RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/228 
2 March 2010 
 (10-1079) 
Trade Policy Review Body Original:   English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
ARMENIA 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Armenia is attached. 
 
 
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/G/228 
 Page 3 
 
 
 CONTENTS 
    P a g e  
I. OVERVIEW  5 
II. ECONOMIC ENVIRONMENT 6 
(1) E CONOMIC POLICY  6 
(i) Fiscal policy 6 
(ii) Monetary policy 7 (iii) Business operating environment 8 
(2) T
HE DOMESTIC ECONOMY  8 
(3) F OREIGN TRADE AND PAYMENTS  9 
(i) Trade 9 
(ii) Remittance and FDI inflows 10 
III. TRADE POLICY  11 
(1) A GRICULTURE  11 
(2) I NDUSTRY  12 
(3) S ERVICES  13 
(i) Financial services 13 
(ii) Telecommunications and postal services 14 
(iii) Transport and the borders 14 
(4) O THER WTO-RELATED POLICY DEVELOPMENTS  14 
(i) Intellectual property rights (IPR) 14 (ii) Government procurement 15 
(5) B
ILATERAL AND REGIONAL ARRANGEMENTS  15 
IV. OUTLOOK  16 
 
 
  Armenia WT/TPR/G/228 
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 I. OVERVIEW 
1. Armenia is pleased to submit this report for its first Trade Policy Review.  The report covers 
the period since the country's accession to the WTO in 2003, where Armenia has long experienced 
strong economic growth accompanied by liberal trad e-economic policies, which continue through the 
current serious economic decline.  The period is essen tially divided into pre-crisis and recession parts 
with all the positive trends in the econo mic environment reversed in the latter. 
2. Before crisis, the government ha d considerably reduced the stat e budget deficit enhancing the 
revenue performance through improved tax administration.  The deficit has been widening in 2009, 
despite additional measures taken to improve collection and reduced  budgetary spending.  External 
financial assistance is also involved to compen sate the revenue underperfo rmance and mitigate the 
deficit.  The strict fiscal policy is  set to continue in Armenia in 2010.  As to monetary conditions, they 
had been stabilized in early 2000s.  The Central Ba nk of Armenia kept reducing the refinancing rate 
through 2007, raising it afterwards to respond to inflation, and again in early 2009 along with the 
devaluation of the national currency.  The refinanc ing rate is currently reduced to 5% to promote 
economic activity. 
3. The economy was growing at double-digit ra tes between 2002 and 2007 with services and 
construction gradually becomi ng its leading sectors.  In 2009, the c ontraction in real GDP is expected 
to be up to 15%.  This is the combined result of  the declines in domestic c onstruction, international 
prices for non-ferrous metals and chemicals, and cash remittances from abroad.  The construction 
sector has experienced the largest contraction among production sectors. 
4. The difficulties in developing export oriented production, and growing domestic demand for 
minerals, machinery and equipment and high world prices for them have led to trade deficit of 
US$3.3 billion in Armenia in 2008.  Both exports  and imports have shrunk in 2009, and the trade 
deficit has narrowed due to a larger reduction in imports.  The growing trade imbalance had 
considerably widened the current-account deficit by 2008, and it continued to increase in 2009, due to 
an extensive decline in net private transfers.  FDI is also expected to be lower in 2009 because of the 
difficulties in source countries. 
5. Armenia has quite liberal trade policy, which is  formed of extensive WTO commitments in all 
the areas.  In particular, agriculture is character ised with minimum bound levels of domestic market 
protection and producer support.  The same is true  for domestic non-agricultural market protection.  
This has been the bases for Armenia to join the proposals of fellow members submitted in the current 
multilateral negotiations that call for taking into account the special conditions of like members.  
Recent legislative developments in the areas of ag riculture and industry are mainly related to the 
safety and technical requirements dimensions and involve adoption of European and international 
practices. 
6. Armenia has also considerably liberalized  its services markets.  Significant recent 
developments in services include: structural and operational improvements in the securities market;  
enhancement in protecting consum er and lender rights;  liberalization in telecommunications;  
development of transport networks;  and etc. 
7. Other WTO related policy developments include further measures taken to make intellectual 
property rights protection more eff ective and reliable in Armenia.  Specifically, an interdepartmental 
commission is established to develop and implement necessary mechanisms for protection.  In the 
area of government procurement, Armenia has already started negotiations for acceding to the WT/TPR/G/228 Trade Policy Review 
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Agreement and work is in progress towards bringing r espective national legislati on in conformity with 
the rules. 
8. Armenia maintains many bilateral cooperation ti es, the most significant of which are those 
with the CIS countries and the EU.  One of the key goals of the cooperation with the EU is signing of 
a deep and comprehensive free trade agreement between the two sides. 
