Issue 2, 2013. April-May

   

DEEP AND COMPREHENSIVE FREE TRADE AREA (DCFTA) NEGOTIATIONS: AN UPDATE

The EU-Georgia Business Council (EUGBC) has been working on the DCFTA intensively since negotiations were launched. Over the past year, the Georgian government has revised several major laws to meet EU requirements.

Tamar Khuntsaria, EUGBC

The DCFTA negotiation process has been quite intensive, especially over the past year. The government of Georgia has already launched a number of reforms as required by the DCFTA process, including the labor code, and the law on competition.

Amendments to Georgia's Labor Code, currently still under consideration in parliament, were prepared to bring the Code into compliance with International Labor Organization (ILO) standards.

A revised Competition Law is being adopted to improve the competition policy in Georgia and to create a single Competition Agency. In addition, a Food Safety Code is being prepared.

Georgia has also made progress in the establishment of a legislative and institutional framework in the Technical Barriers to Trade (TBT) area, in order to make its standards and procedures compatible with international standards. This, however, is a long-term process and more time is needed to put in place a functioning Quality Infrastructure.

In terms of Intellectual Property Rights (IPR), the legislation is not a major concern (Georgia is a party to The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and other international Conventions), but IPR enforcement needs to be improved. The DCFTA suggests that Georgia adopts adequate measures and procedures to improve its IPR enforcement system.


Implementation of these reforms is first of all important for perfecting trade related regulations and practices at home. Secondly, attaining the DCFTA through these reforms is crucial for gaining full access to the EU market. The EU is Georgia's main trading partner (the share of trade with the EU accounts for approximately 30% of Georgia's total foreign trade). For the development of Georgian export, it is crucial to penetrate the EU market- one of the largest, richest, most civilized, and predictable markets. In the long term perspective, a free trade agreement with the EU is expected to bring high gains for Georgia's economy and increase the welfare implication. Moreover, developing deep and stable economic ties with the EU is essential for the diversification of Georgia's export markets, and for the securing of its foreign trade stability.

The EU officially launched negotiation on Deep and Comprehensive Free Trade Area (DCFTA) with Georgia in February 2012. The 6th concluding round of negotiations was held on March 18-22 in Brussels.

Negotiations in all fourteen chapters of DCFTA were covered: Trade in Goods; Rules of Origin; Customs and Trade Facilitation; Technical regulations on industrial products, Standards and conformity assessment procedures; Sanitary and phytosanitary measures; Services; Freedom of establishment and investment; Competition; Intellectual Property Rights (IPR), Geographical indications (GIs); Public procurement; Trade and sustainable development; Transparency; Trade defense instruments; Dispute-settlement/mediation mechanism, and Institutional structures/provisional application.

The Association Agreement, of which DCFTA is an integral part, is planned to be initialized at the Vilnius Summit of the Eastern Partnership taking place in Lithuania in November 2013. It is important to note, however, that concluding the negotiations and signing the agreement does not imply that the agreement enters into force. 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 be in full force is not known.

The EU-Georgia Business Council (EUGBC), as an association representing major European and Georgian businesses operating in the country, and has been actively involved in the DCFTA process. Early in 2012, immediately after negotiations started, EUGBC created a business driven Working Group on DCFTA to strengthen and develop EU-Georgia trade relations by providing a forum for discussions on EU-Georgia trade policy, including negotiations on DCFTA that involved Georgia's business community, authorities, relevant EU institutions, diplomatic representations of EU Member States accredited in Georgia, and other stakeholders.