In captivity of non-tariff barriers problems with EU relations

Nino Arveladze

We strive for European Union, but one cannot call this an aspiration due to existing problems.

Georgia is constantly talking about harmonization of the legislation with European one. Representatives of the EU are pointing to imperfections that are unchangeable – law on food safety, standardization, labour code, competition, faultless quality testing system and so on. What is the way out of this vicious circle?

urasia Cooperation Fund held a forum in Sheraton Metekhi Palace on Nov-20. The aim of the forum was to define readiness of Georgia to conclude free trade agreement with the EU.
Within the framework of the EU integration Georgia has moved to a new stage that is known as Prague Document in the society. Foundation summit of Eastern Partnership was held in Prague, on May-07-2009. Representatives of the EU member countries and six Eastern Europe countries participating in the initiative attended the summit (Ukraine, Moldova, Georgia, Azerbaijan, Armenia and Belorussia). Join Declaration of Eastern Partnership has been adopted at the summit. It implies main principles and conditions of accomplishing the initiative. Declaration emphasizes that the main aim of Eastern Partnership is creation of conditions necessary for strengthening of political cooperation and further economic integration by means of developing specific eastern dimension of European neighboring policy. Eastern partnership is based on devotion to principles of international law and fundamental values such as supremacy of law, human rights and respect of fundamental freedoms, market economy, steady development and good management.
The subject of deep and comprehensive free trade agreement with the EU is not only custom tariffs, but eradication of quite a number of non-tariff barriers. Agreement concerns issues such as technical barriers in trade, food safety, intellectual property issues, customs, and competition laws and so on. Current head of Euro Committee in Georgia, François Massoulié once again reminded Georgian party that in order to enter the EU market, it is necessary to obey strict rules operating there. The head of GEPLAC (Georgian-European Policy and Legal Advise Centre), Professor Claudius Maniocas spoke about technical regulations of the EU legislation:
· Technical regulations concern standards/characteristics of various goods and services that are obligatory and serve public interests, protection of consumers’ health and environment.
· European Council adopted a resolution on “New approach to technical harmonization and standards” in May-07-2009. It gave a foundation to the new European policy that uses standardization to support the legislation and creates systemic approach for designing of technical legislation. Harmonized standards developed by Standardization Committee of Europe define technical performance specifications that obey obligatory requirements specified in the resolution.
Economic experts are declaring that Georgia is having serious problems in the EU integration issues. Expert Soso Tsikarishvili reckons that policy of eastern countries will be justified only in case if the countries of eastern European group have special policy of interrelation. However, it should be noted that representatives of the EU are emphasizing this right aspect.
According to economic expert, Emzar Jgerenaia, the fact that action plan designed three years ago has not been thoroughly analyzed is a big mistake. Action plan covered obligations of Georgia written in details. “There were some issues in the action plan that government of Georgia was able to solve, as it had resources for this. Despite this, action plan has been covered by Prague Document. This is the same thing as to assign new and more difficult tasks to the students who have resit examinations,” declared Emzar Jgerenaia. He reckons that the main problem for Georgia is complicated changes in Geography of business the main reason of which are non-tariff barriers that has become huge load for Georgia business. Expert is emphasizing food safety law that has been delayed. As the system HACCP (Hazard Analysis and Critical Control Points) does not exist in Georgia, products manufactured in Georgia will not see European market. Georgia denied support of tea sector with the agreement signed with WTO, while the price of 1 kg tea made up $4 in the world. In the times of liberalization Georgia abandoned any attempts of protecting own market and as a result low quality tea flooded Georgian market. However, expert Emzar Jgerenaia declares that he does not support tariff barriers and reckons that Georgia should protect itself by means of non-tariff barriers. Non-tariff barrier topic is an foundation stone of economics that impedes business development. Expert mentioned the EU’s attitude towards Georgia and recalled the fact that Poland thoroughly prepared for integration in the EU; Europeans were financing industrial park in the country. Georgia has neither experience, nor funds, but the EU can establish industrial parks, business incubator in Georgia that would simplify entering of the EU market for Georgian business. Export rate of Georgian products in Europe is very low. There isn’t anything done for risk management and competitive, open market development that is proved by monopolistic market and high level of state intervention. Justice system has many imperfections and this is proved by long queues of tax disputes at the Ministry of Finances. Georgian legislation resembles European one in many aspects, but the law that is not obeyed loses its sense. For instance it is illegal to close a shop for more than one week. Quite many shops were closed for months by Financial Police in Tbilisi, said Emzar Jgerenaia. “This is a will not to obey a law and it is directly connected with arbitrage issue that is one of the requirement of the EU”, declared expert.
Another issue discussed by Mr. Jgerenaia was problem of property protection from the taxation service. This is the main concern of investors. Commercial disputes, commercial punishment, and civil code (labour code) are not heard in a court. Essential amendments are not made in labour code. “It would be good to analyze accomplishment of previous action plan and to discuss what has been fulfilled and what hasn’t; and what were the reasons of non-fulfillment. Interests of Georgia must not be sacrificed to African investor. Eradication of symbolism is of special importance. It is always said that everything is done in accordance with European standards, but it is so inferior, symbolic that have no results. Maybe, task assigned by the EU are just impossible for Georgia and Europe must find different approach and invest in institutional reform just like Poland example”, noted Emzar Jgerenaia.
Director of GEPLAC, Kakha Gogolashvili explained that Eastern Partnership policy is an outcome of European neighboring policy. The necessity to separate approaches between southern and eastern neighbors of European Union has come. Eastern Partnership policy has been adopted by Swedish-Polish joint initiative. Policy is oriented toward bilateral and multilateral cooperation in several directions. Cooperation covers the issues such as stability, good management, security, economic integration and harmonization with the EU policy, human relations and energy. Within the framework of Eastern Partnership, associated agreement must be concluded in bilateral format within six former Soviet countries: Georgia, Armenia, Azerbaijan, Ukraine, Belorussia and Moldova. Four thematic platforms are established with the participation of all six partner countries and twenty-seven EU member states. State institutions are cooperating with each other. Meetings have already been held within the framework of economic integration and energy platform. Recommendations and cooperation directions are being already elaborated and designed by the governments. MSE direction is of special importance for the commonwealth countries. The EU has initiated foundation of a forum, where civil society is welcome to participate. Four thematic platforms are designed. Platforms elaborate non-obligatory recommendations of civil society that will be addressed to governments and official parties. Involvement of civil society is very important as it can present actual needs of the country. Kakha Gogolashvili represents platform of economic integration and harmonization with the EU policy. Those organizations that are working on trade issues under the context of economic integration are cooperating with platform. Representatives of Entrepreneurs Unions, Labour Unions are cooperating with the platform either. Recommendations presented by these organizations and proved by the forum will be introduced at Eastern Partnership Council of Ministers in Brussels.
Together with many other problems one of the issues that impede Georgian business and economy are non-tariff barriers. Georgian business cannot develop without corresponding state will. Representatives of the EU were frequently giving high scores to Georgia, but problems remain unchanged. Maybe civil society manages to present the problems facing Georgia today and assist Europe to develop relevant policy.