestions fromsome members oftheWorking Party concerning Armenia 's
salesbetween related persons, therepresentative ofArmenia stated thatthefactthatsalestookplace
between related persons would not,ofitself, prevent useofthetransaction value, unless itwas
determined thatthedeclared invoice value didnotrepresent thepriceactually paidorpayable forgoods.
Paragraph 8ofDecree No.615permitted importers toseekawritten explanation ofanyrejection by
thecustoms authorities ofadeclared invoice value astheprice actually paidorpayable inrespect of
animport transaction between related parties. Inresponse toquestions concerning theobligation
contained inArticle 1.2(b) oftheAgreement onImplementation ofArticle VIIoftheGATT 1994,
therepresentative ofArmenia stated thatDecree No.615didnotcontain aprovision giving effect to
Article 1.2(b) oftheAgreement onImplementation ofArticle VIIoftheGATT 1994. Inresponse
tofurther questions hestated thatDecree No.615provided thatdamaged goods were valued taking
intoaccount theeffects ofthedamage, andduties werecharged ontheassessed value. Noduties were
payable onlostgoods. Inresponse tofurther questions, therepresentative ofArmenia stated thatno
provision hadbeenmade inDecree No.615forthereversal oftheorder ofapplication ofthevaluation
methods specified inArticles 5and6oftheWTO customs valuation agreement. Paragraph 24of
Decree No.615provided forthecircumstances envisaged inArticle 5.2oftheWTO customs valuation
agreement. There arenocases sofarinwhich theprovisions ofArticle 5.2havebeenimplemented.
Article6.2oftheAgreement,dealingwithaccesstoinformationpossessedbyresidentsofothercountries
inthecontext ofdetermining computed values hadnotbeenimplemented byDecree No.615.
59. Therepresentative ofArmenia saidthatinrelation toArticle 7oftheCustoms Valuation
Agreement, paragraphs 27and28ofDecree No.615provided forthedetermination ofcustoms values
when noneoftheotherfivemethods available canbeapplied. Paragraph 27ofDecree No.615required
thatthecustoms authorities make available relevant information when thevalue wasdetermined by
anymethod other thanoneofthefiveavailable. Inrelation totheprohibitions found inArticle 7.2,
paragraph 28ofDecree No.615stated thatneither retail prices inthedomestic market, northeprices
oflocally produced goods, norexport prices tothirdcountries, noranyother price determined atwill
oronaninexact basis, maybeusedforcustoms valuation purposes when noneofthefiveavailable
valuation methods areapplicable. Inresponse toconcerns raised bysome members oftheWorking
Party thatDecree No.615wasinsufficiently precise, therepresentative ofArmenia stated that
paragraph 28ofDecree No.615referring tothedetermination ofprices atwilloronaninexact basisWT/ACC/SPEC/ARM/1
Page22
isintended toruleouttheuseofminimum customs values, arbitrary orfictitious values, orcomputed
values notusing theprovisions oftheAgreement. TheGovernment ofArmenia recognized, however,
thatDecreeNo.615lacksspecificityincertainkeyareas,andwascommittedtoremedyingthissituation.
60. Therepresentative ofArmenia saidthatinrelation toArticle 8oftheCustoms Valuation
Agreement, paragraph 12ofDecree No.615required thatthetransaction value applied forcustoms
dutypurposes should include alltheadditional costs referred toinArticle 8.2oftheWTO Customs
Valuation Agreement. Inresponse toquestions concerning therateofexchange applied bytheCustoms,
therepresentative ofArmenia stated thattheexchange rateusedwasderived from thedaily foreign
exchange auctions heldbytheCentral Bank ofArmenia. TheCentral Bank announced exchange rates
daily andthese ratesarepublished inthepress, asrequired byArticle 9.1oftheCustoms Valuation
Agreement. Confidentiality, wasassured byparagraph 5ofDecree No.615. Inresponse toquestions
concerning themechanisms forprotection ofconfidential information, therepresentative ofArmenia
stated thatparagraph 5ofDecree No.615provided thatconfidential information shallonlybeused
forcustoms purposes andnotdivulged tothirdparties except bypriorconsent. Thismettheobligation
contained inArticle 10oftheCustoms Valuation Agreement.
61. Inresponse torequests foradetailed description oftheprocess forreview ofCustoms valuation
decisions, therepresentative ofArmenia saidthatinrelation toArticle 11oftheCustoms Valuation
Agreement, paragraph 9ofDecree No.615provided foradministrative appeal ofacustoms decision
toahigher customs authority. Legal persons (firms orsoleentrepreneurs) could make judicial appeals
toaspecial arbitration authority incases involving valuation decisions. Thatarbitration wasbinding.
Thespecial arbitration authority wasthesame asthenational courts. Special economic courts will
come intoexistence astheprovisions ofthenewConstitution areimplemented Incases involving any
matter other thanvaluation, legalpersons could appeal tothecivilcourts. Natural persons could only
make appeals tothecivilcourts.
62. Therepresentative ofArmenia saidthatasrequired byArticle 12oftheCustoms Valuation
Agreement, relevant national laws, regulations, decisions andrulings werepublished intheBulletin
ofDecrees oftheGovernment ofArmenia orintheManual oftheSupreme Council oftheRepublic
ofArmenia. Inrelation totheobligation contained inArticle 13(lastsentence) oftheCustoms Valuation
Agreement, when thecustoms value ofgoods cannot beimmediately determined, importers wereentitled
toremove theirgoods fromcustoms control uponpayment ofprovisional duties based ontheassessmentWT/ACC/SPEC/ARM/1
Page23
ofthecustoms authorities. Theimporter thenhadthreemonths inwhich tochallenge theassessment.
Alternatively, animporter could provisionally cleargoods against abankguarantee validforonemonth.
Ifavaluation issue wasnotsettled within onemonth, afurther two-month period wasprovided for
animporter tochallenge anassessment, against provisional payment oftheassessment made bythe
customs authorities. Thedutyassessment, whether adjusted ornotfrom theoriginal assessment of
thecustoms authorities, became finalafterthethree-month period. Paragraph 8ofDecree No.615
provides thatanimporter isentitled, within seven daysofawritten request, toreceive awritten
explanation ofavaluation decision ofthecustoms authorities. Theinterpretative notes oftheWTO
Agreement onCustoms Valuation hadnotbeensystematically included inDecree No.615.
63. Following questions andcomments from Working Party members reflecting concerns about
theneed forimprovements toDecree No.615, therepresentative ofArmenia stated thatthe
WTO Agreement would beadopted asanintegral partofArmenia ’snational lawafterArmenia ’sWTO
accession. Therefore, allnecessary consequent changes willalsohavetobemade innational legislation
andregulations. Asfarascustoms valuation isconcerned, Armenia intends toensure thatthenecessary
legal basis isinplace toimplement theAgreement fullybythefirstquarter of1997, orthedateof
accession totheWTO, whichever wastheearlier. Inaddition, therepresentative ofArmenia stated
thathisGovernment would adopt the“Decision of24September 1984 ontheValuation ofCarrier
Media Bearing Software forDataProcessing Equipment ”bytheendof1997. Therepresentative of
Armenia stated thattheGovernment ofArmenia would ensure thatallrelevant lawswould beinfull
conformity withtheotherrequirements oftheAgreement onImplementation ofArticle VIIoftheGATT
1994 atthetimeofaccession. [TheWorking Party tooknoteofthese commitments.]
- Other customs formalities
- Rules oforigin
64. Therepresentative ofArmenia stated thattherulesoforigin applied byArmenia followed the
principles stated intheAgreement onRules ofOrigin. Origin rulesweredefined interms ofwholly
originating products, achange inthetariffclassification ofthegood, processing criteria, andthevalue-
added criterion. Thechoice ofapproach fordetermining origin depends ontheproduct concerned
andanyrelevant international agreement inrespect ofwhich origin rulesarebeing applied. However,
withtheexception ofwholly originating products, thechange intariffheading criterion (at4-digit level
intheHSclassification) isusedunless analternative isstipulated. Thecustoms authorities areentitledWT/ACC/SPEC/ARM/1
Page24
torequire origin certificates inrespect of:(i)goods subject toquantitative limitation; (ii)imports
under preferential trading arrangements; (iii)fortheprotection oftheenvironment, public health and
safety andnational security; and(iv)insituations where theauthorities consider thatinadequate
information astoorigin hasbeensupplied. Certificates oforigin mustbesigned bysuppliers andverified
bytherelevant national certifying body.
65. Therepresentative ofArmenia stated thattheGovernment ofArmenia would bring allitslaws
intoconformity withtherequirements oftheAgreement onRules ofOrigin fromthedateofitsaccession
totheWTO. [TheWorking Party tooknoteofthiscommitment.]
- Pre-shipment inspection
66. Inresponse toquestions, therepresentative ofArmenia stated thatArmenia didnotatpresent
employ theservices ofanypre-shipment inspection companies.
- Anti-dumping, countervailing andsafeguards regimes
67. Inresponse toquestions, therepresentative ofArmenia stated thatArmenia didnot,atpresent,
haveananti-dumping, countervailing orsafeguards regime. Therepresentative ofArmenia stated that
ifanyofthese policy instruments wereintroduced inthefuture, theywould befullyconsistent with
therelevant WTO provisions. [TheWorking Party tooknoteofthiscommitment.]
- Export regulations
- Export licensing system
68. Therepresentative ofArmenia stated thattheDecree oftheGovernment oftheRepublic of
Armenia No.17of17January 1995OnLicensing and/allocation ofImport andExport ofCommodities
(Jobs/Services) regulated Armenia 'sexport licensing regime. Export licences wererequired fortextiles
(totheEuropean Union only), formedicines, andforcertain liveanimals andplants. Theexport licences
ontextiles were required pursuant toanagreement withtheEuropean Union, butnorestrictions on
theseexports werecurrently inplace. Thelicences formedicines, liveanimals andplants weregenerally
notrestrictive -rather, theyweredesigned toensure public health andsafety. Enterprises withforeign
participation ofatleast30percentofshare capital wereexempted fromexport licensing requirements,WT/ACC/SPEC/ARM/1
Page25
except those relating totextile exports totheEuropean Union. Export prohibitions apply toused
machinery, weapons, components formanufacturing weapons, explosives, nuclear materials, certain
works ofartofnational orhistoric interest, poisons, narcotics, strong psychotropic substances, devices
foropium smoking, andconfidential information whose dissemination could hurtthenational interest.
Allother products maybefreely exported from Armenia. Thesystem applied toexports toall
destinations, except inthecaseofthelicensing requirement forexports oftextiles andclothing tothe
European Union. Thelicensing requirements were notintended torestrict thequantity orvalue of
exports. Rather, theywereintended toprotect thenational interest andhuman, animal orplant life
orhealth, andtheenvironment. Therepresentative ofArmenia stated thattheGovernment didnot
consider thatatthistime, abetter wayexisted ofachieving these objectives.
69. Therepresentative ofArmenia noted thatArmenia ’sexport licensing system closely paralleled
theimport licensing system. Asontheimport side,pharmaceuticals andrareanimals andplants were
subject tonon-restrictive licensing, designed toprotect health andtheenvironment. Inaddition, exports
oftextiles andclothing totheEuropean Union weresubject tolicensing under abilateral agreement
withtheEuropeanUnion,andlicencesarealsorequiredforexportsofrareobjectsorartifactsconsidered
partofthenational patrimony. Thelicensing oftextile andclothing exports totheEuropean Union
allowed these items tobemonitored, buttheyarenotcurrently subject torestrictions ofanykind.
