Protection of Consumers’ Rights in Georgia

Tbilisi, Georgia, The Union “Century21”, 2007

Introduction:
Protection of consumers from poor quality and harmful for health and sometimes even hazardous production and services is a hot issue of modern time.

Increasing amount of unreliable and counterfeited products has a negative impact on developing of economics and brings irreparable damage to the health of every human being. According to the data given by experts there have been calculated results in falsification of products in world economics, which annually equals to astronomous figure – from 500 billion to trillion American dollars. There is even bigger damage to heath of population caused by consumption of poor quality and harmful for health and sometimes even hazardous production.
Despite of many realized in life technical measures (protection of labels and counter labels from falsification, holograms, brand packaging and lids, putting bar codes etc) consumer market finds itself under a bigger pressure of poor quality goods, consumption of which brings chronic and total diseases to population (beginning with degradation of digestion system and finished with hereditary diseases). This means that there is realized “leaking” genocide. We can say it boldly that in XXI century among the issues on the agendas of the leading states of the world and international organizations banning of low quality and falsificated production from the consumer market and protection of consumers’ health occupies one of the most important places.
Protection of consumers’ rights covers a wide specter of activities like working out unified policy in this sphere, creating statutes and regulations, putting forward juridical regulations of consumers and service supplier relationships.
Necessity of protection of consumers’ rights is conditioned by two following matters: in the first place – by means of elimination of the existing misbalance between consumers and suppliers it supports much more effective work of the market. Consumers basically are individuals which are less protected in these relations and have less access to juridical or other kind protection than business organizations and companies. During the agreement because of the existing disbalance between consumers and suppliers the market can not envisage all the desires of consumers that can sometimes bring us to total chaos.
Second condition of necessary protection is public declaration of consumers’ rights.
This means protection of consumers from hazardous products and protecting them from purposeful and untidy advantage of suppliers over the weak position of consumers in this regard.
About the seriousness of the issues connected to protection of consumers’ rights speaks the fact that UN worked out a special document regarding protection of consumers’ rights. In particular General Assembly of the Organization on April 09, 1985, adopted resolution 39/248 “Guidelines of protection of consumers’ rights” in which it formulated principles and basics of civilized consumer policy. According to the document fundamental rights for consumers are:
• Safety of products and services
• Information about the products and services
• Choice of products and services
• Satisfying of basic needs of consumers
• Pay damages
• Consumers education
• Healthy environmental conditions
Protection of consumers’ rights is especially acute in the countries of the third world, where the governments for different reasons can not or would not make valid actions to solve the problem. Situation is analogous to this in Georgia.

LEGISLATION
In Georgia protection of consumers’ rights is declared by the 2nd paragraph of article 30 of the Constitution. Besides, statements about the consumers’ rights are given in the civil code of Georgia, laws of “Protection of consumers’ rights”, “Certification of products and services”, “Standardization”, “Safety and quality of food products” and other juridical acts.