II. ECONOMIC ENVIRONMENT 
(1) ECONOMIC POLICY  
9. In this decade, the government of Armenia c ontinued tight fiscal and monetary policy and 
managed to maintain macroeconomic stability.  Th is was backed up by the successive development of 
export-oriented sectors, such as the inward-proces sing of precious metals and stones, information 
technology, and metallurgy and mining.  Inflation h as been kept at a moderate level as the Central 
Bank of Armenia centred its policy on price stability, and the local currency, the dram, was allowed to 
appreciate.  Currently, the main policy issue is introducing new instruments for coping with a deep 
recession and beginning sustainable growth. 
(i) Fiscal policy 
10. The government had improved its fiscal position not ably before 2008-2009.  The state budget 
underlying deficit had been falling, and it reached to  dram 46.7 billion or 1.5% of GDP in 2007.  The 
revenue performance had been enhanced by im provements to the tax administration, including 
changes to tax legislation and measures to broa den the tax base.  Growing tax revenue allowed 
increased spending at the level of the governme nt's commitments under the Poverty Reduction 
Strategy Paper (PRSP), approved in  2003.  The PRSP changed the g overnment's expenditure priorities 
in such sectors as education and health, and raised public sector wages and pensions. 
11. In 2009, Armenia's budget deficit has been widening due to the economic recession and a 
significant underperformance in tax revenue.  By Au gust 2009, the deficit reached to dram 79 billion, 
equivalent to almost 4.5% of GDP .  In August 2008, the state budget had a surplus of dram 14 billion.  
The legally permitted maximum for the budget deficit is raised from 5% to 7.5% in June 2009. 
12. In January-August 2009, the state revenue amounted to dram 415.5 billion, 14% lower 
compared with the same period in 2008.  Expe nditure was at dram 494.5 billion, up by 5.4%.  
Collected taxes and duties were dram 323.4 billion, down by 18.8%.  This decline was largely the 
result of the significant reduction in the VAT reve nues, the largest source of budgetary revenue, 
which were at dram 150.1 billion by August 2009, 24.5% lower than in January-August 2008.  VAT 
is basically collected at the border on imported goods , and this fall in VAT revenue was due to the 
notable decline in Armenian imports. 
13. Meanwhile, collection of corporate profit ta x has improved.  In January-August 2009, 
corporate profit tax revenues were only 4.7% lowe r than in the same period in 2008, accounting for 
17.8% of total tax revenue.  The not so steep declin e in profit tax was mainly the result of improved 
collection due to effective measures to fight agai nst tax evasion and fraud.  The government's revenue 
from payroll and social security taxes increased to  a total of dram 103 billion by August 2009.  The 
ongoing tax reform will enable to further increase ta x collection and improve the ratio of tax revenue 
to GDP.  In January-August 2009, the ratio of ta x to GDP was at 18.4%, almost the same level 
compared with the same period in 2008. Armenia WT/TPR/G/228 
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 14. Multilateral lending institutions and the Ru ssian Federation have extended significant 
financial assistance to Armenia in the first half of  2009.  This helps the government to compensate the 
revenue underperformance and mitigat e the deficit of the state budget.  In addition, the government 
has cut its planned 2009 expenditure  by 4%, to dram 911 billion.  The planned budgetary spending on 
capital projects mostly bears this reduction.  The planned spending on pe nsions, poverty benefits, 
public-sector salaries and other social programmes were not reduced. 
15. Strict fiscal measures will continue as reveal ed in the government's approved draft state 
budget for 2010.  The budget specifies dram 859.6 b illion in total government expenditure, which is 
down from dram 945.4 billion originally set for 2009.  The state revenue target is set at 
dram 676.6 billion, 25.2% lower compared with th e initial revenue target for 2009.  The draft budget 
for 2010 assumes a public deficit equivalent to ab out 5.5% of GDP.  The government intends to 
reduce the deficit gradually in subsequent years. 
16. The World Bank, the IMF, the EU, the U.S. Millennium Challenge Corporation (MCC) and 
the Armenian diaspora have been important sour ces of foreign financing for implementing various 
social-economic development programmes.  Public external debt of Armenia has increased following 
the external loans allocated to the country in 2009.  As of July 1st 2009, total public external debt of 
Armenia reached to US$2.4 billion, up from US$1. 6 billion in December 2008.  The debt-to-GDP 
ratio of 13.2% in 2008 is likely to more than double in 2009. 
17. Despite the increase in the debt  burden Armenia is seeking further financial support.  The 
government has applied for assistance from a US$10 billion anti-crisis fund set up by the Eurasian 
Economic Community, where Armenia has observer st atus.  In September 2009, the government has 
already obtained US$500 million from the Asian De velopment Bank to inv est in expanding and 
upgrading Armenia's road network adjacent to its borders with Georgia and Iran. 
18. Generally satisfied with Armenia's economic po licies the IMF has recently disbursed the next 
US$60 million installment of its standby loan to Ar menia that was approved in March 2009.  Armenia 
suffered sharper than anticipated impact from the global economic recession, and this led the Fund to 
increase its financial support to the country by more  than one-half, to US$823 million, in June 2009. 
