Tbilisi, Georgia, May, 2004 Tbilisi, Georgia, May, 2004 Armenia Present Situation as Experienced by Traders Armenia Present Situation as Experienced by Traders

Foreign Trade Statistics Year*Export ( $ million) Import ($ million) Export Structure ( in % to total Export ) * Source of Data: State Statistics Department of the RA Charts represent specific weights of individual countries in the export volume to CIS and EU countries in 2003

Trade Regime with Foreign Countries FOREIGN TRADE REGIME FREE TRADEMFNGSP UEUSAJAPAN CANAD A t Armenia has FTA with almost all CIS countries t MFN: European Union India lUSA Argentina lLebanon lBulgaria Canada lRomania China Syria Switzerland Iran Vietnam

Export & Import Procedures  N-1779 Government Decree on 21 st November, 2003 for export/import controls  To conduct import-export activities enterprises must be registered in a respective regional customs house as an entity involved in foreign economic activity  According to the customs procedures, the following documents are required for customs clearance for all imports and exports: an invoice a contract consignment documents a certificate on the country of origin (if an importer or exporter asks for preferential treatment)

Export Cases: Contracts and Transportation ApricotsTextileCopper-molyb. Contract Basic Data Export accomplished by both natural and juridical persons Ex worksEx works, contract cost based on Treatment Charge Transportation Route Lorries: Ararat valley (AV)- Bagratashen (B)-Larsi-North Caucuses. (2 days) Refrig. Cont.: AV-B-Poti- Novorosiysk- RF Airtransport: Europe & USA Yerevan-Poti- Burgas-final destination (22-30 days) Containers: Ayrum-Poti— Novorossiysk-Europe, South Korea Wagons: Ayrum-Poti- Ilichevsk- railway- final destination Total transportation time: days

Export Cases: Customs & Taxes ApricotsTextilesCopper-molibd. Customs Procedures No pre-declaration for natural persons, inspection lasts several minutes. Temporary admission of materials –re- export of final product (change of customs code) Predeclaration-1 day Shipment/Inspection-5-6 days Declaration-1 day Certificates Certificate for origin is required for judicial persons. Phitosanitary Certificate Approval from the Ministry of T& ED Certificate of Origin Certificate of Origin Certificate of conformity Taxes Export is duty free and VAT exempted Export is duty free and VAT exempted

Import Cases: Contracts and Transportation PharmaceuticalsTobaccoCandies Contract Basic Data CIP Yerevan & transport cost; LC CIP Yerevan; LC Transportation Route By air, from European countries Åurope-Poti- Yerevan Containers By air from different countries and by land via Poti

Import Cases:Customs & Taxes PharmaceuticalsTabaccoCandies Customs Procedures Customs clearance: 1,5-2 days Pre-declaration Declaration Declaration of excise stamps Customs clearance: 2 days Certificates Certificate of Conformity (5-7 days) Certificate of Origin Certificate of Conformity Certificate of Origin Certificate of Conformity Taxes 0 customs duties, 20 % VAT Fixed tax: VAT, Excise tax and customs duties per 1000 unit If from CIS countries- 0% customs duty and 20 % VAT Otherwise, 10% customs duty and 20% VAT

Conclusions: General Constraints Regulatory area/2003%Average Rating* Taxes and Tax Administration High Tax Rate Infrastructure Customs Sanitary Regulations Standards and Certification *1 stands for no obstacle, 4-major obstacle: “Regulatory and Administrative Costs in Armenia/2003” FIAS Report

CONCLUSIONS: IMPORT  There is no problem in partner identification and contract conclusion  Artificial complications imposed by Customs-2,5 points  Excessive paperwork (procedures for obtaining necessary certificates for agricultural products, where two overlapping lists exist, in order to avoid putting additional documentary burden on traders) points  Explicit or implicit requirement to give bribes-2.16 points  On average, the process of import customs clearance lasts 4.8 days taking 2.4 person-days of management time and 4.3 person-days of staff time  Application of transaction value method as a primary method for the valuation of goods imported  Very high transportation costs EXPORT  There is no problem in partner identification and contract conclusion  Artificial complications imposed by Customs-2.57 points  Excessive paperwork points  Explicit or implicit requirement to give bribes points  On average, the process of export customs clearance lasts 7 days taking 2.3 person-days of management time and 2.8 person-days of staff time  47.2% of export firms are eligible for VAT refund, which leads to excessive time lost  There are certain complications in obtaining Certificate of Origin (Form A)  Very high transportation costs

Tbilisi, Georgia, May, 2004 Tbilisi, Georgia, May, 2004 Thank You Thank You