RESCTRICTED  
  
WT/TPR/S/328  
10 November 2015  
(15-5922)  Page: 1/116  
Trade Policy Review Body   
 
TRADE POLICY REVIEW 
REPORT BY THE SECRETARIAT 
GEORGIA  
This report, prepared for the second Trade Policy Review of Georgia, has been drawn up by the 
WTO Secretariat on its own responsibility. The Se cretariat has, as required by the Agreement 
establishing the Trade Policy Review Mech anism (Annex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from Georgia on its trade policies 
and practices.  Any technical questions arising from this report may be addressed to Mr Mario Kakabadse 
(tel: 022/ 739 5172) and Mrs Zheng Wang (tel: 022/ 739 5288).  
 Document WT/TPR/G/328 contains the policy statement submitted by Georgia. 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review  Body on Georgia. This report was drafted in 
English. WT/TPR/S/328 • Georgia 
 
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  CONTENTS 
SUMMARY ....................................................................................................................... . 7 
1   ECONOMIC ENVIRONMENT ........................................................................................ 12  
1.1   Introduction ............................................................................................................. 12 
1.2   Main Features of the Economy .................................................................................... 12 
1.3   Main Econom ic Developments .................................................................................... 14 
1.3.1   Macroecono mic perfor mance ................................................................................... 14 
1.3.2   Fiscal policy ......................................................................................................... . 16 
1.3.3   Moneta ry policy ..................................................................................................... 16 
1.3.4   Struct ural reforms ................................................................................................. 16 
1.3.5   Current account ba lance ......................................................................................... 19 
1.4   Trade Performance ................................................................................................... 19 
1.4.1   Mercha ndise trade ................................................................................................. 19 
1.4.1.1   Compos ition of trade ........................................................................................... 19 
1.4.1.2   Direct ion of trade ................................................................................................ 21 
1.4.2   Services trade ....................................................................................................... 22 
1.5   Foreign Dire ct Invest ment ......................................................................................... 23 
1.6   Outlook ................................................................................................................... 24 
2   TRADE AND INVE STMENT RE GIME ............................................................................ 25  
2.1   Introduction ............................................................................................................. 25 
2.2   General Institutional Developments ............................................................................. 25 
2.2.1   Constituti onal fram ework ........................................................................................ 25 
2.2.2   Framework for doing business ................................................................................. 26 
2.3   Economic and Trade Policy Objectives .......................................................................... 27 
2.3.1   Trade aspects of Georgia 2020  ................................................................................ 27 
2.4   Trade Policy  Administration ........................................................................................ 28 
2.4.1   Inst itutions .......................................................................................................... . 28 
2.4.2   Regulatory developments  during the re view period ..................................................... 29 
2.5   Main trade agreem ents and arra ngements ................................................................... 30 
2.5.1   World Trade Organization ........................................................................................ 30 
2.5.2   Euro pean Union ..................................................................................................... 30 
2.5.3   Other agreements and arrangements ........................................................................ 31 
2.6   Foreign Inve stment Regime ....................................................................................... 32 
2.6.1   Legal framework .................................................................................................... 32 
2.6.2   Dispute resolution .................................................................................................. 34 
2.6.3   Investment and tax treaties .................................................................................... 34 
3   TRADE POLICIES AND PRACTICES BY MEASURE ........................................................ 35  
3.1   Introduction ............................................................................................................. 35 
3.2   Measures Direct ly Affectin g Imports ............................................................................ 36 
3.2.1   Customs procedures, customs valuation, and ru les of origin ......................................... 36 WT/TPR/S/328 • Georgia 
 
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  3.2.2   Tariffs ............................................................................................................... ... 39 
3.2.2.1   M FN tari ffs .........................................................................................................  39 
3.2.2.2   Tariff preferences ................................................................................................ 41 
3.2.2.3   Tariff exemptions and reductions ........................................................................... 42 
3.2.3   Other charge s affecting imports ............................................................................... 43 
3.2.4   Import prohibitions, restrictions, an d licensing ........................................................... 44 
3.2.5   Continge ncy measures ........................................................................................... 46 
3.2.6   Governme nt procurement ....................................................................................... 47 
3.2.6.1   Overview ........................................................................................................... 47 
3.2.6.2   Major changes .................................................................................................... 48 
3.2.6.2.1   E-Procurement ................................................................................................. 49 
3.2.6.2.2   Dispute review procedure .................................................................................. 50 
3.2.6.2.3   Administration of banned or qualified suppliers ..................................................... 51 
3.2.6.3   Furthe r reform plans ........................................................................................... 52 
3.2.7   Trade-related investment measures (TRIMs) .............................................................. 52 
3.3   Measures Directly Affecting Exports ............................................................................. 52 
3.3.1   Export procedur es and requirements ........................................................................ 52 
3.3.2   Export fees ...........................................................................................................  53 
3.3.3   Export prohibitions, restrictions, and licensing ............................................................ 53 
3.3.4   Export support, fi nancing, and promotion .................................................................. 54 
3.3.5   Free Indu strial Zones ............................................................................................. 55 
3.4   Measures Affectin g Production and Trade ..................................................................... 55 
3.4.1   Legal framework an d support for busine sses .............................................................. 55 
3.4.2   Tax and incentives ................................................................................................. 56 
3.4.2.1   Tax ................................................................................................................. .. 56 
3.4.2.1.1   Recent developments ........................................................................................ 58 
3.4.2.2   Incentives .......................................................................................................... 59 
3.4.3   Standards and othe r technical requirements .............................................................. 59 
3.4.3.1   Standardization .................................................................................................. 59 
3.4.3.2   TBT notifications ................................................................................................. 62 
3.4.3.3   Conformity a ssessment, accr editation .................................................................... 62 
3.4.3.4   Labelling and packaging requirements .................................................................... 63 
3.4.4   Sanitary and phyt osanitary requ irements .................................................................. 63 
3.4.5   Competition policy and price controls ........................................................................ 66 
3.4.5.1   Competition policy .............................................................................................. 66 
3.4.5.2   Pric e contro ls ..................................................................................................... 70 
3.4.6   State-owned enterprises, privatiz ation, and state trad ing arrangements ........................ 70 
3.4.6.1   State-owned enterprises ...................................................................................... 70 
3.4.6.2   Privatization .......................................................................................................  71 
3.4.6.3   State tr ading arrangement ................................................................................... 71 WT/TPR/S/328 • Georgia 
 
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  3.4.7   Protection of inte llectual proper ty rights .................................................................... 72 
3.4.7.1   Overview ........................................................................................................... 72 
3.4.7.2   Patents .............................................................................................................. 73 
3.4.7.3   Designs .............................................................................................................  74 
3.4.7.4   Copyrights an d neighbouring rights ....................................................................... 75 
3.4.7.5   Trademarks ........................................................................................................ 76 
3.4.7.6   Some ot her IP ri ghts ........................................................................................... 76 
3.4.7.7   Enforcement ....................................................................................................... 76 
4   TRADE POLICIES BY SECTOR ..................................................................................... 78  
4.1   Agriculture, fo restry and fisheries ............................................................................... 78 
4.1.1   Agriculture ............................................................................................................ 78 
4.1.1.1   Overview ........................................................................................................... 78 
4.1.1.2   Main stru ctural fe atures ....................................................................................... 80 
4.1.1.3   Agricultural policies and practices .......................................................................... 80 
4.1.1.3.1   Border measures .............................................................................................. 82 
4.1.1.3.2   Domestic  support me asures ............................................................................... 82 
4.1.1.4   Key sub-sectors .................................................................................................. 83 
4.1.1.4.1   Wine ..............................................................................................................  83 
4.1.1.4.2   Vegetables, fruits, and nuts (HS Chapters 07, 08) ................................................. 85 
4.1.2   Fo restry  .............................................................................................................. . 86 
4.1.3   Fisheries ............................................................................................................... 87 
4.2   Energy .................................................................................................................. .. 88 
4.2.1   Energy policy ........................................................................................................ 88 
4.2.2   Ener gy trade ......................................................................................................... 89 
4.2.3   Transi t ............................................................................................................... .. 90 
4.2.4   Regulato ry framework ............................................................................................ 90 
4.3   Manuf acturi ng .......................................................................................................... 91 
4.4   Trade in Services ...................................................................................................... 94 
4.4.1   Financial services ................................................................................................... 96 
4.4.1.1   Banking .............................................................................................................  97 
4.4.1.2   Other financial services ........................................................................................ 98 
4.4.2   Telecommuni cation services .................................................................................... 99 
4.4.3   Transport ........................................................................................................... 1 00 
4.4.3.1   Regulato ry framew ork ....................................................................................... 100  
4.4.3.2   Transport modes ............................................................................................... 102  
4.4.4   Logistics .............................................................................................................  104 
4.5   Tourism ................................................................................................................ 104 
REFERENC ES ................................................................................................................ 107  
5   APPENDIX TABLES .................................................................................................. 109  
 WT/TPR/S/328 • Georgia 
 
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  CHARTS 
 Chart 1.1 Product composition of merchandise trad e, 2009 an d 2014 ...................................... 20
 
Chart 1.2 Direction of merchandise trade, 2009 and 2014 ...................................................... 22 
Chart 3.1 Distribution of MFN app lied tariff rates,  2009 and 2015 ........................................... 41 
Chart 3.2 Average applied MFN and bound ta riff rates, by HS se ction, 2009 and 2015 ............... 41 
Chart 3.3 Simple average tariffs for applied MFN and FTAs, 2015 ............................................ 42 
Chart 3.4 Share of du ty-free lines, 2015 ............................................................................. 42 
Chart 4.1 Trade in food, by Sitc rev.3 classificati on, 2009 and 2014 ........................................ 79 
Chart 4.2 Domestic support  to agricult ure, 2013 .................................................................. 83 
Chart 4.3 Wine exports by destination, 2009 and 2014 .......................................................... 84 
 
TABLES 
 
Table 1.1 GDP by sectoral activity, 2009-14 ......................................................................... 13 
Table 1.2 Selected macroeco nomic indicato rs, 2009- 14 ......................................................... 14 
Table 1.3 Georgia's selected global competitiveness rankings 2008-9, 2012-13 and 
2014-1 5 ....................................................................................................................... .. 17 
Table 1.4 Composition of tr ade in servic es, 2009- 14 ............................................................. 23 
Table 1.5 Net inflows of foreig n direct invest ment, 2009- 14 ................................................... 23 
Table 3.1 Trading across borders........................................................................................ 36 
Table 3.2 Summary of procedures and do cuments for trading across bord ers, 2015................... 37 
Table 3.3 Georgia's rules of origin ...................................................................................... 38 
Table 3.4 Georgia's tariff structure, 20 09 and 2015 .............................................................. 40 
Table 3.5 Import  prohibitions............................................................................................. 44 
Table 3.6 Impo rt permits .................................................................................................. 44 
Table 3.7 Government procurement valu e and foreign part icipation,  2011- 14 ........................... 47 
Table 3.8 Government pr ocurement pr ocedures ................................................................... 49 
Table 3.9 Export prohibitions, restrictions, an d licensing ........................................................ 53 
Table 3.10 Export permits ................................................................................................. 54 
Table 3.11 Tax revenue, 2009-14 ....................................................................................... 57 
Table 3.12 Special taxation regimes, 2015 ........................................................................... 59 
Table 3.13 Georgia's membership in internat ional/European standa rds organizations ................. 60 
Table 3.14 Georgian standards, 2009-14 ............................................................................. 61 
Table 3.15 SPS regime ..................................................................................................... 64 
Table 3.16 Major differences between the Law on Free Trade and Competition, and the Law 
on Competition ................................................................................................................ 66 
Table 3.17 Key characteristics of the Law on Competition ...................................................... 67 
Table 3.18 Prices se t by the GNERC .................................................................................... 70 
Table 3.19 Selection of large SOEs ow ned by the State Pr operty Agency .................................. 70 
Table 3.20 IPR legislative framework, and inte rnational conventions ratified by Georgia ............. 72 
Table 3.21 Patent applications and patents gran ted, 2009- 14 ................................................. 74 WT/TPR/S/328 • Georgia 
 
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  Table 3.22 Design applications and designs gran ted, 2009- 14 ................................................ 75 
Table 3.23 Copyrights and related rights, 2009-14 ................................................................ 75 
Table 3.24 Trademark applications an d trademarks gran ted, 2009-14 ..................................... 76 
Table 4.1 Sown area, share of agricult ure in GDP, and tr ade performance ................................ 78 
Table 4.2 Agricultural output, 2009-14 ................................................................................ 79 
Table 4.3 Budget allocations for agriculture, 2009-14 ............................................................ 81 
Table 4.4 Tariffs by agricult ural product group, 2015 ............................................................ 82 
Table 4.5 Domestic support  to agricult ure, 2009-13 .............................................................. 83 
Table 4.6 Georgia: comparison between the GATS and the AA/DCFTA specific 
commitments in trad e in services ....................................................................................... 95 
Table 4.7 Financial institutio ns, 2005- 14 ............................................................................. 96 
Table 4.8 Selected financial soundness indicators, 2009-14 .................................................... 97 
Table 4.9 Transport regu latory fram ework ......................................................................... 101  
 
BOXES 
 Box 1.1 Major structural reform developments ..................................................................... 18
 
Box 2.1 Framework fo r doing bu siness ................................................................................ 26 
Box 4.1 Free Indu strial Zones ............................................................................................ 92 
Box 4.2 Export potential of the textile sector ........................................................................ 93 
 
APPENDIX TABLES 
 Table A1. 1 Balance of  payments, 2009-14 ........................................................................ 109
 
Table A1. 2 Merchandise exports by product group, 2009-14 ................................................ 110  
Table A1. 3 Merchandise imports by product grou p, 2009-1 4 ............................................... 111  
Table A1. 4 Merchandise export s by destinatio n, 2009-14  .................................................... 112  
Table A1. 5 Merchandise impo rts by origin , 2009-14  ........................................................... 113  
 
 Table A3. 1 Georgia's tariff summary , 2015 ....................................................................... 114
 
 
 Table A4. 1 Trade balance of agricu lture products, 20 09 and 2014 ........................................ 115
 
Table A4. 2 Domestic support measures: measures exempt from the reduction 
commitment – "Green  Box", 2009- 13 ............................................................................... 116  
 
 
 WT/TPR/S/328 • Georgia 
 
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  SUMMARY 
1. At the start of the review period (2009 to 2015), average annual real GDP growth 
rebounded from -3.7% in 2009 to an average of 5.8% in 2010-2013. GDP per capita increased by 
over half to reach US$3,681 in 2014, although Ge orgia's overall impressive growth performance 
was not matched by commensurate declines in unemployment and poverty. While the current 
account deficit has narrowed from a peak of 22% of GDP in 2008, it has remained significant at 10–13% of GDP during 2010–12.  
2. Real GDP growth slowed significantly to 3.3% in 2013 from 6.4% in 2012, reflecting slower 
global growth, weak domestic demand and economic deceleration related to the political transition 
that prompted investor caution. Growth for 2014 recovered to 4.8% (just below the Government's 5% target) but the depressed economies of Georgia's major trading partners are expected to halve 
growth to around 2% in 2015.  
3. Exports of goods and services remained under 40% of GDP for most of the review period 
(although increasing in 2013 and 2014) and the merchandise trade deficit averaged 23% of GDP, 
underlining the challenge for the Government to re duce the country's significant trade imbalance. 
The deficit has been conditioned by robust import  growth due to growing domestic demand, FDI- 
and tourism-related imports and relatively high energy and commodity prices for most of the 
review period.  
4. In early 2015, Georgia’s economy was hit by a combination of significant external shocks: 
the Russia-Ukraine crisis, the deepening recession in the Russian Federation (both of which have 
created ripple-effects through the region) and currency devaluations in trading partner countries. 
Because of these shocks, in the first half of 2015 Georgia’s exports were 25% lower than in the 
same period of the previous year and remittances from Georgian workers abroad were down 23.3%. The economies of many of Georgia’s main trading partners are slowing by even more, and 
the depreciation of their exchange rates is hurting Georgia’s export performance.  
5. The commodity structure of Georgia’s export s has not changed much since the previous 
review with resource-based products, such as agriculture, ferro-alloys, copper ores and 
concentrates, and other minerals, accounting for over 40% of merchandise exports. The 
dependence on resource-based products with limited employment generation has remained relatively high whereas the share of more processed, employment-generating products is limited.  
6. Although the share of manufactures in exports rose from 42% to over 55% during the 
review period, motor vehicle exports accounted for a significant part of this. Used cars are 
imported mainly from Japan, the United States and Germany with a portion being reconditioned and refurbished in Georgia before being re-exporte d to neighbouring countries (mostly Azerbaijan, 
Armenia, and Kazakhstan). While there is some local value added in such refurbishing activity, the 
bulk of these exports should more properly be considered as re-exports. The re-export of used cars declined in 2014 because of the more stringent requirements on used cars introduced by 
Azerbaijan.  
7. Commonwealth of Independent States (CIS) co untries continued to be Georgia’s largest 
trading partners, increasing their share of Georgi an exports from 37% to 51% during the review 
period. Georgia's main export destinations in 2014 continued to be Azerbaijan (taking 19% of 
Georgian exports), Armenia (10%), the Russian Federation (almost 10%) and Turkey (8.4%). 
With the opening up of the large Russian market  in mid-2013, exports to the Russian Federation 
have increased, in particular of Georgian wine , mineral water and certain agricultural goods.  
8. Services exports rose from 12% of GDP in 2009 to over 18% of GDP in 2014, growing at a 
faster rate than merchandise exports. Transport and tourism receipts account for around 90% of exports although this high share may be expected to fall as the level of development increases. 
Georgia has not yet begun to emulate other comparable countries that have managed to tap into 
the markets for information technology and other business services. Imports of services are dominated by road and maritime transport.  
9. Foreign direct investment (FDI) is a critical element for the Georgian economy and while it 
has declined from its 2007 peak (at 19.8% of GDP), it remains high compared to peers and is an WT/TPR/S/328 • Georgia 
 
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  important source of financing at 10.6% of GDP in 2014. FDI inflows, comprising equity capital, 
reinvested earnings and other capital, rose sharply to US$1.7 billion in 2014, the increase reflecting higher investment in manufacturing and transport and communication. Gross national savings declined sharply at the beginning of the re view period but are showing signs of recovery.  
10. The broad objectives of Georgia's trade policy remain largely unchanged from the previous 
review: integration into the world economy, including implementation of WTO membership 
obligations as well as obligations under other ag reements, notably the Association Agreement with 
the EU; continued trade policy liberalization; facilitation of export and import procedures and 
streamlining of NTB regulations; and diversification of trade relations by establishing preferential regimes with important trading partners.  
11. Integration with the EU remains the mainstay of Georgia's foreign economic and trade 
policy. In 2014, Georgia signed an Association Agreement (AA) with the EU, including a Deep and 
Comprehensive Free Trade Area (DCFTA). The agr eement aims at promoting closer harmonization 
and integration with the EU. The DCFTA includes the complete elimination of tariff and non-tariff 
barriers on nearly all goods and substantial liberalization of services trade. A wide range of trade 
regulations are also due to be implemented, as  the DCFTA envisages wide-ranging approximation 
of Georgia's trade-related legislation with EU legislation.  
12. As a member of the WTO since 2000, Georgia grants MFN treatment to all WTO Members. 
Georgia is an observer to the Government Procurement Agreement. Georgia has GSP arrangements with the United States (temporarily terminated), Japan, Canada, Switzerland and Norway. In 2009, Georgia terminated its membersh ip of the CIS organization but has maintained 
bilateral FTAs with eight CIS countries and also has an FTA with Turkey, a Trade and Investment 
Framework Agreement with the United States and is due to commence FTA negotiations with the 
EFTA states in September 2015. Georgia and China are completing a joint feasibility study on a 
possible Georgia-China Free Trade Agreement and have also signed a memorandum of 
understanding on strengthening cooperation for the Silk Road Economic Belt initiative.  
13. The Ministry of Economy and Sustainable Development is the executive authority which 
determines, implements and coordinates state polic y in the field of trade. In the ministry, the 
Department for Foreign Trade and International Economic Relations is exclusively involved in the formulation of foreign trade policy. As part of its daily functions, the department closely cooperates 
with several trade-related bodies under the ministry and collaborates with other relevant entities, 
including in the private sector. The Department implements the mandatory notification submission 
procedures to the WTO.  
14. The main instrument regulating foreign trade in Georgia is the revised 2011 Tax Code of 
Georgia, which defines objects subject to import taxation, customs regimes and procedures as well 
the exemption of certain goods from import duties. Legislative amendments have taken place in several trade-related areas.  
15. Regarding measures affecting imports, Georgia has continued to bring its border policies 
including its customs regulations and trade facilitation measures into line with international and WTO practices. Georgia implemented a number of re forms to facilitate trade, in particular the 
opening of customs clearance zones. Georgia has indicated that it is going through the necessary 
process to notify the WTO of its adherence to the Trade Facilitation Agreement.  
16. Georgia has bound its tariffs on all products, with a simple average of the final bound tariffs 
being 7.6%. The simple average applied MFN tariff remains low at 2% since 2010 despite being 
increased slightly from 1.6% in 2009. The simple average MFN tariff for agricultural products 
(WTO definition) fell from 7.2% in 2009 to 6.7% in 2015, and that for non-agricultural products increased from 0.2% to 0.8%. Its applied tariffs generally fall into three bands: 0%, 5%, and 
12%. In addition to the customs tariff, the Government applies VAT of 18% and excise taxes on 
imported goods; in principle these apply equall y to domestically-produced and imported goods. 
The contribution of customs duties to overall tax revenue has averaged a little over 1% during the 
review period; excise taxes and VAT collected on imports have ensured that taxes affecting trade 
have maintained a significant share of around one quarter of total tax revenue. Fixed customs fees 
also apply to imports.  WT/TPR/S/328 • Georgia 
 
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  17. Georgia does not apply contingency measures and has not elaborated relevant legislation for 
such measures. Georgia notified to the WTO its list of products prohibited from importation/exportation, and that import/export perm its are required only to protect public health, 
national security and the environment.  
18. Georgia is an observer to the WTO GPA and is currently assessing the prospects for joining 
the agreement. Amendments to existing legislation resulted in a revised Law on State Procurement which applies to the procurement of all goods, works and services funded from state and local 
budgets. The government procurement market accounted for about 10% of GDP during the review 
period. The new legislation entered into force in 2010, when e-procurement was introduced and since has been functioning effectively; according to the European Bank for Reconstruction and Development (EBRD), Georgia's public procuremen t regime achieved the best ranking in the 
region, indicating high compliance with international standards.  
19. There are minimal export restrictions in terms of  export taxes or licensing. According to the 
authorities, Georgia does not provide export su bsidies, and does not have export financing 
instruments. Export support is mainly in the form of facilitating the participation of exporters in 
international trade fairs and planning buyer missions. Reflecting Georgia's location, which provides an alternative transit route to central Asia (other than the routes via China or the Russian 
Federation), the Government operates free industrial zones (FIZs) where investors may conduct 
processing activities in connection with the transit of goods. Incentives in the form of tax exemptions or reductions continue to be provided to international financial companies, international companies operating in FIZs, and to free warehouse companies.  
20. Georgia has continued to develop its national quality infrastructure in accordance with 
international and EU practices. Its TBT strategy stipulates that Georgia refrain from adopting 
national standards in the areas where relevant international standards exist. About 98% of all 
standards adopted in Georgia are international or  European standards. The Government is aware 
that in order to increase the export potential of agriculture, SPS systems need to be developed in accordance with international/European norms. Lack  of effective SPS regulations, in particular for 
food safety continues to hamper Georgian exports of its agricultural products. The Ministry of 
Agriculture is preparing to approximate Geor gia's regulatory framework to about 350 EU 
directives/regulations.  
21. New amendments to the Law on Competition were adopted in March 2014. This law was 
developed as part of the anti-monopoly reform an d aims to strengthen the institutional framework 
for promoting free trade and competition. The Gove rnment also issued a decree to set up the 
Competition Agency, which oversees most economic sectors except for energy and telecoms.  
22. Most state-owned enterprises (SOEs) were privatized before the review period and currently 
the major SOEs include: Georgian Railways (the only major market player), Georgian Oil and Gas Corporation (GOGC), Georgian State Electrosystem (GSE) and the Enguri hydropower plant. 
During 2012, 100% of the assets of Georgian Railways, GOGC, GSE and others were placed into 
the Partnership Fund, a state-run fund to facilitate foreign investment into new projects by providing co-financing.  
23. Georgia has been amending its IP legislation in accordance with regional and international 
trade requirements. The IPR legislation is aligned with international standards, and Sakpatenti, the 
national intellectual property centre, is making e fforts to raise public awareness of IP rights and 
improve enforcement. The adoption by Georgia of  Paragraph 6 of the Doha Declaration regarding 
public health is under consideration.  
24. Georgia's economy has undergone significant structural change since independence. Twenty 
years ago, shares in GDP of agriculture, industry  and services were more or less evenly split. The 
share of agriculture has since declined steeply and stood at an estimated 9.2% of GDP in 2014, 
although the sector remains important, given that agricultural production accounts for 45% of rural household income and subsistence agriculture accounts for 73% of rural employment. Agriculture thus still provides an important safety net for the rural population and also makes an 
important contribution to exports. The low productivity level in the agricultural sector is 
conditioned, inter alia, by low investment, lack of funding, and limited information about markets 
and new technologies.  WT/TPR/S/328 • Georgia 
 
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  25. Agriculture has however shown positive signs of recovery in recent years, which is partly 
driven by the improvement in trade relations with the Russian Federation and a significant increase 
in public spending on agriculture. The Government is increasing public funding to agriculture, either through specific funds (to promote private sector participation) or subsidies to small-holder 
farmers. It is recognized that improving agricultural productivity and facilitating the movement of 
labour from agriculture into higher productivity activities are essential for strengthening economic opportunities in rural areas. Imports of agricultur al products are subject only to tariffs and SPS 
measures. Georgia's domestic support for agriculture falls under the definition of Green Box 
measures exempt from reduction commitments.  
26. Georgia is a net importer of fuels and energy  products. The country relies on imports of 
natural gas, oil products and some hard coal to  meet most of its energy needs. Net imports 
represent 77% of total energy supply, up from 47% in 2002, as Georgia has had to increase its 
reliance on imports to meet robust demand. Azerbaijan is the largest trading partner with Georgia in energy, and is the main source of imports of natural gas and oil. Due to its geographic location, 
Georgia acts as a transit country for the import-exp ort and transit operations of energy carriers in 
the Caucasus region. Georgia is connected by gas pipelines to Armenia, Azerbaijan, the Russian Federation and Turkey. It is also connected by an  oil pipeline to Azerbaijan and Turkey. Georgia 
imports natural gas from Azerbaijan and the Russian  Federation and it transits gas to Armenia and 
Turkey. Georgia imports oil for transit to European countries.  
27. In 2014, the manufacturing sector accounted for around 10.6% of GDP and 14.8% of 
employment, making labour productivity more than twice the level in the rest of the economy. 
Underpinned by Georgia's WTO membership, the sect or is liberalized and open to international 
trade. Since 2009, exports have nearly tripled to US$2.9 billion in 2014, mostly of mining, agrochemicals (fertilizers), metal products, food  processing (such as wine, mineral water and 
nuts), construction materials and equipment and refurbished passenger vehicles.  
28. Problems concerning technological sophistication and innovation are the main reason for low 
export diversification and limited access to new markets. To support the private sector, two new 
agencies - the Entrepreneurship Development Agency (EDA) and the Innovation and Technology 
Agency - were established in 2014 to promote entrepreneurship by improving access to finance, entrepreneurial learning, consultancy services and export promotion and innovation.  
29. Georgia's economy has become increasingly service-based and services made up over two-
thirds of the economy in 2014. Georgia’s financia l sector is dominated by banking with a small 
non-bank financial services market and an inacti ve private securities market. Currently, there are 
19 commercial banks (with branch offices), 16 of which are foreign-controlled. Commercial banks 
account for more than 90% of financial system assets. Commercial banks play the leading role in 
financing the economy. Concentration in the banking system is relatively high with the five largest banks controlling more than 80% of total sector assets. Regarding the foreign presence of banks, 
there are no distinctions made between domestic and non-local banking entities within the 
National Bank of Georgia's (NBG) supervisory framework. Within the process of ongoing supervision, NBG cooperates with the supervisory authorities of those countries where the parent 
banks of locally-licensed foreign banks are incorporated. NBG has established memoranda of 
understanding with a number of foreign supervisory authorities.  
30. The telecommunication sector dominates the ICT market in Georgia and is well penetrated 
by service providers, most of them internationa l companies. Telecommunications are regulated by 
the independent and self-financed Georgian Nati onal Communications Commission (GNCC), which 
is subject to comprehensive rules on independence  and transparency. The regulatory framework is 
relatively well developed and largely aligned with EU requirements although there are still 
challenges, such as ensuring that the regulator has sufficient powers to enforce market access 
requirements or in the area of universal service regulation. The state does not have any outstanding ownership stakes in the telecom op erators. Mobile penetration has reached 111% 
(compared to 69% in 2009) driven by increased competition and pressure on prices as well as 
limited access to fixed-line services in rural areas.  
31. Over the past decade, successive governments in Georgia have revised rules and updated 
regulations on the supply of transport infrastructure and services. They have restructured 
institutions and delegated to line agencies the authority for modernizing the transport system. This 
has helped draw private investment into aviation (airports and airlines), maritime services (ports WT/TPR/S/328 • Georgia 
 
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  and shipping), road transport (all freight and intercity passenger), and pipelines (oil and gas from 
Azerbaijan and Kazakhstan). The railway is now a state-owned enterprise with the authority to raise capital in the open market, leaving the road  network as the only physical asset owned and 
operated in a traditional, public-sector manner.  
32. One of the potential drivers of economic growth is tourism, which makes the development of 
the tourism sector, and related business opportunities and private investments, a priority for the Government. During the review period, Georgia has experienced growth in the number of visitors, 
with the number of international arrivals exc eeding the five million mark in 2014 and with 5.8 
million expected in 2015. This has facilitated a co nsiderable increase in tourism receipts, rising 
from US$954 million in 2011 to US$1.8 billion in 2014. The great bulk of visitors to Georgia are 
from neighbouring countries (Azerbaijan, Armeni a, Turkey and the Russian Federation), which 
suggests that there is potential for diversification into higher spending tourist markets from OECD 
and other countries across the world. A national tourism development strategy has been elaborated with the help of the World Bank to de termine how to improve the sector’s performance, 
define implementation priorities and facilitate job growth.  
33. Looking ahead, Georgia remains vulnerable to external shocks given its heavy reliance on 
FDI and remittances, high current account deficit an d high dollarization. Growth is expected to 
slow to 2% in 2015 in line with slowdowns in the EU and neighbouring Azerbaijan and Armenia and 
a projected recession in the Russian Federation. Th e year 2016 could see some recovery in growth 
to 2.5% as the external environment improves slightly.
 Beyond that, economic growth could rise 
over the medium term based on greater policy ce rtainty, improved market access, and a strong 
reform agenda. Medium-term growth prospects depend on a number of factors, including: 
improved economic ties with the EU; improved relations with Russia (which will benefit trade and tourism); and the robust reform program outlined  in Georgia's development strategy, which will 
support growth in private investment. Growth prospects further depend on Georgia’s ability to take 
advantage of the AA/DCFTA with the EU, which shou ld improve market access and encourage FDI. 
 WT/TPR/S/328 • Georgia 
 
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  1  ECONOMIC ENVIRONMENT 
1.1  Introduction 1.1.  After gaining independence in 1991, Georgia's economy collapsed and it remains one of the 
only countries in the South Caucasus and Central Asia that has not reached its pre-independence 
real GDP level; as of 2013, Georgia's GDP was estimated to be 80% of its 1990 levels.
1 Georgia's 
trade policy review in 2009 showed how since the Rose Revolution in 2003, the Government established a structural reform programme that aimed, inter alia, to liberalize trade, improve 
infrastructure, upgrade the business environment, strengthen public finances and combat 
corruption. As a result, growth accelerated to an average rate of 9.4% during 2004-2007.  
1.2.  This acceleration was halted by the twin  shocks in 2008: the conflict with the Russian 
Federation (preceded in 2006 by the closing of the Russian market) and the global financial crisis. 
The impact of the crises was relatively short-lived and the economy rebounded in 2010-2013, with 
growth averaging 5.8%. Over the past decade or  so, GDP per capita increased from US$920 in 
2003 to US$3,680.8 in 2014, although Georgia's ov erall impressive growth performance was not 
matched by commensurate declines in unemployment and poverty.  
1.3.  The key event of this review period occurred in June 2014, when Georgia signed the 
Association Agreement (AA) with the European Union. The AA includes a Deep and Comprehensive 
Free Trade Area (DCFTA), which is planned to enhance Georgia's trade prospects and boost 
economic growth by bringing its legislation closer to that of the EU. It will also remove the existing barriers on the trade of goods and services with the EU. Georgian products will have to meet 
certain EU requirements not only for export, but also when consumed within the country. Despite 
improvements in trade relations between Georgi a and Russia, economic ties between the two 
countries remain fragile. While the Russia-Ukraine cr isis had no impact of on Georgia in the first 
half of 2014, the country could face headwinds from a further escalation of tensions in the region.  
1.2  Main Features of the Economy 
1.4.  As noted in the previous review, Georgi a's economy has undergone significant structural 
change since independence. Twenty years ago, shares  in GDP of agriculture, industry and services 
were more or less evenly split. The share of agriculture has since declined steeply and stood at an 
estimated 9.2% of GDP in 2014, although the sect or remains important, given that agricultural 
production accounts for 45% of rural household income and subsistence agriculture accounts for 73% of rural employment
2 (Table 1.1). Agriculture thus still provides an important safety net for 
the rural population and also makes an important contribution to exports.  
1.5.  The sector has still not recovered from the 2006 collapse when the cultivated area decreased 
by around 40% mainly due to the Russian trade em bargo and the subsequent dismantling of public 
services in agriculture. The total sown area in 2014 was less than half the area sown in 1990. The 
low productivity level in the agricultural sector is conditioned, inter alia, by low investment, lack of 
funding, and limited information about markets and new technologies. In the mid-2000s imported 
food products accounted for an estimated 50% of consumption, which is puzzling for a country 
with such substantial resources for food production.  
1.6.  Agriculture has however shown positive signs of recovery in recent years, which is partly 
driven by the improvement in trade relations with  the Russian Federation in 2012 and a significant 
increase in public spending on agriculture. The Government is increasing public funding to 
agriculture, either through specific funds (to promote private sector participation) or subsidies to small-holder farmers. It is recognized that improving agricultural productivity and facilitating the 
movement of labour from agriculture into higher productivity activities are essential for 
strengthening economic opportunities in rural areas.  
                                               
1 World Bank (2014a), p.3. 
2 Estimates by the World Bank Group (2015b), p.11.  WT/TPR/S/328 • Georgia 
 
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  Table 1.1 GDP by sectoral activity, 2009-14 
 2009  2010  2011  2012 2013 2014  
GDP by economic activity (2003 prices, % change)
Agriculture, fore stry and fishing -6.5 -4.1 8.5 -3.7 11.3 1.5 
Mining 10.5 5.0 -8.6 6.6 2.8 1.8 
Manufacturing -9.4 18.6 13.4 13.2 8.6 3.9 
Electricity, gas, and water supply 5.6 3.5 7.1 0.7 5.1 -2.8 
Construction -4.0 4.4 3.9 18.2 -10.5 13.5 
Services -4.9 10.1 7.0 7.0 3.8 5.5 
Trade and repair -15.9 12.8 5.2 7.1 5.4 6.1 
Hotels and restaurants -5.0 12.8 9.8 11.4 4.6 5.6 
Transport -0.4 15.6 6.9 7.0 3.2 6.4 
Communication -3.1 10.8 8.1 10.1 0.9 7.1 
Financial intermediation 2.7 13.4 24.3 14.8 7.0 10.0 
Real estate, renting and business activities -4.3 10.4 12.4 5.3 9.6 8.5 
Public administration 0.9 0.9 3.2 3.3 2.2 2.6 
Education 4.5 3.2 2.7 3.1 2.4 2.1 
Health and social work 8.7 2.8 1.3 2.9 0.0 2.2 
Other -12.9 11.0 9.0 7.1 1.5 -0.1 
Share of sectors in current GDP (%)  
Agriculture, forestry and fishing 9.4 8.4 8.8 8.6 9.4 9.2 
Mining 0.8 1.0 1.0 1.0 0.9 0.8 
Manufacturing 8.1 9.2 9.9 10.2 10.6 10.6 
Electricity, gas,  and water supply 3.2 3.0 3.0 2.8 3.0 2.8 
Construction 6.5 6.1 6.7 7.8 6.7 7.3 
Services 70.2 70.7 68.6 68.2 68.0 68.0 
Trade and repair 15.1 16.8 16.9 16.7 17.3 17.4 
Hotels and restaurants 2.2 2.3 2.2 2.3 2.3 2.3 
Transport 7.3 7.9 7.5 7.6 7.7 7.7 
Communication 3.9 3.7 3.0 3.1 2.8 2.9 
Financial intermediation 2.9 2.6 2.6 2.8 3.0 3.3 
Real estate, renting and business activities 4.0 4.9 5.4 5.5 5.8 6.0 
Public administration 15.8 13.0 11.6 11.2 10.1 9.9 
Education 4.9 4.9 5.0 4.9 5.2 5.0 
Health and social work 6.6 6.7 6.1 6.1 5.7 5.7 
Other 4.0 4.7 5.0 4.9 4.7 4.4 
Less: FISIM adjustmenta 1.4 1.3 1.2 1.3 1.4 1.5 
a FISIM = financial intermediation services indirect measures.  
Source: National Statistics Office of Georgia online information.  
1.7.  Georgia's economy has become increasingly  service-based and services made up over two-
thirds of the economy in 2014, followed by ma nufacturing (10.6%), agriculture (9.2%), and 
construction (7.3%). Within services, the largest sub-sectors are trade and repair (17.4%), public 
administration (9.9%), transport (7.7%) and re al estate and business (6.0%). The large but 
declining share of public administration can be attributed to the increase in public sector wages 
before and at the start of the present review period. The post-2009 economic recovery has been 
relatively broad-based with the decline in agriculture starting to slow and even reverse (Table 1.1). Services, in particular transport and tourism, and manufacturing have been the main contributors 
to growth since 2010.  
1.8.  One of the potential drivers of economic growth is tourism. This makes the development of 
the tourism sector, and related business opportunities and private investments, a priority for the Government. International tourist arrivals have increased 10-fold since 2005 when Georgia hosted 
560,000 visitors. Tourism and travel is therefore on e of the fastest growing sectors in Georgia and, 
according to the World Bank, a key generator of jobs, accounting for 14.2% of total employment in 2013 and 16% of GDP (directly and indirectly), an d forecast to continue growing by 4.8% per 
annum. The sector currently provides nearly 20% of export earnings. A national tourism 
development strategy has been elaborated with the help of the World Bank to determine how to improve the sector’s performance, define implemen tation priorities and facilitate job growth.  WT/TPR/S/328 • Georgia 
 