70. Therepresentative ofArmenia saidthatArmenia maintained export licensing requirements
onthefollowing items:
HSnumber
Pharmaceutical products 29.41; 30.00
Rawmaterials forpharmaceutical production
Textiles andclothing toEuropean Union 05.00; 12.11; 13.02; 29.38
Objects considered partofthenational patrimony
Rarewildanimals andplants included inthe
RedBook oftheRepublic ofArmenia
TheRedBook oftheRepublic ofArmenia identifies approximately onehundred rareanimals andbirds,
and390rareplants inrespect ofwhich licences would berequired andwhose exportation maybe
controlled.WT/ACC/SPEC/ARM/1
Page26
71. Therepresentative ofArmenia saidthattheMinistry ofEconomy issued licences for
pharmaceutical products andrawmaterials usedintheirproduction onthebasis ofrecommendations
bytheMinistry ofHealth. TheMinistry ofEconomy issued licences fortheexportation ofrarewild
animals andplants listed intheRedBook onthebasisofarecommendation oftheMinistry ofNature
andEnvironment. Inthecaseoftextile andclothing exports totheEuropean Union, theMinistry of
Economy hadexclusive responsibility forissuing export licences. Exports ofobjects considered of
interest tothenational patrimony mustbeauthorized bytheMinistry ofCulture. Export licences could
bedenied where anexportation would: (i)becontrary toanintergovernmental agreement; (ii)result
inunfair competition asdefined under Armenian legislation; (iii)bebased onincorrect information;
or(iv)involve anyother case,asdefined inthelegislation ofArmenia. Points (ii)and(iv)above have
notbeenusedasgrounds fordenying alicence, since nounderlying legislation requiring suchactions
hasbeendeveloped. Inthecaseoftextiles andclothing, theMinistry oftheEconomy maydenyan
export licence toanapplicant inrespect ofexports totheEuropean Union ifexports oftheitems
concerned weretoexceed acertain quantitative limitation. Since thishasnotoccurred sofar,Armenia
hasnotdeveloped anymechanisms foradministering export quotas.
72. Anypersons, firms andinstitutions wishing toapply foranexport licence maydosoprovided
theyareregisteredasajuridicalpersonorasoleentrepreneurundertakingabusinessactivityinArmenia.
Aprospective exporter ofaproduct subject tolicensing mustsubmit anexport licence application form,
together withacertificate oforigin, aproforma invoice orother agreement indicating thenature of
theproduct, itsprice andtheterms andconditions oftheproposed transaction, andacertificate of
quality. Licences must begranted within tendaysofreceipt ofanapplication. Since theten-day
stipulation isamaximum period, inpractice licences maybeobtained within ashorter period. Anexport
licence willgenerally notbegranted immediately uponrequest, butinpractice thenecessary procedures
maybecompleted within adayortwo. Thefeeforanexport licence was540Drams (approximately
US$1.30) inmid-1995. Theperiod ofvalidity ofalicence isamaximum ofoneyear. Licences may
bere-issued afterthisperiod, butnotextended. Ifalicence isissued forlessthanthemaximum period
ofoneyear, thensuchalicence canbeextended automatically uptothemaximum permitted period.
Nopenalties existforthenon-utilization oflicences. Licences arenottransferable among exporters.
Alicence application and/or anexportation could bemade atanytimeduring theyear.WT/ACC/SPEC/ARM/1
Page27
- Other measures
73. Therepresentative ofArmenia noted thatinorder toprevent exports atartificially lowprices,
ortheunder-invoicing ofexports, theMinistry oftheEconomy hadestablished alistof“minimum ”
prices eachmonth foralistofselected commodities. Witheffect from1January 1995, thislistonly
covered ferrous andnon-ferrous metals. Ifanexporter declared thevalue ofcommodities destined
forexport atlessthantheminimum established price, anamount equal tothedifference waspayable
beforetheexportationisauthorized.Theminimumpricesformostofthecontrolleditemsareestablished
withreference toquotations ontheLondon Metal Exchange, lessadiscount of20-30 percent.
- Export subsidies
74. Therepresentative ofArmenia stated thatArmenia didnotofferanyexport incentives orexport
subsidies ofanykindatthepresent time, nordidArmenia haveanydutydrawback ortemporary
admission arrangements inrespect ofdutiable imports usedinexport production. TheGovernment
believed thatexport expansion wasvitaltoArmenia ’sfuture economic viability. Forthisreason,
consideration wasbeing given tovarious waysofstimulating exports, particularly through promotional
activities. TheGovernment didnot,however, intend torelyonexport subsidies aspartofanexport
expansion programme.
75. Therepresentative ofArmenia stated thattheGovernment ofArmenia would ensure thatany
export subsidy programme wasfullyinconformity withtherequirements oftheAgreement onSubsidies
andCountervailing Measures uponArmenia 'saccession totheWTO. [TheWorking Party tooknote
ofthiscommitment.]
- Internal policies affecting trade ingoods
- Industrial policy, including subsidies
76. Therepresentative ofArmenia stated thatArmenia ’sindustrial policy aimed toensure more
efficient useofdomestic resources within amarket-oriented framework. Acentral policy objective
affecting industry wasprivatization which hadsofaronlytouched asmall share ofthemanufacturing
sector. Hestated thattheGovernment estimated thatapproximately 95percentofindustrial output
emanated from thepublic sector. Inresponse toquestions therepresentative ofArmenia stated thatWT/ACC/SPEC/ARM/1
Page28
pending completion oftheprivatization programme, theGovernment required State-owned enterprises
tooperate according tomarket principles. Enterprises inArmenia wererequired toacquire theirinputs
ontheopenmarket. Most firms hadnotyetputproper market-economy accounting systems intouse,
buttheywere developing them. Inresponse torequests forinformation concerning thepayment of
direct subsidies, therepresentative ofArmenia stated thatsincethebeginning of1995, almost nodirect
subsidies hadbeengranted toindustry. Inprevious years direct subsidies hadbeenprovided onafairly
large scale viaconcessionary credits tofirms. Hefurther noted thattheGovernment ingeneral did
notretain production subsidies intheindustrial sector, andnoindirect subsidies wereapplied onwater
andelectricity supplies intheagricultural sector.
77. Therepresentative ofArmenia saidthattheonlybeneficiaries ofdirect subsidies in1995were
thefirms engaged intheproduction ofstrategic (military) equipment, forwhom subsidies aretobe
granted forfurther construction andtheequipping ofplant. Thebeneficiary firms donotexport their
products. Anyremaining indirect subsidies thatmight ariseasaresult ofclearing arrangements were
disappearing because ofthecontraction (andeventual elimination) ofinter-governmental clearing
contracts. Moreover, procurement viaState orders, which could alsoentail indirect subsidies, was
being replaced bycompetitive tendering procedures.
78. Therepresentative ofArmenia further added thatbecause thecontinuing reform ofpolicies
might indirectly confer subsidies onindustries, theGovernment alsomaintained asubstantially
deregulated business environment which, when combined withtheGovernment 'sopen investment
policies, meant thatthere were effectively nobarriers tomarket contestability. Firms were freeto
enterandexitsectors onthebasisoftheirownmarket-based decisions. Additional measures designed
tosafeguard andstrengthen thisbusiness environment were theestablishment ofanti-monopoly and
bankruptcy laws. Therelevant statutes were under preparation.
79. Therepresentative ofArmenia stated thattheGovernment ofArmenia would ensure thatits
subsidy regime wasinfullconformity withtheAgreement onSubsidies andCountervailing Measures
from thedateofitsaccession totheWTO. [TheWorking Party tooknoteofthiscommitment.]WT/ACC/SPEC/ARM/1
Page29
- Technical barriers totrade/Sanitary andphytosanitary measures
80. Therepresentative ofArmenia noted thatArmenia wasintheprocess ofdeveloping itsstandards
system.ANationalCertificationSystemhadbeencreated.Itsprimarypurposewastoprotectconsumers
andtheenvironment, andtopromote thequality reputation ofArmenian products inforeign markets.
TheNational Certification Body, ArmStateStandard, wasresponsible fordefining standards and
accrediting standards certification bodies andlaboratories within theframework oftheNational
Certification System.
81. Therepresentative ofArmenia added thatArmStateStandard cooperated withtheMinistries
ofHealth, Agriculture andFoodinmatters relating tosanitary andphytosanitary measures. Compulsory
standards existforarange offoodstuffs, electrical goods, alcoholic andnon-alcoholic beverages, tobacco
products, andchildren ’sclothes. However, Armenia hadnotsofardeveloped anyseparate policies
orprovisions dealing withsanitary andphytosanitary measures. ArmStateStandard wasunder the
jurisdiction oftheMinistry oftheEconomy. Itwaspresided overbytheStateChief Inspector, whose
rights andobligations werecontained inArticle 27ofthedraftlaw.ArmStateStandard wasacollegial
bodythattakes decisions bymajority vote. Compulsory certification fortheproducts concerned was
theresponsibility ofArmStateStandard although thisbody wasempowered toappoint another third
party toundertake certification work. ArmStateStandard wascooperating withstandards organizations
inother countries andwasanobserver intheInternational Standards Organization. Asnecessary,
standards would beadapted tointernational norms, andnewstandards would based onISO9000. The
relevant lawsregulating Armenia ’stechnical certification system aretheLawonStandardization and
Certification andtheLawonIdentity ofMeasurements. Boththese lawswerestillindraftformand
under theconsideration ofParliament. TheLawonStandards defines therights andobligations of
ArmStateStandard, andoftheproducers andimporters ofgoods subject tocertification. Thecertification
system inArmenia iscoordinated bytheGOST standards, Series 5.Thecertification system wasbased
ontherequirements ofISO/IEC 2,25,28,40. Work wasalsoproceeding onthedevelopment ofan
Armenian Certificate ofQuality, which would begranted toproducers whocomply withspecified
standards. Newlegislation wasbeing drafted toreplace thepre-independence statute.
82. Inresponsetoquestionsconcerningtheprocedureforobtainingacertificateofqualityfortobacco
andspirits, therepresentative ofArmenia stated thatcertificates ofquality fortobacco andspirits were
issued byArmStateStandard. Thecertificates weresubject toperiodic renewal onthebasisofatechnicalWT/ACC/SPEC/ARM/1
Page30
examination oftheproducts concerned. Therelevant certificates must beproduced atthetimeof
importation. Thecriteria forissuing certificates arespecified intherelevant technical standards.
ArmStateStandard published amonthly journal called Hayast which provides current information on
issues relating tostandardization andcertification. Theenquiry points werenotyetfullyoperational
duetoalackofappropriate facilities andpersonnel. Itisestimated thattheymaytakefourtofive
years tobecome fullyoperational. ArmStateStandard wastheonlybodyresponsible fornotifications.
ArmStateStandardhadsignedcooperationagreementswithcounterpartbodiesintheRussianFederation,
Ukraine, Belarus, Georgia andTurkmenistan. These wereAgreements onProduct Certificates, Quality
Promotion Systems, Certification Bodies andMutual Recognition ofAccredited Testing Laboratories.
Thepurpose ofthose agreements wastoharmonize standards andprocedures, andtoallow formutual
recognition oftesting andcertification. Asimilar agreement hadbeensigned between ArmStateStandard
andtheStandards Institute oftheIslamic Republic ofIran.
