Analysis: US-Armenia trade deal likely to have “declarative” significance

The Trade and Investment Framework Agreement between Armenia and the United States that was signed yesterday in Washington, D.C. by Armenian Foreign Minister Edward Nalbandian and Assistant US Trade Representative Daniel Mullaney in the presence of Armenian President Serzh Sargsyan is likely to have more of a “declarative” than practical significance, experts say.

The document envisages a United States-Armenia Council on Trade and Investment to discuss bilateral trade and investment and related issues. The purpose of the joint council will be expanding trade and investment opportunities of the sides, identifying possible obstacles in areas such as intellectual property, business environment, workers’ rights. According to the document, Armenia and the United States reaffirm their intention to create a favorable environment for investment and promotion of trade between the two countries.

Earlier, in a letter to U.S. Trade Representative Michael Froman calling for a TIFA signing Chairman of the Armenian National Committee of America Ken Hachikian outlined 10 practical benefits of the new trade deal, including: addressing regional trade issues, including the special hardships faced by Armenia due to the blockades imposed on its borders by Turkey and Azerbaijan; discussing the effectiveness of current programs in Armenia of the U.S. Export-Import Bank, Overseas Private Investment Corporation, and U.S. Trade and Development Agency; promoting Diasporan trade and investment, with a special focus on expanding Armenian American trade and investment partnerships with Armenia; improving Armenia ’s use of U.S. Generalized System of Preferences benefits, and others.

However, nothing has been said after the official signing of the document as to what degree these problems will be resolved. Experts say that the agreement is likely to have been signed in an abridged form. From Washington President Sargsyan is flying to Moscow where he will meet with the leaders of the Eurasian Economic Union and attend the Victory Day Parade in Red Square. And, according to an Armenian newspaper Lragir.am commentator, Sargsyan will have to “give an account” to Russian President Vladimir Putin, while a full-scale accord between the United States and Armenia may be not to Putin’s liking.

Even today Armenia has a relatively favorable trade regime with the United States. Armenia is included in the American system of trade preferences, GSP, however, the expansion of Armenian-American cooperation is being clearly torpedoed by Moscow. For a year and a half Armenia has been trying to finalize the sale of the Vorotan Hydroelectric Cascade to the American private firm, ContourGlobal. Though, on the eve of Sargsyan’s visit to the United States the agreement was finally approved by the Armenian parliament.

Speaking in front of representative of the Armenian community in Washington, DC, on May 7 and referring to U.S.-funded companies operating in Armenia, Sargsyan noted that in a few days the US company, ContourGlobal, is going to kick off its operation in the Armenian market with its investment capital of US $250 million, which is the largest American investment in the history of Armenia.

No meeting between President Sargsyan and his American counterpart, Barack Obama, was scheduled during the visit. Some unconfirmed reports claimed that such a meeting had been on the cards, but something must have changed after April 24, the day when Armenia marked the centenary of the Armenian Genocide in Ottoman Turkey. In an interview with Russian journalist Vladimir Posner aired on Russia’s Channel One TV on April 27, Sargsyan said that by not saying the word Genocide again in his annual statement to the Armenian community the U.S. president placed national interests above universal values. It is quite possible that the remarks were seen as another rebound in the Armenian-American relations that had had a tendency towards getting closer before that.

The further course of these relations is likely to depend not on Armenia and the United States, but on Russia and the prospects of its cooperation with the West. In recent days, Russia’s foreign minister has been voicing “peace” appeals, stating Moscow’s readiness to resume cooperation with both NATO and the European Union after a dramatic worsening of their relations following the crisis in Ukraine. At the same time, Russia has proposed establishing direct cooperation between the European Union and the Eurasian Economic Union which currently comprises Russia, Belarus, Kazakhstan and Armenia as well as Kyrgyzstan as an acceding nation.