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  1.3  Main Economic Developments 
1.3.1  Macroeconomic performance 1.9.  Strong growth in Georgia since 2004 was driven in large part by capital inflows and the non-
tradable sectors. The twin shocks in 2008 interru pted capital inflows and private investment and 
growth plummeted; in 2009 GDP contracted by  3.7% (Table 1.2). The Government rapidly 
implemented a fiscal stimulus programme to support recovery, including a large public investment package and increased social transfers. These ef forts resulted in growth quickly rebounding, 
averaging 5.6% during 2010-2014.  
Table 1.2 Selected macroeconomic indicators, 2009-14 
 2009  2010  2011  2012 2013 2014  
Real GDP, 2003 prices (GEL million) 12,085.5 12,835.0 13,757.2 14,637.7 15,123.7 15,844.6 
Real GDP, 2003 prices (US$ million) 7,234.7  7,201.2  8,157.3  8,864.6  9,092.3  8,973.7  
Current GDP (GEL million) 17,986.0  20,743.4  24,344.0  26,167.3  26,847.4  29,187.0  
Current GDP (US$ million) 10,766.9  11,638.3  14,434.7  15,846.9 16,139.9 16,528.5 
GDP per capita at current market 
price (GEL) 4,101.3  4,675.7  5,447.1  5,818.1  5,987.6  6,499.7  
GDP per capita at current market 
price (US$) 2,455.2  2,623.0  3,230.7  3,523.4  3,599.6  3,680.8  
National accounts  
Real GDP (% change) -3.7  6.2  7.2  6.4  3.3  4.8  
Exports of goods and services (% of 
GDP) 29.7  35.0  36.2  38.2  44.7  42.9  
Imports of goods and services (% of 
GDP) 48.9  52.8  54.8  57.8  57.6  60.4  
Unemployment rate (%) 16.9  16.3  15.1  15.0  14.6  ..  
Prices and interest rates  
Inflation (CPI, % change) 1.7  7.1  8.5  -0.9  -0.5  3.1  
Lending rate (%) 17.87  15.85  15.00  14.81  13.59  11.91  
Foreign currency 18.54  15.66  13.80  13.73  12.64  10.90  
Deposit rate (%) 10.81  10.06  11.54  10.71  9.73  8.43  
Foreign currency 9.49  7.67  8.16  8.17  6.04  4.83  
Exchange rate  
lari/US$ (period average) 1.670  1.782  1.686  1.651  1.663  1.7659 
Nominal effective exchange rate (% 
change) -0.4 -7.1  5.4  6.7  0.6  0.3 
Real effective exchange rate (% 
change) -1.5  -4.6  9.3  1.8  -3.3  -0.8 
General government balance  
Revenue 29.3  28.3  28.2  28.9  27.7  27.6  
Tax revenue 24.4  23.5  25.2  25.5  24.8  24.8  
Expenditure 30.0  26.4  23.8  24.8  25.0  26.4  
Net operating balance -0.7  1.9  4.5  4.1  2.6  1.2  
Fiscal balance excluding grants -8.7  -6.8  -1.8  -1.6  -2.0  -3.0  
Public debt (end-period) 30.9  33.6  29.7  32.5  33.9  35.3  
Domestic 9.4  8.8  7.7  7.2  7.5  8.8  
Foreign 25.2  28.0  24.7  25.3  26.4  26.5  
Saving and investment (% of GDP)  
Gross national savings 1.8  10.4  14.0  18.1  19.5  ..  
Gross domestic investment 13.0  21.6  26.2  28.9  24.8  29.8  
Savings-investment gap -11.2  -11.2  -12.2  -10.8  -5.2  ..  
External sector (% of GDP, unless otherwise indicated)  
Current account balance  -10.6 -10.3 -12.7  -11.7  -5.8  -9.7  
Goods balance -22.4  -22.6  -24.2  -26.7  -21.7  -25.7  
Exports 17.2  20.6  22.3  21.8  26.0  24.2  
Imports 39.7  43.1  46.6  48.5  47.7  49.8  
Services balance 3.3  4.7  5.2  7.0  8.8  8.2  
Exports 12.3  14.1  14.0  16.2  18.5  18.4  
Imports 9.1  9.4  8.8  9.1  9.7  10.2  
Worker remittances, net 2.9  3.6  4.3  4.5  4.9  4.6  
Capital account 1.6  1.7  1.0  0.8  0.8  0.7  
Financial account 8.6  8.9  11.6  11.0  5.1  9.3  
Direct investment, net 6.3  5.8  6.2  3.9  5.1  6.5  
Balance of payments 5.7  1.8  4.0  0.2  -0.3  -0.2  
Terms of trade (2000=100) 133.1  137.0  138.1  134.8  132.6   ..  
Merchandise exports (% change)a -22.4  29.1  34.7  7.3  21.2  -4.7  
Merchandise imports (% change)a -31.4  17.6  33.9  14.3  0.2  7.0  
Service exports (% change)a 4.6  23.4  23.0  26.9  16.5  2.0  
Service imports (% change)a -21.5  11.7  15.8  14.4  7.9  7.7  WT/TPR/S/328 • Georgia 
 
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   2009  2010  2011  2012 2013 2014  
Foreign currency reserves (US$ 
million, end period) 1,891.6  2,041.4  2,594.9  2,651.6  2,601.5  2,490.5  
% of GDP 17.6  17.5  18.0  16.7  16.1  15.1  
Gross external debt (US$ million, end 
period) 8,820.2  10,099.5  11,573.9  13,236.2  13,220.6  13,443.9  
% of GDP 81.9  86.8  80.2  83.5  81.9  81.3  
.. Not available.  
a Growth rates based on trade figures taken from the balance of payments in US$.  Source: National Statistics Office of Georgia online info rmation; National Bank of Georgia online information; 
IMF, International Financial Statistics online information.  
1.10.  Growth has largely been powered by services, construction, and non-tradables in general. 
Manufactured exports have not expanded rapidly as  a share of GDP during this period and total 
exports of goods and services remained under 40% of GDP for most of the review period, rising 
slightly in 2013 and 2014. While the current account deficit has narrowed from a peak of 22% of 
GDP in 2008, it has remained large at 10–13% of GDP during 2010–12.  
1.11.  Real GDP growth slowed significantly to 3. 3% in 2013 from 6.4% in 2012, reflecting slower 
global growth, weak domestic demand and economic deceleration related to the political transition 
that prompted investor caution. Growth for 2014 recovered to 4.8% (just below the Government's 5% target) but was expected to halve to around  2% in 2015 due to the depressed economies of 
Georgia's major trading partners.  
1.12.  In early 2015, Georgia’s economy was hit by a combination of significant external shocks: 
the Russia-Ukraine crisis, the deepening recession in Russia (both of which create ripple-effects 
through the region) and currency devaluations in trading partner countries. Because of these 
shocks, Georgia’s exports were 25% (January-May, 2015) lower than in the same period of the 
previous year and remittances from Georgian workers abroad were down 23.3% in the same period. The economies of many of Georgia’s main trading partners are slowing by even more, and 
the depreciation of their exchange rates is hurting Georgia’s export performance.  
1.13.  Despite growth, unemployment has been high  and it remains perhaps the most significant 
public policy challenge. Georgia’s robust growth performance was accompanied by high 
unemployment, which remained in the 12-13% rang e during the pre-crisis boom. It peaked at 
nearly 17% in 2009 and fell to around 15% in 2012. According to the authorities, in 2013-2014 it 
was 14.6% and 12.4%, respectively. Georgia has been able to create significant new employment but this has been insufficient to bring about overall net job creation.  
1.14.  According to the World Bank
3, the majority of the workforce – between 51% and 52% – is 
employed (mostly self-employed) in agriculture, which contributes only 9.2% of GDP and is characterized by largely family-based subsistence farming with a relatively small agri-business 
sector. Low productivity levels in agriculture have contributed significantly to rural poverty. The 
average wage earned in agriculture is only about one-third of that in manufacturing, which employs just over 4% of the workforce. The highest wages are in mining and quarrying and 
construction (accounting for 1% and 3% of employment respectively). Wages are also appreciably 
higher in services, both public and private,  which employ over 35% of the workforce.  
1.15.  Despite improvements over the last decade, Georgia still has a large informal sector, 
estimated by the OECD to be of the order of 22% of GDP in 2010. Non-observed or shadow 
activities are particularly prevalent in the construction sector, in repair services and in the 
restaurant and bar sectors. Small and medium enterprises make up over 90% of active businesses in Georgia and 43% of employment but accounted  for only 20.6% of value added and 18.2% of 
turnover in 2013.
4 As the World Bank notes, countries with a large informal economy typically 
show a scarcity of new medium-size and large firms and an excess of small and inefficient or inactive firms which would otherwise have disappeared.
5  
                                               
3 World Bank (2014b), p.32. 
4 Geostat/The World Bank (2013), p.19. 
5 Geostat/The World Bank (2013). WT/TPR/S/328 • Georgia 
 
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  1.3.2  Fiscal policy 
1.16.  The Government has affirmed its commitment to fiscal consolidation in its current 
development strategy, Georgia 2020.6 The Government is pursuing fiscal policies that support 
inclusive growth while maintaining a sustainable fiscal position. Measures to improve the tax 
system, the business environment and the quality an d composition of public spending have been 
implemented. Between 2009 and 2013 there has been a sharp reduction in the fiscal deficit. The 
fiscal deficit amounted to an estimated 3% of GDP in 2014, which was less than budgeted because 
revenue exceeded the budget, reflecting higher receipts from excise tax on tobacco and VAT. The 
deficit is likely to expand to at least 4% of GDP in 2015 as slowing growth reduces revenue.  
1.17.  Regarding revenues, Georgia continues to have an attractive tax and customs regime. 
Following major tax reforms in 2004, the number of taxes was reduced from 21 to 6; VAT at 18% 
is competitive with that applied in neighbouring countries while income tax peaks at 20%, 
corporate tax at 15% and dividend and interest income tax is at 5%. There is no payroll tax or social insurance tax, no capital gains tax and no wealth, inheritance tax or stamp duty. The tax 
environment is being made more conducive for business through policy reform and better tax 
administration, which should encourage business acti vity and eventually generate higher revenues.  
1.18.  Public debt was 35.3% of GDP in 2014 and is expected to climb to 40% of GDP by the end 
of 2015. Given the constraints of Georgia's narrow financial markets, banks are the main 
purchasers of public debt. Small domestic saving s limit non-bank financing for the budget, leaving 
the economy overly dependent on inflows from abroad.  
1.3.3  Monetary policy 
1.19.  Monetary policy is focused on inflation targeting, implying a free exchange-rate float. To 
achieve the goal of price stability, the National Bank of Georgia (NBG) set a 6% inflation target for 2014, falling to 5% for the two following years.  However, in 2012 and 2013, Georgia experienced 
price deflation, due to lower food prices and the strength of the lari, which led to significant 
monetary easing. Heavy dollarization of Georgia's economy continues to undermine the effectiveness of monetary policy. In 2013, foreig n exchange deposits accounted for 56% of all 
deposits. Over two-thirds of housing loans are denominated in US dollars and more than 80% of 
Georgia's public debt is in foreign currency. Th e NBG is promoting de-dollarization to encourage 
banks to loan in local currency.  
1.20.  The increase of inflation in 2010 and 2011 was not caused primarily by internal monetary 
pressures but was principally attributable to external pressures including increases in energy 
prices. In 2010, the annual rate of inflation rose  sharply to 7.1% owing to increased prices 
worldwide and unfavourable climatic conditions which resulted in bad harvests and supply 
shortages of agricultural products. After a further increase in 2011, Georgia experienced deflation 
in 2012 and 2013 resulting from a sharp decline in global food and fuel prices and a slight appreciation of the lari which lowered import pr ices. Inflation was low in 2014, owing to weak 
commodity and global food prices but it is forecast by the Asian Development Bank (ADB) to reach 
5% in 2015 and 2016, partly as a result of the further devaluation of the lari.
7  
1.3.4  Structural reforms 1.21.  Georgia’s medium-term development plan ( Georgia 2020 ) aims to achieve inclusive, and 
sustainable growth averaging 7% annually. This assumes that structural reforms will support rapid 
growth in investment, employment, and firm prod uctivity and also ensure the realization of 
potential benefits associated with the DCFTA in te rms of higher exports and FDI. The plan is based 
on four pillars: maintaining macroeconomic stability, strengthening competitiveness of the private 
sector, developing human capital, and enhancing access to finance.  
                                               
6 Government of Georgia (2014). 
7 Because foreign earnings are lower, the lari deprec iated by more than 20% against the US dollar since 
January 2014. Although this depreciation is large, it is in line with the depreciation experienced by many other 
countries, given the strength of the US dollar. Indeed, most currencies in the region  have depreciated by even 
more. WT/TPR/S/328 • Georgia 
 
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  1.22.  Regarding competitiveness, while Georgia has done well on the Doing Business index8, there 
is a pending reform agenda to support private sector competitiveness. This is concerned mainly with the need for the protection and enforcemen t property and intellectual property rights, 
improved land titling and collateral registration, the establishment and enforcement of a 
competition framework aligned with international standards, and facilitating access of MSMEs to 
markets and information. Broad competitiveness indicators, such as those documented by the World Economic Forum (WEF), suggest that during  the review period Georgia has improved its 
competitive ranking in some areas but appears to ha ve failed to do so in the areas of education, 
competition, finance and innovation (Table 1.3). 
1.23.  Regarding innovation, development of new firms and export lines in high value addition 
sectors is hampered by the lack of a skilled workforce, low R&D spending, and limited use of 
innovation and technology. It is important to ensure increased investments in R&D and their 
commercialization, to support Georgian entrepreneurship, technological modernization as well as increased competitiveness. There is need for diversified tertiary education and training, especially 
in the technical and vocational areas to enhance firms’ basic innovation management capabilities 
and skills. As laid out in the Georgia 2020  strategy document, the Government is now looking at 
ways to develop an institutional framework to facilitate innovation and scale up of the most 
productive and innovative SMEs.  
1.24.  The Georgian Innovation and Technology Agency (GITA) is working on raising capacities for 
innovation. Aiming to develop innovation infrastructure for Georgia's regions, the Agency’s goal is to build Regional Innovation Hubs and Community Innovation Centres, which will increase the 
number of new Georgian products in the region s; raise awareness about trends; raise digital 
literacy; increase the number of entrepreneurial, skilled inhabitants; develop new start-ups in the 
regions; develop new business approaches and increase competitiveness of the region.  
Table 1.3 Georgia's selected global co mpetitiveness rankings 2008-9, 2012-13 and 
2014-15 
Selected Indicators Ranking 
 2008-09  
(134 countries)  2012-13  
(144 countries)  2014-15 
(144 countries) Trend 
Property rights 109 131 85 + 
Efficiency of legal 
framework 100 98 77 + 
Quality of infrastructure 80 55 54 + 
Quality of primary 
education 81 91 92 - 
Quality of the education 
system 83 114 98 - 
Intensity of local 
competition 114 127 105 + 
Market dominance 95 121 103 - 
Anti-monopoly policy 111 141 127 - 
Professional management 68 92 78 + 
Financial services 94 100 89 + 
Local equity market  107 126 126 - 
Securities exchange 
regulation 103 119 121 - 
Firm-level technology 
absorption 108 116 103 + 
Local suppliers' 
performance 131 134 120 + 
Capacity for innovation 97 116 110 - 
Spending on R and D 121 125 126 - 
University-industry 
collaboration 109 134 128 - 
Overall 90  77 69 + 
Source: World Economic Forum: Global Competitiveness Reports 2008-09, 2012-13 and 2014-15.  
1.25.  Improving private sector competitiveness and further enhancing the investment climate, 
especially for SMEs, entail, inter alia: (i) Moving from deregulation to smart regulation to fill gaps 
in the existing business environment (competiti on policy, strengthened legal enforcement of 
                                               
8 Georgia's ranking on the overall ea se of doing business improved to 15th (of 189 countries) in the 
World Bank's Doing Business 2015 Report from 112th (of 145 countries) in the 2005 report. However, rankings 
in key areas lag, including insolvency resolution and business exit and judicial independence. WT/TPR/S/328 • Georgia 
 
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  property rights including intellectual property rights, updated investment legislation, improved 
bankruptcy procedures, and more effective di spute resolution); (ii) Promoting exports by 
leveraging the DCFTA to support market access9, realizing Georgia’s potential as a regional 
logistics and transit hub, and increasing productivi ty and exports in the agriculture sector; (iii) 
Strengthening innovation capacity through financial support and a well-defined framework for 
collaboration between the private sector, resear ch, and the Government; and (iv) Leveraging 
Georgia’s locational advantage and renewable resour ce potential to meet its growing energy needs 
and develop electricity exports. In this regard, significant reform is under way (Box 1.1).  
Box 1.1 Major structural reform developments 
Georgia’s investment climate rema ins among the best in the region . Large-scale privatization is very 
advanced, tax and customs bodies are generally well run, and tangible results have been achieved in fighting 
corruption. At number 15, Georgia is a top-rated transition country in the World Bank Doing Business 2015 
report. The new Government has purs ued various policies to strengthen  regulatory frameworks for markets 
and to improve the business environment. For exampl e, the Entrepreneurship Development Agency (EDA) 
was established, which will begin operating in the second half of 2014. The EDA will provide training to 
entrepreneurs and start-ups, support  export promotion, and adapt sm all and medium-sized enterprises 
(SMEs) to meet DCFTA requirements. In June 2014 the Government also launched the Produce in Georgia  
programme, which aims to support SM Es and stimulate local production. 
Georgia signed an Association Agreement, including a DCFTA, with the EU . The agreement with the 
EU was officially signed in Brussels on 27 June 2014 and then ratified by parliament in July 2014. The aim of 
this agreement is to provide better access for Georgian  goods and services to the EU by creating a modern, 
transparent and predictable trade and investment regime , and by enhancing institutional capacity through the 
adoption of European standards. Trade relations with the EU will likely be reinforced as a result of the DCFTA. 
The EU is one of Georgia’s main trading partners, accounting for 21 per cent of exports in 2013. As part of 
the agreement, Georgia will also receive technical and financial support from the European Union. The 
AA/DCFTA covers a broad range of cooperation areas an d provides for further deve lopment and strengthening 
of political dialogue, including foreign and security matters, as well as domestic reform. Priority is given to 
reforms in public administration, agriculture, rural development and the judicial  system. In August 2014 
Moody’s changed the outlook on Georgia’s Ba3 sovereig n rating to positive from stable, driven by the 
expectations that the DCFTA will attr act further foreign direct  investment and bolste r the country’s export 
performance. 
The government approved the Georgia 2020  Socio-economic Development Strategy in June 2014 . 
The main objective of the strategy is to achieve fast er, inclusive and sustainabl e growth by maintaining a 
stable macroeconomic environment and strengthening human capital, and health, education and social safety 
nets. The strategy also aims to im prove private sector competitiveness by building on past successes and 
further enhancing the investment climate, especially for SMEs. The Government is expected to formulate a 
specific action plan to achieve long-term development objectives. 
New amendments to the law on free trade and competition were adopted in March 2014 . This law 
was developed as part of the anti-monopoly reform and aims to st rengthen the institutional framework for 
promoting free trade and competition. The Government al so issued a decree to set up a competition agency. 
In addition, the law on food safety underwent amendm ents, which were approved by parliament in April 
2014. 
Reforms in the agricultural sector have been passed . In July 2014 the Presiden t signed amendments to 
the law on ownership of agricultural land. Pursuant to th e law, agricultural land in  Georgia can no longer be 
acquired by a foreigner, a legal entity registered abro ad or a legal entity incorporated by a foreigner in 
Georgia. This moratorium will remain in effect until 31 December 2014. Meanwhile, the Government of 
Georgia is developing a policy on the ownership of agricultural land. 
The electricity regulatory authority approved the new Transmission Grid Code in April 2014 . The 
document detailing the grid code fully meets EU requir ements. The development of these codes is part of the 
Government’s commitment to a broade r set of sector reforms within the Georgian Electricity Market Model 
2015. In addition, the Ministry of Energy amended the Electricity Market Rules in January 2014 to enable the 
adoption of the grid code by the electricity regulatory authority, and to give new hydropower and renewable 
energy projects priority acce ss to the transmission grid. 
Source: EBRD Georgia Transiti on Report 2014. Viewed at: http://2014.tr-ebrd.com/georgia/ .  
                                               
9 Detailed implementation steps regarding many trad e and trade-related areas have been defined by the 
Government's 2015 National Action Plan for the Implemen tation of the Association Agreement between Georgia 
and the EU; approved by Decree No. 59 of 26 January 2015. WT/TPR/S/328 • Georgia 
 
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  1.3.5  Current account balance 
1.26.  Georgia's relatively high current account deficit fell from close to 12% of GDP in 2012 to 
less than 6% in 2013, the first single-digit deficit since 2004, due to improvements in the trade balance (Table A1. 1). Imports slowed down due to the slump in investment while exports grew 
strongly due to the resumption of trade with the Russian Federation (which quickly became 
Georgia's third largest export market after the embargo was lifted) and a good performance in traditional CIS and EU markets. The services balance continued to improve supported by tourism, 
and remittances also grew. The current account deficit widened to an estimated 9.7% of GDP in 
2014. Higher growth drove a 7% rise in imports while exports declined in the face of lower export demand, reduced remittances from the Russian Federa tion (which represent half of total transfers 
from abroad) and lower tourism receipts.  
1.27.  The current account deficit is projected by the ADB to grow further to 12% of GDP in 2015, 
due to an anticipated decrease in merchandise ex ports, reflecting the slowdown that started in 
2014 and the continued decline in remittances. Afterwards, the IMF projects the current account 
deficit will decline to 5% of GDP by 2019, depending on continued fiscal consolidation, exchange 
rate flexibility and implementation of structural  reforms to improve export competitiveness, and 
the positive effects of the FTA with the EU.
10 In light of Georgia's economic vulnerabilities, the IMF 
approved a 2-year Stand-By-Arrangement (SBA) as a macroeconomic safety net and then 
approved a 3-year SBA in 2014, which aims to fa cilitate Georgia's external adjustment, reduce 
macroeconomic vulnerabilities, rebuild fiscal space and support growth.  
1.4  Trade Performance 
1.4.1  Merchandise trade 
1.28.  The merchandise trade deficit averaged 23% of GDP during the review period, underlining 
the challenge for the Government to reduce the country's huge imbalance between imports and 
exports. The deficit has been conditioned by ro bust import growth due to growing domestic 
demand, FDI- and tourism-related imports and relatively high energy and commodity prices for most of the review period.  
1.29.  Georgia’s export performance over the la st decade indicates that exports and tradable 
goods have not served as a leading source of ra pid and sustainable produc tivity growth. Although 
merchandise exports have grown by about 10% per ye ar over the last decade, the export share of 
GDP has not changed much since 2004 and remains below that of other high-growth smaller 
economies. The commodity structure of Georgia’s ex ports has also not changed much over the last 
decade, with resource-based products such as metals and minerals still dominant, while employment-generating processed products remain secondary.  
1.4.1.1  Composition of trade  
1.30.  The structure of Georgia’s exports has not changed significantly since 2009 with primary 
products (agriculture, ferro-alloys, copper ores and concentrates, and other minerals) accounting 
for over 40% of exports (Chart 1.1 and Table A1. 2).  
1.31.  The share of manufactures in exports rose from 42% to over 55% during the review period 
with motor vehicle exports more than doubling from 7% to 18% of exports. This is related to a considerable increase in exports of used cars to neighbouring countries, mostly Azerbaijan, 
Armenia, and Kazakhstan. The used cars are imported from other countries (mainly from Japan, 
the United States, and Germany), with a portion being reconditioned and refurbished in Georgia before being re-exported. While there is some local value added in such refurbishing activity, the 
bulk of these exports should more properly be co nsidered as re-exports. For the bulk of these re-
exports, any local value added has more to do with transport and logistics, with Georgia becoming a major regional marketplace for automobiles. The re-export of used cars declined in 2014 
because of the more stringent requirements on used cars introduced by Azerbaijan. Export of 
vehicles to Armenia did not decline. According to the National Statistics Office of Georgia, the 
                                               
10 IMF (2014), p.52. WT/TPR/S/328 • Georgia 
 
- 20 - 
 
  export of cars in 2014 to Armenia increased by 7% and amounted to US$129.3 million. Other 
leading exports are minerals or chemical fertiliz ers, medicaments and bars and rods of iron.  
Chart 1.1 Product composition of merchandise trade, 2009 and 2014 
2009 2014
(a)    Exports (f.o.b.)
Other semi-
manuf.  3.7%Manufactures
41.7%
Total:   US$1.1 billion Total:  US$2.9 billion
(b)    Imports (c.i.f.)
Chemicals
10.7%Transport 
equipment
8.5%
Manufactures
56.3% Electrical
machines  
8.6%
Non-electrical 
machinery  6.6%Other mining
3.4%Electrical
machines
10.3%Other 
agriculture
16.6%
Other semi-manuf.  
10.5%Chemicals
10.6%Manufactures
63.8%
Total:   US$4.5 billion Total:  US$8.6 billionManufactures
55.5%
Iron & steel
14.6%Mining
18.2%
Other
7.0%Gold
10.2%
Transport 
equipment  
10.9%Other consumer 
goods  7.0%
Mining
13.5%Other semi-
manuf.  2.8%
Iron & steel
12.0%
Other consumer 
goods  10.2%Other 
1.7%
Transport
equipment  
20.7%
Other semi-manuf.
9.2%Other 
0.4%
Agriculture
15.6%Agriculture
18.1%
Transport 
equipment
11.0%Chemicals
9.3%Chemicals
10.4%Other agriculture
18.4%Wine of fresh 
grapes  6.4% Other consumer 
goods  5.9%
Fuels
16.7%Fuels
17.6%Other 
0.5%
Other mining
1.0%Non-electrical
machinery
7.1%Other consumer 
goods  11.0%
Iron & steel
2.6%Iron & steel
3.3%Spirits
4.8%Edible nuts
6.2%
Agriculture
29.4%Agriculture
29.4%Edible nuts
6.4%
 
Source: UNSD, Comtrade database (SITC Rev.3).  
1.32.  The dependence of the merchandise export basket on resource-based products with limited 
employment generation has remained relatively high whereas the share of more processed, employment-generating products seems to be limited.  
1.33.  During the review period, there was little change in the overall composition of imports 
(Chart 1.1 and Table A1. 3). Georgia's largest import  category is hydrocarbons (oil and gas) which WT/TPR/S/328 • Georgia 
 
- 21 - 
 
  accounted for 16.7% of imports in 2014. Other major imports are food, motor cars, telephones for 
cellular networks or for wireless networks, semi-manufactures, gas turbines, electronic and computer equipment and pharmaceuticals. Import growth was spurred at various points by strong demand for intermediate goods in manufacturing and an increase in investments. The strong 
performance in the manufacturing sector raised the demand for intermediate goods, while the 
significant increase in gross capital formation increased investment-related imports.  
1.4.1.2  Direction of trade  
1.34.  CIS countries continued to be Georgia’s largest trading partner, increasing their share of 
Georgian exports from 37% to 51% during the review period (Chart 1.2 and Table A1. 4). 
Georgia's main export destinations in 2014 conti nued to be Azerbaijan (taking 19% of Georgian 
exports), Armenia (10%), the Russian Federation
11 (almost 10%) and Turkey (8.4%). With the 
opening of the large Russian market in mid-2013, exports to the Russian Federation continued to 
grow and increased three-fold in the 1st half of 2014 (year-on-year).  
1.35.  In spite of the large size and proximity of  the EU and Turkish markets, Georgia’s exports to 
both destinations appear to be significantly below potential. Overall, the share of Georgia’s exports 
to the EU has remained fairly stagnant at about 21% since 2009 (it even declined to 15% in 2012), although in the first four months of 2015 the EU's share reached 30%. The EU member 
State accounting for the largest share of Georgia’s exports is Bulgaria. This suggests that the EU 
remains a largely untapped potential market for Ge orgia. The share of exports to Turkey have 
more than halved during the review period (f rom 20% to 8.4%). The share of exports to the 
United States has more than doubled during the review period, while the share going to Canada 
has declined from 10% to under 2%.  
1.36.  The EU is Georgia's main trade partner, accounting for around one-fifth of exports and over 
one quarter of imports. Germany, Romania, Italy and Bulgaria account for half of EU imports from 
Georgia (Chart 1.2 and Table A1. 5). Other signif icant sources of imports in 2014 were Turkey 
(20.1% of total imports), China (8.5%), Azerbaijan (7.4%), the Russian Federation (6.7%), and Ukraine (6.4%). Turkey supplies mainly consumer goods and domestic appliances and Azerbaijan 
is Georgia's main supplier of oil and gas.  
                                               
11 One big change in Georgia’s expo rt structure over the past decade has been the reorientation away 
from the Russian market after 2005. During 2000–05, the share of Georgia’s exports to the Russian Federation averaged 19% which fell to 8% in 2006 and to 2% by 200 8, due to the trade embargo imposed by the Russian 
Federation. Processed food (primarily wines, spirits, mineral waters, fruits, and nu ts) exports to the Russian 
Federation declined sharply after Russia imposed a ba n on wines and mineral water from Georgia in 2006. Most 
of these exports were redirected  to Ukraine, the Caucasus, and other transition countries. WT/TPR/S/328 • Georgia 
 
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  Chart 1.2 Direction of merchandise trade, 2009 and 2014 
2009 2014
(a)    Exports (f.o.b.)
CIS
36.7%
Total:   US$1.1 billion Total:  US$2.9 billion
(b)    Imports (c.i.f.)
EU(28)
28.4%Other Asia  4.4%
United States
4.3%Other
10.5%
EU(28)
27.6%Other
3.5%Russian Federation
6.5%
United States
3.3%
Total:   US$4.4 billion Total:   US$8.6 billionUkraine
7.4%
Azerbaijan
7.4%
Turkey
20.1%Ukraine
6.4%United States
3.3%United States
7.3%Russian 
Federation
9.6%
China  4.0%Azerbaijan
14.6%
EU(28)
21.8%Turkey
19.9%Other 4.2%
Japan
4.3%Other CIS
4.3%Middle East  2.8%Armenia
7.8%
Middle East
4.7%Ukraine
4.9%
Canada
10.3%
Turkey
8.4%
Russian Federation
6.7%Asia  4.4%
Turkey
15.9%Ukraine
9.5%Other  1.9%
Azerbaijan
19.0%
Azerbaijan
8.6%CIS
24.7%CIS
28.7%CIS
51.2%
Other Asia 
3.6%Armenia
10.1%
China
8.5%EU(28)
20.6%Other CIS
7.6%
Other CIS
4.0%Middle East
3.8%Middle East
4.3%Asia  2.6%Other CIS
6.8%
 
Source: UNSD, Comtrade database.  
1.4.2  Services trade 
1.37.  During the review period, services export s increased from 12% of GDP in 2009 to over 18% 
of GDP in 2014, growing at a faster rate than merchandise exports, reaching US$3 billion. (Table 
1.4). Exports are dominated by transport and tour ism receipts, which account for around 90% of 
exports. Georgia has not yet begun to emulate other comparable countries that have managed to 
tap into the markets for information technology and other business services. Imports of services 
are dominated by road and maritime transport.  WT/TPR/S/328 • Georgia 
 
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  Table 1.4 Composition of trade in services, 2009-14 
 2009  2010  2011  2012 2013 2014  
Total credit (US$ million) 1,329.3  1,640.8  2,018.9  2,562.0 2,983.8 3,043.5  
 % of total credit 
Maintenance and repair  0.3  1.4  0.1  0.1  0.1  0.1  
Transportation 47.0  42.5  39.6  33.3  32.3  31.9  
Sea transport 6.3  6.8  6.9  5.1  5.4  5.2  
Air transport 6.1  6.2  7.3  6.5  7.0  6.6  
Rail transport 7.9  7.5  7.7  6.4  5.3  4.9  
Road transport 4.7  4.4  3.7  4.3  4.6  4.3  
Pipelines and electricity transmission 21.7  17.4  13.8  10.9  9.8  10.8  
Travel 35.8  40.2  47.3  55.1  57.6  58.7  
Business 19.5  19.3  19.2  21.5  21.0  21.1  
Personal 16.3  20.9  28.1  33.6  36.7  37.6  
Construction 0.5  0.6  0.4  0.3  0.3  0.2  
Insurance and pension 1.2  2.3  1.0  0.7  0.6  0.7  
Financial service 1.0  1.0  0.9  0.8  0.3  0.2  
Royalties and licence fees  0.6  0.3  0.2  0.1  0.1  0.1  
Telecommunication, computer and information 2.4  2.0  1.9  1.9  1.8  1.9  
Other business services 2.7  2.5  2.7  2.7  2.3  2.1  
Personal, cultural and recreational services 1.1  0.8  0.9  0.6  0.7  0.6  
Government services 6.7  5.2  4.6  3.8  3.3  2.9  
Othera 0.9  1.1  0.4  0.6  0.5  0.8  
Total debit (US$ million) 977.6  1,092.5  1,265.2  1,447.4  1,561.9  1,682.4  
 % of total debit 
Maintenance and repair  0.4  0.4  0.3  0.3  0.2  0.2  
Transportation 50.3  50.8  54.7  55.6  56.9  55.5  
Sea transport 13.2  14.2  18.5  16.5  18.9  18.4  
Air transport 13.2  12.1  12.3  12.6  12.8  12.0  
Rail transport 4.0  4.5  5.0  3.3  2.8  2.6  
Road transport 19.8  20.0  18.9  23.1  22.3  22.5  
Travel 18.6  18.2  16.9  17.7  18.8  17.7  
Business 13.2  11.9  11.2  12.4  12.8  12.4  
Personal 5.4  6.3  5.7  5.4  6.0  5.3  
Construction 2.1  0.9  0.5  0.4  0.6  0.4  
Insurance and pension 11.0  11.0  10.9  9.4  7.9  8.4  
Financial service 1.8  1.3  1.6  1.5  0.8  0.8  
Royalties and licence fees  0.9  0.7  0.6  0.5  0.9  1.2  
Telecommunication, computer and information 2.1  1.6  2.2  2.2  2.4  2.7  
Other business services 5.2  5.6  6.7  6.0  5.6  5.7  
Personal, cultural and recreational services 1.1  1.1  0.9  0.9  0.8  0.7  
Government services 6.6  8.2  4.7  5.4  5.2  6.5  
Othera 0.0  0.2  0.0  0.0  0.0  0.0  
a Manufacturing services on physical inputs owned by others.  
Source: National Bank of Georgia online information.  
1.5  Foreign Direct Investment 
1.38.  FDI is a critical element for the Georgian  economy and while it has declined from its 2007 
peak (at 19.8% of GDP), it remains high compared to peers and remains an important source of 
financing accounting for 10.6% of GDP in 2014 (Table 1.5). In 2014, FDI amounted US$1,758 million, 87% higher than in 2013. This increase reflects higher investment in manufacturing and 
transport and communication, and more recently construction services.  
Table 1.5 Net inflows of foreign direct investment, 2009-14 
 2009  2010  2011  2012  2013  2014  
Total inflows (US$ million) 658.4  814.5  1,117.2  911.6 941.9 1,758.4  
% of GDP 6.1 7.0 7.7 5.8 5.8 10.6 
Inflows by origin (% of total)  
EU 34.1 30.5 49.6 48.3 41.5 46.6 
Netherlands 4.9 9.0 21.6 3.9 16.3 21.3 
United Kingdom 11.0 7.2 4.9 10.3 5.9 6.1 
Luxembourg 1.4 0.9 3.9 4.6 15.1 6.2 
CIS countries 0.2 11.2 17.3 9.5 14.0 25.5 
Azerbaijan 4.5 7.1 12.4 6.5 8.7 19.4 
Russian Federation 1.6 5.9 5.0 2.2 0.2 4.7 
Armenia -0.8 -2.0 -1.1 0.7 0.4 0.7 
China -0.3 -1.0 0.9 4.0 9.5 12.4 WT/TPR/S/328 • Georgia 
 
