What is the GSP+?
The GSP+ is a special incentive arrangement for Sustainable Development and Good Governance that supports vulnerable developing countries. Next to fulfilling the eligibility requirements of the Standard GSP, GSP+ countries are required to ratify 27 international conventions on human rights, labour rights, environmental protection and climate change, and good governance. In order to ensure effective implementation of the conventions as well as compliance with reporting obligations, the EU engages in monitoring activities with the GSP+ countries. GSP+ beneficiaries can benefit from complete duty suspensions for products across approximately 66% of all EU tariff lines.
At a glance: GSP+ beneficiaries' preferential imports to the EU
2,78 M
Population
Parliamentary democracy
Government
12.60%
GDP Growth
4.00%
Inflation
$ 19,51 B
GDP
Facts about the Armenian economy
Landlocked Economy
Geographically, Armenia is a landlocked country and has borders with four countries, though the borders to two of its neighbours, Turkey, and Azerbaijan, have closed since the early 90s due to political conflict. This leaves Armenia with rather slim regional export opportunities.
Export Products
Armenia's main export products are copper ores, cigarettes, spirits, and gold.
Ties with Russia
Armenia's historical ties with Russia are still reflected in the trade relation between these two countries. Russia is the most important destination for Armenian products and at the same time the most important source of imports. This renders the economy dependent on volatilities on the Russian markets.
Economic Structure
The service sector accounts for more than 55% of Armenia's GDP, followed by industry with almost 33%. Agriculture accounts for approximately 25% of the GDP. Almost equally important for the economy are remittances from Armenians living abroad (roughly 14% of the GDP).
Usage of GSP+ Preferences
As from 1 January 2022, Armenia is excluded from the GSP in accordance with R/UE 2021/114, as it has been classified by the World Bank as upper-middle income country in 2018, 2019 and 2021.
Trade with the EU
Total trade with Armenia summed up to € 2,490 million in 2022. The EU is Armenia's second most important trading partner with a share of 16% of total trade, just behind Russia which accounts for approximately 36% of overall trade.
Armenia and the EU (2022)
Imports from Armenia by product section
Imports from Armenia over time (in € m)
ARMENIA AND THE EU’s GSP
Economic Impact
Armenia's economy can be considered vulnerable and is, with a score of 0.2%, considerably below the threshold of 7.4%. Armenia's economy is mostly concentrated on a small bandwidth of products. The country's diversification percentage stands at 98.2% with the minimum diversification threshold standing at 75%.
49%
About two thirds of Armenia's current exports to the EU are eligible for tariff reductions under the GSP.
96%
Armenia currently has a high preference utilisation rate of 96%.
Preference utilisation and export diversification
Armenia's imports to the EU
Preference Utilisation vs. total eligible imports
Over the years, the preference utilisation rate has shown considerable fluctuations. The rate dropped by 10 percentage points between 2011 and 2015 and shows another slump in 2018. Overall, Armenia makes comparatively high use of the preferential tariffs granted under the GSP+, with an average of 92% (2011-2018) of eligible imports being imported at reduced rates. Looking at individual product sections, Armenia makes good use of preferences for its dominant import groups like base metals and food and beverages. Overall, imports under the GSP have decreased quite substantially between 2016-2018. However, this can be attributed to a substantial share of confidential EU imports from Armenia which are not part of this statistic.
The largest product sections under the GSP+
The utilisation of preferential tariffs remains highly concentrated on base metals, including aluminium, iron, and steel, a product group with relatively low added value. Other product groups remain rather insignificant, indicating a lot of room for further diversification particularly also for sectors with higher value addition. Preference utilisation for apparel imports has increased constantly in recent years, however, more than 20% of imports still do not make use of the reduced duties. Likewise, only about 39% of optical and musical instruments currently make use of the preferential market access.
SUSTAINABLE DEVELOPMENT AND MONITORING PRIORITIES
The momentum of the Velvet Revolution and democratic changes of 2018 has continued in 2020-2022, although the Republic of Armenia (Armenia) faced significant challenges: the COVID-19 pandemic and the 2020 war in and around Nagorno-Karabakh. While benefitting from GSP during the period 2014-2022, Armenia made progress over time in implementation of the 27 GSP+ relevant international conventions, though concerns remained on the implementation of the related reforms. In January 2022 and after one-year transition period, Armenia graduated from GSP as the World Bank classified Armenia as an Upper Middle-Income Country for three consecutive years starting 2017. Despite the challenges mentioned above, Armenia maintained this income classification. While monitoring of GSP+ no longer applies to Armenia, many of the issues notably on labour rights and environmental and climate standards, will continue to be addressed in the implementation of the EU-Armenia Comprehensive and Enhanced Partnership Agreement (CEPA), which entered into force on 1 March 2021.
Monitoring priorities during the reporting period 2018-2019
Judicial and criminal law
Law against domestic violence
Anti-corruption
Draft law on ensuring equality
Alignment of domestic legislation with environmental legislations
For the reporting period 2018-2019, the EU has identified five focus areas for its monitoring activities in Armenia. The new government which followed the Velvet Revolution in 2018 is committed to human rights and good governance and has initiated legislative procedures to strengthen the effective implementation of relevant conventions.
EU-Armenia Bilateral Development Assistance
DG NEAR
Access all info about EU-Armenia relations on the European Neighbourhood Policy and Enlargement Negotiations (DG NEAR) website: https://neighbourhood-enlargement.ec.europa.eu/european-neighbourhood-policy/countries-region/armenia_en
Opportunities in Armenia
- Well developed IT-Sector with further potential in developing and exporting application software
- Growing interest in and high potential for renewable energies, solar, hydro and wind energy in particular
- Further market potential in the mining sector
- High level of investment freedom which provides favourable conditions particularly for foreign investment
- Strong and growing agricultural and food processing sector with high-quality export products
- Armenia belongs to the best 50 countries worldwide to do business in