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EU Not Worried About Armenia's CIS Free-Trade Deal

Senior EU official Gunnar Wiegand (left) and Armenian Deputy Foreign Minister Zohrab Mnatsakanian attend a joint news conference in Yerevan on October 26.
Senior EU official Gunnar Wiegand (left) and Armenian Deputy Foreign Minister Zohrab Mnatsakanian attend a joint news conference in Yerevan on October 26.
YEREVAN -- A senior European Union official says Armenia's decision to join a free-trade zone comprising Russia and other former Soviet republics will not hamper its signing of a more far-reaching deal with the EU, RFE/RL's Armenian Service reports.

Gunnar Wiegand, the European Commission's director for Eastern Europe, the South Caucasus, and Central Asia, announced on October 26 that the Armenian government had pledged to address EU concerns preventing the official launch of negotiations on the creation of a Deep and Comprehensive Free Trade Area (DCFTA) between Armenia and the EU by the end of this year.

The DCFTA is a key element of an association agreement offered to Yerevan as part of the EU's Eastern Partnership program covering six ex-Soviet states. It envisages not only the mutual lifting of customs duties but also the harmonization of Armenia's economic laws and regulations with those in the EU.

Armenian Prime Minister Tigran Sarkisian signed the free-trade deal with his counterparts from Russia, Ukraine, Belarus, Kazakhstan, Kyrgyzstan, Moldova, and Tajikistan of the Commonwealth of Independent States (CIS) after talks in St. Petersburg on October 21. Sarkisian described the signing as "historic" upon his return to Yerevan.

Wiegand, who leads an EU team holding association talks with Armenia, insisted that the deal initiated by Russia would not be an obstacle to the planned DCFTA.

"I can confirm that from our perspective there is no problem or incompatibility between negotiating a Deep and Comprehensive Free Trade Agreement and being in association with the European Union on the one side and having free-trade agreements with other countries on the other side," he said after completing a seventh round of Eastern Partnership negotiations with Armenian officials in Yerevan.

"We knew for a long time what will happen in St. Petersburg because this is a rationalization of a web of bilateral free-trade agreements which existed already in the [CIS]," Wiegand said.

Echoing statements by Armenian officials, Wiegand also argued that the St. Petersburg agreement did not run counter to Armenia's membership obligations to the World Trade Organization (WTO).

Armenian Reforms Called For

Despite reporting major progress in the more-than-year-long negotiations on the association agreement with Armenia, the EU has still not set a date for the start of separate DCFTA talks.

The European Commission wants Yerevan to first abolish the discretionary authority of the Armenian customs service to ignore payment invoices submitted by importers and determine the market value of imported goods in accordance with its own "control pricelists."

Speaking to RFE/RL late last month, a senior commission official in Brussels said that authority was "arbitrary" and ran counter to WTO rules.

The legal mechanism, in place since the 1990s, is supposed to complicate fraud in the payment of customs duties and value-added tax at the border. But Armenian entrepreneurs regularly dealing with the customs consider it a breeding ground for corruption. Some of them say, though, that customs officers now tend to accept invoices issued in EU member states.

The European Commission is also demanding changes in the collection of excise duties from domestic and imported alcohol. It says the existing tax rates and procedures discriminate against importers of alcoholic beverages.

Wiegand discussed the matter at a separate meeting with Sarkisian and Economy Minister Tigran Davtian earlier on October 26. He said he received "every possible assurance" that the Armenian government will enact changes sought by the EU by the end of this year.

Wiegand said this would pave the way for the official start of Armenia-EU free-trade talks.

"Of course we have to see it happen before this positive assessment [by the European Commission] will be done," he cautioned at a news conference with Deputy Foreign Minister Zohrab Mnatsakanian, the chief Armenian negotiator.

"Our objective is to make every effort to accelerate this process," Mnatsakanian said in reference to the DCFTA.

Both men also reported major progress in their discussions on other areas of the future association agreement. They said they raised to 19 the number of negotiating "chapters" agreed upon by the two sides.

"I am very pleased that we were able today to advance much further in our negotiations on giving EU-Armenia relations a much deeper and much more ambitious framework," Wiegand said.