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Brussels, 24 July 2013
EU-Armenia Deep and Comprehensive Free Trade Area
The Deep and Comprehensive Free Trade Area (DCFTA) between the EU and Armenia is a further step in developing Armenia's economic relations with the EU.
In the framework of the Eastern Partnership, the EU started negotiations on an Association Agreement with Armenia in July 2010 and on the DCFTA in May 2012. The DCFTA, which will form part of the Association Agreement, aims at strengthening the trade and investment performance of both economies, while facilitating Armenia's progressive integration with the EU economy of 500 million consumers.
In accordance with the basic rules of a WTO-compatible free trade area, the DCFTA envisages that the vast majority of customs duties on goods will be removed as soon as the Agreement enters into force. As regards services, the DCFTA provides for a broad set of commitments that go beyond the EU and Armenia WTO General Agreement on Trade in Services (GATS) schedules. This will serve to create trade opportunities between EU and Armenia to the benefit of both economies. Intended as an ambitious upgrade of current trade relations, the DCFTA also covers rules that frame trade, such as intellectual property rights, rules of origin as well as customs and trade facilitation. It embraces provisions on sustainable development, making sure that growth in trade does not come at the expense of the environment or social and labour rights. A transparency chapter provides disciplines regarding the availability of information and minimum standards for consultations with stakeholders on DCFTA-related domestic legislation
Furthermore, the DCFTA offers Armenia a framework for modernising its trade relations and for economic development. An extensive harmonisation of laws, norms and regulations in various trade-related sectors will create the conditions for aligning key sectors of the Armenian economy to EU standards. Especially sanitary and phytosanitary standards will be targeted, in a move to create an Armenian food safety environment that is similar to EU standards. Moreover, Armenia will adapt several laws of concern for industrial goods, focusing on areas that are central for domestic safety and consumer protection.
A Trade Sustainability Impact Assessment study, conducted by an independent consultant, laid out the likely impact of the DCFTA and the necessary flanking measures that could be required to accompany the reforms in Armenia. The study predicts that both Armenia and the EU can expect to gain from a closer bilateral trade relationship. In the long run the national income gains for Armenia are estimated at €146 million. These gains imply a 2.3 per cent increase in Armenia's GDP. Key to reaping the positive effects is the reduction of non-tariff measures.
The national income gains for the EU are estimated at €74 million.
Looking at the trade impact of the DCFTA, the effects on trade are significant, with a 15.2 per cent increase in Armenian total exports and an 8.2 per cent increase in Armenian total imports in the long run. The DCFTA will thus lead to an improvement in Armenia’s trade balance in relative terms.
Link to the study: http://tsia.ecorys.com/armenia/
The implementation of the DCFTA and related reforms will require adequate financial support by the EU and sharing of know-how with Armenia. The EU has already been assisting Armenia in this regard before the launch of negotiations in the framework of a special Comprehensive Institution Building programme (2011-2013) within the European Neighbourhood and Partnership Instrument. It included financial assistance as well as trainings and advisory activities (e.g. twinning, TAIEX).
Bilateral assistance of EU Member States also takes place in coordination with EU efforts. Further significant assistance, devoted specifically to the implementation of the DCFTA, is planned in the new European Neighbourhood Instrument (2014-20).
For further information
On EU trade relations with the South Caucasus countries including Armenia: