RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG/GEN/M/8
28 June 2002
(02-3630)
Committee on Regional Trade Agreements
Thirty-Second Session
FREE TRADE AGREEMENTS BETWEEN GEORGIA AND THE
RUSSIAN FEDERATION, ARMENIA, AZERBAIJAN, UKRAINE, TURKMENISTAN,
AND KAZAKHSTAN
Note on the Meeting of 3 June 2002
Chairman:  Dr. V. Notis (Greece)
1. The meeting was convened in document WTO/AIR/1805.
2. Under Agenda Items D.VI-XI of its Thirty-Second Session, the Committee on Regional Trade
Agreements (hereinafter CRTA or the Committee) took up the first round of examination of the
following regional trade agreements (RTAs):
- Free Trade Agreement between Georgia and the Russian Federation
- Free Trade Agreement between Georgia and Armenia
- Free Trade Agreement between Georgia and Azerbaijan
- Free Trade Agreement between Georgia and Ukraine
- Free Trade Agreement between Georgia and Turkmenistan
- Free Trade Agreement between Georgia and Kazakhstan
3. The Chairman proposed that the six Agreements notified to the WTO by Georgia be
examined jointly by the Committee.  Given that only one WTO Member was the common
denominator to those Agreements, and their similarities in many respects, it was important to avoidunnecessary repetitions at the meeting.  He recalled that that way of proceeding would have no effect
on the examinations per se , as each Agreement would be judged on its own merit and would have its
own report with its own conclusions.
4. The Chairman noted that the Free Trade Agreement (FTA) between Georgia and the Russian
Federation had been signed on 3 February 1994 and had entered into force on 10 May 1994;  it hadbeen notified to the WTO in February 2001 (WT/ REG118/N/1) and the text of the Agreement had
been distributed in document WT/REG118/1.  The FTA between Georgia and Armenia had been
signed on 14 August 1995 and had entered into force on 11 November 1998; it had been notified to
the WTO in February 2001 (WT/REG119/N/1) and the text of the Agreement had been distributed in
document WT/REG119/1.  The FTA between Georgia and Azerbaijan had been signed on 8 March1996 and had entered into force on 10 July 1996; it had been notified to the WTO in February 2001
(WT/REG120/N/1) and the text of the Agreement had been distributed in document WT/REG120/1.
The FTA between Georgia and Ukraine had been signed on 9 January 1995 and had entered into force
on 4 June 1996; it had been notified to the WTO in February 2001 (WT/REG121/N/1) and the text of
the Agreement had been distributed in documen t WT/REG121/1.  The FTA between Georgia and
Turkmenistan had been signed on 20 March 1996 and had entered into force on 1 January 2000; it had
been notified to the WTO in February 2001 (WT/ REG122/N/1) and the text of the Agreement had
been distributed in document WT/REG122/1.  The FTA between Georgia and Kazakhstan had beenWT/REG/GEN/M/8
Page 2
signed on 11 November 1997 and had entered into force on 16 July 1999; it had been notified to the
WTO in February 2001 (WT/REG123/N/1) and the text of the Agreement had been distributed in
document WT/REG123/1.
5. The Chairman observed that after notification, the Agreements had been considered by the
Council for Trade in Goods at its meeting of 14 March 2001, when standard terms of reference wereadopted for the examination of each agreement: "to exam ine, in light of the relevant provisions of the
GATT 1994, the [name of the agreement] and to s ubmit a report to the Council for Trade in Goods".
The terms of reference for the examination were contained in documents WT/REG118/2 and its
Corrigendum, WT/REG119/2 and its Corrige ndum, WT/REG120/2 and its Corrigendum,
WT/REG121/2 and its Corrigendum , WT/REG122/2 and its Corrige ndum, and WT/REG123/2 and its
Corrigendum.  He then indicated that those terms of  reference applied jointly  with an Understanding
that read "It is understood that the understanding read out by the Chairman of the Council for Trade inGoods under item 7 of the agenda of the meeting of  the Council for Trade in Goods on 20 February
1995, as contained in document WT/REG3/1, will apply mutatis mutandis  to the examination of the
Agreements."
