Issue 6 July 2014
The European Union and Georgia sign the Association Agreement Association with EU leads to privileged trade relations (Source EC/ EU Neighbourhood Info Centre) A screengrab from a footage showing Georgia’s PM Irakli Garibashvili signing Association Agreement in Brussels on June 27, 2014. He said the agreement represents “master plan for Georgia’s modernisation.”
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n today’s challenging economic environment, boosting trade, improving business climate and attracting more investments are the most effective ways to bolster economic growth and create jobs. This vision underlies the EU’s policies towards its Eastern neighbours, both in bilateral relations and in the multilateral framework of the
Eastern Partnership. Progressive trade liberalisation is the cornerstone of the new Association Agreements (AAs) between the EU and its partner countries, which include provisions establishing DCFTAs. Georgia, together with the Republic of Moldova, initialled the AA/DCFTAs, ➜
Issue 6 July 2014
CONTENTS
Trade Insight • The European Union and Georgia sign the Association Agreement
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DCFTA Highlights • Investor’s Conference - Highlights • Association Agreement and DCFTA Highlights Georgia adopts a Competition Law •Facilitating Georgia's integration into the EU market • Georgian Revenue Service and taxation: better control, better service, better legislation. • Regions towards EU integration
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Topic At A Glance • Georgia 2020 SOCIO-ECONOMIC DEVELOPMENT STRATEGY • STATE PROGRAMME "PRODUCE IN GEORGIA" Agriculture • EU and FAO assist in the elaboration of the Agriculture Development Strategy • EU supports the National Food Agency • Agriculture cooperatives gain momentum
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DID YOU KNOW THAT… Upcoming events
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Progressive trade liberalisation is the cornerstone of the new Association Agreements (AAs) between the EU and its partner countries
on 29 november 2013, during the Eastern Partnership summit in Vilnius. on the 27th of June, this process has been completed: the EU and Georgia signed the Association Agreement in Brussels.
boosting competition and exports, improving the business climate, attracting investors while ensuring higher levels of social, environmental and consumer protection. It will provide stable and more predictable governance rules, especially for SMEs, which are more vulnerable. Better products and services will enhance the overall standard of living for consumers and citizens. The country will be ex-
What does it mean? The immediate phasing out of existing customs tariffs and regulatory barriers will increase the variety and quality of products and services,
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Myths about the EU-Georgia Association Agreement EU-Georgia trade – EU statistics
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For more information: Reading guide on the EU-Georgia DCFTA
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pected to bring its legislation closer to that of the EU in a wide number of regulatory policy areas. An independent study predicts that the DCFTA will increase Georgia’s exports to the EU by 12% and imports by 7.5%. Georgia’s GDP could increase by 4.3% or €292 million in the long term, provided that the DCFTA is implemented and its effects sustained.
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DCFTA HIGHLIGHTS INVESTOR'S CONFERENCE – HIGHLIGHTS
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he Investors' conference, with participation of the European Commission President José Manuel Barroso, was held in Georgia on 13 June 2014. The conference preceded by a few days the signing of the EU-Georgia Association Agreement including Deep and
years. More will be needed. our jointly agreed Association Agenda provides a glimpse of what we have identified as key areas to address over the next three years as we work to implement the Agreement,” Barroso said. he believed the goal of the EU-Georgia partnership was to help the country deliver on its own ambitions. "The Association Agreement is only the beginning of EU-Georgia’s cooperation”, he added.
eign Affairs of Georgia, and Giorgi Kvirikashvili, Vice-Prime Minister, Minister of Economy and Sustainable Development of Georgia. The conference focused on business activity and investment in Georgia, because experience shows these are the areas where agreements such as the Association Agreement bring the biggest long-term economic benefits. one of the main benefits of the conference to investors in Georgia has been the discussion of practical implication of the AA/DCFTAs for business. The conference also provided opportunities for businesses to promote themselves, their products and services. In his opening remarks, President Barroso hailed Georgia’s progress towards signing of the AA and said Georgia was a frontrunner of the Eastern Partnership countries. he pointed to the highly anticipated signing of the Agreement between Georgia and the EU. "Georgia has already undertaken many important reforms in recent
President Barroso hailed Georgia’s progress towards signing of the AA and said Georgia was a frontrunner of the Eastern Partnership countries Comprehensive Free Trade Area (AA/DCFTA) on 27 June 2014. The conference was opened by Jose-Manuel Barroso, President of the European Commission, Irakli Garibashvili, Prime Minister of Georgia, Maia Panjikidze, Minister of For-
"The Deep and Comprehensive Free Trade Area is a great responsibility [and] we do not export ready-made solutions. The EU offers only instruments and expertise as we could not replace your eagerness. only you can really make that happen but we, as the European Union, can help you do so”. Several hundreds of representatives of the government, diplomatic corps, business sector and international and non-governmental organisations took part in the event. Speech by President Barroso at the Georgia Investment Conference.