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   2009  2010  2011  2012  2013  2014  
United States -1.5 16.7 2.5 2.2 4.8 10.3 
Turkey 14.9 11.3 6.8 8.9 4.5 3.6 
Panama 11.4 -0.6 0.2 1.1 2.7 4.0 
Other 41.3 32.0 22.8 26.0 23.0 -2.5 
Inflows by sector (% of total)  
Agriculture and fishing 3.4 1.1 1.3 1.8 1.3 0.7 
Mining 2.3 6.6 3.6 0.5 4.6 2.4 
Manufacturing 19.0 21.5 10.8 18.4 10.6 11.7 
Energy sector -0.3 2.7 18.3 19.7 26.0 10.8 
Construction 16.0 0.6 4.3 4.6 5.3 18.0 
Hotels and restaurants 5.7 2.1 2.0 1.9 -1.4 7.1 
Transports and communications 15.0 26.4 11.3 8.0 14.9 24.7 
Health and social work 0.0 0.1 1.5 1.9 0.1 -0.5 
Real estate 22.4 14.6 20.1 5.8 4.5 7.9 
Financial sector 7.5 13.2 15.0 17.8 17.7 6.6 
Other 9.1 11.1 11.7 19.5 16.5 10.7 
Source: National Statistics Office of Georgia online information.  
1.39.  During the review period, the majority of foreign (and local) investment has flowed into 
domestic infrastructure (transport, telecoms, energy, real estate) and domestic-oriented services 
(financial services, retail and construction). During this period imports have increased to satisfy 
domestic demand for construction materials, food and consumer goods as domestic production of these inputs has not kept pace. There has been relatively limited investment in export-oriented agri-business but there has been significant investment in manufacturing.  
1.40.  The largest investors during the review period have been the Netherlands, Azerbaijan and 
more recently China.  
1.6  Outlook  
1.41.  Georgia remains vulnerable to external  shocks given its heavy reliance on FDI and 
remittances, high current account deficit and high do llarization. GDP growth is expected to slow to 
2% in 2015 in line with slowdowns in the EU and neighbouring Azerbaijan and Armenia and a 
projected recession in the Russian Federation. Acco rding to the ADB, GDP growth could recover at 
2.5% in 2016 as the external environment improves slightly.
12 Beyond that, economic growth 
could rise over the medium term based on greate r policy certainty, improved market access, and a 
strong reform agenda. Medium-term growth prospe cts depend on a number of factors, including: 
improved economic ties with the EU; improved re lations with the Russian Federation (which will 
benefit trade and tourism); and the robust reform programme outlined in the Georgia 2020 , which 
will support growth in private investment. Growth  prospects also depend on Georgia’s ability to 
take advantage of the AA/DCFTA with the EU, which will improve market access and encourage 
FDI.13 
 
                                               
12 ADB (2015), p.117. 
13 A trade sustainability impact anal ysis commissioned by the EU suggests a potential increase in GDP 
growth of 4.3% in the long-run. This will require labour and capital reallocations to more productive sectors, 
involving capacity building on planning and implementation, regulatory approximation particularly in trade 
facilitation, technical barriers to trade, and intellectu al property rights and upgr ading of, and investment in, 
human capital. WT/TPR/S/328 • Georgia 
 
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  2  TRADE AND INVESTMENT REGIME 
2.1  Introduction 2.1.  Georgia has made sweeping economic reform s during the last ten years, developing from a 
near-failed state in 2003 to a relatively well-functioning market economy in 2015. Georgia has 
achieved significant results in terms of curbing low-level corruption, streamlining an inefficient 
administration, eliminating unnecessary licensing requirements, improving the State's tax collection capabilities, liberalizing its trade regime and generally improving Georgia's attractiveness 
based on ease of doing business. However, progress has been coupled with shortcomings, 
particularly in the aftermath of the 2008 financial crisis and the war with the Russian Federation.  
2.2.  At the same time, it is notable that following parliamentary and presidential elections in 2012 
and 2013 respectively, a peaceful transfer of po wer took place for the first time in Georgia's 
modern history. Since 2012, the Government has broadly continued the previous Government's 
low-regulation, low-tax free market policies while modestly increasing social spending. Also, the 
Russian Federation lifted its embargo on Georgian wine, mineral water and certain agricultural 
goods in 2013 that had been in place since 2006.  
2.3.  Integration with the EU remains the mainstay  of Georgia's foreign economic and trade policy. 
In 2014, Georgia signed an Association Agreement (AA) with the EU, including a Deep and 
Comprehensive Free Trade Area (DCFTA). The agr eement aims at promoting closer harmonization 
and integration with the EU. The DCFTA includes the complete elimination of tariff and non-tariff barriers on nearly all goods and substantial liberalization of services trade. A wide range of trade regulations are also due to be implemented, as  the DCFTA envisages approximation of Georgia's 
trade-related legislation with EU legislation. The EU estimates that in the longer run (5-10 years 
after implementation) Georgia's exports could in crease by 12% and imports by 7.5% while GDP 
could be 4.3% higher. A more stable and predictable regulatory environment and free trade with 
the EU should also make Georgia more attractive for FDI.  
2.4.  Georgia's investment legislation, aiming to open the economy to increased international 
business activity and foreign investment, remains la rgely unchanged from the time of the previous 
review. However, the Government's medium-term development strategy aims to overhaul current 
legislation to better correspond to international norms and practices but without so far specifying what will be put in place of the current legislation.  
2.2  General Institutional Developments  
2.2.1  Constitutional framework  
2.5.  Under its 1995 Constitution, which separate s government into executive, legislative and 
judicial branches, Georgia was defined as a presidential republic. However, recent constitutional 
amendments entered into force in 2013, distributi ng the presidential powers between the prime 
minister and parliament. The president remains head of state and commander-in-chief but can no longer initiate draft laws, suspend acts issued by the Government or convene emergency sessions 
of parliament. The amendments roll back the concen tration of powers granted to the presidency in 
2004 and increase the role of parliament regarding the direction and execution of foreign and domestic policies.  
2.6.  The government led by the prime minister  is the supreme body of  the executive branch. 
During the current review period, Georgia succe ssfully navigated a complex and unprecedented 
political transition with two landmark elections in which power changed hands peacefully, two changes of prime minister, a change of president, and a constitutional shift in the political system, 
while continuing to deliver on a detailed reform and approximation agenda in the framework of the 
Association Agreement with the EU.  
2.7.  Parliament is responsible for ratification of international treaties, while the executive is 
responsible for implementation. Ratification was required to complete the national procedures 
relating to Georgia's WTO accession. International agreements ratified by parliament, including the WTO agreement, have precedence over domestic laws and other acts in Georgia apart from WT/TPR/S/328 • Georgia 
 
- 26 - 
 
  constitutional law. Georgia's laws provide for the right to appeal administrative rulings on matters 
subject to WTO provisions to an independent tribunal, in conformity with WTO obligations.  
2.8.  Following the adoption of the 1995 cons titution, a legal system was established with a 
constitutional court and a 3-level system of common courts: district or first instance courts; 
appellate courts where decisions of first instance courts can be appealed; and the Supreme Court 
which is the final instance court for administering justice. Despite far-reaching reform measures (including new rules for the appointment of judges  by a non-political body of professionals and a 
significant increase in judges' salaries) the judiciary has failed to win a reputation for 
independence. The inefficiency of the judicial system  and weak capacity of the courts are factors in 
the feeble protection of property rights and poor settlement of commercial disputes.
1 The 
Government recognizes this challenge and is taking steps to reinforce the independence of the 
judiciary through new rules that increase transpar ency and diminish the opportunity for political 
interference. In this regard, basic judiciary reform based on the Venice Commission recommendations is among the priorities of the current Government.
2  
2.2.2  Framework for doing business 
2.9.  In its medium-term economic strategy document, Georgia 20203, the Georgian Government 
duly recognizes that, in spite of improvements (Box 2.1), there are still problems in the legal, 
regulatory and institutional framework for doing business. In order to tackle these problems and 
deficiencies, the Government plans, inter alia, to: improve the protection of property rights; 
increase the efficiency of the system for resolving commercial disputes; further streamline tax administration; overhaul investment legislation; improve the legal and institutional frameworks for 
competition and the development of capital markets as well as the mechanisms for resolving 
insolvency and closing a business. As noted below,  in accordance with the EU-Georgia Association 
Agreement and the DCFTA, the Government is introducing best European practices in several 
areas, including protection of Intellectual Pr operty Rights and promotion of competition.  
Box 2.1 Framework for doing business 
In recent years Georgia has significantly improved the legal, regulatory and institutional framework for doing 
business. According to the 2015 Doing Business report, Georgia has the highest ranking in Eastern Europe 
and Central Asia.4 Its ranking on the overall ease of doing business rose to 15th of 189 economies.5 In 
addition, radical reform of public se ctor management and robust enforcemen t of anti-corruption policies have 
curtailed petty corruption. In the Trace International 20 14 Business Bribery Risk Index, Georgia is ranked 11th 
out of 197 countries. Business interactions with gove rnment and government service transparency are 
assessed as the lowest corrup tion risk domains of Georgia.6 Georgia's ranking in the Transparency 
International Corruption Perceptions Index 2014 rose to 50th of 175 countries from 79th of 180 countries in 
2007.7 According to the World Justice 2014 Rule of Law Index Georgia is ranked 1st out of 13 Eastern 
European Countries and globally 24th by the absence of corruption.8 Considering the achieved results and 
international ratings, Georgia has moved to a new stage of fight against corruption and much like in European 
democracies, the main targets for Georgia now are to ac hieve a high level of transp arency and accountability, 
increase access to public information and enhance involvement of citizens, fu rther improve corruption 
prevention mechanisms in corruption-prone areas, and foster economic deve lopment through taking 
advantage of new technologies and innovative approach es in public governance. The Government’s strong 
commitment to continuing the process of reforms in a consultative and participatory format and initiating a 
new wave of anticorruption reforms was expressed th rough the adoption of the new comprehensive Anti-
Corruption Strategy and 2015-2016 Anti-Corruption Action Plan. The Strategy and Action Plan are based on 
the 13 Strategic Priorities for the Fight against Corrupt ion adopted by the Anti-Co rruption Council of Georgia 
at the initial stage of strategic development. Among the Strategic Priorities are prevention of corruption in 
political parties, the procurement and financial management system, the tax and customs system, health and 
social affairs as well as the private sector. 
                                               
1 Freedom House ranked Georgia low on judici al framework and independence in its study Nations in 
Transit 2013: Authoritarian Aggression and the Pressures of Austerity , online information viewed at: 
https://freedomhouse.org/report/nations-transit-2013/ nations-transit-2013-authoritarian-aggression-and-
pressures-austerity .  
2 Bertelsmann Stiftung (2014), p.12. 
3 Government of Georgia (2014). 
4 World Bank (2014d).  
5 World Bank (2014d).  
6 Trace International's online information: http://www.traceinternational.org/trace-matrix/ .  
7 Transparency International's online information: http://www.transparency.org/cpi2014 .  
8 The World Justice Project (2014).  WT/TPR/S/328 • Georgia 
 
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  In 2014, Moody’s affirmed Georgia's BA3 rating and changed the outlook on sovereign rating to positive. 
Also, Fitch affirmed its BB- rating and ch anged the outlook from stable to positive. 
Heritage Foundation ranked Georgia as  the 22nd freest economy in the world,  citing improvements in 6 out of 
10 economic freedom categories, including management of public finance, inve stment freedom, monetary 
freedom, and property rights. According to Heritage Foundation's Index of Economic Freedom 2015 Georgia’s 
ranking score improved by 0.4 poin ts compared to the previous year and amounted to 73.0. Forbes 
recognizes Georgia as the fourth least tax burdened country in the world after Hong Kong, China; Qatar and 
UAE.  
Source: Georgian authorities.  
2.3  Economic and Trade Policy Objectives 
2.10.  The broad objectives of Georgia's trade po licy remain largely unchanged from the previous 
review in 2009: integration into the world econom y, including implementation of WTO membership 
obligations as well as obligations under other ag reements, notably the Association Agreement with 
the EU; continued trade policy liberalization; facilitation of export and import procedures and 
streamlining of NTB regulations; and diversification of trade relations by establishing preferential regimes with the country's main trading partners.  
2.11.  The coming into effect of the DCFTA in September 2014 is a landmark achievement for 
Georgia during the current review period and is at the heart of its new development strategy, Georgia 2020.  The main goal of this strategy is sustainable and inclusive economic growth that 
benefits a majority of the population. This will be  achieved by private sector growth, supported by 
an efficient and transparent government, respec t for property rights, openness to trade and 
integration with international financial markets. The objective of political and economic integration with the EU is recognized as a cornerstone of  Georgia's 2020 strategy. The strategy emphasises 
Georgia's geographic potential as a trade and logistics hub to link Asia and Europe via the 
Caucasus. In line with this, the implementation of the reforms mandated by the EU-Georgia DCFTA 
are considered an integral part of the policy agenda.  
2.3.1  Trade aspects of Georgia 2020  
2.12.  The strategy notes that the implementation of its obligations under the Association 
Agreement is important for increasing its export potential, integrating with European markets and facilitating penetration of EU markets by Georgian exports. Georgia 2020 also emphasises that 
export expansion and diversification is mainly up to the private sector with the Government acting 
as an effective partner for businesses seeking to identify export markets. Government can protect 
the interests of national exporters in international markets, develop national quality infrastructure 
in accordance with international requirements and seek to reduce technical barriers to 
international trade.  
2.13.  The Government aims to reduce remaining technical barriers to trade in order to facilitate 
export development and integration with internat ional and European markets and to increase the 
competitiveness of Georgian products and services. In this context, national quality infrastructure will be developed and national quality institutions will be integrated with international and European systems. Georgia intends to meet its obligations under the DCFTA, including the 
obligations concerning harmonization of metrology, standardization, accreditation, compliance 
evaluation, technical regulation and market supervision systems with European systems. 
2.14.  To ensure the penetration and maintena nce of Georgian agricultural products in 
international markets, the Government is introducing measures to increase the awareness of 
Georgian entrepreneurs of: food safety, veterinary and phyto-sanitary issues; the steps that are to be taken according to the DCFTA; the requirements of international and European markets; relevant export procedures; and facilitating the further development of Georgian brands.  
2.15.  In order to increase the competitiveness of Georgian products and services and support 
their establishment in international markets, the Government will support the creation of systems 
facilitating export development, which will rais e entrepreneurs’ awareness of Georgia’s export 
products and export markets. In this context, a sp ecial role will be played by the Entrepreneurship 
Development Agency to strengthen export potent ial and inform the entrepreneurs about potential WT/TPR/S/328 • Georgia 
 
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  export markets and requirements existing in th ose markets and supply international markets with 
information on products and services offered by Georgia.  
2.16.  These efforts are aimed at increasing the ro le of exports in the process of development of 
the Georgian economy, which means increased export volumes, greater product diversification and 
improved penetration rates in new markets of more value added products.  
2.4  Trade Policy Administration  2.4.1  Institutions 
2.17.  Georgia applies WTO provisions uniformly throughout the customs territory controlled by 
the central government, including in regions engaging  in border trade or frontier traffic, special 
economic zones and other areas where special regimes for tariffs, taxes and regulations are established. The parts of the country under centra l government control are divided into ten regions 
headed by governors and the capital city of Tbilisi headed by a mayor. The central Government of 
Georgia continues to be deprived of customs control over the regions of Abkhazia and Tskhinvali region/South Ossetia, due to the ex isting situation in these regions.
9  
2.18.  The Ministry of Economy and Sustainable Development (MoESD) of Georgia is the central 
body of executive authority which determines, impl ements and coordinates state policy in the field 
of trade. In the ministry, the Department for Foreign Trade and International Economic Relations is 
exclusively involved in the formulation of foreign trade policy. As part of its daily functions, the 
department closely cooperates with the responsible bodies under the ministry (Technical and Constructions Supervision Agency, Georgian National Agency for Standards and Metrology, Georgian National Tourism Administration, Unified National Body of Accreditation, Georgia’s 
Innovation and Technology Agency and Entrepre neurship Development Agency) and collaborates 
with other responsible entities, including some in the private sector, such as the Georgian Chamber of Commerce and Industry, the International Chamber of Commerce (ICC), American 
Chamber of Commerce in Georgia (AmCham), and the EU-Georgia Business Council. The 
Department implements, inter alia,  the mandatory notification submission procedures to the WTO.  
2.19.  The Department  is structured into four divisions:  WTO Affairs and Trade Negotiations; Trade 
Policy and Regional Economic Relations; European Affairs and Bilateral Economic Relations; Non-
Tariff Regulation of Foreign Trade. The main f unctions of the Department for Foreign Trade and 
International Economic Relations include: participation in elaboration of the foreign economic policy of the country; cooperation with international financial and donor organizations and 
international and regional economic organizations; elaboration of proposals for the development of 
bilateral regional and multilateral trade relations; trade balance analysis and elaboration of recommendations; analysis of implementation of obligations entered into under the international 
agreements and conventions, preparation of appr opriate conclusions and proposals; analysis of 
implementation of WTO commitments, preparation of proposals for trade legislation in order to be in line with WTO requirements; cooperation with relevant European authorities working on Euro 
integration issues; and issuance of: certificates of origin, permits for export, import, re-export and 
transit of the goods of dual use, and re-export of  goods from Georgia produced in CIS countries in 
compliance with the existing legislation.  
2.20.  Coordination mechanisms between relevant  agencies exist at government level regarding 
trade policy implementation. Notably, DCFTA preparatory work and coordination were carried out 
by an interagency working group as of 2009 and from February 2014
10 the MoESD is responsible 
for monitoring DCFTA implementation, coordination with line ministries, reviewing action plans and 
reporting activities, as well as for coordination with the Office of the State Minister of Georgia for 
European and Euro-Atlantic Integration. The Minist ry was in charge of the DCFTA negotiations and 
DCFTA implementation is handled by a special interagency sub-commission (chaired by MoESD) 
established under the State Commission for EU Integration chaired by the Prime Minister.  
                                               
9 See paragraph 3 of section 1 and paragraph 11 of section 2 of the Secretariat report of the 2009 TPR 
of Georgia in document WT/TPR/S/224/Rev.1. 
10 Based on Government Decree No. 186 of 7 February 2014. WT/TPR/S/328 • Georgia 
 
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  2.21.  Other significant bodies/agencies in trade policy implementation are: 
 Trade-related agencies under the MoESD, including: Georgian National Agency for Standards 
and Metrology (GEOSTM); Accreditation Ce ntre of Georgia (GAC); Technical and 
Construction Supervision Agency (TCSA); Georgian National Tourism Administration; various 
transport agencies; Entrepreneurship Developm ent Agency (EDA); Georgian Innovation and 
Technology Agency (GITA); the Entrepreneurship Development Agency (EDA) and Innovation and Technology Agency (GITA), which each established under the MoESD as a 
legal entity of public law (February, 2014) in order to promote SMEs development and 
support to growth of their competitiveness;  
 National Food Agency under the Ministry of Agriculture;  
 Competition Agency;  
 State Procurement Agency (SPA);  
 National Intellectual Property Centre (Sakpatenti); 
 Georgian National Communica tions Commission (GNCC);  
 Customs under the Revenue Service of the Ministry of Finance;  
 Conformity assessment bodies and testin g/validation/calibration laboratories; 
 National Statistics Office of Georgia (GEOST AT), responsible for trade statistics and SME 
surveys; and 
 Business and sectoral associations, chambers of commerce e.g. EU-Georgia Business Council 
(EUGBC); Georgian Chamber of Commerce and Industry (GCCI); American Chamber of Commerce in Georgia (AmCham).  
2.4.2  Regulatory developments  during the review period 
2.22.  The main instrument regulating foreign trade in Georgia is the new 2011 Tax Code of 
Georgia, in which chapter 28 defines objects subject to import taxation, customs regimes and 
procedures as well the exemption of certain goods from import duties and other regulations in line 
with Section 10 of the Tax Code. The Tax Code also defines the list of products subject to excise 
tax and list of goods and services exempted from VAT.  
2.23.  According to the authorities, Georgia is fu lly aligned with WTO requirements in terms of the 
removal of barriers for imported goods. At the sa me time, a number of important measures need 
to be implemented to ensure the recognition of  the safety of Georgian goods to meet the 
requirements of foreign markets and to promote Georgian exports. On technical regulation, in 
2010 the Government adopted the Governmental Strategy in Standardization, Accreditation, 
Conformity Assessment, Technical Regulation and Metrology and the related Programme on 
Legislative Reform and Adoption of Technical Regulations and in 2012 major legislative changes 
were carried out in the field of technical regulations. A Market Surveillance Strategy for Industrial 
Products was adopted in 2011 and the responsible body, the Technical and Construction 
Supervision Agency (TCSA), was set up in 2012 under the MoESD; this body oversees the 
compliance of industrial products entering the market with the requirements of technical 
regulation.  
2.24.  On food safety and SPS measures, in 2010 Georgia produced the Comprehensive Strategy 
in Food Safety, Veterinary and Phyto-sanitary  as well as the Legislative Approximation Programme  
to achieve harmonization with EU legislation. In other policy areas - services, customs, 
government procurement, IPR protection and competition - a number of laws exist and are referred to in the Georgia 2020  development strategy. A competition law was approved in 2014 
and the related enforcing authority, the Co mpetition Agency, has been established.  WT/TPR/S/328 • Georgia 
 
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  2.5  Main trade agreements and arrangements 
2.5.1  World Trade Organization 2.25.  In June 2000, Georgia became the 137
th Member of the WTO, constituting a significant step 
towards Georgia's integration into world trade. It was the fourth former soviet republic to become 
a member, after the Kyrgyz Republic, Latvia and Estonia. Upon its entry into the WTO, Georgia 
was granted MFN treatment by all WTO Members and conferred MFN treatment in return. Also, 
Georgia is also a beneficiary of the GSP schemes offered by the following countries: the United 
States (temporarily terminated), Japan, Ca nada, Switzerland and Norway. In 2005, Georgia 
became the beneficiary of the GSP+ scheme, which grants tariff-free access to the EU market to for 7,200 products.  
2.26.  Georgia is an observer to the Government  Procurement Agreement (GPA). According to the 
authorities, the Law on Government Procurement fully complies with WTO requirements and has 
been in force since 2006. Georgia is an observer to the GPA.  
2.27.  As a Member, Georgia is required to make periodic notifications under the various WTO 
Agreements. Since, 2010, the Ministry of Econ omy and Sustainable Development ensures the 
timely provision of notifications to the WTO pu rsuant to the following agreements: Agriculture 
(art. 18.2), Import Licensing Procedures (art. 7.3), GATS (art.3 .3), Subsidies and Countervailing 
Measures (art. 25.1), and Technical Barriers to Trade (arts. 2.9 and 2.10). According to the 
authorities, Georgia is actively using WTO technical assistance programmes, EU technical assistance programmes and bilateral technical assistance provided by other donors and countries. During the review period, Georgia has participated in a number of trade-related technical 
assistance activities organized by the WTO and partner institutions.  
2.28.  Georgia is cooperating with other recently-acceded members in the RAMs group, mostly on 
the issues regarding developing countries and their engagement in WTO negotiations. In respect of 
the Doha Development Agenda (DDA), Georgia attaches importance in particular to the 
multilateral system of notification and registration of geographical indications for wines and spirits under TRIPS.  
2.29.  Georgia has not been involved in any direct or indirect trade disputes in the WTO during the 
review period.  
2.30.  Georgia's trade relations with the Russian Federation have been affected by the Russian 
trade embargo on Georgian agricultural products. In 2013, imports into Russia of Georgian wine 
and mineral water resumed after an embargo that had been in place since 2006 was lifted. The 
Russian Federation also reopened the border to Georgian freight at the same time.  
2.5.2  European Union 
2.31.  After six rounds of negotiations as part of the EU-Georgia Association Agreement, Georgia 
concluded negotiations with the EU on the Deep and Comprehensive Free Trade Agreement (DCFTA) in July 2013. In June 2014, Georgia signed the Association Agreement with the European 
Union, reaching an important milestone under the EU Eastern Partnership programme. The 
Agreement marks years of cooperation between Tbilisi and Brussels under the Eastern Partnership program. It envisages the gradual improvements needed in areas such as trade, environment, 
agriculture, tourism, energy, transport, and education to bring Georgia in line with EU standards. 
Overall, the process is focused on democracy and the rule of law, human rights, good governance 
and economic development.  
2.32.  The DCFTA provisionally came into force on 1 September 2014, enabling Georgia to export 
duty-free to the EU. Under the Generalized Sy stem of Preferences (GSP+), Georgia already 
enjoyed low or zero tariffs for two-thirds of its exports to the EU. However, certain regulations on Georgian products will remain; one agricultural pr oduct, garlic, will be duty-free but subject to a 
quota.  
2.33.  The DCFTA promises to enhance Georgia's tr ade prospects and to boost economic growth by 
bringing its legislation closer to that of the EU. It will also remove the existing barriers to trade of WT/TPR/S/328 • Georgia 
 
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  goods and services with the EU. The DCFTA covers trade in goods, including tariff elimination, 
provides for further opening of the services mark et and improvement of establishment conditions 
for investors. It contains provisions on the facilitation of customs procedures, on anti-fraud measures and trade defence instruments. A bilateral dispute settlement procedure is envisaged to 
solve issues in an expeditious manner. The DCFTA also sets a path for further reforms in trade-
related policies, such as hygiene standards for agriculture products, the approximation of regulations for industrial products, enforcement of intellectual property rights at the border, rules 
on public procurement and approximation to EU rules in the services area.  
2.34.  Moreover, Georgian products will have to meet certain EU requirements not only for export, 
but also when consumed within the country. This marks the beginning of a lengthy process to improve sanitary and phyto-sanitary standards, inte llectual property rights protection, competition, 
technical regulations on industrial products, and customs and trade facilitation; this process will 
involve short- to medium-term costs. The Government has elaborated a DCFTA implementation action plan for 2014-17.  
2.35.  Georgia has prioritized its various technical assistance needs in the framework of 
implementing the DCFTA Action Plan 2014-2017. Geor gia's needs in terms of funding, training and 
capacity building relate in particular to (i) increasing the diversification of Georgia's export 
structure; (ii) meeting new implementation challenges in the areas of standards and SPS 
measures; (iii) developing capacity in customs and trade facilitation; (iv) improving know-how in rules of origin; (v) elaborating e-commerce legislation and a platform for trade in services; and (vi) meeting the challenges in the areas of public  procurement, IPR protection and competition.  
2.5.3  Other agreements and arrangements 
2.36.  European Free Trade Association (EFTA): In November 2014, EFTA expressed its intention 
to start negotiations in 2015 on a free trade agreement with Georgia. According to the authorities, 
the first round of negotiations is scheduled to be held in September 2015. 
2.37.  Commonwealth of Independent States (CIS): In 2009, Georgia terminated its membership 
of the CIS organization, while maintaining its right to remain a party to the CIS free trade area 
arrangements and the bilateral agreements.  Georgia has eight bilateral FTAs with: Azerbaijan, 
Turkmenistan, Armenia, Ukraine, Kazakhstan, the Republic of Moldova, Uzbekistan and the Russian Federation (though trade has occasionally been restricted by the Russian Government). The bilateral agreements provide for duty-free trade in industrial and agricultural goods but do not 
cover trade in services, investment or government procurement. In 2014, the CIS countries 
accounted for just over half of Georgia's exports and a quarter of imports.  
2.38.  Turkey: Turkey has been an important tr ading partner, accounting for 20% of Georgia's 
imports in 2014, since a free trade agreement between Georgia and Turkey came into force in 
2008. According to this agreement, customs tariffs on industrial products have been fully eliminated. Both countries maintain certain types of tariffs on agricultural products. Also, on the 
Turkish side some agricultural produc ts are subject to tariff quotas.  
2.39.  The United States: Georgia has been able to  export many products duty-free to the United 
States under the GSP programme. In 2007, Georgia and the United States signed a Trade and Investment Framework Agreement (TIFA), which set up a joint US-Georgia Council on Trade and 
Investment that addresses trade and investment issues, including trade capacity building, 
intellectual property, labour and environmental issues. In 2012, the US and Georgia established a 
High-Level Dialogue on Trade and Investment aime d at identifying measures to increase bilateral 
trade and investment, including a possible FTA. Ex pert-level discussions are ongoing on different 
trade policy areas. 
2.40.  China: Georgia and China have signed a joint declaration concerning a joint feasibility study 
on a possible Georgia-China Free Trade Agreement.  The first meeting of the Joint Working Group 
set up for this purpose was held in April 2015, at which the parties agreed that the Working Group will study and identify the benefits and impacts that may derive from a possible FTA and will prepare a final joint feasibility study report, including recommendations. Georgia and China have 
also signed a memorandum of understanding on  strengthening cooperation for the Silk Road 
Economic Belt initiative.  WT/TPR/S/328 • Georgia 
 
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  2.41.  GUAM (Georgia, Ukraine, Azerbaijan, Moldova): A priority for Georgia is cooperation within 
the framework of the GUAM Organization for Democracy and Economic Development, including the development of a transport corridor for GUAM coun tries and the implementation of the agreement 
of the GUAM free trade regime. Guam members are also discussing a draft protocol for the 
implementation of the Facilitate Trade and Transport (FTT) project which aims, inter alia,  to reduce 
border control time and increase customs efficiency.  
2.42.  Black Sea Economic Cooperation Organization (BSEC): In the framework of BSEC,
11 Georgia 
pays special attention to enhancing cooperation in the areas of railway and vehicle transportation, 
as well as the energy sector, due to existing an d future projects in these fields. Georgia is 
committed to further cooperation in the followi ng spheres: tourism, telecommunications, 
agriculture, small and medium enterprises (SMEs), and science and technology.  
2.6  Foreign Investment Regime 
2.43.  Georgia is open to foreign investment, and the Georgia National Investment Agency (GNIA) 
(http://investingeorgia.org/en/ ), established in 2002, is the official state agency that encourages 
and supports foreign investors to come to Georgia. The Law on the Georgian National Investment 
Agency lays down the rules for the establishment and operation of GNIA. Due to the importance of FDI and advanced support from Government, in 2015 the Law was changed and the Agency 
moved under the supervision of the Government of Georgia and is accountable directly to the 
Prime Minister. 
2.44.  The Georgia 2020  strategy document points to the perceived inadequacy of the current 
investment regime, noting that Georgia's current investment legislation is "outdated and 
disconnected from reality". Moreover, as the existing norms are scattered among several 
normative acts, the Government will therefore en sure replacement of the existing investment 
legislation with new legislation that will correspond with international norms and best practices.
12 
The Government is planning to amend legislation affecting investment-related issues in Georgia, 
namely the Law of Georgia on the Investment Activity Promotion and Guarantees and the Law of Georgia on State Promotion of Investments. The aim is to improve the investment climate in 
Georgia and amend the legislation in accordance with the best practices worldwide. 
2.6.1  Legal framework 
2.45.  National treatment is applied to all inve stors and all sectors of the Georgian economy are 
open for foreign investment. The legislation lists a number of exceptions concerning the ban on 
investment in nuclear and chemical weapons, human cloning, narcotics, activities banned by 
international agreements to which Georgia is a party, import and sale of petrol/gas containing more than 0.013 grams of lead per litre. In addition, only the State may issue currency, 
banknotes, and certificates for goods made from precious metals, and import narcotics or 
psychoactive drugs for medical purposes. The Law on Promotion and Guarantees of Investment Activity, which has been in place since 1996, defines the legal basis for realising both foreign and 
local investments and their protection guarantees on Georgian territory. The aim of the law is to 
establish an investment promoting regime. Except for the ownership of agricultural land, the law secures equal treatment and rights for both foreign and Georgian investors. The law protects foreign investors from subsequent legislation that alters the condition of their investments for a 
period of 10 years.  
2.46.  Aiming to further optimize procedures for investment and entrepreneurial activities, the 
Law on State Promotion of Investments was adopted in 2006. Other legislation governing foreign 
investment includes the Constitution, the Civil Code, the Tax Code, the Law on Entrepreneurs, the 
Bankruptcy Law, the Law on Common Courts, the Law on Competition, the Accounting Law, and the Securities Market Law. 
2.47.  In July 2011 Parliament passed the Act of Economic Liberty, which imposes fiscal 
constraints on the Government to reinforce the confidence of local and foreign businesses in the 
                                               
11 Members of the Black Sea Economic Cooperatio n Organization comprise: Albania; Armenia; 
Azerbaijan; Bulgaria; Georgia; Greece; Republic of Moldova; Romania; Russian Federation; Serbia; Turkey; 
and Ukraine. See online information: http://www.bsec-organization.org/Pages/homepage.aspx . 
12 Government of Georgia (2014), p.22. WT/TPR/S/328 • Georgia 
 
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  stability of Georgia’s economy. This law prohibits the executive branch from moving away from its 
current fiscally conservative policies. It mandates that the budget deficit stay below 3% of GDP, total public debt below 60% of GDP, and budget ary expenditures below 30% of GDP. The Act of 
Economic Liberty bans the introduction of new state taxes or increases in existing taxes (excise 
tax being an exception) by means other than a nationwide referendum. The Act also reiterated 
the Georgian Government’s commitment to free movement of capital by banning limitations on repatriation of money or exchange control for residents and non-residents, except in cases 
involving criminal liability or other instances defined by Georgian legislation. 
2.48.  Georgia does not screen foreign investment in the country, other than imposing a 
registration requirement and certain lice nsing requirements. Legal overhauls in 2005
13 simplified 
the business registration process, reducing pa perwork and fees and shortening the processing 
time. Procedures for setting up a business in Georgia are simple and efficient, based on a 
transparent system that promotes the establis hment of new enterprises, according to the 
authorities. According to the 2015 Doing Busine ss report prepared by the World Bank, Georgia 
holds the fifth place among 189 countries, in te rms of starting a business. Entrepreneurs can 
register a business in one day. After the legislative reforms, business registration became centralized and information is publicly available upon request from the National Agency of Public 
Registry. According to the Doing Business report of 2015, starting a business in Georgia needs 2 
days.  
2.49.  All companies are required to register at th e National Agency of Public Registry (NAPR) of 
the Ministry of Justice of Georgia, providing:  founders’ and firm principals' identification 
information; incorporation documents; area(s) of activity; and charter capital. This information is 
made public and any person may review such information/documents free of charge via the official website of NAPR ( http://napr.gov.ge/ ). Business registration and tax registration have been 
unified in a single procedure since 2010. NAPR assigns a unique identification number to the 
company during the registration process; the given number is used also as a tax code (taxpayer’s ID number). Information concerning the business registration is automatically transferred to the 
Ministry of Finance for tax purposes. According to the authorities, the term for ordinary 
registration service at NAPR is one business day an d an expedited service is also available for the 
same day.  
2.50.  The Government has privatized the majority of the largest formerly state-owned 
enterprises (SOEs) in the country. Successful privatization projects include major deals in energy 
generation and distribution, telecommunications, water utilities, port facilities, and real estate assets. Foreign investors have participated in most major privatizations of state-owned property. 
A list of entities available to be privatized can be found on the website www.privatization.ge .  
2.51.  Ownership and privatization of property is governed by the following laws and regulations: 
the Civil Code, the Law on Ownership of Agricultural Land, the Law on Private Ownership of Non-
Agricultural Land, the Law on Management of State-Owned Non-Agricultural Land, and the Law 
on Privatization of State Property. Property rights  in extractive industries are governed by the 
Law on Concessions, the Law on Deposits, and the Law on Oil and Gas. The effective Georgian legislation in the field of intellectual property consists of: Patent Law; Law on Trademarks; Law on 
Appellations of Origin and Geographical Indication s of Goods; Law on Topographies of Integrated 
Circuits; Law on Copyright and Neighboring Righ ts; Law on New Breeds of Animals and Varieties 
of Plants; Law on Border Measures Related to Intellectual Property. Financial sector legislation 
                                               
13 In 2005, the Government eliminated 84% of existing licensing requirements and created a “one stop 
shop” for licenses. By law, the govern ment has 30 days to make a decision on licences, and if the licensing 
authority does not state a reasonable gr ound for rejection within that time, the licence or permit is deemed to 
be issued. The Government only requires  licences for activities that affect public health, national security, and 
the financial sector. The Government cu rrently requires licences in the follo wing areas: weapons and explosives 
production, narcotics, poison ous and pharmaceutical substances, explor ation and exploitation of renewable or 
non-renewable substances, exploitation of natural reso urce deposits, establishmen t of casinos and gambling 
houses and the organization of games and lotteries, banking, insurance, securi ties trading, wireless 
communication services, and the establishment of radio and television channels. The law requires the State to retain a controlling interest in air traffic control, ship ping traffic control, railroad control systems, defence and 
weapons industries, and nuclear energy. Only the State may issue currency, banknote s, and certificates for 
goods made from precious metals, import narcotics for medical purposes, and produc e control systems for the 
energy sector. WT/TPR/S/328 • Georgia 
 
- 34 - 
 
  includes the Law on Commercial Banks, the Law on National Banks, and the Law on Insurance 
Activities. 
2.52.  Foreign individuals and companies may buy non-agricultural land in Georgia. In June 2013, 
Parliament passed a temporary legal ban restricting non-Georgian citizens (including Georgian 
entities with foreign minority shareholders) from purchasing or inheriting agricultural land until 
December 2014. Since June 2014 the above-mentioned legal restrictions have been suspended and currently foreign natural and legal persons are entitled to buy and inherit agricultural land. In 
February 2014, Parliament passed amendments proposed by the Ministry of Economy and 
Sustainable Development of Georgia that provide for establishing a government-appointed committee to judge foreigners’ applications to purchase agricultural land, and that exempts commercial banks from the ban. Parliamentary debate continues on whether to repeal or amend 
the legislation.  
2.6.2  Dispute resolution 2.53.  Georgian investment law allows disputes  between a foreign investor and a governmental 
body to be resolved in Georgian courts or at the International Centre for the Settlement of 
Investment Disputes (ICSID), unless a different method of dispute settlement is agreed upon 
between the parties. The Georgian Government in principle agrees to accept binding international 
arbitration of investment disputes between foreign investors and the State. The Ministry of Justice 
oversees the Government’s interests in arbitratio ns between the State and private investors. Apart 
from this, Georgia tries to promote alternative means of dispute resolution, especially international commercial arbitration, mediation and court-ordered mediation. Georgia has recently adopted the 
changes to the Law on Arbitration, which make the law more consistent with the internationally 
recognized standards.  
2.54.  As noted above, ongoing judicial reforms in  the Georgian court system mean that litigation 
can take long periods of time. Disputes over prop erty rights have at times undermined confidence 
in the impartiality of the Georgian judicial syst em and rule of law, and by extension, Georgia’s 
investment climate. The Government has identified judicial reform as one of its top priorities and 
Parliament has passed reforms aimed at strengthening judicial independence. In May 2013, 
parliament reorganized the High Council of Justice, the institution charged with overseeing the administration of the judiciary, to make it more independent and free from political considerations.  
2.6.3  Investment and tax treaties 
2.55.  Georgia has 31 bilateral investment treaties in force and has concluded agreements (in 
force) for avoidance of double  taxation with 49 countries.  
 WT/TPR/S/328 • Georgia 
 
