Russia’s WTO Entry Does Not Cancel Ban on Georgian Products Automatically
17 November, 2011
Russia’s WTO Entry Does Not Cancel Ban on Georgian Products Automatically

Russian ban on Georgian products won’t be removed automatically after Russia joins the World Trade Organization since officially it was linked with quality problems. 

“Russia’s enrolment within the World Trade organization (WTO) does not mean Russian market will open automatically for Georgian wine and Borjomi,” Genadi Onishchenko, top official of Russian Sanitary Service, was reported saying on November 8, 2011, on the eve of official endorsement of Georgian-Russian agreement in Geneva on November 9. This document secured the long-awaited consent of

Georgia, already the WTO member, to Russia’s WTO bid as sides agreed to admit international monitors to control cargo turnover within Georgian conflict zones.

According to the Georgian government, this is the key achievement as Georgia got a tool to control its borders in its breakaway republics of Abkhazia and South Ossetia, which had been completely uncontrolled since early 90s when the conflicts broke out.

Georgian economic analysts think the actual benefit of Russia’s WTO membership will be lifting the five-year ban on Georgian wine, mineral water and agriculture products imposed by Russia in 2006 under the alleged high amount of pesticides in the product.

The WTO regulation does not allow trade embargo between its member states and requires putting of all trade partners in similar conditions. So quality requirements of Russia for Georgia and Italy for example must be equal. On the other hand, the quality pains that Georgia has faced in Russia will be transferred to WTO and settled through mediation of the WTO dispute council and independent audit.

“Russia can no longer practice discriminating approach toward Georgia thanks to the WTO standards,” Irakli Kovzanadze, an economic analyst, told Georgian Journal. “

How quickly it will happen is another question as officially Russia imposed no trade embargo [that is removed automatically as soon as Russia joins the WTO] but banned Georgian product for quality reasons. And bypassing of those reasons is at Moscow’ discretion.

“It’s up to Russia to make decision and nobody can make a prognosis when it happens. It may take a short time, or a very long time. We are to start working in this direction,” Irakli Matkava, Deputy Economic Minister of Georgia, told GJ. “The good news is that thanks to WTO Russia will be  placed within the international frameworks and we can use this WTO tool.”

This means that if Georgian entrepreneurs want to reenter the Russian market they will have to appeal to Onishchenkos’ office first to be accredited and if the latter snubs Georgian product again they may settle the issue through the WTO that may take indefinite time.

On the other hand, Georgian government finds Russian market attractive but risky and prefers to be focused on alternative markets; especially Chinese one where Georgian wine turned out quite successful lately.

Kakha Kukava, leader of the Free Georgia oppositional party, claims Georgian government presses on business latently to hold them from getting back to Russian market. Due to this very reason only six wine companies became interested to undertake accreditation procedures at Russian sanitary office after Onishchenko expressed a will in this past summer to allow Georgian product back if they go through due certification procedures.

“Companies prefer to remain confidential till procedures are completed,” Kukava said adding that Georgian products will be sold at the Russian market from January 2012.

Those who appealed to Onishchenko’s office openly either changed mind later or make no comment at the moment.  IDS Borjomi Georgia, producing Borjomi mineral water, which started negotiations with Russian sanitary office in summer, does not make comments at the moment. Sarajishvili Company, producing Georgian brandy, appealed to Russian sanitary office a fortnight ago and was supposed to present due papers for certification past week as Onishchenko reported in his comments, however after the visit of Zaza Gorozia, agriculture minister, Sarajishvili changed its mind, Pirveli news agency reported on November 8.

Guja Bubuteishvili, Director General of Sarajishvili, in the cell interview with GJ eluded direct answers whether or not Sarajishvili appealed to Onishchenko’s office or withdrew the request ultimately but did not conceal his intention to reappear at Russian market.

“If someone is supposed to buy our product we will sell it,” he said adding a certain American company plans to take Sarajishvili’s product to Russia. He did not elaborate more details.

Matkava asures government does not dictate business where to export.

“We want Russian market, but Georgian wine and mineral water started hitting alternative markets. It will be good if we get Russian market back but if not it is not the single market where we are competitive,” he said.

Bigger part of Georgian wine-companies considers getting back to Russian market very cautiously as they finds it risky. According to Tina Kezeli, President of Georgian Wine Association, Georgian wine sector learnt a lesson in 2006 when it underwent through a collapse as it was by 90% dependent on Russia, and now once it got recovered, improved its quality and hit new markets, it is focused on more diversification and new export directions in China and Asian countries appear quite promising.

Giorgi Barisashvili, a wine expert, believes Georgian wine sector that came to senses at last after it lost  Russian market that was kind of narcotic as consumed low quality and falsified wine thus providing by easy profit, should focus on qualified product and target at premium segment European markets.

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