Association Agreement and DCFTA Highlights Georgia adopts a Competition law
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ompetition was one of the key trade-related policy areas where reforms were recommended in order to start the negotiations for a DCFTA with the EU. Competition policy is relevant for trade as it provides a level-playing field for companies on the market, for domestic and foreign ones alike. Fair competition leads to better business environment and innovation. It therefore helps enhancing the country's competitiveness on the global market and promotes economic welfare. Free
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competition supports a better choice of products at lower prices and promotes innovation and productivity. A law on Competition was approved and published on 31 March 2014. The provisions of the law are consistent with EU standards. In particular the law establishes the principles for protection of free and fair competition from unlawful restrictions, and provides a framework to ensure that companies operate in the market on the basis of the same rules. In particular, the
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law eliminates barriers to market entry, prohibits the abuse of a dominant position and any agreement or concerted practice with the objective of restricting competition between economic agents, and identifies the form of state aid that endangers competition. According to the law, an independent competition authority (Competition Agency) has been established to oversee the implementation of the law. Integral text of the Competition law in Georgian language.
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DCFTA HIGHLIGHTS Facilitating Georgia's integration with the EU market
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he signature of the Association Agreement marks the beginning of the oďŹƒcial process of integration with the EU through reforms. Georgia has already started the reform process and has come a long way in a number of policy areas. This progress enabled the conclusion of the negotiations on the Association Agreement, and helped determine the next steps. The reform agenda contained in the Association Agreement paves the way for continuation in the path of reforms that will benefit trade and the development of the private sector. In particular, the engagement of the Government of Georgia towards a genuine Small and Medium-sized Enterprise (SME) policy and strategy will necessarily go through the strengthening of key institutions in the trade and business areas. The Entrepreneurship Development Agency (EDA) and Georgia's Innovation and Technology Agency (GITA) will play a key role in supporting and counselling Georgian enterprises interested in exporting to the EU market and
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months of implementation, the programme will address the need to further strengthen key regulatory policies and institutions vital for trade and private sector development, with a close eye to Georgian SMEs to be better prepared to adjust to a new regulatory environment.
start-up innovative businesses. The EU is supporting Georgia's integration with the EU market by further strengthening core institutions and economic actors including SMEs along the DCFTA process. A new programme intended to help reap the benefits of the Agreement is under preparation. With the "Support to the DCFTA and SMEs" totalling â‚Ź 51 million, the EU is combining a full spectrum of measures targeting trade reforms and support to the private sector, in particular SMEs. Budget support (directly benefitting the Georgian budget) will be complemented by a grant scheme for civil society and Georgian business associations, a twinning with the market surveillance authority, and technical assistance delivered through the German agency GIZ, the European Bank for Reconstruction and Development (EBRD), and the FAo.
The programme is in line with Georgia's socio-economic strategy "Georgia 2020" where SME development is recognised as a way to overcome poverty and reach sustainable and inclusive growth. In this sense, the EU programme will contribute to facilitate understanding of the DCFTA for business, especially for SMEs which are the most vulnerable segment of the Georgian economy. While contributing to boost SME competitiveness, improve publicprivate dialogue on DCFTA and the capacities of business associations to deliver better services, the EU action will ensure the continuation of reforms in key trade-related policy areas like food safety and quality infrastructure, to the benefit of the population at large.
Budget support represents 60% of the total EU financial support for Georgia, the remaining being complementary measures. During its 60
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DCFTA HIGHLIGHTS
The Article 280 of the Chapter 3 Title V of the Association Agreement EU-Georgia introduces clear principles of cooperation in the tax field: “The Parties shall cooperate to enhance good governance in the tax area, with a view to the further improvement of economic relations, trade, investment and fair competition.” These principles have been put at the basis of economic relations between EU and Georgia and are also reflected in the DCFTA part of the Agreement.
