EU Regards Georgia as Key Partner in the Region

The European Union says it considers Georgia a key partner in the region and continues to fully support its sovereignty and territorial integrity within its internationally recognized borders.

The statement was made in a report which assesses Georgia’s fulfillment of the EU-Georgia Association Agreement (AA), covering the period since the Association Council meeting in March 2019 and ahead of the next meeting in 2020.

The report speaks about the economic situation in Georgia, its place in international ratings, major political activities, the media environment and the involvement of the non-governmental sector in decision-making processes.

The document underlines that Georgia continues to be fully committed to and actively participates in the Eastern Partnership multilateral architecture, and adds that the country has provided a contribution. Their expectations are then outlined for the future policy framework.

Regarding the economic situation, the report says that the macroeconomic outlook remains stable, with some downward risks.

“The economy continued to grow (by more than 4.5% year-on-year in the first ten months of 2019) but it remains vulnerable to domestic political risks and spill-over effects from external developments, including growing global trade tensions, the economic performance of key trade partners (e.g. Turkey) and financial market volatility,” the document reads.

It also noted that Georgia is doing well in international business environment rankings, and it now ranks 6th out of 190 countries in the World Bank’s ‘Ease of Doing Business’ index, but added that challenges remain with regard to the independence of the judiciary, legal certainty and ongoing investigations of certain major businesses.

The report notes that tourism is a growing and increasingly important industry in Georgia, accounting for 7.7% of GDP in the first two quarters of 2019. According to the document, the second quarter saw a record 1,896.104 international visitor trips, which represents a growth of 13% in comparison to the second quarter of 2018. The third quarter of 2019 also saw a record number (2,753.207), but growth had slowed to 4% in comparison to the third quarter of 2018, primarily as a result of restrictions on tourism imposed by Russia from July.

The report underlines that Georgia is gradually aligning its accounting and auditing practices with EU and international practices in order to improve the investment climate and the competitiveness of local businesses.

Unemployment, named in the report as a major challenge, is said to remain high, at 11.1% (QII), while more than 40% are self-employed in subsistence farming.

Summarizing mutual trade, the report reads that in the first ten months of 2019, trade turnover between the EU and Georgia amounted to €1.3 billion, down by 4% compared to the same period in 2018. EU exports to Georgia remained stable, at €1.7 billion (0.7% lower than in the first ten months of 2018) and EU imports from Georgia fell by 15%, to €475 million.

On technical barriers to trade, it is noted that Georgia has continued to improve the national quality of infrastructure, in particular in the fields of: standards and metrology, accreditation and market surveillance, where the Technical and Construction Supervision Agency is progressing with the provision of market surveillance services for a range of industrial and consumer products, in particular regarding toy safety.

On the Deep and Comprehensive Free Trade Agreement (DCFTA), the Association Implementation report reads that Georgia continues to implement the DCFTA provisions on competition, focusing on amending the Competition Law in order to increase the investigative powers of the Competition Agency, adopt antitrust procedures and introduce a two-phase merger procedure.

“In addition, these amendments aim at ensuring coherence in the application of competition law in the regulated sectors (communication, energy and finance) and other sectors of industry, and to make structural changes to make investigations more efficient,” the report says.

It also underlines that Georgia continues to approximate its public procurement legislation to the EU acquis, adding, with regard to intellectual property protection and the enforcement system, that Georgia has advanced its reforms in order to bring Georgian laws in line with the Agreement.

Regarding the visa-free regime, the report says it is in place for Georgian citizens to visit Schengen and Schengen associated countries and almost 900,000 visits have been made by Georgian citizens since its entry into force.

“However, the number of asylum requests made by Georgians in EU/Schengen countries remained high in 2019, exceeding the overall number of asylum requests in 2018 and 2017, ranking Georgian nationals amongst the top nationalities requesting international protection in the EU,” The European Commission said, highlighting, however, that Georgia has continued to pro-actively address the challenge of increased unfounded asylum applications.

Among the major political events of 2019, the European Commission spotlighted the by-elections for one parliamentary seat and five mayoral posts, as well as mass public protests since the summer and a busy parliamentary session in the autumn to adopt the key legislation relating to democratic consolidation.

The report stressed that the coming months will be decisive for Georgia in tackling the increasing political polarization and for it to demonstrate its continued reform commitment, particularly in the areas of electoral and judicial reform.

Deputy Minister of Economy and Sustainable Development Genadi Arveladze said that the EU 2019 report highlights various areas in which Georgia is progressing, including export dynamics, economic growth, as well as the country's progress in international rankings.

“Exports of Georgian products to the EU are significantly increasing. In 2019, we had a record growth in exports to the EU countries, as well as a 40% increase in the number of exporter companies compared to 2014. The report also speaks of both economic challenges and much higher economic growth than expected in 2019,” he said.

The deputy Minister noted that the report also mentions the Foreign Direct Investments.

“We saw a growth of over 13% in the third quarter of last year. The 100% increase in reinvestment contributed significantly to this. This means that investor confidence in our country is growing. It is also important that FDIs in relation to GDP amounted to 7.6%,” Arveladze said.

By Tea Mariamidze

Image source: balcanicaucaso.org