- 35 - 
 
  3  TRADE POLICIES AND PRACTICES BY MEASURE 
3.1  Introduction 3.1.  Georgia has brought its border policies , including its customs regulations and trade 
facilitation, in line with international and WTO practices. Georgia implemented a number of 
reforms to facilitate trade, in particular the opening of customs clearance zones. Georgia has 
indicated that it is going through the necessary pr ocess to notify the WTO of its adherence to the 
Trade Facilitation Agreement.  
3.2.  Georgia bound its tariffs on all products, with  a simple average of the final bound tariffs being 
7.6%. The simple average applied MFN tariff remains low (2% since 2010), despite being increased slightly from 1.6% in 2009. The simple av erage MFN tariff rate for agricultural products 
(WTO definition) fell from 7.2% in 2009 to 6.7% in 2015, and that for non-agricultural products 
increased from 0.2% to 0.8%. Its applied tariffs generally fall into three bands: 0%, 5%, and 
12%. Georgia notified to the WTO its list of products prohibited from importation/exportation, and that import/export permits are required only to protect public health, national security and the 
environment. Georgia has no legislation on contingency measures regarding anti-dumping, 
countervailing or safeguard measures and thus has not adopted any. 
3.3.  The government procurement market accounted for about 10% of GDP. New legislation 
entered into force in 2010, when e-procurement was introduced, and since has been functioning 
very well. According to the European Bank for Reconstruction and Development (EBRD), Georgia's public procurement regime achieved the best ra nking in the region, indicating high compliance 
with international standards. The Government is currently assessing the prospects for joining the 
Government Procurement Agreement (GPA). 
3.4.  According to the authorities, Georgia does not provide export subsidies, and does not have 
export financing instruments. Export support is mainly in the form of facilitating the participation 
of exporters in international trade fairs, planning buyer missions and various campaigns or 
publications. Reflecting Georgia's location, which provides an alternative transit route to central Asia (other than the routes via China or the Russian Federation), the Government has been 
establishing free industrial zones (FIZs) where investors may conduct processing activities in 
connection with the transit of goods.  
3.5.  Georgia combined its customs tariff and the tax code into a new Tax Code in 2010 aiming at 
increasing transparency. The new Tax Code introduced tax benefits to micro and small businesses. 
Incentives in the form of tax exemptions or reductions continue to be provided to international 
financial companies, international companies operating in FIZs, and to free warehouse companies.  
3.6.  Georgia has continued to develop its national quality infrastructure in accordance with 
international and EU practices. Its TBT Strategy stipulates that Georgia refrain from adopting 
national standards in the areas where relevant international standards exist. About 98% of all standards adopted in Georgia are international or  European standards. The Government is aware 
that in order to increase the export potential of agriculture, SPS systems need to be developed in 
accordance with international/European norms. Lack  of effective SPS regulations, in particular for 
food safety continues to hamper Georgian exports of its agricultural products. The Ministry of Agriculture (MOA) is preparing to approximate Georgia's framework to about 350 EU 
directives/regulations.  
3.7.  New amendments to the Law on Competition were adopted in March 2014. The Competition 
Agency regulates most economic sectors except for energy and telecoms. The new legislative 
framework appears to be up to international standa rds, and the Agency has been active in dealing 
with anti-competitive cases or merger applications.  
3.8.  The State Property Agency (SPA) is re sponsible for the privatization of state-owned 
enterprises (SOEs) and the selling of non-agricultural land and property, and the renting of 
agricultural land belonging to the State. 256 SO Es are owned by the SPA, of which only 69 are 
more or less functioning. The largest SOEs were put into a Partnership Fund in 2011 and 2012, which was established to facilitate foreign investment by providing co-financing. WT/TPR/S/328 • Georgia 
 
- 36 - 
 
  3.9.  Georgia has been amending its Intellectual Property legislation in accordance with regional 
and international trade requirements. The IPR legislation is aligned with international standards, and Sakpatenti, the national IP centre is making efforts to raise public awareness of IP rights and improve enforcement. The adoption by Georgia of  Paragraph 6 of the Doha Declaration regarding 
public health is under consideration.  
3.2  Measures Directly Affecting Imports 3.2.1  Customs procedures, customs valuation, and rules of origin 
3.10.  Since the previous review in 2009, Georgia's customs procedures have been further 
simplified, with the number of documents required to import/export reduced, the time shortened, 
and the cost lowered. In 2015, according to the World Bank, Georgia ranks 33
rd among 178 
economies in terms of the ease of trading across borders (Table 3.1). 
Table 3.1 Trading across borders 
Year Rank (out 
of 178 
economies) Documents 
to import 
(number) Time to 
import 
(days) Cost to 
import 
(deflated 
US$ per 
container) Documents 
to export 
(number) Time to 
export 
(days) Cost to 
export 
(deflated 
US$ per 
container) 
2009 n.a. 7 14 1,726 8 12 1,777 
2010 n.a. 4 11 1,467 4 10 1,491 
2011 n.a. 4 11 1,576 4 10 1,592 
2012 n.a. 4 11 1,893 4 10 1,495 
2013 n.a. 4 10 1,604 4 9 1,363 
2014 31 4 10 1,584 4 9 1,345 
2015 33 4 10 1,595 4 9 1,355 
n.a. Not applicable. 
Source: World Bank, Doing Business online information: http://www.doingbusiness.org/Custom-
Query/georgia  [05/01/15].  
3.11.  Customs procedures are regulated under the Tax Code of Georgia, and relevant regulations, 
instructions and by-laws. According to the Deep and Comprehensive Free Trade Area (DCFTA) 
under the Association Agreement between the EU  and Georgia, which came into provisional 
application on 1 September 2014, Georgia undertook to approximate its customs regulations in 
line with those of the EU. The Revenue Service (R S) under the Ministry of Finance is responsible 
for implementing the Tax Code and conducting customs clearance and other border related procedures (including SPS related inspections and licensing procedures), and passport control of 
truck drivers.
1  
3.12.  Georgia implemented a number of reforms during the review period to facilitate trade: in 
2010, Georgia reduced the cost of trade and simplified the documentation requirements, and opened the first customs clearance zone (CCZ).  Currently there are six CCZs, offering trade 
facilitation services such as: filling out customs declarations; conducting customs clearance, 
examination, and inspection; issuing certificates and permits; providing parking areas and areas dedicated to banking service providers; and provid ing consultation services. The authorities stated 
that placing all services in a single area streamlined customs procedures.  
3.13.  Import declarations may be submitted direct ly by the importer, his/her legal or authorized 
representative, or the customs administration (when the importer or importer’s legal or authorized 
representative makes a request to the customs clearance zone to fill in the declaration on his/her 
behalf).
2 Customs clearance takes on average less than one working day (Table 3.2), depending 
on whether the import declaration is submitted in advance, whether goods are in the form of consolidated cargo, and type of the applied custom s control (for dual-use goods, dangerous goods, 
etc.).  
                                               
1 The Ministry of Internal Affairs is in charge of pa ssport control for pedestrians and light vehicles at the 
border. 
2 RS online inform ation, viewed at: http://www.rs.ge/Default.aspx?sec_id=5415&lang=2# . In addition, 
it should be noted that the Civil Code of Georgia prov ides definitions and the regulatory framework for legal 
representatives and authorized representatives in order to act on behalf of the authorizing person. WT/TPR/S/328 • Georgia 
 
- 37 - 
 
  Table 3.2 Summary of procedures and docu ments for trading across borders, 2015 
Customs procedures Import procedure Export procedure 
Time 
(days) Cost 
(US$) Time 
(days) Cost 
(US$) 
Documents preparation  5 255 4 255 
Customs clearance and inspection  1 240 1 0 
Ports and terminal handling  2 800 2 300 
Inland transportation and handling  2 300 2 800 
Totals 10 1,595 9 1,355 
Documents required:  Bill of lading,  
commercial invoice,  
confirmation/receipt of payment 
of customs clearance fees, 
customs import declaration  Bill of lading,  
certificate of origin/note from 
manufacturer,  
commercial invoice,  
customs export declaration  
Source: World Bank (2014c), Doing Business 2015 – Going beyond Efficiency - Economy Profile 2015 
Georgia . Viewed at: 
http://www.doingbusiness.org/~/media/giawb/doi ng%20business/documents/profiles/country/GEO.
pdf.  
3.14.  Simplified customs procedures are available for goods of "Golden List" members. These 
goods may be released directly at the border, or may be transported to the warehouse of this importer. Payment of customs duty, VAT and excise may be deferred for 30 days for the importation of these goods, and the supporting documents to the customs declaration may be 
presented in electronic version when all the paper documents are kept at the declarer's premises. 
To become a "Golden List" member, a company must be registered as a VAT payer; have an annual trade value of at least GEL 5 million; have paid import duties amounting to at least 
GEL 900,000 and/or have submitted at least 100 commodity declarations for import or export; and 
have not committed any serious customs offences during the last 12 months.
3  
3.15.  The Revenue Service carries out customs form alities and procedures on the basis of a risk 
management system in accordance with random and selectivity criteria. All customs operations are 
fully automated through ASYCUDA World and its supplementary software (such as Oracle® system). Each e-declaration is routed through different risk channels:  
 green channel: goods are not subject to docume ntary check, no physical examination, and 
are released immediately;  
 blue channel: goods are examined after being released (post-clearance control);  
 yellow channel: goods are subject to full documentary check, no physical examination;  
 red channel: goods are subject to both documentary check, and physical examination.  
3.16.  In January 2011, the Revenue Service introduced a post-clearance audit; the corresponding 
e-declaration goes through the blue channel. In 2014, 85.5% of the e-declarations were routed 
through the green channel, followed by 7.3% th rough the yellow channel, 5.2% through the red 
channel, and 2% through the blue channel. 
3.17.  Preshipment inspection has been abolished since 2001, in accordance with Ordinance 
No. 543 of the President of Georgia. 
3.18.  Georgia has indicated that it is going thro ugh the necessary process to notify the WTO of its 
adherence to the Trade Facilitation Agreement (TFA). On 3 November 2014, the Revenue Service in cooperation with the Ministry of Economy an d Sustainable Development established a national 
working group for the classification of Section I of the TFA into A, B and C Categories. The working 
group (composed of customs, legal and IT experts)  prepared a report on the evaluation of the 
compliance of the Georgian legislation with the TFA commitments. The classification of Section I 
was carried out based on international standards of the World Customs Organization Revised Kyoto 
Convention, although to which Georgia is currently not a contracting party. From April 2015, the 
                                               
3 RS online inform ation, viewed at: http://www.rs.ge/Default.aspx?sec_id=5277&lang=2# . WT/TPR/S/328 • Georgia 
 
- 38 - 
 
  Ministry of Foreign Affairs began the necessary procedure to submit the TFA and Category A 
commitments to the Parliament for its ratification.  
3.19.  According to the OECD Trade Facilitation Indicators, compared to the average of Europe 
(non-OECD) and Central Asia and lower-middle-income countries, Georgia performs better in the 
areas of simplification and harmonization of documents, automation and internal border agency 
cooperation. Its performance for advance rulings is below the averages of Eastern Europe and Central Asia and lower-middle-income countries.
4  
3.20.  Customs valuation is based on the WTO Agr eement on the Implementation of Article VII of 
the GATT 1994, and is determined in accordance with paragraph 1 of Article 213 of the Georgian 
Tax Code, and Chapter V of the Instructions appr oved by the Order No. 290 of the Minister of 
Finance (26 July 2012). Accordingly, customs value is determined on the basis of the transaction 
value of the imported goods.  If the transaction value cannot be determined, other alternative 
methods may be used.  
3.21.  The Customs Department of the Revenue Service does not apply a reference price approach 
for the valuation of second-hand goods (including second-hand vehicles). When the Revenue 
Service doubts the declared value, it will ex amine the goods to determine their value. The 
examination is based on documentary checks, images (such as photos) of goods, a detailed 
examination of markings and a physical examination. 
3.22.  If the value declared is not accepted by the Revenue Service, the Valuation and 
Classification Division of the Customs Department will then re-examine. Appeals may be made to the Dispute Resolution Board of the RS, the Disput e Resolution Board of the Ministry of Finance, 
and/or the courts. From 2013 to 2014, there were four court cases concerning customs valuation, 
regarding the results of the examination carri ed out by the RS. Importers may request a 
preliminary release of the goods during the appeal process, after presenting  a guarantee (equal to 
the difference between the importer's declared value, and the value determined by the RS). 
3.23.  Non-preferential rules of origin are regu lated by both the Tax Code, and Decree No. 420 of 
Georgia on "approval of criteria for the originating country, form of origin certificate, and rules for 
filing and issuing them".   
3.24.  Preferential rules of origin are determin ed and implemented in accordance with the RTAs 
that Georgia has signed (Table 3.3), and the rules of origin of the countries providing preferential 
treatment within the scope of GSP for Georgian exports.  
Table 3.3 Georgia's rules of origin 
Preferential rules of origin 
Agreement Rules 
CIS (excluding 
the Russian 
Federation)a All imports from CIS partners enter Georgia duty -free and quota-free. A good originates from a 
CIS country: if it is: 
 If it is wholly obtained in that country. 
 Where raw materials, or materials which originate in one or more countries are subject 
afterwards to stage-by-stage processing in other countries, are used in production of 
the final goods in one of the signatory States of the Agreement, the country of origin of 
such goods is the country where it was subject to the last substantial 
processing/transformation.  
 Where third countries are involved in the production of the goods, the country of origin 
of the goods is determined in compliance with the criterion of substantial 
processing/transformation of the goods: (i) a change in the tariff clarification at the 
heading level; (ii) specific conditions for manufacturing and processing operations are 
specified for a large number of products (mainl y food and chemical products) in a List of 
Conditions annexed to the Rules; these conditions determine whether the goods can be 
considered to originate from the country wher e the operations took place; (iii) the rule 
of ad valorem  percentage, whereby the value of the materials to be used or the added 
value must reach a fixed percentage in the price of finished products. The goods must 
be shipped directly from the te rritory of one of the Parties, and they must be purchased 
directly from an enterprise or incorpor ated company in one of the Parties.  
                                               
4 OECD online information, viewed at: http://www.oecd.org/tad/faci litation/Georgia_OECD-Trade-
Facilitation-Indicators.pdf . WT/TPR/S/328 • Georgia 
 
- 39 - 
 
  Preferential rules of origin 
Agreement Rules 
CIS (Russian 
Federation) The following goods are considered to have originated in the Russian Federation: (a) goods 
fully produced in the Russian Federation; (b) g oods produced from raw materials originating in 
third countries which have been sufficiently processed in the Russian Federation to have 
undergone a change in tariff classification based upon the Harmonized System of tariff 
classification; and (c) goods in paragraph (b) provided that the total value of the finished 
goods does not exceed the fixed share of the export  part of the final goods, or the value of the 
non-originating goods does not exceed 50% of the ex-works price of the final product.  
EU Products are generally considered as originating in a Party: if they are wholly obtained in a 
Party; or if they are obtained in a Party, incorporating materials which have not been wholly obtained there, provided they have undergone sufficient working or processing in the Party. Sufficient working or processing must satisfy product-specific rules of origin listed in Appendix II of the Association Agreement. Specific rules are defined for textile and textile articles and "basic textile materials".  Direct transport is required. Cumulation of origin is allowed. No outward-processing authorized 
(except for a tolerance rule of up to 10% of th e ex-work price. Does not apply to textiles and 
clothing). Drawback prohibited. 
Turkey Products are generally considered as originating in a Party: if they are wholly obtained in a 
Party; or if they are obtained in a Party, incorporating materials which have not been wholly 
obtained there, provided they have undergone sufficient working or processing in the Party. 
Sufficient working or processing must satisfy prod uct-specific rules of origin listed in Annex II of 
the Free Trade Agreement. Specific rules are defined for textile, textile articles, and "basic 
textile materials".  
Direct transport is required. Cumulation of origin is allowed. No outward-processing authorized 
(except for a tolerance rule of up to 10% of th e ex-work price. Does not apply to textiles and 
clothing). Duty drawback permitted under specific conditions. 
Non-preferential rules of origin  
For a product to be considered originating it must be: 
 wholly obtained and/or produced in the country; 
 change of tariff classification (on 4-digit level); 
 value added ( ad valorem ) rule; 
 special working and processing list rules. 
Certificates of origin are not required for goods of non-preferential origin. Cert ificate of origin is only mandatory to 
extend the preferences.  
a Rules of origin are the same for all CIS countries except for the Russian Federation (regulated in 
accordance with the Diplomatic Note exchange d between the Government of Georgia and the 
Government of the Russian Federation in March 2010). 
Source: WTO documents, WT/REG82/5, 31 March 2003, Factual Presentation – Free Trade Agreement 
between Georgia and Ukraine (Goods); WT/REG121/6, 30 June 2009, Factual Presentation – Free Trade Agreement between Turkey and Georgia (Goods); and WT/REG261/1/Rev.1, 23 March 2010. 
EU Official Journal L 261, Volume 57, 30 August 2014. And information provided by the authorities.  
3.2.2  Tariffs 
3.2.2.1  MFN tariffs 3.25.  In 2010, the Customs Code was combined with the existing Tax Code to create a unified Tax 
Code, which came into effect on 1 January 2011,
5 of which the tariff became a part. The 
authorities stated that the change, such as the simplification of the tax/tariff legislation, makes it 
easier for traders to understand the current legal framework. Import tariffs accounted for 1.4% of total tax revenue in 2014 (section 3.4.2  ). 
3.26.  Georgia has bound its tariffs on all products, and the simple average of the final bound 
tariffs is 7.6%: 12.4% for agricultural products (WTO definition), and 6.4% for non-agricultural products (Table 3.4).  
                                               
5 FAO, Eastern Europe and Central Asia Agro-Ind ustry Development Country Brief – Georgia , viewed 
online at: 
http://www.fao.org/fileadmin/user_upload/Europe/documents/Publications/AI_briefs/AI_breiefs2012/fao_geor
gia.pdf . WT/TPR/S/328 • Georgia 
 
- 40 - 
 
  Table 3.4 Georgia's tariff structure, 2009 and 2015 
(%, unless otherwise indicated) 
 MFN applied rate 
Final bounda 2009  2015 
Bound tariff lines (% of all tariff lines) 100.0 100.0 100.0 
Simple average rate 1.6 2.0 7.6 
WTO agricultural products 7.2 6.7 12.4 
WTO non-agricultural products 0.2 0.8 6.4 
Duty-free tariff lines (% of all tariff lines) 85.8 79.6 23.6 
Tariff quotas (% of all tariff lines) 0.0 0.0 0.0 
Non-ad valorem  tariffs (% of all ta riff lines) 1.7 4.5 1.8 
Domestic tariff "peaks" (% of all tariff lines)b 14.0 14.7 1.5 
International tariff "peaks" (% of all tariff lines)c 0.1 0.1 3.2 
Overall standard deviation of tariff rates 4.2 4.3 5.8 
Nuisance applied rates (% of all tariff lines)d 0.0 2.7 0.0 
Total number of tariff lines 10,895  10,255 10,255  
Ad valorem  rates 1,366 1,630 7,645 
Duty-free 9,346 8,161 2,424 
Specific ratese 183 185 186 
Special duties on motor vehiclesf 0 279 0 
a Final bound rates are based on the  2015 tariff schedule in HS 2012 nomenclature. 
b Domestic tariff peaks are defined as those exc eeding three times the overall average applied rate. 
c International tariff peaks are defined as those exceeding 15%. d Nuisance rates are those greater than zero, but less than or equal to 2%. 
e 181 lines related to alcoholic beverages and 4 lines to vinegar products. f Special duties apply to motor vehicles under HS 8703. Imported cars are taxed at GEL 0.05 
multiplied by the capacity of the en gine, plus 5% of import tax on each additional year for used cars.  
Note: 2009 tariff is based on HS02 nomenclature, 2015 tariff is based on HS 12 nomenclature. 
Calculations for averages are based on national tari ff line level (11-digit), including AVEs provided by 
the authorities for non- ad valorem  rates, as available. 
Source: WTO Secretariat calculations, based on data provided by the authorities. 
3.27.  Based on data provided by the authoritie s, Georgia's 2015 applied MFN tariff consisted of 
10,255 lines at the HS 11-digit level (HS 2012). Almost 80% of the tariff lines (8,161 lines) are 
duty free. Applied MFN tariffs fall into three bands: 0%, 5%, and 12% (Chart 3.1). The simple average applied MFN tariff rate increased slightly from 1.6% in 2009 to 2% in 2010, and has 
remained the same since then. In 2010, tariff rates were increased in mainly three categories of 
products: rates for HS chapter 39 on plastic and articles thereof were increased from 0% to 5% or 12%, those for HS chapter 44 on worked wood were  increased from 0% to 12%, and those for HS 
chapter 73 on articles of iron and steel were increased from 0% to 5% or 12%. The simple 
average MFN tariff rate for agricultural products (WTO definition) fell from 7.2% in 2009 to 6.7% 
in 2015,  and the simple average for non-agricultural products (WTO definition) increased from 
0.2% in 2009 to 0.8% in 2015. 
3.28.  The dispersion in applied MFN rates, indica ted by the standard deviation, was up slightly 
from 4.2% in 2009 to 4.3% in 2015, reflecting the increase in the number of tariff lines falling under the 12% tariff rate. The 12% tariff rate a pplies to: agricultural products, prepared food 
products, mineral products, plastic and rubber, w ood and articles, articles of stone, precious 
stones, base metals and products (Chart 3.2 and Table A3. 1).  
3.29.  The calculation of the simple average applied tariff rate includes the ad valorem  equivalents 
(AVEs) for non- ad valorem  duties. Specific rates (185 lines) apply to alcoholic beverages and 
vinegar products, and special duties (279 lines) apply to motor vehicles under HS 8703. Among 
the 185 tariff lines with specific rates, 178 AVEs were provided by the authorities. These AVEs vary between 2.1% (on spirits obtained by distilling grape wine or grape marc) and 70.3% (on 
undenatured ethyl alcohol of an alcoholic strength by volume of 80% or higher; ethyl alcohol and 
other spirits, denatured, of any strength), with  an average of 9.6%. AVEs for the 279 lines for 
motor vehicles are all 1.7%. Thus, the average of all AVEs is 4.8%.  WT/TPR/S/328 • Georgia 
 
- 41 - 
 
  Chart 3.1 Distribution of MFN applied tariff rates, 2009 and 2015 
(Number of tariff lines) 
(85.8)
(0.6) (12.0)
(1.7) (79.6) 
(2.2) (13.7)
(4.5) 
01,0002,0003,0004,0005,0006,0007,0008,0009,00010,000
Duty-free 5% 12%MFN 2008 MFN 2015
Non-ad valorem rates 
Note: Figures in parentheses denote the share of total lines. Non- ad valorem  rates consist of 183 specific 
tariff lines in 2009, and 185 specific and 279 "other" tariff lines in 2015 (Table 3.4).  
Source: WTO Secretariat calculations, based on data provided by the authorities.  
Chart 3.2 Average applied MFN and bound tariff rates, by HS section, 2009 and 2015 
0%2%4%6%8%10%12%14%16%
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 2101   Live animals & products        
02   Vegetable products03   Fats & oils      
04   Prepared food, etc.
05   Mineral products
06   Chemicals & products07   Plastic & rubber
08   Hides & skins09   Wood & articles
10   Pulp, paper, etc.
11   Textiles & articles
12   Footwear, headgear13   Articles of stone
14   Precious stones, etc.15   Base metals and products
16   Machinery
17   Transport equipment
18   Precision instruments19   Arms & ammunition
20   Miscellaneous manuf.21   Works of art, etc.MFN 2009 Bound
Average applied rate
2009 (1.6%)
2015 (2.0%)Average bound rate
(7.6%)MFN 2015
 
Note: Calculations include AVEs for non- ad valorem  rates, as available.  
Source: WTO Secretariat calculations, based on data provided by the authorities. 
3.30.  The authorities stated that Georgia does not have tariff quotas.  
3.2.2.2  Tariff preferences 
3.31.  Georgia has several preferential trade agreements, with much wider duty-free coverage 
(Chart 3.3 and Chart 3.4).  WT/TPR/S/328 • Georgia 
 
- 42 - 
 
  Chart 3.3 Simple average tariffs for applied MFN and FTAs, 2015 
2.0%
0% 0%0% 0.2%6.7%
0% 0.2% 0%0.8% 0.8%
0% 0% 0% 0%
0%1%2%3%4%5%6%7%
MFN CIS (excl. R.F.) CIS Russian Federation EU TurkeyAll products WTO Agri. WTO Non-agri.
 
Source: WTO Secretariat calculations based on data provided by the authorities.  
Chart 3.4 Share of duty-free lines, 2015 
0%10%20%30%40%50%60%70%80%90%100%
All products WTO agriculture Animals and products
thereofFruit, vegetables and
plantsSugars and
confectionaryBeverages, spirits and
tobaccoWTO non-agriculture
MFN CIS (excl. R.F.) CIS R.F. EU Turkey
 
Source: WTO Secretariat calculations based on tariff information provided by authorities.  
3.2.2.3  Tariff exemptions and reductions 
3.32.  Customs tariff is exempted on, inter alia : 
 exports, re-exports, goods in transit;  
 imports of goods for response to natural disaster and for humanitarian assistance; 
 imports of goods defined by grant agreements; 
 imports of goods funded under grants or a pref erential credit provided by a foreign country 
government body and/or international organization, at least 25% of which is a grant; 
 imports of goods by an individual for non-economic purposes, where the value or weight 
does not exceed certain specific limits;  
 imports of baby food and diabetic food products; 
 imports of goods intended for the supply on board for international flights and shipment; WT/TPR/S/328 • Georgia 
 
- 43 - 
 
   imports of appliances and equipment, mean s of transport, spare parts and materials 
designated for oil and gas transactions under the Law of Georgia on Oil and Gas; 
 imports of tobacco raw materials and products up to 1 January 2016;6  
 import and temporary admission of goods in accordance with the provisions of Article 168, 
paragraph 1, Sub-paragraph (o) and Article 168, paragraph 3, sub-paragraphs (c), (d), (i), 
and (j) of this Code;7 
 imports of goods produced in a free industrial zone.  
3.33.  Through the temporary import regime for inward processing, exporters who use imported 
inputs for export production can obtain tariff exemptions on imported inputs.  
3.2.3  Other charges affecting imports 3.34.  VAT and excise taxes are collected at the border on imports (section 3.4.2  ). They apply 
equally to domestically-produced and imported goods.  
3.35.  In accordance with Government Resoluti on No. 96 on “approving fees and rates of the 
services rendered by the Legal Entity of Publ ic Law – Revenue Service”, a fee of GEL 100 is 
charged per customs declaration for goods valued  below GEL 3,000, a fee of GEL 300 is charged 
for goods valued between GEL 3,000 and GEL 15 ,000, and a fee of GEL 400 for goods valued 
above GEL 15,000, with the following exceptions:  
 a fee of GEL 20 is charged per customs declaration for goods valued below GEL 3,000 when 
a simplified customs declaration is submitted; 
 a fee of GEL 50 is charged per customs declaration for goods valued below GEL 3,000, if the 
goods are brought by natural persons by air transport with a simplified customs declaration; 
 a fee of GEL 150 is charged per customs declaration for the customs clearance of vehicles 
(except goods under the HS heading 8429); 
 in case of advance import declaration, a f ee of GEL 100 is charged per customs declaration 
for goods valued below GEL 3,000, a fee of GE L 200 is charged for goods valued between 
GEL 3,000 and GEL 15,000, and a fee of GE L 300 is charged for goods valued above 
GEL 15,000; 
 a fee of GEL 50 is charged for customs cleara nce of goods subject to re-export customs 
procedure; 
 a fee of GEL 300 is charged for customs cl earance of goods valued above GEL 10,000 
brought into Georgia by post. 
3.36.  In 2014, a total of GEL 76 million (US$32 million) in customs fees were collected, compared 
with the GEL 96 million customs duty values.  
                                               
6 The authorities stated that the necessity of this  exemption is currently under consideration of the 
Government. 
7 Tax Code, Article 168, paragraph 1, sub-paragraph (o): the import or temporary admission of personal 
consumption and household items intended for personal consumption of foreign citi zens (including family 
members residing thereof) employed in the oil and gas exploration and extraction works. Article 168, paragraph 3, sub-paragraph (c): temporary admission of  goods to Georgia to facilitate the fulfilment of 
obligations stipulated under international agreements of Georgia, namely, the construction of the Baku-Tbilisi-Jeyhan and Baku-Tbilisi-Erzurum pipelines; d) tempor ary admission of fully exempted goods envisaged under 
this Code; i) the import or temporary admission of the goods intended for th e official use of foreign diplomatic 
and equalized representations thereof,  for personal consumption of diplom atic and administ rative-technical 
staff of such agencies (including the family members re siding thereof), in the form whereby such exemption is 
stipulated under relevant international agreements to which Georgia is a party;  and j) import of the property of 
Georgia’s diplomatic  missions abroad. WT/TPR/S/328 • Georgia 
 
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  3.2.4  Import prohibitions, restrictions, and licensing 
3.37.  Georgia notified to the WTO in 2014 the list of  products subject to import prohibitions from 
2014 to 2016 (Table 3.5).  
Table 3.5 Import prohibitions 
Products prohibited from 
importation National legal basis Agency  
Dangerous (including toxic) 
and radioactive industrial and other waste  Law on Transit and Import of Wastes in the 
Territory of Georgia (8.2.1995) Ministry of Environment 
and Natural Resources Protection 
Certain hazardous pesticides 
and chemical substances Law on Licences and Permits (9.7.2005) Ministry of Agriculture; 
 
Ministry of Environment 
and Natural Resources 
Protection 
Some nuclear and radioactive 
substances Law on Licences and Permits (9.7.2005); 
 
Law on Nuclear and Radioactive Security (20.3.2012) Ministry of Environment 
and Natural Resources 
Protection 
Prohibited except under defined conditions 
Pesticides Government Decree No. 184 (28.9.2006) on 
approval of the List of Materials of Limited Circulation and Charter on the Issuance of Permission for Production, Transportation, Import, Export, Re-export or Transit of Materials of Limited Circulation  Government Decree No. 427 (31.12.2013) on approval of the rule on labelling of pesticides and agrochemicals; Government Decree No. 447 (31.12.2013) on approval of the rule on the control and sampling of pesticides and agrochemicals placed on the market; Government Decree No. 451 (31.12.2013) on approval of the rule on pesticides and agrochemicals storage, transportation, sale and use; Government Decree No. 437 (31.12.2013) on 
approval of the rule on organizing small packaging 
of pesticides Ministry of Agriculture 
Narcotic drugs extremely 
dangerous for human health 
(List 1), except for 
application for education, 
research, expertise and 
criminalistics purposes Law on Narcotic Drugs, Psychotropic Substances, 
Precursors and Drug Assistance (2002) Ministry of Labour, Health 
and Social Affairs  
Source: WTO document, G/MA/QR/N/GEO/1, 4 April 2014 and information provided by the authorities. 
3.38.  In accordance with Georgia's notification to  the WTO, import permits are required to protect 
public health, national security and the environment (Table 3.6).  
Table 3.6 Import permits 
Products Agency Rationale Fees Validity 
Products of floral 
origin subject to phytosanitary control National Food Agency of 
the Ministry of Agriculture Food safety GEL 50 6 months 
Products subject to 
veterinary controla National Food Agency of 
the Ministry of Agriculture Food safety GEL 100 1 month 
Endangered wild flora 
or fauna specimens Ministry of Environment 
and Natural Resources Protection Environment 
protection GEL 30 12 months WT/TPR/S/328 • Georgia 
 
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  Products Agency Rationale Fees Validity 
Nuclear, radioactive 
objects, nuclear 
materials, radioactive 
substances, 
radioactive wastes, 
minerals (subsoil) 
from which it is 
practically possible to 
extract nuclear 
materials, also 
nuclear technologies, 
all that is made of 
nuclear materials or 
radioactive 
substances or 
contains them as a 
component Ministry of Energy and 
Natural Resources Environment 
protection GEL 40 12 months 
Military equipment 
and technique Ministry of Defence Ensure the interests 
of national and international security 0.5% for an 
import value between GEL 500 and GEL 10 million; 0.1% for an import value above GEL 10 million; Maximum fee level GEL 120,000 No period of 
validity 
Pharmaceutical 
products under 
special controlb Ministry of Labour, Health 
and Social Affairs Public health GEL 100 Predetermined 
period  
Product of dual purposes Ministry of Economy and 
Sustainable Development, and Revenue Service (RS) (before 2014);  RS (after 2014) Ensure the interests 
of national and international security GEL 30 12 months 
Non-ionic salt Ministry of Agriculture Public health Free Unlimited 
duration 
Surveillance 
equipment Ministry of Internal Affa irs Ensure the interests 
of national and international security 1% of the 
transaction value Not defined 
Materials of limited 
circulation Ministry of Environment Environment and 
safety protection GEL 200 Up to two 
years 
a May be restricted if the place of origin of the prod uct was identified as an in fected zone with respect 
to animal disease. 
b Law on New Psychoactive Substances, entered into force on 1 May 2014, applies to new 
psychoactive substances that are not defined in the Convention on Narcotic Drugs (1961) and the 
UN Convention on Psychoactive Substances (1971). 
Source: WTO documents, G/LIC/N/3/GEO/4, 20 March 2012; G/LIC/N/3/GEO/5, 9 December 2013; and 
information provided by the authorities.  
3.39.  Import permits are governed by the Law on Licences and Permits of 2005, the Law on 
Licensing and Permission Fees of 2003, as well as relevant legislation on, inter alia , arms, 
pesticides, and endangered species. Import permits apply to any products imported from any country, and products originating in any country. They do not contain any quantitative or value 
restrictions. 
3.40.  In accordance with the Law on Licences and Permits, a licence grants the right to exercise a 
certain activity such as conducting a business. The right is granted to a person by an 
administrative authority, based on an administrative act if the conditions prescribed by this Law 
are fulfilled. A permit grants the right to exerci se a certain action under this Law, such as 
conducting importation, for a definite or indefinite term and certifies compliance with the 
conditions prescribed by the Law. A permit may be transferred to another person unless prohibited WT/TPR/S/328 • Georgia 
 
- 46 - 
 
  by the Law, or unless the permit is essentially related to its holder.8 A licence is not transferable by 
right of succession.  
3.41.  In September 2014, a joint electronic system for licences, permits and certificates became 
operational. The e-system ensures that relevant agencies in charge of issuing certain 
licences/permits/certificates upload such documents in this e-platform by which 
licence/permit/certificate is considered to be presented to the customs crossing point where importation or exportation of goods takes place. Furthermore, the issuing agency receives 
notifications in real-time on the status of issued licences/permits/certificates through such an 
e-platform. 
3.42.  It takes a maximum of 20 days (for pharmaceutical products under special control) to 
obtain a permit, after submission of completed do cuments. If no reasonable rejection is given 
within a predetermined time-limit, the permit is considered as issued by the licensing authority. 
Reasons for rejecting a permit may be: 
 the application does not fulfil the requirements prescribed by the relevant law; 
 the application does not fulfil the terms adopte d by the local governmental bodies according 
to the relevant law. 
3.43.  Reasons for refusal must be given to the applicant in written form. The applicant has the 
right to appeal in the upper administrative organ or court. There have not been any refusal cases 
since 2009. 
3.44.  Permits are grouped into restrictive ones, and non-restrictive ones. To obtain a restrictive 
import permit (such as those on narcotic and psychoactive substances), the importer must be 
either a legal entity possessing the licence on this activity, or a medical research institution. To 
obtain a non-restrictive import permit, no registration is required. A list of licence holders is published by the agencies responsible for specific types of permits. 
3.45.  Fees charged for obtaining import permits aim to cover the administrative expenses. The 
fees are determined in accordance with the Law on Licensing and Permission Fees, and vary for 
different imports.  
3.46.  Permits may be issued for different periods of time, depending on the products. The validity 
of a permit may be extended upon justified request to the administrative organs responsible for issuing the permit. In cases where the terms for obtaining the permit were not amended according to relevant legislation, and the applicant presents the application along with the receipt showing 
payment of the permit fee, the permit may be au tomatically extended. There is no penalty for the 
non-use of a permit.  
3.47.  Georgia notified that imports of ozone depleting substances are subject to global quota 
allocated by country: according to the Montreal Protocol on Substances that Deplete the Ozone 
Layer, import quotas are defined individually for each country.
9 Quotas are regulated in 
accordance with Order No. 176 of the Minister of  Environment and Natural Resources "Protection 
of Georgia on the Approval of Yearly Quota on Ozone Layer Depleting Substances 2015" 
(6 February 2015). 
3.2.5  Contingency measures 3.48.  Georgia has no legislation on contingency measures regarding anti-dumping, countervailing 
or safeguard measures. Georgia has not taken any contingency measures to date.  
                                               
