Georgia Expects Free Trade with EU in One Year
20 December, 2012
Georgia Expects Free Trade with EU in One Year
Georgia may get free trade access to European market in a year since the new Georgian government appears appeasable to European recommendations. The fourth round of negotiations in Brussels at the end of past November turned out positive enough. The EU got convinced that the new administration of Georgia is amenable to the recommendations set to Georgia as preconditions for attaining free trade access to the EU market. Therefore, the EU does not rule out now that negotiations between the
EU and Georgia on Deep and Comprehensive Free Trade Agreement (DCFTA) may be through at the Vilnius Summit scheduled by the end of 2013. The EU requirements include streamlining Technical Barriers to Trade (TBTs), Sanitary and Phytosanitary (SPS) Measures, Intellectual Property Rights (IPR), and Compatibility with the European law.
While ex-government of Georgia has been more or less appeasable to fulfill the first three conditions, the compatibility issue turned out as a real stumbling block. The super-liberally inclined ex-government of Georgia revoked anti-trust law as well as the service in 2005 and introduced a kind of competition agency instead, which proved to be completely ineffective. The EU pressed to restore an adequate competition legislation and effective regulatory body but ex-government of Georgia rebuffed the offer for a long time.
However, as the desire to get a free access to the enticing EU market was quite strong, ex-government made cosmetic changes to the law and restored the Agency for Trade and Competition. However, it was merged with the State Procurement Agency in January of 2012. The merger posed explicit interest conflict risks. Experts feared that as far as competence of the new Agency incorporated both organizing and monitoring of the state procurement process it might lead to non-transparency and interest clash. Besides, the personnel balance at the integrated Agency created less hopes that the competition body might have been effective: one-third of the personnel or around 40 people made the procurement division and only 9 persons worked for the competition one.
The EU was not quite happy over the merger that hampered the negotiation process. When talks on DCFTA started in 2008 the EU official delegation to Georgia hoped to get through procedures by 2012 as a maximum. As a matter of fact the procedures lingered up to this day and only shift of power eased the situation. No sooner new government took the office term it started work to separate the competition and procurement agencies again in order to establish a strong and effective competition body in the country. The EU greeted the decision and Georgian analysts expect of the Europe to accelerate procedures hence forth.
According to Badri Ramishvili, a marketing analyst and associated professor, now when Georgian government became docile to meet EU requirements thoroughly the EU has no reason to linger with official procedures and adoption of the unfettered trade between Georgia and the EU by end of 2013 seems quite realistic. He believes that the EU is no less interested than Georgia in free trade due to political aspects of the issue.
“All the time we speak of geopolitical location of Georgia and it became kind of a trite thing but this is the trump card to Georgia that really matters today. Clash of civilizations is obvious and the frontal line lays at the Caspian Sea. The EU and the west generally are interested to keep this line off the Black Sea while China is interested to keep the west off the Caspian Sea. And Georgia with its 2 thousand years of Christian background and around 3 million of population located between the Caspian and Black seas seems as the most reliable ally to the west. Secondly, the EU has its interest in energy projects [aimed on channeling Caspian gas and oil to Europe through Georgia]. On the other hand China, aspiring to worldwide leadership and particularly eyeing on Russia, considers Georgia [bordering with Russia and Europe] as an apt platform to get a foothold. It was China who was to construct a new town Lazika [a project of Mikheil Saakashvili, President of Georgia that is revoked by new power] at Georgia’s Black Sea littoral. It is up to Georgia to make a reasonable choice now,” Ramishvili said in the interview to Georgian Journal.
However the EU is not supposed to sit twiddling thumbs while Georgia thinks. Europe very likely will do its best to secure Georgia’s partnership to the west and will make lucrative suggestions that Georgia would not be able to refute. And adoption of unfettered trade or visa-free regime between Georgia and the EU can be one of these attractions.
Ramishvili believes Georgia may enjoy big profits of the huge EU market, whose capacity is ten times bigger than the much coveted Russian market. Georgian wineries hope to be more competitive in Russia than in EU due to market memory. Ramishvili assures competition in Russia became as strong as in the EU since 2006 when Georgia was ousted from the said market. Besides, Georgia has no tariff-free trade with Russia as the EU promises; it makes Russian market less important for Georgia.
“As soon as the political decision is made and the EU declares it opens up its market to Georgia, I expect increase of investments in Georgia roughly, by 10%. And since it is a small county, the economic effect of this figure will be huge,” Ramishvili said.
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