tsia of the dcfta between the eu and armenia · 2016-08-04 · 1 tsia of the dcfta between the eu...

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TSIA of the DCFTA between the EU and Armenia

Civil society workshop in Yerevan, Armenia Please note that the reporting of the workshop is therefore the sole responsibility of the consultants. Date: 17 April 2013 Location: Golden Palace Hotel, Yerevan, Azatutyan Ave. 2/2,Yerevan –

0037, Republic of Armenia Ecorys-CASE: Nora Plaisier, Jurgen Vermulen, Wojciech Paczynski,,Ugne

Steliulionyte EC Delegation Armenia: Onno Simons

TSIA of the DCFTA between the EU and Armenia 1 List of workshop participants 2 Workshop Agenda 3 Summary of the workshop 4

1.1.1 Opening address by the EC Delegation representative 4 1.1.2 Opening address by the EC Delegation representative 4 1.1.3 Background of the DCFTA and Trade SIA 4 1.1.4 Main findings Interim Report-I: Macro results / sector results 5 1.1.5 Main findings Interim Report-II: Additional social, human rights and environmental analyses 6 1.1.6 Sector and horizontal issues selection 7 1.1.7 DCFTA impacts on sector specific issues for Armenia 7 1.1.8 DCFTA and sustainable development – social and environmental impacts 10 1.1.9 Wrap up and conclusions 11

Presentation slides of the workshop 12

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List of workshop participants

First name Surname Organisation Garnik Vagharshakyan Confedaration of Trade Unions of Armenia (CTUA) Samvel Nazaryan Urban foundation for Sustainable Development Veronika Danielyants Analytical Centre on Globalization and Regional Cooperation

(ACGRC) Anna Sarkisyan Caucasus Research Resource Centres Lena Harutyunyan Republican union of employers of Armenia Mariam Sargsyan “Blackstairs Energy Armenia” LLC Shushanik Barseghyan Republican Union of Employers of Armenia Viktor Yengibaryanv GIZ Lilit Apujanyan SME Development National Centre of Armenia Rima Bekirski TOSP Suren Bekirski TOSP Robert Kadaryan The National Citizens’ Initiative Hovsep Khurshudyan The National Citizens’ Initiative Makar Araqelyan Association of freight forwarders Erik Gyulazyan Trade Adviser British Embassy Yerevan Karen Gevorgyan SME Development National Centre of Armenia Aram Jivanyan "Free Citizen" Civic Initiatives Support Center Valeriu Razlog EBRD Hayk Khalatyan ARKA Ara Danielyan DSIF Anna Nahapetyan ANAC Mileta Aristakesyan National Association of Consumers Silva Adamyan Ecodashinq Shant Khlghatyan Armenpress Gayane Avetisyan Newsletter Alla Mkheyan National Association of Consumers Heghine Manasyan The Caucasus Research Resource Center

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Workshop Agenda

Time: 17 April 2013, 9:00AM – 5:00PM Venue: Golden Palace Hotel, Yerevan, Azatutyan Ave. 2/2,Yerevan – 0037, Republic of Armenia Time Programme Who 9:00- 9:30 Registration / coffee & tea 1.1.1 9:30-9:35 Opening address EUD 1.1.2 9:35-9:40 Introduction workshop Ms. Nora Plaisier,

project team leader 1.1.3 9:40-10:10 Background study – approach, methodology, process Ms. Nora Plaisier 1.1.4 10:20-10:50 Main findings Interim Report – I Mr. Jurgen

Vermeulen 10:20-11:00 • Macro results / sector results 11:00-11:20 Coffee & Tea 1.1.5 11:20-12:00 Main findings Interim Report – II Mr. Wojciech

Paczynski • Additional social, human rights and environmental

analyses

1.1.6 12:00-12:30 Sector and horizontal issues selection Ms. Nora Plaisier • Selection criteria and preliminary selection phase 2

(from interim report)

12:30-13:30 Lunch 1.1.7 13:30-14:30 DCFTA impacts on sector specific issues for Armenia Chair: Arthur

Khachatryan • Sector 1: Textiles & Clothing

• Sector 2: Primary metals sector • Sector 3: Spirits

Mr. Suren Bekirski Mr. Arthur Khachatryan

14:30-14:45 Coffee & Tea 1.1.8 14:45-15:45 DCFTA and sustainable development – social and

environmental impacts Chair: Grigor Hayrapetyan

• Part I: Labour mobility issues and the DCFTA • Part 2: Environmental issues and the DCFTA

Mr. Garnik Vagharshakyan Ms. Silva Adamyan

1.1.9 15:45-16:00 Wrap up & Conclusions and way forward Ms. Nora Plaisier

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Summary of the workshop

1.1.1 Opening address by the EC Delegation representative Mr. Onno Simons, First Counsellor at EU Delegation in Armenia, introduces himself, explains the scope and the purpose of the workshop and thanks all participants for their interest and participation. Mr. Onno Simons also gives an update on the status of the negotiations: • The 5th round of the EU-Armenia DCFTA negotiations started this week and is taking place in

Yerevan at this moment. • One more round will be needed to finalise the overall negotiation. Several chapters of the

negotiations have already been finalised. • Negotiation are planned to be finished in November 2013. • The implementation of the DCFTA will commence next year.

1.1.2 Opening address by the Trade SIA study team Ms. Nora Plaisier, team leader of the Trade SIA study of the DCFTA between the EU and Armenia, opens the workshop on behalf of Ecorys-CASE and presents the programme of the day.

1.1.3 Background of the DCFTA and Trade SIA The Ecorys-CASE team presents information on the background of the DCFTA and the Trade SIA study. The methodology and approach of the Trade SIA study conducted by Ecorys-CASE is also presented according to the presentation (included in the second part of these minutes). Questions and feedback on ‘the background of the DCFTA and Trade SIA’ Mr. Simons: Is the study going to be translated into Armenian? Ecorys-CASE: The complete study will only be available in English. However, the executive summaries are translated into Armenian and Russian and are available on the project website. Q: Does this study plan to facilitate the process of regulatory approximation, i.e. aligning our standards to European level? We experience a lot of obstacles in trading products such as meat, fish and honey. Hence, I would like to see how our trade could be facilitated for these products. Ecorys-CASE: The Trade SIA study only analyses the impacts on various levels of implementing the DCFTA. Hence, Ecorys-CASE is not tasked to assist the implementation of the DCFTA and in particular the approximation process. However, the EU already provides assistance to Armenia in a number of areas to facilitate the approximation process. However, we are very interested to hear from you how the process of approximation could be made easier or more efficient, so that we could potentially include these as recommendations to the Commission. Q: One of the areas of difficulty lies in protecting the name of Cognac in Armenia as we understand. Could we expect some support from Ecorys-CASE in the process of protecting this name? Mr. Simons: Armenia became a member of the WTO in 2001. Becoming a member of the WTO implies accepting the obligation to protect the geographical indications of wines and spirits by preventing the use of a name for a spirit if that spirit does not originate from the location indicated by the name (such as cognac). In Armenia’s case, the name thus has to be changed. The DCFTA will reinforce this principle. Q: What are the primary data sources for the quantitative analysis of this study? Ecorys-CASE: The main data source for the quantitative analysis is the GTAP 8.0 database (which is used for the CGE model) and 2010 household survey data from the Armenian Statistical office for the additional social analysis. You can find all data sources in the report.

