RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/GEO/25
1 June 1999
(99-2216)
Working Party on the
Accession of Georgia
ACCESSION OF GEORGIA
Progress Report
I. BACKGROUND
Georgia submitted its application for accession to the World Trade Organization in July 1996.
Observer status was granted, and a Memorandum on the Foreign Trade Regime was submitted on
April 7, 1997.  Responses to a large number of questions submitted by Members were submitted on
13 October, 1997, and market access offers were submitted February 2, 1998 (services) and February
19, 1998 (goods).  Working Party I in March, 1998, and Working Party II in October, 1998, togetherwith bilateral negotiations with a number of interested Members, have made substantial progress
towards completing market access negotiations on tariffs and services and on bringing Georgia’s
foreign trade regime into compliance with WTO requirements.
This report summarizes developments as of June 1, 1999, taking into account progress since
the conclusion of the last bilateral round of negotiations in April, 1999.
II. LEGISLATIVE AND REGULATORY ACTIONS
The following specific actions have been taken to enact or revise legislation or regulations to
meet specific WTO requirements:
Customs Valuation Regulations:
The Customs Department prepared detailed regulations to implement the provisions of the
WTO Agreement on the Implementation of Article VII of the GATT 1994 ("Customs Valuation
Agreement").  The Ministry of Justice formally approved these regulations, including the Decisions of
the WTO Customs Valuation Committee concerning ‘Valuation of Carrier Media Bearing Software”and “Treatment of Interest Charges” (WTO/VAL/6&8 ), and the Interpretive Notes provided in Annex
I of the Customs Valuation Agreement, on May 31, 1999.
Due to the fact that CVA Article 13 is not consistent with existing Georgian law, it cannot be
implemented by regulation.  A conforming amendment to the Customs Code, expected to be approvedby Parliament in early June, will implement this provision.
Rules of Origin Regulations
The Customs Department prepared detailed regulations covering the requirements of the
WTO Agreement on Rules of Origin. The Ministry of Justice formally approved these regulations on
May 31, 1999.WT/ACC/GEO/25
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Antidumping, Countervailing Duties, and Safeguards Regulations
The Government of Georgia proceeds its policy to refrain from applying any antidumping,
countervailing or safeguard measures until WTO consistent legislation has been implemented.
Presidential Decree on Managing the WTO Relationship
The Ministry of Trade and Foreign Economic Relations has prepared a draft Presidential
Decree assigning the responsibilities for managi ng various aspects of the relationship between
Georgia and the WTO after accession is achieved.  Having such a decree in place will help Georgia to
transition smoothly from the accession to the post-accession phase.  Issuance by the President is
expected in June, 1999.
Excise and VAT Taxes
Excise stamps were introduced at the retail level on March 20, 1999 for cigarettes, and on
March 30 for alcoholic beverages other than beer.  Both importers and domestic producers pay the fulltax at the time of issuance of the stamps.
In late May, 1999, the Ministry of Finance was negotiating with the International Monetary
Fund the precise levels of excise tax to be applied to alcohol and cigarettes.  The Draft Law on
Amendment and Changes to the Tax Code has been prepared which appears to be in consistency(meeting Article III of the GATT) with WTO requirements.  Amendments to the tax code
implementing the new excise rates on alcoholic beverages are expected to be passed by Parliament
during June. The amendments also provide for observing the national treatment clause with regard to
VAT exemptions.
Georgia undertakes a commitment that upon accession to the WTO it will observe the
provisions of Article III of the GATT with regard to taxation of tobacco products.
Intellectual Property Rights
Work has continued in many areas related to the TRIPs agreement. In particular:
(a) On August 20, 1998, Georgia formally adhered to the Protocol of the Madrid Agreement on
the International Registration of Marks.
(b) A new TRIPS-consistent patent law was appr oved by Parliament in February, 1999, and
entered into force on May 27, 1999 (three months after publication on February 27th).  This
law has been notified to WTO.
(c) The draft copyright law, which will supplement the provisions of the Civil Code on copyright,
has passed the first hearing in Parliament. This law has been prepared in close cooperation
with WIPO experts, and is available in English for WTO review.  Passage is expected in early
June 1999.
