Armenia’s Import and export

Armenia’s possible integration with the Customs Union of Russia, Belarus and Kazakhstan is one of the most discussed political topics in Armenia. Even though this issue is discussed from the political point of view, its economic side is even more important. The choice between the Customs Union and Association Agreement with Europe first of all is motivated by economic interests. In defining Armenia’s interests between these two options experts refer to economic interests Armenia may benefit from.

Supporters of integration policy with the European Union say that EU is Armenia’s largest partner for export. For example, 37% of Armenia’s export in 2012 was imported by EU. For better understanding of Armenia’s export potential we need to discuss not only the groups of countries that import most, but also the main directions of export from Armenia. The chart in this publication is made based on information retrieved from the Armenian State Customs Committee and reflects Armenia’s economic potential.

The Customs Committee publishes foreign trade indicators according to separate countries. In the chart these countries are grouped in Customs Union and EU countries. The chart includes not all products exported to those countries but the ones with higher customs price (37 types of products). These products are the milestone of Armenia’s export as they cover 90% of the entire export capacity.

The chart shows the main markets each of those products targets. For example, the Customs Union consumes 76.1% of Armenian winery products, EU countries consume 17%, and the rest is exported to third countries. The main market for Armenian cigarettes is neither the Customs Union nor EU. Most Armenian cigarettes are consumed in third countries (mostly Iraq). Armenian cigarettes are not exported to Europe. Customs Union countries’ import of Armenian cigarettes covers 7% of the entire export volume.

The chart illustrates that EU does not import food products from Armenia. In 2012 Armenia’s export of food products amounted $286.6 million, and Europe’s import was only 16.6 million. The three countries of the Customs Union imported food products with a value of 205 million from Armenia.

Neither EU nor the Customs Union are important markets for medical products made in Armenia. In 2012 Armenia exported medical products with a value of 5.9 million, with 1.1 million imported by the Customs Union, 240k by EU countries, and 4.4 million by third countries (Georgia’s import in this volume was 2.5 million).

The European Union is the main buyer of mining products from Armenia. In 2012 Europe imported 93.1% of Armenia’s copper export. Bulgaria imported copper for 127.7 million. Switzerland imported Armenian copper for 45.7 million. Zinc and molybdenum were exported to Europe only.

Armenia’s mining export is about 400 million dollars annually, 90% out of which is exported to EU. Half of Armenian diamond export goes to Europe, too.

It depends on Armenia’s priorities which foreign policy is more beneficial. If Armenia’s priority is cattle breeding, Iran is the best trade partner. If Armenia is more interested in exporting foods and beverages, the best trade partner is the Customs Union. If Armenia wants to rely on mining export in the future, the best partner would be the European Union.

In consideration of the factors above there are things that are strange. For example, many of the civic groups that are against integration with the Customs Union are environmental protection civic groups that act against mining industry. The paradox is that these civic groups want to integrate with the European Union, but meanwhile develop trade relations with the Customs Union. Even if these groups want the best for Armenia, in real life one cannot sit on two chairs.

By Babken Tunyan