The EU decided Monday to launch negotiations on a deep and comprehensive free trade area with Armenia to boost economic growth and investment with this Eastern European Partner.
The negotiations will cover matters that have become crucial to a modern, transparent and predictable trade and investment environment. They will not only tackle market access conditions but also focus on regulatory approximation, which will help to achieve a closer economic integration of Armenia with the EU.
“The opening of free trade negotiations mark a turning point in our trade relations with Armenia. We are entering a new phase that will bring our economic ties to a new level of depth and ambition”, said EU Trade Commissioner Karel De Gucht. “The EU is Armenia’s first trading partner and a deep and comprehensive free trade area will give Armenia a more favourable access to the European Single Market thereby helping to boost economic growth in the country.”
Commissioner for Enlargement and European Neighbourhood Policy Štefan Füle said, “This is a further sign of the strengthening of our political and economic ties. Launching DCFTA negotiations is one more step towards closer economic integration which is one of the cornerstones of our relations with countries of Eastern Partnership.”
The free trade area will be part of the broader Association Agreement which has been negotiated with Armenia since July 2010, in the framework of the Eastern Partnership and the European Neighbourhood Policy.
The EU aims to enhance political stability and security in this country by means of closer economic integration with the EU. The free trade area is expected to diversify and strengthen Armenia’s export capacity and effectively open the way to access the EU market of 500 million consumers.
Armenia needs to continue its work towards reaching a stable, transparent and predictable economic environment. This is essential to attract foreign direct investment inflows, leading to job creation and long-term growth. The most important gains for Armenia lie therefore behind the border, in regulatory reforms, and as such will impact on its long-term development perspective.
The EU has been negotiating an Association Agreement with Armenia since July 2010 in the framework of the Eastern Partnership and the European Neighbourhood Policy. The future Deep and Comprehensive Free Trade Area will be part of this Agreement, which aims at closely associating this country to the EU both in economic and political terms, in line with the Eastern Partnership objectives. The future trade relations will therefore expand significantly beyond the scope of current cooperation, set out in the Partnership and Cooperation Agreements, in force since July 1999.
The launch of the trade negotiations was conditioned upon Armenia fulfilling a set of “key recommendations”. These were issued in June 2009 and covered necessary reforms in key regulatory areas related to trade, in order to prepare Armenia for the upcoming negotiations.
Armenia made substantial reforms notably in the fields of technical regulations, sanitary and phytosanitary measures and the protection of intellectual property. The EU supported Armenia in this process, providing technical assistance in the framework of the European Neighbourhood Partnership Instrument and the Comprehensive Institution Building programme, as well as with the EU Member States’ support.
According to the European Commission’s assessment, Armenia has achieved sufficient progress in these preparations and recommended to the Member States the launch of negotiations. The Council’s Trade Policy Committee gave the Commission the green light in this regard on 17 February.
The parties will now engage in preparations for the first negotiating round to take place soon in 2012.
Current trade relations
The EU is Armenia’s first trading partner. Bilateral trade in goods amounted to €960 million in 2011.
The country already benefits from preferential access to the EU market through the EU Generalized System of Preferences with additional incentives for sustainable development and good governance (“GSP+”). This means that existing import duties are already very low, so the benefits of the future deep and comprehensive free trade area lie predominantly behind the border, in the regulatory area.