GEORGIAN LAW OF “PROTECTION OF CONSUMMERS’ RIGHTS”
In Georgia legislation regarding the protection of consumers’ rights was worked out at the beginning of the transition to market economics. As the bases there was taken Russian legislation adopted in 1992, which on its side was not free from soviet mentality and of course from centralized management. Main drawback of the above mentioned legislation is an attempt to take in view and put under the state control and regulation elementary relations between consumers and suppliers existing in different spheres of trade and services. These relations are regulated in practice without administrative interference. Also life made it clear that extra regulation does not mean effectiveness of the regulation.
On the bases of the law of “Protection of Consumers’ Rights” there is worked out and adopted by the ministries and interested offices more than 30 normative acts about trade and services in separate fields. Such an amount of normative acts in fact is not effective for the population, as they can not make their way through and use them properly. Nevertheless, exactly the formation of civil society and increasing of civil activity must be laid as a foundation for perfection of the system of protection of consumers’ rights.
In the Georgian law of “Protection of Consumers’ Rights” there were realized several changes in 2005-2006, out of which we will single out changes that were anticonstitutional and an obstacle for business development, in particular:
According to changes made in 2005:
– there was liquidated authorization of the Antimonopoly Service in the sphere of consumers’ rights, and they stopped authority of safety monitoring and regulation bodies for products (State Standard, sanitation and hygiene office etc) until January 1, 2006. It must be noted that until January 1, 2006 Georgian Government liquidated bodies of monitoring of safety of production as a result of which Georgian consumer market and consumers were left unprotected from the State.
Among the changes made in 2006 we must note the fact that Parliament of Georgia adopted legislative changes which hamper economical activities, in particular they introduced responsibilities of vendors who must ensure indication of the price for every product on sale, which is in contradiction to basics of market economy. We welcome measures taken for elimination of this change in 2007.
Georgian law of “Protection of Consumers’ Rights” as we have already mentioned above was adopted in 1996. In the opinion of experts of our organization, coming out of the strategy of integration of Georgia in European structures, there must be worked out a new bill which will be in compliance with the demands of European Union. Meanwhile we offer corresponding bodies of the government a brief overview of the changes which will liberate existing law from characteristic features of centralized system management by all means.
1. As Georgia moved to voluntary standardization the word “standard” used in the law should be changed by the word “technical regulation”. Correspondingly definition of “technical regulation” according to ISO/IEC 2-96 guidelines must be introduced in the law.
2. From the law there must be taken out point E, of the second part of the article 6 which obliges an entrepreneur to indicate technical regulation or standard on the label of the product. This demand is an extra technical barrier in free trade, as it does not exist in WTO member countries (also in the countries of European Union). In point F of the same article to the list of main consumer characteristics of production there should be added compulsory information about Gene Modified products for consumers (such indication is compulsory in the states of European Union and limited in amount at the same time, it should not exceed 0.9%).
3. There should be removed article 11 “rights of privileges and advantages” which does not exist in reality.
4. Changes should be made in Chapter II “rights of consumers and their protection during selling of production, fulfilled jobs and supplied services” as given in he chapter requests do not meet needs of modern market.
5. Regarding the reorganization of State structures carried out in Georgia Chapter III “State and Civil Protection of consumers’ rights” also needs revision (there are mentioned structures that do not exist any more).

GEORGIAN LAW OF “STANDARDIZATION”
In Georgia first law of “Standardization” was adopted in 1996, it represented Georgian version based on corresponding law of Russian Federation. Actually it was based on the model of centralized management. After Georgia decided to take the way towards becoming a member of WTO adoption of the new law of standardization found itself on the agenda and in 1999, June 25 a new law was adopted according to the recommendations of the experts of EU and other international organizations. This law itself was a document of transition from compulsory standards to voluntary standards and was fixed in point 4 of article 23 of the law:
“Compulsory standards of Georgia after integration of Georgia to WTO will be changed to voluntary standards during three years.”
Despite the existence of this note, until 2005 no effective steps were taken by the executive government after adoption of the law.
In 2005 at the spring session of the Parliament there were entered changes in the law of “Standardization.”
This legislative change first of all established fundament of the institution of voluntary standardization, simplified organization of standardization works, made standards accessible, there was created National Agency of Standards, Technical regulation and Metrology, which has no monitorial function and extra beaurocratic mechanisms that used to have Georgian Standard (Sakstandart).