83. Therepresentative ofArmenia stated thatifArmenia decides toadopt separate machinery or
policies relating tosanitary andphytosanitary measures thiswillbedoneinfullconformity withthe
Agreement onApplication ofSanitary andPhytosanitary Measures.
84. Some members oftheWorking Party noted thatArmenia didnothaveinplace theprocedural
guarantees needed toensure thatthenewrequirements didnotactasbarriers totrade. Armenia should
ensure thatitstechnical regulations, standards, certification andlabelling requirements werenotapplied
inanarbitrary manner inawaythatactsasadisguised restriction oninternational trade.
85. Inresponse, therepresentative ofArmenia stated thatallrelevant lawsrelating toTechnical
Barriers toTrade andSanitary andPhytosanitary Measures would bebrought intoconformity with
therequirements oftheAgreements onTechnical Barriers toTrade andSanitary andPhytosanitary
Measures bythedateofArmenia 'saccession totheWTO. [TheWorking Party tooknoteofthese
commitments.]
- Trade-Related Investment Measures (TRIMs)
86. Therepresentative ofArmenia stated thatthe1994 LawonForeign Investments regulated
Armenia'spoliciestowardsforeigninvestment.TheLawwasdesignedtoattractinvestmentfromforeign
sources. Itprovided guarantees against nationalization andprovided thatconfiscation could onlytakeWT/ACC/SPEC/ARM/1
Page31
place following ajudicial decision. Intheunlikely event ofconfiscation, fullcompensation would
bepayable. Foreign investors were indemnified against damages resulting from illegal actions by
Government, orfrom theimproper performance byGovernment ofitsobligations (asdetermined in
aCourt ofLaw). TheLawalsoguaranteed investors therighttorepatriate profits andassets without
hindrance. Intheevent thatforeign investment legislation waschanged afteraninvestment hasoccurred,
theinvestor concerned wasentitled toanexemption fromanylessfavourable provisions during afive-
yearperiod.
87. TherepresentativeofArmeniafurthernotedthatinparticular,foreignenterprisesorjointventures
comprising atleast30percentofinvested capital, allprofits were freeoftaxes fortwoyears, and
afterthatprofits taxwascharged at70percentofthefullrate.Forenterprises withatleast50percent
foreign ownership, profits taxes werecharged atonly50percentofthefullrateaftertheinitial grace
period. Enterprises withanyforeign ownership atallwereentitled toindefinite duty-free treatment
onalltheirimports ofcapital equipment andrecurrent inputs. Inaddition, foreign enterprises (defined
asthose withatleast30percentforeign ownership) were alsoentitled tocertain exemptions from
import andexport licensing requirements. Foreign investors werefreetochoose theirowninsurers.
Noinvestment performance requirements aremaintained. There were norequirements forforeign
investors toexport acertain amount ofproduct, andtheGovernment didnotintend tointroduce any
suchrequirements. Foreign investors received fullnational treatment (orbetter). Therepresentative
ofArmenia stated thatanyrestrictions oninvestment weregenerally applied onanon-discriminatory
basisasbetween national andforeign investors. Inresponse toquestions henoted thatunder Armenia ’s
Constitution, nolegalpersons could ownland. Forforeign investors, ownership rights wererestricted
toproperty andassets ontheland,andthelanditselfcould onlyberented. Theacquisition ofownership
rights inrespect ofother natural assets would beregulated byaLawonConcessions, which wasstill
under discussion.
- State-trading enterprises
88. Inresponse toquestions therepresentative ofArmenia stated thattheState monopoly over
foreign trade oftheFormer Soviet Union wasabolished in1989, andwasreplaced byaregistration
requirement fortheconduct ofsuch activity. Byadecree ofthePresident oftheRepublic of
4January 1992 entitled “OnForeign Economic Activity, ”allenterprises registered andoperating inWT/ACC/SPEC/ARM/1
Page32
theterritoryofArmenia,regardlessoftheirformofownership,hadtherighttoconductforeigneconomic
activity, andarenotsubject toanyadditional registration requirements.
89. Inresponse torequests forinformation onenterprises engaged inStatetrading intheRepublic
ofArmenia, therepresentative ofArmenia stated thatbased onthedefinition ofState trading setout
intheInterpretation ofArticle XVII oftheGeneral Agreement onTariffs andTrade 1994, Armenia
maintained noStatetrading enterprises. Armenia maintained nolaw,regulation ormeasure thatgranted
exclusive orspecial rights orprivileges toanyenterprise, intheexercise ofwhich suchenterprises
might influence through theirpurchases orsalesthelevelordirection ofimports orexports. Given
theabsence ofState trading inArmenia, thequestionnaire onState trading hasnotbeencompleted.
90. Therepresentative ofArmenia stated however thatResolution 161ofMarch 1991, asamended
byResolution 415ofJune1995, reserved certain activities exclusively totheStateandrequired that
certain other activities werelicensed bytheauthorities. List1attached toResolution 161identified
eighttypesofactivities thatwerereserved exclusively fortheState. These were: (i)thesaleandpurchase
ofweapons, armaments, narcotics, explosives, radioactive materials andother strong substances; (ii)
theproductionandrepairofweapons,armamentsandexplosives;(iii)thepreparationofdrugs,narcotics,
poisonous andstrongly acting substances; (iv)theconducting ofcourt examinations; (v)thediagnosis
ofthepsychical stateofcitizens; (vi)patenting andconferring copyright; (vii)theissuing ofmoney
andpreparation ofStatemedals; andstorage, preservation andutilization ofgoldandother precious
metals andsubstances ofmilitary significance. Allthese reserved activities involved theStateinthe
exercise ofitsunique responsibilities, including thepreservation ofnational security, public order,
andthehealth andsafety ofthepopulation. List2ofResolution 415indicated those activities that
require priorauthorization andthebodyresponsible forproviding theauthorization. Aswiththeitems
onList1,fewinvolved manufacturing activity. Alltheitems onList2were controlled forsimilar
reasons tothose items inList1.Licensing ofeconomic activities included under List2isnon-restrictive
inthesense thatlicensing decisions arenotmotivated bytradeprotection considerations. Inresponse
toquestions fromWorking Party members, therepresentative ofArmenia stated thatthecoverage of
these reservation powers wasunder review. NoStatemonopoly existed inrespect oftheproduction
ofpharmaceuticals. However, bothStateandprivate enterprises required licences fromtheMinistry
ofHealth inorder toproduce pharmaceuticals.WT/ACC/SPEC/ARM/1
Page33
91. Inresponse toquestions whether Armenia intended toreport itsStatemonopoly ofnatural gas
distribution under Article XVII, therepresentative ofArmenia replied thatArmgas hadnotbeengranted
exclusive orspecial rights orprivileges inthemarket fornatural gasdistribution. Armgas was
State-owned andtheGovernment haddetermined thatthisenterprise would betheonlyState-owned
enterprise todistribute gas.Butthisdoesnotprevent anyother entity withmajority private ownership
frompurchasing gasorfrominvolvement ingasdistribution. Inlightofthissituation, theGovernment
ofArmenia didnotbelieve itwasrequired tonotify Armgas under Article XVII.
92. Therepresentative ofArmenia saidthatnoStateorprivate enterprises operating inArmenia
hadexclusive orspecial rights orprivileges granted bytheGovernment ofArmenia toconduct
international trade ingoods orservices. However, henoted thatalow-interest loanhadbeengranted
totheState enterprise Hayhatsahatik (ArmCereal) inFebruary 1996 toacquire andstockpile wheat
from theEuropean Union Counterpart jointassistance wheat fund.
93. Some members oftheWorking Party noted thatcertain telecoms enterprises appeared tobe
engaged inState trading pursuant toArticle XVII oftheGATT 1994.
- Freezones, special economic zones
94. Therepresentative ofArmenia stated thatArmenia didnotmaintain anyfreetrade zones in
which special dutyprivileges ofanykindweregranted. Armenia had,however, established aFrontier
Trade AreaintheMeghri Region, ontheborder withIran. Thezonewasestablished topromote trade
between Armenia andIran. Under thearrangement, Armenian enterprises wereencouraged toestablish
apresence intheborder areaandIranian enterprises were encouraged todothesame ontheirside
ofthefrontier. Forty citizens from eachcountry were entitled toenter eachother’szones inorder
toexplore business andtrading opportunities, butnospecial customs régime orprivileged dutytreatment
wasassociated withanyexchanges agreed onthebasis ofthese contacts.
- Government procurement
95. TherepresentativeofArmeniainformedtheWorkingPartythatwhengovernmententitieswished
toprocure goods, theycould dosoeither through anentity called Armcontract, under theMinistry
ofMaterial Resources, ordirectly from themarketplace. Under thenewapproach toprocurementWT/ACC/SPEC/ARM/1
Page34
introduced in1995, Armcontract enjoys nospecial rights orprivileges. Armcontract canparticipate
inprocurement activities under thecommon rules. Entities authorized toprocure could decide touse
theservices ofArmcontract, could procure ontheirownbehalf, orcould useanyother procurement
agent. These purchases, which weregiven effect through State Orders, werefinanced directly from
thebudget, andinvolved theacquisition ofgoods andservices bygovernment entities fortheirown
consumption (i.e.notforresale oruseasinputs intoproduction). Inthepast,these arrangements had
sometimes involved implicit subsidy elements forthesuppliers concerned, since prices under State
Orders hadnotnecessarily corresponded tomarket prices. Asmarkets developed, however, andmore
competition occurred, bothamong Armenian enterprises andwithimports, subsidized procurement
wasbecoming alessfrequent occurrence.
96. Therepresentative ofArmenia saidthatwitheffect from 1995, State Orders inexcess of
US$50,000 foritems including: electric energy, various health services training andeducation,
geological exploration, television broadcasting, water supplies andsewerage weresubject tocompetitive
tender. Inresponse toquestions, therepresentative ofArmenia stated thattender announcements are
made inofficial periodicals oftheGovernment ofArmenia. Themaincriteria forselecting bidsincluded
theprices, thequality oftheproducts orservices offered, conditions ofpayment, andterms and
conditions ofdelivery. Foreign enterprises received equal treatment toArmenian enterprises. The
tenders wereadministered bytheMinistries andDepartments concerned, orbytheirrepresentatives.
Procurement decisions following theevaluation ofbidsrequired approval from theMinistry ofthe
Economy. Approval bytheMinistry oftheEconomy wasapre-requisite oftheprovision offunds
forprocurement bytheMinistry ofFinance. Afurther lawregulating government procurement was
under preparation.
97. Inresponse toquestions frommembers oftheWorking Party, therepresentative ofArmenia
stated thattheGovernment ofArmenia haddecided commence negotiations tojointheAgreement on
Government Procurement from thedateofaccession. [The Working Party took noteofthis
commitment.]
- Transit
98. Therepresentative ofArmenia stated thatArmenia permitted theunimpeded andtax-free transit
ofgoods through itsterritory, withtheexception ofthose goods whose importation isprohibited, i.e.WT/ACC/SPEC/ARM/1
Page35
weapons, components usedintheproduction ofweapons, explosives, nuclear materials, poisons,
narcotics, strong psychotropic substances, devices foruseinopium smoking, andpornographic material.
These items would onlybeabletotransit Armenian territory withtheexplicit consent oftheGovernment
ofArmenia. Transit goods remain under customs supervision while theyareonArmenian territory.
Armenia wasparty toaplurilateral agreement ontransit tradewithin theframework oftheCISTreaty
onEconomic Union. Thisagreement provided thatsignatories should nottaxorimpede transit trade
through theirterritories. Armenia hasalsosigned abilateral agreement onthissubject withGeorgia.
