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41МИРОВАЯ ЭКОНОМИКА
REGIONAL ANALYSIS IN THE WORLD TRADE ORGANIZATION (WTO) CONTEXT BY THE EXAMPLE OF ARMENIA Parsadanyan T.S. (Republic of Armenia) Email: Parsadanyan238@scientifictext.ru
Parsadanyan Tatevik Smbatovna - Candidate of Economic Sciences, Junior Researcher, MICKAYEL KOTANYAN INSTITUTE OF ECONOMICS NATIONAL ACADEMY OF SCIENCES OF THE REPUBLIC OF ARMENIA, YEREVAN, REPUBLIC OF ARMENIA
Abstract: despite the regional conflicts with Turkey and Azerbaijan, implementation of WTO-compliant laws and regulations in the countries of the region can contribute to the development of economic co-operation with neighbouring countries. WTO membership would enhance the process of legislative and regulatory harmonization. Armenia may also use its WTO commitments as a reference for the country's participation in various regional integration initiatives in the region. The WTO dispute settlement mechanism as well as active participation in the multilateral trade negotiations within the WTO framework would provide Armenia with opportunities for defending its economic interests. Keywords: World Trade Organization, high transportation costs, logistic costs, limited transparency, computerization of customs, economic interests.
РЕГИОНАЛЬНЫЙ АНАЛИЗ В КОНТЕКСТЕ ВСЕМИРНОЙ ТОРГОВОЙ OРГАНИЗАЦИИ (ВТО) НА ПРИМЕРЕ АРМЕНИИ Парсаданян Т.С. (Республика Армения)
Парсаданян Татевик Смбатовна - кандидат экономических наук, младший научный сотрудник, Институт экономики им. Микаела Котаняна Национальная академия наук Республики Армения, г. Ереван, Республика Армения
Аннотация: несмотря на региональные конфликты Армении с Турцией и Азербайджаном, реализация законов и нормативных положений, действующих в рамках ВТО в странах региона, может способствовать развитию экономического сотрудничества с соседними странами. Членство в ВТО будет способствовать процессу гармонизации законодательной и нормативной базы. Армения может также использовать свои обязательства в рамках ВТО в различных инициативах региональной интеграции. Механизм для разрешения споров ВТО, а также активное участие в многосторонних торговых переговорах в рамках ВТО предоставят Армении возможности для защиты своих экономических интересов. Ключевые слова: Всемирная Tорговая Oрганизация, высокие транспортные расходы, логистические издержки, ограниченная прозрачность, компьютеризация таможни, экономические интересы.
Armenia is a land-locked country in the Southern Caucasus region which borders Azerbaijan, Georgia, Iran, and Turkey. Among these neighbours, Georgia and Turkey are World Trade Organization (WTO) members. However, the borders with Azerbaijan and Turkey are closed which means that, at present, the only land access to and from Armenia is via Georgia and Iran. Iran is under embargo by most of the rest of the world, and transport through Georgia is plagued by bribery, restricted travel time, insecurity, and the poor quality of roads and railways. Because of the situation in Georgia, trucking companies based in Armenia cannot transport goods competitively to the Black Sea or to Russia. The physical factors of high transportation costs,
conflict-induced border closures distort the physical geography forcing trade flows to travel via circuitous routes. This further elevates transport costs.
Among many regional conflicts, two are of paramount importance for Armenia:
1) a decade-old dispute between Armenia and Azerbaijan over the Nagorno-Karabakh region had led to a war between the two countries. An armistice was reached in 1994, but the borders between the two countries are closed and trade, officially at least, does not exist.
2) Seriously strained relations between Turkey and Armenia dating back to World War I, when large numbers of Armenian population perished triggering a mass exodus out of the country. Currently, the Turkish-Armenian border is closed, forcing trade to the west to take place via a circuitous route through Georgia [3].
