WT/REG383/2  
 
19 May 2020 
(20-3727) Page: 1/7 
Committee on Regional Trade Agreements  Original: English  
 
FREE TRADE AGREEMENT  BETWEEN THE GUAM PARTICIPATI NG STATES 
(REPUBLIC  OF MOLDOVA, AZERBAIJAN,  GEORGIA AND UKRAINE ) 
(GOODS ) 
QUESTIONS AND REPLIE S 
 The following communication, dated 28 April 2020, is being circulated at the request of the 
delegations of  the Republic of Moldova, Azerbaijan, Georgia and Ukraine . 
 
 
_______________  
 
 
Questions from the delegation of Brazil  
 
Subsidies and State -aid 
 
1.1.  Is there an exact definition for the concept of "fair competition"? If so, what is it?  
Response from the delegation of the Republic of Moldova  
 
 The Agreement does not specify any definitions or concepts related to fair competition. Parties 
may refer to international or national legislation while defining/interpreting the term.  
 In case of the Republic of Moldova the Law no 183 dated July 11 2012 specifies the terms 
competition and unfair competition. Therefore, according to the above mentioned law "unfair 
competition " represents "any action carried out by enterprises involved in the competition process, 
which is contrary to honest use in economic activity ". While competition means "existing or potential 
economic rivalry between two or more independent enterprises in a relevant market, when their 
actions effectively limit the possibilities of each of them to unilaterally influence the general 
condit ions of products movement on that market, stimulates technical -scientific progress and 
increased consumer welfare. " 
1.2.  The "fair competition" concept seems to establish "WTO -minus" obligations when it 
comes to the granting of subsidies, that is to say, the me mbers of the FTA are, apparently, 
willing to waive their right to grant subsidies that are permitted by the WTO (all specific 
programs that are not subject to the use of local content or to the exporting performance), 
if such permitted subsidies violate co nditions of "fair competition". Is this perception 
correct? If so, what was the negotiating interest of the members of the FTA in establishing 
such an obligation?  
Response from the delegation of Georgia  
 
 The concept of the "fair competition " in the Agreem ent bears a declaratory character. As for 
the exact definition of the term, there is no singular codified definition of fair competition, which in 
itself entails broader understanding and extends to multiple areas.  (Reply to questions 1.1. and 1.2.)  
 
Respo nse from the delegation of the Republic of Moldova  
 
 The interpretation is an erroneous  one. The right  of granting subsidies by Parties is regulated 
by WTO principles, the language of the FTA is based on WTO rules. The intention of the language is WT/REG383/2  
 
- 2 - 
 
  to establish more clear rules rather than diminishing the Parties commitments undertaken within 
WTO legal fram ework.  
Response from the delegation of Ukraine  
 
 There is no definition of the concept of "fair competition".  
 
 Under A rticle 10 of the Agreement, in order to monitor subsidies other than State export 
assistance , the relevant Working Body shall develop rul es for the application  of subsidies, guided by 
international practice . Until now no such rules have been developed .  
 
Competition  
 
1.3.  Are there any mechanisms (consultations, notifications, technical cooperation, etc.) 
foreseen for the Parties regarding competition? If so, which?  
Response from the delegation of Georgia  
 
 There are no active mechanisms such as consultations, notification s, technical cooperation 
with respect to competition.  
 
Response from the delegation of the Republic of Moldova  
 
 The Agreement does not specify any mechanisms for the Parties regarding competition except 
the establishment of a Working Body within the meaning of art 10. on subsidies and State-aid.  
 However, the Parties cooperate closely on a bilateral/plurilateral an d regional levels. In this 
context, the national authorities responsible for Competition meet on an annual bas is and have 
established close technical cooperation. The technical cooperation program me aims to promote 
awareness of the role and significance of  fair and impartial competition policies at the domestic and 
international levels. It seeks to enhance government representatives working within the competition 
sector, awareness of national and international key concepts, principles and best practices in this 
area, to exchange information and to share experiences on the implications of different bilateral, 
regional and multilateral disciplines.  
 In this context, the Competition Council of the Republic of Moldova is actively involved on an 
international and  regional level in different activities that contribute to facilitating the exchange of 
experience in competition and state aid, which is one of the basic dimensions of the functioning of 
the authority. Along the way, several activities have been carried o ut that have contributed to the 
development and diversification of the collaboration relations of the Moldovan Competition Council 
both within the international and regional competition structures and with similar structures in GUAM 
countries.  
 The Compet ition Council of the Republic of Moldova has shown a pro -active attitude within 
international structures aimed at promoting competitive culture and strengthening the capacities of 
the world's competition authorities, such as: the International Network of C ompetition (ICN), the 
OECD Regional Competition Centre in Budapest (CRC), GUAM, the Interstate Council for 
Antimonopoly Policy (CIPA) of the Member States of the Commonwealth of Independent States 
(CIS), the United Nations Conference on Trade and Developme nt ( UNCTAD), Energy Community 
(EC), Euro -Mediterranean Competition Network (EMCN), BRICS Competition Countries Meeting 
(Brazil, Russia, China, India, South Africa), etc. A considerable share in the international relations 
of the Competition Council is col laborative projects with the European Union and the World Bank 
Group as strategic development partners.  
Response from the delegation of Ukraine  
 The provisions of the Agreement do not provide for any mechanisms on competition issues.  
 