(d) A new TRIPs-consistent trademark law was approved by Parliament in February, 1999, and
entered into force on May 27, 1999 (three months after publication on February 27th).  This
law has been notified to WTO.WT/ACC/GEO/25
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(e) A draft law on Geographic Indications and Appellations of Origin has passed the first hearing
in the Parliament of Georgia.  The draft has been notified to WTO.  Passage is expected for
early June 1999.
(f) A draft law on protection of layout designs of integrated circuits has passed the first hearing
in the Parliament of Georgia. Passage expected for early June 1999.
(g) A draft law on border measures to enforce TRIPS requirements with respect to copyright and
trademark has been drafted and submitted to the Parliament. Passage is expected in June
1999.
(h) Amendments to the criminal code to enforce copyright and trademark provisions of TRIPs
have passed first reading in the Parliament and will be enacted in June, 1999. The
amendments to the codes of criminal, civil, and administrative procedure designed to improve
enforcement of intellectual property rights are in preparation.
(i) The President approved the regulations establishing the National Center of Intellectual
Property.
(j) A table describing the state of compliance with TRIPs, on an article-by-article basis, is
attached to the Draft Working Party Report.
Land Privatization
The Law on Declaration of Private Ownership of Land in Use by Physical and Private Legal
Persons, adopted October 28, 1998, provides that non-agricultural land can be privatized by any
Georgian natural or legal person, including 100% foreign-owned legal persons.  Under this law,privatization of urban land has been proceeding rapidly; as of May 1, 1999, approximately 3000
parcels have been privatised.  Agricultural land may be privatized by Georgian natural persons under
the Law of Agricultural Land Ownership of Ma rch 22, 1996.  Under this law, approximately 800,000
hectares of agricultural land have been privatized by about 1 million farmers as of May, 1999.
Business Licensing Law
A new law concerning licensing of business activities was approved by Parliament on May
14, 1999.  The law provides explicitly for national treatment of both domestic and foreign-owned
businesses in Georgia, and restricts the authority of ministries to control businesses through the
issuance of licenses to those industries involving safety, consumer protection, environmental
protection, or national security issues that are specifically listed in the law.  The new law has beennotified to WTO.
Administrative Procedure Code
A new Administrative Procedure Code, which will establish the procedures by which judicial
appeal of administrative actions may be pursued, has been prepared and is scheduled for
Parliamentary consideration in June, 1999. The law has been prepared with the assistance of experts
provided by USAID and European donors.  Although ce rtain rights of appeal are contained in specific
laws or regulations (for instance, there is a specific right of appeal contained in the customs valuation
and rules of origin regulations), the Administrative Procedure Code will systematize such rights in allareas, thus covering such additional WTO-related areas as business licensing, appeal of export or
import license denials, etc.  The draft Code was notified to WTO in January, 1999.WT/ACC/GEO/25
Page 4
Government Procurement Legislation
A new law on government procurement, based on the UNCITRAL model law and prepared
with the help of European experts through GEPLAC, passed Parliament on December 11, 1998.
Further work will be undertaken to amend this law in order to be fully compliant with the Agreementon Government Procurement. A list of the government entities to which the law will apply will be
provided to WTO before the date of accession. Georgia intends to join the Agreement on Government
Procurement. It will request for observer status in the Committee on Government ProcurementUpon
accession to the WTO, Georgia will initiate negotiations for membership in the Agreement on
Government Procurement by tabling an entity offer. It also confirms that, if the results of the
negotiations are satisfactory to the interests of Georgia and the other members of the Agreement,
Georgia will complete negotiations for membership in the Agreement by 31 December 2000.
Accession to International Conventions
On 16 April 1999, Georgia acceded to the Convention and Statute on Freedom of Transit of
20 April 1921; the Convention on Transit Trade of La nd-Locked States (New York, 8 July 1965); and
the International Convention on the Harmonization of Frontier Controls of Goods (Geneva, 21
October 1982). Georgia has also acceded to the Basel Convention on trans-boundary transportation of
dangerous wastes.
III. ADMINISTRATIVE ACTIONS
Information Technology Agreement
Georgia has prepared the necessary schedules for accession to the Information Technology
Agreement, and will submit these to the WTO secretariat for review in the near future.
