Georgia and Armenia to Unite Markets
24 January, 2013
Georgia and Armenia to Unite Markets
Georgia and Armenia plan to set up an integrated market. Sector pundits find the initiative a step toward creation of unified South Caucasian market space ultimately.
Creation of unified Georgian-Armenian market was decided during the visit of Georgian Prime Minister Bidzina Ivanishvili in Yerevan on January 17, 2013. Tigran Sargsyan, Prime Minister of Armenia, suggested his Georgian peer to integrate markets and the latter eagerly accepted the idea.
“Mister Prime Minister said during our meeting that we should build a
united market, I loved the idea and took it up immediately,” Ivanishvili is reported as saying during his mutual press conference with Armenian Primer on January 17. “It will be great if we make maximal integration of markets that will facilitate to economic prosperity and improvement of our countries. Our team is absolutely prepared to deepen relationships between two friendly states and first of all economic relationships should increase.”
An inter-governmental agreement on mutual administration of three customs check-points at Georgian-Armenian borders was signed by Georgian and Armenian finance ministers immediately. The agreement envisages simplification of customs procedures on commercial cargos and improvement of customs control. The general information necessary for cargo declarations will be exchanged through electronic way between Georgiana and Armenian customs that will reduce differences between two customs on information obligatory for customs procedures. If any doubt will arise on account of certain cargos, the customs of releasing country may control the questioned cargo.
The mutual administration of customs check-points is expected to bring more effective management of customs check-points as well as higher transportation and trade-and-economic relationships between countries.
Georgian economic analysts greet the unified market initiative as they find it in line with the idea to create the unified Transcaucasia market incorporating Georgia, Armenia and Azerbaijan ultimately. The idea looks quite hypothetical at the moment due to territorial conflict between Armenia and Azerbaijan tracing back to early 90s of the past century, however sector pundits hope that neither feud nor friendship between countries is eternal as history shows.
Demur Giorkhelidze, an economic expert with Georgian Dream, the ruling power believes that Georgia having friendly relationship with both Azerbaijan and Armenia should play a role of careful mediator wisely balancing the situation between rivaling neighbors so as to put them to peaceful solution of political conflicts in the end.
“Deepening economic relationships with Armenia is as important as with Azerbaijan and we all should focus on creation of the common South Caucasian or Transcaucasia market as a target point,” Giorkhelidze said in the interview to Georgian Journal. “There should be no bureaucratic barriers between our countries and the unified economic space should exist that will attract more investors to our countries that otherwise are less attractive to big fishes as separately South Caucasian countries are small markets.”
Ditrikh Muller, a co-founder of Georgian Investment Group, also cherishes the idea of unified Transcaucasia markets and finds apt to double the EU economic model. He also believes only economic relationship may discharge all political conflicts in the region. But customs and trade regulating legislation as well as democratic level of all the three countries should be streamlined first of all.
“As of yet Georgia is far ahead to its neighbors from the point of view of business regulation and democracy whatsoever. And if we speak of unified market with Armenia it will be impossible if customs and trade regulations are not harmonized. On the other hand, similar sort of unified market should be set with Azerbaijan. Once businesses of conflicting countries start communication it will gradually lead to solution of political conflicts, I mean our territorial conflicts with our breakaway republics of Abkhazia and South Osetia too. South Caucasus is a small territory to have such resisting long-term political tension that scares investors off. It should become a peaceful region at last,” Muller said. Soso Archvadze, an economic analyst, finds the idea of Transcaucasia market in line with the global tendency focused on removing trade barriers as much as possible worldwide, but remote due to political conflict between Azerbaijan and Armenia.
“During Soviet regime South Caucasian countries were not discussed separately but as unified Transcaucasia market, so certain logic does exist in the idea, but it is scarcely possible in near future due to political conflict between Azerbaijan and Armenia,” He said.
To Archvadze unified market with Armenia is bigger trade turnover first of all. Armenia is number 9 trade pairtner to Georgia with around 3.2% of share in entre Georgian foreign trade [following the US and Bulgaria with 4.3 and 3.3% respectively] that is not normal to neighboring countries. Turkey and Azerbaijan, another immediate neighbors of Georgia are traditionally top two trade partners with around 15% and 12% respectively at the moment. Russia used to be top trade partner before it imposed embargo on Georgian agriculture product in 2006 and Turkey actually replaced it after embargo. High trade turnover with Azerbaijani is defined by its energy resources and mutual regional projects with Georgia. Armenia has less economic opportunities to this end but it definitely is able to increase its trade share with Georgia to at least 10%.
“It is a shame to have such a low turnover with our immediate neighbor like Armenia. So it is a high time to deepen economic relations with this country and let’s start by increased trade first of all,” Archvadze said.
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