RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/228 
2 March 2010  
 
(10-1080) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
ARMENIA 
 
  
 
This report, prepared for the first Trad e Policy Review of Armenia, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from Armenia on its trade policies and 
practices. 
 
Any technical questions arising from this report may be addressed to 
Mr. John Finn (tel:  022 739 5081). 
 
Document WT/TPR/G/228 contains the policy statement submitted by Armenia. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Armenia. Armenia WT/TPR/S/228 
 Page iii 
 
 
 CONTENTS 
    Page 
SUMMARY OBSERVATIONS ix 
(1) E CONOMIC ENVIRONMENT  ix 
(2) I NSTITUTIONAL FRAMEWORK  x 
(3) M EASURES AFFECTING MARKET ACCESS FOR GOODS  x 
(4) M EASURES DIRECTLY AFFECTING EXPORTS  xi 
 (5) O THER MEASURES AFFECTING INVESTMENT AND TRADE   xi 
 (6) T RADE POLICIES BY SECTOR  xii 
I. ECONOMIC ENVIRONMENT 1 
(1) O UTPUT AND EMPLOYMENT  1 
(2) M ONETARY AND EXCHANGE RATE POLICY  4 
(i) Monetary policy 4 (ii) Exchange rate policy 5 
(3) F
ISCAL POLICY  6 
(4) B ALANCE OF PAYMENTS  8 
(5) D EVELOPMENTS IN TRADE AND INVESTMENT  9 
(i) Merchandise trade 9 
(ii) Trade in services 10 
(iii) Foreign direct investment 11 
II. TRADE AND INVESTMENT POLICY FRAMEWORK 13 
 (1) B ACKGROUND  13 
 (2) G ENERAL INSTITUTIONAL FRAMEWORK  13 
(i) Branches of government 13 (ii) Institutional powers in WTO-related matters 15 
 (3) I
NSTITUTIONAL REFORMS  16 
 (4) M AIN TRADE AGREEMENTS AND OBJECTIVES  17 
(i) World Trade Organization 17 
(ii) Generalised System of Preferences 20 
(ii) European Union 21 (iii) Commonwealth of Independent States 21 
(iv) Other agreements 22 
III. MEASURES AFFECTING MARKET ACCESS FOR GOODS 23 
(1) C
USTOMS PROCEDURES  23 
(2) C USTOMS VALUATION  24 
(3) R ULES OF ORIGIN  25 WT/TPR/S/228 Trade Policy Review 
Page iv 
 
 
     Page 
(4) T ARIFFS   26 
(i) MFN applied tariff 27 
(ii) Tariff bindings 29 (iii) Tariff concessions 29 
(iv) Tariff preferences 30 
(5) O
THER CHARGES AFFECTING IMPORTS  30 
(i) Charges applied exclusively to imports 30 
 (ii) Indirect taxes 30 
(6) I MPORT PROHIBITIONS , RESTRICTIONS , AND LICENSING  32 
(7) C ONTINGENCY MEASURES  33 
(i) Anti-dumping and countervailing measures 33 
(ii) Safeguard measures 34 
(8) T ECHNICAL REGULATIONS AND STANDARDS  34 
(9) S ANITARY AND PHYTOSANITARY MEASURES  37 
IV. MEASURES DIRECTLY AFFECTING EXPORTS 40 
(1) C USTOMS PROCEDURES AND CHARGES  40 
(2) E XPORT TAXES  40 
(3) E XPORT PROHIBITIONS , RESTRICTIONS , AND LICENSING  40 
(4) D UTY AND TAX CONCESSIONS  41 
(5) E XPORT FINANCE , INSURANCE , AND PROMOTION  41 
V. OTHER MEASURES AFFECTING INVESTMENT AND TRADE 43 
(1) B USINESS FRAMEWORK AND FOREIGN INVESTMENT REGIME  43 
(i) General legal framework for businesses 43 (ii) Foreign investment regime 45 
(2) S
TATE TRADING , STATE -OWNED ENTERPRISES , AND PRIVATIZATION  46 
(3) I NCENTIVES  46 
(4) C OMPETITION AND PRICE POLICIES  47 
(i) Competition policy 47 
(ii) Price policy 48 
(5) G OVERNMENT PROCUREMENT  48 
(6) I NTELLECTUAL PROPERTY RIGHTS  51 
(i) General aspects 51 (ii) Regulatory framework 52 
(iii) Enforcement 55 
VI. TRADE POLICIES BY SECTOR 56 
(1) A
GRICULTURE  56 
(2) M INING   59 Armenia WT/TPR/S/228 
 Page v 
 