8 Law of Georgia on Licences an d Permits, viewed online at: 
http://www.economy.ge/uploads/kanonmdebloba/sagare o_vachroba/Licenses_and_Permits_Legislation_ENG.p
df.  
9 WTO document, G/MA/QR/N/GEO/1, 4 April 2014. WT/TPR/S/328 • Georgia 
 
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  3.2.6  Government procurement 
3.2.6.1  Overview 3.49.  Government procurement, with a market va lue of around GEL 3 billion, accounted for 9.7% 
of GDP in 2014 (Table 3.7). Georgia is an observer to the WTO plurilateral Agreement on 
Government Procurement. According to the EB RD's 2014 report, Georgia's public procurement 
reform is "close to achieving compliance with the 2012 WTO GPA standards for public procurement."
10  
Table 3.7 Government procurement va lue and foreign participation, 2011-14 
 2011  2012  2013 2014  
Total value (US$ million)a 1,888  1,779  1,699 1,642  
Percentage of GDP (%) 10.9% 10.6% 10.4% 9.7% 
Share     
Domestic 97% 95% 87% 94% 
Foreign 3% 5% 13% 6% 
Number of contracts awarded (e-Tenders) 16,669 18,484 19,790 21,822 
Share     
Domestic 99.80% 99.82% 99.86% 99.74% 
Foreign 0.2% 0.18% 0.14% 0.26% 
a Exchange rates used for the calculation: US$1 equals GEL 1.69 in 2011; GEL 1.65 in 2012; GEL 1.66 
in 2013; and GEL 1.77 in 2014.  
Source: Information provided by the authorities.  
3.50.  Georgia has reformed its public procurem ent regime a number of times, and its current 
government procurement legislation entered into force in 2010.11 The Law on State Procurement 
(LSP) applies to the procurement of all goods, wo rks, and services funded from state and local 
budgets. It also applies to those enterprises wi th more than 50% of state share. This Law, 
however, does not apply to the purchase of, inter alia , state secrets; electricity, natural gas and 
water supply or purchase by the National Bank of Georgia related to the implementation of fiscal 
policy.12  
3.51.  Foreign companies can bid in any tender, and all tenders are announced internationally 
regardless of the value of procurement. Both th e price preference to local firms, and the 70% 
preference on local labour force were abolished. The contracting authority may issue the tender notification in English as well.
13 The Law requires a tender announcement to be issued in English 
as well as Georgian for contracts exceeding GE L 2 million for products and services, and GEL 4 
million for public work projects. According to the authorities, the European Common Procurement 
Vocabulary (CPV) system was adopted, which enabled consistency in defining homogeneity of goods and services and the possibility to identify the tenders of interest by suppliers from abroad. 
The relatively low participation of foreign suppliers in Georgia's public procurement market (6% in 
2014) was due to two reasons: the tender value is often small, as 80% of tender values are less than GEL 50,000; and there is a lack of awarene ss of Georgia's public procurement market abroad, 
which may be improved by Georgia's accession to the GPA.  
                                               
10 EBRD (2013a), p. 11. 
11 The first post-Soviet Law on State Procurement (LSP) was adopted in 1999. In 2006 a new LSP 
entered into force, and was later assessed by both the World Bank and the EBRD to be a "high-risk" 
procurement system. The Government of Georgia embark ed on a public procurem ent reform in 2009, and 
promulgated a new LSP in 2010. (EBRD (2013a), p. 11.) 
12 It does not apply to the purchases made with: re serve funds of the President, Government and Mayor 
or visits of and meetings, sending and hosting of delegations by the President, speaker of parliament, 
Government, Tbilisi Mayor, Ministry of  Foreign Affairs; services of tempor ary employees; expenditures incurred 
during business trips; expert  services prescribed by the Criminal Proced ure Code; real estate or rights in real 
estate; financing and use of educational, healthcare, and social protection vouchers; TV/radio airtime; public 
broadcasting on procurement of TV/r adio and via-satellite broadcasting  services from non-residents. The 
Government is working on minimizi ng exemptions from the public proc urement legislation and tendering 
procedures. 
13 Order of the Chairman of SPA on Approving th e Rules for Conducting Si mplified Procurement, 
Simplified Electronic Tender and Electronic Tender. WT/TPR/S/328 • Georgia 
 
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  3.52.  The main agency responsible for public  procurement is the State Procurement Agency 
(SPA), an independent Legal Entity of Public  Law. Between 2012 and 2014, the SPA was merged 
with the Free Trade and Competition Agency, and was renamed the Competition and State Procurement Agency. This agency was split into  a Competition Agency, and a State Procurement 
Agency on 21 March 2014, following amendments to the Law on Free Trade and Competition. The 
SPA develops and adopts implementing legisl ation and documents on public procurement; 
develops and monitors the procurement process an d maintains the unified electronic procurement 
system: http://tenders.procurement.gov.ge ; provides advisory services and training courses to 
procuring entities and suppliers; maintains a black list of entities that are banned from 
participating in government procurement, and a white list of qualified suppliers; monitors the electronic tendering process and simplifies procurement to detect violations; and houses a Dispute 
Resolution Board that reviews complaints filed by  stakeholders. The authorities stated that the 
e-Procurement portal is available in five languages, with the intention of increasing transparency. In 2011, the function of the SPA to ensure tran sparency of the procurement system became the 
joint responsibility of both the SPA and the tender committees. Tender committees are in charge 
of conducting electronic tenders. They are form ed by the head of a contracting authority and 
consist of at least three members, usually the depu ty-head of the entity and/or heads of sub-units. 
3.53.  One of the main strategic goals of the SP A is to facilitate greater access of SMEs to 
Georgia's public procurement market. In October 2014, the SPA set up a Training Centre to improve knowledge and capacity on procuremen t procedures among suppliers and contracting 
authorities, and to provide guidance and traini ng to contracting authorities on how to better 
include SMEs in their tendering process. The State Procurement Agency issued several 
recommendations/guidelines aimed at increasing knowledge and awareness of procuring entities. These recommendations refer to international best practices regarding identifying procuring 
entities' needs, procurement planning, developing specifications, and writing appropriate 
qualification and technical requirements.  
3.2.6.2  Major changes 
3.54.  The SPA has been making efforts to bring Georgia's public procurement legislation and 
policy into compliance with the relevant EU directives. Since the previous review in 2009, a number of reforms have been carried out, includin g mainly the introduction of e-Procurement, and 
the establishment of a dispute review procedure. Other reforms include: 
 introduction of a "standstill period": the peri od between when the decision on a contract 
award is made and the conclusion of the contract. According to the authorities, this has strengthened the rights of suppliers and othe r interested parties to request a debrief of 
challenged decisions;  
 introduction of a legal mechanism preventing excessively low bids: bids with a price 20% 
lower than the estimated price of procuremen t are deemed bids with an abnormally low 
price. In this case the contacting authority can require the bidder to explain the bid price 
proposed (in line with the EU Directive 2014/ 24/EU); and/or require the supplier to provide 
a higher guarantee (from 2% to 10 % of the es timated value of procurement) than in usual 
cases (from 2% to 5%). The contracting authority may reject the bid where the evidence 
submitted does not satisfactorily account for the low level of the proposed bid price; 
 introduction of procurement method with assessment of the tenders on the basis of the 
best-quality ratio (procurement of design and engineering related projects); and 
 abolishing the obligation for procuring entities with an annual procurement value off less 
than GEL 50,000 to report every quarter, and replaced that with an annual reporting requirement. 
3.55.  The authorities stated that the transiti on of Georgia's public procurement system was 
accompanied by comprehensive amendments to th e LSP and a number of implementing acts. The 
target was to fully re-engineer the procurement process for planning procurements (all annual plans are uploaded into the e-PLAN module and ar e available to the public); conducting simplified 
procurement tenders (the applicable procurement procedure is defined based on the value of 
procurement); evaluation of proposals (the eval uation procedure and grounds of disqualification WT/TPR/S/328 • Georgia 
 
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  were fully revised); execution of contracts; as well as meeting the reporting obligations of 
procuring entities.  
3.2.6.2.1  E-Procurement 3.56.  A significant change to the public procurem ent regime in Georgia was the introduction of the 
e-Procurement system in 2010. The authorities co nsider the e-Procurement system to be broadly 
consistent with the best international practices, and it has increased competition among suppliers and ensured greater transparency and simplicity of the procurement process. Many international 
organizations highly praised Georgia's e-Procur ement regime. For example, the United Nations 
awarded the Georgian e-Procurement system th e second place among 471 candidates from 71 
countries in the UN Public Service Award in 2012.  The EBRD considered Georgia to be the number 
one among its 26 countries in the region with regard to the implementation of e-Procurement.  
3.57.  Currently, procurement in Georgia is conduc ted according to the procedures listed in Table 
3.8.  
Table 3.8 Government procurement procedures 
Procedures Circumstances Electronic 
procurement 
required Share in 
procurement 
contracts, 
2014 
Simplified procurement  Procurement under GEL 5,000; 
 with special governmental 
authorization/act; 
 in case of urgent necessity; and 
 procurement related to business expenses No 32% 
Electronic tender: open 
tender   68% 
Simplified electronic 
tenders  Procurement of homogeneous objects between 
GEL 5,000 and GEL 200,000  Yes 70.9% (of 
open tenders) 
Electronic tenders  Procurement of homogenous objects of 
GEL 200,000 and higher  Yes 17.5% (of 
open tenders) 
Design contest Procurement of design related projects and 
services, such as architecture and engineering projects, plans or designs based on the decision of a procuring entity E-Contest was 
fully 
automated on 
1 July 2015 0.6% (of open 
tenders) 
Consolidated tender 
for framework 
agreements Procurement of certain goods: fuel, computer 
hardware, A4 format paper, communication 
(mobile) services Yes 11% (of open 
tenders) 
Two-stage procurement Still in progress n.a. n.a. 
n.a. Not applicable.  
Source: Information provided by the authorities.  
3.58.  The electronic procurement platform (maintained by the SPA) 
(https://tenders.procurement.gov.ge/ ) allows the public to search, explore and monitor public 
procurement. Interested persons may access the following information: annual procurement plans; 
tender notices; estimated cost of procurement; tender documentation and any amendments to the 
documentation; price bids; proposals; tender commission’s meeting minutes and correspondence 
exchanged with the supplier; contracts and any am endments to them; and information on actual 
payments. Contracting authorities must upload information on the contracts awarded through 
simplified procurement, any changes to contra cts, their fulfilment and actual payments, and 
related documents in a CMR (Contract Manageme nt Reports) module of the e-Procurement 
system.14 In August 2014 the CMR module was upgrad ed and linked to an e-PLAN module. No 
public contracts can be concluded if the respective procurement was not planned and properly 
reflected in e-PLAN.15 According to the authorities, this re striction could help to prevent possible 
law infringements. Civil society organizations may monitor public procurement, such as the tender monitoring website ( http://tendermonitor.ge/en ) launched by Transparency International Georgia. 
                                               
14 Online information viewed at: https://tenders.procuremen t.gov.ge/public/?lang=en.  
15 E-Plan refers to the mandatory planning of all pu blic procurements and annual plans to be published 
in the e-Procurement system. WT/TPR/S/328 • Georgia 
 
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  By 25 September 2015, 4,449 procuring entities and 23,865 suppliers were registered in the 
Georgian e-Procurement system.  
3.59.  The authorities stated that the share of si mplified procurements (with special governmental 
authorization or act, or in case of urgency) have been decreasing: from 49% in 2012, to 39% in 
2013 and then 32% in 2014, indicating the increasing share of open tenders in e-Procurement.  
3.60.  Procurement by some state-owned enterpri ses, due to the specific character of their 
operations and to avoid any impediment to their activities, is not covered by the Law on State 
Procurement and is subject to the special proc urement rules adopted by the Government of 
Georgia. The Government significantly reduced the number of exemptions from the LSP in 2014.16 
The number of state enterprises applying specia l procurement rules was reduced by 51%; the 
scope of procurements (list of procurement obje cts) that may be conducted according to these 
special procurement rules was narrowed by 50%. Moreover, the state enterprises still applying the 
special procurement rules are obliged to conduct procurements through the e-Procurement system, which provides the same level of transparency as the electronic tenders. 
3.61.  The authorities estimated that, because of greater transparency and competition, the 
e-Procurement system has generated savings of  GEL 1,086 million from 2010 to September 2015, 
which resulted from the difference between the estimated price of procurements and the award 
price. The electronic system also reduced business  cost for regional companies to participate in 
public procurement: before the introduction of the e-procurement system, regional companies had to visit Tbilisi at least four times to submit documents and bid.
17 
3.62.  For procurement of design related projects and services, the new electronic module was 
launched enabling authorities to rank suppliers by using automatic evaluation methods and assess 
the tenders based on the best price-quality ratio.  
3.2.6.2.2  Dispute review procedure 
3.63.  In December 2010, the SPA established a Dispute Resolution Board (DRB). Complaints on 
the procurement system may be addressed directly  to the contracting authority, the DRB, or a 
court. The DRB comprises six members: three appointed by the SPA, and three elected by civil 
society organizations including non-governmental organizations. Their term is one year; this, 
however, may result in the problem of lacking institutional memory.18 The authorities pointed out 
that a numbers of surveys had found the DRB to be an efficient and independent review 
mechanism: the EBRD ranked Georgia the 4th highest among the 29 EBRD countries in the quality 
of public procurement remedies system, and considered that only Georgia has a fully independent 
remedies body.19  
3.64.  The lodging and hearing of a complaint are not subject to a fee. Complaints are submitted 
electronically by filling out a form on the tend er page. When the legitimacy of a complaint is 
confirmed, the DRB may, within a maximum of 10 days: 
 inform the contracting authority of the error and require a correction to comply with the 
Law; 
 require a total revision or cancellation of the decision of the tender committee; 
 report the case to law enforcement and other relevant bodies in case of a serious violation. 
                                               
16 For example, the Partnership Fund, the Georgian Ra ilways, the Georgian Oil and Gas Corporation, the 
Georgia Lotteries, the Government's and the President's Reserve Funds, and the Ministry of Defence (when it 
procures state secrets) may sign contracts without using the electronic procurement platform. In 2014, of the US$1,608 billion government procurement market, contracts worth US$517 million were procured through simplified procedures. 
17 Transparency International Georgia (2013). 
18 Transparency International Georgia (2013). 
19 EBRD (2011). WT/TPR/S/328 • Georgia 
 
- 51 - 
 
  3.65.  If the complainant is still not satisfied wi th the decision, he or she may appeal the DRB 
decision to the courts. All registered users may appeal to the DRB, including other economic operators who have no direct relation to the tender. 
3.66.  From 2010 to 2014, 1,149 complaints were submitted to the DRB. Among these, 440 were 
successful, 490 unsuccessful, 183 rejected as they did not meet the legal requirements, and the 
remaining 36 were withdrawn or cancelled. During the same period, 44 DRB decisions were appealed to the courts, but none were quashed. 
3.2.6.2.3  Administration of banned or qualified suppliers 
3.67.  The SPA may put a company on its "black list" and ban it from participating in public 
procurement for one year. Companies are black list ed if they are subject to a complaint by a 
contracting authority for: (a) failing to fulfil partially or completely the contract; (b) being detected 
engaging in fraudulent practices in order to gain the contract; (c) refusing to conclude a contract 
after being identified as bid winners.  
3.68.  The SPA has discretion to register the company in the black list depending on, inter alia : 
competitiveness, proportionality of public and private interests, and damages caused due to its 
infringement behaviour. Statutory time limits for review procedures against a debarred company were introduced in September 2014, by amendments to the respective legislation. Black listed 
companies are either removed after expiration of one year, or by a court order. 
3.69.  The SPA also maintains and publishes on its official website a list of qualified suppliers – a 
"white list". These suppliers must meet the following technical, financial, and qualification requirements: 
 no registration in the black list during the one year prior to the date of requesting white list 
registration; 
 no insolvency proceedings; 
 at least one positive reference from a procuring organization on the supplier's performance 
of contractual obligations over the past three ye ars. The value of such contract has to be at 
least GEL 50,000; 
 no criminal proceedings: all individuals havi ng the authority to represent or manage the 
supplier have no criminal record, or have had the criminal record lifted or cleared; 
 at least GEL 1 million total turnover for the 3 years prior to the date of requesting white list 
registration;  
 no debt to the State Budget as of the time of requesting white list registration, and an 
updated extract from the Registry of Entrepreneurs and Non-Commercial Legal Entities.  
3.70.  Suppliers must also submit: their CV (a corporate one for a legal entity); information about 
the supplier from Joint Stock Company (JSC) Credit Info Georgia; information about the 
qualifications of its employees, and about the tec hnical equipment of the supplier (only in the case 
of a supplier providing construction works). From 2012 to September 2015, 125 suppliers were 
registered in the white list. 
3.71.  According to an EBRD report, Georgia achieved the best result in the region, indicating a 
high level of compliance with international standards. The LSP is compliant with the general principles of competition, transparency, and non-discrimination in public procurement. The 
e-Procurement system supports planning, procurement, monitoring and management of public 
contracts and provides reliable market data for all sector stakeholders and audit. The basic 
principles and general framework of the public procurement process are contained in the LSP and 
secondary legislation, and the accessible online information on public procurement informs all 
stakeholders of their roles, rights and obligations in the public procurement process. The LSP WT/TPR/S/328 • Georgia 
 
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  regulates most of the public procurement process, and requires mandatory scrutiny of all contract 
variations.20 
3.2.6.3  Further reform plans 3.72.  The SPA recognizes the importance of continued reform, and intends to:  
 extend the e-Procurement system and interconnect it into  eTreasury, e-Budget and 
electronic revenue system of the Ministry of Finance of Georgia;  
 develop new electronic services for different internal business processes and procedures; 
 amend legislation to tighten up rules allowing exemptions from the e-tendering procedures; 
 continue providing training to contracting authorities and suppliers to minimize mistakes and 
possible infringements.
21  
3.2.7  Trade-related investment measures (TRIMs) 
3.73.  The authorities stated that Georgia does not maintain any trade-related investment 
measures (TRIMs). 
3.3  Measures Directly Affecting Exports 
3.3.1  Export procedures and requirements 
3.74.  According to the World Bank's Ease of Doing Business Report, in 2015 it took on average 
US$1,355 and about 9 days to export a container, which was much lower than the average for the 
economies of Europe and Central Asia (US$2,154 and 23.6 days), and compares favourably with 
OECD countries (US$1,080 and 10.5 days). 
3.75.  The authorities stated that, since 2009, the export procedures have been simplified:   exporters are allowed to present their goods dire ctly at the border crossing points, and the 
goods are checked using the risk management system; 
 export declaration at the border crossing points is also allowed: 
 when exporters present a waybill; 
 when goods have a value not exceeding GEL 15,000; 
 for simplified declaration; and 
 for natural person’s declaration ; 
 applications for permits and certificates required for exportation may be lodged electronically 
through the Revenue Service webpage based on a single window principle; 
 exporters are allowed to obtain the customs seals and affix them to the means of transport. 
A special registry programme was put in place to track and monitor the information 
concerning the seals issued to the exporters; 
 exporters are no longer required to present a registration certificate for rail cargo, as each 
consignment has a separate export declaration; and 
                                               
20 EBRD (2013a), p. 18 . 
21 The SPA Training Centre provided training sessions to 419 representatives from contracting 
authorities, as well as to 38 businessmen from October 2014 till September 2015. WT/TPR/S/328 • Georgia 
 
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   exporters are now allowed to present their goods to the customs authority at a pre-agreed 
location.  
3.76.  Export procedures and requirements are li sted in Table 3.2. Among the documents required, 
certificates of origin are issued in accordance with the provisions of Government Decree No. 420 
(29 December 2010). For goods exported from Georgia, the certificates of origin are issued by: 
Ministry of Economy and Sustainable Development; Revenue Service of the Ministry of Finance; Georgian Chamber of Commerce and Industry; and the Ministry of Finance and Economy of the 
Autonomous Republic of Ajara. Enterprises are allowed to obtain the certificates of origin from any 
of the above mentioned agencies, except for the EUR-1 certificate which is issued by the Revenue Service exclusively.  
3.77.  When exporting winery products, certificates of origin are issued by the National Wine 
Agency under the Ministry of Agriculture, in accordance with the regulation determined by the 
Ministry of Agriculture.
22  
3.3.2  Export fees 
3.78.  According to the authorities, export and re-export from Georgia are free from any customs 
duties. Georgia applies services fees for pr ocessing the exports of waste or scrap of 
ferrous/precious metals. According to the authorities,  fees are collected at the border to facilitate 
the development of steel production by local industry:  
 GEL 160 per tonne for waste or scrap of ferrous/precious metals; 
 GEL 40 per tonne for ferrous me tal production waste; and 
 GEL 50 per tonne for raw alloy of precious metals. 
3.79.  Exports are VAT free. 
3.3.3  Export prohibitions, restrictions, and licensing 3.80.  In accordance with the Law on Licences an d Permits, non-tariff limitations in international 
trade apply only for healthcare, security and en vironment protection purposes (Table 3.9).  
Table 3.9 Export prohibitions, restrictions, and licensing 
Product description National legal basis Agency  
Products prohibited from exportation (P – X) 
Ozone depleting substances: 
halogenated derivatives of 
hydrocarbons Government Decree No. 184 (2006) on Approval 
of the List of Materials of Limited Circulation and 
Charter on the Issuance  of Permission for 
Production, Transportation, Import, Export, Re-
export or Transit of Materials of Limited 
Circulation Ministry of Environment 
and Natural Resources 
Protection 
Prohibited except under defined conditions (CP - X)  
Cultural heritage goods: 
works of art, collectors' 
pieces and antiques Law on Export and Import of Cultural Values from 
and to Georgia (2001) Ministry of Culture and 
Monument Protection 
Drugs, narcotics, and 
related chemicals  Law on Narcotic Drugs, Psychotropic Substances, 
Precursors and Drug Assistance (2002) Ministry of Labour, Health 
and Social Affairs, State Regulation Agency for Medical Activities 
Products subject to non-automatic export licensing (NAL – X) 
Some nuclear and radioactive substances  Law on Licences and Permits (2005); Law on 
Nuclear and Radioactive Security (2012) Ministry of Environment 
and Natural Resources Protection 
Endangered animal and plant 
species  Law on Licences and Permits (2005); Government 
Decree No. 18 of 6 Feb 2007 on Approving 
Provision on Regulations and Conditions of Issuing Ministry of Environment 
and Natural Resources 
Protection 
                                               
22 Ministry of Economy and Sustainable Deve lopment online information, viewed at: 
http://www.economy.ge/en /economic-review/trade . WT/TPR/S/328 • Georgia 
 
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  Product description National legal basis Agency  
Permits on Export, Import, Re-export and 
Introduction from the Seas  of Species, their Parts 
and Derivatives Included in the Annexes of the 
Convention on International Trade in Endangered 
Species of Wild Fauna and Flora (CITES) 
Drugs, narcotics, and 
related chemicals  Law on Narcotic Drugs, Psychotropic Substances, 
Precursors and Drug Assistance (2012) Ministry of Labour, Health 
and Social Affairs, State Regulation Agency for Medical Activities 
Weapons and military 
equipment  Resolution of the Presiden t No. 304 (2000) on List 
of Military Goods under Export and Import Control; 
Order No. 394 (2014) on the Approval of List of 
Military and Dual Use Goods Ministry of Defence 
Goods of dual purposes  Order No. 394 (2014) On the Approval of List of 
Military and Dual Use Goods Ministry of Economy and 
Sustainable Development/ 
Revenue Service (since 1 
October 2014, only the RS) 
Source: WTO document, G/MA/QR/N/GEO/1, 4 April 2014, and information provided by the authorities. 
3.81.  In addition, the following products are subject to export permit requirements 
(Table 3.10). 
Table 3.10 Export permits 
Products Agency 
Means of electronic surveillance Ministry of Internal Affairs 
Materials of limited circulation Ministry of Environment and Natural Resources Protection 
Non-iodized salt Ministry of Agriculture 
Narcotic drugs and related 
chemicals Ministry of Labour, Health and Social Affairs 
Source: Ministry of Economy and Sustainable Development online information, viewed at: 
http://www.economy.ge/en /economic-review/trade ; and information provided by the authorities. 
3.3.4  Export support, financing, and promotion 
3.82.  Georgia notified that it provided no export subsidies to agricultural products in 2007-2012.23 
The authorities stated that Georgia does not provide any export subsidies.  
3.83.  Georgia does not have export financing instruments. 3.84.  Export promotion and development activities are mainly carried out through the 
Entrepreneurship Development Agency (EDA, also ca lled Enterprise Georgia), established in March 
2014 under the Ministry of Economy and Sustainabl e Development. Within the framework of EDA, 
export development and promotion activities includ e: creating exporters' profiles, developing the 
online export portal, participating in and conducting international trade fairs, planning 
inward/outward buyer missions and various camp aigns/publications, submitting products to 
international awards and competitions, and promoting Georgian exports domestically. EDA is also performing the following activities related to export  promotion: identifying sectors with high export 
potential (such as wine and beverages, nuts, pharmaceuticals, apparel, and construction 
materials), elaborating sectoral development strate gies, monitoring and analysing export dynamics 
and building the capacity of exporters (such as pr oviding market entry briefs, market entry advice 
through a helpdesk and training for export managers). A Business Service Centre was set up as a 
place for lectures, trainings and different events for SMEs. 
3.85.  The Government implements two export promotion programmes: "Production of Georgian 
Agricultural Products", and "Promotional Meas ures to Popularize Georgian Wine Products" 
(Chapter 4). The main export promotion activities are organizing exhibitions, tastings and displays 
of Georgian agricultural products, including wine products.  
                                               
23 WTO document, G/AG/N/GEO/12, 5 November 2013. WT/TPR/S/328 • Georgia 
 
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  3.3.5  Free Industrial Zones 
3.86.  Developing transit trade has been one of the Government's main strategic initiatives. 
Georgia's location provides an alternative transit route into central Asia, other than the routes via China and the Russian Federation. The Government thus has been establishing free industrial 
zones (FIZs), where investors may conduct processing activities in Georgia in connection with the 
transit of goods without being subject to Georgian taxes. Incentives, in the form of a special tax 
regime, have been provided to companies operating in FIZs (Table 3.12).  
3.87.  FIZs are regulated under the Law on Free Industrial Zones, adopted in 2007. FIZs may be 
established either by the initiative of the Gove rnment, or upon requests of natural or legal 
persons. FIZs are created to promote the inflow of capital, technology and know-how. Financial 
operations in FIZs can be carried out in any currency. Currently Georgia has four free industrial 
zones (FIZs): Poti (established in 2009), Kutaisi (established in 2009), Kulevi (in 2012), and 
Kutaisi’s Hualing (established in 2015).  
3.88.  Goods produced or assembled in FIZs are allowed to be sold in the domestic market. When 
enterprises from FIZs sell goods to Georgian entities other than those in FIZs, they must pay 4% 
of their gross income from the sale to the Government. The following activities are prohibited in the FIZs:  
 production of and/or trade in arms and munitions;  
 production of and/or trade in nuclear and radioactive substances; 
 import, storage, production and/or sale of narcotic and psychotropic substances; and 
 import, storage, production and/or sale of tobacco and/or raw materials for tobacco 
production except for cases of use only (which is not considered as an export of goods).  
3.89.  The authorities consider that the FIZs, through their more liberal tax regime and simplified 
administrative procedures, help to attract FDI and thus new/modern technologies, increase 
employment and investment in human resources. Th ey also consider that by promoting exports, 
these FIZs contribute to export diversification and to reducing Georgia's external vulnerabilities. They also contribute to regional development, and the development of cargo transportation and 
related services.  
3.4  Measures Affecting Production and Trade 3.4.1  Legal framework and support for businesses 3.90.  The Government made great efforts in reducing obstacles to doing business in Georgia. In 
2015, the World Bank ranks Georgia 15
th among 189 countries in the world in the Ease of Doing 
Business Index.24 Georgia 2020  placed strong emphasis on enhancing the private sector's 
competitiveness. Significant progress was made in aligning Georgia's policies on small and 
medium-sized enterprises (SMEs) with that of the EU and international best practices. The 
Government and the OECD are working closely to prepare a SME Development Strategy and related Action Plan, which are expected to be adopted by the end of 2015.  
3.91.  The Government also launched the "Produce in Georgia" programme in 2014 to support 
local agri-processing and industrial production through financial support (co-financing of interest on loans and collateral requested by commercial banks), infrastructural support (real estate provided at a symbolic price to companies investing in Georgia) and the provision of consulting 
services, which is being implemented in close cooperation with financial institutions.
25 So far, the 
Government has allocated through its budget GEL 46 million to the "Produce in Georgia" programme, of which GEL 16 million has been allocated to industrial manufacturing, and GEL 30 
million to agriculture. 
                                               
24 World Bank (2014c). 
25 European Commission (2015). WT/TPR/S/328 • Georgia 
 
- 56 - 
 
  3.92.   In March 2015, the Entrepreneurship Development Agency (EDA) launched a programme 
under “Produce in Georgia”: “Support to Micro and Small Enterprises in Georgian regions”. This programme enables an entrepreneur to present a business plan and have an opportunity to 
receive financial support of GEL 5,000 with a matching investment of at least 20%. In addition, 
technical assistance (training, professional business consulting, individual consultations) is 
provided to beneficiaries. The Government allocated a budget of GEL 20 million to co-finance more than 3,000 people (25-30% women) under this programme.  
3.93.  On 6 July 2015, the EDA opened its Business Service Centre for SMEs to provide information 
and basic consulting services. Moreover, the EDA is conducting a technical assessment for the beneficiaries and planning appropriate training according to their identified needs. For instance, MiniMBA training for up to 20 Georgian company representatives was provided in May 2015 by an 
initiative of the EDA and organized by E&Y Company.  
3.94.  After the Government eliminated 84% of licensing requirements in 2005, licences are only 
required for activities affecting public health, national security and the financial sector, such as: 
weapons and explosives production, narcotics, poisonous and pharmaceutical substances, 
exploration and exploitation of renewable or non-renewable substances, exploitation of natural resource deposits, establishment of casinos and gambling houses and the organization of games 
and lotteries, banking, insurance, securities trading, wireless communication services, and the 
establishment of radio and television channels.
26 The Government must decide if it is going to 
issue a licence within 30 days; if the licensing authority does not state a reason for rejection within that time limit, the licence or permit is deemed to be issued.  
3.95.  The Government recognized the need to support new business creation and development of 
existing ones, and established Georgia’s Innovation  and Technology Agency (GITA). GITA has been 
assigned the task of providing the legal framew ork for innovation; coordinating among various 
public and private stakeholders on innovation  policies and reforms; fostering innovative 
entrepreneurship; enhancing the innovation ecosystem; supporting R&D commercialization and facilitating the technology absorption process. Innovation Strategy 2020  is being developed, with 
the help of the World Bank.  
3.96.  A Research and Innovation Council was crea ted, and is chaired by the prime minister. It 
consists of all line ministers, scientists and priv ate sector representatives. The GITA functions as 
the secretary of the Council. Currently the Council is drafting a law on innovation and is amending 
the existing laws related to, inter alia , innovation, creation of businesses, and supporting SMEs.  
3.4.2  Tax and incentives 3.4.2.1  Tax 
3.97.  Tax revenue is equivalent to about one quarter of GDP in Georgia. According to the 
Government's vision (Social Economic Development Strategy - Georgia 2020 ), the goal of the 
Government is to create a more stable tax system, which will facilitate sustainable economic 
development and reduce the risk of economic shocks. Georgia 2020  states that, in order for 
Georgia to remain an attractive place for doing business, the current low tax policy is to be preserved.
27 Within the framework of the EU Twinning Pr oject, a comparative analysis of Georgian 
and EU legislation on VAT and excise tax is being carried out, with a view to harmonizing Georgian 
legislation with that of the EU in indirect  taxes based on the Association Agreement.  
3.98.  According to the World Bank, Georgia ranks 38th out of 189 economies for paying taxes in 
2015, down from 22nd in 2014. According to the authorities, this drop was because: the 
methodology to calculate these rankings changed, and the Revenue Service introduced a 
comprehensive and detailed corporate income tax return system for tax risk management 
                                               
26 Provision of electronic communication networks and services are subject to general authorization. 
Broadcasting activities requiring usag e of broadcasting transmitters, radio frequency ranges or the terrestrial 
and orbital stations of satellite systems fall under the licensing regime. Activities in the field of electronic 
communications requiring frequency resources are subject to the licensing regime as well. Also provision of 
broadcasting services requires Ge orgian citizenship or residency,  with no equity requirement. 
27 Government of Georgia (2014). WT/TPR/S/328 • Georgia 
 
- 57 - 
 
  purposes. On average, firms pay total taxes amounting to 16.4% on profits, most of which come 
from corporate income tax and property tax.28 
3.99.  Major taxes include the VAT, excise tax, customs duties, and taxes on income and profits 
(Table 3.11). VAT accounted for nearly half of to tal tax revenue during the review period. At a 
standard rate of 18%, VAT is applied equally to imported goods and domestically produced goods 
and services. Article 168 of the Tax Code contains an exhaustive list of goods and services exempted from the VAT. Examples include: exports;  supply of assets within the state privatization 
process; imports of machinery, means of transpor t, spare parts and materials needed for the oil 
and gas industry, and supply of goods and services  necessary to implement oil and gas operations 
by investors and operating companies; imports of  natural gas for the production of electricity 
(thermal electric stations); supply of goods or services between enterprises in a FIZ; financial 
services; and medical services.  
Table 3.11 Tax revenue, 2009-14 
(GEL million) 
 2009  2010  2011  2012 2013 2014a 
Total taxes  4,388.9  4,866.9  6,134.8  6,671.1 6,659.3 7,153.5  
Of which (% share)       
VAT 46.7  45.3 42.3 45.7 42.9 45.7  
VAT collected at the 
borderb 27.9 23.5 14.4 11.2 8.8 16.3 
Excise tax 10.1  12.2 10.6 10.4 11.5 11.8  
Excise collected at the 
border 7.5 8.1 6.9 6.7 7.7 8.3 
Customs duties 0.8  1.4 1.5 1.3 1.3 1.3  
Direct and others taxesc 41.5 40.8 42.5 42.8 44.4 41.5 
a Provisional.  
b VAT at the border varies signific antly. The authorities indicated that this was caused by a legislative 
amendment in July 2010, according to which taxpayers with declared/paid VAT exceeding 
GEL 200,000 did not need to pay VAT at the border when they imported. VAT collected at the border 
thus reduced significantly. This amendment was ab olished in April 2014, consequently VAT collected 
at the border increased.  
c Personal income tax, prof it tax and other taxes.  
Source: Information provided by the authorities.  
3.100.  Georgia levies excise tax on: alcohol, tobacco products, cars and various petroleum 
products. From January 2010, excise tax also applies to mobile communication services. Normally, excise tax is levied to discourage the consumption of certain products, for health or environment 
protection purposes. The excise on mobile communication services is to raise revenue, so it 
remains to be seen if this tax could discourage the consumption of mobile communication services. Exports of excisable products, and the supply of Ge orgian excisable products for sale in duty-free 
zones, are exempted from excise tax. 
3.101.  Excise tax rates are in general fixed per physical unit of excisable good (litre, cm
3, 
kilogram, ton, etc.). On 1 July 2015 the excise tax on tobacco products changed to an ad valorem  tax: excise tax is calculated on the basis of the retail selling price of the product. A 
retail selling price of an excisable product must be  determined no later than 1 December of each 
year, and based on the information provided by the producers/importers.
29  
3.102.  Customs duties accounted for 1.3% of total tax revenue, up from 0.8% in 2009, reflecting 
an increase in import values.  
3.103.  The standard corporate income tax rate is 15%, and the standard individual income tax 
rate is 20%. There were plans to lower income tax rates further; however, such plans have not 
been carried out because of concerns on ensuring adequate government revenue.  
                                               
28 World Bank (2014c). 
29 The changes were reflected in sub-paragraph one of  the Tax Code, as well as the Finance Minister's 
Decree No. 996, and an act issued by the Director General of the Revenue Service. WT/TPR/S/328 • Georgia 
 