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Q: Are the workshop organisers responsible for advising on the practical issues of the DCFTA, such as certification and documentation? Ecorys-CASE: We are not responsible for that part of the DCFTA, as this project is a study. Other (technical assistance) projects might provide support in these areas. If you have any specific issues or recommendations with respect to these issues, we would however be pleased to take them aboard in our study.

1.1.4 Main findings Interim Report-I: Macro results / sector results The Ecorys-CASE team presents the main findings on macroeconomic and sector level, see the slides included in part 4 of this document. Questions and feedback on the ‘main findings of the interim report-I’ Mr. Simons: As I understand, the overall impact on macro level only takes into account trade flows, but does not include the impact of FDI flows. Could you please clarify this? Russia is namely one of the main investors in, for example, the communications and services sector in Armenia. Ecorys-CASE: Investment flows are indeed included in the CGE model, and this becomes visible in the difference between short-term and long-term effects. The long run effect namely takes into account capital reallocations in the economy, including investments. However, investments from abroad (FDI) is not included in the model. Q: Do you take into account the EU-Georgia DCFTA in this study? Ecorys-CASE: The EU-Georgia DCFTA and the EU-Moldova DCFTA are taken into account in this analysis. Both of these agreements are included in the ‘status quo’ or baseline scenario assumed in our study. That implies that all the effects reported are the changes expected with these other two DCFTAs already in place. Mr. Simons: Your presentation showed that the imports of textiles & clothing will become cheaper. Does that mean that Turkish textile imports to Armenia will become cheaper as well? Ecorys-CASE: The effect presented by us is an overall effect for the entire sector. This effect shows that the average costs of all imports in this sector will go down. However, as there is no official trade between Turkey and Armenia, the DCFTA EU-Armenia will not have any effect on Turkey –Armenia tariffs. In addition, the analysis shows that the result is driven by lowering the tariffs between EU – Armenia trade flows. Q: It seems that footwear is not included in your analysis, but this sector has historically been very important for Armenia. Ecorys-CASE: The textiles & clothing sector presented in our analysis also includes the footwear sector. Indeed, looking at the data, the footwear sector seems to play an important role in this sector. Hence, the effects of the DCFTA on the footwear industry are included in the results for the Textiles & Clothing sector. As the Textile and Clothing sector will be studied in more detail in the next phase, we will also look at footwear in this part of the analysis. Q: Is the food sector also included in the analysis? Ecorys-CASE: Yes, this sector is also included in the analysis, but we did not present it during the presentation, as we only show the sectors with the highest changes in relative and absolute terms. We invite you to look at the full report available online for the effects for this particular industry. We also have some copies here, please let us know if you want to have a look. Q: I would like to see how the DCFTA will affect the financial services flows from the EU to Armenia. This aspect is namely very important for Armenian’s development.

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Ecorys-CASE: According to our analysis, there is no significant increase in exports of the financial services. Imports of the financial services from the EU to Armenia, on the other hand, are going to increase by 16.6%. We recommend looking at the interim report to see all results of the analysis. Q: Would you be able to present the changes in the absolute terms for the indicators presented? Ecorys-CASE: Where possible, we have presented the changes also in absolute terms. However, for employment it is only possible to present relative changes (in shares), since the model assumes full employment and hence no increase or decreases in total employment figures.

1.1.5 Main findings Interim Report-II: Additional social, human rights and environmental analyses The Ecorys-CASE team presents the main findings from the additional social, human rights and environmental analyses in line with the slides included in section 4. Questions and feedback on ‘main findings interim report-II’ Q: In your conclusions on environmental and social impact, have you taken into account the interest in future exploration of natural resources such as oil and gases? Ecorys-CASE: No, we do not explicitly take exploration of natural resources into account since these activities would not show up as economic activity in terms of output or trade yet. Q: In Armenia, the informal employment is around 50%. Knowing this I doubt that the accuracy of your analysis on labour mobility in the study since it is impossible to take the flow of labour in the informal sector into account. Q: Moreover, regarding the environmental analysis, did you take into account changes from gas to wood as an energy source? Q: What is the difference between short and long run in terms of years? Q: Lastly, will your study provide policy recommendations in this field? Ecorys-CASE: We do take into account informal employment dynamics, however not quantitatively as you mentioned. We do use household survey data that come from the Armenia’s statistical office in our labour mobility analysis, but complement the analysis on informality of labour more qualitatively. Changes from gas to wood energy sources have not been investigated in our analysis, so we are unfortunately not able to present results on this trend, but it is an interesting point. The timing of what is the long run can not be characterised by a specific number of years, but more on the time it takes to reallocate capital and people between sectors. Depending on how fast this adjustment goes in a country, it could be more or less than 10 years. Lastly, policy recommendations will be indeed be part of the reporting of our study. Any suggestions for recommendations from your side are welcome. Q: What are your prognoses on the development of Armenia’s fiscal debt? What would be the expected dynamic of the external debt by the year 2020? Ecorys-CASE: This is difficult for us to predict, since there is no indicator included in the model on the development of the external debt. However, the model predicts higher economic growth and a growth in exports. The absolute value of external debt could thus be expected to decrease. Q: Have you done the impact assessment of DCFTAs for other countries? For example, have you conducted the assessment for Bulgaria, Cyprus, and Greece also? Lastly, what is the margin of error that is present in the model? Ecorys-CASE: The countries that you mention are members of the EU and hence do not have DCFTAs in place. Before becoming members they had association agreements and accession agreements, which are not similar to a DCFTA. Nevertheless, we have done similar trade impact assessments for other free trade agreements between the EU and third countries, such as EU-

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India, EU-Ukraine, EU-Georgia/Moldova. Lastly, the margin of error present in the model cannot be captured by a simple percentage like in a statistical model. The limitations of the CGE model are presented in the report and the technical specifications of the CGE model are also included in an annex of the report, if you wish to look those up. Q: Do you have, or are you aware of, any programmes that would help us to decrease the pollution in the mining sector and help us to meet the required standards? Ecorys-CASE: Unfortunately, looking at this technical assistance aspect of the DCFTA is beyond the scope of the project. Thus, we are not able to help here. However, we are interested to hear from you what issues and pollution problems are present in this sector. Q: Does the DCFTA tackle issues such as corruption and monopoly or is it going to be taken care of in another agreement? Especially corruption is an important issue that affects the Armenian economy. Ecorys-CASE: The DCFTA has its legal base in the Association Agreement. The DCFTA will not directly tackle these issues since it focuses on liberalising trade in goods and services, although provisions on competition policy are included in the DCFTA, which may have some effect. However, issues like corruption might be covered in more depth in the Association Agreement and in other agreements,. Hence, it will be up to the Armenian government and citizens to tackle these issues and fully reap the benefits from liberalised trade. Q: Do you think that after signing the DCFTA, the textiles & clothing sector will be able to compete on price with China and Turkey? A (from participant): Armenia cannot compare itself with these countries in terms of volume. At the moment, there are still obstacles to enter the world markets, but we should find (and have) our niche in the market. Q: The DCFTA is only one of the elements of the Association Agreement. What is the share (or importance) of the DCFTA in the Association Agreement? Ecorys-CASE: This cannot really be expressed in percentage terms, as it would be a subjective judgement since for people focusing on liberalising trade, the DCFTA will be a very important element. For others that value social and environmental cooperation more, the DCFTA might be less relevant. However, in terms of trade aspects, it is clear that the DCFTA covers the most important issues. Q: Do you consider GMO seeds to be an issue for trade with the EU? Ecorys-CASE: We know that GMOs in the EU have always been a sensitive topic, and that the EU is not in favour of GMOs. It is therefore unlikely to be an issue in the current DCFTA negotiations..