Similar agreements withIranandtheUkraine areunder consideration.
- Agricultural policy
99. Therepresentative ofArmenia saidthatasinthecaseofindustry, theGovernment ofArmenia
doesnotmaintain Stateplanning ofanykindintheagricultural sector. Thesituation intheagricultural
sector isalsosimilar toindustry inrespect ofsubsidies. Thepastpractice ofsupplying concessionary
credits hasbeendiscontinued, andfarmers nolonger receive anydirect subsidies. Indirect subsidies
arealsominimal, withelectricity supply prices perhaps representing themost significant remaining
element. Incontrast totheslow paceinindustry, Armenia hasprivatized almost 90percentof
agricultural land, andmade landtitles freely transferable.
100. Therepresentative ofArmenia added thatasfarasinputs areconcerned, twolarge State
enterprises aredominant suppliers ofagricultural services andinputs suchasseeds andfertilizers.
These enterprises haverecently beentransformed intostock companies inpreparation forprivatization.
Theenterprises accept payment inkindonthebasisofpre-negotiated contracts, andtheyarerequired
tobeself-financing. There isnothing tostopother suppliers entering themarket. Nevertheless, the
predominance ofthese firms, together withthefactthattheyreceive atleastsome ofthepayment for
theirservices inkind, means thatcompetition remains somewhat constrained inbothinput andoutput
markets. TheGovernment regards thisasatransient phenomenon, since theconditions areexpected
todevelop inwhich more firms become involved inthese activities. Moreover, theState-owned
enterprises involved aredueforprivatization. ALawonAgricultural Policy isbeing prepared. Among
otherthings, itwillconfine theroleoftheGovernment inthesector totheprovision oftraining, technical
support, andextension services.WT/ACC/SPEC/ARM/1
Page36
101. Therepresentative ofArmenia saidthattheGovernment ofArmenia doesnotmaintain any
direct subsidies totheagricultural sector. Indirectly, however, farmers have benefited from the
Government ’spolicy ofcharging onlyvariable costsonwater andelectricity supplies. These policies
haveapplied toallusers ofelectricity andwater. However, fullcostpricing (costrecovery pricing)
wasintroduced forelectricity in1995, andforwater during thecourse of1996. Since then, nodirect
orindirect subsidies areprovided totheagricultural sector. Thevalue oftheindirect water andelectricity
subsidies tofarmers hasnotbeencalculated bytheauthorities. Inaddition, theGovernment supports
alimited range ofactivities dedicated totraining farmers inimproved agricultural techniques, to
upgrading seedandlivestock quality, andtoproviding technical advice andextension services. These
services areavailable toallfarmers andinvolve verymodest budgetary outlays.
102. Therepresentative ofArmenia further stated thattheGovernment ofArmenia paidnoexport
subsidies onexports ofagricultural products. Accordingly theGovernment ofArmenia would bind
itsagricultural export subsidies atzerolevelintherelevant partoftheSchedule ofConcessions on
Goods.
V. Trade Related Intellectual Property Rights (TRIPS)
103. Therepresentative ofArmenia stated thatthefirststepinthedirection ofintellectual property
protection wastheestablishment oftheArmenian Patent Office in1992. Since December 1992, it
hasbeenpossible tofileapplications forpatents inrespect ofinventions, andasfrom August 1993,
toregister utility models andindustrial designs. During 1993-4, theArmenian Patent Office received
some 400applications forinventions fromArmenians andover100applications fromforeigners. An
applicant notanational ofArmenia andnotdomiciled inArmenia mustconduct hisaffairs through
apatent attorney registered withtheArmenian Patent Office.
- Industrial property protection
104. Inresponse torequests forinformation concerning theintellectual property policy ofthe
Government ofArmenia, therepresentative ofArmenia stated thattheGovernment ofArmenia was
currently engaged inasubstantial programme oflegislative reform. AdraftLawonTrade Marks,
Service Marks andAppellations ofOrigin iscurrently under consideration intheArmenian Parliament.
Theprovisions oftheproposed statute arefullyconsistent withinternational norms inthisarea. AWT/ACC/SPEC/ARM/1
Page37
distinctive feature ofthestatute isthelegal equality itestablishes between trade marks andservice
marks. During 1993-4, theArmenian Patent Office received some 3,000 applications fortrademarks,
service marks andappellations oforigin from foreign applicants. Registration ofthese applications
willbegin aftertheadoption ofthedraftlaw,which isexpected inearly 1995.
- Responsible agencies forpolicy formulation andimplementation
105. Therepresentative ofArmenia saidthatpolicy formulation andimplementation intheareaof
industrial property (patents, utility models, industrial designs, trademarks, tradenames, andappellations
oforigin) istheresponsibility oftheArmenian Patent Office. ThePatent Office isresponsible for
approving industrial property rightapplications, maintains aStateRegister ofindustrial property rights,
issues anofficial bulletin reflecting itsdecisions, andcooperates withhomologue foreign institutions
andinternationalorganizations.ThePatentOfficeisalsoresponsiblefortheregimecoveringtrademarks.
- Participation ininternational intellectual property agreements
106. Therepresentative ofArmenia stated thaton22April 1993, Armenia deposited adeclaration
ofcontinued application oftheConvention Establishing theWorld Intellectual Property Organization
(WIPO). On17May1994, Armenia alsodeposited adeclaration ofcontinued application oftheParis
Convention fortheProtection ofIndustrial Property, Madrid Agreement Concerning theInternational
Registration ofMarks andthePatent Cooperation Treaty.
- Application ofnational andm.f.n. treatment toforeign nationals
107. Some members oftheWorking Party noted thatalthough therepresentative ofArmenia had
stated thatforeigners enjoy national treatment inbothcivilandcriminal procedures before thecourts,
itsreplies toquestions concerning administrative review proceedings, dealing withthepowers ofjudicial
branchesofgovernment,suggestedthatthejurisdictionofeconomiccourtswasnotavailabletoforeigners
fromoutside theCIS. Therepresentative ofArmenia stated thatallcitizens enjoy equal rights under
thelaw,forexample, theLawonPatents provided thatallforeigners enjoyed thesamerights asnationals
ofArmenia inrelation toallpatent matters, including protection ofpatents andlegalremedies against
infringement. Resolution No.4of19August 1995“OnConfirmation oftheTemporary Regulations
forTrademarksandServiceMarks”similarlyenvisagesfullnationalandmost-favoured-nationtreatmentWT/ACC/SPEC/ARM/1
Page38
forforeigners. Thiswasalsothecaseinrespect oftheLawonCopyright, andanyfuture lawsand
regulations adopted inthesphere ofintellectual property protection.
- Feesandtaxes
108. Therepresentative ofArmenia stated thatfeeswerepayable upon thefiling ofanapplication
andthegranting ofapatent. Similar arrangements areinplace fortrademarks andservice marks.
Feeswillalsobechargeable under thelegislation tobedeveloped ontrademarks andcopyright. All
feesweresetsoastocover costsoftheservices provided, andthegranting andprotection ofintellectual
property rights isnotsubject totaxation.
- Substantive standards ofprotection, including procedures fortheacquisition and
maintenance ofintellectual property rights
- Copyright protection
109. Therepresentative ofArmenia saidthattheNational Copyright Agency wasestablished in1993.
More than2,000 authors, theatre andconcert organizations areregistered withtheagency. TheNational
Copyright Agency registered copyrights, assisted individuals tosecure copyrights, provided advisory
services, andcollected andpaidroyalties duetoauthors andtheirsuccessors intitle.
110. Therepresentative ofArmenia added thattherepresentative ofArmenia added thatadraftLaw
onCopyright hadbeenprepared intheearly 1990s andsubmitted totheNational Assembly forits
consideration. After examination oftheproposed legislation, however, itwasfeltthatitsprovisions
were inadequate foramodern system ofcopyright protection. New legislation istherefore under
preparation. Thenewversion ofthedraft LawonCopyright wassubject toafirstreading bythe
National Assembly inFebruary 1996. Itwasexpected thatthedraftwillbecome lawbefore theend
of1996. Neighbouring rights, computer programs andcompilations ofdataarealsotobeprotected.
ThedraftLawonCopyright alsoprovided protection fortheproperty rights ofthephonogram and
videogram producers, aswellasofbroadcasting andTELEVISION stations. TheLawhadbeendrafted
inaccordance withtheprovisions oftheBernConvention onthissubject.WT/ACC/SPEC/ARM/1
Page39
- Trademarks, including service marks
111. Therepresentative ofArmenia informed theWorking Party thatpending thefinalization and
adoption oftheLawonTrademarks, Service Marks andAppellations ofOrigin, Resolution No.4of
19August 1995"OnConfirmation oftheTemporary Regulations forTrademarks andService Marks"
hasbeenintroduced. Thisresolution setsouttheterms andconditions oftrademark protection, the
kinds oftrademarks thatmaynotberegistered, theprocedures forregistering trademarks, therights
ofappeal against decisions relating totrademarks, thecircumstances inwhich trademarks maybeused,
andthedocumentary requirements forregistering atrademark. Trademark protection isgranted for
10years, renewable forsuccessive periods of10years. Provisions ofthetemporary regulation on
trademarks andservice marks contained inResolution No.4of19August 1995wereinfullconformity
withArticles 15,16.1, and17to21oftheTRIPS Agreement. Asregards theprovisions ofArticle 16.2
andArticle 16.3oftheTRIPS Agreement, these willbetaken intoaccount intheabove-mentioned
newdraftLawonTrademarks, Service Marks andAppellations ofOrigin.
112. Therepresentative ofArmenia stated thatthenewdraftLawonTrademarks, Service Marks
andAppellations ofOrigin would beadopted within eighteen months ofArmenia ’saccession tothe
WTO. [TheWorking Party tooknoteofthiscommitment.]
- Geographical indications, including appellations oforigin
113. SomemembersoftheWorkingPartyaskedhowArmeniawouldprotectgeographicalindications
under theLawonTrade Marks, Service Marks, andAppellations ofOrigin, andwhether thatlegislation
would beinconformity withArticles 22to24oftheTRIPS Agreement. Therepresentative ofArmenia
statedthatgeographicalindicationswerenotexplicitlymentionedinResolutionNo.4of19August1995,
soprotection forthiskindofproperty would notbeprovided untiltheLawonTrademarks, Service
Marks andAppellations ofOrigin becomes operative. Therepresentative ofArmenia stated thatthe
provisions ofthenewdraftLawonTrade Marks, Service Marks, andAppellations ofOrigin would
beinconformity withArticles 22to24oftheTRIPS Agreement. Therelevant provisions inthedraft
lawhadbeendeveloped incompliance withtheprovisions oftheParis Convention (Articles 1(2),10,
10ter,10bis,6quinquiesB.3),theMadridAgreementontheRepressionofFalseorDeceptiveIndications
ofSource onGoods (Articles 1(1),1(2)), andtheLisbon Agreement fortheProtection ofAppellations
ofOrigin andtheirInternational Registration (Articles 2(1), 2(2), 3,6).WT/ACC/SPEC/ARM/1
Page40
- Industrial designs
114. Therepresentative ofArmenia stated thatindustrial designs were protected under Article 7
oftheLawonPatents. Article 7wasconsistent withArticles 25and26oftheTRIPS Agreement.