Pre-Shipment Inspection
The Government, following discussions with the World Bank and the IMF, has tentatively
selected a PSI contractor.  Contract negotiations are in progress as of late May, 1999.  The
Government is familiar with the Agreement on Pre-Shipment Inspection and the December, 1997,
Report of the Working Party on Pre-Shipment Inspection.  The PSI contract and any implementing
regulations will be consistent with the Agreement on Pre-Shipment Inspection.
Customs User Fee
The existing Customs User Fee of 0.3% will be reduced to 0.2% on June 1, 1999, and further
reduced to 0.15% upon accession to WTO.  The amendments to the Law on Customs Fee providingfor these changes were approved May 28, 1999, with effect from June 1.
Sanitary and Phytosanitary ("SPS") Measures
Based on discussions with the Ministries of Foreign Affairs and of Agriculture, IRIS provided
short-term technical assistance to assist the various ministries concerned with sanitary and
phytosanitary import control measures to revise their procedures to meet WTO requirements.  A
detailed working plan was prepared to bring Georgian procedures into conformance with WTO
requirements.   An "Enquiry Point" has been established as required by WTO.  An Interministerial
Coordinating Body for SPS Implementation ("ICB" ) has been established, chaired by the Deputy
Minister of Agriculture responsible for intern ational issues.  A working-level body has been
established under the ICB, with representatives of each concerned agency identified.  A ProjectWT/ACC/GEO/25
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Director and staff have been appointed, and an office provided and equipped. As of July, 1988, the
enquiry point was in full operation.
A Presidential decree ensuring compliance with the disciplines of the SPS Agreement has
been prepared and is expected to be issued in June 1999.
Agricultural Subsidies
With technical assistance from GEPLAC (TACIS) and IRIS (USAID), Georgia’s agricultural
subsidies during the period 1996-98 have been reviewed and the necessary documents submitted to
WTO for analysis.  Georgia believes that all iden tified subsidies fit easily within the “Green Box”
category under the criteria of Annex 2 to the WTO Agreement on Agriculture.
Technical Barriers to Trade
A Presidential Decree on Measures Implementing the Requirement of the WTO Agreement
on Technical Barriers to Trade was adopted on 5 December 1998.  In addition, the draft Law onAmendments to the Standardization Law has been prep ared to ensure full compliance with the various
requirements of the TBT Agreement.  These amendments are expected to be enacted in June, 1999.
The required TBT enquiry point has been established which is expected to be in full operation in the
beginning of June, 1999. A decree has been issued which provides for removing of 120 items from the
list of products (initially there were 240 items subject to mandatory certification) subject to mandatorycertification.  Finally, agreement has been reached with Japan to provide technical assistance to bring
Georgia's procedures for enforcing technical stan dards into conformance with WTO requirements.
The Government of Georgia has elaborated the precise plan of actions for bringing Georgia’s
standardization system in full compliance with WTO requirements. This document has been
submitted to the WTO Secretariat for review.
IV. PREPARATION OF MARKET ACCESS OFFERS
Tariff Offer
A completely revised tariff offer has been prepared in HS96 format at the six and eight-digit
level.  This offer substantially responds to tariff requests made by negotiation partners in the bilateral
negotiations, including the Sectoral Initiatives.  Bilateral tariff negotiations are virtually completewith all negotiating partners.
Services Offer
On the basis of previous bilateral negotiations, Georgia’s market access offer in the services
area has been revised to meet the requests of negotiating partners.  Georgia believes that this offer
meets all requests for revision put forward at previous negotiating sessions.  It is expected that
negotiations on services will be concluded with all partners in June, 1999.
V. PRIVATIZATION PROGRESS
The privatization process in Georgia has been essentially completed for small and medium-
sized companies, privatizing more than 13000 small and medium-sized enterprises.  Privatization of
larger companies, including those in the energy and telecommunication sectors, water supply and
sewage, gas distribution, ports, airports and the railroad, is proceeding on a case-by-case basis.  In this
regard, a significant achievement was the sale in early January of TELASI, the electric distributionsystem for Tbilisi, to a U.S. energy company.
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