(ii) Monetary policy 
19. After monetary conditions had already stabilised in early 2000s, the Central Bank of Armenia 
(CBA) gradually reduced the refinancing rate to a lo w of 3.5% in 2005.  The CBA started to raise the 
refinancing rate to respond to the rise in infla tion, since 2007.  Although lending rates had fallen, 
businesses still confronted wide interest rate spre ads based on perceptions of high business risk.  
Rates are expected to fall further, as th e banking sector continues to strengthen. 
20. Since March 2009, when the refinancing rate w as increased by one percentage point to 7.75% 
along with the devaluation of the currency, the CBA has been steadily reducing the minimum cost of 
borrowing bringing it to 5% in September 2009 to promote economic activity without threatening 
price stability.  It became possible as the inflationary  risks did not fully materialize.  By the end of 
2008, the credit terms of Armenian commercial banks  had been significantly tightened due to the 
global financial crisis, and the measu re taken by the CBA has to some extent relaxed the situation as 
several commercial banks began repor ting increased lending to businesses. 
21. Financing problems of industries, particularly of the domestic construction industry, have 
contributed to their low performance and a significant drop in GDP.  On the other hand, the effect of 
the reduced refinancing rate is limited, as the domest ic debt market is underdeveloped.  As part of the WT/TPR/G/228 Trade Policy Review 
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efforts to help the construction industry the author ities took measures to stimulate mortgage lending.  
In July 2009, the CBA launched its National Mo rtgage Company (NMC) to start refinancing 
commercial banks' mortgage loans.  The NMC expects funding of €20 million from the German 
government in support of its activities.  Mortgage rat es in Armenia are expected to fall in the result of 
competition in the mortgage market. 
22. The target band for consumer price inflation is  4% (±1.5%) in 2009, and inflation has been 
kept within the band.  Despite the inflationary pressures from depreciation of the dram and increased 
regulated prices, the year-on-year inflation rate  was 3.5% in August 2009, due to the decreased 
aggregate demand and international prices on raw materi als and food.  In the meantime, it is expected 
that the average annual inflation in 200 9 will be in the range of 3.3-3.4%. 
23. To maintain financial stability the CBA had kept  the national currency exchange rate stable 
for two quarters (Q4 2008-Q1 2009), despite the declin ing inflows of foreign exchange from exports 
and remittances.  In March 2009, the CBA, being c onfident in stability of the banking system, allowed 
the dram to depreciate by 18% against the U.S. dol lar.  Since then, the CBA makes only moderate 
interventions in the local currency market to avoid excess volatility of the dram exchange rate. 
(iii) Business operating environment 
24. Continuous improvements have been made  in the business operating environment in 
Armenia, and the legislative framework for businesses is  quite favourable.  Past  developments include 
simplification of licensing and tax registration pr ocedures for companies;  simplification of the 
process for registering property in terms of the num ber of procedures, time and cost;  etc.  The 
country now ranks 43rd out of 183 economies in the World Bank's Doing Business 2010 report.  
Recent improvements have been notable in the pr ocedures for starting a business.  In particular, 
access to credit information has been strengthene d for local businesses and legal procedures for 
enterprise registration have been further simplified.  In addition, the measures to reduce the number of 
goods requiring inspection and streamline the numb er of documents needed to clear goods have 
improved trading across borders in Armenia. 
(2) THE DOMESTIC ECONOMY  
25. Armenia's economic structure has changed signi ficantly since its independence, and services 
and construction experiencing st rong growth became the leading sectors of the economy.  Their 
contribution to GDP reached to 34.7% and 26.9%, r espectively, in 2008.  The growing importance in 
services and construction has pushed agriculture's and industry's shares of GDP down to 15.8% and 
13.1%, respectively, in 2008.  Agriculture show ed improved performance in recent years owing to 
rehabilitation of the irrigation network and the deve lopment of more efficient marketing systems.  
Industry benefited from increasing investment in meta llurgy and mining, which together with energy 
led the sector growth, followed by the food processing subsector.  The economy was growing at double-digit rates between 2002 and 2007;  growth in 2008 was slowed down to 6.8%, reflecting the 
impact of the global financial crisis.  Economic  performance in 2009 has been marked by further 
difficulties caused by the crisis. 
26. In January-August 2009, Armenian economic activity in terms of real GDP contracted by 
18.4% to dram 1.76 trillion compared with the same pe riod in 2008.  The full-year contraction in real 
GDP is expected to be 12-15% in 2009 as a whole.   The sharp drop in real GDP was the combined 
result of the serious decline in the construction sect or, the significant fall in international prices for 
non-ferrous metals and chemicals in late 2008,  and critically reduced cash remittances from 
Armenians working abroad that lowered domestic  demand.  The government takes comprehensive Armenia WT/TPR/G/228 
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 measures to reduce the impact of the global financia l crisis.  These efforts are getting financial support 
from multilateral institutions and b ilateral lenders.  Short term improvements are expected in the 
construction, services and agriculture sectors to wards the end of 2009.  These improvements will 
support the economy in 2010, where real GDP is likely to expand by 1.2%. 