Georgian Revenue Service and taxation: better control, better service, better legislation.
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ation according to double taxation agreements. Another is to put together recommendations on improved regimes for business start-ups and SMEs.
clude developing and producing business sector guides, training auditors in specific taxation issues (e.g. offshore/tax haven issues) and drafting legislation for computer audit, using computer audit in tax control and producing guidelines for computer audit. As for tax collection, a number of results are envisaged to help with the enforcement of tax debts. These include putting in place methods to assess the effectiveness of enforcement procedures, drafting legislation for debt enforcement measures, training staff and preparing guidelines about these measures. Under taxpayers’ services, one result envisaged is for guidelines to be drafted to do away with double tax-
An 18-month EU twinning project to strengthen the administrative capacity of the Georgia revenue service in the area of taxation began in May 2014. The project, which comes with a budget of 1.3 million euro, is being implemented by the Austrian Ministry of Finance. The general aim of the project is to improve the tax administration system for businesses and citizens in Georgia. The specific aim is to bring the administrative capacity of the Georgia Revenue Service in line with European Union and international standards in terms of tax controls, tax collection, taxpayers’ services, legislation (e.g. VAT and excise) and human resources. In terms of tax controls, the aims in-
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"The general aim of the project is to improve the tax administration system for businesses and citizens in Georgia"
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DCFTA HIGHLIGHTS Regions towards EU integration
September 2014 marks the start of a new EU-funded project entitled 'Georgians in Europe: lessons learned from Visegrad countries'. Members of the Armenian and Azeri minorities in 6 municipalities will be able to meet and speak with teachers, doctors, farmers and fire-
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their heart and mind into supporting Georgia's aspirations towards the EU project becomes a powerful engine for awareness-raising of the benefits and impact of the European Integration.
men, people just like them, from the Visegrad countries about their experience of EU integration. Some of these municipalities already have established contacts with counterparts in the Czech Republic, hungary, Slovakia and Poland. Building on these relationships, 'local ambassadors' for European integration will be supported to go out into their communities and explain the impact of the Association agreement and the DCFTA on people in the everyday lives. An important part of the project is the use of twinning relations – personal contacts between schools, teachers, farmers' groups, CSos and others with their Visegrad countries counterparts. Bringing together people with a shared will and common interest to consolidate their efforts and put
"An important part of the project is the use of twinning relations – personal contacts between schools, teachers, farmers' groups, CSos and others with their Visegrad countries counterparts"
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At least 30 local ambassadors in the following 6 municipalities - Marneuli, Bolnisi, Gardabani, ninotsminda, Akhalkalakhi and Akhaltsikhe - will get trained, informed and involved; At least 60 teachers will increase their knowledge on EU related issues through training and consultancy; At least 320 students will get a better understanding of EU issues through training and participation in debates; At least 30 firemen and rescue medical staff will learn more and establish contacts and partnerships with their European collegues; At least 3 schools will have twinning initiatives with Czech schools; At least 12 farmer groups, cooperatives and rural associations uniting over 600 local farmers will increase their knowledge and will be trained in EU agriculture and free trade related issues; Representatives of the local NGO community, media and self-governments will be better informed and mobilized in a support of Georgian reforms towards the EU integration.
The immediate beneficiaries of the project will be representatives of the target groups from the selected districts, approx. 1.500 people. The final beneficiary will be the population of 6 municipalities, approx. 200.000 people.
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TOPIC AT A GLANCE
Georgia 2020 SOCIO-ECONOMIC DEVELOPMENT STRATEGY The socio-economic development strategy "Georgia 2020", which outlines the social and economic development priorities and targets over the period 2014-2020, was adopted by the Governmental Decree nr 400 on 17 June 2014. The strategy is built around three pillars: private sector competitiveness, development of human capital and access to finance. Private sector competitiveness has been identified as the most significant driver of economic development. The
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strategy rests on macroeconomic stability and eective public administration as preconditions for inclusive economic growth. Measures to improve the business climate and to attract capital remain among the future Government's priorities. A strong focus on social policy measures to achieve more inclusive growth and to protect the poorest is evidenced. The enhanced role of Georgia as a transit country, favoured by a well-established and well-functioning transport, energy,
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logistical and agriculture infrastructure, is the key to boost country's competitiveness.
