WT/REG386/2  
 
15 March 2019 
(19-1628) Page: 1/6 
Committee on Regional Trade Agreements  Original: English /Spanish  
 
FREE TRADE AGREEMENT  BETWEEN GEORGIA AND THE EFTA  STATES  
(GOODS  AND SERVICES )  
QUESTIONS AND REPLIE S 
 The following communication, dated 13 March 2019, is being circulated at the request of the 
delegations of Georgia and the EFTA States (Iceland, Liechtenstein, Norway and Switzerland) . 
 
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Questions from the delegation of Canada  
 
Government procurement  
 
1.1.  Paragraph 5.18 states that: "in case a Party offers a third -party, after the conclusion 
of the Agreement, additional benefits to those agreed under Chapter 8, that Party shall 
agree, upon request of another Party, to enter into negotiations with a view to extending 
coverage und er Chapter 8 on a reciprocal basis (Article 8.28)."  
a. Could the Parties describe how this requirement will be enforced?  
Joint response from the Parties  
 Article 8.28 of the Agreement is an expression of the Parties ' commitment to provide for the 
highest pos sible level of liberali zation of each other 's public procurement markets on a reciprocal 
basis. While the objective of the negotiations referred to in this article is clear ( "extending coverage 
under Chapter 8 on a reciprocal basis "), the specific modaliti es will be subject to negotiations.  
 
b. Are there any recourses if a Party refuse to enter into negotiations with another 
Party?  
Joint response from the Parties  
 
 The provisions of Chapter 8 are subject to the dispute settlement provisions of Chapter 12 
(Disp ute Settlement) of the Agreement. As the commitment undertaken in Article 8.28 is the 
expression of a common ambition among the Parties, they do, however, expect that all questions 
arising in this context will be solved amicably through discussions in the Joint Committee.  
 
1.2.  Paragraph 5.19 states that : "Georgia is an observer to the GPA (negotiating i ts 
accession)[…]".   
What are Georgia 's next steps regarding its accession to the WTO GPA?  
Response from the delegation of Georgia  
 Georgia currently enjoys the observer status to the WTO GPA. There are internal discussions 
underway with respect to the accession of Georgia to the WTO GPA.  
 
 
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  Questions from the delegation of Ecuador  
 
1.3.  With regard to safeguard measures, the text of Article 2.15 includes jurisprudence  
as an additional basis for excluding imports that do not cause injury to the importing 
party. This raises the following questions:  
a. What is the purpose of including jurisprudence? (when it is optional, depending 
on each case).  
Joint response from the Parti es 
 
 The reference to jurisprudence is intended to ensure that the Parties comply with WTO rules, 
as interpreted by WTO adjudicative bodies (see also next question), considering the evolution of 
WTO jurisprudence on the conditions that exclusions of import  from certain sources from global 
safeguard measures must fulfill.  
 
b. Why are imports that would not cause injury excluded from a safeguard 
measure? Must an additional analysis be undertaken to demonstrate that such 
imports do not cause injury? If so, please  indicate what elements would have to 
be included in the analysis to demonstrate that the imports of the trading partner 
are not causing injury?  
Joint response from the Parties  
 
 The EFTA States and Georgia consider that free -trade partners should be exempted from a 
safeguard measure, provided that certain requirements are met, in particular that i mports from the 
Parties do not cause or threaten to cause serious injury. The EFTA St ates and Georgia consider that, 
in line with WTO jurisprudence, t he competent authority must establish that (1) imports from sources 
other than the excluded countries satisfy, alone , and in and of themselves, the conditions for the 
application of a safegua rd measure; and (2) that injury caused by factors other than increased 
imports is not attributed to increased imports.  
 
Provisions on trade in goods  
Sector -specific provisions on trade in goods  
Processed agricultural products  
 
1.4.  Paragraph  3.69 states that: "[…] Georgia's schedules of tariff commitments on 
agricultural products with Norway and Switzerland and their schedules with Georgia 
contain specific provisions which apply to products identified as Processed Agricultural 
Products (PAP)".1 The Agreement do es not preclude the levying of import duties and 
measures on exports, when such measures are intended to take account of differences in 
the cost of the agricultural raw materials incorporated into PAPs. Moreover, import duties 
levied by the Parties shall b e based on, but not exceed, the differences between the 
domestic price and the world market price of the agricultural raw materials incorporated 
into the products concerned. Switzerland and Norway shall publish the applicable import 
duties for PAPs on the website of the EFTA Secretariat.2 In the case of Norway, and subject 
to the provisions set out in Section I of Annex VI, preferential treatment granted for the 
                                                
1 The Schedule of tariff commitments on agricultural products between Iceland and Georgia 
does not contain any specific disciplines on PAP.  
2 Information available at: http://www.e fta.int/free -trade/free -trade -agreements/central -
american -states . For Switzerland, notification on the applicable system and detailed information on 
concessions made for PAPs refer to Protocol 2 of the bilateral a greement between Switzerland and 
the EU on PAPs. In the case of Norway ( and theoretically also Iceland – though there are no 
specific PAP -related modalities in the agreement for Iceland), reference is made to Protocol 3 of 
the EEA Agreement. Moreover, Norway's treatment of PAPs originating in Georg ia shall be identical 
to the treatment it gives to the EU. The Concessions for PAPs are the same granted to the EU as of 
1 January 2015. If the treatment for these products changes in the agreement between Norway 
and the EU, Georgia will simultaneously get  identical treatment.  WT/REG386/2  
 
