WORLD TRADE
ORGANIZATIONWT/MIN(98)/ST/44/Rev.1*
20 May 1998
(98-2156)
MINISTERIAL CONFERENCE
Second Session
Geneva, 18 and 20 May 1998Original:  English
GEORGIA
Statement Circulated by Mr. Konstantin Zaldastanishvili,
Minister of Trade and Foreign Economic Relations
(as an observer)
Revision
It is high honour to take part in the 2nd Ministerial Conference of the WTO as well as to
represent Georgia on the 50th Anniversary of the Multilateral Trading System.
After the first Ministerial Meeting Georgia has made a big step towards the accession to the
WTO. The latter we consider as the most important stage on the road to the full inclusion of Georgiainto the world trading system.  Because of this fact, the Government of Georgia has declared that
rapid entry into this international organization is the most important priority in its entire foreign
economic policy.  In connection with this fact, I would like to express my deep gratitude to
Ambassador E. Herfkens, the chairperson of the Working Party of Georgia’s acceding to the WTO;
to the Members of the World Trade Organization; and to the Secretariat for their cooperation in theprocess of the accession of Georgia to the WTO.  An additional important benefit for us is the
stimulus that the accession process provides to more rapid development of market reforms in Georgia.
Georgia began the process of joining the WTO in 1996, when it officially applied for full
membership and received observer status.
Under the Ministry of Foreign Affairs, the Commission on accession to the WTO was
established in Georgia.  Representatives from virtually all Ministries and Departments take part in the
work of the Commission.  Our work has also been substantially assisted by representatives of theEuropean Union, the United States, and the World Bank, for which help we are very grateful.
In a short period of time, the Commission prepared the Memorandum on the Foreign Trade
Regime, which was officially submitted to the Secretariat of the WTO in April 1997.  We thank the
Member States of the WTO for attentive study of this document.  As a result, we received about
400 questions on the Memorandum, the replies to which we submitted in September 1997.
At the beginning of December 1997, in the headquarters of the WTO here in Geneva, bilateral
consultations were conducted with representatives of the United States, Canada, the European Union,
Japan, and Australia.  The main subject of these consultations was discussion and clarification of
questions concerning Georgia's foreign trade regime.  These consultations contributed substantially to
the process of our accession to the WTO.
                                                     
* Editing changes only.WT/MIN(98)/ST/44/Rev.1
Page 2
At the beginning of this year, we submitted to the Secretariat our Initial Offers on goods and
services.
Bilateral negotiations with the representatives of Australia, Canada, the Czech and Slovak
Republics, the European Union, Hungary, Switzer land, Turkey, and the United States, which took
place last week and yesterday, have also been very fruitful.
The first meeting of the Working Party on the Accession of Georgia to the WTO was held on
3 March 1998 and in accordance with the opinion of the WTO Member States it was quite successful,
that, undoubtedly, brought us near the day of obtaining a full-member status of the WTO.  After this
meeting we received about 170 additional questions.  The draft version on replies on this
questionnaire we have already circulated.
Moreover, as results of the aforementioned bilateral meetings we submitted to the WTO
Secretariat our revised initial offers on goods and services.
Let me now to invite your attention to severa l positive developments in Georgian legislation
since the submission of the Memorandum on Foreign Trade Regime.  For example, in compliance
with our commitments in the Me morandum, such important laws as the Civil Code, the Tax and
Customs Codes, the Maritime and Aviation Codes, the "Law on Privatization of State Property", the
"Law on advertisement" have been adopted and ha ve already come into force. Experts from key
international organizations made important contributions to the development of these laws, which
fully comply with international norms.
At the present time, Parliament is considering such important bills as the "Law on
Trademarks", the "Law on Copyright", the "Law  on Patents", and others.  The draft "Law on
Government Procurement" is in the process of development in the appropriate ministries.  Therequirements of the WTO have been fully taken into account in the development of these documents.
In addition, the Parliament has made a commitment that, beginning 1 September 1998, all
new legislation adopted in Georgia must be in fu ll compliance with the legal norms of the European
Union.
In this connection, note should be taken that the Georgian-European Centre for Economic
Policy and Legal Consultation ("GEPLAC") which has been recently established in Tbilisi under the
aegis of the European Union, has actively begun to assist in the process of harmonizing our legal
system with the EU and WTO standards.
It is important also to mention the significant contribution of the Caucasus Mission of the
United States Agency for International Development (USAID) and its Centre for Institutional Reform
and the Informal Sector (IRIS) to the harmonization of our legal system in general and specifically to
the accession of Georgia to the WTO.
