Transcript Association Agreement Deep and Comprehensive Free Trade Area

Challenges Beyond Euro-Enthusiasm:
EU-Georgia
Deep and Comprehensive Free Trade Area
Nina Jajanidze
Umbrella Topic: Transformation of Legislation
WINSEM Conference
Gyor, Hungary
27.02.2015
From Post-Communist Past to EU Negotiation Table:
 "Technical Assistance to the Commonwealth of
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Independent States" (TACIS), 1992
Trade Regime of Generalized System of Preferences
(eventually, GSP+), 1995
“Partnership and Cooperation Agreement” (PCA), 1996
World Trade Organization (WTO),
1997
Eastern Partnership (EaP) Initiative,
2009
Step Ahead
Within the framework of Eastern Partnership, Association Agreement (AA) and its
core Agreement on Deep and Comprehensive Free Trade Area (DCFTA) as well
as Visa Facilitation and Readmission Agreements have been negotiated from
2012 till AA/DCFTA was signed on June 27, 2014.
Association Agreement
Deep and Comprehensive
Free Trade Area
Political Implications
Fact: AA provides NOT A SINGLE provision which guarantees
successful ascension.
Restatement of EU’s
willingness to cooperate and a
promise for future ascension.
Temporary measure to keep
region quiet on
international front and busy
on internal one.
Association Agreement (AA) in a nutshell:
 Article 2. The aims of this association are: (a) to promote political association and economic
integration between the Parties based on common values and close links, including by increasing
Georgia's participation in EU policies, programmes and agencies; (b) to provide a strengthened
framework for enhanced political dialogue on all areas of mutual interest, allowing the
development of close political relations between the Parties; (c) to contribute to the strengthening
of democracy and to political, economic and institutional stability in Georgia; (d) to promote,
preserve and strengthen peace and stability regionally and internationally, based on the principles
of the Charter of the United Nations and the Helsinki Final Act of 1975 of the Conference on
Security and Cooperation in Europe, including through joining efforts to eliminate sources of
tension, enhance border security, and to promote cross-border cooperation and good neighbourly
relations; (e) to promote cooperation aimed at peaceful conflict resolution; (f) to enhance
cooperation in the area of freedom, security and justice with the aim of reinforcing the rule of law
and the respect for human rights and fundamental freedoms; (g) to support the efforts of
Georgia to develop its economic potential through international cooperation, including
through the approximation of its legislation to that of the EU; (h) to achieve Georgia's
gradual economic integration into the EU Internal Market, as stipulated in this
Agreement, in particular through establishing a Deep and Comprehensive Free Trade Area
which will provide for far-reaching market access on the basis of sustained and
comprehensive regulatory approximation in compliance with the rights and obligations
arising from its WTO membership; (i) to establish conditions for an increasingly close
cooperation in other areas of mutual interest.
Diagnosis:
Competition
Customer
Protection
Intellectual
Property
Food Safety
Key Elements:
 Values and Principles:, respect for human rights and fundamental freedoms
as well as the rule of law, a market economy and sustainable development;
 Enhanced cooperation in foreign and security policy, with the focus on
regional issues, weapons of mass destruction (WMD), non-proliferation and
disarmament, conflict prevention, and crisis management;
 A DCFTA, which goes significantly further than classical forms of economic
integration, offering not only improved trade and investment opportunities but
also assistance in trade-related reforms with the aim to contribute to economic
recovery and growth and to better integration of the Georgian economy with
the world markets;
 Justice, Freedom and Security, covering the rule of law and respect for
human rights and fundamental freedoms, protection of personal data,
cooperation on migration, the fight against money laundering and terrorism,
illicit drugs, and the fight against organised crime and corruption;
 Enhanced cooperation in some 28 key sector policy areas,
including in the fields of: economic dialogue; management of public
finances and financial control; taxation; statistics; transport; energy
cooperation; environment; climate action; industrial and enterprise
policy and mining; company law, accounting and auditing and
corporate governance; financial services; cooperation in the field of
information society; tourism; agriculture and rural development;
fisheries and maritime governance; cooperation in research,
technological development and demonstration; consumer policy;
employment, social policy and equal opportunities; public health;
education, training and youth; cooperation in the cultural field;
cooperation in the audiovisual and media fields; cooperation in the
field of sport and physical activity; civil society cooperation; regional
development, cross-border and regional level cooperation; civil
protection based on gradual approximation with the EU acquis
and also – where relevant – with international norms and
standards.
Benefits of Association Agreement for the Civil Society:
 Better protection of consumers through the higher quality AND
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improved safety of locally-grown agricultural products;
Better business opportunities for small- and medium-sized enterprises
through the opening of markets;
Better access to improved health services;
Energy savings thanks to more efficient use of energy resources;
Development of renewable energy sources;
Better functioning judiciary;
Strengthened Rule of Law;
Accountability rules for public decision-makers and increased
transparency;
Trick or Treat?
 Myth 1: "Signing the Association Agreement poses a threat to Georgian culture and traditional
values."
 Myth 2: "The Association Agreement will force Georgia to legalize gay marriage."
 Myth 3: "The EU forces Georgia to introduce anti-discrimination legislation which will pave the way
for gay marriage."
 Myth 4: "The Association Agreement will further enflame Russia-Georgia relations and
could lead to further tensions in the breakaway regions."
 Myth 5: "The Association Agreement could cause the isolation of national minorities in Georgia –
including those of Armenian and Azeri origin – and possibly lead to secession attempts."