6. The Chairman also said that examination of th e specifics of the Agreements would be guided
by the respective Standard Formats (WT/RE G118/3, WT/REG119/3, WT /REG120/3, WT/REG121/3,
WT/REG122/3, and WT/REG123/3), which ha d practically parallel structures.
General Statements
7. The representative of Georgia said that after the break down of the Soviet Union, traditional
trade-economic links established for several decades among the former Republics, had been
drastically disrupted.  Faced with the severe consequences of the resulting a sharp decline in theirproductivity rates, trade flows and overall economic welfare, Georgia had been trying its utmost to
revive and strengthen trade-economic ties with its traditional partner countries.  He indicated that the
conclusion of bilateral FTAs with most of the countries of the Commonwealth of Independent States
(CIS) represented the first attempt to establishing effective trade-economic relations based on the
principles of equality and mutual advantage.  Th e FTAs which were under consideration belonged to
that first generation of FTAs signed among CIS countries.  This explained why they did not cover all
legal aspects of international trade and referred to trade in goods only.
8. The representative of Georgia added that, when concluding the Agreements, the Parties were
not members either of GATT nor of the WTO (Georg ia gained observer status to the GATT in late
1993), but tried to reflect the adherence to the principles and norms of the GATT/WTO to the
maximum extent possible.  The conclusion of the six bilateral FTAs was an attempt to remove
obstacles to bilateral trade-economic relations, thus ensuring free movement of goods and makingbilateral trade rules-based, transparent and predictabl e.  He indicated that some exemptions from the
free trade regime were maintained with the Russian Federation and Kazakhstan.  The Protocol of
exemptions from the free trade regime signed with the Russian Federation, which constituted an
integral part of the corresponding FTA, provided fo r the exemption of four items, namely white sugar,
beer made from malt, not-denatured ethyl alcohol and denatured ethyl alcohol.  The volume of thefree trade with the Russian Federation in the year 2001 amounted to 93.5 per cent of the total.  He also
indicated that work was underway to abolish the existing list of exemptions from the free trade regime
with Kazakhstan; the completion of that process was anticipated in the near future.  He ended by
saying that rules of origin for goods were defined according to the decision of the Council of Heads of
States of the CIS dated 30 November 2000.
9. The representative of India welcomed the introductory statement made by the representative
of Georgia and requested that copies of it be distributed to the Committee.WT/REG/GEN/M/8
Page 3
A-F.EXAMINATION OF THE FREE TRADE AGREEMENTS BETWEEN GEORGIA
AND THE RUSSIAN FEDERATION, ARMENIA, AZERBAIJAN, UKRAINE,
TURKMENISTAN, AND KAZAKHSTAN
Section I - Background Information on the Agreements
Section I.3 - Scope
10. The representative of the United States noted that the FTA between Georgia and the Russian
Federation covered commodities, services, capital and labour.  Recalling that the introductory
statement made by the Georgian delegate only referred to trade in goods, he asked for a clarification
about the meaning of the word 'services' and in particular whether the Agreement included any
services provisions through which Georgia or the Russian Federation afforded the other Party
preferential market access in services.  If the word 'services' was meant in a GATS context, he wished
to know whether Georgia had notified such services agreement with the Russian Federation to theGATS Council.  The representative of the European Communities shared similar concerns and sought
for a clarification on the meaning of the word 'services ' as employed in the text of the Agreement.  He
added that his delegation understood the context in which the Agreements, as well as other
agreements within the CIS, had been negotiated, and noted that the trade relationships between
Georgia and its partners, and within the CIS as a whole, were in constant evolution.
11. The representative of Georgia pointed to a likely mistake in the text of Agreement and said
that the wording 'service, capital and labour' would have to be deleted.  He observed that the
Agreement had been drafted at a time when the Parties had little or no knowledge on the meaning of
GATS.  He added that although the preamble to the Agreement was designed to be very general in
scope, the Agreement itself did not make any reference to services, movement of capital and labour,and at least not in a GATS sense.  The representativ e of the Kyrgyz Republic remarked that also the
FTAs signed by his country included a similar wo rding on services.  He explained that a standard
format had been used for the conclusion of FTAs since the creation of CIS, and that, in the former
Soviet Union, services as such were not separated for the calculation of GDP and were thus associated
with trade in goods and with movement of capital and labour.