Active work has started on the transformation of the old Soviet system of standardization and
certification to a new one corresponding to international standards.  The first real step in this was the
adoption of two important documents: the "Law on Certification of Products and Services" and the
"Law on Standardization".  Together with their Georgian colleagues, foreign experts are actively
involved in this work.  Also, on 1 January 1998, Georgia became a correspondent-member of theInternational Standards Organization (ISO).  On 17 October 1997, Georgia applied for membership in
the Codex Alimentarius Commission as well.  This application was officially registered by the
Secretariat of the Commission in January this year.WT/MIN(98)/ST/44/Rev.1
Page 3
Nowadays, the appropriate structures of the Government of Georgia are in the process of
converting from the Harmonized System of Nomenc lature of Goods 1992 to the Harmonized System
1996.
It is also important to note that, effective from 1 January of this year, Georgia applies the
destination principle with respect to indirect taxation of imports and exports.
Not content to be a passive observer of further liberalization of the world trading system,
Georgia is considering the important initiatives that  have been adopted covering trade in information
technology and pharmaceuticals. In addition, a Presidential Decree on "The Common Plan of
Privatization of Separate Sectors of the Georgian National Economy" has been adopted, which
envisages restructuring, de-monopolization and privatization of the entire telecommunications
network of the country.  These measures will be implemented with the participation of the World
Bank and the conduct of international tenders.
With respect to intellectual property rights, Georgia is a member of the Paris Convention on
Protection of International Property Rights, the Bern Convention on Protection of Works of Literature
and Art, and the Treaty on Patent Cooperation.  The necessary intergovernmental procedures for
accession of Georgia to the Protocol of the Madrid Convention on International Registration of Marks
have just completed.
Georgia pays great attention to regional cooperation.  We welcome the prospect of
cooperation within the framework of such regional organization as the Black Sea Economic
Cooperation (BSEC).  We have also concluded a Partnership and Cooperation Agreement between
Georgia and the European Union.
The active support of international organizations and individual country donors has greatly
helped the Government of Georgia to implement market reforms.
The latest statistical data demonstrate the rapid improvement of the Georgian economy.  In
1997, real growth in GDP was 11.3 per cent against 10.6 per cent in 1996.  The annual inflation rate
was fixed at the level of 7.3 per cent in 1997, and is projected to decline further to 3.1 per cent in
1998.  Price liberalization has been completed.  The national currency introduced in 1995 -- the lari --is stable.  The foreign debt of Georgia, which totals $1.6 billion, has been entirely restructured.
The banking system of Georgia is being actively reformed.  As a result of increased liquidity
requirements, the number of banks has been reduced from 229 to 53.  Ten of these have been
established with the participation of foreign capital.  Most Georgian banks have joined the
international "SWIFT" system of payments.  Special attention should be drawn to the fact that
Georgia has accepted Article 8 of the IMF Agreement.
There are also positive trends in the development of foreign trade. In 1996, Georgia had trade
relations with 82 countries;  last year this number increased to 93.  Foreign trade turnover increased
30 per cent in 1997, rising to a total of one US$1.108 billion.  Exports amounted to US$250 million.
There was a growth of exports, but imports also increased, due especially to the need to import energy
and grains.
From May 1996 through the end of 1997, 161 private foreign investments, totalling
US$135 million, were registered in Georgia. Investors from 36 countries have put their money in
Georgia.  One stimulus to this investment wa s the adoption in 1996 of the "Law on Promotion and
Guarantee of Investment Activity", which provides for national treatment of investments.WT/MIN(98)/ST/44/Rev.1
Page 4
Adoption and enforcement of such laws as the "Law on Monopoly and Competition", the
"Law on Entrepreneurship", and the "Law on Bankruptcy" have played a significant role in increasing
business activity and competition in Georgia.
Small privatization is virtually complete in Georgia.  More than 11,492 small enterprises have
already been privatized.  1,160 medium and large enterprises have already been converted into jointstock companies.  The fact that privatization has included such strategic branches of the economy as
energy, transport, and the bread industry points out the depth of the process.  It is noteworthy that
during 1997, the total amount of capital attracted by privatization tenders was more than
US$100 million.
To emphasize the importance of Georgia's rapid accession to the WTO, we would like to
invite your attention to the important effects that accession will have on world trade. What do I mean?
Georgia, with a population of just over five million people, occupies a strategically located
territory of approximately 70,000 square kilometres.  With its deepwater ports on the Black Sea,
Georgia provides the most direct transit corridor between the Black and Caspian Seas.
Great attention has recently been focused on the development of the Transport Corridor
Europe-Caucasus-Asia (TRACECA), which is sometimes  described as a restoration of the "Great Silk
Road."  The fact that this route, which would run through the Black Sea and across Georgia to theCaspian Sea, would shorten the sea routes connecting Europe with Asia by approximately
8,000 kilometres is an indication of its importance.
Because Georgia is a central country for the carriage of both energy and goods along the Silk
Road, the rapid accession of Georgia to the WTO wo uld significantly assist the realization of this
project.
In conclusion, on behalf of the Government of Georgia, let me once more assure you that we
will do everything that we are required to do in order to fulfil the commitments we are undertaking in
acceding to the WTO.
__________