 
     Page 
(3) E NERGY   62 
(i) Overview 62 
(ii) Electricity 63 (iii) Gas 65 
(iv) Urban heating 65 
(v) Transport fuel 65 
(4) S
ERVICES  66 
(i) Main features 66 
(ii) Financial services 66 (iii) Telecommunications 70 
(iv) Transport 72 
(v) Professional services 78 (vi) Tourism 80 
REFERENCES   83 
APPENDIX TABLES  89 WT/TPR/S/228 Trade Policy Review 
Page vi 
 
 
 CHARTS 
    P a g e  
VI. TRADE POLICIES BY SECTOR  
VI.1 Production of selected agricultural products, 1992-08 57 
TABLES 
I. ECONOMIC ENVIRONMENT  
I.1 GDP growth, measured by expenditure, 2003-08 1 
I.2 Basic economic indicators, 2003-08 2 
I.3 Main monetary indicators, 2003-08 5 
I.4 Fiscal accounts of the General Government, fiscal years 2003-08 7 
I.5 Balance of payments, 2003-08 8 
I.6 Trade in services, 2003-08 11 
I.7 FDI inflows and stock, 2003-08 11 
II. TRADE AND INVESTMENT REGIMES 
II.1 Notifications to the WTO, 2003-09 19 
III. MEASURES AFFECTING MARKET ACCESS FOR GOODS III.1 Structure of the tariff schedule, 2003 and 2009 27 
III.2 Summary analysis of MFN tariff, 2009 28 
III.3 Excise tax rates, 2009 31 
III.4 Legislation and institutions for SPS, 2009 38 
V. OTHER MEASURES AFFECTING INVESTMENT AND TRADE V.1 Principal business structures and selected requirements, 2009 43 
V.2 Procurement methods, 2006-08 50 
V.3 Overview of intellectual property rights protection, 2009 53 
VI. TRADE POLICIES BY SECTOR  
VI.1 Value of gross agricultural production, 2000-08 56 
VI.2 Production of selected agricultural products, 2003-08 57 VI.3 Domestic support measures, 2003-07 59 
VI.4 Production of mineral commodities, 2001-07 60 
VI.5. Main electricity plants, 2009 64 VI.6 Overland transport, 2003-07 73 
VI.7 Air transport indicators, 2003-09 76 
VI.8 Selected tourism indicators, 2003-08 81 Armenia WT/TPR/S/228 
 Page vii 
 
 
 APPENDIX TABLES 
    P a g e  
I. ECONOMIC ENVIRONMENT  
AI.1 Composition of exports, including re-exports, 2002-08 91 
AI.2 Destination of exports, including re-exports, 2002-08 92 
AI.3 Composition of exports, 2002-08 93 
AI.4 Composition of imports, 2002-08 94 AI.5 Destination of exports, 2002-08 95 
AI.6 Origin of imports, 2002-08 96 
III. MEASURES AFFECTING MARKET ACCESS FOR GOODS AIII.1 Applied MFN tariffs, by ISIC Rev.2 category, 2008 97 
V. OTHER MEASURES AFFECTING INVESTMENT AND TRADE 
AV.1 Trade in selected IPR-intensive products, 2003-08 100 VI. TRADE POLICIES BY SECTOR  
AVI.1 Specific commitments under the GATS, 2009 101 Armenia WT/TPR/S/228 
 Page ix 
 