12. The representative of Japan asked whether Article 3 of the FTA with the Russian Federation
provided for the elimination of other restrictive regulations of commerce in addition to the stated
elimination of customs duties, taxes or charges of equivalent effect.
13. The representative of Georgia said that on entry into force of the Agreement all customs
duties had been eliminated except export duties on fuel and gas, on which negotiations were being
held.  He expected that an agreement would be reached as part of the accession negotiations of the
Russian Federation to the WTO.  Similarly, the elimination of the other restrictive regulations ofcommerce was being addressed through bilateral talks and as part of the Russian Federation's
accession process.
Section I.3 – Trade Data
14. The representative of Canada noticed that trade data had been provided only with respect to
imports into Georgia, but were missing for the othe r Parties to the Agreements.  While acknowledging
that the latter were not WTO Members, which could explain the lack of import data for those
countries, she wondered whether that data could be somehow provided, and failing that, whether
export data from Georgia into those various countries could be made available respecting the same
format as it was given for imports.  The representatives of the European Communities and the United
States supported that request.  The latter also sought confirmation from the Georgian delegation thatWT/REG/GEN/M/8
Page 4
under the column 'trade covered' in the table under Section I:4 of the Standard Format, duties and
other restrictive regulations of commerce had been eliminated.
15. The representative of Georgia said that his delegation would certainly provide more detailed
information concerning trade data on imports and exports.  Turning to the question posed by the
representative of the United States, he said that the data shown in the table referred to all thecommodities covered by the Agreements and confirmed that duties and other restrictive regulations of
commerce were also included.
Section II - Trade Provisions
Section II.1 – Import Restrictions
16. Referring to the protocols of exemptions in the Georgia-Russian Federation and Georgia-
Kazakhstan FTAs, the representative of Australia sought confirmation that no exemptions applied to
the other four Agreements, these therefore covering 100 per cent of trade.  In that respect, he inquired
whether copies of those two protocols had been made available to the Secretariat for consideration of
Members.  He also remarked that in the opening statement, reference was made to the aim on behalf
of Georgia and Kazakhstan to eliminate their currently existing exemptions.  He demanded that the
CRTA be kept informed of progress in relation to that process.  Finally, he wondered whether further
statistical information on the trade covered by the exemptions with the Russian Federation could bemade available.
17. With respect to the Georgia-Russian Federation FTA, the representative of the European
Communities wished to know whether the exemptions  were the same for each partner, with the
specified products being therefore excluded from liberalization on a equal basis.  He also asked for
statistics on the trade taking place under the Protocol of exemptions and therefore still subject to someform of import duty.  He sought confirmation that such trade reflected the difference between the
figures of 'total trade' and 'trade covered' shown in the table under Section I:4.  Finally, referring to
Section II.1.2, he asked whether any quantitative restrictions on imports were currently in place,
noting that the Agreement, while calling on Parties to refrain from applying quantitative restrictions,
did not seem to actually forbid them from doing so.
18. Following up from the previous interventions, the representative of Canada inquired on
whether the Agreements with the Russian Federation and Kazakhstan, as well as any of the other
FTAs, provided for the inclusion of additional products in the Protocols of exemptions.  Turning to
the scope of the FTAs, she asked for confirmation that 100 per cent of tariff lines were duty free under
the Agreements with the exception of the four products covered by the Protocols of exemptions.
Concerning these exempted products, she requested information on the rates of duty that were applied
and, in particular, whether MFN or reduced rates were applied.  Like other delegations, she soughtclarification on the trade statistics provided.  She referred, as an example, to the trade data provided
for the Georgia-Kazakhstan FTA for the year 2000.  Since, in spite of the products exempted, a trade
coverage of 100 per cent was indicated, she wondered whether that meant that no trade had taken
place for the exempted commodities.  Finally, turning to quantitative restrictions, she wished to know
whether the use of the word 'refrain' was meant in the sense of 'shall not'.