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  PAPs originating in Georgia shall be no less favourable tha n that accorded to the 
European  Union ."3 […] 
a. Please indicate what is meant by: "the Agreement does not preclude the levying 
of import duties and measures on exports, when such measures are intended to 
take account of differences in the cost of the agricultural raw materials 
incorporated into PAPs"?  
b. What is the purpose of this non -preclusion, as applied in line with the tariff 
reduction?  
Joint response from the Parties  
 
 Due to higher production costs in Norway and Switzerland, the producers of processed 
agricultural products from these two countries are often faced on the domestic market with higher 
prices for the relevant raw materials than on the world market. As the pr ice for the agricultural raw 
materials in a processed product constitutes an important part of the final price for that product, 
these producers are put at a competitive disadvantage compared to competitors in countries where 
these materials can be sourced  at lower prices. In order to promote competitive conditions for these 
domestic producers, Norway and Switzerland apply price compensation measures, with the aim of 
equalising the difference between the domestic and the world market prices for the raw mate rials 
incorporated in processed agricultural goods. This ensures the domestic food processing industry a 
level playing field to compete with foreign companies on the domestic market.  
 
 With respect to imports, the policy of price compensation measures cons ists of the levying of 
a duty comprising an agricultural and industrial element. The agricultural element aims at equalising 
the differences between the prices for the relevant agricultural raw material in a processed product 
on the domestic and on the wor ld market. In addition to the agricultural element an industrial 
element is added which provides a certain industrial protection. However, on imports from Georgia 
and other countries with which EFTA has concluded free trade agreements covering processed 
agricultural goods, the industrial element is not levied. Following the decision of the WTO ministerial 
conference in in December 2015  Switzerland has abolished any measures on exports from 
1 January  2019.  
 
Questions from the delegation of Mexico  
 
Provisions  on trade in services and investment  
Investment  
 
1.5.  Paragraph 4.96 : The disciplines covering commercial presence for services sectors 
are contained in Chapter 5 (on trade in services).  
 Paragraph 4.97 : In addition, Chapter 6, on establishment, applies to commercial 
presence in sectors other than services sectors covered by Chapter 5 (on trade in 
services).4 Chapter 6 is nevertheless without prejudice to the interpretation or application 
of other interna tional agreements on investment or taxation to which one or several 
EFTA  States and Georgia are party.  
 
 Paragraph 4.98 : Articles 6.3 provides that each Party shall accord national treatment 
to juridical and natural persons of another Party and to the comm ercial presence of such 
persons, subject to their reservations in Annex XIV. Article 6.4 allows for the modification, 
removal or the incorporation of new reservations. A Party may add a new reservation, 
through a written notification to the other Parties i s required. Such addition may be made 
provided that the new reservation does not affect the overall level of commitments of that 
Party under the Agreement. This may trigger consul tation amongst the Parties. 
The Party's lists of reservations are contained i n, respectively, Appendixes 1 through 5 to 
Annex  XIV and are summarized in Table 4.6 below.  
                                                
3 Preferential treatment granted to the EU in the context of the EEA (European Economic 
Area).  
4 Services specifically exempted from the scope of Chapter 5 do not fall under the scope of 
Chapter  6. WT/REG386/2  
 
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a. Mexico would like to see a list of the "sectors other than services sectors covered 
by Chapter 5" that fall within the scope of Chapter 6.  
Joint response from the Parties  
 
 Chapter 6 (Establishment) of the Agreement covers all non -services sectors, for example 
sectors such as agriculture, forestry, fishing and aquaculture, mining and quarrying, manufacturing 
and energy excluding related services activities.  
 
b. In the  case of Switzerland and Georgia, the two Parties have signed an 
agreement on the promotion and reciprocal protection of investments or bilateral 
investment agreement. Given that the Switzerland -Georgia agreement exists 
alongside the provisions on commerci al presence in Chapters 5 and 6, Mexico 
would like to know what the operating mechanism is.  
Response from the delegations of Georgia and Switzerland  
 
 Georgia and Switzerland consider that Chapters 5 (Trade in Services) and 6 (Establishment) 
of the Agreeme nt and the Georgia -Switzerland BIT are complementary and there is no conflict 
between these two agreements. In any case, Article 6.1 provides that Chapter 6 of the Agreement 
"shall be without prejudice to the interpretation or application of other internat ional agreements 
relating to investment or taxation to which one or several EFTA States and Georgia are parties ". 
 
Questions from the delegation of Thailand  
 
Denial of benefits  
 
1.6.  Paragraph 4.4 : The Agreement does not contain any specific provision on denia l of 
benefits.  
 Since there is no specific provision on denial of benefits in the Free Trade Agreement 
between Georgia and the EFTA States, how could Georgia and EFTA States react to the 
situation under this Agreement when "service suppliers of the other P arty that is a 
juridical person through which the service is being supplied is owned or controlled by 
persons of a non -Party and such juridical person has no substantive business operations 
in the territory of the other Party"? Please clarify.   
 
