Georgian products to enjoy free trade benefits with the EU

Once Georgia signs the Association Agreement (AA) with the European Union and the document comes into effect, of which the Deep and Comprehensive Free Trade Area (DCFTA) is an integral part, Georgian products will be able to enjoy the benefits of free trade with EU member countries.

The AA document, revealed by the Foreign Affairs Ministry of Georgia in the local language, outlined which products, including agriculture and industrial products, which will have the opportunity to be exported to EU.

The DCFTA-EU agreement will also introduce the ability to provide local and international markets with safety foods.

Once negotiations are completed and the DCFTA is signed, it does not imply the agreement will come into immediate effect. Initially, it will take time to implement and institutionalize the EU requirements and DCFTA provisions at home.

In addition, a certain period is needed for the ratification of the document by all EU member states' parliaments and the European Parliament. Therefore, the exact date the DCFTA will come into full force is unknown.

As soon as the agreement is adopted, both sides will have to cancel all custom taxes. Some limits will still exist.

For example the vegetable item garlic will be included in the so-called annual duty free tariff quota. This means in cases when more than 220 tonnes of garlic is exported from Georgia in a year, the exporter will have to pay custom taxes.

Furthermore, while importing more than 28 Georgian-made products including vegetables and wine, to the EU, the importer must pay a custom tax but not the value added tax.

The document also made a list of products that would be added to the anti-fraud list, which are limited by volume in terms of importing.

Five years after the agreement comes into effect, both sides will have the opportunity to discuss opportunities of expanding trade liberalization.

Currently, Georgia enjoys the EU General System of Preferences (GSP+), which allows preferential access to the EU market through lower import duties.

In 2013, the EU’s bilateral trade with Georgia amounted to $2.87 billion USD, a 3% increase compared to 2012, which accounted to 27% of country’s total trade turnover, the state statistics office Geostat reported.

Georgia export to EU member states reached $608 million USD last year. This was a 72% y/y increase, whereas imports from the EU declined by 7% y/y, to $2.27 billion USD.