Inresponse torequests forinformation concerning thespecific protection fortextile designs, provided
forinArticle 25(2) oftheTRIPS Agreement, therepresentative ofArmenia stated thatalthough textile
designs werenotexplicitly mentioned inArticle 8oftheLawonPatents, theywerenevertheless covered
under thatprovision.
- Patents
115. Therepresentative ofArmenia stated thattheLawonPatents hadbeenadopted inAugust 1993.
Under thelaw,patents aregranted forinventions, utility models andindustrial designs. Theterm
ofpatent protection is20years forinventions, 15years forutility models, and10years forindustrial
designs. These periods arecounted from thedateoffiling. Patents were granted subject tothe
requirements thattheobject ofthepatent isnew, thatitwassuitable forindustrial application, and
thatnoconflict arose withrespect topublic order andsecurity, goodmorals andlaw.Where apatentee
failstoexploit thepatented object within fouryears from thedatethepatent wassecured, anyparty
interested intheuseoftheinvention, utility model orindustrial design mayrequest thatacompulsory
licence beissued. Asfaraspatents forinventions areconcerned, thelawprovides fortheso-called
"differed examination" forathree-year period. Afullexamination ofapatent application iscarried
outasaruleonlyupon request andpayment ofafeebytheapplicant oranyother interested party.
Some members oftheWorking Party asked whether Armenia 'sLawonPatents wasinfullconformity
withArticle 27to34oftheTRIPS Agreement, andrequested further information ontheconformity
ofArmenia 'ssystem ofcompulsory licensing. Therepresentative ofArmenia stated thattheLaw
onPatents wasinconformity withArticles 27to34oftheTRIPS Agreement.
116. Therepresentative ofArmenia saidthattheowner ofapatent forinvention oranindustrial
design patent granted bythePatent Office oftheSoviet Union andstillinforce mayfilewiththe
ArmenianPatentOfficeforanArmenianpatentatanytimeduringthevalidityoftheinventor’scertificate
orindustrial design certificate, butsuchfiling must occur before 30June1995. Some ideaofthe
potential volume ofsuchfilings isgiven bythefactthatintheten-year period to1990, residents of
Armenia registered 6,000 inventions withthePatent Office oftheSoviet Union. TheLawonPatentsWT/ACC/SPEC/ARM/1
Page41
specified thenature ofpatentable material, theconditions forpatentability, therights ofpatent holders,
theconditions ofcompulsory licensing, theprocedures forgranting patents, anddispute settlement.
- Plant variety protection
117. Therepresentative ofArmenia stated thatArmenia currently hadnolawsdealing withplant
variety protection. Inresponse, some members oftheWorking Party asked howitwasproposed plant
varieties would beprotected inthefuture. Therepresentative ofArmenia stated thatlegislation to
cover theprotection ofplant varieties isbeing drafted. Itwasintended thatthislegislation willenter
intoforce within eighteen months ofArmenia ’saccession totheWTO. [TheWorking Party tooknote
ofthiscommitment.]
- Layout designs ofintegrated circuits
118. Inresponse toquestions concerning thesystem forprotection oflay-out designs ofintegrated
circuits, therepresentative ofArmenia stated thatArmenia didnotyethavelegislative protection for
thiskindofintellectual property. Itisintended thatlegislation tocover layout designs ofintegrated
circuits would enter intoforce within twoyears ofArmenia ’saccession toWTO.
- Requirements onundisclosed information, including trade secrets andtestdata
119. Inresponsetorequestsforinformationconcerningtheprotectionoftradesecretsandundisclosed
information inArmenia, notably inview ofArticle 39oftheTRIPS Agreement, therepresentative
ofArmenia stated thatArmenia hadnotyetdeveloped provisions fortheprotection oftrade secrets
andundisclosed information. Legislation tocover theprotection ofundisclosed information wasunder
preparation. Itisintended thatthislegislation willenter intoforce within twoyears ofArmenia ’s
accession totheWTO.
- Measures tocontrol abuse ofintellectual property rights
120. Inresponse toaquestion, therepresentative ofArmenia stated thatlegislation regulating unfair
competition wasstillunder preparation.WT/ACC/SPEC/ARM/1
Page42
121. Therepresentative ofArmenia alsostated thatcompulsory licensing wasprovided forunder
theLawonPatents. Incases involving national security, public order oremergencies, theGovernment
caninsist oncompulsory licensing, provided thepatent holder hasnotworked thepatent within four
years ofregistration. Article 16oftheLawonPatents stated thatintheinterests ofnational defence,
protection ofpublic order orinanemergency situation, theGovernment could permit athirdparty
towork apatent without theagreement ofthepatent holder, while obliging suchlicensee toprovide
compensatory remuneration tothepatent holder. Anydispute overtheamount ofcompensation had
tobesettled inthecourts. Acompulsory licence could onlybeobtained ifapatent hasnotbeenworked
within fouryears andafteranattempt hasbeenmade tosignalicence agreement withthepatent holder.
Alicence could notbeawarded toathirdparty iftheowner ofapatent could establish thatthefailure
toworkthepatent wasattributable tofactors beyond theowner ’scontrol. Similarly, under theresolution
ontrademarks, trademark protection canbenullified byacourt decision ifatrademark hasnotbeen
usedwithin fiveyears ofthedateofregistration ofthetrademark orthedateofapplication for
registration. Atrademark owner hastherighttodefend thenon-use ofatrademark, andblock adecision
toremove theproperty right ifthereasons fornotusing thetrademark were beyond thecontrol of
theowner.
- Enforcement
- Civil judicial procedures andremedies
122. Therepresentative ofArmenia stated thatcivilCourt procedures werealways available todeal
withlegalmatters relating tointellectual property protection. Thecourts wereempowered toorder
thepayment ofdamages andcourt expenses. Theother remedies envisioned intheAgreement on
Trade-Related Aspects ofIntellectual Property Rights (TRIPS) arealsowithin thedecision-making
authority ofArmenian courts. Inresponse toquestions concerning foreigners 'rights toenforce
intellectual property rights, andwhether theremedies, procedures andpenalties were inconformity
withArticle 42to49oftheTRIPS Agreement, therepresentative ofArmenia stated thatthecivilcourts
inArmenia werefullyempowered toprovide theremedies referred toinArticles 42to48oftheTRIPS
Agreement. Civil remedies could notbeordered asaresult ofadministrative procedures. Foreigners
enjoyed thesame rights asArmenian nationals inthisarea. Remedies against criminal behaviour are
available under Armenia ’scourts andpenal system. Foreigners havethesameaccess totheseremedies
asArmenian nationals. TheGovernment wasconsidering theamendment ofexisting legislation and
introduction ofadditional legislation containing remedies thatareframed inmore specific terms forWT/ACC/SPEC/ARM/1
Page43
theenforcement ofintellectual property rights. Such legislation isunder preparation intheMinistry
ofJustice andisexpected tobeadopted within twoyears ofArmenia ’saccession totheWTO.
123. Some members oftheWorking Party asked whether Armenian judicial authorities hadthe
authority toorder injunctions orprovisional measures against infringements ofintellectual property
rights, asprovided forinArticles 44and50oftheTRIPS Agreement, andwhether administrative
authorities enjoyed similar authority. Inresponse therepresentative ofArmenia stated thatthejudicial
authorities hadthepower toorder injunctions orprovisional measures. Article 33oftheLawonPatents
indicated theareasinwhich remedies maybesought through thecourts intheareaofpatent protection.
Paragraph 36ofResolution No.4of1995 provides similar provision inthecaseoftrademarks and
trade secrets.
- Provisional measures
124. Therepresentative ofArmenia stated thatthecivilCourts alsohavethenecessary authority
totaketheprovisional measures envisioned inArticle 50oftheTRIPS Agreement.
- Administrative procedures andremedies
125. Therepresentative ofArmenia stated thatcivilremedies could notbeordered asaresult of
administrative procedures inArmenia.
- Special border measures
126. MembersaskedwhetherArmeniahadasystemofborderenforcementagainstintellectualproperty
rights infringements inaccordance withArticles 51to60oftheTRIPS Agreement. Therepresentative
ofArmenia replied thatalthough noexplicit provisions hadsofarbeendeveloped inthisarea, the
judicial authorities wereempowered totakethekinds ofmeasures envisioned inArticles 51to60of
theTRIPS Agreement. Inaddition, theCustoms authorities areempowered toprevent theimportation
intoArmenia ofcounterfeit trademark orpirated copyright goods.WT/ACC/SPEC/ARM/1
Page44
- Criminal procedures
127. Therepresentative ofArmenia stated thatatpresent, criminal procedures existed forcopyright
infringement involving scientific knowledge, literature, music andart.Penalties thatcould beimposed
included imprisonment fortwoyears oramaximum fineofthree hundred drams. Inaddition, the
Ministry ofJustice isdeveloping newcivil, criminal andadministrative procedures andremedies.
Thelatter willbeinconformity withtheprovisions ofPartIIIoftheTRIPS Agreement. Therelevant
legislation willenter intoforce within twoyears ofArmenia ’saccession totheWTO.
- Laws, decrees, regulations andother legal actsrelating totheabove
128. Some members oftheWorking Party requested clarification ofthestatus ofthedraftLawon
Trade Marks, Service Marks andAppellations ofOrigin beenadopted bytheParliament, andwhether
thelegislation wasinfullconformity withArticles 15to21oftheAgreement onTrade-Related Aspects
ofIntellectual Property Rights. Therepresentative ofArmenia replied thatpending theapproval of
theDraft LawonTrade Marks, Service Marks andAppellations ofOrigin atemporary regulation,
contained inResolution No.4of19August 1995, wasinforce. Thatregulation wasinfullconformity
withArticles 15to21oftheTRIPS Agreement, including therights specified inArticle 16.
- Statistical dataonapplications forandgrants ofintellectual property rights, aswellas
anystatistical dataontheir enforcement
129. Inresponse torequests forinformation concerning thenumbers ofpatent applications filed
inArmenia,therepresentativeofArmeniastatedthatsincethebeginningof1993,408patentapplications
hadbeenfiledwiththePatent Office. In207cases aprovisional patent wasgranted, in59cases a
patent wasrefused ortheapplication withdrawn, and142applications were under examination.
130. Inresponse toquestions regarding when Armenia would beinposition tofullyimplement the
WTO provisions onTRIPS, therepresentative ofArmenia stated thatduetotheneedtoembark upon
asignificant legislative programme toencompass alltheintellectual property rights covered bythe
TRIPS Agreement, Armenia would require atransition period ofthree years following itsWTO
accession. Some members oftheWorking Party stated thatsince 1992, Armenia hadhadbilateral
commitments fortheprotection ofintellectual property rights. Armenia should accelerate itslegislativeWT/ACC/SPEC/ARM/1
Page45
process toensure thefullimplementation oftheTRIPS Agreement from thedateofitsaccession to
theWTO. Inresponse therepresentative ofArmenia stated thattheGovernment ofArmenia would
bringallotherrelevantlawsintoconformitywiththeTRIPSAgreementwithinsixmonthsofitsaccession
totheWTO. [TheWorking Party tooknoteofthiscommitment.]
VI. Policies Affecting Trade inServices
- General
131. Inresponse toquestions, therepresentative ofArmenia informed members oftheWorking
PartythatArmenianlawsandregulations,andthepolicyframeworkdidnotgenerallydistinguishbetween
trade ingoods andtrade inservices. Therights totrade were enshrined intheLawonEnterprises
andEntrepreneurial Activities. Allenterprises mustberegistered andtheregister isopentopublic
scrutiny. These requirements apply toalljuridical persons, whether theyarecorporations orsole
entrepreneurs.
