EU extends GSP+ for Georgia

Maka GHaniaSHvili

Maximal realization of export abilities on world market is a question of particular significance for the developing countries.

Otherwise, it would be impossible to overcome poverty and reach economic growth of the country. Georgia is not an exception in this respect.
Delivering information about the aspects of trading with EU in a simplified manner is especially important for Georgian entrepreneurs. As from the strategic point of view, UN represents one of the most significant markets for Georgia. EU-Georgia business council (EUGBC), founded by Georgian and European companies in Brussels in 2006, serves the mentioned purpose. The main area of its activity comprises encouraging growth of trade turnover and investments between Georgia and EU member countries.
To this effect, on 12th of December EUBGC conducted a workshop financed by EU on the following subject “What the Georgian exporter should know to access EU market”. A speech was delivered by several prominent public figures: Geir Westgaard – vice president of StatoilHydro and member of EU-Georgian business council; Tamar Mikadze- representative of EU committee mission to Georgia; Tamar Beruchashvili – Georgian state deputy minister of European and Euro-Atlantic integration; Jemal Inaishvili – Head of International school of Economics’ Advisory council, coexisting with Tbilisi State University, president of Georgian Chamber of Commerce, active member of EU-Georgian business council.
Geir Westgaard declared that “Statoil Hydro” is a significant investor for Georgian economy, as it participates in two important projects – Southern and Baku-Tbilisi-Jeihan pipe-line. Statoil Hydro is one of the founders of Georgia-EU business council and consequently it takes part in this workshop. The workshop serves the purpose of encouraging export to Europe; one of the main activities of EUGBC is organizing workshops in order to help small and average size business. We welcome the fact of Georgia receiving GSP+ status that surely influences Georgia-EU trading relations. However, there are some procedures, which Georgian exporter should know, as they are essential to cope with European market entry. This is the reason of our presence.
Tamar Beruchashvili – Georgian state deputy minister of European and Euro-Atlantic integration emphasized the importance of prolonging (Generalized System of Preferences) GSP+ for Georgia: “As you know, Georgia is the follower of European neighborhood policy. Two days ago, annual meeting in Brussels between Georgia –EU came to an end and allow me to announce some positive novelties: First of all, I want to inform you that GSP+ for Georgia has been prolonged up to 2011. This fact gives a privileged position to Georgia for accessing the European market. Of course, we mustn’t be satisfied with effectiveness of using GSP+. Carrying out joint works in order to use these opportunities and benefits efficiently is very crucial. Besides this, we are expecting to start some negotiations with EU concerning free trade relations in 2009. It will be very broad, all-embracing and significant free trade agreement, not only from the trading point of view, but for investment business relations’ development also. EU recently started a conversation about the theme – “Partnership with West”. Although, EU hasn’t formulated its policy yet, member countries have a well assumed position in this respect. To my mind, EU formulates its policy toward several concrete countries in the nearest future. West Partnership supposes strong economical relations with six countries, and these are: Georgia, Armenia, Azerbaijan, Ukraine, Moldavia and probably Belorussia. This partnership covers the spheres of trading and investment business, which are very important and interesting for Georgia. Using these opportunities efficiently needs deep knowledge, experience, relations and partners.”
Kakha Gogolashvili – director of Georgian European consulting center of policy and law and Aleksandre Khvtisiashvili – executive director of Georgian trading policy and law international center delivered the speech. The subjects of discussion were the creation of common European market and its development, EU trading and tariff policies toward the Third World Countries; Existing tariff and non-tariff barriers when trading with EU (import tariffs, excise, VAT, standard and other requirement); internet-handbook created for entrepreneurs who desire to enter EU market; some specific examples of custom, excise and VAT imposed duties were given.
These topics have been frequently discussed in our magazine, so we will not pester our readers by repeating already familiar subjects. We focus on GSP+ and on the subject of prolonging its term for Georgia, as all the participants of the workshop emphasized its importance.
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United Nations’ conference on trade and development (UNCTAD) in 1968, recommended elaboration of the “Generalized System of Preferences” or GSP, according to which developed industrial countries were obliged to give some trading preferences to the developing countries. The main point of GSP is to help developing countries to export their goods to the developed countries and thus encourage trading and economical development.
For the mentioned purpose developed countries are establishing some benefits of mutual trading for the developing countries. According to which tariff preferences are imposed on exported goods from the beneficiary countries. Such unilateral benefits simplify new product acceptance on the market and increase competitiveness of the developing countries and help them to develop own export production.
At the present time, there are several preference-giving countries: EU, US, Australia, Canada, Japan, New Zealand, Switzerland, Norway, Russian federation, Belorussia, and Turkey.
Georgia has the status of preference-receiving country in the following states: EU, US, Australia, Canada, Japan and Turkey. Georgia is enjoying the privileges of Generalized System of Preferences since 1999, owing to this customs duty has been annulated on the goods exported in EU from Georgia.
In 2005, Georgia became beneficiary of second phase EU Generalized System of preferences, which is called special system encouraging stable development and good management (GSP+). The first stage comes to an end in 31st of December and the second stage begins in 1st of January.
GSP full scheme (2005-2014) is divided into several stages in order to monitor how the beneficiary countries or candidate countries fulfill the requirements. In 2005, at the time when GSP+ scheme became operative, according to the EU regulations beneficiary countries should have ratified sixteen UN main conventions. However, according to those same regulations, at the end of 2008 preference-receiving countries and pretenders should ratify already 27 international conventions in the fields of Human Rights and Labor Standards. These countries should have stable development and good management system.
For preserving or receiving the GSP+ beneficiary status, applicant countries should have submitted the application together with the documents proving the ratification of 27 international conventions to EU committee no later than October 31, 2008. Those countries, which were ineligible and do not meet the requirements of the new regulations would have had an opportunity to submit a new application only at the end of 2010.
In the summer of 2008, from the above mentioned 27 international conventions, Georgia had left to ratify only two conventions. This was a serious obstacle for Georgia preserving the status of GSP+ beneficiary. Another encumbrance created discrepancies between Georgian legislation and some regulations of ILO (International Labor Organization) Convention.
Georgian parliament ratified the last two conventions at an accelerated pace in September-October, 2008 (Cartagena act on bio-security and UN convention against corruption). In addition, after intensive consultations and negotiations with the International Labor Organization Georgian government settled some controversial matters and informed EU committee. In order to receive prolongation of the beneficiary status Georgian Ministry of Economics submitted an application, together with all the necessary documents, to EU committee in October 31, 2008.
EU made a decision to prolong status of GSP+ preference-receiving country for Georgia up to 2011, on Georgia-EU annual meeting held in Brussels, in October 9, 2008.
New scheme includes 6421 product names. It is noteworthy that any country is free of customs duty on 2452 products in EU. In case of GSP the list increases up to 6421 product names, so the overall quantity of product names is 8873.
8873 Georgian products are customs duty- free that comprises 92% of overall list. On the rest 824-product names (EU product list consists of 9697 product names) customs duty will be imposed.