18 July, 2014
Georgia and the European Union signed Association Agreement, including deep and comprehensive free trade area (DCFTA), on June 27 in the margins of the European Council meeting in Brussels. The same day, the EU signed similar agreements with the Republic of Moldova and Ukraine.
The EU-Georgia Association Agreement has been ratified by the Georgian parliament today.
The Agreement constitutes a ‘reform agenda’ for Georgia designed for gradual approximation of the country’s legislation to EU norms and regulations. It is a part of a new generation of Association Agreements with Eastern Partnership countries as it provides a long-term foundation for future EU-Georgia relations and a free trade component. Hence, it offers not only improved opportunities for trade and investment, but is aimed to contribute to Georgia’s gradual economic integration into the EU Internal Market, notably through establishing a Deep and Comprehensive Free Trade Area.
The document is comprised of 8 titles which mainly concern political dialogue and reform, cooperation in the field of foreign and security policy, justice, freedom and security, economic and other cooperation policies, trade and trade-related matters (DCFTA) as well as financial assistance and anti-fraud and control provision.
The most comprehensive part of the Agreement comprise of trade and trade-related matters which includes:
(a) Establishing a free trade area starting from the entry into force of the Agreement. The free trade area shall be organized in accordance with the requirements set forth under the General Agreement on Tariffs and Trade 1994;
(b) Elimination of customs duties on imports on the goods originating in the other party. Certain products are, however, subject to limitation of the tariff rate quotas and some products will remain subject to custom duties. Notably, the Agreement does not preclude the maintenance or establishment of customs unions, free trade areas or arrangements for frontier traffic provided that it shall not contradict with the terms of the Agreement;
(c) Approximation of technical regulations, standards, and conformity assessment;
(d) Sanitary and phytosanitary measures;
(e) National treatment and most favoured nation treatment;
(f) Cross-border supply of services;
(g) Temporary presence of natural persons for business purposes;
(h) Conditions for licencing and qualification;
(i) Computer, postal and courier services;
(j) Electronic communication networks and financial services.
Other areas of cooperation include maritime, electronic commerce, competition, antitrust and mergers legislation, energy sector, public procurement, capital movement, intellectual property rights and etc.
The Parties also commit to cooperate in the areas of public internal financial control (PIFC) and external audit, taxation and statistics, development of a sustainable national transport policy covering all modes of transport, the development of competitive, transparent and efficient energy markets allowing third parties with non-discriminatory access to networks and consumers, environment, climate action and others with a view of gradual approximation of Georgia’s legislation with EU standards.
Considerable regulation is present with respect to securing the personal data and legislative measures to that end. Georgia already made pre-Agreement arrangements by adopting the personal data protection laws and establishing supervisory agency for this purpose.
The Agreement provides for establishing the Association Council which shall supervise and monitor the application and implementation of the Agreement and periodically review it in the light of its objectives
Under the Agreement Georgia must adopt some 350 EU laws by a specific date with timeframes ranging from two to ten years. In return, the country will get access to the EU's 500 million consumers’ market with free movement of goods, services and capital. This will open up new opportunities not only in EU-Georgia trade, but in Georgia's trade with other countries of the world, given that the EU norms and standards are recognized worldwide.
Georgian officials declared that the private sector will get the state’s support in adaptation to legislative and institutional changes that will be introduced in the country step by step. As regards the free movement of citizens, it will be facilitated after implementation of the Visa Liberalization Action Plan in which Georgia is progressing well, according to the European Commission first progress report.
The main benefits the implemented Association Agreement with EU will bring for Georgia:
- Establishment of a trading system, compatible with the European Union – the largest single market in the world;
- Creation of a transparent business environment;
- Increase in investment attractiveness of Georgia;
- Creation of new enterprises and increase of exports;
- Creation of new jobs;
- Better business opportunities for SMEs through the opening of markets;
- Diversification of export markets and reduction of exporters’ expenses;
- Better protection of consumers through the higher quality and improved safety of locally-grown agricultural products;
- Increase in Georgia’s short-term GDP by 1.7% and long-term GDP by 4.3%;
- Increase in Georgia’s short-term export by 9%, long-term – by 12%;
- Introduction of European standards in administration;
- Better access to improved health services;
- Better functioning judiciary, strengthening the rule of law, increased transparency and many others.