132. Inreply torequests foranexplanation oftheGovernment ofArmenia 'sunderstanding ofthe
different modes ofsupply, therepresentative ofArmenia noted thatinterms ofthemodes ofsupply
identified intheGeneral Agreement onTrade inServices (GATS), theLawonEnterprises and
Entrepreneurial Activities wasrelevant forenterprises selling services across frontiers (mode 1),for
service supply through commercial presence (mode 3),andfornatural persons whoareindependent
service suppliers (mode 4).Consumption abroad (mode 3)wasnotcovered inthiscontext. Armenia
hadnotdeveloped anypolicies thatrestricted theconsumption ofservices abroad. Moreover, Armenian
nationals andresidents wereatliberty totravel abroad andconsume services within foreign jurisdictions
iftheysowish
133. Asfarascommercial presence (mode 3)andnatural persons whoareindependent service
suppliers (excluding thatpartofmode 4dealing withemployees ofservice suppliers) areconcerned,
theLawonForeign Investments covered investment inbothgoods andservices. Thelawestablished
thelegalframework foralltypes ofinvestment involving foreign capital, including jointventures and
wholly-owned enterprises andsubsidiaries, whether theforeign investor isanindividual oranenterprise.
Norestrictions wereimposed onthetemporary presence ofnatural persons inArmenia, whether as
employees offoreign service suppliers orasindependent suppliers ofservices. Inthelatter case,
however,theservicesupplierwouldberequiredtoregisterinArmeniaasabusinessorsoleentrepreneur.WT/ACC/SPEC/ARM/1
Page46
134. TheGovernment ofArmenia submitted aDraft Schedule ofSpecific Commitments inServices
indocument WT/SPEC/42. Armenia 'sSchedule ofSpecific Commitments inServices isannexed to
theDraft Protocol ofAccession.
- Banking services
135. Therepresentative ofArmenia stated thattheCentral Bank ofArmenia wasresponsible for
regulating thebanking sector. TheCentral Bank granted licences fortheestablishment ofcommercial
banks andtheir activities, andsetandmonitored prudential requirements. Resolution No.31of
February 1995 established theCentral Bank’sauthority inthisarea. Banks could bejoint-stock or
cooperative banks andcould beresident ornon-resident. Banks could belocaliftheirstatutory capital
wasownedbyresidentsofArmenia,foreigniftheircapitalwasownedbynon-residents,andjoint-venture
ifownership wasmixed between resident andnon-resident owners. Anindividual shareholding in
abank could notexceed 35percentofthestatutory capital, except inthecaseofnon-resident
shareholders, when aspecial resolution waspassed bytheBoard oftheCentral Bank.
136. Therepresentative ofArmenia saidthattheCentral Bank wasrequired toconsider alicence
application within onemonth. Alicence could berefused iftherequired documents didnotconform
withstatutory requirements, ifthebankwould beunable tomeetthenecessary prudential standards,
orifthequalifications oftheproposed topmanagement were inappropriate. Licences could be
subsequently withdrawn ifinitial declarations proved false, ifbanking activity wasnotcommenced
within oneyearofalicence being granted, ifinitial capital wasnotbeenpaidupwithin oneyear,
ifactivities were carried outoutside theauthorized sphere ofactivities, orifabank failed toabide
byCentral Bank regulations.
137. Therepresentative ofArmenia further noted thatareas ofauthorized activity forresident banks
weremaking loans, maintaining accounts, issuing, buying andselling shares, bonds, promissory notes,
letters ofcredit, cheques andcredit cards, factoring, foreign currency transactions, consulting services,
andtransactions involving precious stones, metals andothervaluables. Banks wereexplicitly forbidden
fromdealing ininsurance. Non-resident, oroffshore banks, wereonlyentitled toofferforeign-exchange
relatedservices,andrequiredspecialauthorizationfromtheCentralBanktoserviceresidentsofArmenia
ortoengage indram operations.WT/ACC/SPEC/ARM/1
Page47
138. Inreply toquestions seeking more information onrequirements forresident banks, the
representative ofArmenia stated thatprudential requirements forresident banks were defined in
Resolution No.78ofApril 1995. They related tominimum statutory capital, acapital toassets ratio,
aliquidity ratio, themaximum exposure toasingle borrower, theration between household deposits
andtotalcapital, andaminimum reserve requirement withtheCentral Bank. Theminimum statutory
capital wascurrently US$100,000, butthisrequirement would risetoUS$1,000,000 bytheyear2000.
Thecapital toassets ratiowas6percent,andwould riseto10percentbymid-1996. Theliquidity
ratio(liquid tototalassets) was20percent,butwould riseto35percentbymid-1996. Themaximum
exposure toasingle borrower inrelation tothetotalcapital ofthebankwas50percent,butthiswould
belowered to20percentbymid-1996. Theratioofhousehold deposits tothebank’scapital was
ninetoone. Theminimum reserve requirement withtheCentral Bank was15percent.
139. Therepresentative ofArmenia saidthatforty-four resident commercial banks wereoperating
inArmenia, mostofthembeing joint-stock companies. Fifteen banks hadclosed inthelasttwoyears,
either voluntarily, orupontheinsistence oftheCentral Bank. There arefivebranches ofRussian banks
operating inArmenia asnon-resident banks. There arefourforeign non-resident banks operating in
Armenia andoneforeign resident bank. TheGovernment ofArmenia wasseeking tostrengthen the
financial system byensuring thatresident banks areviable. Mergers among small banks were
encouraged, andstandards aregradually being raised through more stringent prudential requirements.
Nobarriers existed totheestablishment offoreign-owned resident banks, provided theymeettheCentral
Bank’slicensing andprudential requirements. Non-resident banks, however, onlyenjoy limited access
tothebanking market.
- Insurance services
140. Therepresentative ofArmenia informed members oftheWorking Party thattheinsurance
industryinArmeniawassupervisedbytheMinistryofFinance,whichalsodefinedregulationsgoverning
theindustry. Allregulatory authority relating toinsurance rested withtheCentral Government. The
m.f.n. principle applies tothissector.In theGovernment ofArmenia 'sopinion, thesector was
under-regulated andwould besubject tofurther legislative attention inthenearfuture. Work was
proceeding intheMinistry ofFinance onalawoninsurance. During thelastfiveyears, theMinistry
ofFinance hadissued 71licences toinsurance providers inArmenia. Ofthese, threehadsubsequently
ceased operations. Three insurance companies hadforeign equity participation (twoRussian andoneWT/ACC/SPEC/ARM/1
Page48
Swedish). Sofar,insurance companies hadnotspecialized, although thiscould change inthefuture.
While Armenian nationals faced norestrictions inpurchasing insurance abroad, andforeign insurance
companies could advertise theirservices inArmenia, insurance providers wererequired tobeestablished
andlicensed inArmenia iftheywished tosellinsurance onArmenian territory. There were no
restrictions uponforeign enterprises wishing tobecome established inthismanner, provided thatthey
metthenecessary regulatory requirements.
141. Some members oftheWorking Party asked forconfirmation thatcross-border supply and
consumption abroad ofinsurance activities waspermitted particularly asregards maritime, airand
transport insurance, aswellasreinsurance. Therepresentative ofArmenia stated thatconsumption
abroad ofinsurance wasnotsubject toanyrestriction, butaprerequisite forthesaleofinsurance within
Armenia wasthattheseller ofinsurance beregistered asajuridical person.
- Telecommunications
142. Therepresentative ofArmenia informed members oftheWorking Party thattheMinistry of
Telecommunications wasresponsible forpolicy andregulation inthetelecommunications sector. The
State telephone company, Armentelecom, isresponsible forallother telecommunication services
throughout Armenia, bothlocalandlong-distance. Nobarriers toentry existinthese sectors ofthe
market. InviewofthepoorstateofArmenia ’stelecommunications infrastructure, theGovernment
haddecided totender foraforeign partner inajointventure thatwould havemonopoly rights tosupply
certain basic telecommunication services inreturn forexplicit commitments oninfrastructure
development.ThetenderwaswonbyaUnitedStates'companyandtheresultantjoint-venturecompany,
Armentel, wasestablished on1July1995. TheGovernment ofArmenia holds 51percentoftheequity
andtheforeign partner holds 49percent. Theservices which havebeenreserved exclusively for
Armentel areinternational basic telecommunications services, allwire-based services inMunicipal
Yerevan, andcellular telephony services inYerevan. Thecontract hasaduration of20years, but
canberescinded iftheforeign partner doesnotdeliver onthestipulated infrastructure development
commitments within theagreed time-frame. Armentel willleaselinesfortheprovision ofvalue-added
services byother suppliers, andmaysubcontract various services tointerested parties.WT/ACC/SPEC/ARM/1
Page49
- Professional services
- Accounting andauditing services
143. Therepresentative ofArmenia responded toquestions from some members oftheWorking
Party inrelation totheaccounting andauditing services sector, bystating thataccountancy andauditing
services wereregulated bytheMinistry ofFinance, onthebasis ofatemporary Resolution No.581
of1994, pending theestablishment ofalawonauditing. AStateenterprise, Finaudit, wasresponsible
forauditing government departments thatspend money from thebudget. Finaudit could alsooffer
auditing services tothepublic sector ingeneral ortheprivate sector, butincompetition withother
auditing enterprises. Intheprivate sector, domestic andforeign auditors wereatliberty toestablish
operations domestically, subject tomeeting Armenia ’sregulations andpassing anexamination.
Successfulcandidateswereprovidedwithacertificatethatallowsthemtobelicensedandtoofferauditing
services. Some 15foreign individuals currently heldlicences. TheMinistry ofFinance wasresponsible
forthislicensing process, except inthecaseofauditors ofbanks, whowere required toobtain a
certificate from theCentral Bank.
- Legal services
144. Inreplytorequests formoreinformation concerning thelegalservices sector, therepresentative
ofArmenia informed members oftheWorking Party thatthemain lawyers ’organization inArmenia
wastheCollegia ofAttorneys, which wasintheprocess ofbecoming independent oftheMinistry of
Justice. Itrepresented about 250lawyers whopractised incourt andithadoffices alloverthecountry.
TheCollegia wasseeking toexpand itsroleanditsmembership. Membership oftheCollegia was
notobligatory forpractising lawyers, butallpractising lawyers must belicensed bytheMinistry of
Justice, whether theywereinvolved incourt representation oracting inanadvisory role. Apart from
thegeneral legalbasisforactivities provided bytheLawonEnterprises andEntrepreneurial Activities,
noother legislation hasbeenestablished inthissphere. Alessactive, butmore widely representative
body, wastheLawyers Association ofArmenia. Itsmembership wasapproximately 5,000 individuals.
TheAssociation encompassed abroad range oflaw-related professions, including attorneys, judges,
academicsandstudents.Approximately50lawofficesoperatedinArmenia,mostofwhichareregistered
assoleentrepreneurs.WT/ACC/SPEC/ARM/1
Page50
- Judicial, arbitral oradministrative tribunals orprocedures providing forthereview of,
orremedies inrelation to,administrative decisions affecting trade inservices
145. Inresponse torequests forclarification ofthejudicial, arbitral oradministrative tribunals
providing forreview ofdecisions affecting trade inservices, therepresentative ofArmenia explained
thatArmenian Court system could beusedforlitigation (regular courts) andarbitration (arbitral courts).