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  3.104.  Property tax is the only tax levied by loca l governments in Georgia. The listing of property 
subject to tax is prescribed in Article 201 of the Tax Code. Enterprises and individual entrepreneurs (domestic and foreign) are subject to property tax on fixed assets, non-assembled equipment, unfinished capital investments, intangible assets, and assets that they have leased to 
other persons. Individuals are also subject to pr operty tax on immovable property. The property 
tax rates are determined by local authorities, within the limits established by the Tax Code. The annual property tax rate is up to 1% of the average annual balance sheet value of the taxable 
assets (excluding land and its varieties depend ing on the location of the taxable property). 
3.4.2.1.1  Recent developments  3.105.  In 2010, the Georgian parliament passed the new Tax Code aimed at increasing 
transparency.
30 The Revenue Service began implementing the Code in early 2011. The new Code 
introduced tax benefits to micro and small businesses:  
 registered micro businesses, whose annual turnover is below GEL 30,000 with no 
employees, are entitled to a complete tax exemption; 
 registered small businesses, whose annual turnover is below GEL 100,000, pay a 5% 
turnover tax and are exempted from all other taxe s. This tax rate will be reduced to 3% if 
the business has documented business expenses (excluding salary costs) exceeding 60% of 
its turnover.31 
3.106.  An Office of the Tax Ombudsman (often referred to as the "Business Ombudsman") was 
established under the Tax Code, and Decree No. 92 of 2011. A new Law on the Business Ombudsman came into effect on 5 June 2015, according to which, the Business Ombudsman 
protects the rights and interests of business people, reveals any alleged breaches of their rights 
and interests by government agencies, and contribute s to the restoration of the rights affected in 
accordance with the Law (Article 6.1). Its website www.businessombudsman.ge  was launched in 
November 2011, to publish information on business registration, amendments to tax legislation, 
rules of litigation, etc. The Ombudsman Office pe rforms two main types of activity: dealing with 
individual applications/claims of taxpayers; and addressing systemic irregularity by substantiated 
opinion, or by legislative proposal. The Ombudsma n Office was nominated by the prime minister in 
consultation with the chairman of the parliament, and reports to the Finance and Budgetary Committee of the parliament.  
3.107.  From 2013 to 2014, there were 530 written applications to the Business Ombudsman, 
which held meetings with up to 1,500 taxpay ers. The Ombudsman's Office issued about 150 
opinions/recommendations/motions, 80% of which were fully or partially accepted by government agencies. At the beginning of 2015, a draft law on the Business Ombudsman was submitted to the 
parliament, which reiterates clauses from the Tax Code and Decree No. 92 of 2011, and added the 
following functions to the Office: presenting draft laws, acting as an amicus curiae  in the 
Constitutional Court, or to having the right to ask a public agency to perform an action (such as 
expediting a case or expulsion of persons from illeg ally occupied property). In accordance with the 
draft law, the Business Ombudsman is to be accountable both before the Government, and respective committees of the parliament. Public agencies are to be held explicitly accountable before the Business Ombudsman in terms of responding to the latter. 
3.108.  In July 2011 the parliament passed the Act of Economic Liberty, which imposes fiscal 
constraints on the Government to reinforce the confidence of local and foreign businesses in the stability of Georgia's economy. The Liberty Act bans the introduction of new state taxes or the 
increase in existing taxes (except excise tax) by means other than a nationwide referendum.  
3.109.  The Government endorsed the amendments to the Tax Code in August 2014, and 
implemented these amendments with a view to improving the business environment and 
streamlining tax administration. The main changes include: the introduction of VAT exemption for 
local businesses that serve foreign companies operating in the goods processing industry; the 
                                               
30 Tax Code of Georgia online information viewed at: http://www.rec-cauc asus.org/cp/wp-
content/uploads/2014/07/Tax-Code-Of-Georgia.pdf . 
31 PWC (2011). WT/TPR/S/328 • Georgia 
 
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  writing off of certain long overdue tax arrears and fines; and allowing small businesses to 
postpone tax obligations.32  
3.4.2.2  Incentives 3.110.  The Government continues to provide incentives, through special taxation regimes, to 
international financial companies, international companies operating in free industrial zones, and 
to free warehouse companies (Table 3.12). These companies may be exempted from VAT, property tax, customs duties, or corporate income tax. 
Table 3.12 Special taxation regimes, 2015 
Type of tax Standard tax 
rates International 
financial company 
(IFC) International 
company operating 
in a FIZ Free warehouse 
company 
Corporate income 
tax 15% 0% 0% 0% 
Value added tax 18% 0% 0% 0% 
Customs duties 0%, 5% or 12% 0%, 5% or 12% 0% 0% 
Property tax up to 1% up to 1% 0% up to 1% 
Source: Information provided by the authorities. 
3.111.  An international financial company is a fi nancial institution that conducts most of its 
business with parties outside Georgia, and is located outside a FIZ. If an IFC's income from 
Georgian sources exceeds 10% of its gross income, it will be subject to a 100% penalty on the 
excess amount.  
3.112.  The Government has also been providing state aid, which is one-time aid conferred by the 
Government for a definite period. In accordance  with Government Regulation No. 529 of 2014 on 
Approving Small Amounts of Individual State Aid and General Procedure for Granting State Aid, 
effective 1 September 2014, state aid may be provided for the purposes of the economic development of certain regions, or to facilitate the conservation of culture and cultural heritage. 
State aid may take, inter alia , the following forms: tax exemptions/reductions/deferrals; writing off 
debt and debt restructuring; issuing preferential  loans; transferring operating assets; providing 
financial aid; and tax privileges (tax reduction or writing off by the State). Applications are made 
to the Competition Agency. According to the authorities, since 1 September 2014, there have not 
been any applications for state aid. 
3.4.3  Standards and other technical requirements 3.4.3.1  Standardization 
3.113.  Georgia has continued to develop its national quality infrastructure according to 
international and EU practices. It form ulated its TBT Strategy (Strategy in Standardization, 
Accreditation, Conformity Assessment, Technical Regulation and Metrology , adopted by 
Government Decree No. 965 on 16 July 2010), and the TBT Programme ( Programme on 
Legislative Reform and Adoption of Technical Regulations , adopted by Government Decree 
No. 1140 on 25 August 2010). The TBT Strategy follows the principles that, inter alia : all 
obligatory requirements related to the protection of health and safety are set by mandatory 
technical regulations, which are adopted through government resolutions; standards are voluntary and are developed by the State and any interested party; and Georgia refrains from adopting any 
national standards in the areas where relevant international standards are in place.
33 
3.114.  In May 2012, the Code of Product Safety and Free Movement of Goods (the Code) was 
adopted, and replaced: the Law on Standardizatio n, the Law on Certification of Products and 
Services, the Law on Ensuring Uniformity of Measurements, and the Law on Control of Technical 
Hazard. The Code incorporates all relevant legislation in the field of quality infrastructure, and 
                                               
32 World Bank (2014e), p.14. 
33 Other principles include:  the market surveillance body does no t perform any conformity assessments, 
which are performed only by technically competent co nformity assessment bodies; manufacturers may apply 
all internationally accepted forms of conformity asse ssment including self-declaration on conformity to 
regulations and/or standards,  or as defined by a rele vant technical regulation. WT/TPR/S/328 • Georgia 
 
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  reflected requirements of two EU directives: the General Product Safety Directive, and the Liability 
for Defective Products. 
3.115.  In accordance with the Code, the Georgian National Agency for Standards, Technical 
Regulations and Metrology changed its name to th e Georgian National Agency for Standards and 
Metrology (GEOSTM).34 The main activities of the GEOSTM include: organizing the activity of 
national standardization and metrology through participation in the elaboration of legislative and normative documents in these fields; developing national measurement standards; and 
participating in the elaboration of mandatory  technical regulations. It is responsible for the 
registration of standards including foreign ones. Other major institutions involved in quality infrastructure include the Unified National Body of Accreditation (the Accreditation Centre – GAC), and the Technical and Construction Supervision Agency (TCSA). Standards are administered by the 
GEOSTM.  
3.116.  In the framework of the Comprehensive Institutional Programme (CIB), the physical 
infrastructure of the GEOSTM was renovated, ensu ring the proper functioning of the metrological 
reference laboratories. The GEOSTM implemented Georgia's Quality Management System 
according to international standard ISO/IEC 17025. In 2013, the regional metrology organization (COOMET) conducted peer assessment of three GE OSTM laboratories (electrical, mass, and 
temperature measurement labs). By June 2015, Georgia had 30 CMC (calibration and 
measurement capabilities) entries published in th e BIPM (International Bureau of Weights and 
Measures) data-base. The BIPM authorized the GEMSTM Metrology Institute to use the CIPM MRA logo on calibration certificates: Georgia is the first country in the region to achieve international 
recognition in the metrology field. 
3.117.  GEOSTM is the WTO TBT enquiry point, and is a member of a number of 
international/European standards and metrology organizations (Table 3.13).  
Table 3.13 Georgia's membership in intern ational/European standards organizations 
Organization  Year of 
participation Type of membership 
ISO (International Organization for Standardization) 2006 Corresponding member 
CEN (European Committee for Standardization) 2008 Affiliated member 
CENELEC (European Committee for Electrotechnical 
Standardization) 2010 Affiliated member 
IEC (International Electro technical Committee) 2010 Associate member 
OIML (International Organization of Le gal Metrology) 2011 Corresponding member 
BIPM (International Bureau of Weights and Measures) 2008 Associate member 
COOMET (Euro-Asian Cooperation of National Metrological 
Institutions) 2006 Full member 
IRSA (Inter-regional Standardization Association) 1991 Full member 
Euro-Asia Interstate Council for Standardization, Metrology and 
Certification 1995 Full member 
Source: Information provided by the authorities.  
3.118.  According to the Code, all standards are voluntary. The following types of standards may 
be used in Georgia:  
 international and regional standards;  
 standards of any EU or OECD member state;  
 Georgian standards; 
 Georgian company standards; and 
 GOST standards, used in Georgia when they trade with CIS countries, according to the 
Agreement signed in 1998 on the implementati on of agreed policies in the fields of 
standardization, certification and metrology. GOST standards are voluntary, and are not 
                                               
34 ISO online information, viewed at: 
http://www.iso.org/iso/home/about/iso_me mbers/iso_member_body.htm?member_id=1950 . WT/TPR/S/328 • Georgia 
 
- 61 - 
 
  adopted as Georgian standards. Georgian compan ies interested in exporting to CIS countries 
may use the GOST standards.  
3.119.  The Government allows importers, producers or exporters to choose which of these 
standards to make their products conform. Products imported into Georgia, from the EU and OECD 
and CIS countries and other countries where respective bilateral agreements exist, may be placed 
on the Georgian market without additional conformity assessment procedures. Technical regulations of other countries may be acknowledged and accepted for use in Georgia, provided 
that the mentioned regulation adequately fulfils the objectives of national regulation. Georgia 
acknowledges the standards and technical regulati ons of EU and OECD countries and of those 
countries with which Georgia has bilateral or mu ltilateral trade agreements; the share of these 
countries in Georgia's total imports amounted to around 30% in 2014.
35 
3.120.  In accordance with the Code, Georgia does not develop or adopt national standards in 
fields where international or European standards are being developed or adopted.36 Currently 
about 98% of all standards adopted in Georgia ar e international or European standards; 2% are 
Georgian standards developed for specific Georgian products. By December 2014, Georgia had 
adopted more than 5,500 international and European standards (Table 3.14).  
Table 3.14 Georgian standards, 2009-14 
Standards 2009  2010  2011  2012 2013 2014  
Georgian national standards 2 22 2 3 0 0 
International/European standards adopted 
as Georgian standards 872 977 48 247 234 936 
Standards of foreign countries adopted as 
Georgian standards, th at are developed on 
the basis of international standards 0 0 0 0 0 47 
Standards of foreign countries adopted as 
Georgian standards 0 21 3 4 8 21 
Total 874  1,020  53 254 242 1,004  
Source: Information prov ided by the GEOSTM.  
3.121.  In 2014, standards applied mainly to: general requirements for the competence of testing 
and calibration laboratories; inspection bodies; medical laboratories; for conformity assessment purposes; security techniques; and fibre-reinforc ed polymer (FRP) reinforcement of concrete.  
3.122.  The Government has adopted a system of  voluntary standards and certification. When 
there are no relevant international standards, new national standards may be developed. Georgia applies the Code of Good Practice for the Prepar ation, Adoption, Application and Notification of 
Standards and Technical Regulations in accordance with the TBT Agreement. Respective technical 
committees (TCs) are established to adopt and approve new standards. Any group or individual may propose drafts of standards, and all interested parties (including foreign ones) may participate in the work of TCs on a voluntar y basis. The public may comment on the draft 
standards for a period of at least one month. Companies may develop and use their own company 
standards without registering them, but assume full responsibility for being compliant with the relevant technical regulations.
37 
3.123.  Currently there are five standardization technical committees, on: electrotechnical 
standards, conformity assessment and manageme nt standards, food products, tourism, and 
construction. According to the authorities, de pending on the needs of the country, technical 
committees in other standardization areas are to be established.  
                                               
35 These countries are: Australia; Austria; Belgium; Canada; Chile; Cyprus; Czech Republic; Denmark; 
Estonia; Finland; France; Germany; Un ited Kingdom; Greece; Hungary; Ireland; Iceland; Israel; Italy; Japan; 
Republic of Korea; Latvia; Lithuania; Luxemburg; Malta; Mexico; Netherlands; New Zealand; Norway; Poland; Portugal; Slovakia; Slovenia; Spain; Sweden; Switzerland; and the United States. 
36 FAO, Eastern Europe and Central Asia Agro-Ind ustry Development Country Brief – Georgia , viewed 
online at: http://www.fao.org/fileadmin/user_upload/Europe/documents/Publications/AI_briefs/AI_breiefs2012/fao_geor
gia.pdf . 
37 EU-Georgia Business Council, Report on Technical Barriers to Trade . Online information viewed at: 
http://eugbc.net/wp-content/uploads/2014/11/Technical%20Barriers.pdf . WT/TPR/S/328 • Georgia 
 
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  3.4.3.2  TBT notifications 
3.124.  To facilitate the notification process under the WTO TBT (Technical Barriers to Trade) 
agreement, the Government adopted its decree “o n the procedure of notification to the WTO 
regarding standards, technical regulations, confor mity assessment procedures and drafts thereof” 
on 18 September 2009.  
3.125.  Between 1 January 2009 and 4 August 2015,  Georgia made 84 notifications on standards 
and technical regulations to the WTO. Among these,  30 were notified under Article 2.9 of the TBT 
Agreement. All were submitted by the GEOSTM, and the products concerned include different 
types of vehicles, electronic communications, oil products, construction rules, labelling rules, tobacco products, environmental protection, and rules on air transport, road transport, and maritime transport. Some of the notified draft technical regulations approximate to relevant 
international or EU legislation. All technical regulations notified were developed on the basis of EU 
directives or according to international conventions. Georgia, as a developing country, also submitted notifications using Article 2.10 of the TBT agreement, which allows members to adopt 
technical regulations urgently.  
3.126.  Georgia also submitted five notifications under both Article 2.9.2 and Article 5.6.2 of the 
TBT Agreement on, inter alia , the approval of the rules and procedures of the accreditation 
system; the unilateral recognition of technical re gulations of EU and OECD member countries; the 
rules of conformity assessment procedures for imported objects requiring conformity assessment; the rules defining conformity assessment modu les, sub-modules and related procedures; and 
certification on bio-farming procedures. 
3.127.  Between January 2009 and August 2015, no concerns were raised by WTO Members in the 
TBT Committee over Georgia's technical regulations.
38  
3.4.3.3  Conformity assessment, accreditation 
3.128.  The main piece of legislation on conformi ty assessment is the Code on Safety and Free 
Movement of Products, which replaced the Law on  Certification of Products and Services, and 
incorporated the Law on Conformity Assessment. The Code provides for the  basic principles on 
conformity assessment of products and services. Further, according to Government Decree No. 50 
issued on 7 March 2013, Georgia unilaterally reco gnized technical regulations of EU and OECD 
member countries. Thus imports from these countries do not need to go through additional conformity assessment procedures in Georgia.
39 For imported products from other countries, 
conformity assessment procedures are carried out according to the Code.  
3.129.  Conformity Assessment is performed by accr edited bodies (primarily private bodies). The 
Georgia Accreditation Centre (GAC) conducts accredit ation and surveillance in testing, calibration, 
verification and certification, and inspection. The GAC has accredited 125 conformity assessment 
bodies: 77 testing laboratories, 7 calibration laboratories, 30 inspection bodies, 2 medical laboratories, 6 product certification bodies, and 3 personnel certification bodies. Testing 
laboratories are mainly in the following fields: electrical products; products from chemical, 
perfume and pharmaceutical industries; food, drinking water and mineral water, alcoholic and non-alcoholic beverages; composition of soil and mineral resources; oil and mineral products; glass products; paints and dyes; building materi als; and radio engineering products.  
3.130.  Market supervision is conducted by the National Food Agency under the Ministry of 
Agriculture on agricultural products, and by the Technical and Construction Supervision Agency (TCSA) on construction and hazardous materials, and industrial products. The Government 
elaborated a Market Surveillance Strategy for Industrial Products .  
3.131.  Georgia signed a number of regional/bilateral agreements covering TBT-related issues, 
with the CIS, Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Russian Federation, Turkmenistan, 
Ukraine, and Uzbekistan. The DCFTA also covers TBT-related issues, including standardization, 
                                               
38 WTO TBT website: http://tbtims.wto.org/web/pages/search/stc/Search.aspx . 
39 WTO document, G/TBT/N/GEO/72, 17 April 2013. Th e Government Decree No. 45 on Recognition of 
Technical Regulations of other Countries and Rules of their Application was repealed. WT/TPR/S/328 • Georgia 
 
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  technical regulations, metrology, accreditation, conformity assessment, market access, and market 
surveillance.  
3.4.3.4  Labelling and packaging requirements 3.132.  General requirements on labelling are provided in: 
 the Code on Food/Feed Safety, Veterinary and Plant Protection (Article 18), which lays down 
the general requirements for labeli ng of food and food products;  
 the Code on Safety and Free Movement of Products (Article 12), which provides information 
to be presented to consumers regarding the product; 
 Government Resolution No. 441 (31 December 2 013) on the Approval of the Rule of the 
Additional Labelling of Food Products; 
 Government Resolution No. 173 on General Hygienic Rules of Food/Feed Producing 
Enterprises/Distributers and Rules of Implementa tion of Supervision, Monitoring and Official 
Control in the Areas of Food Safety, Veterinary and Plant Protection; and 
 the Government Resolution on Sanitary-hyg iene Rules of Food Trade and Government 
Decree No. 90 (7 March 2012) on Specific Hygiene Rules for Food of Animal Origin.  
3.133.  All cosmetics, pharmaceutical, chemical, an d food products must have Georgian language 
labelling at the sales point.  
3.134.  The introduction of living modified organi sms (LMOs) into Georgia is prohibited, according 
t o  t h e  L a w  o n  L i v i n g  M o d i f i e d  O r g a n i s m s .  A  l i v i n g  m o d i f i e d  o r g a n i s m  m a y  b e  p l a c e d  o n  t h e  Georgian market if it belongs to the species of LMOs approved by the Minister of Environment and 
National Resources Protection (Ministerial Order No. 198 of 24 April 2015). Genetically modified 
organisms for food/feed use and genetically modified  products must be labelled if the genetically 
modified components contained therein exceed 0. 9% of the total mass as prescribed by the Law 
on the Labelling of Genetically Modified Organisms for Food/Animal Feed Use and of Genetically 
Modified Products Derived Therefrom. 
3.4.4  Sanitary and phytosanitary requirements 3.135.  The main factors hampering food exports from Georgia are weak food safety regulations 
and supervision capacity, and the lack of best in ternational practices among food producers. Thus, 
improved food safety management would benefit both public health and trade.
40 The authorities 
stated that Georgia has gradually developed its national regulatory system in line with the EU and international standards. The legislative approximation process has been moving faster since the 
DCFTA with the EU was signed. The Government also facilitates the establishment of good 
agricultural practices in different fields.
41  
3.136.  Main legislation on SPS is the Code of Food/Feed Safety, Veterinary and Plant Protection 
(2012) (Table 3.15). All other secondary legislative documents are adopted according to this Code 
and have to be in compliance with this Code. This Code was most recently amended in 2014, with the main change relating to the protection of consumer rights and interests. Symmetry to cover all 
three areas (animals and animal products, plants and plant products, and food and food products) 
was improved.  
                                               
40 IFC online information, viewed at: 
http://www.ifc.org/wps/wcm/connect/region__ext_content/regions/europe+middle+east+and+north+africa/ifc
+in+europe+and+central+asia/countrie s/improving+food+safety+in+georgia . 
41 International Standards For Phytosanitary Measures  (ISPM) are implemented in Georgia: ISPM 1, 
ISPM 5, ISPM 7, ISPM 12, ISPM 13, ISPM  15 (partially), ISPM 23, and ISPM 32. WT/TPR/S/328 • Georgia 
 
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  Table 3.15 SPS regime 
SPS Description 
Legislation Code of Food/Feed Safety, Veterina ry and Plant Protection (2012, most recently 
amended on 17 April 2014) Georgian Tax Code (2011) Code of Food Safety and Free Movement of Goods (2012) 
Government resolutions No. 170 General Hygienic Rules of Food/Feed Producing Enterprises/Distributers 
and Rules of Implementation of Supervision, Monitoring and Official Control in the 
Areas of Food Safety, Veterinary  and Plant Protection (2010)  
No. 90 Special Hygiene Rules of Animal Origin Food (2012) 
No. 426 - Permits;  
No. 427 - Phytosanitary Certificates for Export;  
No. 428 – Sanitary-quarantine Control Rules;  
No. 429 – Phytosanitary and Veterinary Border Control Rules;  
No. 430 – Veterinary Certificates for Export. 
Membership in SPS-related 
international organizations  Codex Alimentarius Commission;  
Food and Agriculture Organization (FAO);  World Health Organization (WHO);  World Organisation for Animal Health (OIE);  International Plant Protec tion Convention (IPPC); 
European Commission for the Control of Foot-and-Mouth Disease (EuFMD) 
International conventions  WTO Agreement on Sanitary and Phytosanitary Measures;  
International Convention on the Harmoniz ation of Frontier Controls of Goods; 
International standards of phytosanitary measures  
Import/transit permits for 
goods subject to phytosanitary and veterinary control issued by National Food Agency (NFA) 
Revenue Service (RS) 
Types of permits Transit permit for goods subject to veterinary control; 
Import permit for goods subject to veterinary control;  
Import permit for goods subject to phytosanitary control; and 
In case of transit, providing permit is not mandatory 
Source: Information provided by the authorities.  
3.137.  The National Service of Food Safety, Vete rinary and Plant Protection (established in 2006) 
was transformed into the National Food Agency (NFA) in 2010. The NFA provides food and feed 
safety and quality assurance, carries out state control over hygiene, veterinary-sanitary and 
phytosanitary rules and requirements, and conduc ts risk management and communication tasks.42 
To measure the risk of processing establishments , the NFA and the Ministry of Agriculture (MOA) 
prepared risk ranking tools, and the FBOs (food/f eed business operators) are prioritised according 
to the level of risk identified.43  
3.138.  Some research found that the incidence of food-borne diseases continued to increase after 
2009, which may be attributed to a lack of food safety control.44 The NFA elaborated an Annual 
Control Plan of Food/Feed Business Operators (FBOs), who are responsible for food safety and 
quality. The NFA is the only authority that can inspect FBOs. The authorities stated that the number of NFA staff increased between 2013 and 2014 when capacity-building programmes were 
strengthened. As a result, the number of FBOs inspected by the NFA increased threefold from 
2013 to 2014, and the number of both follow-u p inspections and sanctions imposed increased 
significantly.  
3.139.  The Ministry of Agriculture sets food-s afety policy and standards, and the Ministry of 
Health and Social Affairs contributes by defining parameters of food safety for human health. In 
2010, the Government adopted a comprehensive SPS strategy (Decree No. 1756), which was later amended by Decree No. 783 in May 2014. According to the amendment, nearly 90 SPS regulations 
in food safety, veterinary and plant protection  are to be implemented in 2015, and the main 
framework for the development of Georgian legisl ation is the list adopted according to the DCFTA 
requirements.   
                                               
42 Risk assessment is conducted by the Sc ientific Research Centre of the MOA. 
43 FAO, Eastern Europe and Central Asia Agro -Industry Development Country Brief  – Georgia , online 
information viewed at: http://www.fao.org/fileadmin/user_upload/Europe/documents/Publications/AI_briefs/AI_breiefs2012/fao_geor
gia.pdf . 
44 Food safety paper: Food Safety in Georgia , viewed online at: 
http://www.eastagri.org/meetings/d ocs/meeting93/B ooklet_eng_web.pdf . WT/TPR/S/328 • Georgia 
 
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  3.140.  Imports of animals and animal products mu st be accompanied by a veterinary certificate 
issued in the country of origin. Imports of plants and plant products must be accompanied by a phytosanitary certificate. For food of animal origin, the veterinary/health certificate is required. The NFA is responsible for issuing import/transit  permits for goods subject to phytosanitary and 
veterinary controls. 
3.141.  Border inspection is conducted by the Revenue Service, and is free of charge. The standard 
processing time is not defined, while the normal time for documentary, identity and physical 
checks ranges from 20 minutes to five days in the case of laboratory analysis. If a consignment is 
found to be not in conformity with Georgian SPS requirements, the goods are: prohibited from being imported into Georgia; subject to treatmen t, sorting, packing replacement if such actions 
preclude the identified risk; subject to destruction; or subject to suspension.  
3.142.  Live animals and animal products intended for import into Georgia must be subject to 
inspection at the border for: documentary check; identity verification; physical examination (in case of suspicion, or in accordance with the monitoring plan); and a clinical test for live animals. 
Veterinary control does not extend to: personal belongings of diplomats, diplomatic mail and 
consular pouch; goods imported by mail or by passengers in baggage or hand luggage within certain limits; goods imported as a sample, and/or imported in small quantities for exhibition 
purposes and not intended for human consumption; or in cases of movement of goods in order to 
eliminate the consequences of force majeure. 
3.143.  Plants and plant products intended for import into Georgia must be subject to: 
documentary check; identity check; plant health control; and sampling for local inspection or 
laboratory analysis. Plants and plant products subject to phytosanitary control must be 
accompanied by a phytosanitary certificate issued by the quarantine authority of the exporting country, and in cases required by Georgian legislation, the consignment intended for import must 
be accompanied by an import permit issued by the National Food Agency and the Revenue 
Service. Infested or infected shipments that canno t be disinfected are returned to the country of 
origin or destroyed with the owner's consent. 
3.144.  In March 2015, Georgia notified its Law on Live GMOs, which was adopted in September 
2014.
45 The notification makes reference to the Constitution of Georgia, and to the Cartagena 
Protocol on LMOs. The Law was prepared according to EU practices. The authorities indicated that Georgia is in the process of notifying its SPS enquiry point to the WTO. 
3.145.  Georgia does not have mutual recognition agreements (MRA) with other countries with 
respect to quarantine requirements on plants and plant products, animals and animal products, or import requirements for food products. 
3.146.  Pesticide management is governed by the Food/Feed, Veterinary and Plant Protection 
Code, and the Law on Pesticides and Agrochemicals, in accordance with the Rotterdam Convention, the Stockholm Convention, the Basel Convention, and the Montreal Convention, as 
well as the FAO International Code of Conduc t on the distribution and use of pesticides.
46 
Institutions involved include: the Ministry of Environment Protection and Natural Resources, the 
Ministry of Labour, Health and Social Affairs, and research institutions. According to the authorities, the registration process is harmoniz ed with Annex I of the 91/414 EEC Directive.  
3.147.  Before 13 September 2014, it was not mandatory for exporters to provide phytosanitary or 
veterinary certificates, unless requested by the importing country. In accordance with the amendments to Government Resolutions No . 426 and No. 430, from 13 September 2014, 
exporters must submit the phytosanitary and/or veterinary certificates of their exports if the goods 
are subject to phytosanitary/veterinary control. 
3.148.  Exports of Georgian agricultural products  were banned from entering the Russian market 
as of 2006. The export bans were lifted on a number of agricultural products in 2013, including on 
wine and mineral waters.  
                                               
45 WTO document, G/SPS/N/GEO/23, 9 March 2015. 
46 Pesticide Registration in Georgia, online information viewed at: 
http://www.ceureg.com/17/docs/presentations/V_3_A smat%20Buachidze%20-% 20Eka%20Tsankashvili.pdf .  WT/TPR/S/328 • Georgia 
 
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  3.149.  The inspection procedure for domestically-produced food products is regulated under the 
Code on Food/Feed Safety, Veterinary and Plant Protection and relevant secondary legislation. The NFA has the right to verify documents and ente r and inspect premises to check their hygiene 
conditions. The NFA issues recommendations, and imposes fines in case of non-compliance or if 
corrections are not made. The NFA may stop produc tion or recall products from the market. The 
NFA implements inspection of domestic products intended for human consumption and feed. All premises handling food of animal origin are currently inspected once per year, and 
slaughterhouses and dairy productions are in spected twice a year. Follow-up non-planned 
inspections may be carried out. The NFA and the MOA rank the risks according to the CODEX guidelines, and the type of production, processing  capacities, and inspection history. Companies 
with International Organization for Standardization and Hazard Analysis and Critical Control Points 
(HACCP) certificates are inspected less frequently.
47 
3.150.  During the review period (up to 4 August 2015), no trade concern was raised in the SPS 
Committee with regard to Georgia.48  
3.151.   Georgia signed several RTAs covering SPS-related issues. In accordance with Chapter 4 of 
the DCFTA, both the EU and Georgia are commi tted to: ensuring full transparency of SPS 
measures; approximating the Georgian regulatory sy stem to that of the EU; further implementing 
the principles of the Agreement on the Applicatio n of Sanitary and Phytosanitary Measures of the 
WTO; and conducting other actions related to trade and to the protection of public, animal and plant health. In accordance with the FTA with Turkey, both parties agree: not to apply their SPS regulations as an arbitrary or unjustifiable discrimination or a disguised restriction on trade 
between them; apply their SPS measures within  the rules and procedures of the GATT 1994 and 
the other relevant WTO agreements. 
3.4.5  Competition policy and price controls 
3.4.5.1  Competition policy 
3.152.  Both the legislative and the institutiona l framework on competition policy have been 
changed significantly during the review period. 
3.153.  Reform of competition policy was considered one of the priority areas for the successful 
completion of the negotiations between Georgia and the EU on the DCFTA. In accordance with 
these requirements, the Government approved the Comprehensive Strategy on Competition Policy in 2010. Also in the framework of the DCFTA, th e Law on Free Trade and Competition was adopted 
on 8 May 2012. It was renamed as the Law on Competition following amendments passed by the 
Parliament on 21 March 2014. Major differences between the Law on Competition, and the Law on Free Trade and Competition are listed in Table 3.16. 
Table 3.16 Major differences between the La w on Free Trade and Competition, and the 
Law on Competition 
Law on Free Trade and Competition Law on Competition 
Did not apply to the markets where commodity 
turnover did not exceed 0.25% of GDP (Article 1(4)(f)). There was a risk that competition legislation did not apply to markets such as salt and matches. Applies to all sectors of the economy, except those 
with sectoral regulators, and those with de minimis  
agreements. 
Did not apply to:  Does not apply to: 
- horizontal agreements if the aggregate market share of the parties did not exceed 25%;  - horizontal agreements if the aggregate market 
share of parties does not exceed 10%; 
- vertical agreements if the aggregate market share 
of the parties did not exceed 40%. - vertical agreements if the market share of each 
party does not exceed 15%; 
- if the contract involves bo th horizontal and vertical 
agreements (it was difficu lt to identify if the 
agreement was a horizontal or a vertical one), and - the agreement made among economic agents 
containing characteristics of  horizontal and vertical 
agreements, whereby it is diffi cult to classify it as a 
                                               
47 FAO, Eastern Europe and Central Asia Agro-Ind ustry Development Country Brief – Georgia , online 
information viewed at: 
http://www.fao.org/fileadmin/user_upload/Europe/documents/Publications/AI_briefs/AI_breiefs2012/fao_geor
gia.pdf . 
48 WTO SPS online information: http://spsims.wto.org/web/pag es/search/stc/Search.aspx . WT/TPR/S/328 • Georgia 
 
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  Law on Free Trade and Competition Law on Competition 
the parties' aggregate market share did not exceed 
40% (Article 8); horizontal or a ve rtical agreement, and market share 
on the relevant market of each party to the 
agreement does not exceed 10%. (Article 8 (c)).  
Allowed the competent agency to deal with anti-
competitive activities only in some pre-determined 
sectors.  Allows the competent agency to conduct 
investigations either on the basis of submitted 
applications/complaints or at its own initiatives. 
Did not cover unfair competition Chap ter II(1) covers unfair competition 
Fines were linked to profits of the past year; if there 
was no profit in the past year, fines were linked to 
the turnover Fines linked to turnover, as per the EU's practice. 
Source: Information provided by the authorities.  
3.154.  The Law on Competition regulates anti-competitive agreements, abuse of dominant 
position and mergers (Table 3.17). The Law applies to all production, commerce and service activities in Georgia except those sectors wher e the Sector Regulators are operating. The Law 
applies to all enterprises including SOEs.  
Table 3.17 Key characteristics of the Law on Competition 
Subject Exceptions 
Anti-competitive agreements:  
The Law bans any explicit or implicit agreements that 
would restrict competition De Minimis  agreements are exempted from this ban, 
provided that they do not fix prices, share markets, or 
set agreed terms of tender. 
Agreements of minor importance are those where: 
(a) aggregate market share of the parties to a horizontal 
agreement does not exceed 10%; 
(b) market share of each party to a vertical agreement 
does not exceed 15%; 
(c) the agreement among economic agents contains 
characteristics of both horizontal and vertical agreements 
whereby it is difficult to classify it as a horizontal or a 
vertical agreement, and the market share of each party 
does not exceed 10%. 
Abuse of dominant position:  
The Law prevents enterprises with a dominant 
position in the domestic market from abusing their 
dominance to limit competition Dominant position is defined as the status in which the 
economic agents may substantially influence the general 
market conditions and restrict competition.  
If no other evidence exists, the economic agent/agents is 
not regarded as having dominant position if his/their 
market share does not exceed 40%. Each of the two or 
more agents is regarded as having dominant position if 
he is not subject to any significant competition from the 
other economic agent, regarding sources of their raw 
materials and limited availability of their products 
market, market entry barriers and other factors and in 
addition:  
(a) aggregate market share of no more than 3 economic 
agents is more than 50% and market share of each of 
them is no less than 15%; 
(b) aggregate market share of no more than 5 most 
significant economic agents is more than 80% and 
market share of each of them is no less than 15%. 
Abuse of dominant position includes: 
 imposing unfair purchase or selling prices; 
 limiting production, markets or technical 
development to the prejudice of consumers; 
 applying dissimilar conditions to equivalent 
transactions with other trading parties and thus placing them at a competitive disadvantage; 
 making the conclusion of contracts subject to 
acceptance by the other parties of supplementary obligations which have no connection with the subject of such contracts, etc.  The Law does not establish cases of exemption from 
abuse of dominant position; however, it should be noted that in general, an economic agent having the dominant 
position on the market is not violating the Law, but only 
abuse of dominant position can be punished. 
Mergers and acquisitions are subject to 
monitoring  
Concentration is subject to preliminary written notification to the agency if the involved economic agents meet one of the following conditions: Exceptions are: 
(a) merger of the economic agents with the market power less than the limit established by Section 1 of WT/TPR/S/328 • Georgia 
 
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  Subject Exceptions 
(a) joint annual turnover in Georgia exceeds GEL 20 
million, and annual turnover of at least two members of concentration from each economic agent exceeds GEL 5 million; 
(b) joint value of operating assets in Georgia exceeds 
GEL 10 million and value of operating assets in Georgia of at least two members of concentration 
from each economic agent exceeds GEL 4 million. Article 111 of this Law takes place; 
(b) concentration results from insolvency and is provided in accordance with the procedures specified by the Law on Insolvency Proceedings, and in the process of 
liquidation, with the exception of cases where the 
competing enterprise or group, to which the competitors of the insolvent enterprise belong, gains control; (c) control is gained temporarily to secure the loan, provided that the rights gained through ownership of the assets are not exercised, with the exception of the right of disposal; (d) concentration applies to the participants of the interdependent persons; (e) financial institution purchases, with its own or client’s funds, the participation interests or shares in the other 
enterprise and gains control over it temporarily or 
purchases assets for their further disposal, in the ordinary course of its business, provided that this transaction is made within one calendar year, from the date of their purchase/gaining control over them; in addition: such institution has no rights with respect to ownership of the shares or pa rticipation interests, with 
the exception of rights on dividends; such institution uses the rights for preparing the establishment of the enterprise, its assets or shares and participation interests for preparing for sale, in full or in part. 
Unfair competition practices are prohibited  
For the purposes of this Article, any action of an economic agent that contradicts the norms of business ethics and infringes the interests of competitors and consumers is regarded as unfair competition, in particular: (a) transfer of information by any means of communication (including through improper, unfair, unreliable or apparently false advertising), misleading consumers and stimulating him/her to perform certain economic actions; (b) concealing the actual purpose of the deal for the purpose of misleading a party and thus gaining 
advantages in competition; 
(c) undermining the competitor’s business reputation (formation of improper impression on the enterprise, products, entrepreneurial or trade activities); (d) misappropriation of the competitor’s or third person’s form of goods, their packaging or appearance; (e) gaining, using or disseminating scientific-technological, production or trade information or commercial secrets without consent of their owner; (f) subordination of the buyer, supplier, employee or person with decision-making authorities to act against 
the interests of their employee or neglecting 
consumers’ interests; (g) call for boycott. Exceptions not prescribed by the Law. 
Source: Information provided by the authorities.  
3.155.  Two by-laws of the Law on Competition were adopted before 1 September 2014: the Small 
Amounts of Individual State Aid and General Procedure for Granting State Aid, which, inter alia , 
ensures non-discrimination and transparency of the procedures for granting state aid; and the 
Exceptions from Prohibition of Competition Restrictive Agreements, which defines exemptions from 
the agreements that restrict competition in the relevant markets.   
3.156.  Another five by-laws were passed by the order of the Chairman of the Competition Agency 
before 1 October 2014:  
 Procedure for extending the leniency progra mme and benefiting from exemption from 
liability;  
 Methodological instructions of market analysis; WT/TPR/S/328 • Georgia 
 