 
 SUMMARY OBSERVATIONS 
1. Armenia's accession to the WTO in 
2003 consolidated a process of trade liberalization and institutional reforms that started soon after its independence from the Soviet Union in 1991.  Since accession, reform 
has continued.  Armenia has a liberal trade and 
investment regime.  The average applied tariff, at 2.7%, is among the lowest of WTO Members.  It grants MFN and national treatment to foreign investors, which are 
present in almost every economic sector.  In 
many areas, particularly in services, Armenia's trade policies are more liberal than its WTO 
accession commitments. 
2. Economic stability, along with foreign 
remittances and investment from the large Armenian diaspora, led to high levels of 
economic growth up until the global financial 
crises hit Armenia in 2009.  Continued efforts to improve implementation of institutional and regulatory reforms and to develop a more diversified economy ar e key to Armenia's 
future economic growth.     
(1) E
CONOMIC ENVIRONMENT  
3. Armenia is a land-locked country in 
the Southern Caucasus region which borders 
Azerbaijan, Georgia, Iran, and Turkey.  The 
economic difficulties it faced with the collapse of the Soviet Union and the chaos that followed were exacerbated  by the war in Nagorno Karabakh and the subsequent closure 
of its borders with Azerbaijan and Turkey. 
4. Economic stabilization started with the 
introduction of the Armenian dram as the 
national currency late in 1993.  At the same 
time Armenia began, with international support, to implement a wide range of economic reforms that included trade liberalization and its application to accede to the GATT and later the WTO.   
5. Before and after acceding to the WTO 
in 2003, Armenia's economy grew very 
strongly, almost doubling in real terms between 2003 and 2008.  The main driver of growth was domestic consumption fuelled by 
remittances from abroad and by improved productivity, which followed the rapid restructuring of the economy from the mid 
1990s.  GDP reached nearly US$12 billion and 
GDP per capita US$3,684 in 2008.
1 
6. Since 2003 the economy has changed 
a lot.  Agriculture grew less rapidly than other sectors and its share of the economy fell to 18% in 2008, although it still employed almost half of the workforce.  Manufacturing also 
declined in relative importance as services 
grew strongly to reach nearly three quarters of GDP in 2008.  Within the services sector, construction grew most  rapidly reaching 30% 
of GDP in 2008. 
7. Unfortunately, the economy went into 
reverse in 2009.  The global financial crisis 
and the down-turn of the world economy 
reduced remittances and foreign investment.  The sudden drop in investment hit property prices and the construction industry.  As construction activity had grown to be such a large part of the economy the decline in this 
sector hurt other areas.  Overall economic 
growth went from 7% in 2008 to about -15% 
in 2009.   
8. Throughout the review period of 2003 
to 2009, inflation was kept in check (at around 4%) by the independent Central Bank.  For most of this time the Armenian dram was 
allowed to float.  The fiscal deficit was kept 
reasonably low and public debt decreased significantly as a percentage of GDP, although both indicators worsened considerably in 
2009.     
9. Overall, trade is about 43% of GDP 
and Armenia has a large deficit in trade in both 
goods and services (at 25% of GDP).  During 
the review period, the trade deficit increased due to strong domestic demand and the loss of competitiveness of Armenian exports as large foreign exchange inflows caused the dram to appreciate.  Furthermore, Armenia's closed 
                                                     
 
1 The average exchange rate for the first 
half of 2009 was dram 1 = US$350. WT/TPR/S/228 Trade Policy Review 
Page x 
 
 
 borders, particularly with Turkey, led to 
transport costs higher than they might otherwise have been.  The impact of high transport costs is particularly hard on heavy 
bulk commodities, like minerals, which make 
up a large proportion of Armenia's exports.      
10. Foreign direct investment, mainly 
from Russia and the EU, increased considerably between 2003 and 2008, particularly in utilities, financial services, 
mining and food processing. 
(2) I
NSTITUTIONAL FRAMEWORK  
11. During the process of acceding to the 
WTO Armenia undertook considerable legal and institutional re form and made a 
comprehensive set of commitments.  For 
example, it bound all tariff lines at rates between 0% and 15%, it replaced ad valorem  
customs fees with specific duties, and its services commitments covered almost all sectors. 
12. Since it acceded, the process of legal 
and institutional reform has continued.  Much 
of the reform is intended to improve the investment climate, governance, transparency and accountability:  the Constitution was amended to improve the distribution of powers 
within the State;  the Ministry of Economy 
became responsible for trade policy; and the State Revenue Committee took over responsibility for tax revenue and customs 
administration.  
13. Armenia continues to face resource 
constraints to deal comprehensively with WTO issues.  It has a Permanent Mission in 
Geneva, which currently has one diplomat 
who is responsible for WTO matters and other economic issues in other International 
Organizations.   
14. In the negotiations under the Doha 
Development Agenda, Armenia is a member of the group of recently acceded Members (RAMs) and has participated in its proposals.   15. Armenia has nine trade agreements in 
force with other members of the Commonwealth of Independent States (CIS).  Armenia is also working towards beginning 
negotiations on a deep and comprehensive 
trade agreement with th e EU.  Such agreement 
would go beyond tariffs and would require close alignment with the EU's laws in areas related to trade, including SPS and TBT measures, and intellectual property.    
(3) M
EASURES AFFECTING MARKET 
ACCESS FOR GOODS  
16. The administration of customs 
procedures was significantly improved during 
the review period.  The institutional structure was streamlined with the creation of the State Revenue Committee in 2008.  At the same time, customs procedures were simplified and 
processing of imports made more efficient.  
The improvements included:  the introduction of an on-line customs declaration system;  the launch of a traffic light system for inspection of goods entering Armenia;  and the reduction in the number of import documents required 
(from nine to three).  However, customs 
clearance is still perceived by users as relatively slow and subject to a certain amount 
of corruption. 
17. Despite improvements during the 
review period, there remain some concerns about the efficiency and transparency of the 
application of the legislation on customs 
valuation.  The authorities stated that under-declaration of import values is a persistent problem that explains why transaction value is often not accepted for customs valuation.  
They also pointed out that importers have the 
right to appeal decisions of the customs authority and to use bank guarantees to cover duties in cases where documentation is 
incomplete. 
18. Armenia's average applied MFN tariff 
is 2.7% with a simple tariff structure:  no tariff quotas;  73% of tariff lines are duty free;  and 
almost all the rest subject to a 10% tariff rate.  
There are 19 alcohol and tobacco items subject to non- ad valorem  tariffs, for which Armenia WT/TPR/S/228 
 Page xi 
 
