EXTERNAL TRADE OF GEORGIA ON LEVEL OF MODERN REQUIRE MENTS

By. Bondo Sopromadze

Ever since Georgia gained independence, it has intensively tried to enter into international trade relations.

Georgia establishes relations with many countries, especially with Euro Union countries, because it would be difficult for our pro-western oriented country to form a democratic state without close ties with the Euro Union. It is common knowledge that Georgia has already become a member of European Union. Membership in the Euro Union implies a principal social-economic direction of the country: establishment of close bilateral relations with member-countries of this organization .
The volume of trade turnover of Georgia with countries of European Union has systematically changed of late years and achieved the maximal level in 1998 running into 332,2 US dollars or 26,8% of the total trade turnover. Judging by these data, the situation is more or less satisfactory. If we consider it from the viewpoint of export-import, we will have a different picture. The matter is that in the given period the volume of goods imported from the Euro Union countries has exceeded import-export by 8-10 times or more, which, undoubtedly, is a very negative phenomenon. It turns out that Georgia is rather a marketing area than a potential partner of Euro Union. As far as we know, negative external trade balance is characteristic of Georgia where import has always exceeded export by approximately 3-4 times. The current situation will deteriorate still more if we take into consideration the trade pattern of export-import: raw materials are principally meant for export whereas consumer goods are meant for import.
Georgia has had preferential terms with European countries since its membership in this organization. Preference system in our country envisages for assistance of developed countries to Georgia in the sphere of export, which implies establishment of preferential customs tariffs. In other words, developed European countries impose low customs tariffs on goods exported from Georgia. These preferences are implemented in a unilateral order without any reciprocal concessions.
Despite the preferential terms, an appropriate certificate is issued by the country of export for goods exported from Georgia to European countries. Thus, preferential exported goods are subject to strict registration and control. It is difficult to imagine the way this requirement is realized in practice because it is not easy to obtain information on this issue.
As far as we know, Georgian firms and enterprises dealing with export production are not well-informed of the benefits for their production and mechanisms of using them. Many of them do not even know that any entrepreneur can obtain a so-called “preferential certificate” for exporting his goods to Euro Union countries. The former ministry of trade and economic relations issued five “preferential certificates” in 1995, 14 certificates in 1996, 64 certificates in 1997, 153 certificates in 1998, 261 ones in 1999. As we see, the growth is obvious enough. However, given the real possibilities for expanding assortment and increasing volume of exported goods, the growth is not yet sufficient. The executive power of the countries should provide assistance to the firms dealing with export to enable them to receive maximal profit through the use of benefits established by 20 highly developed European countries including Euro Union countries. They give such firms the status of beneficiary of generalized system (the word beneficiary comes from the Latin one “benefizium” meaning favour).
Given the current situation in the trade with foreign states, we should take into consideration the fact that the above-mentioned official data about export and import are understated; they do not reflect real conditions. The matter is that, as a rule, legal and natural persons who export and import goods always manage to understate the value of imported and exported goods with the purpose of evading the requirements of fiscal system within the country. Contraband goods are much heavier burden on the state. They are imported by means of money transactions with some representatives of the Customs House. A more organized control system is necessary for avoiding these defects. We should use the great experience of America, developed European and Asian countries in the sphere of controlling international transportation of goods. Yet, it is impossible to achieve desirable results only by means of foreign experience. The attitude of Customs body collaborators towards their responsibilities must become more honest and conscientious one.
The clear example of it are results of the work performed by the firm “ITS” . This firm was invited to our Customs house after winning a tender. The aim of this firm is to improve the work of customs in our country. It promised that it would increase customs revenues by approximately 1,5 times annually. The firm has worked for two years now, yet the customs revenues still remain small. This circumstance has to a large extent been due to the fact that the contract did not envisage for particular moments or articles, which caused weakening of customs goods control and free illegal business of customs employees.
Decree of an appropriate governmental body has come in force since June 2000. It was aimed at reducing the number of contraband goods. Under the decree, contraband goods as well as transport means were confiscated and transferred to the State-owned property. This measure is strict enough, but it served to bring some positive results. Yet, it is necessary to take a package of more decisive measures for improving situation in the sphere. We mean attraction of highly qualified and conscientious people to the sphere of trade and customs, which can be achieved by way of increasing their salaries. It is essential to give a particular part of above-the-plan revenues to the staff of customs bodies, which will serve to increase their material incentive. These measures must be aimed at improving the work conditions of customs employees and increasing their salaries. We think that the final indices of the measure will serve to increase tax and volume of funds assigned for economic stimulus as well as budget revenues