Joint response from the Parties  
 
 Clear and precise rules of origin for trade in services are included in the Agreement through 
the definitions of "Natural Person of another Party " and "Juridical Person of another Party ". As a 
consequence, it is clear who is ent itled to benefit from the Agreement and not. We do not see the 
need for an article on Denial of Benefits.  
 
Movement of natural persons  
 
1.7.  Paragraph 4.14: In the context of the provisions on establishment (Chapter 6 on 
investment with respect to sectors other  than those covered in Chapter 5 on trade in 
services), Article 6.5 contains provisions related to "key personnel".  Each Party shall, 
subject to its domestic law, grant natural persons of another Party who have established 
or seek to establish commercial p resence in that Party, and key personnel employed by 
natural or juridical persons of another Party, temporary entry and stay in that Party to 
engage in activities connected with commercial presence, including the provision of 
advice or key technical servic es. 
 With reference to paragraph 4.14., it would be appreciated if you could elaborate 
what "key personnel" is and what position could "key personnel" be employed.  
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  Joint response from the Parties  
 
 This obligation contained in Article 6.5 of the Agreement and the definition of key personnel 
is subject to each Party's laws and regulations. The Agreement does not contain a common definition 
of key personnel, but Article 6.5 indicates that temporary ent ry and stay shall be granted "in order 
to engage in activities connected with commercial presence, including the provision of advice or key 
technical services ". 
 
Business services  
 
1.8.  Paragraph 4.25: While most of Iceland's commitments in business services u nder the 
Agreement are identical to those under the GATS, some limitations essentially on 
commercial presence with respect to some legal services and some other professional 
services are added under the Agreement .  
 Does the underline d sentence mean that Iceland has taken GATs -minus 
commitments in some Business services sub -sectors under Georgia -EFTA FTA? Please 
explain why.  
 
1.9.  Table 4.1 (Iceland: comparison between the GATS and Agreement specific 
commitments)  
Sector  
(CPC Classification ) GATS  
Sectoral 
Commitments  RTA 
Compared to GATS  Sectoral 
Commitments  
10. Recreational and cultural 
and sporting services     
E. Other  Partial  Limited  ---- 
 
 According to Table 4.1, in recreational and cultural and sporting services, Iceland 
has made no specific commitment under the category "other" in Georgia -EFTA FTA while 
it has taken commitments in the GATs for this subsector. Does it mean that Iceland has 
taken GATs -minus commitments in this area? Please explain why.  
 
Response from the delegation of Iceland  
 
 Iceland thanks Thailand for pointing out that commitments referred to in questions 1.3 and  1.4 
could be interpreted as a GATS minus. Iceland always regards GATS commitments as the minimum 
when negotiating free trade agreements so free trade agreements always provide the same 
commitments as GATS - or are a GATS+. We are in any case bound by our G ATS commitments vis-
a-vis Georgia so the GATS commitments apply to them if the commitments in question are found to 
be inferior in the EFTA -Georgia FTA.  
 
Investment  
 
1.10.   Paragraph 4.97 : In addition, Chapter 6, on establishment, applies to commercial 
presence in sectors other than services sectors covered by Chapter 5 (on trade in 
services). Chapter 6 is nevertheless without prejudice to the interpretation or application 
of other international agreements on investment or taxation to which one or several EFTA 
States and Georgia are party.  
a. What is the main focus of the Chapter 6 of Georgia -EFTA FTA (Establishment)? 
Does it cover all important elements of investment; namely, liberalization, 
promotion, facilitation and protection? Please elaborate.  
Joint response f rom the Parties  
 
 The aim of Chapter 6 (Establishment) of the Agreement is to improve the legal framework 
conditions for investors from the EFTA States and Georgia investing in each other's markets. This is 
achieved by granting national treatment regarding  the establishment ( "commercial presence ") in 
economic sectors not covered by the Chapter on trade in services. The chapter provides that 
investors from the EFTA States respectively Georgia establishing or acquiring a company within the WT/REG386/2  
 
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  territory of the ot her party are treated no less favorable than domestic investors in like situations. 
Exceptions from this principle of national treatment are only possible for measures and regarding 
sectors which are listed in the Schedule of Reservations of each party. Ho wever, the chapter does 
not contain specific provisions regarding investment promotion or facilitation and investment 
protection matters are not covered under the Agreement.  
 
b. In case there is an investment dispute between a Party and an investor of 
another Party resulting from breaching any obligation under Georgia -EFTA FTA, 
what channel such dispute could be solved? Is there an Investor -State Dispute 
Settlement mechanism unde r this agreement?  
Joint response from the Parties  
 
 The Agreement does not contain an investor -state dispute settlement mechanism. Any dispute 
arising regarding the implementation of Chapter 6 (Establishment) is subject to the general 
(state -to-state) dis pute settlement provisions of Chapter 12 (Dispute Settlement) of the Agreement.  
 
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