 
 ad valorem  equivalents (AVEs) were 
impossible to calculate.  These specific duties are expected to be converted into ad valorem  
charges in January 2011. 
19. Under Armenia's free-trade 
agreements with some CIS countries, all 
imports are duty free with no implementation 
period.  Although 31% of Armenia's imports come from these countries, trade diversion is probably low given that duty-free rates also 
apply to most MFN trade.   
20. Apart from import prohibitions 
applied to a number of products for health, 
security and environmental reasons, Armenia 
does not apply quantitative restrictions to imports.  Anti-dumping and safeguard legislation has been in place since before accession to the WTO, but, so far, no 
investigations have been conducted and no 
contingency measures have been taken. 
21. Certain imports are affected by a 
business licensing system applied to a list of economic activities, such as pharmacies and pharmaceuticals.  Some of these licences are non-automatic and only granted with the 
approval of a licensing commission.   
22. As in other areas, Armenia is working 
towards bringing its technical regulations and 
standards into conformity with the EU.  Armenia did not adopt urgent measures during the review period and has notified to the WTO all the technical regulations that were 
considered to affect trade.   
23. SPS policy, legislation, and 
implementation is also moving towards 
convergence with the EU.  Nevertheless, lack 
of resources remains a significant problem, affecting the application of SPS rules not only for imported products but also for domestic 
production.  
(4) M
EASURES DIRECTLY AFFECTING 
EXPORTS  
24. All exports of goods from Armenia are 
subject to a simple customs declaration system.  During the review period, the 
documentation and the time required to export have been reduced.  However, certification of origin is perceived by exporters as costly and 
complicated.   
25. Armenia does not apply export taxes, 
although its legislation permits them.  Export prohibitions apply only to  a limited range of 
products such as weapons, ammunition, 
explosives, and narcotics.  Armenia applies 
only those trade embargoes imposed by the UN Security Council Resolutions.  Permission is required for exports of rare plants, animals, and objects considered of interest to the national heritage.     
26. During the review period, there were 
no export processing zones in Armenia, no officially supported export credit schemes, and the government did not provide subsidies contingent on exports.  The Armenia 
Development Agency, a p ublic agency mainly 
financed by international organizations, is responsible for export promotion.   
(5) O
THER MEASURES AFFECTING 
INVESTMENT AND TRADE  
27. Armenia has continued to improve the 
legislative base for business, investment and 
trade.  Although implementation continues to be a problem, this too is  being improved.  An 
enterprise (including an importer) must register as a legal entity in the State Registry, 
as well as in the regional offices of the tax 
authority and customs.  A single rate of profit tax, at 20%, applies to all commercial organizations.   
28. Foreign investment has been vital for 
economic growth in Armenia and is officially 
encouraged through the development of 
investment-friendly policies.  The only restriction on foreign investment is the Constitutional ban on fore igners owning land 
in Armenia.  Investors are also protected from 
adverse changes in legislation and from 
nationalization of property by the State.  In addition, during the review period, the WT/TPR/S/228 Trade Policy Review 
Page xii 
 