1.1.6 Sector and horizontal issues selection The Ecorys-CASE team presents the screening and scoping exercise applied in the study. Please see the accompanying slides (at the end of the document) for the details of this assessment. The result of this analysis shows that Spirits, Primary metals, Textiles & Clothing and Labour mobility have been chosen as sectors and issues that will receive more focus in the last phase of the study. The second part of the workshop treats these issues in more detail.

1.1.7 DCFTA impacts on sector specific issues for Armenia

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Guest speaker 1: Textiles & Clothing (Mr. Suren Bekirski) • The light industry of Armenia has been a significant factor in Armenia’s recent economic

development process. • Light industry has a significant social impact mostly on the uneducated and unskilled citizens. • The Light industry association represents approximately 30-35 manufactures in Armenia. • This industry is not that centralised around Yerevan as other industries. The Vanadzo region,

for example, houses many promising businesses. • In Vanadzo there are 4-5 larger textile businesses and 5-6 SMEs that could become serious

local actors in enforcing economic development in these provinces. • Other than the Light Industry association that I represent, my own textile & clothing company

employs some 150 workers. With this number, we are one of the largest producers in Armenia. Without any additional capital investments, we could still grow to around 240 work places.

• Light industry is not a large business in terms of income, but the income that it provides is relatively stable. It is a significant tax contributor, as around 25-30% of our income goes to taxes.

• I do, however, need to mentioned the issue of transparency here. Much of the sector’s turnover is still not transparent and is traded via the informal economy. This is also a larger problem: around 95% of businesses tend to be not transparent in Armenia.

• In terms of compliance with labour regulations, I trust that we could be more reliable than Asia. When you would like to trade with the EU, you need to operate transparently. At the moment, in our sector only some 30-35% of businesses are operating in a transparent manner.

• The businesses that do not operate in a transparent manner only produce for the internal market, though.

• Aligning to EU standards will not cost too much money, because our company currently already export to the EU. Hence, our compliance costs will be low.

• Nationwide, the market is very small, the products for the army are the most important. Therefore exports are very important for the sector.

• According to me, the Light Industry sector in Armenia also has a healthy open market competition, definitely compared to other Armenian economic sectors.

• The DCFTA would give the possibilities for this sector to innovate and develop. Discussion Q: How do you protect the labour rights in your organization? Do you pay for over-hours? Mr. Bekirski: We are one of the few organisations in Armenia that has a trade union with a merit-based policy. The trade union organizes all sorts of things. We buy cinema and concert tickets to our employees. The labour inspectors come to our office approximately four times a year and we have not received any complaints. Yes, we do pay for extra working hours, but not a lot. We do not have children working in our factories. Even though the labour conditions are still far from the EU labour conditions, I think we are managing quite well to protect the labour rights of our workers. Q: Where do you think that most of the expansion in the textile & clothing sector would take place? In which markets, for example? Mr. Bekirski: We choose our markets based on market availability and profitability. For me personally, the EU is the most desirable market. In this market, you do not have very high prices or big incomes, but reliable trading partners and a real assessment of the quality. We can get contact with traders quite easily in the EU market. We cooperate with a Slovenian company for example, that organizes sales to former Yugoslavia countries and Italy. The Russian market is also attractive in terms of possible income, but it is at the same time twice as risky and unpredictable. The US market is hardly accessible for us. The local market is too small.

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Q: Is there any cooperation between government and businesses to unlock the potential of the DCFTA? Mr. Bekirski: I do not know which businesses our government is currently protecting. There is at least no need to protect the exporters. Exporters have access to trade with the EU markets and they are protected by the international laws. The government would probably have to protect the importers. Of course, there are geographical obstacles for Armenia to export, as we are a landlocked country. Business support (e.g. concessional credits) like it is offered in some other countries to promote exports would very much help the Armenian industry. Q: In the textiles & clothing sector, China and Turkey are very well represented in the EU and in the rest of world. I can imagine that the Armenian manufacturers will be able to compete in terms of quality, but the price of our goods will be higher. What kind of competitive advantage do you see in Armenia? Do you benefit from the GSP+ system? What opportunities do you see after DCFTA? What additional opportunities would the DCFTA will bring, in particular, to your business? Mr. Bekirski: From my business perspective, I do not see any negative impacts of the DCFTA. We could expand our business without the need for additional investments. Still, Turkey is an important competitor. Turkey is a member of the EU Customs Union, while Armenia is trying to become one. We are currently also not profiting much from the GSP preferences that exist since even though the goods are produced in Armenia, we do so with Turkish raw materials. Since Turkey and Armenia do not have strong inter-governmental relations, we cannot prove the origin of our raw materials. Hence, they do not classify for the preferences, because the products do not classify for the A category certificate. We are only able to get the B category certificate. Q: You have mentioned that your company can expand capacity by up to 240 employees without additional investments. But do other businesses in the sector also have the same situation? Or would they need additional capital investments in order to expand? A: I would say that the potential is much higher than it is presented in your results. I can ensure that the sector has potential to grow by 5-6 times in a very short time period. The expansion of the Textiles & Clothing sector will be unavoidable once we sign the DCFTA and the investments will follow automatically. First, big locomotors need to pull the sector and the SMEs along. Guest speaker 2&3: Primary metals sector and Spirits (Mr. Arthur Khachatryan) Mr. Khachatryan presents the primary metals and spirits sector according to the slides included in this document. Afterwards, he chairs the discussion. Discussion Q: If we export Armenian cognac to other countries, say China and Russia, do we still need to change the name to comply with the rules? Mr. Arthur Khachatryan: Yes, this is not only relevant for exports to the EU, it does not matter were you export. The name of Cognac cannot be used anymore for the Armenian brandy. Q: What kind of prospective do you see for Armenian producers? How they are going to approach the issue of the name change, are they going to rebrand cognac? Mr. Arthur Khachatryan: Some of them have already changed the labelling and started calling it brandy. We also notice that they are marketing their products much more according to the brand names, rather than ‘Cognac’ or ‘Brandy’. Hence, it is difficult to judge what the impact of the DCFTA on this sector will be. Q: What kind of local policy do we have to facilitate the exports of primary metals to the EU? Mr. Arthur Khachatryan: In order to increase our exports, we need to focus on the final products, such as metals. Still, environmental problems will be an obstacle in this sector.

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1.1.8 DCFTA and sustainable development – social and environmental impacts

Mr. Grigor Hayrapetyan chairs a discussion on the social and environmental impacts of the DCFTA. First, Mr. Vagharshakyan speaks about labour mobility. Guest speaker 1: Labour mobility issues and DCFTA (Mr. Garnik Vagharshakyan) • Some days ago, a truck with 30 tonnes of Armenian cognac went on fire in Georgia. • This case highlights that transportation and its security are very important for free trade. • The possible entrance of the Carrefour supermarket into Armenia’s market brought some

concerns among oligarchs of Armenia. This case highlights that internal competition issues need to be addressed for reaping the benefits of trade.

