South Caucasus Brussels, 22 July 2013
EU and Georgia conclude talks on Deep and Comprehensive Free Trade Area
The European Union and Georgia today successfully concluded negotiations for a Deep and Comprehensive Free Trade Area (DCFTA), as part of the Association Agreement between them. The Association Agreement, together with the DCFTA, will provide for the close political association and economic integration of Georgia with the EU.
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The comprehensive FTA, negotiated in just 17 months and seven rounds, will see Georgia gaining better access to the EU market for its goods and services. The FTA also sets a path for further reforms in trade-related policies, such as hygiene standards for agricultural products and the approximation of regulations for industrial products. This will boost access for Georgian goods to the EU market whilst also increasing consumer safety in Georgia. The Agreement is expected to boost the inflow of European direct investment to Georgia thanks to an open, stable and predictable policy-making environment.
An independent study – a Trade Sustainability Impact Assessment – carried out for the EU forecasts that the DCFTA will increase Georgia’s exports to the EU by 12% and imports from the EU by 7.5%. Full implementation of trade-related reforms could increase Georgia’s long-term GDP by +4.3% or €292 million.
The DCFTA will be included in the Association Agreement and signed as soon as internal EU and Georgia procedures are completed.
In the framework of Eastern Partnership, the EU started negotiations on an Association Agreement with Georgia in July 2010. A deep and comprehensive free trade area will be included in this Agreement, aiming to strengthen the export and investment performance of Georgia and facilitate its progressive integration with the EU economy of 500 million consumers. The EU is Georgia’s biggest trading partner, accounting for 26.6% of its total trade (2012).
The negotiations on the DCFTA, which started in February 2012, were launched in Tbilisi by EU Trade Commissioner Karel De Gucht and Georgian Prime Minister Gilauri.
The DCFTA aims to be an ambitious upgrade of current trade relations between the two partners. Currently, these rely on the EU granting Georgia a unilateral preferential access to its market for goods through the Generalised System of Preferences with additional benefits for good governance (GSP+). However, the GSP cannot remove systemic non-tariff barriers to trade with the EU, which are linked, for example, to insufficient animal welfare standards or insufficient competitiveness. Georgia’s trade with the EU is heavily reliant on base metals and other primary commodities. The DCFTA is intended to remedy this lack of diversification through reforms and the expected inflow of EU FDI.
In order to start DCFTA negotiations, Georgia carried out substantial reforms in key trade- and investment-related regulatory areas, notably in the fields of technical regulations, hygiene standards for agricultural products (sanitary and phytosanitary measures), protection of intellectual property rights and competition rules. The EU helped Georgia in this process, including by providing technical assistance under the European Neighbourhood Partnership Instrument and the Comprehensive Institution Building programme, as well as through support from EU Member States.
Current trade relations
The EU is Georgia's biggest trading partner. Bilateral trade in goods amounted to €2.63 billion with Georgia in 2012.
Current relations are governed by the Partnership and Cooperation Agreement, in force since July 1999. The future trade area within the Association Agreement will therefore extend significantly beyond the current scope of cooperation.
For further information
EU-Georgia Deep and Comprehensive Free Trade Area (Memo/13/705)
On EU trade relations with the South Caucasus countries including Georgia
Trade Sustainability Impact Assessment – DCFTA EU-Georgia