Service suppliers withgrievances relating toadministrative decisions would notnormally seekremedies
through litigation orarbitration, until theyhadexhausted theirrighttoappeal totheadministrative
organ directly responsible forthedecision inrespect ofwhich theyhadagrievance.
- Provisions, including those ininternational agreements, concerning qualification
requirements andprocedures, technical standards andlicensing and/or registration
requirements forthesupply ofservices
146. Inresponse toquestions frommembers oftheWorking Party, therepresentative ofArmenia
stated thattheapproach tolicensing/registration andtechnical standards continued tobedeveloped
tocover newareas ofservice activities. Indoing sotheGovernment ofArmenia would ensure that
theprovisions ofGATS Article VIarefullyrespected. Healsonoted thatfewforeign service suppliers
hadsofarbeenestablished inArmenia, andthattheGovernment would welcome greater foreign
participation inthese activities. TheGovernment ofArmenia wasnotparty toanyinternational
agreements forthemutual recognition ofqualifications, andhasnotyetfullydeveloped itsownpolicy
regime inthisarea.
- Provisionsgoverningtheexistenceandoperationofmonopoliesorexclusiveservicesuppliers
147. Following questions fromsome members oftheWorking Party, therepresentative ofArmenia
responded thatwiththeexception oftheexclusive arrangements described above inrelation tocertain
telecommunicationsservices,Armeniaretainednomonopolyorexclusivesupplyarrangementsinservices
trade.WT/ACC/SPEC/ARM/1
Page51
- Provisions relating tosafeguard measures astheyapply totrade inservices
148. Therepresentative ofArmenia alsonoted thatArmenia hadnolegislative orregulatory basis
upon which itmight apply safeguard measures totrade inservices, andnosuchmeasures havebeen
applied.
- Provisions relating tointernational transfers andpayments forcurrent transactions of
services
149. Inreply toquestions fromsome members oftheWorking Party, therepresentative ofArmenia
alsostated thatArmenia didnotretain anyrestrictions oncurrent account transactions asrelated to
trade inservices.
- Provisions relating tocapital transactions affecting thesupply ofservices
150. Therepresentative ofArmenia alsoinformed theWorking Party thattheLawonInvestments
guaranteed therights ofinvestors freely totransfer capital.
- Provisions governing theprocurement bygovernmental agencies ofservices
151. Therepresentative ofArmenia noted thatthesameprovisions forprocurement ofgoods applied
totheprocurement ofservices (seeparagraph ....above).
- Provisions concerning anyform ofaid,grant, subsidy, taxincentive orpromotion scheme
affecting trade inservices
152. Inresponse torequests forinformation onanyfinancial assistance affecting trade inservices,
therepresentative ofArmenia informed theWorking Party thatnoStateaidswereprovided toservice
suppliers.WT/ACC/SPEC/ARM/1
Page52
- Market Access andNational Treatment
- Limitationsonthenumberofservicesuppliers/thetotalvalueofservicetransactions
orassets/ thetotal number ofservice operations oronthetotal quantity of
service/on output/on thetotalnumber ofnatural persons thatmaybeemployed
inaparticular service sector
153. Inresponse torequests forinformation concerning limitations onthesupply ofservices, the
representative ofArmenia stated thattheonlylimitation onthenumber ofservice suppliers wassector-
specific, relating tocertain telecommunications services. There werenolimitations onthetotalvalue
ofservice transactions orassets. There werenolimitations onthetotalnumber ofservice operations
oronthetotalquantity ofservice output. There werenolimitations onthetotalnumber ofnatural
persons thatmaybeemployed inaparticular service sector.
- Restrictions on,orrequirements ofspecific types oflegal entity through which
aservice maybesupplied
154. TherepresentativeofArmeniastatedthattheLawonEntrepreneursandEntrepreneurialActivities
defined 20kinds oforganizational forms thatenterprises could take. Accordingly, therange oflegal
entities through which services could besupplied wastherefore verywide. Noparticular typeoflegal
entity wasdiscouraged.
- Limitations ontheparticipation offoreign capital
155. TherepresentativeofArmeniastatedthattherewerenolimitationsontheparticipationofforeign
capital, although Regulation No.31ofFebruary 1995doesgivediscretion totheBoard oftheCentral
Bank tolimitthesizeofindividual shareholdings inresident commercial banks.
- Measures providing forlessthanthetreatment accorded tonational services or
service suppliers
156. Therepresentative ofArmenia stated thatnomeasures were maintained byArmenia which
provided forforeign services orservice suppliers tobeaccorded treatment lessfavourable thanthat
provided tonational services orservice suppliers. Itmaybenoted, however, thatoffshore banks wereWT/ACC/SPEC/ARM/1
Page53
notentitledtoprovideretailbankingservicesinthesameunrestrictedmannerasresidentbanks.Armenia
didnotmaintain anymeasures inconsistent withm.f.n. treatment inthefieldofservices.
- Transparency
157. Some members oftheWorking Party requested thattheGovernment ofArmenia confirm that
from thedateofaccession, alllaws, regulations, rulings, decrees orother measures related totrade
ingoods orservices willbepublished initsofficial publication forpublic review atleasttwoweeks
prior toimplementation, unless alonger period isspecified under therelevant WTO Agreement.
VII. Trade Agreements
158. Some members oftheWorking Party requested thatArmenia provide detailed information on
therange ofFreeandBarter Trade Agreements towhich Armenia wasaparty. Other members requested
information sothattheWorking Party could examine whether Armenia ’splurilateral andbilateral Free
TradeAgreementswereconsistentwithArticleXXIVoftheGATT1994.Inresponsetotheserequests,
therepresentative ofArmenia informed theWorking Party thatArmenia haddeveloped anetwork of
plurilateral andbilateral tradeagreements withvarious countries. Anumber ofthearrangements were
short-term innature, designed torespond toparticular needs, other agreements wereviewed asmore
durable, representing theArmenian Government ’sperception ofthedirections inwhich future trade
relations should develop. Asamember oftheWorld Trade Organization, Armenia would keepits
bilateral andregional trade agreements under review, notonlytoensure legalconsistency, butalso
toensure thecoherence ofArmenia ’strade relations withabroad multilateral framework.
- Plurilateral orregional agreements
159. Inresponse tofurther requests forinformation onArmenia 'sRegional Trade Agreements, the
representative ofArmenia stated thattheTreaty ofEconomic Union wasaframework agreement signed
bynineHeads ofState oftheCommonwealth ofIndependent States (C.I.S.) in1993 (Azerbaijan,
Armenia, Belarus, Kazakhstan, Kyrgyz Republic, Moldova, Russia, Tajikistan andUzbekistan). The
treaty committed signatories totheeventual establishment ofacustoms union andcommon market
among CIScountries. Other economic andfinancial components oftheCIStreaty related toapayments
union, cooperation oninvestment, industrial cooperation, andanagreement oncustoms procedures.WT/ACC/SPEC/ARM/1
Page54
Thetreaty setoutquitespecific commitments inmany ofthese areas (aswellasoncultural, scientific,
anddefence matters). Because thetreaty wasessentially anevolving framework document, itdidnot
"operationalize" these commitments. Instead, thespecifics ofpreferential trading relationships were
defined inbilateral freetrade agreements andinclearing agreements.
160. Alsoinresponse torequests forfurther information, therepresentative ofArmenia explained
thatArmenia wasalsoamember oftheBlack SeaEconomic Cooperation (BSEC) Organization, along
withtenother countries (Albania, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia,
Turkey andUkraine). Thisagreement covered anumber offields, including economic cooperation
andtrade, investment, scientific andtechnical cooperation, theestablishment ofaBSEC Bank, and
cooperationontransportandcommunications.Theagreementdidnotmakeanyprovisionforpreferential
trade, although itenvisaged thepossibility offreetrade zones inthefuture. More generally, the
organization seeks tocement relations among neighbouring countries through cooperation insuchareas
astransport, international payments andindustrial development.
161. Some members asked whether Armenia hadconcluded aneconomic cooperation agreement
withtheEuropean Union. Therepresentative ofArmenia responded thatArmenia hadnotdoneso
yet,buthoped todosointhefuture. Inthemeanwhile, the1989Trade andCooperation Agreement
between theEuropean Union andtheSoviet Union defined Armenia ’sbilateral relations withthe
European Union. Thatagreement didnotprovide foranytrade preferences.
- Bilateral freetrade agreements andtrade andeconomic cooperation agreements withCIS
countries
162. Inresponse toquestions fromsome members about Armenia 'sbilateral agreements withCIS
countries, therepresentative ofArmenia noted thatbilateral freetrade agreements (FTAs) hadbeen
signed withRussia, Ukraine, Moldova, Kyrgyz Republic andTajikistan. Except fortheagreement
withRussia, noneofthose FTAs hadbeen"operationalized". Inreplytoquestions fromsome members
concerning thereason thattheseagreements werenot“operationalized ”,therepresentative ofArmenia
stated thatbecause littleornotrade iscurrently taking place between Armenia andthese countries,
thereweretherefore nopractical consequences arising fromnotoperationalizing theagreements. Under
theFTAwithRussia, eachparty could exempt from dutyfreetreatment anyexport items subject to
quotas, licences andexport taxes. Since Armenia didnotmaintain anyexport restrictions (other thanWT/ACC/SPEC/ARM/1
Page55
thosegenerally applicable forpublic security, health andsafety reasons), therewasnothing onArmenia 's
exception listunder thefreetradeagreement. Russia maintained certain export restrictions which could
becovered bytheexception provisions oftheFTA, butinpractice these often donotapply because
ofthetrade andeconomic cooperation agreements thatArmenia alsosigns annually withRussia (see
below). Noexceptions toduty-free treatment forimports arecontemplated intheRusso-Armenian
freetrade agreement.
163. Therepresentative ofArmenia further responded thattheFTAs wereanoutgrowth ofthetrade
andeconomic cooperation agreements thatArmenia signed withCIScountries immediately after
independence, andwhich inmany cases arestilloperational. Most ofthese early agreements were
negotiated annually, theyenvisaged freetradeandtheyincluded listsofproducts thattheparties agreed
totradewithoneanother. Thepurpose oftheseagreements wastotrytoensure thatpre-existing trade
linkswerenotruptured altogether inthedisarray thatfollowed thebreakup oftheSoviet Union. The
specificity ofproduct-wise commitments varied considerably, including astotheidentification ofprices
andquantities tobeexchanged. Particularly after1992, product liststended tobecome indicative,
withnoprior agreement onprices, andthecommitments were onlypartially fulfilled. In1993, for
example, product commitments under these agreements weremettotheextent of20-50 percent,and
figures for1994 areexpected tobeevenlower.
- Bilateral clearing arrangements
164. Inresponse torequests forinformation inrelation toArmenia 'sbarter trade agreements with
othercountries, therepresentative ofArmenia stated thatbarter wastheessence oftheremaining clearing
arrangements maintained byArmenia. Barter wasborne ofnecessity andwasnotapreferred policy.