• We want to be competitive in exporting goods to the EU. In order to do that, we need to have competitive specialists that could organise such export.

• Due to the geographical position of Armenia, transportation costs will be significantly higher for Armenia compared to other countries such as Georgia.

• Employment, education and training of these specialists are the responsibility of the higher education sector in Armenia. However, the effectiveness of these institutions is not very high yet. Education services need to improve in order to make Armenia a competitive country compared to other EU countries.

• The EU is able to solve some political problems and give support to Armenia. The EU already gives support to Armenia through the ENP programme. Compared to other countries under the ENP cooperation, Armenia has a additional obstacles due to its geographical situation.

• There are significant reforms taking place in the trading unions, which aim to maintain the identity of the trading unions, while changing the economical structure. The reforms are directed at creating trade unions that are real social partners with the government and with employers.

• Some population groups are specifically targeted by trade unions: e.g. pensioners (about 600 thousand people) and public officials that are funded from the public finances.

Q: What is the situation with trade unions in Armenia? How many citizens have you actually protected over the last years? What kind of measures have you taken? In my opinion, trade unions are very idle in Armenia. Mr. Garnik Vagharshakyan: Trade unions represent the aggregated opinion of every citizen in Armenia. Q: In 2011, the EU and Armenia signed the circular migration agreement. When we talk about the DCFTA, do we mean only goods and services flows, or also labour and capital migration? What kind of impact will the DCFTA have on labour migration and on education sector policies? Mr. Garnik Vagharshakyan: According to the Bologna higher education system, Armenia’s higher education system will need to approximate to the EU standards. This implies that Armenian certificates will be recognized in the EU and it will allow students and professors migration. However, this does not allow the migration of all specialists, because of visa and other requirements for people mobility. Still, Europeans can come to Armenia without any barriers. Ecorys-CASE: The DCFTA does not mean that capital and labour can move freely between the EU and Armenia. In services trade there is likely to be some easy in movement of natural persons (mode 4, but for temporary stay only. The DCFTA does not facilitate the free movement of people, like between EU countries. Q: What about internal labour mobility related to national security issues?

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Mr. Garnik Vagharshakyan: The internal labour movement could also pose a problem in Armenia. Yerevan might become a city-state since a large part of Armenia’s economy is concentrated in Yerevan. This could potentially be dangerous. Q: What kind of barriers does Armenia experience that could hamper the internal mobility of labour? Mr. Garnik Vagharshakyan: If you look at the labour structures we see that there is a lot of shortages in terms of specialization. There is a big gap between the education system and needs of businesses. Employers often need specific professions. We almost lost our entire vocational system after the collapse of the Soviet Union. We are trying to establish it, but at the moment there is still a weak link between education and businesses’ needs. Managers are often employing relatives instead of skilled labour experts. We can only produce competitive goods when we have competitive professions. Guest speaker 1: Environmental issues and the DCFTA (Ms. Silva Adamyan) Ms. Adamyan presents the environmental issues in Armenia in relation to the DCFTA: • Land, water, air pollution are the main environmental issues in the mining sector. • Mining companies have a significant impact on the environment and on health. • There are 10-20 species registered in the red book that are affected by the mining sector, but

Armenian mining companies continue to produce. • Mining cannot be a priority for Armenia as it produces too much damage to Armenia’s

environment. Due to high pollution of mining sector, we are not ready to expand the mining sector. We need to protect Armenia’s beautiful natural resources and beautiful nature. We should promote tourism.

• The ecosystem is disturbed. Armenia’s rivers and lakes are highly polluted. There are no white fish in the lakes left anymore.

• • Yerevan is also becoming an industrial area.

1.1.9 Wrap up and conclusions The discussion during the workshop on the trade impact assessment of the DCFTA between the EU and Armenia is summarised and concluded by Ms. Plaisier. She thanks all participants for their input. She invites all stakeholders to continue to provide inputs through www.tsia.ecorys.com/armenia and [email protected].

mailto:[email protected]

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Media coverage

• http://www.panarmenian.net/eng/photoset/all/4153 • http://shamshyan.com/arm/H7GCrZW8dQ.html • http://www.panarmenian.net/eng/news/154552/ • http://www.armtown.com/news/am/pan/20130417/154552/ • http://nt.am/am/news/180092/ • http://www.youtube.com/watch?feature=player_embedded&v=loXT1HFvXLc • http://www.armeniatv.am/hy/news/37193 • http://www.armnewstv.am/hy/1366192281

http://www.panarmenian.net/eng/photoset/all/4153

http://shamshyan.com/arm/H7GCrZW8dQ.html

http://www.panarmenian.net/eng/news/154552/

http://www.armtown.com/news/am/pan/20130417/154552/

http://nt.am/am/news/180092/

http://www.youtube.com/watch?feature=player_embedded&v=loXT1HFvXLc

http://www.armeniatv.am/hy/news/37193

http://www.armnewstv.am/hy/1366192281

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Presentation slides of the workshop

See next page

Trade Sustainability Impact Assessment (TSIA) in support of the DCFTA negotiations between the EU and the Republic of Armenia Workshop Yerevan, 17 April 2013

http://www.case-research.eu/en


Workshop agenda

Time Programme

9:00-9:30 Registration / coffee &tea

9:30-9:35 Opening address by the EU delegation

9:35-9:40 Introduction to the workshop

9:40-10:20 Background study – approach, methodology, process

10:20-11:00 Main findings Interim Report-I: Macro results / sector results

11:00-11:20 Tea/Coffee break

11:20-12:00 Main findings Interim Report-II: Additional social, human rights and environmental analyses

12:00-12:30 Sectoral and horizontal issues selection

12:30-13:30 Lunch

Workshop agenda Time Programme

12:30-13:30 Lunch

13:30-14:30

DCFTA impacts on sector specific issues for Armenia •Textiles & Clothing (Mr. Suren Bekirski ) •Primary metals sector (Mr. Arthur Khachatryan) •Spirits (Mr. Arthur Khachatryan)


14:45-15:45

DCFTA and sustainable development – social and environmental impacts •Labour mobility issues and DCFTA (Mr. Garnik Vagharshakyan) •Environmental issues and the DCFTA (Ms. Silva Adamyan)

15:45-16:00 Wrap up (conclusions and way forward)

16:00-16:10 Closing remarks

Background of the EU – Armenia DCFTA

Trade relation EU – Armenia key figures in 2011 • EU is Armenia’s most important trading partner – 32.5% of total trade. • Other major Armenia’s trade partners: Russia (20.3%), China (7.7%), Iran (5.9%),

US and Ukraine (4.5%) • EU share of Armenia’s total exports 45.5% (account for EUR 436 million) • EU share of Armenia's total Imports 29.3% (account for EUR 315 million)

Trade policy between the EU and Armenia • Context relations EU-Armenia: Eastern Partnership – European Neighbourhood

Policy (ENP). In 2006, the EU Armenia ENP Action Plan was adopted and has been implemented since then.