Impact of the crisis 
27. The construction sector has experienced the larg est contraction among production sectors.  In 
January-August 2009, the sector output dropped by 44.1%  to dram 285.5 billion, compared with an 
increase of about 12.8% in the same period of 2008.   Production of construction materials declined by 
about 30% to dram 23.8 billion.  Resumed lending by  commercial banks to domestic consumers for 
mortgages will support construction in the near future. 
28. The chemicals sector and the manufacture of je wels both declined by almost 50%.  This 
together with the sharp fall in the construction sector  contributed to a contraction of about 11.5% in 
Armenia's overall industrial production in January-A ugust 2009, to dram 393.8 billion.  Two largest 
chemical enterprises underperformed  in the result of decreased global demand for synthetic rubber 
and calcium carbide.  The largest manufacturing su bsector, food-processing, contracted by 7.1% in 
the same period, to dram 136.4 billion.  This make s up over one-third of tota l industrial production.  
The other important subsector, metallurgy, expanded by almost 12%, to dram 50.9 billion, largely 
owing to almost doubled production of aluminium foil. 
29. The mining sector was down by 3%, to dram 47.6 billion, in January-August 2009.  The 
sector particularly suffered from decreased gl obal demand for copper and molybdenum, and the 
government extended emergency loans to some of the sector enterprises.  Following the recovery in 
international metal prices, a number of mining co mpanies have raised production volumes in summer 
2009.  In January-August 2009, contributing to the industry decline was also the 14.4% drop in energy production, to dram 79.3 billion. 
30. In January-August 2009, agricultural producti on accounted for nearly 15.6% of GDP and 
declined by 1.5%.  The lower domestic demand fo r meat and dairy products was the primary reason 
for this fall.  The yields in important autumn crops, wheat and grapes, will determine the sector's 
full-year performance.  Production of grapes is expect ed to increase by about 10% in 2009.  Armenian 
wine and brandy companies, which are the main buy ers of grapes, have also experienced drops in 
their sales.  There are concerns that these comp anies may reduce their grape purchases or lower 
purchasing prices, which can cause huge difficulties to tens of thousands of grape farmers. 
(3) F
OREIGN TRADE AND PAYMENTS  
(i) Trade 
31. Armenia's exports of goods and services as a share in GDP have been below 20% in recent 
years, which is quite low in international terms.  Th at is due to the combined impact of the country's 
geopolitical situation, the non-diversified structur e of exports, and difficulties in developing export 
oriented production.  The latter concentrated  on developing export-oriented sectors with low 
transportation costs in early 2000s.  With new in vestments in the mining sector, exports of base 
metals and minerals grew by importance, since 2005.  Minerals and machin ery and equipment have 
had the highest shares in Armenia's import structure in recent years, due to high world prices for those products.  Growing domestic demand for them has al so affected Armenia's trade balance – by 2008 
the trade deficit rose to US$3.3 billion, up by 58%  from 2007 and the largest since independence. WT/TPR/G/228 Trade Policy Review 
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32. In 2009, lower domestic demand resulted in a sharp drop in imports, which in turn has 
reduced Armenia's substantial trade deficit.  In  January-August 2009, the trade deficit decreased by 
22.2% compared with the same period in 2008, to US $1.54 billion.  However, due to the double-digit 
GDP decline the trade deficit as a share of GDP is  expected to increase in 2009 to almost 23.6% from 
22.4% in 2008. 
33. Imports fell by 27% in January-August 2009, to US$1.95 billion.  Armenia's largest import 
item accounting for 18% of total imports was machin es and other industrial equipment, which fell by 
13.3%.  Reflecting decreased energy consumption, im ports of natural gas and other minerals declined 
by 23%.  Imports in the third-largest category, metals, dropped by 15.3%.  Importation of cars and 
other transport equipment declined by 52.6%. 
34. The trade deficit shrank despite a sharp contrac tion in exports by 41%, to US$409 million, in 
January-August 2009.  Exports of base metals and ore concentrates th at accounted for over one-half 
of total exports decreased by about 40%, which contri buted largely to the sharp fall in total exports.  
The recent increase in international metals prices is likely to raise foreign sales in this largest export 
category in the near future.  Exports of gem diamonds, machinery and textiles, and prepared 
foodstuffs each fell by over 40% in the same period. 