19. The representative of Korea wished some clarification with respect to the scope of the
Protocols of exemptions.  His understanding was that they applied only to the Georgia-Russian
Federation and Georgia-Kazakhstan FTAs.  However, he noticed that the data provided for the FTA
between Georgia and Ukraine also pointed to some trade not being covered by the Agreement.  He
asked for the reason why some products were apparently excluded, and for a description of thoseproducts.WT/REG/GEN/M/8
Page 5
20. The representative of Georgia confirmed that the list of exemptions applied only to the FTAs
with the Russian Federation and Kazakhstan.  He added that for both those Protocols it was MFN rate
that applied to the exempted products.  With regard s to the Protocol of exemptions with the Russian
Federation, its text was being translated into English and it would be submitted to the Committee for
consideration.  As regards the products exempted, he said that Georgia exempted beer made frommalt, while the Russian Federation exempted sugar.  Both countries exempted undenatured ethyl
alcohol. With regards to the Protocol of exemptions between Georgia and Kazakhstan, he said that
both countries had agreed to abolish the exemption list and that a Protocol was being prepared for that
purpose.  He was confident that such Protocol would be signed in the near future.  Like the other
Protocols, it would be translated into English and submitted to the Secretariat.  Concerning statistical
data, more accurate and detailed information would be provided in time for the next consideration of
the Agreements by the Committee, as requested by Members.  With respect to the questions posed bythe EC and Korea on the trade data covering the exempted products, he said that his delegation would
reply in written form.  Turning to the Canadian question concerning the use of the word 'refrain', he
said he would check the Russian original text of the Agreement and reply in written form, though in
his opinion the text should read 'shall refrain'.
21. The representative of Canada remarked that the Georgian delegate had mentioned in his latest
intervention three exempted products with respect to the Georgia–Russian Federation FTA, rather
than the four mentioned in the Standard Format.  Sh e wished some clarification in that respect.  She
also reiterated her previous question concerning th e inclusion of additional products to the exemption
list.  The representative of Georgia replied that the fourth product (cigars, cheroots, etc.) belonged to
the old exemption list.  He explained that the exemption lists were subject to annual revisions leading
to  new Protocols being signed at the end of each year.  He added that the new list would be submitted
to the CRTA as part of the new Protocol of exemptions.
Section II.2 – Export Restrictions
22. The representative of the European Communities wanted to know whether the Agreements
provided an encouragement to the Parties to refrain from applying export quotas, or an obligation to
not do so.  Additionally, he asked whether any quotas were at that time in force on the export of goods
from either Georgia to any of its partners or vice-versa.
23. The representative of the United States raised concerns with respect to the meaning of the
trade covered as provided in the table in Section I:4 relating to imports from the Russian Federation
into Georgia.  He noted that the paragraph on Export Restrictions made reference to a list of
commodities in Annex I on which the Russian Federation seemingly applied an export tariff.  He
observed that, if duties were in fact being applied on those imports from the Russian Federation, thetrade coverage percentages could in fact be considerably lower.  He questioned therefore whether the
elimination of duties and other restrictive regulations of commerce also included those export tariffs.
24. The representative of Georgia confirmed that no export quantitative restrictions were in place.
While some restrictions on exports of basic metals had existed, those were currently being considered
by the Georgian Parliament and their elimination could be anticipated in the near future.  In responseto the United States question, he said that the elimination of duties and other restrictive regulations of
commerce only covered Georgia's import duties and not the export duties applied by the Russian
Federation.
Section II.3 – Rules of Origin
25. The representative of Korea noted that the description of the rules of origin in the FTA
between Georgia and Ukraine was different from that provided for the FTA between Georgia and theWT/REG/GEN/M/8
Page 6
Russian Federation.  Accordingly, he wished to know whether those differences were still in place, or
whether the rules of origin criteria had been harmonized.
26. The representative of the United States inquired on whether the CIS harmonized system
provided for some sort of cumulation of origin  scheme whereby, for example, items that were
imported from one CIS country would receive diff erent treatment than those from other MFN
partners, were those imports to be processed, say in the Russian Federation, for export to Georgia.
27. The representative of Georgia said that the definition of rules of origin that Georgia employed
with its partners in the CIS was the one adopted by the Decision of the Council of Heads of
Government of CIS of 30 November  2000.  He added that the document was in the process of being
translated into English and that it would be submitted to the Secretariat.  With respect to the United
States question, he said that he would reply in written form.
