Monthly Review - Friday, January 15, 2016 0:01 - 0 Comments

Europe in Georgia – Benefits of the AA/DCFTA


Soon the Association Agreement (AA) and the Deep and Comprehensive Free Trade Agreement (DCFTA) that were acting only provisionally till now will enter into force. Good results have already been achieved within the framework of these agreements and from January the process of enactment will be completed. The Signing of the AA/DCFTA in June 2014 is considered one of the main achievements of the current and former governments of Georgia. These two documents are important as they help the country in moving closer to the EU.

What do the AA and the DCFTA mean for ordinary Georgians? Through the AA, Georgia took on the responsibility to change its legislation, the laws and regulations and harmonize them with the European legislation. Ministries and other Governmental bodies have already started working in this direction and there is already significant progress.

“Crucial reforms have been implemented. For example, the reform on the Prosecutor’s Office, an important step towards democracy. Also, a new Law on Public Service was codified. To sum up, 71 legislative changes were implemented in 2015”, – says Nino Grzelishvili, Head of EU Integration Coordination Department of Office of State Minister of Georgia on European and Euro-Atlantic Integration.

As EU Integration Program Manager of Open Society Georgia Foundation Vano Chkhikvadze says, there is progress but not about the rights of children: “There are still many cases of child trafficking; we still have the problem of street children. We should have had progress in this issue. Concerning the other paragraphs of the Association Agreement, we can say that overall there is progress in all of them”.

Indeed, reforms in the different structures have carried progress, however in many cases, it is not tangible for ordinary citizens. As for the DCFTA seems to have brought quite concrete results. The free trade area (DCFTA) was set up between the EU and Georgia as part of the Association Agreement. DCFTA gives Georgians an opportunity to easily bring their products to the EU market making profit. Allowing Georgians to export their products to the EU without any tariffs, DCFTA has already brought quite significant profit for Georgian entrepreneurs who have already exported some of their products to the EU market.

According to the EU official statistics, exports of Georgian products, such as hazelnuts, copper, and petroleum oils, doubled or even tripled in the first six months after the signing of the DCFTA. The tendency is still running positive. The EU is the main trade partner for Georgia. 26.1 percent of its trade takes place with the EU, followed by Turkey (17.2 percent) and Azerbaijan (10.3 percent). In 2014, the EU imported goods in the value of €657 million from Georgia. According to official statistics, in 2014 14,636.2 tons of nuts were exported from Georgia to the European market and in January-November 2015, 14,692.5 tones were exported. Since nuts are easier to export than animal products, farmers in western Georgia started to work towards producing different kinds of nuts and hazelnuts.

“We are going to expand our enterprise. Now we only have equipment for drying nuts. From September we are going to export our product”, says Shalva Agumava, a farmer from Zugdidi who established the enterprise “Darchelis Tkhili” last year.

Thus, Georgian farmers see the EU market as an opportunity. They say that it poses a big challenge to them, but they are ready to use this opportunity in order to make profit. Farmers think that European market is more reliable for them than for example the Russian one because the latter is not predictable.

Until now, Georgian farmers have been exporting vegetables and fruit. However, as in the Ministry of Agriculture of Georgia say, soon the European market will also be supplied with Georgian fish and honey.

“According to agreement, first only plant products were allowed to the EU market, but now work is underway to facilitate the export of animal products too. Now Georgian honey is going to be checked in the laboratory. After that, farmers will receive recommendations and if they meet the requirements, honey also will also be exported”, – says Head of International Relations department of the Ministry of Agriculture Khatia Tsilosani.

The DCFTA is surely beneficial for Georgian entrepreneurship and agriculture. On the other hand, it requests compliance with many standards and rules in order to bring Georgian products to the EU market.

“There is a lot of work to be done. Important reforms should be implemented in the framework of food safety. All products should satisfy the European standards in order to be exported into the European market. Unfortunately, now they do not satisfy the requested standards”, – says Mariam Gabunia, Deputy of the Department for Foreign Trade and International Economic Relations of the Ministry of Economy of Georgia.

She defines that Georgia is making progress in complying with the EU sanitary requirements. This means in the future more Georgian food products will be authorized to be sold in the EU. Georgians hope that after the AA/DCFTA documents are published in the official journal of the EU, the progress reached though these two documents will increase. As expected, the EU is planning to publish the document till the end of the January.

The views expressed in the Review may be different from the views of the editors of the Caucasus Edition.

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