(ii) Remittance and FDI inflows 
35. In early 2000s, the current-account deficit had decreased substantially owing to rising exports, 
slower growth in imports and stable current tran sfers.  The growing trade imbalance widened the 
current-account deficit in 2006 to US$117 million, or  1.8% as a share of GDP.  By 2008 the deficit 
reached a post-independence high level of aro und US$1,355 million (11.4% of GDP).  The 
current-account deficit stood at US$240.3 milli on in the second quarter of 2009, while it was 
US$219.1 million in the same period of 2008.  As a proportion of GDP, the current-account deficit was at 15.7%, up from 12.3% in th e same period of 2008.  This increase is partly the result of the 
double-digit economic decline. 
36. The large Armenian diaspora, including tho se working temporarily abroad, has been a 
significant source of foreign exchange inflows in to Armenia.  Rising current transfer surplus 
amounted to US$709.7 million in 2006  and to US$1,163.1 million in 2008.  Despite the fall in the 
trade deficit, the current-account deficit widened because of an extensive decline in net private 
transfers.  In January-August 2009, total non-comme rcial cash transfers into  Armenia that are the 
main means of financing the trade deficit fell by  35.1%, to US$672 million.  Cash transfers from 
Armenia fell by 24.7% to US$114.7 million during the same period. 
37. Since 2002, FDI inflows to Armenia have been  increasing to record levels.  In 2007, FDI 
inflows amounted to US$669.8 million and in 2008 inflows rose by 69% to US$1.13 billion – the highest level since independence.  The Russian Federation is the main source for FDI.  Energy, telecommunications and transport, metallurgy, ci vil aviation, gas distribution are among the sectors 
that attracted investment in recent years.  Fore ign direct investment dropped sharply in the first 
quarter of 2009 and increased in the second quarter to  just US$68.3 million.  FDI is expected to be 
lower in 2009 because of the difficulties in source co untries.  The low FDI will further slow down the 
growth of exports and GDP, and keep the country ser iously reliant on inflows of remittances to fund 
its foreign payments. Armenia WT/TPR/G/228 
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 III. TRADE POLICY 
(1) AGRICULTURE  
38. In the area of agriculture, Armenia has b een implementing the WTO Agreement and its 
commitments, which include: no subsidies are ex tended to agricultural exporters;  no domestic 
support in terms of current aggregate measurement of  support is extended to agricultural producers;  
since 1 January 2009, product-specific domestic suppor t is kept below 5% of the total value of 
production of a basic agricultural product, and no n-product-specific domestic support is kept below 
the same de minimis  percentage of the value of the to tal agricultural production;  and since 
1 January 2009, sales of domestic agricultural produc tion and veterinary produc ts are subject to the 
same value added tax rate and pr ocedures applied by law to all other industries in the economy. 
39. Armenia grants considerable agricultural mark et access to its trade partners.  The simple 
average MFN applied customs tariff was 6.9% in 2008.  The simple average final bound tariff is 
14.7% with 100% tariff binding coverage.  MFN a pplied duty free tariff lines made up 32.1% of the 
total tariff lines in 2008, and respective imports re presented about one third of the total imports.  
There have been no non-tariff measures in for ce except those in the fo od safety, sanitary and 
phytosanitary areas.  Given the substantial level of its commitments in agriculture as compared to 
other WTO members and its social-economic situation,  Armenia is not in a position to take additional 
commitments in this area in the current multilateral negotiations.1 
40. Domestic agricultural support in Armenia is quite  insignificant due to the budgetary restraints.  
The average annual support expenditure administered by the Ministry of Agriculture of Armenia in 
the period of 2004-2008 was just 1.22% of the value of the total agricultural production.  Moreover, 
the bulk of this support is the state financing of "green box" measures specified under Annex 2 of the 
WTO Agreement on Agriculture.  The support to farmers that would be required to be included in the 
calculation of the current aggregate measurement of support if in excess of the de minimis level was 
just about 0.25% of the value of the to tal agricultural production in recent years. 
41. Armenia has a considerable potential for e xpanding its food production level and improving 
its strictly negative balance in food trade – food imports exceed food exports more than four times.  
For that purpose, Armenia seeks to address a number of  issues that are present in its agricultural and 
agro-processing sectors, such as: raising productivity a nd effectiveness;  enhancing industrialisation;  
improving infrastructure;  easing access to credit financing;  introducing modern technologies;  promoting innovation;  and increasing investment attractiveness. 
42. Despite the domestic issues, Armenian agri cultural products enjoy a certain degree of 
competitiveness in overseas markets, due to good tast e and high quality, and are, therefore, exported 
to 96 countries.  However, Armenian agricultura l products also face ma rket access difficulties, 
particularly related to requirements of product conf ormity with strict regulations of destination 
countries.  Meeting these regulatory requirement s is time consuming and demands too much 
investment.  Furthermore, destination countries often have more benefi cial domestic market 
protection and producer support policies, which co mplete the picture of unequal market access 
conditions. 