LAW OF ‘PRODUCTION AND SERVICE CERTIFICATION’
Georgian law of “Production and Service Certification” was adopted in 1996 after adoption of the law of “Protection of Consumers’ Rights.” Until 2005 no significant changes were made in the law. The law regulated compulsory and voluntary certification and determined rights and duties of people involved in this process. One of the main aims of the law was realization of control and monitoring of safety of production.
The law mainly was adjusted to the system of centralized management. Legally determined system was proper to “Goststandart” and it was a serious source of putting an extra barrier in trade.
The law was constructed for compulsory certification and according to it certification of a product was determined as a confirmation that the product was corresponding to indicators of safety and quality determined by the standard. By the law State Standard was authorized to formulate general rules of certification and determine the list of compulsory certification together with other executive bodies of government. The law pointed out that certification can be realized by any registered “nonprofit organization” which has corresponding accreditation. Such approach to certification was contradictory to recognized in the world principles of confirmation of compliance. By the same law there were determined functions of state inspection of the safety of production and services that is absolutely unnecessary in conditions of market economics.
In 2005, July 24, change that was adopted by the Parliament of Georgia gave us a new form of the law. By existing law of 1996 there remained only the preamble, the rest underwent changes and there appeared new chapters, in particular:
A new Chapter I – sphere of activities was added to chapter I of the law,
Chapter II “purposes” (existing was rendered precise and there were added new aims), in Chapter III – “definition of terms” in the legislative space of Georgia there appeared obligatory for this field definitions like “accreditation”, “technical regulation”, “evaluation of compliance” (here we would like to make it precise that there should be used the term “Confirmation of compliance”), “testing lab”, “safe and hazardous production”, “distributor” and other. Definitions are mainly taken from ISO 8402-94 international terms of standards and this is one more step to approach the principles of international market economics.
Chapter II of the law – “technical regulation” gives us bases to adopt it, also to work out legislative fundament to adopt, declare and accept it as an equivalent.
Chapter III – “Safety of production and its marketing” introduces to us responsibilities and duties of producers and distributors, marketing of production regulated by technical regulation and legislative bases of the declaration of compliance.
It was fascinating and necessary to give legislative bases to accreditation given in Chapter IV. Before adopting this change, accreditation did not figure in Georgian legislative space, though it must be noted that I would have been better to have a separate law of accreditation. Chapter VI – “National body on Accreditation – Accreditation Centre” also deals with the regulation of accreditation issues, which we find unnecessary to enter especially in the law of certification (there is no necessity for the Parliament to make changes in the statement of National Body of Accreditation).
Chapter V of the law gives us information about “evaluation of compliance” (?) and Chapter VII about control and monitoring of the market.
We have several remarks about the new addition of the adopted law:
1. As the term “confirmation of compliance” is a wide concept and means both certification of compliance and declaration of compliance, in the title of the law word “certification” must be changed with the term “confirmation of compliance.”
2. According to part 4 of article I the law does not regulate production received by activities of peasant, farmer, family and domestic industries. As a result quite a big amount of products remain outside the sphere of legislative regulation, which is unacceptable. We find it necessary that all the production for realization should be subordinated to legislative space.
3. According to part 5 of the same article certification of production which is subject to obligatory certification is carried out by “administrative body”, which means ignoration of the requests of international certification (State structures must have arbitration functions and should not interfere in the matters of certification).
4. Terms “evaluation of compliance” and “evaluative body of compliance” is misrepresented. International guide ISO/IEC 2-96 “Standardization and activities connected to it’, defines this term according to general dictionary as “confirmation of compliance” (includes “certificate of compliance” – a conformational document issued by the third party and “declaration statement” document issued by the producer – first party) and the other term is “confirmation of compliance bodies”. That is why in order to harmonize Georgian legislation with the legislation of EU it is necessary to introduce these terms and change the existing ones.
5. Coming out from the above mentioned changes there must be changed article 9 -”declaration of compliance.” At the same time should be changed the meaning of part 7 of the same article, according to which “declaration of compliance must be presented by the market supervising body at request . . . if this is envisaged by the technical regulation.” According to the demands of international market relations compliance confirmation document (certificate of compliance or statement declaration) is a conformational document of product compliance and it must be presented not only to supervisory body but also to the consumers. Also a phrase “if it is envisaged by the technical regulation” is unnecessary, as the technical regulation envisages obligatory demands; it is included in the aerial of obligatory certification.
6. According to part 6, article II of the law “only accredited body has a right to carry out evaluation of compliance”, which is not correct, as statement declaration is issued by the producer and he does not need to have accreditation, that is why it is necessary to make it concise that only a body which issues a certificate of compliance needs accreditation.
7. Chapter V of the law also needs revision according to declared requests.

