Tbilisi, Georgia, May, 2004

Tbilisi, Georgia, May, 2004

Armenia Armenia Present Situation as Present Situation as Experienced by Traders Experienced by Traders

Armenia Armenia Present Situation as Present Situation as Experienced by Traders Experienced by Traders

Foreign Trade Statistics

Year* Export( $ million)

Import($ million)

1999 231.67 811.2

2000 300.5 884.7

2001 341.8 877.4

2002 505.2 987.15

2003 678.1 1269.4

0

5

10

15

20

25

30

35

40

2000 2001 2002 2003

EUCIS

Export Structure (in % to total Export)

*Source of Data: State Statistics Department of the RA

Charts represent specific weights of individual countries in the export volume to CIS and EU countries in 2003

Trade Regime with Foreign Countries Trade Regime with Foreign Countries

FOREIGN TRADE REGIMEFOREIGN TRADE REGIME

FREE TRADEFREE TRADE MFNMFN GSPGSP

UEUE USAUSA JAPANJAPANCANADACANADA

Armenia has FTA with almost all CIS countries MFN: European Union India

USA Argentina Lebanon Bulgaria Canada Romania China Syria Switzerland Iran Vietnam

Export & Import Procedures

N-1779 Government Decree on 21st November, 2003 for export/import controls

To conduct import-export activities enterprises must be registered in a respective regional customs house as an entity involved in foreign economic activity

According to the customs procedures, the following

documents are required for customs clearance for all

imports and exports:• an invoice• a contract• consignment documents• a certificate on the country of origin (if an importer or exporter

asks for preferential treatment)

Export Cases: Contracts and Transportation

Apricots Textile Copper-molyb.

Contract Basic Data

Export accomplished by both natural and juridical persons

Ex works Ex works, contract cost based on Treatment Charge

Transportation Route

Lorries: Ararat valley (AV)-Bagratashen (B)-Larsi-North Caucuses. (2 days) Refrig. Cont.: AV-B-Poti-Novorosiysk-RF Airtransport: Europe & USA

Yerevan-Poti-Burgas-final destination (22-30 days)

Containers: Ayrum-Poti—Novorossiysk-Europe, South Korea

Wagons: Ayrum-Poti-Ilichevsk- railway- final destination Total transportation time: 22-30 days

Export Cases: Customs & Taxes

Apricots Textiles Copper-molibd.

Customs Procedures

No pre-declaration for natural persons, inspection lasts several minutes.

Temporary admission of materials –re-export of final product (change of customs code)

Predeclaration-1 day Shipment/Inspection-5-6 days

Declaration-1 day

Certificates Certificate for origin is required for judicial persons.

Phitosanitary Certificate

Approval from the Ministry of T& ED

Certificate of Origin

Certificate of Origin Certificate of conformity

Taxes Export is duty free and VAT exempted

Export is duty free

and VAT exempted Export is duty free

and VAT exempted

Import Cases: Contracts and Transportation

Pharmaceuticals Tobacco Candies

Contract Basic Data

CIP Yerevan & transport cost;

LC

CIP Yerevan; LC CIP Yerevan; LC

Transportation Route

By air, from European countries

Åurope-Poti-YerevanContainers

By air from different countries and

by land via Poti

Import Cases:Customs & Taxes

Pharmaceuticals Tabacco Candies

Customs Procedures

Customs clearance: 1,5-2 days

Pre-declaration

Declaration

Declaration of excise stamps

Customs clearance: 2 days

Certificates Certificate of Conformity (5-7 days)

Certificate of Origin Certificate of Conformity

Certificate of Origin

Certificate of

Conformity Taxes 0 customs duties, 20

% VATFixed tax: VAT, Excise tax and customs duties per 1000 unit

If from CIS countries-0% customs duty and 20 % VAT

Otherwise, 10% customs duty and 20% VAT

Conclusions: General Constraints Regulatory areas

- 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

Taxes and taxadministration/regulation

Infrastructure

Policy instability/uncertainty

Corruption

Complexity, non-transparencyof government policies

Price instability/inflation

Customs/foreign traderegulations

% of dissatisfied respondents

2000200120022003

Regulatory area/2003 % Average Rating*

Taxes and Tax Administration

83.6 3.26

High Tax Rate 59.4 2.70

Infrastructure 74.0 2.95

Customs 27.3 1.43

Sanitary Regulations 16.4 1.47

Standards and Certification

16.3 1.38*1 stands for no obstacle, 4-major obstacle: “Regulatory and Administrative Costs in Armenia/2003” FIAS Report

CONCLUSIONS:IMPORT There is no problem in partner identification

and contract conclusion

Artificial complications imposed by Customs-2,5 points

Excessive paperwork (procedures for obtaining necessary certificates for agricultural products, where two overlapping lists exist, in order to avoid putting additional documentary burden on traders)- 2.24 points

Explicit or implicit requirement to give bribes-2.16 points

On average, the process of import customs clearance lasts 4.8 days taking 2.4 person-days of management time and 4.3 person-days of staff time

Application of transaction value method as a

primary method for the valuation of goods imported

Very high transportation costs

EXPORT

There is no problem in partner identification and contract conclusion

Artificial complications imposed by Customs-2.57 points

Excessive paperwork -2.40 points

Explicit or implicit requirement to give bribes- 2.30 points

On average, the process of export customs clearance lasts 7 days taking 2.3 person-days of management time and 2.8 person-days of staff time

47.2% of export firms are eligible for VAT refund, which leads to excessive time lost

There are certain complications in obtaining Certificate of Origin (Form A)

Very high transportation costs

Tbilisi, Georgia, May, 2004

Tbilisi, Georgia, May, 2004

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