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The EU Stands Ready to Further Assist Georgia along the Way: Newsletter

Published: November 9, 2012 | 10:51 pm
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The COMMERCIAL TIMES

The first edition of the EU Delegation newsletter on EU-Georgia trade relations was released on November 9. The newsletter will be released on a regular basis, providing updated information and background on relevant EU- Georgia trade and DCFTA-related matters, a press release from the Delegation says.

In the introduction to the first issue, Philip Dimitrov, Ambassador, the Head of the European Union to Georgia said: “Relations between the European Union (EU) and Georgia have intensified over the last few years across a broad policy spectrum. Through the Eastern Partnership, the EU and Georgia have engaged in an ambitious agenda, aimed at bringing Georgia closer to the EU. Our common objective is far-reaching democratic and market-oriented reforms, contributing to the political stability and economic development of Georgia. Economic integration is a key element of the Eastern Partnership, not to say its cornerstone. The EU’s own integration started this way and has been successful. Today, Georgia and the EU enjoy a very close trade and investment relationship; we are working together to make it even stronger. The start of the Deep and Comprehensive Free Trade Area (DCFTA) negotiations between the EU and Georgia, launched last February, has been a major step forward in this regard. Together, we have been working intensively to reach this point. We still have a busy agenda in front of us and the completion of the DCFTA talks is only one step in a long reform process. The EU stands ready to further assist Georgia along the way.”

According to the newsletter, “following the 1st October parliamentary elections, the new Georgian Government expressed its strong commitment to continue the Association Agreement and DCFTA negotiations at a steady pace. The EU welcomes this declaration. At the same time, it is vital for the new Government to continue the DCFTA-related reforms if the free trade area with the EU is to gradually reveal its full benefits for Georgia.”

The DCFTA negotiations between the EU and Georgia were launched in February 2012, following a long preparatory process.

The EU’s Internal Market consists of 27Member states. The removal of barriers faced by economic operators, as well as the introduction of high standards of consumer protection is the main foundation of the EU. It is widely acknowledged that the Internal Market has created enormous benefits to its members.

The free trade area will provide a gradual integration of Georgia with the EU’s Internal Market. Extending the Internal Market to Georgia will, inter alia bring benefits for:

• Domestic and foreign investors and entrepreneurs: more legal certainty creates trust, in addition to a fair and business-friendly environment, and further reduces corruption (e.g. by introducing transparent rules on competition and strengthening protection of intellectual property). In consequence, investors will be attracted to the Georgian market and help diversify Georgian economy by spreading technology and know-how;

• Consumers: because Internal Market rules would institute modern standards in the field of industrial products and food safety, it would ensure better product quality and lower prices for goods as a result of increased number of products on the market.

The areas covered by the DCFTA include: trade in goods (including gradual elimination of import duties, rules of origin, customs and trade facilitation, sanitary and phytosanitary measures, technical barriers to trade), trade-related energy aspects; trade in services and general establishment provisions; intellectual property rights and geographical indications; public procurement; sustainable development; competition; dispute settlement; trade defense instruments; transparency provisions.

At present Georgia enjoys unilateral trade concessions from the EU through the so-called Generalized system of Preferences (GsP+). This system is offering some preferences as compared to the future DCFTA. Once the DCFTA replaces the GsP, EU import duties will be abolished for almost all products.

On top of this both sides will address barriers to entry on the EU market of goods such as products of animal origin. Currently these are not admitted to the EU market as they do not conform to EU food safety standards. This would be a major improvement as compared to the current GsP+ treatment which has a unilateral, temporary character and is not negotiable with the EU.

In 2011, the EU’s share in Georgia’s international trade represented 26 %, followed by Turkey (16 %) and Azerbaijan (10 %). Total trade in goods with the EU amounted to €2.19 billion in 2011, the highest ever igure in terms of total trade value. EU trade with Georgia increased by 27% compared with 2010. That said, growth of EU exports to Georgia has been much higher (37%) than of imports from Georgia (8%), conirming the trend from 2010.

Georgia imports from the EU machinery and transport equipment, chemicals, fuels and mining products; while Georgia exports cover mostly fuels and mining products, some chemical and agricultural products.

A trade and sustainability impact assessment study, carried out by a consortium of Ecorys (Netherlands) and CAsE (Poland and Georgia), has assessed the short and long-term effect of DCFTA on Georgia. The final report has just been released. It confirms that, in the long run, Georgia’s exports to the EU are expected to grow by 12% and imports by 7.5%. In the long run and if Georgia conducts prescribed policy reforms, its GDP is expected to grow by 4.3%.

 

 

 

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