 Nevertheless, Article 21 of the Agreement foresees the mechanism of consultations in case of 
failure by one of the Party fulfilling its obligations under the Agreement.  
 WT/REG383/2  
 
- 3 - 
 
  1.4.  Does the scope of Article 18 include State-owned enterprises?  
Response from the deleg ation of Georgia  
 
 Yes, Article 18 extends to State-owned enterprises.  
 
Response from the delegation of the Republic of Moldova  
 
Yes. The meaning of Article 18 of the Agreement covers State-owned enterprises.  
 
Response from the delegation of Ukraine  
 
 Article 18 covers enterprises irrespective of their form of ownership.  
 
Response from the delegation of Azerbaijan  
 
 In accordance with the current local legislation, we state the following:  
 
 The Law of the Republic of Azerbaijan "On Antimonopoly Activity" defines the organizational 
and legal bases of prevention, restriction and elimination of monopolistic activity.  
 
 The Law of the Republic of Azerbaijan "On Antimonopoly Activity" is in force in the entire 
territory of the Republic of Azerbaijan ( except for the Alat free economic zone) and applied to all 
legal entities and individuals. The law is also applied in cases when agreements and contracts 
concluded by economic entities, executive authorities and governing bodies with individuals and 
legal entities of foreign countries lead to restriction of competition in the national market.  
 
 Basic concepts used for the purposes of this Law are as follows:  
 
 - subjects of the market - economic entities and governing bodies that are participants 
 of market relations;  
 
 - competition  - is a form of struggle between market participants for the most favourable 
 conditions of entrepreneurial activity, in which their independent activities substantially 
 limit the ability of each to influence the general s tate of trade in the market and 
 stimulate the production of consumer goods;  
 
 - dominant position  - an exceptional situation that allows the economic entity to exert a 
 decisive influence on competition based on the advantage of its economic potential, 
 thereby making it difficult for other market participants to enter the market. A business 
 entity with a market share of more than 35% or more than the other limit established 
 by law is considered having a dominant position.  
 
Questions from the delegation of Canada  
 
1.5.  Article 1 (General Provisions) states:  
 "1. The Contracting Parties, in order to achieve the goals of the present Agreement, 
shall cooperate in establishing free trade area to ensure:  
 
[…] Cooperation in conducting trade and economic policy to achieve the goals of this 
Agreement in the fields of industry, agriculture, transport, finance, investments, social 
sphere, as well as in development of fair competition etc."  
 
 What type/form of cooperation do Parties envisage regarding investment policy?  
 
Response from the delegation of Georgia  
 
 It is a general norm and there is no specific type or form of cooperation envisaged regarding 
the investment policy.  
 
 WT/REG383/2  
 
- 4 - 
 
  Response from the delegation of the Republic of Moldova  
 
 The form of cooperation between GUAM Parties on a plurilateral basis regarding  investment 
policy has not yet been established.  
Currently, the cooperation on investment policy takes place on a bilateral level. The Republic of 
Moldova negotiated and signed the following agreements related to the protection of investments, 
with each of  the Parties, as follows:  
1. Agreement between the Government of the Republic of Moldova and the Government of 
Georgia on the promotion and mutual protection of investments of 28.11.1997. Ratified by 
Parliamentary Decision no.1512 -XIII of 18.02.98   
2. Agreement between the Government of the Republic of Moldova and the Government of 
Ukraine on the promotion and mutual protection of investments of 29.08.1995. Ratified by 
Parliamentary Decision no.762 -XIII of 06.03.96.  
3. Agreement between the Government of the Republi c of Moldova and the Government of the 
Republic of Azerbaijan on the promotion and mutual protection of investments of 
27.11.1997. Ratified by Parliamentary Decision no.1511 -XIII of 18.02.98  
Response from the delegation of Ukraine  
 
 To improve the investme nt and business climate, ensure  a permanent forum for discussion of 
the problems of development of business within the GUAM region and active involvement of business 
community in the processes of GUAM cooperation, the Business Council of GUAM (hereinafter 
referred to as "the Council ") was established as a part of the organizational structure.  
 
