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Armenia Denies Finalizing Free-Trade Deal With Iran

Armenia's Economic Minister Nerses Yeritsian
Armenia's Economic Minister Nerses Yeritsian
YEREVAN -- Armenian officials have denied reports that Yerevan and Tehran have finalized a free-trade agreement in an effort to expand bilateral economic ties, RFE/RL's Armenian Service reports.

"The Tehran Times" newspaper reported on September 13 that a trade agreement will be signed during Armenian Economic Minister Nerses Yeritsian's upcoming visit to Iran. Citing the official IRNA news agency, the English-language daily said the issue was discussed last week by Iranian Commerce Minister Mehdi Ghazanfari and Armenian Ambassador to Iran Grigor Arakelian.

But an Armenian government source on September 14 dismissed the report, saying that the two governments are still holding "preliminary discussions" on a free-trade deal and that talk of its impending signing is "premature."

"The Iranians very much want to have it signed, but the terms they are offering are not beneficial for us," the source, who requested anonymity, told RFE/RL. He did not give further details.

He added that such an agreement "will definitely not be signed" during Prime Minister Tigran Sarkisian's visit to Iran, which is scheduled for the second half of October. He and Armenian officials could not clarify whether the signing will take place after this trip, something that is reportedly planned by Yeritsian but not yet confirmed by the Armenian Economy Ministry.

The Iranian side is also likely to raise the matter with Armenian Foreign Minister Eduard Nalbandian. The latter was due to fly to Tehran later on September 14 for talks with his Iranian counterpart, Manuchehr Mottaki, and other Iranian officials.

Mottaki stressed the importance of free trade between Armenia and Iran in an interview with published on September 2. He said it "would help to elevate our relations to a proper level."

He also made a case for the signing of such a deal when he visited Yerevan earlier this year. Armenian-Iranian trade would skyrocket as a result, he said.

But the scale of that trade remains rather modest in both absolute and relative terms. According to the National Statistical Service (NSS), it totaled $97.6 million and accounted for only 4.5 percent of Armenia's overall external exchange in the first half of this year. By comparison, the volume of Armenia's trade with the United States was slightly higher.

The Iranian market remains protected by extremely high import tariffs, a sharp contrast to Armenia's liberal trade regime, one of the reasons why Armenian exports to Iran make up only a fraction of bilateral trade. Armenian businessmen have long complained about that disparity.

Iran, which unlike Armenia is not a member of the World Trade Organization, expressed readiness in 2001 to set duty-free import quotas for nearly 40 types of Armenian products, including machines, chemicals, and cigarettes. No relevant intergovernmental agreement is known to have been signed in the following years, however.

Armenian-Iranian trade should rise significantly in the coming years with an anticipated surge in Iranian natural-gas supplies to Armenia and the implementation of more joint energy projects planned by the two governments. Those include the construction of a major hydroelectric station on the Armenian-Iranian border and a third high-voltage transmission line linking the two countries' power grids.