• Association Agreement under negotiation since July 2010: political dialogue; free trade zone; broader economic cooperation. • As part of the Association Agreement, negotiations on a Deep and Comprehensive Free Trade Area (DCFTA) started in May 2012.

Background of the EU – Armenia DCFTA

Preferential market access EU-Armenia

• Armenia has preferential access to the EU market: Since 1999 EU-Armenia bilateral trade relations are regulated by a

Partnership and Cooperation Agreement; In 2006-2008 General System of Preferences (GSP). This agreement

provided preferential access to the EU market in the form of zero duties on 3,300 products and reduced tariffs for another 3,900 goods. In 2009-2013 General System of Preferences Plus (GSP+). This

upgrade allows Armenia to export to the EU 7,200 products without any customs duties.

Negotiations on a DCFTA ongoing; 5th round of negotiations this week.

What does a DCFTA entail?

• Liberalisation of trade: oTariff liberalisation oServices non-tariff liberalisation oReduction of other non-tariff measures (NTMs)

• NTM reduction through regulatory approximation, mainly in following fields: o Sanitary and Phytosanitary measures (SPS o Technical Barriers to Trade (TBT) o Intellectual Property Rights (IPRs) o Competition o Trade Facilitation (customs) o Investment Protection o Public Procurement

• Policy tool European Commission DG Trade – conducted by independent consultants.

• Standard overall TSIA methodology for all EU FTA negotiations conducted.

Main aim

assessing potential economic, social and environmental impacts of the DCFTA

• Used as supporting evidence to negotiation teams of both EU and the Republic of Armenia.

• Basis for policy recommendations and flanking measures.

Background of the Trade SIA

Background of the Trade SIA

TSIA methodology consists of 4 main phases:

Phase 2: Sectoral analysis – present stage of study

• Scenario analysis and CGE modelling • Additional quantitative and qualitative analyses social / HR / environmental • Screening and scoping analysis

Phase 0: Inception

Phase 1: Overall analysis of the sustainability impacts – present stage of study

• In-depth analysis of selected sectors and horizontal issues • Causal Chain Analysis (CCA) • Literature review, Partial Equilibrium modelling, consultations, interviews

Phase 3: Policy recommendations and flanking measures

• Causal Chain Analysis • Consultation and dissemination (throughout all phases) • Final report Consultation and dissemination (throughout all phases)

Approach to the study - schematic

1. Screening and scoping

2. Scenario analysis & CGE

3. Add’l quantitative & qualitative analysis

› Social (quantitative & qualitative) › Human rights (qualitative) › Environmental (quantitative &

qualitative)

4. Sectoral analysis

› Sectoral analysis › Horizontal issues

5. Causal Chain Analysis

6. Consultation and dissemination

Methodology phase 1 – Overall analysis

• CGE takes into account all economic linkages • CGE compares the situation with and without DCFTA

• The results from the CGE model are obtained in different detail:

›Macro – economic results ›Sector - specific results ›Short-run ›Long-run ›Effects on 3rd countries

Computable General Equilibrium (CGE) modelling

Methodology phase 1 – Overall analysis

• A scenario is developed that tries to imitate the outcomes of the negotiations:

How do we estimate the impacts of the DCFTA?

# Liberalisation element Scenario

1 Tariff liberalisation • All tariffs eliminated in trade between the EU and Armenia

2 Services Non Tariff Measures • Overall liberalisation in services trade of average 15% across services sectors

• 25% spill over effect to third countries for Armenia

3 Other Non Tariff Measures (such as e.g. standards)

• Reductions in Trade Cost Equivalents

• 25 % spill-over effect to third countries for Armenia

Methodology – quantitative social and environment analysis

• Combine results on changes in relative prices and wages from the CGE model

• and household budget survey data

• to see distribution of welfare effects, changes in poverty, inequality, etc.

• Combine results on changes in sectoral outputs from CGE

• With what is known about sectoral air emissions intensity

• To see changes in emissions and their decomposition: scale & composition effects

• Also – costs due to these emissions (mainly via effects on human health, ecosystems, etc.)

Additional quantitative environmental effects (air emissions only)

Additional quantitative analysis of social effects

Methodology phase 2 – In-depth sector analysis

Screening & scoping exercise

• Based on the results of the overall analysis (phase 1), 4 sectors and/or horizontal issues are selected to be analysed in more detail.

• Selection criteria: › Cr 1: Initial importance for economy (GDP, employment, trade shares) › Cr 2: Economic impact from DCFTA › Cr 3: Social / environmental importance and impact / Human rights › Cr 4: Stakeholder issues of special importance › Cr 5: Strategic importance of sector/issue in the negotiations

Methodology phase 2 – In-depth sector analysis

Sectoral analysis

• In-depth analysis based on: › Causal Chain Analysis (CCA); › Literature review; › Interviews and consultations; › Selected additional quantitative analysis (partial equilibrium modelling).

• Timing: April - May

Methodology phase 3 – Policy recommendations and flaking measures

Policy recommendation, flaking

• Analysis based on: › Causal Chain Analysis › Consultation and dissemination (throughout all phases) › Final report

• Timing: June - July

• Continuous consultations are a key element of the study. • The inputs for stakeholders contribute to a higher quality of an impact

assessment.

Consultation activities undertaken so far

Methodology phase 1 & 2 – Consultations

Activities Detail

1 Electronic consultation and documentation Continuously tsia.ecorys.com/armenia Facebook 2 newsletters

2 Public meeting EU 12 December 2012 24 June 2013

3 Workshops in Armenia 17 April (Yerevan)

4 Attendance of other relevant conferences, workshops etc.

No specific events

5 Personal interviews with individual representatives of civil society and stakeholders

Continuously

Website: tsia.ecorys.com/armenia

Email: [email protected]

Telephone: +31-104538781

Facebook page: Trade-sia/Armenia

Methodology phase 1 & 2 - Consultations

Provide your input by contacting us:

› Your inputs on sectoral analysis by 17 May, 2013

TSIA in support of negotiations of DCFTAs between the EU and Armenia

Workshop presentation By: Nora Plaisier, Wojciech Paczynski, Jurgen Vermeulen, Ugne Steliulionyte Ecorys – CASE consortium

Main findings Interim Report – I Macro results / sector results



Workshop agenda

Time Programme









12:30-13:30 Lunch


12:30-13:30 Lunch

13:30-14:30



14:45-15:45




Overall impacts at macro level

Variable EU Armenia EU Armenia

Short Run Long Run National Income, Million € 37.4 62.0 74.2 146.1 GDP, % change 0.0 1.1 0.0 2.3 Consumer prices, % change 0.0 -1.2 0.0 -0.05 Wages, less skilled % change 0.0 1.4 0.0 2.6 Wages, more skilled % change 0.0 1.6 0.0 2.7 Total Imports, % change 0.0 4.9 0.0 8.2 Total Exports, % change 0.0 10.7 0.0 15.2

