Armenia expecting wave of price hikes for 800 goods due to increased customs duties

Customs duties for 800 goods imported into Armenia will increase from January 1, 2020.

This concerns goods imported into Armenia from outside the Eurasian Economic Union.

The Eurasian Economic Union is an international economic integration organization that operates under the auspices of Russia and includes Armenia, Belarus, Kazakhstan and Kyrgyzstan. The organization provides its members with the freedom of movement of labor, goods, services and capital.

Armenia joined the EAEU in 2015 and automatically became part of the customs union of this organization. In the same 2015, it was decided to equalize customs duties in all countries of the Eurasian Economic Union. The ultimate goal of this process should be the formation of a single market.

With the entry into force of the changes, imports into Armenia from third-party countries, that is, non-EAEU countries, will face higher customs duties at the border. Thus, goods from the EAEU will have a competitive advantage.

The increase in duties in Armenia has so far been postponed, that is, exceptions were made for some products. By 2020, it was assumed that the Armenian authorities would have prepared the country’s economy to the changes.

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For what items will customs duties will rise

Among the 800 items, there are a number of essential goods. For example, customs duties on meat of domestic animals in 2020 will increase by 25 percent, and in the future by as much as 80 percent.

Customs duties on wheat, sunflower oil, milk, and agricultural machinery will also be subject to changes.

Passenger cars will rise in price most of all, since for their customs clearance, one will have to pay six times more.

Experts say this could lead to a dramatic increase in the price of cars.

What will this lead to?

The increase in customs duties will lead to the inevitable increase in prices not only of those goods that are indicated in the list, economist Vahagn Khachatryan says.

“All this will affect our citizens and adversely affect housekeepers. In the EAEU countries, customs duties are on average 2.7 times higher than in Armenia. I also note that prior to joining the union, Armenia pursued an open door policy, when duties did not exceed 5-10 percent.”

The change in customs duties for goods from third countries will also lead to the fact that for the residents of Armenia, the choice of products will be significantly reduced:

“We will not be able to buy many products to which we are accustomed, because a business that imports, for example, household or agricultural machinery, will understand that it cannot standup against the competition. We will buy not Korean, but Russian TVs”, says economist Vahagn Khachatryan.

In order to prevent such a situation, the Armenian authorities should start negotiations with their colleagues from the EEU, economist Tatul Manaseryan said.

“It is possible that in the case of some names, an agreement will be reached to extend the validity of the current rates. Because it is not only the problem of Armenia, but also of other members of the union.”

In 2019, the chairmanship of the Eurasian Economic Union passed to Armenia, and on April 30, the heads of government of all members of the organization arrived in Yerevan to participate in the EAEU intergovernmental council.

One of the main issues discussed during the meeting in Yerevan was the situation with customs duties. However, at the end of the meeting, Russian Prime Minister Dmitry Medvedev himself stated that he had not yet been able to take a concrete decision on import customs duties.