Section II.5 – Safeguards
28. The representative of the European Communitie s noticed that under the Agreements the only
way a safeguard measure could be implemented was through quantitative restrictions.  He was
interested on whether any other measures were available to the Parties, such as price-based measures
or tariff rate quotas, which would perhaps achieve the objective behind the safeguard with less drastic
effects than quantitative restrictions.  With regards to the timeframe of the measures, therepresentative of Canada wondered whether there was any time-limit for a safeguard measure
remaining in place once introduced.  With respect to the FTA between Georgia and the RussianFederation, the representative of the United States noted that the information provided referred to
bilateral quantitative restrictions as between the Parties pursuant to the Agreements.  His question,referred to whether or not there were any restrictions on the ability of Georgia to apply a globalsafeguard to the Russian Federation pursuant to GATT Article XIX and the WTO Agreement on
Safeguards.  He also wished to know whether any safeguard measure was in place at the time.  The
representative of Korea shared similar concerns and wanted to know whether Georgia had introduced
in the Agreements any mechanism which would provide for the exclusion of the Parties from theapplication of a global safeguard measure.
29. In response to the question asked by the Canadian delegate, the representative of Georgia said
that as stated in the Standard Format, the time limits for a safeguard measure would have to be agreed
by the Parties.  Concerning the EC question, he said that no measure other than quantitative
restrictions was provided by the Agreement.  Addressing the questions by the United States and
Korea, he said that at the time the Agreement with the Russian Federation had been signed, Georgia
was not a WTO Member and could thus not introduce such wording in the Agreement.  The absence
of such specific provision in the Agreement still applied, although Georgia could of course use its fullrights to employ the global safeguard mechanism provided by the WTO.  He added that since the
Agreement had been signed, no safeguard measure had been implemented between Georgia and the
Russian Federation.
Section II.6 – Anti-Dumping and Countervailing Measures
30. Quoting the text of the Standard Format, the representative of the United States wanted to
know how unfair business practices, should they actua lly occur, were dealt with.  More specifically,
he asked whether the Parties retained their right to use the anti-dumping and countervailing
mechanism set out in the WTO Agreement to address unfair business practices.  As with safeguards,
he was keen to know whether any such measure was in place at the time.
31. The representative of Georgia said that since the Agreement with the Russian Federation had
been signed, no anti-dumping and countervailing measures had been invoked, nor was any in place atWT/REG/GEN/M/8
Page 7
the time.  He added that, beyond the Agreement, they had other processes to deal with unfair
practices, such as bilateral talks with the Russian Federation, both as part of the accession process of
the Russian Federation to the WTO, and as regular bilateral economic talks.
Section II.7 – Subsidies and State-Aid
32. Referring to the text of the Standard Format, the representative of the United States inquired
on the existence of disciplines and investigatory procedures to determine whether or not government
support could negatively affect normal economic condit ions.  He also wished to know whether or not
any such investigation had ever been carried out, and whether or not any criteria existed to evaluate
such question.
33. The representative of Georgia replied that they had never used any kind of subsidies or state-
aid since the signing of the Agreement.  He added that the Agreement did not provide for any
guidelines nor procedures on how to investigate th e impact of subsidies and state-aid on the economy.
Section III - General Provisions of the Agreement
Section III.I –Exceptions and Reservations
34. The representative of the European Communities noted that several Agreements contained a
provision concerning controls over the re-export of goods from one party, if those goods were also
subject to export controls in the originating party.  In order to better understand the rationale and thetype of considerations underpinning that provisi on, he wondered whether further information on the
practical use and coverage that re-export controls had in the lifetime of the Agreements could be
provided.
35. The representative of Georgia indicated that at the time of signing the FTAs it was very
fashionable to include in the text of the Agreements  that provision, especially Article 4, because of the
many cases of violation of principles over exports, especially in the case of trade of carbohydrates and
fuel.  It was thus the desire of the Russian Federation to have that provision included in all the
Agreements.
36. The Chairman concluded the first round of examination of the six FTAs signed by Georgia.
He indicated that the next round of examination wo uld be scheduled for a forthcoming Session of the
CRTA in 2002.  Such timeframe would allow Georgia to answer in writing those questions still
pending and the delegations wishing to ask additional questions to the Parties to do so in writing
through the Secretariat.  He invited delegations to forward additional questions to the Secretariat by
21 June 2002 and Georgia to submit written replies not later than 26 July 2002.
37. The Committee took note of the comments made.
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