About simplified visa regime with Europe and the free trade problems
After the Russia-Georgia War the wide discussion have been started to judge and estimate what influence the August’s events had on this or that sphere, what kind are the losses, what are the perspectives and what ways of development exist. This,of course, touches every sphere: the swocial economic condition of citizens, ecology, energy sphere, construction business, Bank System and so on. In this case, our main subject of interestis the Georgia-EU relationship. What has changed after the famous events of August, in the backgroud of the politicaly activated European Union, towards Georgia-Russia’s issues, what is taking place in the frame of the Neighbourhood Policy? Moreover that the European Integration still remains as a top priority in Georgia’s Foreign Policy.
Economic integration is vitally important to preserve the policy of Georgia’s integration towards European Union. Thats why we will direct our attention on economic issues. Everyone knows that Georgia uses GSP (General System of Preferences) tariff privileges. With this way the EU voluntarily creates the primary conditions for developing countries to enter its market that helps developing countries to favor their export. It is worth mentioning that the EU was the first to adopt the GSP in 1971. Nowadays the EU has granted GSP user country status to the worlds’ more than 180 countries, this gives countries the possibiity to carry goods on the European market with reduced or zero tariff. From 2005, the EU has adopted the new, special scheme “GSP+”- on this the special schemes have been united: protection of labor rights, environmental protection, drug and fighting against traffiking, and according to this committee along with the other 14 countries Georgia is included too. GSP+ managed to include the variety of 7200 products. Though, it is worth to mention that during the trade with the EU the third world countries are managing with more or less success to overcome the so called Tariff or administrative barriers and are facing significant resistance during the non-tariff barriers’ overcoming process. Among non-tariff barriers are considered those technical (among them Sanitary and Phytosanitary) standards, which the product is to satisfy in order to enter the EU market. They also imply the demands of manufactured products and certification, etc. Overcoming the EU non tariff barriers are complicated by the reason that these barriers are the result of the EU’s legislative acts asserted by its institutions and the hard synthesis of the EU member states’ national legislation.
It should be mentioned, that the negative influence of non-tariff barriers on the development of global trade system is not only observed in the mutual trade with the EU. Correspondingly, the issue of their reduction is inserted in the negotiations of “Doha Round Development” which is lead in the framework of the WTO (World Trade Organization).
GSP offers only tariff privileges to the developing countries. The European Union has never worked out trade privileges connected with the non-tariff barriers, which even in the conditions of low custom-tariffs creates an obstacle for the developing countries to enter the European market. In spite of this, the continuation of the program GSP+ has a great meaning for Georgia. The continuation or non continuation of it has to be decided soon, before the end of 2008. What are the chances of Georgia in connection with this program and in spite of this, in what stage is the agreement about the issue of free trade between Georgia and the EU? On these matters we spoke to Kakha Gogolashvili -the director of Georgia-European Politic and Law Consultation Center.
– Mr. Kakha what has changed in Georgia-EU relationship after the famous events of August? What influence may the Russia-Georgia War and its results have while Georgia’s integration to the European Institutions?
– The facts about losses that Georgia experienced during this war are well estimated in the joint document of the World Bank and the UN, which had been presented in Brussels on the Donor Conference. As it is described in the document, the losses compose 3.25 billion USD. Here is included everything- infrastructure, the worsening of the social background, ecological condition, budget, the losses of Bank and Business sector, etc. But as we know, we received more aid from donors- 4.5 billion USD, which should manage to guarantee the renewal of these losses. This is about financial losses. The first thing that greatly changed relatively with the EU is that it became a more active partner for Georgia. It has imposed a new mission for itself; this is the unprecedented level of political support, when the European Union is settling your problem with the third country, cares to defend your territorial integrity, peace agreements, to defend you from military aggression, etc.
– Does this mean that simultaneously of such strong political support, the European Commission when it starts the estimation of liabilities our country has taken in the framework of the ENP (European Neighborhood Policy) will close its eyes on several facts?
– The European Commission won’t close its eyes on anything. This means that it is taking more responsibility for ensuring your development, defense and security. As for our relationships’ specific aspects, those principal approaches that have been existed will remain unchanged. These may be either the development of democracy or the introduction of market economy. In all these the EU will remain as successive and exigent as it used to be before.
– And what is happening with connection of the GSP+? As we know the issue of its continuation or non continuation is to be decided in the end of the year.