43. The WTO related legislative development rega rding agriculture had been completed in 
Armenia during the process of its accession to the WTO.  Recent developments are in accordance 
                                                     
 
1 Proposals submitted to the Special Session of Committee on Agriculture (documents 
TN/AG/GEN/24, TN/AG/GEN/21, TN/AG/GEN/16, and TN/AG/GEN/10 and Corr.1). WT/TPR/G/228 Trade Policy Review 
Page 12 
 
 
with the political decision of euro-integration and ma inly related to the approxi mation of legislation to 
that of the EU.  New legal acts particularly co ncern such areas as food safety, sanitary and 
phytosanitary regulation and are in conformity with  the WTO Agreement.  It is foreseen that the 
legislative work will continue in those areas al ong with implementation of institutional reforms, 
technical re-equipment of laboratories,  and development of human resources. 
(2) INDUSTRY  
44. With respect to non-agricultural products , Armenia has been implementing the WTO 
Agreement and its commitments.  Armenia grants c onsiderable non-agricultural market access to its 
trade partners.  The simple average MFN applied customs tariff was 2.2% in 2008.  The simple 
average final bound tariff is 7.5% with 100% tariff binding coverage.  MFN applied duty free tariff 
lines made up 77.5% of the total tariff lines in 2008, and respective imports represented over 80% of 
the total imports.  There are no non-tariff measures in force except those in the safety, technical 
requirements areas.  Given the substantial level of  its commitments in non-agricultural products as 
compared to other WTO members and its social-econom ic situation, Armenia is not in a position to 
take additional commitments in this ar ea in the current multilateral negotiations.2 
45. Armenia takes a number of measures to support the development of local industry sectors.  
Among the notable ones is the techno-park project for the town of Gyumri.  The project aims to build and develop knowledge based infrastructures with e ducational institutions and research centres that 
will offer opportunities for innovation, developmen t of information and high technology based 
industries, and development of small and medium en trepreneurship using high technologies.  Another 
project is the establishment of a free economic zone  in the area neighbouring Zvartnots International 
Airport, still in its design phase. 
46. A government Task Group has been established to  directly deal with support efforts to the 
real sector with the aim of:  creating new jobs ;  promoting import substitution by locally produced 
goods;  increasing exports;  expanding the usage of local raw materials;  and encouraging application of innovation technologies.  The Group consider s business projects submitted by enterprises for 
assistance and determines the level of assistance.  A ssistance will take the form of extending state 
guarantees, subsidies, direct lending, and particip ation in corporate capital.  Of 300 business projects 
received 44 of a total value of dram 14.1 billion have been approved.  Additionally, the SME 
Development National Centre provides credit guara ntees to small and medium enterprises.  The 
Centre will also start lending to SMEs through its  lending organization using a small portion of the 
funds of a US$500 million interstate loan from the Russian Federation for economic stabilization 
purposes.  The rest of the funds of the loan will be allocated to the banks for lending to various 
businesses and the Ministry of Finance of Armenia fo r lending to system-building enterprises such as 
in the mining sector. 
47. The WTO related legislative development con cerning non-agricultural products had been 
completed in Armenia by 2004.  Regarding technical  requirements, the preparation, adoption and 
application of standards and technical regulations, as well as procedures for assessment of conformity 
are all in accordance with the WT O Agreement in Armenia.  The development of standards and 
technical regulations is based on an annual progr amme approved by the government.  Between 2002 
and November 2009, overall 68 regulat ions have been approved of which 39 cover product groups.  
Technical regulations and standards on products are being harmonized with the EU directives, and 
international and European standards.  From  2002 to November 2009, overall 1,015 national 
standards were harmonized with in ternational and European standard s and entered into force.  In 
                                                     
 
2 Proposals submitted to the Negotiating Group on Market Access (documents TN/MA/W/83 and 
TN/MA/W/56/Rev.1). Armenia WT/TPR/G/228 
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 August 2008, the number of products subject to mandatory certification was reduced from 65 to 16.  
The majority of applied conformity assessment schemes correspond to the EU global approach 
modules. 
48. Armenia has developed its legislation regard ing anti-dumping, countervailing and safeguard 
measures in conformity with the WTO Agreement.  The government does not plan to initiate any 
contingency measure in the foreseen future. 
(3) SERVICES  
49. In the services area as well, Armenia has b een implementing the WTO Agreement and its 
commitments.  Armenia grants cons iderable services market  access to its trade partners.  The country 
has GATS commitments in 106 services sectors.  Give n the substantial level of its commitments in 
services as compared to other WTO members and its social-economic situation, Armenia is not in a 
position to take additional commitments in this  area in the current multilateral negotiations. 
(i) Financial services 
50. Regarding financial services, there are no legal restrictions for foreign financial organizations 
to operate in Armenia, and there are no restric tions on Armenian residents to purchase financial 
services on the world market.  Unlike domestic services providers, foreign investment firm or bank 
branches are released from the liability to meet th e capital ratio requirements, and the legislation 
requires their home country regulations be no less gen tle than that effective in Armenia.  Currently, 
the foreign participation in the capital of Armenian  banking system and insurance companies is about 
70% and 63%, respectively. 