LAW OF ‘SAFETY AND QUALITY OF FOOD”
According to Rome World Food Safety Declaration, 1996, every human has a right to have safe food. In Georgia from the point of view of food safety conditions before the beginning of reforms was far from desired, as a result everybody incurred losses and in the first place, consumers.
In the sphere of food safety as a beginning of radical changes of legislative environment we can consider adoption of Georgian law of “Safety and quality of food” in December of 2005. Adopted law was qualified as an attempt to bring close Georgian legislative environment for food safety to the legislation of EU. The aim of the adopted law is “to protect the rights of consumers in regard of health, life and economical interests in connection with food taking in view effective functioning of inner market and its diversity.”
Food safety law was based on the legislation of EU, which on its side meets demands and approaches of WTO. In particular:
– general principles of food safety recognize scientifically proved, transparent and objective approaches;
– general demands connected to safety of food for human consumption;
– responsibilities of producers on every stage of food production and transportation;
– general demands for food declaration and labeling;
– functioning of the State food control systems;
– Institutional arrangement of food safety.
The law introduced a concept of risk analyses, which means that every activity in the sphere of food safety must be based on the results of risk assessment. There is introduced an approach of from farm to the table and the emphasis from final certification of the product is moved to the control of the process. There is defined unified State policy and a body responsible for it -National Service for Food Safety, veterinary and plant protection. The law implies step by step planning of the schedule of its activization, which must ensure development of State potential and proper preparation of industry to meet the demands of consumers.
We have several remarks concerning the adopted law, changing and amending of which will bring us closer to the regulation of European Parliament and Council (EC) N178/2002 “general bases and demands of the law of food”:
1. Parliament of Georgia (a legislative body) and executive body could not get rid of Soviet vision and in the sphere of regulation was included food quality, which is basically regulated by the market relations.
2. Some of the terms need to be precisely defined according to ISO/IEC 2-96 “Standardization and activities connected to it. General dictionary” and regulation (EC) N178/2002
3. The law does not cover units of public, company and organization catering, restaurants etc.
In 2006-7 changes were made in the law which increased the distance to European legislature instead of harmonization with it.
On December 29, 2006 by the changes made in the law, date for starting articles 22, 23, 30 of the law was determined by June 1, 2008. These articles regulated bases for inspection carried out by National Service for Food Safety, veterinary and plant protection. By accepting these changes aerial of State Control of Food Safety determined by article 21 became much limited and actually the article became the means of control of documental materials, by which it increased the distance from the demands of 178/2002 regulation.
Article 36’ was amended to the law, according to point 3 of which “Before June 1, 2008 food/animal food safety State Control is realized in special cases by the rule stated by Georgian Government.” but the rule for “special cases” has not been stated yet.
On July 29, 2007, in Georgian law of “Safety and quality of food” there was made one more change and amendment and date of realization of inspection determined by the first change was postponed from June 1, 2008 to December 31, 2009 (a year before it started). Also to the same date was postponed starting date for article 14, which regulated food producing enterprises, which is contradictory to 178/2002 regulation. According to article 17 of this regulation “countries must control food and animal food producing companies so that they meet the demands put forward by the law of food on every stage of production, recycling and distribution.”
Initial form of the law helped and regulated to establish partnership relations between the State and private sector, but changes and amendments made decreased State responsibility on the expense of consumers and left them facing consumer market, which is impossible. The Service has only one thing to do – to carry out monitoring on the level of retail sale and to send correspondence to producer/distributor in the case of violation. The Service does not have right to stop realization of suspicious or hazardous production (not to say anything about withdrawal and liquidation).

LAW OF ‘’LICENSING AND PERMISSION”
By Georgian law of “Licensing and permission” in Georgia entrepreneurs needed to take a license or permission to start their business for more than 1000 activities. According to the law of 2005 number of the activities significally decreased, in particular there remained only 84 activities, 8 profit licensing and 52 types for permits.

SUMMARY
In the sphere of protection of consumers’ rights in Georgian legislature most noteworthy are legislative changes made in 2006-7. Changes made in the law of “Protection of consumers’ rights”, “Certification of production and services”, law of “Safety and quality of food”, Georgian code of sanitation, (stopped from October 1, 2007), law of “protection of plants against harmful organisms”, law of “veterinary” are in contradiction to recognized by World Organization of Consumers rights of consumers and taken by Georgia international obligations, particularly
– International Protection of Plants Convention (IPPC)
– World Organization of Animal Protection (OIE)
– Obligations by the agreement for sanitary and phitosanitary events (SPS)
– Agreement of partnership and cooperation between EU and Georgia
– Technical Barriers of Trade (TBT)
– Obligations to WTO
Our legislative space instead of harmonizing with the legislation of EU has even more removed away (e.g. regulation of European Parliament and Council (EC) N 178/2002 “General bases and demands of the law of food”).
STATE STRUCTURES
In Georgia competent bodies in the sphere of protection of consumers’ rights are Antimonopoly Service of Georgia and Sakstandarti (State Standard). Also other State structures realizing functions of advocates of consumers’ rights according to specific fields.

SAKSTANDART
Structure of Sakstandart and its responsibilities could not met modern demands of consumer market. It was not in compliance with responsibilities of analogical organizations of USA or EU, neither by its structure nor with its subordination. Reorganization of Sakstandart carried out by the State was not effective. Before 2003, Sakstandart united in itself National Body of Standardization, Department of Accreditation, Institute of Metrology and Standardization and Department of Control and Supervision. In 2003 by the decree N374 and 376 of the President there were partly accomplished obligations taken by Georgia for World Bank, WTO, and EU and there were created structural units:
Ø National Body of Standardization – juridical person of public jurisdiction
Ø National Body of Accreditation – juridical person of public jurisdiction
Ø Institute of Metrology and Standardization – juridical person of public jurisdiction
Ø Control and Supervision – inspection
According to obligations taken for WTO, World Bank and EU Sakstandard was to be freed from any other functions and be busy only with renovation of standards, their publication, registering and their delivering to consumers.
In 2005 according to structural changes on the bases of Sakstandart there were created two independent structures: National Agency for Georgian Standards, Technical Regulations and Metrology (takes care of metrology and standardization) and “National Body on Accreditation –Accreditation Center” (takes care of accreditation). These bodies do not realize functions of production control body, which is quite acceptable.