Barter wasdeemed essential intheimmediate post-independence period, inorder topreserve theonly
trade links thatArmenia hadatthattime, andwasafeature ofthetrade andeconomic cooperation
agreements described above. Moreover, barter offers amodicum ofenergy security, which inthe
current environment remained ofparamount importance totheGovernment. Also, transport difficulties
andapoorly functioning payments system haveoften made governmental support asinequanonof
doing business withFSUcountries. Asthese kinds ofconstraints arerelaxed, barter isexpected to
disappear. Indeed, theGovernment iscommitted toeliminating barter arrangements assoonasitis
practicable todoso.TheGovernment recognizes thatitsroleastrader orasintermediary intrade
inhibitstheindependentdevelopmentofexportcapacitybyenterprises,andtheestablishmentofnetworksWT/ACC/SPEC/ARM/1
Page56
andcontacts withforeign buyers thataresoessential toexporting success. Headded thatin1995,
theonlybarter arrangements (called "clearing") thatwillremain arethose withTurkmenistan forgas,
andRussia foroilandmazout. Theagreement withTurkmenistan hasalready beensigned. Itinvolves
thepurchase of2.2billion cubic meters ofgasat$80perthousand cubic meters. Payment forthe
gaswillbeinbothcash($30perthousand cubic meters) andincounterpart products ($50perthousand
cubic meters). Counterpart products include suchitems asmetals, chemical products, machinery,
products oflightindustry, andproducts offoodindustries (including brandy, wine, jams, andcigarette
filters). Theclearing arrangements statethequantities andprices ofgoods guaranteed inexchange
fortheenergy. Inthecaseofthe1995 agreement withTurkmenistan, however, anadditional listof
products thatmight beexchanged hasbeenincluded, inorder toprovide additional flexibility. This
latter feature isakintowhataproduct listrepresents under atradeandcooperation agreement. Thus,
thefinalcomposition ofgoods forexchange isestablished during thecurrency ofthecontract.
165. Inresponse torequests fortrade flows arising from the1995 agreement withRussia, the
representative ofArmenia stated thattheAgreement involved thepurchase byArmenia of200,000
tonsofmazout and200,000 tonsofoilunder thecontract. Theterms ofthisagreement were more
rigidthanthoseforTurkmenistan, andthecomposition, quantity andprices ofgoods fixedinthecontract
negotiation werenotsubject toanychange. The1993clearing arrangements (which existed withRussia,
Turkmenistan andGeorgia, andincluded metals, paper wood products andindustrial rawmaterials
aswellasenergy) involved 74percentoftotalexports and56percentoftotalimports. Therespective
figures in1994 were 46percentforexports and29percentforimports. Domestic producers are
atliberty tochoose whether ornottosupply goods fortheclearing arrangements. Butinviewofthe
difficulties many enterprises faceinovercoming transport andpayments problems relating toexports,
theGovernment generally encounters littledifficulty insecuring thenecessary supplies from local
industries tofulfil theclearing contracts.
- Bilateral trade andcooperation agreements
166. Therepresentative ofArmenia alsostated thattradeandcooperation agreements hadalsobeen
signed withmany non-CIS countries, including Latvia, Lithuania, Estonia, Vietnam, China, Romania,
Bulgaria, theUnited States, Argentina, Greece, Austria, Iran,Syria, India, Poland andHungary. The
possibility ofsuchagreements withanumber ofother countries isunder active consideration. These
agreements seektostrengthen economic links, butdonotcontain anyprovisions forpreferential trade.WT/ACC/SPEC/ARM/1
Page57
- Other non-trade bilateral agreements
167. Therepresentative ofArmenia noted thatArmenia hadalsosigned aseries ofother agreements
oninvestment andoncustoms relations. Theinvestment agreements sought toencourage investment
between theparties, primarily byguaranteeing national treatment, non-expropriation, andunrestricted
transfers ofinvestment funds andreturns fromtheinvestments. Investment agreements hadbeensigned
withUkraine, Kyrgyz Republic, Vietnam, China, theUnited States, Argentina, Greece andthe
United Kingdom. Agreements oncustoms relations areintended toensure cooperation andsmooth
working relations between thecustoms services ofthesignatories. Suchagreements havebeensigned
withUkraine, Tajikistan, Turkmenistan, Georgia andIran.
168. Inresponse tofurther requests forclarification ofthecompatibility ofArmenia 'sfreetrade
agreements withtheCISStates withArticle XXIV oftheGATT 1994, therepresentative ofArmenia
stated thatwithin theframework ofthe1994 Free-Trade Agreement among thecountries ofthe
Commonwealth ofIndependent States, Armenia ’splurilateral andbilateral free-trade agreements
eliminated duties andotherrestrictive regulations onsubstantially alltradebetween theparties. Armenia
considered thatthesearrangements wereconsistent withArticle XXIV ofGATT 1994. Itmaybenoted
thatatpresent Armenia doesnotconduct trade withalloftheCIScountries, butinrespect ofthose
countries withwhich Armenia doestrade, Armenia imposes notaxes orbarriers onitsimports and
exports. These agreements donotcover trade inservices.
169. Therepresentative ofArmenia informed theWorking Party thattheGovernment ofArmenia
haddecided toaccede totheAgreements onGovernment Procurement andTrade inCivil Aircraft.
TheGovernment ofArmenia would alsoaccede tothefuture Information Technology Agreement.
170. TherepresentativeofArmeniaalsoinformedtheWorkingPartythattheGovernmentofArmenia
would alsobring allpreferential trading agreements intoconformity withrelevant provisions ofthe
WTO Agreement from thedateofitsaccession totheWTO. [TheWorking Party tooknoteofthis
commitment.]WT/ACC/SPEC/ARM/1
Page58
Conclusion
171. TheWorking Party tooknoteoftheexplanations andstatements ofArmenia concerning its
foreign trade regime, asreflected inthisReport. TheWorking Party tooknoteofthecommitments
given byArmenia inrelation tocertain specific matters which arereproduced inparagraphs ...ofthis
Report. TheWorking Party tooknotethatthese commitments hadbeenincorporated inparagraph 2
oftheProtocol ofAccession ofArmenia totheWTO.
172. Having carried outtheexamination oftheforeign trade regime ofArmenia andinthelight
oftheexplanations, commitments andconcessions made bytherepresentatives ofArmenia, theWorking
Party reached theconclusion that,Armenia should beinvited toaccede totheAgreement Establishing
theWTO pursuant totheprovisions ofArticle XII. Forthispurpose theWorking Party hasprepared
thedraftDecision andProtocol ofAccession reproduced intheAppendix tothisReport, andtakes
noteofArmenia 'sSchedule ofSpecific Commitments onServices (document ...)anditsSchedules
ofConcessions andCommitments onAgriculture andGoods (document ...)thatareattached tothe
Protocol ofAccession. Itisproposed thatthese textsbeapproved bytheGeneral Council when it
adopts theReport. When theDecision isadopted, theProtocol ofAccession would beopen for
acceptance byArmenia which would become aMember thirty daysafteritaccepts thesaidProtocol.
TheWorking Party agreed, therefore, thatithadcompleted itswork concerning thenegotiations for
theaccession ofArmenia totheAgreement Establishing theWTO.WT/ACC/SPEC/ARM/1
Page59
APPENDIX
ACCESSION OFARMENIA
Draft Decision
TheGeneral Council,
Having regard totheresults ofthenegotiations directed towards theaccession ofArmenia
totheMarrakesh Agreement Establishing theWorld Trade Organization andhaving prepared aProtocol
fortheAccession ofArmenia.
Decide ,inaccordance withArticle XIIoftheMarrakesh Agreement Establishing theWorld
Trade Organization, thatArmenia mayaccede totheMarrakesh Agreement Establishing theWorld
Trade Organization ontheterms setoutinthesaidProtocol.WT/ACC/SPEC/ARM/1
Page60
PROTOCOL FOR THE ACCESSION OFARMENIA TOTHE
MARRAKESH AGREEMENT ESTABLISHING THE WORLD TRADE ORGANIZATION
DRAFT
TheWorld Trade Organization (hereinafter referred toasthe"WTO"), pursuant totheapproval
oftheGeneral Council oftheWTO accorded under Article XIIoftheMarrakesh Agreement Establishing
theWorld Trade Organization (hereinafter referred toasthe"WTO Agreement"), andtheGovernment
ofArmenia, (hereinafter referred toas"Armenia"),
Taking noteoftheReport oftheWorking Party ontheAccession ofArmenia totheWTO
Agreement indocument ...(hereinafter referred toasthe"Working Party Report"),
Having regard totheresults ofthenegotiations ontheAccession ofArmenia totheWTO,
Agree asfollows:
PartI-General
1. Upon entry intoforce ofthisProtocol, Armenia accedes totheWTO Agreement pursuant to
Article XIIofthatAgreement andthereby becomes aMember oftheWTO.
2. TheWTO Agreement towhich Armenia accedes shallbetheWTO Agreement asrectified,
amended orotherwise modified bysuchlegalinstruments asmayhaveentered intoforce before the
dateofentry intoforceofthisProtocol. ThisProtocol, which shallcomprise thecommitments referred
toinparagraph ...oftheWorking Party Report, shallbeanintegral partoftheWTO Agreement.
3. Armenia willnotify theSecretariat annually oftheimplementation ofthephased commitments
withdefinitive dates referred toinparagraphs ...oftheWorking Party Report, andwillidentify any
delays inimplementation together withthereasons therefore.WT/ACC/SPEC/ARM/1
Page61
4. Except asotherwise provided forinthepreceding paragraph orintheparagraphs referred to
inparagraph ...oftheWorking Party Report:
(a) Those obligations intheMultilateral Trade Agreements annexed totheWTO Agreement that
aretobeimplemented overaperiod oftimestarting withtheentry intoforceofthatAgreement
shallbeimplemented byArmenia asifithadaccepted thatAgreement onthedateofitsentry
intoforce.
(b) Those notifications thataretobemade under theMultilateral Trade Agreements annexed to
theWTO Agreement within aspecified period oftimestarting withthedateofentry intoforce
oftheWTO Agreement shallbemade byArmenia within thatperiod oftimestarting with
thedateofentry intoforce ofthisProtocol.
PartII-Schedules
5. TheSchedules annexed tothisProtocol shall become theSchedule ofConcessions and
Commitments annexed totheGeneral Agreement onTariffs andTrade 1994 (hereinafter referred to
asthe"GATT 1994") andtheSchedule ofSpecific Commitments annexed totheGeneral Agreement
onTrade inServices (hereinafter referred toas"GATS") relating toArmenia. Thestaging ofthe
concessions andcommitments listed intheSchedules shallbeimplemented asspecified intherelevant
parts oftherespective Schedules.
6. Forthepurpose ofthereference inparagraph 6(a)ofArticle IIoftheGATT 1994 tothedate
ofthatAgreement, theapplicable dateinrespect oftheSchedules ofConcessions andCommitments
annexed tothisProtocol shallbethedateofentry intoforce ofthisProtocol.
PartIII-Final Provisions
7. ThisProtocol shallbeopenforacceptance, bysignature orotherwise, byArmenia until...
8. ThisProtocol shallenter intoforce onthethirtieth dayfollowing thedayupon which itshall
havebeenaccepted byArmenia.WT/ACC/SPEC/ARM/1
Page62
9. ThisProtocol shallbedeposited withtheDirector-General oftheWTO. TheDirector-General
oftheWTO shallpromptly furnish acertified copyofthisProtocol andanotification ofacceptance
byArmenia thereto pursuant toparagraph 7toeachMember oftheWTO andtoArmenia.
10. ThisProtocol shallberegistered inaccordance withtheprovisions ofArticle 102oftheCharter
oftheUnited Nations.
Done atGeneva this....dayof....onethousand ninehundred andninety ...,inasingle copy
intheEnglish, French andSpanish languages, eachtextbeing authentic.WT/ACC/SPEC/ARM/1
Page63
ANNEX I
SCHEDULE ...-ARMENIA
PartI-Goods
Circulated indocument ....
PartII-Services
Circulated indocument ....