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   Rules for submission and consideration of concentration notification; 
 Rules and procedures for case investigation; 
 Forms of applications and complaints, rules for their submission and procedures and 
deadlines related to the admissibility of the application and complaint.  
3.157.  The Free Trade and Competition Agency had been merged with the State Procurement 
Agency between 2012 and 2014, when it was renamed as the Competition and State Procurement Agency. From March 2014, according to the Law on Competition, the Competition and State 
Procurement Agency was split into the Competitio n Agency, and the State Procurement Agency. In 
accordance with the Comprehensive Strategy, the Competition Agency is the single authority responsible for competition enforcement in all sectors of the economy, except those sectors 
possessing sector regulators such as the National Communications Commission (on 
telecommunications), the National Bank of Georgia (on financial services), and the National Energy 
and Water Supply Regulatory Commission (on electricity, natural gas, water, etc.). The cooperation between the Competition Agency and the sectoral regulators is regulated under the 
Law on Competition.  
3.158.  The Competition Agency has become a me mber of the International Competition Network 
(ICN) since 29 October 2014. According to the authorities, Georgia has become a member of the 
Sofia Competition Forum (SCF), whose members are: Albania; Bosnia-Herzegovina; Bulgaria; 
Croatia; Kosovo; Montenegro; the Former Yugosl av Republic of Macedonia; Serbia; and the 
UNCTAD. 
3.159.  The Competition Agency completed investigations of the following five cases:  
a. on the possible violation of Article 10 of the Competition Law, on the inadmissibility of 
competition distortion by the State authorities, authorities of the autonomous republic and local self-government authorities – violation was confirmed, and recommendations 
given; 
b. on the alleged abuse of dominant position of  the JSC "Balneoservice" on thermal mineral 
water markets in Tskaltudo – violation not confirmed, and recommendations issued to 
improve the competitive environment on the relevant market; 
c. the Georgian Trans Expedition Ltd. - violat ion of Article 10 confirmed, and relevant 
recommendations issued to the Revenue Service; 
d. merger applications by Limited Liability Co mpany (LLC) “Heidelbergcement Georgia” of 
the LLC “Tbilcement Group” – merger was found to fall into the allowed limits of 
concentration, and was in compliance with anticompetitive legislation; 
e. due to high public interest, the Competition Agency conducted investigations of the fuel 
market on its own initiative. The Agency found : violation of Article 7 on diesel and fuel 
markets from 2008 to 2014. Infringement constituted intended price fixing and market quantitative sharing practices by five major market players in cooperation with three 
economic agents, as well as creating artificial entry barriers by the five major players 
between 2010 and 2012. Two major players were also found to set price margins 
through their franchising licences given to 23 small economic agents. The Competition Agency imposed fines up to a total of GEL 55 million on eight major economic agents, 
and a symbolic fine of GEL 200 for each of the franchise agents.  
3.160.  The Competition Agency commenced investigations on its own initiative into the following 
anti-competitive cases: oil terminals' activities in the Black Sea ports, and the possible abuse of 
dominant position of the "Batumi Oil Terminal "; and the wheat and grain products producer 
association "Globalagro". The Agency also commenced investigation of anti-competitive cases based on complaints or applications on: the "Consumers Rights Protection Society", the "Georgian 
Trans Expedition Ltd.", the "Globalagro" (the wheat and grain products producer association), the 
"Intertechnics" Ltd, the "Tbilservice Group", , and the merger application submitted by the JSC 
"Medical Corporation Evex" .  WT/TPR/S/328 • Georgia 
 
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  3.161.   In addition, the Competition Agency co nducted a survey in accordance with problems 
raised by economic agents, in the areas of audit services, accounting and financial services, and state procurement of cars. 
3.4.5.2  Price controls 
3.162.  According to the authorities, prices are de termined by the market in Georgia, except for 
the prices of communications, water and energy supply, and of municipal services such as the 
subway and other public transport.  
3.163.  The Georgian National Communications Commission, based on analysis of relevant 
markets (subject to ex ante regulations), identifi es significant market power operators. The GNCC 
may define specific obligations including price controls for such operators.  
3.164.  In accordance with the Law on Electricit y and Natural Gas, the Georgian Energy and Water 
Supply Regulatory Commission (GNERC) is authorized to set and regulate tariffs for electricity 
(since 1997), natural gas (since 1999), and water (since 2007) (Table 3.18). 
Table 3.18 Prices set by the GNERC 
 The Commission sets and regulates the following 
prices: Deregulated prices: 
Electricity Tariffs for electricity generation, transmission, dispatch, 
distribution and pa ss-through, import and consumption, 
market operator (Electri city System Commercial 
Operator (ESCO)) services, and for guaranteed capacity. Small hydropower plants (HPP) 
(up to 13 mw) and power plants constructed after 2008 are deregulated. 
Natural gas Tariffs for natural gas transportation, supply (only the 
household category), distri bution, pass-through and 
consumption (only the household category). Supply and consumption tariffs for 
non-household consumers are 
deregulated. 
Water  Drinking water supply and waste-water treatment 
tariffs.  
Source: Information provided by the authorities.  
3.165.  According to the Law on Electricity and Natural Gas, subsidies are not allowed in the 
electricity and natural gas sectors. Subsidies are allowed in the water supply sector, thus water supply tariffs set by the GNERC for household consumers are subsidized at the expense of 
non-household tariffs.  
3.4.6  State-owned enterprises, privatiz ation, and state trading arrangements 
3.4.6.1  State-owned enterprises 
3.166.  State-owned enterprises are regulated under the Civil Code of Georgia, the Law on State 
Property, the Law on Entrepreneurs, the Law on State Procurement, and various government decrees. The State Property Agency (SPA) is responsible for the privatization of SOEs, the selling 
of non-agricultural land and property, and the renting of agricultural land belonging to the state. 
The SPA estimates that land/property sales have generated annual revenues of GEL 100 million in 
the past decade. Regarding SOEs, 256 are owned by the SPA, of which only 69 are functioning. By 
1 January 2014, these SOEs contributed to about 1% of GDP, and employed about 0.8% of the 
workforce. A selection of large SOEs owned by the SPA is listed in Table 3.19. 
Table 3.19 Selection of large SOEs ow ned by the State Property Agency 
(US$ million) 
Name/ operation Total asset 
value Activity Operating 
revenue Operating 
profit 
Marabda-Kartsakhi Railway  1,017 Railway construction .. 12 
Georgian Union of Airports 184 All airports in Georgia 15 3 
Tbilaviamsheni 179 Metallurgy plant 22.9 3.5 
Georgian Post 88 Postal services 53 0.9 
Sakaeronavigatsia 115 Air transition 55 7.5 
Georgian Tele-Radio Centre 26.6 Radio and television 
services 4.7 0.15 WT/TPR/S/328 • Georgia 
 
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  Name/ operation Total asset 
value Activity Operating 
revenue Operating 
profit 
National High Technology Centre of 
Georgia 5 Isotope separation, 
isotopes of compounds and clean materials manufacturing 2 0.13 
.. Not available. 
Source: Information provided by the authorities. 
3.167.  The state retains a controlling interest in air traffic control, shipping traffic control, railroad 
control systems, defence and weapons industries, and nuclear energy. Only the state may issue currency, banknotes, and certificates for goods made from precious metals, import narcotics for medical purposes, and produce control systems for the energy sector.
49 
3.168.  In 2011, a Partnership Fund (a sovereign fund) was created on the basis of consolidating 
the ownership of the largest SOEs operating in transportation, energy and infrastructure sectors.50 
With a total asset of more than GEL 5 billion and capital of GEL 2.4 billion, the Partnership Fund 
has 100% of shares of the Georgian Railways, Georgian Oil and Gas Corporation (GOGC), Georgian 
State Electrosystem, and Electricity System Commercial Operator (ESCO). It also has 24.5% of the shares of JSC Telasi. The Fund is chaired by the Prime Minister, and was established to facilitate 
foreign investment in new projects by providing co-financing. The participation of the Fund in each 
project is limited to minority share (up to 50%).  Energy, agriculture, manufacturing, real estate, 
tourism and logistics, and infrastructure sectors are on the priority list of the Fund, as these sectors are largely untapped and have the great potential for further development. 
3.4.6.2  Privatization 
3.169.  The Government has privatized the majority of the largest formerly state-owned 
enterprises in the country. Successful privatization projects include major deals in energy 
generation and distribution, telecommunications, water utilities, port facilities, and real estate 
assets. A list of entities available to be privatized can be found on the website www.nasp.gov.ge , 
or www.privatization.ge .  
3.170.  Privatization was conducted mainly in three forms: auction; direct sale (including direct 
sale on a competitive basis); and free transfer of title of the property. Privatization through direct 
sale is an exceptional form used only in cases where investors are making significant investment. According to the authorities, property's initial selling price generally equal to market price and is 
determined by an independent expert. 
3.171.  According to the authorities, during the privatization process, foreign companies have 
equal treatment as domestic companies in purchasing the shares of SOEs, except as regards the 
purchase of agricultural lands. 
3.172.  Regarding gains from the privatization process, 7% (which includes the 18% VAT) goes to 
the State Property Agency  in charge of the privatization process, while 93% is exempt from VAT 
and is transferred to the budget. 
3.4.6.3  State trading arrangement 3.173.  Georgia notified that from 2003 to 2013, it did not maintain any state trading enterprises 
in accordance with Article XVII:4(a) of the GATT 1994.
51 According to the authorities, Georgia does 
not maintain any state trading enterprises.  
                                               
49 U.S. Department of State (2013). 
50 Partnership Fund  online information, viewed at: http://www.fund.ge/eng/home/ . 
51 Latest notification by Georgia contained in WTO document, G/STR/N/15/GEO, 3 February 2014. WT/TPR/S/328 • Georgia 
 
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  3.4.7  Protection of intellectual property rights 
3.4.7.1  Overview 3.174.  Georgia ratified a number of internationa l conventions related to IP rights, and made 
amendments to its IP legislation during the review period. Its IP legislation is still being amended; 
in 2014, new amendments to IPR laws on trademarks, patents, designs, copyrights and 
neighbouring rights were drafted in accordan ce with the DCFTA and are under interagency 
procedures (Table 3.20). The authorities stated that Georgia's IPR legislation is fully aligned with 
the TRIPs Agreement.  
Table 3.20 IPR legislative framework, and inte rnational conventions ratified by Georgia 
Date of accession  Multilateral agreements joined by Georgia 
25 December 1991 Convention establishing the WIPO 
25 December 1991 Paris Convention for the Protection of Industrial Property 
25 December 1991 Patent Cooperation Treaty 
16 May 1995 Berne Convention for the Protection of Literacy and Artistic Works 
20 August 1998 Protocol Relating to the Madrid Agreement Concerning the International Registration of 
Marks 
4 June 1999 Agreement on Measures for Prevention and Repression of use of False Trademarks and 
Geographical Indications (CIS) 
4 June 1999 Agreement on Mutual Ensuring of Interstate Secrets Safety in the Field of Legal Protection 
of Inventions (CIS) 
14 June 2000 Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement) 
6 March 2002 WIPO Copyright Treaty 
20 May 2002 WIPO Performances and Phonograms Treaty 
28 Feb 2003 Nice Agreement Concerning the International Classification of Goods and Services for the 
Purposes of the Registration of Marks 
1 August 2003 Hague Agreement Concerning the International Registration of Industrial Designs  
23 December 2003 Geneva Act of the Hague Agreement Concerning the International Registration of 
Industrial Designs 
23 September 2004 Lisbon Agreement for the Protection of Appe llations of Origin and their International 
Registration 
14 August 2004 Rome Convention for the Protection  of Performers, Producers of Phonograms and 
Broadcasting Organizations 
30 September 2005 Budapest Treaty on the International Recogn ition of the Deposit of Micro-organisms for 
the Purposes of Patent Procedure 
29 October 2008 International Convention for the Protec tion of New Varieties of Plants (UPOV Convention) 
Year of adoption or 
amendments IPR related legislation 
1999 Law on Topographies of Integrated Circuits 
Most recently 
amended in 2010 Patent Law 
Most recently 
amended in 2010 Trademark Law 
2010 Law on Design 
2010 Law on Protection of Animal Breeds and Plant Varieties  
Most recently 
amended in 2011 Law on Appellations of Origin and Geographical Indications of Goods 
Most recently 
amended in 2013 Law on Copyright and Neighbouring Rights 
2013 Law on Border Measures Related to Intellectual Property  
Year of adoption or 
last amendment IPR enforcement related le gislation also includes: 
1997 Civil Procedural Code 
2005 Criminal Code 
2010 Code of Administrative Offences 
Institutions Institutional framework 
Sakpatenti Determines the policy in the field of intellectual property. Registering IP rights. 
Revenue Service Registering IPR at the border, enforcing IPR protection at the border. 
Ministry of Internal 
Affairs, Financial 
Police Enforcing IPR protection within the country. 
Source: WIPO online information. Viewed at: http://www.wipo.int . EU online informatio n on the "Protection 
of Intellectual Property Rights (IPR) in Georgia", viewed at: 
http://www.gca.ge/uploads/files/leaflet_on_IRP_protection_-_FINAL-EN.pdf . UNDP Georgia (2010), 
Study on Counterfeiting and Piracy in Georgia , June, Georgia. Viewed at: 
http://www.undp.org.ge/files/24_1046_187891_counterfeiting-piracy-eng.pdf .  WT/TPR/S/328 • Georgia 
 
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  3.175.  Georgia has bilateral agreements concerning IPR-related issues with: Armenia, Azerbaijan, 
the EU, Kazakhstan, Russian Federation, Turkmenist an, Ukraine, and Uzbekistan. Sakpatenti also 
signed Memoranda of Understanding concerning IP-related issues with more than 40 organizations and national IP offices.  
3.176.  Georgia has brought its IPR legislation into line with international standards, but 
enforcement and raising public awareness are chal lenging issues, which the Government is making 
efforts to improve (section 3.4.7.7  ). The Ge orgian National Intellectual Property Centre 
(Sakpatenti) remains the agency formulating and implementing IPR-related policies. It deals with 
all IP rights, including patents, copyrights and neighbouring rights, trademarks, and new plant and animal varieties. The Revenue Service is respon sible for enforcing IPR at the border, while the 
Ministry of Internal Affairs and the Financial Police are responsible for enforcing IPR within the 
country.  
3.177.  In order to obtain IPRs in Georgia, applicants must register their IP objects (except 
copyrights) at Sakpatenti. For enforcement of IP rights at the border, IPR owners must register 
their objects at the register of the Revenue Servic e. Therefore a right-holder (except for copyright) 
needs to provide the Revenue Service information about his protected IP objects from Sakpatenti’s register.  
3.178.  The Revenue Service has a one-month period in which to decide to register or refuse the 
registration of an IP object. Decisions of the Revenue Service may be appealed to the superior 
authorities: the Ministry of Finance, or the Administrative Panel of Tbilisi Civil Court. 
3.179.  The information provided by the right-hold er will define the risk profile of the object. 
According to a UNDP study, the number of regist rations was growing at a rather slow pace and 
right-holders did not seem to be aware of the im portance of their cooperation with the Revenue 
Service to determine the risk profile of their products. The authorities stated that in recent years 
the situation has improved significantly: there are 450 IP objects registered with the Revenue 
Service and this number is continuing to grow. The Revenue Service is dedicated to raising the awareness of right-holders to increase the number of registrations for customs action. 
3.180.  The Law on Border Measures Relating to Intellectual Property allows parallel imports, 
except for objects protected by copyrights and related rights. 
3.4.7.2  Patents 3.181.  According to the authorities, fundamental changes were introduced to the Patent Law 
through its amendments in 2010. The amendments include mainly: 
 Criteria of patentability: substantive examination includes the assessment of an inventive 
step (in addition to novelty). Sakpatenti, after considering the examiner’s proposal, decides 
on examination of an inventive step, on the ba sis of which Sakpatenti decides on granting a 
patent;
52  
 Rules and terms of conducting patent examination: examination of inventions, and re-
examination of the patent were introduced. Re-examination may be performed upon the 
request of the interested party within the term of patent validity, on the grounds that an invention does not meet the patentability criteria; 
 Functions and competences of the Chamber of  Appeals of Sakpatenti: the Chamber of 
Appeals considers disputes arising in connection with examination of industrial property 
objects and the Sakpatenti; and  
 Introduction of the concept of supplementary pr otection certificate, which allows a maximum 
five-year extension of the protection of patents for medical products, with the purpose of 
harmonizing with EU Regulation 1768/92 of 1992.  
                                               
52 Before 2010, substantive examination was only conducted on novelty, not the inventive steps. WT/TPR/S/328 • Georgia 
 
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  3.182.  Protection of rights related to patents (i nventions and utility models) can be acquired by: 
filling an international application under the Patent Cooperation Treaty (international procedure), or filling an application directly at Sakpatenti (national procedure) (Table 3.21). The number of patent applications, and the number of patents gr anted, both dropped significantly during the 
review period. The authorities considered two reasons for this: the increased fees for patent 
applications between 2010 and 2014, and the global financial crisis which reduced the number of patent applications. To encourage patent applications, in December 2014 Sakpatenti issued a 
decree to reduce the patent application fee by 70 % for higher education institutions and scientific 
and research entities, and is trying to organize international innovation fairs in Georgia. The average time for a patent to be granted is about 2-3 years. The Patent Law protects inventions for 20 years, and utility models for 10 years. Patentability requirements for utility models and 
inventions are the same. However, utility models are characterized by lesser inventive steps 
compared to inventions.  
3.183.  According to the authorities, the proce ss of the adoption of Paragraph 6 of the Doha 
Declaration is to be considered under the upcoming amendments to the Georgian IP legislation. 
The current version of the Patent Law does not provide compulsory licensing. Accordingly there are no applications for granting of compulsory licences.  
3.184.  The Patent Law contains limitations on the exclusive rights of a patent holder to ensure the 
fair use of patents: according to Article 52, the use of invention in the case of natural disaster, catastrophe, epidemic or other emergency situations is not considered as a violation of exclusive rights. The authorities stated that upcoming  amendments of the Patent Law foresee the 
re-introduction of compulsory licensing.  
3.185.  In August 2009, the Law on Drugs and Ph armaceutical Activities was amended. The Law 
protects the confidentiality of market authorization for pharmaceuticals and applications from a 
non-reliance perspective. It is prohibited to spread the scientific-technical information on 
pharmaceutical products which was presented by the supplier to the administrative authority during the registration process, or use such information for the registration of another product.  
Table 3.21 Patent applications  and patents granted, 2009-14 
 2009 2010  2011  2012  2013 2014  
Inventions 474 362 398 372 333 297 
Domestic 256 183 138 137 114 110 
Foreign 32 17 15 16 20 8 
International 186 162 245 219 199 179 
Utility models 107 60 78 49 65 51 
Domestic 106 59 70 48 63 50 
Foreign 1 1 6 1 1 1 
International 0 0 2 0 1 0 
Industrial 
designs 271 233 n.a. n.a. n.a. n.a. 
Domestic 49 39 n.a. n.a. n.a. n.a. 
Foreign 18 8 n.a. n.a. n.a. n.a. 
International 204 186 n.a. n.a. n.a. n.a. 
Granted 651 497 290 405 329 254 
n.a. Not applicable. 
Note Up until 2010,  issues connected with the protection of in dustrial designs had been regulated by the 
Patent law of Georgia. Since 2010, designs are taken out from patent protection and are subject to the Georgian Design Law of 2010.  
Source: Information provided by the authorities.  
3.4.7.3  Designs 
3.186.  In 2010 the Parliament passed the Design Law. The protection of industrial designs was 
then shifted from the Patent Law to the Design Law. A design is protected if it is new and has an 
individual character. Right-holders are granted fi ve years of protection, which can be renewed for 
one or more periods of five years, up to a total of  25 years from the date of filling the application.  WT/TPR/S/328 • Georgia 
 
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  3.187.  In accordance with the DCFTA, the Desi gn Law is to be amended, and provisions for 
effective enforcement of design owners' rights are to be introduced. In 2014 Georgia proposed 
amendments to the Design Law to bring it into conformity with the DCFTA, focusing on general 
procedural issues and clarification of enforcement measures.  
3.188.  Designs must be registered to be protected (Table 3.22), either through a national 
procedure – with the Sakpatenti - or an international procedure, as Georgia joined the Hague Agreement in 2003. 
Table 3.22 Design applications and designs granted, 2009-14 
 2009 2010  2011  2012  2013 2014  
Designs n.a.  n.a. 236 244 310 305 
Domestic n.a. n.a. 39 44 39 43 
Foreign n.a.  n.a. 7 12 10 5 
International n.a. n.a. 190 188 261 257 
Granted n.a.  n.a. 225 223 247 281 
n.a. Not applicable.  
Source: Information provided by the authorities.  
3.4.7.4  Copyrights and neighbouring rights 
3.189.  The Law on Copyrights and Neighbouring Rights was most recently amended in 2010.53 
The amendments were made to bring Georgian copy right legislation in line with the requirements 
specified in the DCFTA, and cover mainly the granti ng of additional terms of protection to right- 
holders, the determination and specification of new adequate provisional measures for protection 
and perfection of authors rights, related right-ow ners and database producer rights. Georgia is 
planning new amendments to its copyright legislation to be aligned with the DCFTA.  
3.190.  Copyright protection is valid from the crea tion of a work, for the duration of the author's 
life, plus 70 years after his/her death. Copyright on a work, which was published or made available 
to the public as an anonymous or pseudonymous work, is protected for 70 years after the work is lawfully disclosed. Copyright on a work of joint authorship is protected for the life of each co-
author and for 70 years from the death of the last  surviving author. Where a work is published in 
volumes, parts, issues or episodes, the term of  protection is for each such item separately. 
Copyright of a composite work and a derivative work , is protected for 70 years from the time when 
the works were lawfully published or made availabl e to the public for the first time, and from the 
date of its creation (if a work has not been pub lished or made available to the public). Copyright 
on an audiovisual work expires 70 years after the death of the last surviving author (co-authors). 
Economic right of the person who lawfully publishe d or made available to the public a work which 
was not published or made available to the public previously, is protected for 25 years from the 
time when the work was first lawfully published or lawfully made available to the public. 
3.191.  Copyright does not need to be register ed. Sakpatenti has a system for the voluntary 
deposition for protected subject matters of copy right. Table 3.23 contains data regarding the 
deposition of copyright and related right works at Sakpatenti.  
Table 3.23 Copyrights and related rights, 2009-14 
 2009 2010  2011  2012  2013 2014  
Copyrights 487 538 496 459 393 499 
Source: Information provided by the authorities.  
3.192.  There are no special units to tackle in ternet piracy in Georgia. Only a collective 
management society, "Georgian Authors Society", takes care of authors' rights on the internet. In case of discovering piracy, right-holders may appeal to courts. 
                                               
53 Law on Copyrights and Neighbouring Rights, online information viewed at: 
http://www.sakpatenti.org.ge/i ndex.php?lang_id=ENG&sec_id=15 . WT/TPR/S/328 • Georgia 
 
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  3.4.7.5  Trademarks 
3.193.  On 28 June 2010, amendments were made to the Trademark Law. The amendments 
provided for an accelerated procedure for the registration of trademarks. Trademarks must be registered on the basis of formal and substa ntive examination carried out by Sakpatenti. 
Sakpatenti conducts substantive examination of tr ademarks on absolute and relative grounds for 
refusal. Before registration, Sakpatenti publishes relevant data in the Official Bulletin of Industrial Property. After three months from publication, if no appeal concerning this trademark is filed with 
the Chamber of Appeal of Sakpatenti, the trad emark is registered. The exclusive right of a 
trademark-holder comes into force on the day of  the registration of the trademark. It takes 
approximately 10 months to register a trademark under the common procedure, and 10 business days under an accelerated procedure. Registered trademarks are protected for 10 years, and the 
10-year term can be renewed indefinitely for additional periods of ten years. 
3.194.  In addition to filing a trademark application directly with Sakpatenti, the applicant may 
also register it through an international procedure following the Protocol Relating to the Agreement 
Concerning the International Registration of Marks - the Madrid Protocol (Table 3.24). 
Table 3.24 Trademark applications  and trademarks granted, 2009-14 
 2009 2010  2011  2012  2013 2014  
Trademarks 4,432 4,321 4,863 4,564 5,104 4,825 
Domestic 623 675 838 754 805 913 
Foreign 597 706 752 659 842 782 
International 3,212 2,940 3,273 3,151 3,457 3,130 
Granted 5,253 4,280 4,054 3,518 4,154 4,097 
Source: Information provided by the authorities. 
3.195.  Well-known trademarks are protected without registration under Article 6 bis of the Paris 
Convention. 
3.196.  In accordance with the DCFTA, the Trademark Law is to be amended further, to contain 
provisions on the determination and specification of new adequate provisional measures for 
effective enforcement of trademark right-holders. New amendments intend to further harmonize Georgian legislation with that of the EU. In case of infringement, the right-holder will be able to request seizure and destruction of infringing goods, destruction of all associated images and 
published materials on the internet, and all technica l devices used for producing infringing objects. 
The law will also stipulate the legal mechanisms for defining the amount of damages and reimbursement of monetary compensation. 
3.4.7.6  Some other IP rights 
3.197.  New varieties of plants and breeds of anim als are protected under the Law on Protection of 
Animal Breeds and Plant Varieties. Difficulties for Georgia in registering and protecting new 
varieties of plants and animals derive from th e absence of competent laboratories. The UPOV 
allows member countries to use laboratories  from other members of the Convention.  
3.198.  The Law on Appellations of Origin and Geog raphical Indications of Goods came into effect 
in 2005. According to the authorities, this legislation protects all products equally, as subordinate 
legislation is available for all products since 2014.  
3.199.  The Law on Topographies of Integrated Circuits was enacted in 1999. Since then, no 
amendment has been made. 
3.4.7.7  Enforcement 
3.200.  In addition to legislation on various IP rights, enforcement of IPRs is also under the Civil 
Procedural Code, the Criminal Code, the Administ rative Offences Code, and the Law on Border 
Measures Relating to Intellectual Property. The Civil Procedural Code stipulates that courts may 
order a party to desist from an infringement. Th e Criminal Code and the Administrative Offences 
Code provide for liability in case of infringement of intellectual property rights. Penalties range from a fine, to detention or imprisonment. WT/TPR/S/328 • Georgia 
 
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  3.201.  The Law on Border Measures Relating to Intellectual Property establishes the rules for 
enforcement at the border of the rights of tradem arks, copyrights and neighbouring rights, rights 
of database producers, design rights, and righ ts on appellation of origin and geographical 
indications of goods. It does not include patents.  
3.202.  The Law on Border Measures Relating to In tellectual Property provides no ex officio power 
to any agency. Under the Law, a special register is established at the Revenue Service, where the interested right-holder may register trademark,  subject-matter of copyright and neighbouring 
rights, database, design, appellation of origin  or geographical indication and declare the 
information necessary for identification of goods. Once the registration process is completed, the Revenue Service is obliged to seize unauthorized importation/exportation of objects, only if an application for action has been lodged by the righ t holder or his/her legal representative. Goods 
may be detained or suspended from release for no more than 10 business days, which may be 
prolonged for another 10 days. Perishable goods may be seized for no more than six business days, which cannot be prolonged. After the suspension, the right-holder may file a law suit against 
the importer on the condition that he submits a bank guarantee or deposit for protection. The 
counterfeited goods are then destructed by the Revenue Service.  
3.203.  Sakpatenti, along with other government institutions, organizes various activities for 
raising awareness among IP right-holders, busi ness representatives, lawyers and other target 
groups in Georgia. In December 2014 Sakpatenti, in cooperation with relevant governmental bodies, created an IPR Enforcement Interagenc y Coordination Body, which deals with IPR 
enforcement issues, including implementation of bo rder measures. It also created an IP Training 
Centre, and has been improving IPR enforcement through publications, training sessions for 
judges, various materials distributed free of char ge, and databases available online to external 
users. 
3.204.  The Sakpatenti Action Plan for 2015-18 identified a number of areas for future work to 
improve the awareness of IP rights, including the plan to establish an IP education centre, train IP examiners, continue amending IP-related legislation,  promote innovative activities such as offering 
assistance to R&D projects, and promote a geogra phical indication system in Georgia for its 
agricultural products. Another area for future work id entified by the Plan is  the  preparation of an 
IP strategy to assess the current IP protection situation, identify areas for improvement, and 
define short- and long-term activities to improve the IP system.  
3.205.  The Revenue Service uses risk analysis to determine which goods, including means of 
transport, must be examined, and the extent of the examination. The selection module compares 
each electronic declaration to the examination crit eria and selects those that match the criteria for 
one of the following customs controls: red, ye llow, blue, and green channels. When importers 
indicate their commodity code in the declaration, which is identical to some IP object code registered in Georgia, and if the importer/exporter does not mention the name of the trade mark, 
the Revenue Service will automatically detect the commodity and subject it to physical control. The 
risk modules are being updated and improved period ically. After finding the suspicious goods, the 
Revenue Service may suspend these goods, immediately notify the right-holder or his representative and hand over the specimen for in spection. Where the right-holder confirms that 
the suspended goods are counterfeit, he may apply to the court and request reimbursement of 
damages, and destruction of the goods.  
3.206.  The number of cases handled by the Revenue  Service has generally been increasing during 
the review period, from 14 in 2011 to 50 in 2013, falling to 44 in 2014 (30 cases for the first half 
of 2015). Among the 44 cases in 2014, more than half (25 cases) were destructed, about one quarter (12 cases) released, and the remaining ones initiated to courts (7 cases). Main products 
concerned include household appliances, and mobile phones and accessories. The value of 
destroyed goods dropped from GEL 62,633 in 2013 to GEL 40,343 in 2014, then increased to 
GEL 63,977 in the first half of 2015. 
 WT/TPR/S/328 • Georgia 
 
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  4  TRADE POLICIES BY SECTOR 
4.1  Agriculture, forestry and fisheries 4.1.  In the agricultural sector, government intervention is limited and prices are liberalized with 
low tariffs across commodities and agricultural inputs. Productivity levels in primary agriculture 
remain well below potential. The privatization of agro-processing has made some progress but 
owners need to improve efficiency and upgrade hy giene and quality standards in order to become 
internationally competitive. Georgia's economic development strategy ( Georgia 2020 ) notes that in 
order to increase the export potential of the country's agricultural products, food safety and the 
veterinary and phytosanitary systems will be developed in accordance with international and European norms through gradual implementation of obligations under the DCFTA.  
4.1.1  Agriculture 
4.1.1.1  Overview 
4.2.  Georgia has favourable natural conditions (such as fertile soil and good climate) for 
production of a wide variety of agricultural products. Despite this, the share of agriculture in GDP 
has been declining, as have sown areas. The country has had a trade deficit in agricultural 
products for many years (Table 4.1, Chart 4.1 and Table A4. 1). The agricultural sector employs about half of the labour force; although this shows that it provides an important safety net for the 
rural population, it also demonstrates the low labo ur productivity of the sector and the subsistence 
nature of Georgian farming. The share of agriculture in GDP began to rise in 2013, reflecting the 
Government's renewed interest in and incr eased support provided to this sector.  
Table 4.1 Sown area, share of agricu lture in GDP, and trade performance 
Year Sown areas as a 
percentage of the 
1990 level  
(%) Share of 
agriculture in GDP 
(%) Exports  
(US$ 
million) Imports  
(US$ 
million) Trade 
balance  
(US$ 
million) 
1990 100.0 31.6 n.a. n.a. n.a. 
1996 64.5 34.1 61.9 246.4 -184.5 
2000 87.0 21.9 85.8 122.2 -36.4 
2005 76.9 16.7 294.6 316.4 -21.8 
2009 41.3 9.4 313.7 778.6 -464.9 
2010 36.6 8.4 344.1 938.8 -594.7 
2011 37.4 8.8 434.2 1,160.5 -726.3 
2012 37.0 8.6 510.7 1,239.3 -728.6 
2013 44.3 9.4 772.1 1,255.3 -483.2 
2014 45.4 9.2 822.4 1,272.9 -450.5 
n.a. Not applicable. Trade data is available only from 1995. 
Note: 1990: 100% = 701,900 ha. The first TPR of Georgia contains information on the deteriorating 
agriculture sector prior to 2007 (WTO document, WT/TPR/S/224, 3 November 2009). 
Source: GeoStat, WTO Secretariat calculations, and information provided by the authorities.  WT/TPR/S/328 • Georgia 
 
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  Chart 4.1 Trade in food, by Sitc  rev.3 classification, 2009 and 2014 
00 01 02 03 04 05 06 07 08 09 11 12 22 41 42 43-300-200-1000100200300400500
00 01 02 03 04 05 06 07 08 09 11 12 22 41 42 43-300-200-10001002003004005002009 2014 (US$ million)Imports Trade balance Exports
(US$ million)
00 Live animals
01  Meat and meat preparation02  Dairy products and birds' eggs03  Fish, crustaceans, prep. thereof08  Animal feedstuff09  Miscellaneous edible products11  Beverages12  Tobacco, products thereof04 Cereals and cereal preparations05  Vegetables and fruit06  Sugar, sugar preparations, honey07  Coffee, tea, spices, prep. thereof22  Oil-seeds and oleaganious fruit41  Animal oils and fats42  Fixed vegetable fats and oils43  Animal, vegetable fats/oils n.e.s
 
Source: UNSD, Comtrade database.  
4.3.  More than 40% of Georgia's territory is desi gnated as agricultural land (including pastures 
and meadows). Main crops in Georgia include cereals, leguminous crops, vegetables, melons and gourds, potato, grapes, subtropical crops, and fruits. The value of total agricultural output in 2014 
was GEL 3.4 billion (US$1.9 billion). Plant growing,  animal husbandry, and agricultural services 
accounted for 44%, 51%, and 5%, respectively (Table 4.2). 
Table 4.2 Agricultural output, 2009-14 
(%, and GEL million) 
 2009  2010  2011  2012  2013 2014a 
Plant growing  42 42 46 39 44 44 
Grains and other crops, 
which are not included in 
the other categories 18 13 18 15 15 15 
Crops needed for the 
production of fruit, walnut, drinks and spices  14 15 18 14 19 18 
Vegetable, specialized 
horticulture, and breeding  10 14 11 10 10 11 
Animal husbandry  55 55 50 57 52 51 
Agricultural services  3 3 4 4 4 5 
Total output  2,072.2  2,241.8  2,674.0  2,807.2  3,210.0 3,378.1  
a Data for 2014 is preliminary.  
Source: Information provided by the authorities.  
4.4.  Georgia has a trade deficit in agricultural products (WTO definition). Imports of agricultural 
products represented about 14.8% of total merchandise imports in 2014, the major products 
being: wheat and meslin (12%), cigarettes (9%), chicken meat (6.7%), and sugar (5%). Main 
sources of imports are CIS countries (excluding the Russian Federation) (27.5%), followed by the Russian Federation (21.5%), EU-28 (18.9%), Turkey (12.1%), and Brazil (8.4%).  
4.5.  Exports of agricultural products comprised about 28.7% of total merchandise exports in 2014 
led by hazelnuts (22.3%), wine (22%), mineral water (16.7%), and spirits (11.6%). Main export markets are CIS countries (excluding the Russian  Federation) (37.7%), the Russian Federation 
(27%), and EU-28 (26.3%). The Russian Federation traditionally received most of Georgia’s 
exports. Georgia's agricultural exports were ba nned from entering the Russian market from 2006; 
the ban was lifted in 2013 on a number of products including wine and mineral water. New WT/TPR/S/328 • Georgia 
 
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  European markets are developing, into which Georgia is exploring expansion of its agricultural 
exports. The Government implements two progra mmes: "Production of Georgian Agricultural 
Products", and "Promotional Measures to Popularize  Georgian Wine Products", with an intention to 
increase the exports of Georgia's agricultural products through participating in local and 
international exhibitions, developing marketin g programmes, and informing representatives and 
missions abroad of Georgia’s agriculture sector.  
4.1.1.2  Main structural features 
4.6.  Development of the agricultural sector face s constraints due to the small size of land plots 
and thus the lack of economies of scale; shortage of capital and thus lack of machinery; and the 
underdeveloped agricultural infrastructure. The de cline in the agriculture sector consequently 
resulted in an enlarging rural-urban income gap and the continuation of rural poverty. 
4.7.  Agriculture is characterized by small landholdings. Small farmers (farmers with less than 5 
hectares of land) accounted for 98% of all farm ers in 2004 (the latest year for which data are 
available), typically cultivating around 1 hectare of land with low output. The average farm size 
was 1.22 hectares in 2004.  
4.8.  Land reforms began in 1992, and up to 2004,  25% of agricultural land was privatized. During 
the privatization process, land was distributed to rural households. However, farmers cannot use 
their land as collateral to expand or improve their holdings, and fragmented holdings increase 
production costs and hinder achieving economies of scale.  
4.9.  According to the Law on Privatization of State-owned Agricultural Land, foreign natural 
persons may not buy land. However, legal entities owned by a foreign citizen and registered in 
Georgia may purchase land. Georgian legislation do es not differentiate between Georgian nationals 
and foreign citizens on regulations regarding the leasing of agricultural land.  
4.10.  Banks have been traditionally reluctant to grant loans to farmers, and insurance companies 
did not wish to insure crops. Lack of capi tal and resources have prevented farmers from 
purchasing agricultural machinery to raise productivity. For the same reason, Georgia's agricultural infrastructure, particularly its irrigation  and drainage systems, is underdeveloped.
1 A shortage of 
processing, storage, and logistics facilities for agricultural products affects the performance of the 
agricultural sector.  
4.11.  The difficulties in agriculture affect povert y indicators in rural areas: the average annual 
salary of a farmworker was the equivalent of 64%  of the national averag e in 2013, although this 
has improved significantly from its 47% level in 2009. The income gap between urban and rural 
residents remains wide.  
4.1.1.3  Agricultural policies and practices 
4.12.  The Ministry of Agriculture (MOA) is responsible for the administration of agriculture, and 
other affairs concerning foodstuffs. The Government considers that full utilization of its agricultural 
potential is vitally important to the economy. Main legislation on agriculture includes: the Law on 
Agricultural Cooperatives (2013); Code of Food/Feed Safety, Veterinary and Plant Protection 
(2012); Code of Food Safety and Free Movement of Goods (2012); General Hygienic Rules of Food/Feed Producing Enterprises/Distributers (20 10); Rules of Implementation of Supervision, 
Monitoring and Official Control in the Areas of Food Safety, Veterinary and Plant Protection (2010); 
and the Special Rules on Hygiene of Food of Anim al Origin (2012). Legislation has been issued in 
2014 and 2015 concerning SPS and IPR related issues, with an intention to approximate the legislation with the respective EU legislation.  
4.13.  The MOA elaborated an Agriculture Development Strategy 2015-2020, with a view to 
creating an environment that capable of increa sing competitiveness of the agro-food sector, 
promoting stable growth of high-quality agricultural production, ensuring food safety and security, 
                                               