"The strategy is built around three pillars: private sector competitiveness, development of human capital and access to finance"
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TOPIC AT A GLANCE
STATE PROGRAMME "PRODUCE IN GEORGIA"
The 46 million GEl (ca. € 19 million) state programme “Produce in Georgia” is a positive step undertaken by the Georgian Government to strengthen the local agri-processing and industrial production, to enhance entrepreneurship and to create new job opportunities. The programme
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started its implementation in June 2014 and builds on three components: financial assistance in the form of preferential loans, infrastructure support and consulting services. All information is available at http://www.qartuli.ge.
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AGRICULTURE AND FOOD SAFETY
EU and FAO assist in the elaboration of the Agriculture Development Strategy Funded by the European Union as part of the EnPARD programme, the project Capacity Development of the Ministry of Agriculture of Georgia has been providing technical advice and expertise in the preparation of the for the Georgian Agriculture Development Strategy for 2014-2020. The project, which is implemented by FAo, has facilitated the process of sharing the Strategy document amongst all key stakeholders in the sector for their consideration and feedback. In June 2014, after reviewing all comments and consolidating inputs received from representatives of different donors, international or-
ganizations, nGos, academia and other key stakeholders, the final working version of the document was made available to the Government of Georgia for final comments.
EU supports the National Food Agency on 26 April 2014 the implementation of the first phase of the EU funded (EUR 2.5 million) Comprehensive Institutional Building Programme to the national Food Agency was completed. The project, which aimed to support Georgia to enhance its sanitary and phyto-sanitary standards towards those in the European Union, has successfully improved the skills and capacities of the food inspectors, veterinarians and other staff of the Agency. The project also provided laboratory and technical equipment required for food-testing, assisted in the rehabilitation of new branches and offices of the Agency and conducted awareness campaigns to better control rabies, brucellosis and other animal diseases. Second phase of this project (EUR 4.5 million) is due to start in June 2014.
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"the European Union, has successfully improved the skills and capacities of the food inspectors, veterinarians and other staff of the Agency" I
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Food Safety: where does Georgia stand ?
Agriculture cooperatives gain momentum More than 80 new agriculture cooperatives were registered in Georgia until May 2014, in the framework of the Agriculture Cooperatives law approved by the Government in 2013. The registration is managed by the ACDA, which also conducted awareness campaigns about cooperatives and defines programmes and activities to assist the registered coops. The ACDA is supported by the European Union in the context of the EnPARD programme. In the EU, and in most of the developing countries, a majority of the farmers are members of cooperatives. Cooperatives help farmers to gain economies of scale, increase their production and ensure access to the markets, while matching the required standards.
The concept and the potential of farmers' cooperatives in Georgia has historically been subject to numerous misconceptions; but this trend is now changing. In May 2014 the EU-funded EnPARD programme conducted a survey on the level of understanding and the attitude of the small farmers regarding cooperatives. The survey saw that 67% of the farmers have heard about agriculture cooperatives in the last 12 months, largely thanks to the awareness eorts conducted by Agriculture Cooperatives Development Agency (ACDA) and by the EnPARD project’s partners. According to the survey, half of Georgian farmers now have a positive opinion about business-oriented cooperatives and would be interested in joining them.
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"Cooperatives help farmers to gain economies of scale, increase their production and ensure access to the markets, while matching the required standards"
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DID YOU KNOW THAT…
TECHNICAL REGULATION SUGAR
STANDARDIZATION
ATO TOM ES
METROLOGY
MADE IN GEORGIA
ACCREDITATION CONFORMITY ASSESSMENT
AUTHORS / TAMAR KHURTSIA / MARIAM CHALAURI
WINE GEORGIANGLUTEN
K MIL
UPCOMING EVENTS
II Seminar Safe and Sustainable Transport in Georgia
In September 2014, the Partnership for Road Safety Foundation, supported by the EU, will hold a seminar to increase awareness of Georgian road safety and transport sector stakeholders, civil society, business and media representatives about the effect of AA/DCFTA agreements in transport field.
The Newsletter is solely distributed via electronic mail. Do not hesitate to forward it to interested persons or suggest new recipients by sending an email to Mr. Antonio Lo Parco, Trade AttachĂŠ at the Delegation Of the European Union to Georgia:
antonio.lo-parco@eeas.europa.eu
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