Macroeconomic effects in the short run and long run

The macroeconomic effects for the EU are negligible





National income gain for Armenia €146 million in the long

run, equal to a 2.3% change in GDP





Trade flows for Armenia increase significantly





Purchasing power in Armenia will increase: consumer prices

drop, whereas wages go up

Overall impacts at macro level The largest effects are due to reductions in NTMs

Overall impacts on macro level

No major significant spill over effects for third countries

Variable

Geo

rgia

Mol

dova

Rus

sia

Turk

ey

Ukr

aine

Iran

Chi

na

RoW

Long Run

National Income, Million € -3.7 -0.2 -7.3 -0.6 2.5 -2.9 -8.7 -146.2 GDP, % change -0.04 -0.1 0.0 0.0 0.0 0.0 0.0 0.0 Consumer prices, % change -0.02 0.00 0.0 0.0 0.0 0.0 0.0 0.0 Wages, less skilled % change -0.04 -0.01 0.0 0.0 0.0 0.0 0.0 0.0 Wages, more skilled % change -0.05 -0.01 0.0 0.0 0.0 0.0 0.0 0.0 Total Imports, % change -0.08 -0.01 0.0 0.0 0.0 0.0 0.0 0.0 Total Exports, % change -0.10 -0.01 0.0 0.0 0.0 0.0 0.0 0.0

Main impacts at sector level

Expected impacts on value added and employment

Overall macroeconomic results are positive, but sectoral results differ

-Competititive sectors - Growth in output & employment

- Non competitive sectors - Decline in output, employment

Discussion on the impact of the DCFTA on the various economic sectors: 1. Absolute and relative impact on value added and employment 2. Absolute and relative impact on trade


Relative changes Value added baseline

% change in value added

% change in skilled employ.

% change in unskilled employ.

+ Textiles and Clothing 0.1% 207.1 192.7 193.3 + Other machinery and equipment 0.2% 49.8 46.2 46.4 + Personal and recreational serv 0.0% 15.7 12.8 13.0 + Electronics, computers 0.0% 8.3 6.5 6.7 + Business and ICT 0.4% 7.7 5.6 5.8

Absolute changes Value added baseline

change in value added

change in skilled employ

change in unskilled employ.

+ Construction 34.2% 0.62 0.01 0.07 + Textiles and Clothing 0.1% 0.28 0.23 0.43 + Utilities 8.2% 0.16 0.07 0.06 + Trade 8.8% 0.14 -0.01 0.00 + Public and other services 11.0% 0.11 0.06 0.02

Winning sectors due to the DCFTA


Relative changes Value added baseline

% change in value added

% change in skilled employ

% change in unskilled employ.

- Motor vehicles 0.0% -22.7 -22.5 -22.4 - Vegetables oils and fats 0.0% -10.7 -11.0 -10.8 - Livestock and Meat Products 0.2% -6.5 -7.1 -6.9 - Ceramics, cement, etc 0.0% -6.0 -6.6 -6.4 - Other manufacturing 0.8% -5.9 -6.7 -6.5

Absolute changes Value added baseline

change in value added

change in skilled employ

change in unskilled employ.

- Other processed food 3.5% -0.11 -0.18 -0.21 - Beverages and tobacco 3.2% -0.08 -0.08 -0.14 - Other manufacturing 0.8% -0.05 -0.03 -0.06 - Wood, paper, publishing 0.7% -0.04 -0.03 -0.05 - Fabricated metals 1.0% -0.04 -0.05 -0.07

Losing sectors due to the DCFTA

Expected impacts on trade

Relative changes Total export value baseline

% change in total exports

% change in exports to the EU

+ Textiles and Clothing 20.5 362.9 -4.3 + Other machinery and equipment 64.4 69.4 87.0 + Personal and recreational serv 6.2 36.1 78.3 + Air transport 37.4 23.6 48.8 + Electronics, computers 24.8 20.8 13.4

Absolute changes Total export value baseline

Absolute change in total exports

Absolute change in exports to the EU

+ Textiles and Clothing 20.5 74.28 -0.61 + Other machinery and equipment 64.4 44.67 1.08 + Primary metals 221.4 12.78 8.41 + Air transport 37.4 8.81 7.23 + Business and ICT 41.6 7.84 8.50

Winning sectors due to the DCFTA


Relative changes Total export value baseline

% change in total exports

% change in exports to the EU

- Forestry products 4.7 -0.4 -0.3 - Other manufacturing 118.6 -0.6 9.5 - Beverages and tobacco 47.9 -0.7 -4.4 - Communications 35.9 -1.5 3.2 - Motor vehicles 8.2 -7.9 0.4

Absolute changes Total export value baseline

Absolute change in total exports

Absolute change in exports to the EU

- Forestry products 4.7 -0.02 0.00 - Beverages and tobacco 47.9 -0.32 -0.16 - Communications 35.9 -0.55 0.65 - Motor vehicles 8.2 -0.65 0.00 - Other manufacturing 118.6 -0.72 5.53

Losing sectors due to the DCFTA


Relative changes Total imports value baseline

% change in total imports

% change in imports from, the EU

+ Dairy products 18.1 72.4 182.4 + Livestock and Meat Products 37.5 35.1 198.0 + Other crops 10.3 33.1 58.8 + Beverages and tobacco 82.8 24.9 85.7 + Other processed food 88.8 24.8 60.4

Absolute changes Total imports value baseline

Absolute change in total imports

Absolute change in imports from the EU

+ Other processed food 88.8 22.02 13.68 + Beverages and tobacco 82.8 20.59 16.34 + Primary metals 235.4 15.40 12.81 + Livestock and Meat Products 37.5 13.18 7.50 + Dairy products 18.1 13.12 9.27

Changes in imports due to the DCFTA

Coffee & Tea



Main findings Interim Report – II:

Additional social, human rights and environmental analyses



Workshop agenda

Time Programme









12:30-13:30 Lunch


12:30-13:30 Lunch

13:30-14:30



14:45-15:45




• Q: how will households welfare (consumption) be affected by the DCFTA? • Approach: building on CGE results & combining them with household-level data • Welfare measure used: aggregate expenditures per adult equivalent

Average HH: 0.7% 1st Quintile: 0.4%

› Consumption / price effects (LR): › Changes in food & non-food

expenditures › In-kind income (e.g. agri self-

production) › Cash income (sale of agri-

products

› Income/ wage effect (LR): Wage changes

› Overall (LR): Average HH: 2.5% 1st Quintile: 2.3%

Average HH: 1.8% 1st Quintile: 1.7%

Social effects – additional analysis (micro simulation exercise)

Absolute poverty: • Headcount: short-run & long-run decline (by 1.4 & 1.8% points to 34%) • Poverty gap: down 1.4 and 1% p in SR & LR

Extreme poverty:

• Headcount: down by 0.3%p in SR & LR (to 2.7%) • Poverty gap: down by 0.8 & 0.1%p in SR & LR

Inequality increasing only minimally: • Relative poverty - Headcount & gap: constant in SR, up 0.1%p in LR • Decile dispersion ratio up from 5.16 to 5.20 in LR

› Vulnerable groups: low education; unemployed or inactive, children; urban areas (except Yerevan)

› Summary: welfare gains overall, fairly evenly distributed; ~6-7% may experience welfare losses

Social effects – additional analysis (micro simulation exercise)

• Social (labour, HR) issues part of trade-relations already (GSP+)

• Difficult to comparatively assess the current situation in the sphere of labour rights

