Tariff and non-Tariff barriers To The Trade wiTh The eu

KOTE ZALDASTANISHVILI

Nowadays one of the main factors in the economic growth of developing countries is their ability to successfully interact and integrate with international markets.

Realization of their export potential is another key element which is closely linked to their integration.
Developing countries need not only to find their export markets but also to diversify them to avoid dependence. The embargo on Georgian produce introduced by Russia in 2005 caused significant damages to Georgian exporters. Unfortunately, no immediate solution has been found. Nevertheless, the embargo forced the Georgian authorities and exporters to look for alternative markets. As a result, the European Union market given its size, high standards and sophistication, acquired even higher importance for Georgia.
It should be noted that further rapprochement with the EU firmly remains on Georgia’s external policy agenda. Therefore, economic integration with the EU is crucial for driving Georgia’s European aspirations forward and feeding the process with new ideas.
Despite the growth that has been observed recently, the EU fairly assesses the EUGeorgia trade as limited, with a clear need for diversification, especially when it comes to Georgian exports. It should be noted, that a number of positive preconditions for achieving better results are already in place, namely, Georgia’s WTO membership, the EU GSP benefits (to be discussed in the next chapters), continuous EU technical and financial assistance, etc. In this publication the authors will try to identify reasons that prevent the sides from trading more intensively.
The first chapter of the publication introduces tariff and non-tariff barriers in the trade with the EU. The past experience shows that third countries are more capable of overcoming the EU tariff (i.e. administrative- barriers) while non-tariff barriers (standards and norms for production, transportation, labeling and storage requirements, etc.) require more time and efforts on their part.
examples of The eu non-Tariff barriers
The EU single market is governed by a complex merger of EU-wide and national regulations. Through its strict non-tariff barriers, the EU pursues two objectives: protection of European consumers from unhealthy and dangerous foodstuffs and creation of conditions for fair competition. This way the import of those products which do not comply with the EU norms is being prevented.
Exporters from third countries experience difficulties with the interpretation of and understanding the EU legislation on import rules and standards. Therefore, the main goal
of the present publication (and a few more that will follow) is to explain the complex EU regulations and directives and work out recommendations which may be easier to understand and implement. It is also noteworthy that the EU legislation is continuously updated and amended and therefore, needs to be closely observed. In this respect, the second chapter of the brochure gives some useful examples of the EU non-tariff barriers introduced by EU directives, EU Council decisions, such as
sanitary and phito-sanitary norms, food safety and hygienic standards, etc.
The european single markeT and some imporTanT aspecTs concerning iTs funcTioning
The third chapter makes a brief overview of the EU market and its gradual development focusing on the so-called “turning points” in its history. The main success in EU’s economic development results from lifting all the trade barriers between the member states. Tariff barriers such as customs and others were eliminated relatively easily. As regards the reduction of non-tariff barriers, the EU member states had to agree on a common set of requirements which had to be implemented in each and every one of them. The chapter illustrates how the EU internal market has been liberalized so far, giving examples from service, employment, taxation, competition, consumer protection and other sectors.
implemenTaTion of eu Trade policy Towards Third counTries Through bilaTeral and mulTilaTeral relaTions
The fourth chapter of the publication refers to the EU trade policy towards third countries. This policy includes the EU activities in the framework of the WTO, development of bilateral relations with third countries and asymmetric trade preferences to support their economic development. In this context, the EU stands for the simplification of market access for third countries, also trying to eliminate tariff barriers for “non-sensitive” products.
The EU largely contributes to the reduction of custom tariffs, supports strengthening of bilateral relations with third countries through new policies and agreements as well as sectoral initiatives, introduces various schemes of asymmetric trade preferences to stimulate production and trade growth in third countries, provides for significant technical and financial assistance to improve administrative capacities of the countries concerned, etc. At the same time, it would be fair to say that the abovementionedwere comparatively low, the complex EU regulations on standards remained to be
an obstacle for third countries requiring more time and efforts. However, the EU has developed new approaches starting from 2002, when a Free Trade Agreement (FTA) with Chile was signed. In the new approach the EU tries to overcome the above problems by establishing a Deep FTAs with those third countries which are supposed to become closer EU partners. Deep FTA is designed for not just elimination of tariff barriers between the partners but also for harmonizing trade-related legal and regulatory framework of a partner country with that of the EU. This way, bigger chances will be
given to third countries to get a real stake in the EU Internal Market.
legislaTive framework of The eu-georgia Trade
and The sTeps Towards iTs furTher development
Chapter five describes the legislative basis for EU-Georgia trade starting from the Partnership and Co-operation Agreement (PCA) and ending in the EU-Georgia Action Plan, elaborated in the framework of the European Neighborhood Policy (ENP). The authors also give an overview of GSP+, a comprehensive scheme of the EU Generalized System of Preferences, introduced in 2005, as well as current trends in the EU-Georgia trade development, focusing on new opportunities for the reduction of EU non-tariff barriers.
Further, the chapter describes recent steps, jointly taken by the Georgian and European sides, aimed at further harmonization of Georgian export standards to those of the EU. In this context, the EU Georgia bilateral agreement on mutual recognition and protection of geographical indications for wine, spirits and other foodstuffs as well as a feasibility study on the possible EU-Georgia Free Trade Agreement is discussed.
In the follow-up publications, the authors will put forward concrete recommendations on the production, transportation, labeling, packaging and other norms related to third countries. We will also provide information on VAT, excise and other duties in the EU states for certain categories of exported products, as well as information on other important legislative acts of the EU.