 
 Government offered a profit tax break and a 
tariff exemption for imports of certain capital inputs.  However, there is no information available on their utilization.     
29. Privatization continued during the 
2003-09 period.  As of end 2009 the process was essentially completed.  Most of the enterprises still owned, wholly or partially, by the State are involved in health care, 
education, and military activities.  The rest are 
non-operational.  
30. Although Armenia's legislation on 
competition policy was enacted in 2000 and has since been brought into approximate conformity with that of the EU, concerns 
remain about the reach of the competition 
authority's powers and the lack of competition in several sectors. 
31. In line with its WTO accession 
commitment, in October 2009 Armenia 
presented its initial offer and started 
negotiations with other WTO Members to accede to the Government Procurement Agreement.  This follows the enactment in 2005 of the Law on Procurement, which applies to purchases of goods and services by 
public bodies.  The preferred method of 
procurement is lowest price, and the Law contains no provisions promoting local content or domestic suppliers.  Open tendering accounted for 78% of the total value of 
contracts awarded in 2008.   
32. Since 2003, Armenia has continued to 
update its intellectual property legislation with new laws on copyrights and patents and amendments to its law on trade marks.  In 
addition, draft laws sent to the National 
Assembly would extend the coverage of rights to geographical indications and appellations of origin.  As in other areas, implementation of the law remains a challenge. 
(6) T
RADE POLICIES BY SECTOR  
33. Agriculture development faces several 
major constraints such as:  small and fragmented farms; mountainous terrain; an 
expensive and inefficient irrigation system; and lack of farm support services.  
34. Despite these constraints, some 
subsectors, particularly alcoholic beverages, 
have scope for development.  Improved irrigation and better financial services for farmers would also help agricultural development.  However, significant foreign 
investment in agriculture is unlikely given the 
Constitutional prohibiti on on land ownership 
for non-Armenian citizens. 
35. Armenia is a net food-importing 
country with most imports coming from Russia.  Its main agriculture export is brandy, 
most of which goes to Russia.   
36. Armenia has significant deposits of 
molybdenum, copper, a nd gold and smaller 
deposits of several other minerals.  Thus, despite high transportation costs, mining 
accounts for over a quarter of Armenia's 
exports and has been a source of considerable foreign investment.  The North-South Road Corridor, which would link the mining areas with Georgian ports on the Black Sea, would help to address transport costs.  
37. The services sector grew strongly in 
both relative and absolute terms during the review period.  In acceding to the WTO, Armenia undertook commitments in most service areas, the main exceptions being postal 
services, passenger transport, and air and rail 
freight transport. 
38. With the exception of hydroelectricity,  
all primary energy supplies in Armenia are imported.  The energy sector is dominated by 
Russian enterprises, which either own or 
operate the major power plants, the electricity distribution system, and the gas pipeline network.  Although the infrastructure is being improved, much of it needs to be upgraded and some of it needs to be replaced.   
39. Purchase and sale prices for 
electricity, gas, and thermal energy (in Armenia WT/TPR/S/228 
 Page xiii 
 
 
 addition to water and telecommunications) are 
set by the Public Services Regulatory Commission.  The purchase prices for electricity set by the Commission encourage 
production from renewable sources.  The 
Commission does not set prices for transport fuel, all of which is imported.  The market for the import and distribution of fuel is concentrated with only two firms having 84% 
market share. 
40. The financial services sub sector is 
relatively small and underdeveloped.  Although it grew at an annual rate of 29% per year in 2003-08, this was from a very small base.  Since 2003, Armenia has also taken 
steps to improve the stability of, and 
confidence in the banking sector with a deposit guarantee scheme and increased capital requirements introduced in 2004 and 2009 respectively.  There are no restrictions on 
participation of foreign investors in the 
banking and insurance sectors.  Furthermore, going beyond its accession commitments, Armenia permits branches of foreign banks to accept deposits from Armenian nationals.  However, there are some restrictions on cross-
border insurance services.     
41. Telecommunications in Armenia are 
still at a developing stage, particularly internet access.  The main cause of this lag in development is lack of investment during 
1998-2004 when the market was controlled by 
a single company.  During the review period, the Government renegotiated the sole service supplier's licence and gradually ended its exclusive rights.  As a result, there are now no 
restrictions on the participation of foreign 
investors and, by end 2009, the applied legislation was more liberal than Armenia's 
GATS commitments.   
42. The transport sector in Armenia is 
relatively well developed but in need of 
significant funds to maintain and upgrade 
existing routes and to build new ones.  Armenia is participating in a number of regional initiatives, which are designed to improve transport in the region.  Foreign 
investment is focused on road construction 
while public funds are mostly devoted to road maintenance.  In 2008, a 30-year licence was granted for a Russian company to provide railway passenger and freight services, but the infrastructure remains state-owned.  
43. Foreign professionals or enterprises 
are not restricted from setting up law or accountancy firms in Armenia.  Both service sub sectors have undergone a lot of reform since 2003.   
44. The Chamber of Advocates was 
established in 2005 and replaced the two bar unions.  In August 2009, the Association of Accountants and Auditors of Armenia was recognized as the professional association representing accountants and auditors.   
45. There are no restrictions on foreign 
investment in hotel services or on foreign nationals applying for tour-guide licences.  
Tourism is expanding in Armenia, with visitors coming mainly from countries with 
large diaspora communities.  However, high 
flight costs and limited schedules, as well as high taxes on passengers and underdeveloped infrastructure appear to be hampering tourism growth.