The Armenian President's statement on joining the Customs Union caused a wave of heated public debate where the political assessments mixed with emotional analyses prevailed. However,, both the Customs Union and the Eurasian Economic Union due to be set up on its basis are economic structures and the processes will first of all affect Armenia's foreign trade. There have been  some assessments on the import tax duties and now we will try to touch upon the impact of the Union's policy on competitiveness of Armenia's export.

Over the past decade, mining industry has been still playing a dominant role in Armenia's export. Moreover, the economy considerably depends on the sphere - decline in mining industry in the years of financial-economic crisis affected Armenia's other indices. On the other hand, mining industry is rather an appealing one as all the major investors and export markets are outside the borders of Customs Union.

As a joint economic system, the Customs Union also sets single import tax duties with 22.%% rate swapping with two-level 0% and 10%. From this standpoint, seemingly there will be no new hindrance for export. Anyways, apart from processing and exporting copper and molybdenum ores the sphere is also specialized in processing and exporting imported ores. Given this fact, the extra tax duties set by the Customs Union may impede procession of ores in Armenia leading to rise in prices for ore. There was such an example in case of De Beers Belgium company engaged in diamond mining which imported the feedstock of diamonds to Armenia for further processing. Tax duties for extra import hindered the company's operation and it left the Armenian market.  

As of the data provided by National Statistical Service, Germany and Canada are the main markets of export of Armenian mining industry. Around 70% of mining industry products are exported to these countries. Indeed, the DCFTA would considerably facilitate competitiveness of the mining industry in terms of export as EU states are our major partners. From merely regional point of view, volumes of export to the EU exceeded export turnover to the CIS about 2-fold over past 3 years.

At the same time, Armenian economy's competitiveness on the foreign market is greatly conditioned by mining industry which plays a critical role in export. Over the past 5 years, precious and non-precious metals and ores have had considerable shares in the exported items.  That's why, membership to the Customs Union may have mostly negative and not so big positive impact which will mainly be conditioned by rise in price for ore imported from the countries outside Customs Union.

The Customs Union and Eurasian Economic Union open up new opportunities in terms of enhancing export competitiveness. However, they don't mostly concern heavy industry but are linked to increase in export of agricultural goods and food industry (alcohol in particular).

Thus, the main partners in mining industry are outside the Customs Union and membership to the Union will mostly exert an indirect impact on the field. And competitiveness of economy and export will mostly be conditioned by export of agricultural goods and growth in trade turnover with the Customs Union states which nonetheless will make the economy dependent and less diversified.

Andranik Mnatsakanyan