The opening of the borders would result in significant savings in transport logistic costs. If peace agreements were concluded, transportation savings for Armenia would amount from 6.4 million to 8.4 million U. S. dollars. Moreover, if the Armenian-Turkish borders were opened, transport costs between Poti and Yerevan would drop by 30-50 percent [3]. In sum, if conflicts were resolved and regional cooperation achieved, trade facilitation measures would be a driving force for trade expansion in the Caucasus.
Another factor affecting free market relations is the lack of harmonized and cost-effective transport regulations and duties. All Caucasus countries apply road transport quotas that, for example, limit the annual number of vehicles allowed to enter or pass through their territory. Armenia and Georgia impose high transit fees on foreign vehicles, while Azerbaijan does not. In October 2000, it cost the equivalent of $245 in local currency for a truck with a capacity of 10-20 tons to transit across Georgia, and the equivalent of $197 for a similar vehicle to transit across Azerbaijan [3]. Georgia and Azerbaijan are under an agreement that allows a 50 percent tariff reduction for all goods traveling within member countries. Armenia, on the other hand, is not under this agreement. These differences in regulations reduce railway shipments across borders throughout the Caucasus region.
The major problems common to all Caucasus countries include (1) a lack of regional harmonization of customs practices, (2) limited transparency in clearance regulations and procedures and problems with corruption, and (3) limited application of information technology in border clearance systems. Among these problems, corruption and the imposition of unofficial fees at the border are most frequently reported by the private sector as the most serious issues [3]. According to one estimate, unofficial fees accounted for around 6-13 percent of the total cost of transport on the railway from Armenia to Georgia [2].
The WTO accession process and the computerization of customs have so far fallen well short of improving the quality of customs services. In defiance of the WTO rules, reference prices arbitrarily set by the government are used, and customs procedures have yet to achieve the WTO standards of transparency. Finally, there is a built-in asymmetry in the customs/traders relationship, hugely favoring the latter and offering little resort to WTO-determined rules for the settlement of disputes in cases such as differences in the valuation of a consignment [2].
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 [4].
As customs are the immediate actors in the process of foreign trade, the administration of customs procedures needs further improvement as well. The government should take steps for harmonizing the customs system with Georgia which is a crucial country for Armenia. This means that the two states should cooperate more intensively toward making their customs system fully compliant with WTO standards. Moreover, the delivery of
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customs services should be transparent and consistent with the existing legal framework of Armenia, thus of WTO as well. The further introduction of technological innovations and the computerization of the customs system will decrease the time of long bureaucratic proceedings and will help to reduce corruption risks.
Despite the regional conflicts with Turkey and Azerbaijan, implementation of WTO-compliant laws and regulations in the countries of the region can contribute to the development of economic co-operation with neighbouring countries. Georgia and Turkey are already members of the WTO, and Azerbaijan is in the accession process. WTO membership would enhance the process of legislative and regulatory harmonization. Armenia may also use its WTO commitments as a reference for the country's participation in various regional integration initiatives in the region. During the process of acceding to the WTO Armenia undertook considerable legal and institutional reform and made a comprehensive set of commitments. The WTO dispute settlement mechanism as well as active participation in the multilateral trade negotiations within the WTO framework would provide Armenia with opportunities for defending its economic interests.
References / Список литературы
1. «Armenia Trade Diagnostic Study: Poverty Reduction and Economic Management Europe and Central Asia Region», 2002. The World Bank on the Web. [Electronic resource]. URL: http:// www.worldbank.org/ (date of acces: 13.04.2018).
2. «Armenia: The Caucasian Tiger: Background Papers.», 2006. Poverty Reduction and Economic Management Unit: Europe and Central Asia Region. The World Bank on the web. [Electronic resource]. URL: http:// www.worldbank.org/ (date of acces: 13.04.2018).
3. «Trade Facilitation: Challenges and Opportunities in Eastern Europe and the Former Soviet Union.» (2004) The World Bank on the web. [Electronic resource]. URL: http://www.wto.org/ (date of acces: 15.04.2018).
4. «Trade Policy Review: Report by the Secretariat: Armenia.», 2010. The World Trade Organization on the web. [Electronic resource]. URL: http://www.wto.org/ (date of acces: 15.04.2018).