• Informality of labour – a major issue

DCFTA + likely to contribute to job creation (and necessitate more employment

reallocation) +/-0 labour rights: combination of chances and risks – overall impact likely small (rather positive) – unclear impact on informality +/-0 social security schemes +/-0 social dialogue (other factors will be decisive) +/-0 equality: very weak effects widening inequality vs. higher living standards

and incentives for implementation of international conventions

Social effects – additional qualitative analysis

DCFTA mainly affects economic and social rights, no significant effects on cultural civil or political rights. Positive effects: Right to adequate standard of living, Right to food, Right to health, and Right to just and favourable conditions of work, particularly fair wages, Right to work => main reasons: increases in wages, lower consumer prices and SPS. No clear negative effects but possible pressure on: Right to be protected from forced labour, Right of the child to be protected from economic exploitation, Right to work => Main reasons: increased competitive pressure; labour re-allocations

Important:

• provisions of the DCFTA to mitigate HR risks • effective implementation of HR treaties

Human rights effects

Issues: • soil pollution lack of functioning (solid) waste treatment systems; • surface water pollution lack of proper waste water treatment & earlier

human interventions in major water reservoirs (Lake Sevan); • air pollution in cities old vehicle fleet and polluting heating systems • land degradation and deforestation leading to losses to biodiversity

poor agricultural practices and industrial and mining activities

Armenia ratified CITES to meet GSP+ conditionality • DCFTA should maintain incentives to implement conventions, unlikely to

strengthen them much

Environmental effects – qualitative analysis

Agriculture & forestry: • Land use falling, output declining slightly (as predicted by the CGE model) • Scope for improving agricultural practices (SPS reform, rising living

standards, etc.)

Mining: • Scope for increasing environmental pressure (mainly due to higher output)

Various industries: • Some indication of reallocation towards sectors with lower environmental

pressure (suggested by CGE) but overall effect unclear

Construction: • Some scope for positive effect (energy efficiency)

Environmental effects – a view from the sectoral perspective

SOx (and CO2): DCFTA impact mainly on emissions of these; particulate matter (PM) emissions even falling

Composition effects plays positively (especially in LR): emissions falling i.e. the structure of the Armenian economy shifts to less polluting

one External costs: only SOx and CO2 have a role: DCFTA estimated to

add 2.6% to external costs of air emissions in the LR: ~EUR 7 million (SOx) & EUR 2 million (CO2)

Environmental effects – modelling of air emissions

Overall social effects – a chance for positive outcomes if certain conditions met relative prices and wages play positively for 93% of population Labour re-allocations – may be difficult and associated with social

costs – they are also a condition for DCFTA gains DCFTA Job creation; zero or minimally positive impact on labour

rights; any impact on social dialogue? HR effects: mostly economic and social rights affected; not cultural, civil

or political rights; effects likely small overall; combination of chances & risks

Environmental effects likely to be small Output expansion may somewhat increase environmental

pressures a chance for DCFTA to make growth greener

Social, HR and environmental effects – summary



Sector and horizontal issues selection :

Selection criteria and preliminary selection phase 2 (from interim report)



Workshop agenda

Time Programme









12:30-13:30 Lunch


12:30-13:30 Lunch

13:30-14:30



14:45-15:45




Screening

• Aim: to identify key sectors or horizontal issues for further in-depth analysis (up to four in total)

• Selection criteria applied in screening and scoping exercise:

Number Criterion

Criterion 1 Initial importance for economy (GDP, employment, trade shares)

Criterion 2 Economic impact from DCFTA

Criterion 3 Social / environmental importance and impact / Human rights

Criterion 4 Stakeholder issues of special importance

Criterion 5 Strategic importance of sector/issue in the negotiations

Selection of sectors and horizontal issues

Sectors Cr 1: Initial

importance

Cr 2: Economic impact

Cr 3: Social/HR/

Environmental

Cr 4: Civil Society

Cr 5: Importance for negotiations

Grains and Crops

Veg, fruits, nuts, oilseeds

Other crops ✓

Animal products ✓

Forestry products ✓

Fish products

Energy

Other minerals ✓ ✓ ✓ Livestock and Meat Products ✓ ✓ ✓

Vegetables oils and fats ✓

Dairy products ✓ ✓ ✓ ✓ ✓

Sugar ✓

Other processed food ✓ ✓

Beverages and tobacco ✓ ✓ ✓

Textiles and Clothing ✓ ✓ ✓

Wood, paper, publishing ✓

Petrochemicals Chemicals, rubber, plastics

Selection of sectors and horizontal issues

Sectors Cr 1: Initial

importance

Cr 2: Economic impact

Cr 3: Social/HR/

Environmental

Cr 4: Civil Society

Cr 5: Importance for negotiations

Ceramics, cement, etc. ✓

Primary metals ✓ ✓ ✓ ✓ ✓

Fabricated metals ✓ ✓

Motor vehicles ✓ Other transport equipment

✓

Electronics, computers ✓ Other machinery and equipment

✓ ✓

Other manufacturing ✓ ✓ ✓

Utilities ✓ ✓

Construction ✓ ✓ ✓

Trade ✓

Water transport

Air transport ✓ ✓

Other transport services ✓ ✓

Communications ✓

Finance and insurance ✓

Business and ICT ✓ ✓ Personal & recrea-tional services

✓ ✓ ✓

Public and other services ✓ ✓

Sectors selection for in-depth analysis (Phase 2)

Horizontal / social / environmental issue Sector

Competition policy SPS

Invest-ment

Labour mobility Social

Environ-ment Other

Livestock and meat √ √ √

Dairy products √ √ √ Beverages and tobacco √ √ √ √

Primary metals √ √ √ √

Other manufacturing √ √

Textiles & clothing √ √ √

Personal and recreational services √ √ √ Growth

sector

Selected sector 1 – Primary metals Expected impacts DCFTA, long run:

› Value added: +2.8%; › Exports: + 5.8%; › Imports: + 6.5%

Selected sector 2 – Spirits (Beverage & Tobacco) Expected impacts DCFTA, long run:

› Value added: -2.6%; › Exports: -0.7%; › Imports: + 24.9%

Selected sector 3 – Textile & Clothing Expected impacts DCFTA, long run:

› Value added: + 207.1%; › Exports: + 362.9%; › Imports: + 4.8%

Selected horizontal issue: Labour mobility

Sectors selected for in-depth analysis (Phase 2)

Horizontal issue for in-depth analysis Expected changes in wages and labour mobility

Variable Wage change Labour displacement

Less skilled Labour Less skilled More skilled European Union 0.00 0.00 0.00 Armenia 2.55 9.56 7.25


Workshop presentation Chair: Arthur Khachatryan Ecorys – CASE consortium

DCFTA impacts on sector specific issues for Armenia



Workshop agenda

Time Programme









12:30-13:30 Lunch


12:30-13:30 Lunch

13:30-14:30



14:45-15:45




Guest speaker 1: Textiles & Clothing

Mr. Suren Bekirski

Trends in exports

Focus sector 1: Textiles & Clothing

USD millions To EU

2008 2009 2010 2011

Men's or boys' suits, ensembles, jackets, blazers, trousers, etc 0.9 2.4 7.1 13.2