 Myth 6: "The Agreement challenges the authority of the Georgian Orthodox Church.“
 Myth 7: "The Agreement brings little benefit to Georgia and just imposes extra demands."
 Myth 8: "The signature of the Agreement will harm the Georgian economy."
 Myth 9: "The EU is engaged in a geopolitical competition with the Russian Federation."
 Myth 10: "The AA/DCFTA ties Georgia’s hands and limits its sovereignty."
 Myth 11: "Georgia has several FTAs in force with CIS members which the EU considers incompatible
with DCFTA.“
 Myth 12: "Georgia-Russia trade relations are likely to worsen as a result of DCFTA."
 Myth 13: "If the Association Agreement is signed, Georgia's traditional exports to Russia will be
disrupted because of the adoption of European standards."
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Myth 14: "The EU will gain more than Georgia from the removal of customs duties."
Myth 15: "The economic benefits of DCFTA for Georgia are negligible, while the costs of reform will be
significant."
Myth 16: "Only the EU will benefit from the DCFTA. Georgia stands only to lose jobs, companies and talented
people who will go work in Europe."
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Myth 18: "Georgian farmers will lose out because of reforms”.
Myth 19: "Reforms will destroy the sectors that manage to get by in Georgia."
Myth 20: "European imported food will ruin Georgian agriculture producers."
Myth 21: "Food is going to be more expensive as a result of the DCFTA."
Myth 22: "Many small farmers will go out of business as a result of forced increase of food safety standards."
Myth 23: "Under DCFTA, the size and looks of tomatoes will be regulated and hens will have to be raised in
special cages."
Myth 24: "The EU will continue to protect its market for most sensitive agricultural products, while Georgia opens
up fully."
Myth 25: "Georgian manufacturers will lose out because of reforms.“
Myth 26: "Imports from the EU will drive Georgian companies out of business.“
Myth 27: "Georgia decided to open up fully to the European imports and cannot protect itself from influx of
European goods."
Myth 28: "Only businesses will benefit from the DCFTA, not the Georgian people."
Myth 29: "Georgia has to engage in ambitious reforms like the EU’s new Member States but it does not have the
membership perspective.
Myth 30: "Georgia has to implement all the reforms in less time than EU Member States.“ …
Myth 40: "DCFTA with the EU is not better for Georgia than participation in the Customs Union."
Myth 17: "This is not a good time to start the reforms. Georgia’s
economic growth has slowed down, we cannot afford it now.
Business will go bankrupt as they are already facing crisis."
FACT: It is true that Georgia experienced a slow-down in economic
growth in 2012. This slow-down was certainly felt by businesses. But
the World Bank forecasts suggest that this was a temporary slump
and that growth is coming back to Georgia for the coming years,
expected at 6.3% of GDP in 2014 and 2015, and 6.5% in 2016. This
growth is linked to recovery in Europe and the United States. As it
materialises in the coming years, the reforms will gradually progress as
well. Georgian businesses do not have to fear sudden negative
consequences in this regard. In addition, the reforms will
strengthen democracy and political, economic and institutional
stability in Georgia, making it a more predictable and attractive
destination for investment.
Deep and Comprehensive FTA
The Deep and Comprehensive Free Trade Area (DCFTA) is an arrangement
between the EU and Georgia that foresees a preferential trade relationship,
based on mutually advantageous treatment, giving to each other better
access to their markets than that offered to other trade partners.
“Trade
Only”
rules
Compre
hensive
Aspect
Deep
Components
DCFTA – Peculiarities:
Tariff Duties
“Trade
only”
Rules
Services and
Establishment
Rules of
Origin
DCFTA – Peculiarities:
Intellectual
Property
The
“Comprehensive”
Aspect
Sustainable
Development
Competition
Policy
DCFTA – Peculiarities:
Deep Component
Food Safety
Technical
Regulations
Public
Procurement
Services
Customs
Facilitation
- Boosting trade between the EU and Georgia: by 12% as regards Georgia’s
exports to the EU, and by 7.5% on imports from the EU.
- The prices are expected to be lowered for domestically available goods,
resulting increased real purchasing power of consumers.
- Stronger domestic rules will improve the safety of consumer products
and therefore of consumers in general.
- The DCFTA, by providing more stable and predictable trade regime,
based on EU legislation, is expected to boost the inflow of EU FDI to the
country,
creating
more
enterprises
and
strengthening
the
competitiveness of the economy and individual sectors.
- The DCFTA as a whole is expected to improve the current account
balance of Georgia and boost the GDP by 4.3% ( 292 million EUR in
national income), provided that the reforms are completed.
A. The Government of Georgia might sacrifice business interests to accelerate the
implementation of the DCFTA due to political reasons.
B. DCFTA implementation may result in a quick and ‘careless’ legislative approximation
process, whereby the domestic political agenda could be justified by the often nonexisting obligations resulting from the DCFTA.
C. Agricultural sector and the associated obligations, is one of the most sensitive areas
when it comes to analyzing the preparedness of Georgia’s private sector
D. Misconception
E. Georgia has 95% of GSP+ opportunities out of which it uses only two or three.
Roadmap should be more detailed.
F. Import ratings are static due to Low Quality Products and non-efficiently functioning
manufacturing chain.
G. 70% of the lands are not registred and its utopian to attract investment or capital.
H. Cooperatives, farmer unions are not functioning in the region, Land fragmentation
outcomes.
I. EU GSP+ enables to export 7200 kinds of product.
J. Technological investment is imminent.
Thank you for attention 