In February 2006, Armenia will have been a member of the World Trade Organization (WTO) for three years, however, the largest WTO country-Russia-is still thinking twice about joining the largest international economic organization. What did we get out of the WTO? With this question in mind, we talked with National Assembly MP, doctor of economics, Professor Tatul Manaseryan.
According to Manaseryan, any country would like to become a member of the WTO. This means that the given country is ready to cooperate, while having free economy on one side and striving to compete against others on the other. However, the problem at hand is the following: the country must first be ready to take that step which in many cases is looked at from the economic and political point of views. “In this case, I think that Armenia has more or less rushed in becoming a member of the WTO. Why? First of all, let’s draw our attention to the field of agriculture, the field where half the work force is. However, despite that, the specific weight of agricultural products in the GDP is less than 25%,” says T. Manaseryan. He explains this by the fact that workers don’t expect much from the agricultural product both in Armenia as well as the other CIS countries part of the WTO (Georgia, Moldova, and Krzghstan). There is a rise in the number of people working in this field, but this hurts the other fields of economy. The specific weight of hand made jobs has increased, yet there is no progress in doing the job mechanically and the state does not show any support regarding the increase in competitiveness of agricultural products. In the MP’s words, this is a sad image for the agriculture in Armenia and causes one to worry. After all, the WTO has required Armenia to raise the level of competitiveness of products until 2009, so that the organization can start taxing workers starting from January 1, 2009. Basically, the value added tax will be levied on agricultural products, which is not currently done. “Armenia is in a serious situation. Not only is there no governmental aid, but also, agricultural economies are slowly yet surely being destroyed due to departures for seasonal work, rise in the price of petroleum, the standards of compensation in case a disaster takes place which may ruin the agricultural economy and other reasons,” says T. Manaseryan. Manaseryan compared Armenia with other countries and stated that although 2-3% of the work force in developed countries is occupied with agricultural work, however, the field is developing and it provides competitive products. That is due to the fact that the state simply provides help by funding. For example, the amount of money given for one cow in the European Union exceeds that of the money given to the villager living in Russia. It would be a waste of time to talk about the European farmers that receive large profits from the state and maintain their products. It doesn’t matter how high the price for agricultural products in European countries is; the state is still interested in lowering prices in order to not have problems with the consumer basket. Besides that, the state sometimes exports the products at a fixed price.
As we talk about the relations between developed and undeveloped countries which are going through globalization, T. Manaseryan brought up the most talked about issue in the world-shortage in poverty. In the “Millennium Battles” contract, signed by more than 180 countries, it is stated that poverty will not perish as long as the developed countries do not allow equal competition.
Recently, many of the leaders of South American countries reacted to the U.S.’s suggestion on joining the North-American free trade zone. They understand perfectly that as long as the developed countries have not agreed to export their products, then there is no need for further conversation since that is what allows free competition; that is what will give the developed and transitional countries the opportunity to have advantages for competition. T. Manaseryan believes that Armenia has serious opportunities and advantages for competition which can not only be realized by large financial investments, but also by managing the resources correctly. “We must consider the fact that the Diaspora can help us with this; as a matter of fact, not the far away Diaspora, but rather the one near Armenia-especially our military ally Russia. Russia is a very good consumer market for Armenian products. If it weren’t for that market, products would be bought from other countries. I also place importance on the role that exchange rates play. They can send the quickly expiring products on time, and different regions of Russia have a high demand for those products,” says the MP.
T. Manaseryan believes that in Armenia, agriculture is the field of economy where there are more or less tries for organizing work. However, the problems can be seen in other fields too, especially industry. “Not only are the amounts of products lessening, but also, there is no potential for production. Since the Ministry of Industry turned into the Ministry of Economic Development and Trade, means to say that there is no state structure today which is totally responsible for industrial development,” says T. Manaseryan. As for the IT field, which is a supreme field of economy, the professor stated that the “ridiculous” amount of money provided by the state budget for science-5.1 billion dram- is 14 times less than the amount foreseen for the educational funding and the salary for a scientist working in Armenia does not exceed 27,000 drams.
Creations (regulated by the WTO) need to be regulated much because according to T. Manaseryan, there is no copyright defending the rights of the creator living in Armenia as well as abroad. Although the WTO has formed a corresponding agency in Armenia involved in solving these kinds of issues, it still does not function properly. “The only way that Armenia helps the WTO by being a member is by selling its products to other countries and creating work places in other countries on the account of the decline in the competitiveness of our country. Our country is not ready for that type of competitiveness. A couple of years ago, I was not really going against WTO membership (due to the fact that we can’t bring up an issue like that), but rather the fact that we are ready as a country to accept WTO membership because we still haven’t matured as a country. Experience shows that we are still losing. First of all, the most important issue is the lack in supreme economies which is an issue concerning economic security. Basically, Armenia does not have standards by which the policy of economics should follow,” says T. Manaseryan. In regard to economic policy, the National Assembly MP is of the opinion that each country must have a strict plan where there must be yearly projects, including the budget. Unfortunately, the budget for Armenia is “full” of mistakes. T. Manaseryan claims that many fields of economy are neglected as a whole, for example, aviation, increase in the expenses made out of the budget on the account of the deficit, the large specific weight of foreign funds, which may seriously threaten the economy. Another threat to Armenian economy is the country’s dependence on imports. The amount of imports exceeds that of exports by two times.
One of the requirements of the WTO is the guarantee for the country’s economic development. However, the unpredictability and tendencies of the exchange rates in Armenia reflect negatively on foreign trade. If the country’s economy is not stable, then there will be no investments and we can not talk about development if there are no investments being made. According to T. Manaseryan, “the two digit rise in Armenian economy is just a reconstructive rise. We can not compare that rise to the 1-3% rise in developed countries. After all, the rise is stable in those countries.” Instead of comparing Armenia to developed countries, Manaseryan suggested comparing our country with the post-war German economy where the rise exceeded 30-33% yearly.
T. Manaseryan explains Armenia not taking advantage of its WTO membership as a lack in economic competition. Instead of that, we have monopolies, oligopolies closely connected with one another, clans that do not integrate into the national economy in any way but rather have their interests and evade from paying taxes. “The goals set by other WTO member countries in these conditions become unreachable for Armenia. The only thing that we “got” out of WTO membership was opening our doors to foreign products. We were not able to realize two very important competitive advantages-the mental abilities of our work force and professionals in the Diaspora. Only after making the latter a reality can we say that we have actually achieved economic success by becoming a member of the WTO,” added the professor.