– Yes, government is now preparing a document that is to be carried in the European Union before the 31st of October. After this, the European Commission will discuss this statement and decide prolong or not the program of GSP+ to Georgia. That is mostly important on this stage, all the 27 Conventions, which have been taken as necessary conditions in order to preserve the GSP+ for Georgia are ratified. The ratification of the last 2 Conventions have taken place recently. One was the Convention of Mexico, the ratification of which took place on October 2 and the second- the Protocol of Katrakhena, ratification of which followed on September 26. The latter concerns the issue of biological diversity. But the talk is not only in the ratification of the Conventions but in the implementation of them too. How well are they fulfilled? Directly with the connection of this the Georgian government is preparing a statement in which everything would be described in detail. Finally, of course, it is the European Commission to decide how are the demands of the EU fulfilled in that level to satisfy the needed demands for the continuation of the GSP+ program. The European Commission will by all means have claims in distinct directions, but the chance of agreeing and prolonging the GSP+ for Georgia, to my mind exists.
– Besides that the EU has activated the negotiations with Georgia about the issues of free trade and simplified visa regime.
– The statement of the EU on hastening the negotiations with Georgia on free trade and simplified visa regime is very important. Main is to start negotiations on these soon. To this was connected the arrival of the European Delegation in Tbilisi on October 14-16, who organized the first consultations with Georgian government and discussed how much Georgia is ready to move on this regime.
– Specifically, what privileges does the agreement on free trade imply?
– This is a deep agreement, which implies the removal of tariff barriers towards all directions, on every kind of trade, as in service also in industrial sphere. Beside this, the agreement on free trade foresees the minimization of non tariff barriers. But for this it is necessary that Georgian legislation approach the European legislation, because of the standards of products produced or production standards equal those of the European ones. Nowadays the tariff barriers are very low 2-3 % and directly the non tariff barriers are barriers the fulfillment of which are necessary and for their sake you are not allowed to enter that market. The complexity of these demands are dictated by the member states, for one side, to maximally defend the health of their citizens, and for the other side to create the conditions of fair competition on the inner market of the EU, in other words not to let the entering of products on their market, which are made in the conditions and by such technologies that do not correspond to the European Union standard and have low self cost price and because of it has superiority on the market.
– Exists the initiative of the WTO (World Trade Organization), the so called Doha Round Agenda, which implies the facilitation of access procedures on Western markets for the developing countries. The EU is backing this initiative.
– I do not pay great attention to the ongoing negotiations and processes of the WTO, but it is obvious that the general tendency is to drop the tariff barriers to zero. As for non-tariff barriers the facilitation of them would not be followed in the EU. Because this is not only the matter of competition, this touches the issues of peoples’ health and safety, the standard and quality of living. So towards this direction, I hardly doubt that the facilitation would follow. While importing food products on the European market, the maintenance of such kind of non-tariff barriers, which serves the health protection and food safety norms, is considered to be fair by the EU. Correspondingly, it is natural that the EU is trying hardly to create insuperable obstacles for the flow of low grade and customer health’s dangerous products on the European market from the developing countries.
– For this the regulation system and the issues of standardization should be settled in the country. Towards this direction we experience serious problems.
– Yes you are right, many directions and exactly state regulation did not exist here. For example here have not existed the food safety, industrial standards, construction norms, energy security and the issues of environmental protection and so on, or everything that touches economic activity. Everything above mentioned is regulated in the EU and subordinates to the special norms, exist the services of product quality control. Everything this needs to reach corresponding level in Georgia.
– In case of free trade, will tariff barriers reduce to the zero point?
– Yes it will be reduced to the zero point. Generally such kinds of agreements imply the working out of removal list for several products. Nearly 70 % of the product is not taxed when the regime of free trade is established. Some species of products may be taxed. This is a matter of mutual agreement. When such kind of agreement takes place between 2 big countries, there always exist removal lists, where the products are indicated that do not enter to this list and is taxed according to the old regime. In other words, the tariff barriers on several products might not be annulled. We hope that such kind removal list would not exist for Georgia; we are just to try to reach the kind of agreement in the framework of which none of the variety of product be taxed.
– approximately what time is needed to reach this agreement and move to free trade regime?
– 2-3 years will be needed to reach the point of agreement signing. It depends on how intensively the State works on this issue and how much prior this direction become for it.