 The Council renders assistance to deepening comprehensive economic cooperation within 
GUAM, realization of free trade regime, ensures establishing favourable  conditions for a transition 
to a higher level of economic cooperation based on free movement of goods, services and capital, 
development of cooperation ties and scientific/technical cooperation among enterprises of GUAM 
Participating States, trade, invest ment activity, rendering services in the sphere of manufacturing 
and business activities.  
 
 In this regards the main functions of the Council  are exchange of information in the field of 
economic cooperation and investment, formation of common market of bus iness information , 
promotion of integration of G UAM Participating States into the global business system, organization 
of specialized exhibitions, conferences, business -forums , etc. 
 
Response from the delegation of Azerbaijan  
 
 In accordance with the Law o f the Republic of Azerbaijan "On Protection of Foreign 
Investments" and "Agreements on Promotion and Mutual Protection of Investments" signed with 
foreign countries, we consider it expedient to implement investment cooperation with the countries 
mentioned in the agreement based on principles such as full and unconditional protection, 
management, maintenance, use of investments and free transfer of profit.  
 
1.6.  Article 19: Public Procurement states: "The Contracting Parties shall create 
conditions for liberalization of national public procurement markets on the basis of 
non-discrimination and reciprocity."  
a. Would Parties consider, in a future amendment to the Agreement, to expand 
Article  19 to go beyond a provision on non -discrimination and reciprocity?  
Response from the delegation of Georgia  
 
 Currently, the issue of expanding the Article 19 is not on the agenda.  
 
b. For example, would Parties consider including public procurement procedural 
rules and market access commitments?  WT/REG383/2  
 
- 5 - 
 
  Response from the delegation  of Georgia  
 
 No considerations as such are envisaged.   
 
Response from the delegation of the Republic of Moldova  
 
 The Parties agree to create conditions for the liberalization of national public procurement 
markets on the basis of non -discrimination and reciprocity under the Article 19. Currently, the Parties 
do not plan to amend the Agreement in this sector.   
 
 In this context, it is important to mention that Republic of Moldova and Ukraine are also parties 
to the revised WTO's Agreement on Government Procurement. Republic of Moldova ratified the 
Revised GPA and became a Party to the Agreement on 14 July 2016.  Moldova 's GPA accession has 
been made possible by adoption of a new law on public procurement No. 131 on 3 July 2015 (the 
"Law"), which came into force on 1 May 2016.  
 
 Additionally, 3 GUAM states (Republic of Moldova, Ukraine and Georgia) currently are 
implement ing the Association Agreements and DCFTA signed with EU. These Agreements contain 
rules applicable to government procurement. As a result, the Agreement's provisions on government 
procurement improve legal certainty in relation to market access for all the se Parties for the 
procurement of goods and services covered by the Agreements.  
 
GUAM Parties are also actively involved in technical cooperation aiming to promote awareness 
of the role and significance of transparent, fair and non -discriminatory governme nt-procurement -
related policies at the domestic and regional/international levels. The activities seek to enhance 
national government procurement representative 's awareness of key concepts, principles and best 
practices in this area, to exchange informatio n and to share experiences on the implications of 
different bilateral, regional and multilateral disciplines.  
 
Response from the delegation of Ukraine  
 
 Currently, there are no negotiations on amending the existing provisions of Agreement.  
 
Response from the delegation of Azerbaijan  
 
 Pursuant to Article 36.9 of the Law of the Republic of Azerbaijan "On Public Procurement", 
within the evaluation and compar ison of tender proposals, the procuring entity applies a discounted 
adjustment in favour of tender proposals up to 20 per cent of the proposed price of the same goods 
imported from abroad.  
 
 Pursuant to Article 50 -1.1 of the same Law, the procurement of g oods (works, services) with 
the probable procurement value of AZN equivalent or less of 3.0 million USD shall be organised only 
with the participation of micro, small and medium enterprises through e -procurement.  
 