51. Foreign insurance companies may, without estab lishing branches or subsidiaries in Armenia, 
perform insurance activities through public offering, if  they are registered in countries that are parties 
to the agreements signed within th e framework of the WTO.  Such insurance may cover only the risks 
of maritime shipping, civil aviation, spaceship la unching and freight, internat ional freight carriage, 
reinsurance and retrocession, and other services rela ted to reinsurance.  These insurance activities may 
be performed in Armenia by foreign insurance co mpanies with or without intermediaries and shall 
comply with the laws and prudential regulations of Armenia. 
52. As to the securities market, some legal amendments  are envisaged in the future to soften and 
simplify the terms of registration of entities providing financial services, and reduce the number of documents to be submitted by foreign investment ser vices suppliers and fund managers to the Central 
Bank of Armenia.  Currently, foreign investors can  invest their funds in the Armenian securities 
market by opening either personal securities accounts with the Central Depositary of Armenia (CDA) 
or securities accounts with sub-custodians in their home countries while the latter open nominee accounts with the CDA or other custodians in Ar menia.  The securities market infrastructure 
institutions, the Stock Exchange and the Central Depository, have become for-profit organizations, 
which will allow them to raise more capital a nd be competitive businesses.  The securities market 
regulation and supervision is perform ed within the unified policy of regulation and supervision of the 
financial market and institutions. 
53. The recent legislative developments in the financ ial sector also affect areas such as: consumer 
rights, rules consistency and communication rega rding bank deposits a nd consumer lending to 
increase financial intermediation;  financial media tion to effectively review consumer complaints;  
mortgage securities and securitization of assets regulati ons to help financial organizations secure more 
long-term financing, prolong mortgage loan te rms and lower their cost;  and credit bureaus for WT/TPR/G/228 Trade Policy Review 
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circulation of credit information to effectively pr otect consumer and lender rights.  Additionally, 
money pricing in non-cash payments and signed wr itten contracts already may be done in foreign 
currency on the condition that one of the parties is a non-resident legal entity or private entrepreneur. 
(ii) Telecommunications and postal services 
54. The telecommunications sector has an important role for economic, social and technological 
progress in Armenia.  The telecommunications market 's recent developments have been marked by 
liberalization measures in the cell phone services, whic h led to the termination of the exclusive right 
of ArmenTel cjsc and the entries of the second operator, K-Telecom cjsc, in 2005 and the third 
operator, Orange Armenia cjsc – a subsidiary of France Telecom, in 2009.  Improved competition in 
the cell phone subsector brought about significant reduc tions in tariffs, a better quality of service, and 
increasing geographical coverage.  Fixed tele phony services are still provided by the dominant 
operator, Armentel cjsc, although a number of compan ies have been issued licenses to provide fixed 
telephony services in Armenia.  Regarding the Internet , after the liberalization of the market in 2007 
several companies have been licensed to pr ovide electronic communication network, data 
transmission and internet access services.  Measu res are planned to improve the quality, access and 
competition. 
55. Postal communication services in Armenia are provided by the national operator, Hypost cjsc, 
in accordance with the Worl d Postal Union Convention and provisions of international agreements.  
Five other postal communication operators licensed by the Ministry of Communication and Transport 
of Armenia have a small share of the total postal communication services market.  There are also a 
number of companies that provide mail and mes senger services only, making up about 95% of the 
market in the Business-to-Consumer format.  The go vernment owns the shares of Hypost cjsc and, to 
improve its operation, has transferred its shares ' rights to Hypost Trust Management cjsc (a Dutch 
company) in 2006.  The legislative developments in th e future will be in line with the current trends of 
the development of the sector and consider the inte rnational, in particular the EU experience of its 
legal regulation. 
(iii) Transport and the borders 
56. Following the signing of the Turkish-Armenian  normalisation agreements, the reopening of 
Armenia's border with Turkey became more sens ible.  Armenia's economic benefits from this 
development would include reduction in the cost of  shipment of goods to the landlocked country and 
opportunities for Armenian exporters in Turkey's larg e market.  For the moment, Georgia is and will 
remain in the near future Armeni a's most reliable distribution channel to the world;  it currently 
processes at least two-thirds of Armenia's commercial shipments. 
57. The governments of Armenia and Georgia have planned to cut down the distance between 
Armenia and Georgian seaports.  The loan alrea dy obtained from the Asian Development Bank will 
finance the ongoing reconstruction of roads in th at area.  A further loan from the Bank will be 
provided in support of the extension of roads from Ar menia's border with Iran to southern Georgia.  
This will make Armenia the main transit route for commercial operations between Iran and Georgia.  
To complete the project the government will need  to raise extra funding from external sources. 
