New EU trade incentives will not solve key problems of exports from Armenia - economist (EXCLUSIVE)

YEREVAN, September 3. /ARKA/. New EU trade concessions alone will not solve key problems affecting Armenian exports and are unlikely to lead to significant growth, according to economist Hrant Mikaelyan.

The EU Council supported the European Commission's proposal for temporary trade liberalization with Armenia, which would eliminate duties on approximately 80% of Armenian exports to the EU, with the possibility of introducing protective measures for the European market.

"The EU leadership made a political statement two or three months ago about the need to liberalize duties on Armenian goods exported to the EU. At the time, it was stated that duties on imports of Armenian goods would be abolished. Now we are seeing this decision being formalized bureaucratically and legally for a period of two years," Mikaelyan said in an interview with ARKA.

He added that it can be assumed that the EU is assuming that these measures may no longer be necessary in two years if Russia's restrictions are lifted. Another scenario is possible: the restrictions remain in place, and by then additional measures will be required. The economist noted that two years is a fairly long period.

“If we look at Armenia’s exports to the EU, a significant portion of them is made up of mining and raw materials. According to my calculations based on data for the first five months of 2026, approximately 62% of exports came from this sector, with another 13% from other individual goods. It turns out that duties are not the only factor. Until the end of 2021, Armenia was under the GSP+ regime, under which duties on most exported goods were either reduced or eliminated. Thus, this preferential regime is not new to Armenia. However, it has not allowed for a significant increase in Armenia’s exports to the EU,” Mikaelyan noted.

“Why? Because Armenia’s exports to the EU face several restrictions. One of the main challenges is logistics. A significant portion of goods of Armenian origin, which were primarily exported to Russia, are perishable. The European market is significantly further away, so transportation increases the final cost of goods. Furthermore, the EU is highly competitive in virtually all product categories. Unlike Russia, for example, which has little or no domestic apricot production, the European market offers apricots from Spain and France, wines from Italy, and many other countries," the expert said.

According to him, there are also non-tariff trade barriers that create significant restrictions for exporters.

"First of all, we're talking about EU standards and requirements. Some of these are driven by the need to ensure quality, but even these requirements are heavily bureaucratized. Others, in my opinion, are aimed at ensuring competitive advantages for European goods so that they don't lose ground in their own markets amid protectionism. Therefore, entering the European market remains quite challenging for Armenian producers," Mikaelyan believes.

He emphasized that diversification doesn't just refer to geographic diversification: from an economic perspective, it should also mean diversification of production.

"If we look at Armenia's import and export structure, imports are quite diversified, while exports are concentrated. Diversification should involve the export of new types of goods. At the same time, our supply for the EU market is limited: the goods we already produce aren't always in demand in the EU, and we don't produce many of the goods the EU needs. In terms of product mix, we produce a relatively small number of products," the expert said. Thus, according to Mikaelyan, the new trade benefits for a significant portion of goods will not in themselves produce tangible results and will not significantly change the export situation. He recalled that the GSP+ regime was in effect for Armenia until the end of 2021 and provided preferential access to the European market, but did not lead to a significant increase in Armenian exports to the EU.

Regarding restrictions on the supply of Armenian products to Russia

Since the end of May, Russia has been gradually introducing restrictions on the supply of certain products from Armenia, citing violations of phytosanitary requirements. The restrictions include flowers, mineral water, certain beverages and alcoholic beverages, vegetables, fruits, berries, grapes, potatoes, dried fruits, and later, live fish and fish products, as well as dairy products.

The restrictions also include a ban on the transit of products of Armenian origin through Russia to other EAEU countries.