 The Code of Administrative Offenses of t he Republic of Azerbaijan establishes liability for 
violation of the requirements of the mentioned articles of the Law. (questions 1.6a and b) . 
 
Questions from the delegation of  the European Union  
 
1.7.  On 12 December 2019, at the occasion of the Meeting of the Heads of Government of 
the GUAM member States, two Protocols of intent were signed. One on the use of 
blockchain technologies in verifying certificates of goods' origin transported across the 
state  borders of the GUAM member States and one on the mutual recognition of 
Authorized Economic Operators.  
a) Will these protocols eventually be part of the agreement?  
Response from the delegation of Georgia  
There are or have been no intentions to integrate these  protocols to the Agreement.  
 
 WT/REG383/2  
 
- 6 - 
 
  Response from the delegation of Ukraine  
 
 The above -mentioned  Protocols will not be part of the Agreement . According to f inal provisions 
of both Protocols they are not international treat ies and do not create any rules and obligations 
governed  by international law.  
 
b) We would also like to receive more information, in particular about the mutual 
recognition of AEOs.  
Response from the delegation of Georgia  
 The Protocol on the AEOs serves to enhance the interaction of customs authorities of the 
Parties with the view to protect the economic interests of the member States as well as to raise 
effective customs control on cross border goods and transport and expe dite the procedures of 
customs formalities.  
 
Response from the delegation of the Republic of Moldova  
 
 Indeed, during the high level summit hosted by Ukraine, delegations from the four States 
(Moldova, Georgia, Ukraine and Azerbaijan) agreed on the develo pment of cooperation relations in 
the field of trade facilitation by signing two Protocols.  
 
 The above mentioned protocols were signed in the context of the trade and transport 
facilitation initiative, in particular the AEO related protocol, involve s the creation of working groups 
with representatives of all the Customs Services of GUAM members. The first meeting of the Working 
Group on the AEO is due to take place in Kiev from 15 -16 April 2020.  
 
Based on the first signed Protocol, the parties will analy se the opportunity of creating a 
transparent, efficient and secure common system for verifying certificates of origin of goods, th rough 
implementing a software based on blockchain technology. It will allow  the simplification of customs 
procedures and the r eduction of customs clearance times for goods and means of transport from 
GUAM Member States.  
 
 The second signed Protocol aims to boost cooperation relations in the field of AEO (Authorized 
Economic Operator). It will represent an instrument which will co ntribute to the enhancement of 
trade relations between GUAM Member States, as the holders of the AEO's statutes enjoy significant 
facilities when carrying out customs operations (reduction of physical controls based, priority 
treatment of goods and means o f transport if selected for additional control, prior notification, 
facilitation of access to customs simplifications, priority crossing of the border, etc.).  
 
 Additional information may be found following the link: 
https://customs.gov.md/ro/content/intensificarea -cooperarii -vamale -discutata -la-reuniunea -
statelor -membre -guam  
 
 With reference to the recognition of AEOs, as a general  point, referring to the practices of the 
Republic of Moldova, shall be mentioned that Moldova started to implement the concept of AEO since 
2017. In this context, the number of valid AEO authorisation holders has steadily increased, from 
110 in 2017, to 1 15 in 2018 and to 117 holders in 2019.  
 
Response from the delegation of Ukraine  
 
 Within the framework of the signed Protocol of intent on the mutual recognition of AEO, the 
Parties agreed to  adhere to the principles of mutual recognition of A EO, to establish  a Working Group 
on this issue and to hold its meetings as needed or at the request of one of the Parties, but at least 
twice a year.  
 
1.8.  The agreement was notified as a goods and services agreement. However, the only 
reference to services is a rende z-vous clause.  
 What – if any - are the plans to activate this clause and introduce provisions on 
services?  WT/REG383/2  
 
- 7 - 
 
  Response from the delegation of Georgia  
 Currently, there are no plans to activate the clause or introduce provisions on services.  
 
Response from the delegation of the Republic of Moldova  
 
 Indeed, the Parties to the Agreement set up the scope to achieve further liberalization and 
integration th rough the inclusion of a specific evolutionary in services, however, no new protocols 
were agreed yet, particularly covering trade in services.  
 
Response from the delegation of Ukraine  
 
 Currently, there are no intentions for the beginning of negotiations  for introducing  provisions 
on services.  
 
Response from the delegation of Azerbaijan  
 We state that the Ministry does not have relevant information on the issues raised by the 
European Union.  
 
__________