(4) OTHER WTO-RELATED POLICY DEVELOPMENTS  
(i) Intellectual property rights (IPR) 
58. In the area of protection of IPR, Armenia has been implementing the WTO Agreement and its 
commitments.  The main policy developments have  been directed towards improving the legislation Armenia WT/TPR/G/228 
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 aimed at harmonizing it with international sta ndards, making the public active, and making the 
intellectual property mechanisms more effective and reliable.  In 2009, the government has adopted a 
Concept Paper, which outlines the programmes and measures that the government will implement to 
ensure effective and reliable protection of IPR.  In  particular, the Paper envisages providing adequate 
assistance to SMEs and improving the measures for pub lic awareness on issues in the area of IPR.  An 
interdepartmental commission headed by the Minist er of Economy of Armenia has been established to 
strengthen and systemize the fight against infri ngements of IPR, and based on the enforcement 
practice, to develop effective and up-to-date provisions for protection of IPR. 
59. Recent legislative developments include:  a draft Law on Trademarks, which is in full 
conformity with the EU relevant directives;  a draft Law on Geographic Indications to regulate the 
registration, legal protection and u se of appellations of origin and tr aditional names of products;  and a 
draft Law on Assessment of Intellectual Propert y, which provides for independent assessment of 
intellectual property to promote the results of r esearch and development in economic activity and 
improve performance in overseas markets. 
(ii) Government procurement 
60. Armenia has taken definite steps towards ac ceding to the WTO Agreement on Government 
Procurement.  A round of negotiations between Ar menia and Parties to the Agreement on the initial 
offer of Armenia has taken place during the meeting of the WTO Committee on Government Procurement in December 2009.  Considerable wo rk is being done to bring the procurement 
legislation of Armenia in conformity with the Agreement. 
61. In particular, based on the Strategy of Improve ments of the Procurement System approved by 
the government in 2009 and procurement system assessment reports of the EU and World Bank 
experts, a draft government decree on amending the current government decree on the rules and procedures of procurement (853-N) has been appr oved and a draft Law on Procurement has been 
submitted to the government.  These drafts provide fo r significant changes in the current procurement 
system, including principal reconsiderations of powers of involved bodies and processes of 
procurement.  In the meantime, steps are taken to  introduce the electronic competition system by the 
third quarter of 2010. 
(5) B
ILATERAL AND REGIONAL ARRANGEMENTS  
62. Armenia has bilateral free trade agreements w ith the Commonwealth of Independent States 
countries, namely, with the Russian Federation, Ge orgia, Belarus, Kazakhstan, Kirghizstan, Moldova, 
Tajikistan, Turkmenistan, and the Ukraine.  Ther e are protocols signed with the Russian Federation 
and Belarus on exemptions from free trade, whic h expire in 2012.  Free trade negotiations have 
started with Egypt, Lebanon and Iran. 
63. The United States, Canada, Switzerland, Japan, and the EU have extended preferences to 
Armenia under their Generalised System  of Preferences (GSP) programmes. 
Relations with the EU 
64. The Partnership and Cooperation Agreement (P CA) entered into force in 1999 provides the 
legal framework for bilateral re lations between Armenia and th e EU.  The cooperation touches 
economic, investment, trade, and legislative areas,  among others.  Regarding legislative cooperation, 
the work has included approximation of Armenian legi slation to that of the EU within the framework WT/TPR/G/228 Trade Policy Review 
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of the 2005 National Programme for Implementa tion of the PCA and continues under the 2006 
European Neighbourhood Policy Action Plan. 
65. On the trade side, Armenia has been grante d the EU Special Incentive Arrangement for 
Sustainable Development and Good Governance, GSP+ , in the beginning of 2009.  Meanwhile, one of 
the key goals of the cooperation between Armenia a nd the EU within the fra mework of the Eastern 
Partnership initiative launched in 2008 is signing of a deep and comprehensive free trade agreement 
(DCFTA) between the two sides.  Euro-integration is among the priorities of the foreign policy of 
Armenia, and signing of a DCFTA will be an important  integration step.  The topic is currently on the 
political agenda of Armenia, and notable steps have already been taken towards launching the 
negotiations for concluding the agreement. 
66. An EU fact-finding mission has assessed Ar menia's preparedness for possible future 
negotiations for a DCFTA with the EU.  The assessme nt was summarized in a report on the issues and 
areas where additional progress is necessary.  The interested Ministries and other bodies are involved 
to address the issues, and a Work Plan is develope d.  Additionally, an internal structure has been 
created and approved by a Prime Minister decision for the preparation and implementation of the 
negotiations process. 
IV. OUTLOOK 
67. Armenia has undertaken extensive WTO commitmen ts in all the areas and has yet to reach 
such a balance between what it gives to and ge ts from the system that would best serve its 
development needs.  In the meantime, Armenia will continue taking all the necessary measures to 
ensure further implementation of the WTO Agreemen t and its commitments in all the areas in the 
future. 
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