Men's or boys' overcoats, and similar articles 0.2 1.4 5.5 12.1

Woman's or girls' overcoats, and similar articles 0.2 1.8 3.6 5.7

Track suits, ski suits and swimwear/ other than garments 0.1 0.7 1.0 1.9

Articles of leather or of composition leather, nes 0.1 0.5 0.9 1.5

Trends in imports

USD millions

To EU 2008 2009 2010 2011

Woven fabrics of synthetic filament yarn 1.7 1.1 2.5 9.1

Footwear, with rubber, plastics, leather... soles, leather uppers 8.9 4.7 6.8 7.4

Women's or girls' suits, ensembles, jackets, dresses, skirts, etc

9.6 4.3 4.3 5.4

Track suits, ski suits and swimwear/ other than garments 3.2 4.1 2.6 3.9

Woven cotton fabrics with man-made fibres 0.3 0.4 1.5 3.5


Summary of estimated impacts


Textiles & Clothing, Armenia

short-run ( %

change)

long-run ( % change)

Indicators total total

Changes in employment by sector, (Skilled) 13.61 192.68

Changes in employment by sector, (Unskilled) 13.83 193.29

Changes in value added 14.22 207.13

Changes in output 15.74 289.85

Changes in total imports 14.20 4.77

Changes in total exports 62.25 362.93

Changes in total Armenia exports to EU 24.76 -4.30

Changes in Armenia Consumer prices -4.27 -10.40

Changes in Armenia domestic producer prices -0.78 0.42

Guest speaker 2: Primary metals sector

Mr. Arthur Khachatryan

Trends in exports

Focus sector 2: Primary metals

USD million To EU

2008 2009 2010 2011

Ferro-alloys 232.2 75.4 121.1 120.4

Unrefined copper/copper anodes for electrolysis refining 66.2 57.7 70.0 76.6

Molybdenum, including waste and scrap 20.2 8.4 14.6 16.6

Aluminium foil,of a thickness not exceeding 0.2mm 9.1 1.3 3.4 2.8

Copper waste and scrap 3.2 1.5 1.5 2.5

Trends in imports


From EU

USD million 2008 2009 2010 2011

Gold, semi-manufactured, in powder forms 148.7 47.3 31.7 26.2

Aluminium bars,rods and profiles 2.3 1.6 1.1 1.6

Aluminium foil,of a thickness not exceeding 0.2mm 2.0 1.4 1.4 1.5

Unwrought lead 0.9 1.8 1.1

Angles,shapes and sections of iron or non-alloy steel 0.6 0.4 0.2 0.4

Unwrought aluminium n.a. n.a. n.a. n.a.



Primary Metals, Armenia

short-run ( %

change)



Changes in employment by sector, (Skilled) 5,74 1,75

Changes in employment by sector, (Unskilled) 5,94 1,95

Changes in value added 6,05 2,85

Changes in output 6,66 3,57

Changes in total imports 3,32 6,54

Changes in total exports 9,05 5,77

Changes in total Armenia exports to EU 6,22 4,71

Changes in Armenia Consumer prices -2,00 -1,94

Changes in Armenia domestic producer prices -1,89 -16,93

Policy – Primary metals

Current relevant policies with respect to the DCFTA

• DCFTA will have a significant impact on trade in prime metals Once DCFTA is signed Armenian export of primary metals is expected to increase by 5% due to lowering of tariffs and NTMs.

Focus sector 3: Spirits (Beverage & Tobacco)

Trends in exports

Focus sector 3: Sprits (Beverage & Tobacco)

From EU

USD million 2008 2009 2010 2011

Spirits from distilled grape wine or marc 3.2 1.7 2.5 3.0

Vodka 0.1 0.2 0.2 0.5

Whiskeys 0.005 0.0007 0.005 0.03

Rum and tafia 0.02 0.014 0.2 0.03

Other spirituous beverages 0.0008 0.0009

Liqueurs and cordials 0.004 0.000014

Vermouth and other wine of fresh grapes 0.02

Trends in imports

Focus sector 3: Sprits (Beverage & Tobacco)

From EU USD million 2008 2009 2010 2011

Spirits from distilled grape wine or marc 4.0 2.9 4.9 11.9

Vodka 1.5 1.2 0.9 1.8

Whiskeys 0.7 0.8 0.8 0.9

Rum and tafia 0.02 0.03 0.01 0.2

Other spirituous beverages 0.1 0.1 0.05 0.2

Liqueurs and cordials 0.2 0.3 0.2 0.1

Vermouth and other wine of fresh grapes 0.2 0.08 0.01 0.04

Gin and Geneva 0.004 0.02 0.02 0.03


Focus sector 3:Sprits (Beverage & Tobacco)

Beverages & tobacco, Armenia

short-run ( % change)



Changes in employment by sector, (Skilled) -1,95 -3,34

Changes in employment by sector, (Unskilled) -1,78 -3,17

Changes in value added -2,01 -2,58

Changes in output -1,89 -4,46

Changes in total imports 17,91 24,86

Changes in total exports 3,55 -0,68

Changes in total Armenia exports to EU 1,57 -4,38

Changes in Armenia Consumer prices -3,01 -0,52

Changes in Armenia domestic producer prices -0,86 0,75

Policy – Sprits (Beverage & Tobacco)


• Armenians are traditionally very proud of Armenian cognac. A whole chapter of the Law of the Republic of Armenia on Alcoholic Drinks Made from Grape is devoted to Armenian cognac (Armenian brandy). However EU strictly regulates the use of the word “cognac” To be able to export cognac, Armenia must re-name the drink.

So far, similar attempts were not very successful (e.g. exporting cognac

under generic name “Noyak” in late 90s)

Coffee & Tea


Workshop presentation Chair: Grigor Hayrapetyan Ecorys – CASE consortium

DCFTA and sustainable development – social and environmental impacts



Workshop agenda

Time Programme









12:30-13:30 Lunch


12:30-13:30 Lunch

13:30-14:30



14:45-15:45




Guest speaker 4: Labour mobility issues and the DCFTA

Mr. Garnik Vagharshakyan, Confederation of Trade Unions of Armenia (KPA)

Policy – Labour mobility


GDP structure in 2010 • industry 12%, agriculture 18%, Construction 18%, Trade 13% Labour involvement • agriculture 47%, Industry 18, services 35 DCFTA impact • Increasing trade which will in turn bring increasing output • In short run

• Labour( unqualified and qualified) movement between sectors • In long run

• Changes in labour standards (rights at work, social protection) • Informal employment in Armenia (will DCFTA increase or

decrease) • Increasing competition in specific sectors

Guest speaker 5: Environmental issues and the DCFTA

Ms. Silva Adamyan,



Wrap up



Workshop agenda

Time Programme









12:30-13:30 Lunch


12:30-13:30 Lunch

13:30-14:30



14:45-15:45




Timeline:

Contact us through: W: tsia.ecorys.com/armenia

E: [email protected]

T: +31-104538781

Activity Deadline Your comment on sectoral analysis 17 May 2013

1st Draft Final Report 6 June 2013

Send draft inception report to Civil Society and/or summary 10 days before CSD 14 June 2013

Civil Society Dialogue 24 June 2013 afternoon

2nd Draft Final report (Final version) 15 July 2013

tsia of the dcfta between the eu and armenia · 2016-08-04 · 1 tsia of the dcfta between the eu...

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