Workshop on Corridor Development For Caucasus Countries

1. Workshop on Corridor Development For Caucasus Countries Armenia: Transit and Multimodal Transport Integration Tbilisi, Georgia May 18-19, 2004

2. Statistics and Development Trends Railway cargo transportation is increased by 5.3 % against 2002 and made up 2125.5 thous. tones Railway cargo turnover is raised by 17.1% against 2002 and totaled 529.2 million tones/km Export, million USD 678.1 300 2000 2003 Import, million USD 17 % growth in cargo turnover in 2003 –the highest indicator among CIS countries 1269.4 840 2000 2003

3. Transit Procedures in Armenia Armenia permits unimpeded and tax free transit of goods

4. Transit Procedures in Armenia For customs convoy of goods via the territory of the Republic of Armenia the Customs Fee is collected at 10,000 drams per 100 km. In the event that the vehicle of transit shipment and customs safeguard is broken, the customs convoy of goods is compulsory, while in the other cases it is performed at the forwarder's request in writing

5. Transit Achievments • Legal: Transit shipment of goods and means of transportation via the RA is regulated by Articles 27, 28 of the RA Customs Code and by the RA Government Decree N 887, which are in full conformity with Article V of the GATT 1994 on Freedom of Transit • Institutional: The RA joined TIR International Convention in September 1993; Full Membership of European Conference of Transport Ministers (April 2003) • Infrastructure:Construction of Kajaran Tunnel; Opening of new transportterminal at the Iranian-Armenianborder (v. Norduz) in 2004;construction of Bagratashen-Marneli road is under construction • Development of PPP in transport sector: Establishment of Business Council chaired by Prime Minister, ArmPro Committee for TTF, Armenian International Road Carries Association (AIRCA)

6. Transit Bottlenecks via Armenia 1. Armenia is not signatory to International Convention on Freight, Convention on trade transit of land locked countries, Convention on free transit status, etc. 5. Lack of state budget funding to maintain and recover physical infrastructure 6. Poor record in traffic safety 7. Lack of management skills 8. Weak institutional capability in all levels of public administration • Weak legal environment for Freight Forwarders • Shortage of tracks meeting international standards • Absence of modern information system

7. Transit Bottlenecks via Georgia • Not providing with MFN and National Treatment status to Armenia; filer of bilateral interstate auto-transport agreement for exemption of customs duties in Georgia within specified quotas • Mistreatment of transportation means under the TIR carnet • Mandatory announcement of data in Commercial invoice • Application of two types of transit customs declarations • Excessive paperwork for Phytosanitary and Veterinary control procedures for Armenian imports takes about 2-3 days with extra payments • Special permission for transit of double-purpose goods • Special permission for excise goods • Various approaches in identification of excise goods across Georgia • Unclear approach in identification of overloaded tracks, which lead to additional payments totaled $ 250-300 • Numerous checking points, extensive delays while customs procedures, Mandatory Convoy Service and Georgian Insurance, unofficial payments • Freight-forwarding companies pay CCD fees and port charges in USD instead of lari. • Backlog in maintenance, absence of modern information system • GeorgianInterstate Road Status • Bagratashen-Marneli 30- km poor road

8. Transport Problems • Unresolved political and border disputes • Weak local and regional legal framework for transport sector along with weak execution of existing Laws and regulations • A severe shortage of funds to maintain and improve infrastructure, especially technical re-equipment of Railway • Very high logistics cost ( the highest in the region and in average twice higher than in the rest of the world) • Underdeveloped Multimodal transport, due to the lack of economy of scale, imperfect legal environment, absence of logistics centers, complicated border crossing procedures • Non trade barriers

9. Transport Development Policy The market economy dictates new directions toward development of comprehensive Transport policy: • To set up legal environment (currently new transport Law package is under consideration in the Government ) • To further develop transport infrastructure (Construction of railway line Vanadzor-Fioletovo (21 km) • Capacity Bulidingin Transport sector

10. From National Development to Regional Integration • Establishment of the necessary political will as a foundation stone upon which all other factors have to rest • Perfection of transport and trade legal framework across region • Construction and upgrading of roads and railway lines and installation of related combined transportation • Harmonization of Customs Procedures across borders • Improvement in coordination of international organizations (ECMT, UN ECE, UC, WB, EBRD, and others) to maximize synergy and minimize overlapping activities in the region • Human capital development, constant coordination of educational programs in all levels across region • Conclusion: We have to work toward evaluation of mutual benefits and come up with solutions targeted at further transport integration by enlarging our scope of work considering harmonized customs procedures within the unified legal environment along with growing demand for combined shipment, multimodal transport and international logistics.

11. Workshop on Corridor Development For Caucasus Countries Thank you Tbilisi, Georgia May 18-19, 2004