Sea of opportunity: Experts say international conventions on landlocked countries could improve Armenian foreign trade

Sea of opportunity: Experts say international conventions on landlocked countries could improve Armenian foreign trade


Menua Soghomonyan (left) and Narek Galstyan

An expert in Yerevan believes that the upcoming visit by Georgia’s new Prime Minister Bidzina Ivanishvili to Armenia is a good occasion to discuss a fair application of international conventions that would improve trade opportunities for the landlocked South Caucasus country. The bulk of Armenian trade is currently conducted through Georgia, which has at least two major operating seaports – Poti and Batumi. Arguably high transportation costs and other problems connected with the transit of goods have been a constant concern for Armenian entrepreneurs engaged in importing businesses.

The Convention on Transit Trade of Landlocked States adopted in New York in 1965 and the 1982 UN Convention on the Law of the Sea enable landlocked countries like Armenia to have ships and vessels sailing under their own flags.

Also, under these conventions, a country with access to the sea must provide a neighboring landlocked country with certain space and equipment in its seaports, explains Menua Soghomonyan, an international affairs expert based in Yerevan.

“It is important that the transportation of goods through transit countries in that case should not be taxed,” he says.

Neither convention is binding for countries that have not acceded to them. Of Armenia’s neighbors Turkey and Georgia have acceded to the conventions, while Azerbaijan and Iran have not.

“We have no diplomatic relations with Turkey and Turkey is keeping its border with Armenia closed, which is, in fact, considered to be an act of war. And the conventions allow the countries that are in conflict or in military action to be free in making their decisions on their application. In this particular case Turkey does not allow [Armenia] to use its wharves. But most importantly we haven’t joined the conventions ourselves yet,” adds political analyst Narek Galstyan.

The countries that join the conventions are supposed to sign bilateral agreements regulating their economic and trade relations amongst themselves, while the conventions allow landlocked countries to negotiate the establishment of low customs dues for the transit of cargoes via countries with seaports.

The parliament of Armenia addressed the matter still in 2008. Late last year the Armenian National Assembly held one-day parliamentary hearings on the issue, but no concrete steps followed.

During those discussions MP Martin Sargsyan, who is the head of the Chamber of Commerce, said that as a landlocked country Armenia is not protected from the socio-economic, political and military conditions in the neighboring countries. According to him, in the case with Armenia the problem is becoming more acute due to its having closed borders with two of its four neighbors.

Deputy Minister of Economy Garegin Melkonyan said that under the Convention no additional transit customs or taxes should be levied from cargoes being shipped from seaports to a landlocked country aside from normally applied vehicle taxes and fees.

Political analyst Galstyan considers it likely that lobbyists in Georgia or elsewhere in the world find it unsuitable to have low customs duties established for Armenia.

“Armenia is a mostly importing nation, its market is small and economically it is not profitable for Georgia to lower the customs duties on goods imported by Armenia through its territory, as it won’t result in any essential increase in freight because of the small size of the Armenian market,” he explains.

At present, there are 50 landlocked nations in the world, 30 of them, including Armenia, are considered to be developing countries.