Monday

20th Jan 2020

EU rewards Georgia with 'deep' free trade talks

  • Georgia is proud of having won the trade battle with Russia (Photo: Thomas Depenbusch)

After having lifted its veto against Russia joining the World Trade Organisation (WTO) following a Swiss-brokered deal, Georgia will start "deep" free trade negotiations with the EU in December.

While EU countries are being downgraded one after the other, the small country in the Caucasus has a different story to tell: Credit rating agency Standard & Poor's on Wednesday upgraded Georgia's rating from BB- to B+, citing "strong growth prospects" at around six percent of the gross domestic product and frugal public expenditure.

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"It's a recognition that real free market policies work - keep bureaucracy low, don't spend too much, create an investment-friendly environment. It was not capitalism that failed in the crisis, but state intervention to save greedy banks," Georgia's Europe minister Giorgi Baramidze told this website.

The so-called "deep free trade agreement", which could be wrapped up in mid-2013, will enhance Georgia's attractiveness even further, the minister said.

He shrugged off questions about the potential negative impact for local producers. "They are competing in the free market anyway, we are not subsidising or protecting our local industry. On the contrary, this deep free trade agreement will open up new markets to them, so it will be something positive," he said.

Pre-conditions for starting the talks had been met for over a year, but the EU has been reluctant to launch them while Georgia opposed Russia's membership of the WTO. "Formally, there was no connection between the two," Baramidze says. Once Tbilisi said yes to Moscow joining the international trading body, the EU indicated it would open the talks in December, however.

A compromise deal negotiated by Switzerland was key to unblocking the deadlock.

Russia, who fought a brief war with Georgia in 2008, still has troops on the ground and has recognised the independence of two Georgian provinces - Abkhazia and South Ossetia. Georgia, a WTO member, had for a year been refusing to let Russia join the trade body so long as they had no customs agreement to deal with the disputed northern border.

"They thought once the EU and the US had agreed to Russia's WTO membership, it would be enough. Russia never thought it would have to negotiate with Georgia on this," the minister said.

The Swiss-brokered deal obliges Russia to let a Swiss-hired contractor monitor all customs operations on the Russian side when exporting or importing from Georgia.

As no representatives from Abkhazia and South Ossetia were even invited at the talks, the Georgian minister says that Moscow is practically ignoring the very "independence" it had recognised for the two regions.

"This is an example to show that Russia can do a lot of things when it has a direct interest like joining the WTO," Baramidze said.

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The EU should move faster on free trade agreements and negotiations for visa-free travel with Georgia, Ukraine and Moldova, which are 'inexpensive' policies that can be pursued in times of austerity as funding priorities shift to the southern neighbourhood, a Georgian minister has said.

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