Yesterday the Armenian press published very interesting information. Specifically, the Haykakan Zhamanak writes that according to their reliable sources of information, the corresponding departments of the European Union and World Trade Organization have decided to sue Armenia for violating the free trade rules.
“It is about the difference of the cigarette and vodka imported and produced in Armenia. It means that Armenia has taken the responsibility and puts more taxes on the imported vodka and cigarette than the domestic production,” writes the newspaper. We could not find out if this information is true. We were told by the EU delegation in Armenia that they would answer in the near future. The ministry of economy knew about the published information, but they failed to comment and promised to speak about it later.
In a word, they are accusing us in a policy of backing business, which means that the state backs the domestic producers and creates difficulties for importers. It is worth mentioning that the countries, which have the highest level of industrial development, used to back and support their domestic production too. Now their producers don’t need the support of their governments and are trying to make the world accept their rules by creating equal conditions for producers and importers. It does not matter if it is good or no; Armenia officially accepted those rules in 2003 by becoming a member of the World Trade Organization.
In addition, even the most liberal countries which are members of the WTO sometimes support their domestic businesses but not openly. However, neither of these countries would ever tolerate if the import was several times more than the export like in Armenia. Even a number of economists have blamed our government for an almost absolute liberal trade policy. Why would they accuse us in supporting our domestic production and violating the rules of free trade? Even more, it is done in conditions of the crisis, when many countries of the world have done things that are even against the market economy principles.
The answer may seem very strange: “Armenia has confessed”. Specifically, RPA faction member Gagik Minasyan spoke about supporting domestic producers much concerning the government’s policy to resists the crisis. “We should create the same economic conditions for the domestic and foreign producers, and the difference should be only the customs fees. But the crisis is over, and the time for such things is over too,” said Gagik Minasyan on October 6 and added that if they continue this policy, they should also be ready that the other countries will apply the same policy on their export too, specifically the wine and brandy export. “It evolves more dangerous prospect for us. The crisis is over and it is time for the government to give up on the policy of protectionism,” he said. However, even if there is a danger, he said that the government would not return to the past conditions for 100% and would still define 120 drams tax for one liter of import, thus creating better conditions for domestic producers.
To note, recently the National Assembly made changes to a number of laws and cut the difference between the taxes on the imported and domestic products. But still the WTO and the European Union are not satisfied and they amend equal conditions. However, if the issue is discussed in the Arbitrage, there is a big possibility that Armenia may be imposed a penalty because Gagik Minasyan is not an ordinary man as he is the head of the parliament standing committee on budgetary and financial affairs. If he has already agreed that we have violated the rules, it will be very hard to convince in the vice versa.
There is a funny and interesting thing in this negative information. The international organizations (the WTO and EU) are accusing Armenia in supporting (or wishing to support) the domestic production. If we forget about our responsibilities and the penalties, it is a real compliment to the government. It means that the government of Armenia is ready to get a “slap” in favor of supporting the domestic production. This is a great PR. Please pay attention to the fact that it concerns the government, due to which the national currency grew in the price so much that the economy would almost collapse and the sector of construction, which cannot be exported, was highly developed. And now they are trying to “develop” the production by the tax load, corruption, many small and medium supervisory and controlling institutions, etc. It is really funny.
Now it turns out that our authorities are super-patriotic powers, which are doing their best for the purposes of our state and economy. Maybe they do, but the goal is simple and all what they were trying to do is the attempt to increase the budget inflow through taxing the income more. It is only about a limited type of products such as cigarettes and vodka. It is not about a super-nationalistic ideology, but a “bazaar” for money between importers and producers. As for the state, they have calculated which of those options will help them to get more money. But we should not speak of it in a high voice; let the foreigners think that our government and officials really care about their country and domestic producers.