ANTIMONOPOLY SERVICE
In Georgia Antimonopoly Service was a competent State body in the matter of protection of consumers’ rights, by legislation it was responsible for market monitoring and giving consultations for consumers, though these functions were against institutional arrangement of world’s developed states, where as a rule this service has only a monitoring function on monopolist activities.
In 2005 as a result of structural reorganization instead of Antimonopoly Service there was created a supervisory body for monopolist activity in the State and it has lost its functions as an advocate of consumers’ rights.

STATE SANITARY –HYGIENIC SUPERVISION INSPECTION
Reforms carried out at the State Sanitary – Hygienic Supervision Inspection had positive impact on Georgian consumer market. Conditions of food producing enterprises and realization places improved but in 2005 according to changes made in sanitation code its functions as a State Supervision were significantly cut off, later this service was cancelled.
MINISTRY OF AGRICULTURE OF GEORGIA
On the bases of demands of the Georgian law of “Safety and Quality of Food” there was created a State sub agency – National Service of Food Safety, Veterinary and Plant Protection.
The Service was to begin realization of its functions from January 1, 2007. Though as we have noted above as a result of changes that entered the law, its activities were postponed to December 31, 2009.
According to point 3, article 36’ “Before December 31, 2009 in special cases food/ animal food safety State Control is realized by the rule stated by the Government of Georgia,” but Ministry of Agriculture has not stated the rule for “special cases” yet.
According to the same amendment 36’, article 2, Ministry of Agriculture of Georgia was to elaborate and affirm a list of necessary training events for authorized public servants of food safety, veterinary and plant protection services, which was not done.

SUMMARY
There is a very poor situation in the State from the point of view of protection of consumers’ rights. In the State there was not formed a unified controlling body, instead, in different State structures there were created surveillance bodies only for some spheres. For instance, National Service for Food Safety, veterinary and plant protection formed at the Ministry of Agriculture of Georgia (takes care of the sphere of food safety and quality), Georgian National Commission of Energy Regulation, and Services for consumers’ rights created at Georgian National Commission of Communications. In many spheres, e.g. industrial and domestic life, construction, toys and clothes for children, and in many other fields of production and services there was not formed a State surveillance body, which will be obliged according to Georgian Constitution to protect consumers’ rights. At the same time it must be noted that formation of controlling bodies in separate directions can cause subordination of one controlled to be unit to two or more State controlling structures, which will be excluded in conditions of unified controlling structure.
Today we can say that these structures work ineffectively. There are rare cases when in supreme bodies of the Government there are fixed any kinds of activities connected to the thematic of protection of consumers’ rights. In Georgia today issues of consumers, production and safe services are interconnected to many other problems and are not given any priority.
As a result of implemented changes there decreased quality of local production and Georgian market became second-rate and in many cases a place for realization of rejected by other countries products. All this seriously interrupted development of business in the country.
Georgian government immediately must realize declared by World Organization of Consumers “Guiding principles of protection of interests of consumers” and demands of Constitution of Georgia:
1. Georgian government must define which model it will chose for protection of consumers’ rights;
2. There must be determined a structure for protection of consumers’ rights in every sphere;
3. There should be implemented consumer education at elementary, secondary, high schools and universities
4. There should be realized trainings and workshops of consumer rights for representatives of public offices, experts, business circles, experts of education and teachers.
5. After having analyzed experience of world’s leading countries according to chosen model in the sphere of protection of consumers’ rights there should be worked out a new bill of “protection of consumers’ rights.”
6. As violation of consumers’ rights mainly comes to food products:
6.1. The laws of “certification of production and services”, “Safety and quality of food”, “food and tobacco”, “public health” etc must be refined in regard of protection of consumers’ rights;
6.2. As according to Georgian legislation it is compulsory to indicate used food additions on products but there is no lab in Georgia which will determine existence of food additions, the State must support creation of such a laboratory.
6.3. There should be elaborated a bill of “withdrawal and liquidation of hazardous products”, which will become a legal mechanism for cleaning of Georgian market from hazardous production.
6.4. There should be elaborated a bill about the issues of importing gene modified products, their production and realization.