1 Government of Georgia (2014), p. 32. WT/TPR/S/328 • Georgia 
 
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  and eliminating rural poverty through sustainabl e development of agriculture and rural areas.2 The 
Strategy includes seven major targets:  
 improving the competitiveness of the agricultural sector, such as promoting national food 
products via marketing and other supporting measures3;  
 improving institutional arrangements; 
 ameliorating soil fertility; 
 supporting regional and sectoral development, by creating a complete cycle for agriculture 
production and increasing its value added; 
 ensuring food security; 
 improving food safety, veterinary and plant protection; and 
 dealing with climate change, protecting the environment, and maintaining biodiversity. 
4.14.  Agricultural policy was changed significantly in 2012. Beforehand, agriculture was not 
viewed as a priority, and government spending on  agriculture accounted for only 0.4% and 0.8% 
of total government spending in 2010 and 2011, respectively (Table 4.3). This share jumped to 
about 3% in 2012. 
Table 4.3 Budget allocations for agriculture, 2009-14 
(GEL million) 
 2009  2010  2011  2012 2013 2014  
Total budgetary allocations 6,754 6,972 7,459 7,807 8,104 9,080 
Allocations to the MOA 75 31 58 228 227 264 
Share in total budgetary allocations 1.1% 0.4% 0.8% 2.9% 2.8% 3.1% 
Source: Ministry of Finance.  
4.15.  In 2012, the Government declared that agriculture was a top priority and significantly 
increased financing to the MOA, concentrating on improving infrastructure, purchasing and 
applying agricultural technologies, implementing assistance projects to small farmers, and diversifying international markets. As an estimated 98% of farmworkers are considered self-employed, the agricultural policy has also been aimed at creating off-farm jobs, and promoting 
family farming and agri-tourism. Tax incentives are given to the agriculture sector: primary 
supplies of agricultural products are subject to a ze ro rate of VAT, and imports of agricultural and 
other equipment are subject to a zero-rate import tariff.  
4.16.  In 2012, an Agriculture Development Fund was set up to support the agriculture sector by 
providing easier access for farmers and producers to low-cost finance. The Fund was renamed in 2013 as the Agricultural Projects Management Agen cy (APMA). The APMA co-finances the interest 
payments for loans to the primary agriculture sector: 8% per annum for loans for working capital, 
and 11% for loans for fixed assets. The APMA also secures 50% of the loan principal for beneficiaries with a letter of guarantee. Betw een 2013 and 2014, a total of GEL 33 million of 
subsidized interest payments was provided to farmers. As a result, loans to primary agriculture 
from commercial banks totalled GEL 861 million as at 27 May 2015. 
4.17.  The Agro-insurance pilot programme commenced on 1 September 2014, and is subsidized 
and supported by the Government. This prog ramme has highly increased the insurance 
penetration percentage and has insured more than 21,000 beneficiaries. The Government is 
studying how to develop agro-insurance to be more stable and effective for potential beneficiaries.  
                                               
2 MOA (2015). 
3 Raising competitiveness of the agricultural sector  also includes: expanding knowledge among farmers 
and extending effective agricultural services; improvin g the quality of higher education and professional 
teaching; developing agricult ural land markets and implementing modern methods in land use; creating and 
developing agricultural credit loan and leasing systems; developing agricultural insurance market; improving cooperation in the agriculture sector; and raising the aw areness of investment possibilities in agriculture. WT/TPR/S/328 • Georgia 
 
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  4.18.  The Law on Agricultural Cooperatives was adopted in 2013, pursuant to which an 
Agricultural Cooperatives Development Agency wa s created in October 2014. The Agency conducts 
information and awareness campaigns on market-oriented cooperatives among small farmers.4 In 
2014, a Scientific Research Centre of the MOA was created to contribute to the development of 
agriculture and food production. It intends to pr omote the preservation of animal and plant agro 
biodiversity; reconstruct the breed selection st ations; support animal breeding activities and 
develop seed/planting material standardization and certification systems; introduce new 
technologies; provide extension services to farmwo rkers; conduct risk assessment in food safety, 
veterinary and plant protection; and support the development of biologically clean agriculture. 
4.1.1.3.1  Border measures 4.19.  Imports of agricultural products are subject only to tariffs and SPS measures. Georgia 
bound its tariffs on all products including agricultural products; the simple average of the final 
bound tariff is 12.4% for agricultural products (WTO definition). The simple average applied MFN tariff rate for agricultural products (WTO definition) fell from 6.9% in 2009 to 6.7% in 2015 (Table 
4.4). Specific rates apply to 185 tariff lines at the HS 11-digit level: 4 lines are for vinegar 
products and the other 181 lines for alcoholic beverages.   
Table 4.4 Tariffs by agricultural product group, 2015 
(%) 
 2015 MFN applied rate Bound rates 
 Average 
rate Maximum 
rate Duty free 
lines Average 
rate Maximum 
rate Duty 
free 
lines 
WTO agricultural products 6.7 70.3  40.4 12.4 70.3 6.7  
Animals and products thereof 8.5 12.0 24.8 11.6 12.0 3.4 
Dairy products 5.3 12.0 39.5 12.8 25.0 0.0 
Fruit, vegetables, and plants 10.0 12.0 16.5 15.3 30.0 0.0 
Coffee and tea 5.0 12.0 44.9 11.5 20.0 0.0 
Cereals and preparations 6.3 22.6 49.2 13.8 25.0 0.8 
Oil seeds, fats, oil and their 
products 0.1 12.0 99.4 3.2 12.0 71.7 
Sugars and confectionary 11.0 12.0 8.2 11.4 12.0 0.0 
Beverages, spirits and tobacco 9.7 70.3 4.3 14.2 70.3 0.0 
Cotton 0.0 0.0 100.0 8.2 12.0 0.0 
Other agricultural products, 
n.e.s. 0.3 12.0 97.2 10.6 15.0 0.7 
Note: Including AVEs, as available, provided by the authorities.   
Source: WTO Secretariat calculations, based on da ta provided by the Georgian authorities.  
4.20.  Georgia does not apply tariff quotas on any agricultural products.  
4.21.  According to the authorities, Georgia does not maintain any state-trading arrangement, 
including on agricultural products.  
4.22.  Georgia notified that it provided no expo rt subsidies to agricultural products in 2007-2012.5 
The authorities stated that Georgia provided no export subsidies for 2013 and 2014. 
4.23.  Agricultural products and food items are subject to SPS controls (section 3.4.4  ). Lack of 
food safety regulation and supervision capacity  makes it difficult for Georgia to export its 
agricultural products. The authorities stated that the Government is implementing programmes to 
approximate its legislation with that of the EU over the next 10-15 years. 
4.1.1.3.2  Domestic support measures 4.24.  According to Georgia's notification, all its domestic support for agriculture falls within the 
definition of Green Box, i.e. measures exempt from reduction commitments. In 2013, total 
domestic support reached GEL 427.2 million, equivalent to 1.6% of GDP, 6.4% of total tax 
                                               
4 European Commission (2015). 
5 WTO document, G/AG/N/GEO/12, 5 November 2013. WT/TPR/S/328 • Georgia 
 
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  revenue, and 6.4% of total government expenditure (Table 4.5). According to the authorities, this 
support includes private investment and financing, so it goes beyond the budget allocation to the 
Ministry of Agriculture (GEL 227 million).  
Table 4.5 Domestic support to agriculture, 2009-13 
(GEL million and %) 
 2009  2010  2011 2012 2013  
Total domestic support  50.9  18.1 62.9 216.3 427.2  
Equivalent to GDP (%) 0.3 0.1 0.3 0.8 1.6 
Equivalent to total tax revenue (%) 1.2 0.4 1.0 3.2 6.4 
Equivalent to total government expenditure (%) 0.9 0.3 1.1 3.3 6.4 
Source: WTO Secretariat calculations, based on  WTO documents G/AG/N/GEO/13, 8 October 2014; 
G/AG/N/GEO/11, 5 November 2013; and G/AG/N/GEO/10, 14 February 2013. 
4.25.  Both the components of the support measures, and their values, have changed significantly 
since 2012 (Table A4. 2). In 2013, support continued to increase as more emphasis was given to agriculture, in particular in the areas of the agricultural support programme,
6 renewal of 
agricultural machinery, rehabilitation of amelioration system, development of viticulture and wine 
making, and protection of food safety (Chart 4.2). 
Chart 4.2 Domestic support to agriculture, 2013 
Agricultural support 
programme, 44.8%Renewal of agrarian 
machinery, 15.3%Rehabilitation of 
amelioration system, 
14.4%Development of 
viticulture & winemaking, 
8.4%Grape harvest support 
measures, 7.6%
Food safety, plant 
protection & epizootic 
safety, 3.3%Rural development 
programme in regions, 
1.4%
Food safety, plant 
protection & epizootic 
reliability programme 
management & 
administration, 1.3%
Epizootic reliability, 
1.3%
Other, 2.0%
 
Source: WTO document G/AG/N/GEO/13, 8 October 2014.  
4.1.1.4  Key sub-sectors 
4.1.1.4.1  Wine 
4.26.  Georgia used to have a strong wine sector with its traditional export market being the 
Russian Federation. During the period 1995-2005, about 75% of Georgian wine exports were to 
the Russian Federation. The ban by the Russian Federation between 2006 and 2013 on Georgian 
wine had a profound impact on Georgian wine exports. The share of wine exports in total wine production dropped from 75% in 2005 to 29% in 2006, and recovered only in 2013 to 36%. The share of wine exports in total merchandise exports fell from 9.4% in 2005 to 4.4% in 2006, and 
recovered to 6.3% in 2014 after the ban was lifted in 2013. The major export markets, changed 
during the review period (Chart 4.3).  
                                               
6 The agriculture support programme includes, inter alia , rural leasing support, full rehabilitation of 
Lami-Misaktsieli, and irrigation channel systems. WT/TPR/S/328 • Georgia 
 
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  Chart 4.3 Wine exports by destination, 2009 and 2014 
United States
4.6% Ukraine
39.2%2014 2009
EU(28)
18.9%
Belarus
12.8%Other 
10.5%
Kazakhstan
14.0%Belarus
4.0%Other 
6.1%
Russian Federation
61.7%EU(28)
7.6%
Kazakhstan
9.1%
Ukraine
11.5%
Total:  US$32.0 million Total:  US$180.7 million  
Source: UNSD Comtrade dataset, and info rmation provided by the authorities.  
4.27.  Like other agriculture subsectors, wine is also characterised by small-scale production. Most 
farmers have a vineyard and produce wine for self -consumption. 92% of grapes produced are used 
for wine. Some small- and medium-sized farm en terprises sell grapes to commercial wineries. 
Between 91% and 96% of grapes are grown on family holdings, and they account for around 40% 
of the volume of all fruits produced in Georgia.7  
4.28.  According to a 2009 Transparency Internatio nal report on Georgia, the development of the 
wine sector is hampered by: poor technology an d vineyard management, lack of skilled labour, 
lack of innovation; small investments in R&D and human capital; inefficiencies of grape suppliers; 
lack of scientific and research institutions and educational facilities; low public awareness of 
Georgian brands in EU and global markets; low marketing skills and capabilities; small local 
market; and falsification of known brands in CIS markets.8 The authorities stated that, during the 
past two years, the Government had implemented important reforms in the wine sector to increase public awareness of Georgian wine in the global market. Measures adopted include: 
creating a national cadaster system; operating a Georgian Appellations of Origin registration 
system in several CIS countries; harmonizing Georgian wine legislation with international regulations; and intensifying marketing activities based on international wine consumption 
research data and the Georgian Wine Marketin g Strategy. The Wine Marketing Strategy was 
adopted in 2014, with two major goals: achieving a stable growth of the wine sector, and diversifying Georgian wine exports. The auth orities promote Georgian wine exports through 
seminars, exhibitions, and organized wine tastings , the main message of which is that Georgia is 
the oldest wine country with an 8,000-year histor y of wine culture and the origin of hundreds of 
different varieties of grapes and wine, as well as a unique wine-making tradition. 
4.29.  Wine imports accounted for a tiny share of total merchandise imports (0.03% in 2014) and 
a small share of domestic consumption (0.3% in 2013). The tariff schedule of wine contains 110 
tariff lines (HS 11-digit), all have specific duties:  
 sparkling wine: 1.5 euro/litre; 
 wine in containers holding 2 litres or less: 0.5 euro/litre; and 
 wine in containers holding more than 2 litres: 0.2 euro/litre. 
                                               
7 World Bank (2013). 
8 Transparency International Georgia (2009). WT/TPR/S/328 • Georgia 
 
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  4.30.  Ad valorem  equivalents of some non- ad valorem  tariffs are provided: the AVEs are 11.03% 
(HS 2204.10), 5.11% (HS 2204.21), and 11.87% (H S 2204.29), with a simple average of 8%. 
There is no tariff quota on wine imports. 
4.31.  In accordance with the Georgian Law on Vine and Wine (entered into force in 1998), wines 
with protected designation of origin are allowed to be exported or imported, but only in bottles. 
Wine products must receive Appellations of Origin Certification, and therefore are subject to IPR protection. The National Wine Agency, a subordinat e body of the Ministry of Agriculture, launched 
a programme in 2009 to renew vineyards. The Agency provides compensation to volunteers who 
replace hybrid varieties by new varieties of vineyards.  
4.32.  In 2013 and 2014, the Government initiated the revision of the Law on Vine and Wine 
including normative acts in order to harmonize them with OIV (International Organization of Vine 
and Wine) and other international norms. At the same time, the Ministry of Agriculture launched 
an "ambitious" project to create a National Vine Cadastre System which will be based on modern software and GPS system. The Government also increased budget allocations for Georgian wine 
marketing activities in the international market.  
4.1.1.4.2  Vegetables, fruits, and nuts (HS Chapters 07, 08) 
4.33.  As exports of wine declined, hazelnuts and tangerines became the most important 
agricultural exports. Georgia used to have a strong vegetables, fruits and nuts (VFN) sector, but 
its situation has deteriorated over the last two decades.
9 Currently, Georgia is a net importer of 
vegetables and fruits. In 2014, the share of the VFN sector in total agricultural output was 28.7%; in total agriculture added value the share was 29.2%, and in GDP, 2.7%. 
4.34.  Productivity in the sector is low, mainly due to high labour intensity, low mechanization and 
commercialization, and limited land use. The development of this subsector faces constraints such as lack of access to agricultural insurance and to affordable long-term financing, and an 
underdeveloped infrastructure. 
4.35.  Producers of vegetables, fruits and nuts are predominantly small- and medium-sized 
farmers cultivating from 3 to 30 hectares of land and selling products in the domestic market. 
There are fewer than 100 farmers cultivating plots larger than 500 hectares. Production of fruits 
and vegetables is mainly seasonal as greenhouse production is very small in Georgia, and there is no infrastructure to store products until off-season periods. The lack of cold storage infrastructure 
leads to seasonal price variability ,rising in peak seasons when local farmers sell their products, 
and falling in low seasons when Georgia relies on imports. 
4.36.  The authorities stated that Georgia has clean soil and little reliance on agricultural 
chemicals. Lack of labelling and certification capacities hinder the development of Georgia's 
agricultural exports.  
4.37.  Total exports of vegetables, fruits and nuts in 2014 reached US$215.5 million, or 7.5% of 
total merchandise exports,. Hazelnuts are by far the most important export product, accounting 
for 85% of total exports of the VFN sector. Mand arins account for 6%, followed by some other 
fruits and vegetables including peaches and nectarines, persimmons, oranges and potatoes. Georgia has a trade surplus in nuts, but has a trade deficit in most other agricultural products. Major export markets are: the EU-28 (67.2%), the Russian Federation (8%), and 
Kazakhstan (7.3%).  
4.38.  Imports of the VFN sector accounted for 1.3% of total merchandise imports in 2014. Major 
sources of imports are Turkey (50.9%), Ecuador (18.1%), EU-28 (5.4%), Armenia (5.3%), and 
Uzbekistan (3.7%).  
4.39.  The tariff schedule of the VFN sector (HS Chapters 07 and 08) contains 245 tariff lines (HS 
11-digit). The simple average tariff rate is 10.8%: 90. 2% of the tariff lines are subject to a rate of 
12%, and the remaining 9.8% of tariff lines are duty free. Duty-free products include: lettuce, 
                                               
9 ECORYS (2012). WT/TPR/S/328 • Georgia 
 
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  some vegetables, coconuts, Brazil nuts, cashew nuts, dates, figs, pineapples, avocados, Guavas, 
and mangoes. There are no non- ad valorem  duties, and no tariff quotas.  
4.40.  VFN products are subject to SPS regulation. Vegetables, fruits and nuts must be 
accompanied by a phytosanitary certificate issued by the exporting country, and in the case of 
imports, by an import permit for products of plan t origin. According to the authorities, there are no 
import and/or export prohibitions and restrictions. 
4.1.2  Forestry 
4.41.  Forestry policy is contained in the National Forest Concept for Georgia, adopted by 
Parliament in December 2013. The Concept applies to all forests in Georgia, irrespective of their ownership and form of management. In accordance with the Concept, the legislative and institutional framework is being revised. The three key institutions under the Ministry of 
Environment and Natural Resource Protection are:  
 the Forest Policy Service, which is responsible for forestry policy-making, including main 
strategies;  
 the National Forestry Agency, which is responsible for the management of forests; and 
 the Environmental Supervision Department, which is in charge of supervising activities 
related to forestry. 
4.42.  The Government is preparing a new Forestry  Code to ensure the protection and sustainable 
use of forests. The draft law sets out principles for sustainable management of forests,
10 states 
different forest property schemes, and provides a new approach to forest utilization. The drafting process was facilitated by the World Bank. The auth orities stated that the first draft of the Law 
would be ready by August 2015. 
4.43.  Occupying about 40% of the territory of Georgia, forests constitute the most valuable 
natural resource of the country. The forestry sector provides timber for industrial and household 
use, non-timber resources including medicinal plants, and adds to the potential value of tourism. 
4.44.  Trade in forestry products must be accomp anied by the phytosanitary certificate issued by 
the exporting country, and in case of import by an  import permit for products of plant origin. SPS 
restrictions apply to:  
 isolated bark of Castanea  Mill, except from European countries; 
 isolated bark of Populus  L., from American countries; 
 isolated bark of Acer saccharum  and Quercus  L. (other than Quercus suber ), from Canada, 
Mexico and the United States; 
 Pinus  spp, picea abies , tsuga , Pseudotsuga  (conifers), round wood, wooden material, cut 
branches and planting material, from Canada, Mexico and the United States; and 
 Populus  spp., Juglans  planting material, round wood, wooden products, from Canada and 
the United States.  
4.45.  The tariff schedule of HS Chapter 44 for wood and articles of wood and wood charcoal 
contains 167 tariff lines at the HS 11-digit level. The simple average tariff rate is 7.5%: 105 tariff 
lines are subject to a rate of 12%, and the remaining 62 tariff lines are duty free.  
                                               
10 Sustainable management of forest s is the guiding principle of the Concept, meaning "the stewardship 
and use of forests and forest lands in  a way, and at a rate, that mainta ins their biodiversity, productivity, 
regeneration capacity, vitality and their potential to fulf ill now and in the future, relevant ecological, economic 
and social functions at local, national , and global levels, and that does no t cause damage to other ecosystems”. WT/TPR/S/328 • Georgia 
 
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  4.46.  Georgia exported US$21.8 million of wood  and wood articles and wood charcoal in 2014, 
accounting for 0.3% of total merchandise exports. Major export destinations are Armenia (45%), EU-28 (21%), Iran (18.6%), and Turkey (10.6%). Georgia has a trade deficit in forestry products, importing US$107 million of wood and wood articles  and wood charcoal in 2014. Major sources of 
imports are: Turkey (41.5%), China (27.4% ), the EU-28 (16.2%), Ukraine (9.4%), and 
the Russian Federation (2.9%). 
4.47.  According to the authorities, in 2013, the sh are of forestry exports in total production was 
6.6%, while the share of imports in domestic consumption was 2.6%.  
4.48.  The authorities stated that several programmes are being conducted, on sustainable 
management of biodiversity and forestry, as well as on controlling illegal activities in the forestry sector. Financial support comes from the Georgian Government, and partner and donor 
organizations from Austria, Finland, Germany, the EU, and international organizations such as GEF 
(Global Environment Facility)/UNEP (United Nations Environment Programme), and the 
UNECE/FAO. Besides, two Memoranda of Understanding (MOU) were signed, between the Ministry 
of Environment and Natural Resources Protection of Georgia, National Forest Agency, and their 
counterparts in Austria and Germany on the forest sector reform and development programmes. 
4.1.3  Fisheries 
4.49.  There is no legislation on fishing; fishery regulatory issues are included in different bylaws. 
Both Georgian fishing vessels, and Turkish vessels hired by Georgian companies, conduct fishing in 
Georgian waters. 
4.50.   Fishing and marketing are under the respon sibility of the Ministry of Agriculture. In 
particular, the National Food Agency (NFA) is in ch arge of food safety, veterinary health, hygiene, 
fishing industry and aquaculture. The Department of Agriculture and Food is in charge of the development of fish-breeding issues.  
4.51.  The Ministry of Environment and Natural Reso urces Protection is also in charge of various 
fishery issues. The Service of Biodiversity Protec tion, the Department of Environmental Permits, 
the Environmental Supervision Department, and the National Environment Agency are all in charge 
of elaborating management plans, approving fishin g quotas, approving and issuing fishing permits, 
and controlling the implementation of laws, rules and regulations. 
4.52.  Fishing licences are awarded via an auction system. Fishermen with licences must pay taxes 
according to the annual approved quotas (before 20 10, they paid taxes according to the number of 
fish caught). The licensees were required to finance the researches for setting quotas.  
4.53.  In accordance with the conditions listed in the licences, Georgian companies are allowed to 
hire foreign fishing vessels to cover the annual quotas. During the first five years, the licensees 
were allowed to process two-thirds of fish caught in Georgia and to export the rest without 
processing. The licensees are required to deliver 10% of annual quotas to the local small fishing 
companies. The authorities stated that small local fishing companies comprise the 23 small fishing 
vessels belonging to small local fishing companies, and 20 Turkish vessels hired by small local 
companies.  
4.54.  According to the authorities, the fishing sector is not subsidized by the Government. 4.55.  Fishing accounted for about 0.05% of GDP in  2014. The share of exports in total production 
was 7.1% in 2013. Georgia exported US$26.3 million of fishery products in 2014, accounting for 
0.9% of total merchandise exports, with the top export markets being Turkey (85%), Azerbaijan 
(7%), Armenia (6%), and Turkmenistan (0.8%). 
4.56.  Georgia also has a trade deficit in fisher y products, with an import value of US$44 million. 
The share of imports in domestic consumption reached 53% in 2013. Major sources of imports are: EU-28 (31.7%), Norway (18.8%), the United  States (14.8%), and Viet Nam (4.3%). There 
are 336 tariff lines on fishery products (HS 11-digit level), all duty free. According to the 
authorities, there are no SPS/TBT restrictions or prohibitions: the consignment must be WT/TPR/S/328 • Georgia 
 
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  accompanied by the veterinary certificate issued by  the exporting country and, in case of import, 
by the import permit for goods subject to veterinary control. 
4.57.  Sustainable use of fishing resources is the main policy objective of the fishing sector. To 
reach this objective, proper policy tools including stock assessment, establishing quotas, seasonal 
bans, fishing gear and area restrictions were applied. The authorities stated that, in accordance 
with the 2014-2020 National Biodiversity Strategi es and Action Plans, the Government is to 
implement the following activities in the next five  years: assessing the ecological consequences of 
commercial fisheries, monitoring of catches; and further refining of fishing methods.  
4.58.  The authorities stated that overfishing has not been detected in Georgian waters. Regarding 
illegal, unreported, unregulated (IUU) fishing, th e DCFTA refers to Georgia's responsibility to 
address IUU fishing-related problems. Relevant measures are being developed. 
4.2  Energy 
4.59.  The energy sector plays a critical role in  the Georgian economy. Affordable and reliable 
energy supply is key for building a competitive and productive economy. Georgia is seeking to 
develop its energy generation and transmission system to increase electricity trade with 
neighbouring countries by taking advantage of it s abundant and low-cost hydropower resources, of 
which only an estimated 20% is utilised at present.11 The Government is focused on securing 
private investments for the construction of new hydropower stations and diversifying fossil fuel 
supply sources and routes.  
4.60.  Natural gas is the main fuel in Georgia’s energy mix, accounting for 45% of total primary 
energy supply. Oil, also a significant fuel in Geor gia, represents 27% of the energy supply and coal 
has had a resurgence with its share in the ener gy mix increasing from 0.5% in 2002 to 3% in 
2012. Georgia has plentiful hydropower resources, wh ich generate more than three-quarters of its 
electricity requirements. Hydropower represents 17 % of total energy supply, having increased by 
7% comparing 2012 to 2002 data. The electricity sector in Georgia is partially deregulated and 
legally unbundled into generation, transmission and distribution companies. Most generation and distribution assets are fully privatized. Hydropower  plants provide up to 100% of generation in the 
summer months, while gas-fired power stations and imports meet peak consumption during the 
winter months.  
4.61.  Over the last decade, the Government has transformed the energy sector, ensuring fast 
growth with improved efficiency. The Government is pursuing two strategic objectives: to ensure 
continued reliable domestic energy supply for firms and homes; and to facilitate and bolster 
electricity production from hydropower plants (HPPs) to expand regional electricity trade. Important institutional and regulatory reforms have been initiated to support private investment in 
energy. Moving towards more energy independence is critical given that energy imports, mainly oil 
and gas, accounted for around 17% of the total import bill during the review period, a significant contributory factor to the country's large trade deficit.  
4.62.  The priorities now are to work on: (a) ad opting market rules to facilitate trade through 
compliance with the EU energy regulations applic able to Georgia under the Association Agreement 
and the Community Treaty; (b) implementing intern ational standards for environmental and social 
impact assessments and mitigation; (c) strengthening the transmission network capacity to 
improve reliability and support electricity trade; and (d) creating the conditions for efficient private 
investment in hydropower and other renewables. Given its geographic location, Georgia remains an important regional transit route for oil and natural gas and can leverage this advantage for 
electricity trade. 
4.2.1  Energy policy 4.63.  According to the Asian Development Bank,
12 significant progress has been achieved in 
energy sector reforms over the past 15 years, which have resulted in increased energy supply 
                                               
11 World Bank (2015a), p.9. 
12 ADB (2013). WT/TPR/S/328 • Georgia 
 
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  reliability and lower losses.13 Regulatory and market reforms - focused on deregulation and 
privatization, unbundling and tariff adjustments to cost-recovery level - have helped improve service quality and the financial viability of the sector. The energy sector has gone from almost 
total operational and financial collapse and import dependency to making Georgia a net electricity 
exporter that provides an affordable, reliable energy service to the Georgian population.  
4.64.  In 2013, the Government launched a process of developing medium- to long-term energy 
policy with a strategy to 2020. The policy will be  submitted to parliament for approval and the 
strategy document is under elaboration. Issues under discussion cover : longer-term hydropower 
development dedicated to attracting FDI in the hy dropower sector in order to phase out thermal 
generation and imports; meeting domestic demand in full; expanding electricity exports to neighbouring markets; and assessment of the economic potential of renewable energy 
development (biomass, solar, wind, geothermal) and elaboration of an appropriate legal and 
regulatory framework with targeted measures and incentive schemes.  
4.65.  Until the adoption of the new energy policy,  the energy sector in Georgia continues to be 
guided by the 2006 Main Directions of State Policy in the Power Sector. Key policy directions have 
not changed significantly since 2006. The Georgian Government continues to attribute strategic importance to improving self-sufficiency, reducing import dependency, expanding its electricity 
export capacity and utilizing its energy transit potential. As such, construction of new large 
hydropower plants and new transmission lines remain its top priority. It is also continuing co-operation with neighbouring countries to develop regional energy markets, and cooperation in international projects aimed at transportation of Caspian energy resources to EU markets.  
4.66.  In 2014, the Georgian Government appr oved the country’s Socio-Economic Development 
Strategy to 2020, (known as Georgia 2020 ). The strategy sets out the main directions of the 
country’s energy sector, among other priorities. Georgia 2020  notes that expanding Georgia's 
export market requires integrating the country in to the European energy union and implementing 
the new electricity market model which is expected to create regional trade opportunities and facilitate increased competition.
14 Key energy sector directions include market liberalization, 
strengthening private sector participation and competition, developing indigenous energy sources 
(mainly hydro) and increasing energy efficiency. As  noted, the strategy stresses the importance of 
moving to the new 2015 market model and a new electricity trading mechanism (or ETM)15 both 
internally and in neighbouring markets.  
4.2.2  Energy trade 
4.67.  Georgia is a net importer of fuels and energy products.16 The country relies on imports of 
natural gas, oil products and some hard coal to  meet most of its energy needs. Net imports 
represent 77% of total energy supply, up from 47% in 2002 as Georgia has had to increase its 
reliance on imports to meet robust demand. Azerbaijan is Georgia's largest trading partner in energy, and is the main source of imports of natural gas and oil. Since 2009, Georgia has imported 
around 90% of its natural gas and more than 45% of  its oil products from Azerbaijan, diversifying 
its import sources from the Russian Federation. Gas imports are highest during winter months, for heating, and when hydropower capacity for electricity generation falls.  
4.68.  Georgia exports excess electricity from hydr opower and is interconnected with the Russian 
Federation, Azerbaijan, Armenia and Turkey. The volumes of electricity exports are relatively 
limited at present (860 MW to Turkey, 860 MW to  the Russian Federation, 1200 MW to Azerbaijan, 
and 150 MW to Armenia) although over the past decade electricity exports have increased by more 
than fourfold while imports have remained relatively constant. Georgia launched a programme for 
promoting hydropower generation and expects to increase electricity trade with Turkey in the 
                                               
13 According to the ADB, collection rates in creased from 20%-40% in 1999 to 95% in 2011 and 
transmission system losses decreased from 16% in 2002 to 2% in 2012. 
14 Government of Georgia (2014), p.37.  
15 The ETM is a basic trading platform for making comp etitively priced sales across international borders. 
16 OECD (2015). WT/TPR/S/328 • Georgia 
 
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  coming years.17 It is also in discussions with Armenia and Azerbaijan to trade electricity with 
Turkey via Georgia.  
4.69.  In 2014, the Georgian Government started working on a new Georgian Electricity Market 
Model aimed at boosting hydropower generation to allow increased electricity exports to Turkey 
and eventually other European markets. The Geor gian electricity market model and electricity 
trade mechanism will be implemented progressively from 2018 to encourage private sector investment in hydropower generation, allowing the country to boost its exports. The model is 
based on EU electricity markets. Key features include: cross-border transmission capacity rights 
for Georgian exports to Turkey; regional competit ive electricity markets; and electricity transit 
from neighbouring countries to Turkey and on to South-Eastern Europe. The model includes spot power trading and rules for non-discriminatory mark et access. The eventual goal is for Georgian 
hydropower producers to have access to European buyers that have varying obligations to 
purchase electricity from renewable sources.  
4.70.  Regarding gas, Georgia privatized its gas distribution companies as well as some large 
licensed importers which consume gas for industrial purposes. While the gas sector is liberalized, 
competition in the sector is limited as the stat e-owned Georgian Oil and Gas Corporation (GOCGC) 
maintains control over the import of gas. The oil products distribution sector is open to competition 
and a number of regional players participate in the market.  
4.2.3  Transit 4.71.  Due to its geographic location, Georgia acts as a transit country for the import-export and 
transit operations of energy carriers in the Caucas us region. Georgia is connected by gas pipelines 
to Armenia, Azerbaijan, the Russian Federation and Turkey. It is also connected by an oil pipeline 
to Azerbaijan and Turkey. Georgia imports natural gas from Azerbaijan and the Russian Federation 
and it transits gas to Armenia and Turkey. Georgia imports oil for transit to European countries.  
4.72.  The Baku-Tbilisi-Ceyhan (BTC) pipeline transp orts crude oil from Azerbaijan via Georgia to 
Turkey’s Mediterranean port of Ceyhan. From there the oil is shipped to world markets via tankers. 
The Western Route Export Pipeline (WREP) transpor ts crude oil from offshore oil fields in the 
Caspian Sea (belonging to Azerbaijan) to Supsa (Georgia) on the Black Sea, where it continues to 
European markets via tankers. Gas imports from Azerbaijan are via the South Caucasus Pipeline (SCP), which transports gas from the Shah Deniz field paralleling the route of the BTC crude oil 
pipeline from Azerbaijan through Georgia to Turkey.  
4.2.4  Regulatory framework 
4.73.  The Ministry of Energy
18 carries out state policy in the energy sector and is in charge of 
national energy policy development and implem entation. The Government of Georgia also 
manages national energy companies and the privatiz ation of energy assets. One of its main tasks 
is to create a competitive energy market. Other responsibilities include energy efficiency policy 
developments and energy research, developmen t and deployment policies. The Ministry has 
completed work on the new energy policy docu ment, which is due to be presented to the 
parliament for approval.  
4.74.  The Ministry of Environment and Natural Re sources Protection governs sustainable resource 
development and environmental protection, and de velops national policies and strategies on 
environmental and natural resource protection.  
4.75.  The Georgian National Energy and Wate r Supply Regulatory Comm ission (GNERC) is an 
independent energy and water supply regulator, established in 1997. The Commission's main 
source of finance is the regulatory payment made  by the licensees, importers, service providers 
                                               
17 The newly built Akhaltsikhe-Borchkha (A-B) transmission line started to operate in 2013 and currently 
its transmission capacity is 700 MW. According to th e 10-Year Network Development Plan prepared by the 
Georgian State ElectroSystem, the A-B transmission line will increase capacity up to 1400 MW by 2025. Currently, this line is used for export from Georgia and transit from Armenia and Azerbaijan. 
18 According to the Law on Amendments to the Law of  Georgia on the Structur e, Powers and Order of 
Activity of the Government of Georgia (2013), the Ministry of Energy and Natural Resources of Georgia underwent reorganization and became the Ministry of Energy. WT/TPR/S/328 • Georgia 
 
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  and electricity market operator (ESCO). GNERC’s responsibilities include: licensing for electricity 
generation, transmission, distribution and dispatch; licensing for natural gas transportation and distribution; regulation of electricity generation, transmission, distribution and end-user tariffs; 
dispute resolution; billing, reporting and fee-payi ng service development; and the promotion of 
local resources. GNERC also sets caps on wholesale prices for existing plants based on their costs. 
Changes to the Electricity and Natural Gas Law in 2007 transferred some of the key functions of the regulator (i.e. approval of market rules) to the Ministry of Energy, which limits the ability of 
this independent body to exercise its rights and ob ligations as it is practised in European markets, 
thus weakening its position as an independent regulator.
19  
4.76.  The electricity sector is mostly privately owned and nearly fully liberalized. Only 
transmission, dispatch and the largest hydropower  plant Enguri are owned by the State, whereas 
all the other generation and distribution assets are privately owned. Newly constructed small hydro 
plants with installed capacity of less than  13 MW are deregulated. Bundled ownership of 
generation and distribution assets is allowed. Th e Georgian authorities expect that the electricity 
sector will be opened by 2017-2020.  
4.77.  There has been a substantial reduction in  network losses since 2006, the authorities stating 
that total electricity system losses in 2014 amounted  to 7.3% of output. According to the Law on 
Electricity and Natural Gas, subsidies are not permitted for any licensee, importer, market 
operator, supplier or consumer in the electricity and natural gas sectors. The law also defines the scope and authority of the Ministry of Energy and GNERC. The Ministry is responsible for approving 
the following: electricity (capacity) balance; natural gas balance; electricity (capacity) market 
rules; natural gas market rules; rules of operatio n, arrangement and use of energy facilities and 
other technical equipment in the power sector; and the 10-year transmission network development plan of Georgia. The GNERC approv es: the Charter of the Commission; rules and 
procedures of administrative proceedings; procedural rules for consideration of disputes; the 
amount of the regulatory fee and its calculation methodology; licensing rules; supply and consumption rules; the tariff methodology; tariffs (including marginal tariffs); the volume of 
normative losses and rule for their calculation; and the Grid Code.  
4.78.  The Law on Electricity and Natural Gas of 1997 (with 2005 and 2007 amendments) is the 
principal piece of energy legislation in Georgi a. Amendments include the establishment of the 
responsibilities of an independent energy regulato ry authority, wholesale electricity market rules, 
third-party access for electricity and gas networks, unbundling of generation, transmission, 
distribution and retail activities. Secondary legislation comprises different statutory acts such as government resolutions, ministers’ orders and GNERC’s resolutions and includes the Electricity 
Supply and Consumption Rules and the Electricit y (Capacity) Market Rules (2006, amended in 
2010), and the Transmission Grid Code for the electricity sector which outline electricity and natural gas tariff methodology, and retail market and power supply market conditions. The latest 
amendments to the Law on Electricity and Natural Gas are the market rules for the new Energy 
Market Model, providing a legal framework for the electricity sector’s new structure.  
4.3  Manufacturing 4.79.  In 2014, the manufacturing sector accounted for around 10.6% of GDP and 14.8% of 
employment. The largest industries are food an d beverages and metal products. Exports have 
grown from US$1.1 billion in 2009 to US$2.9 billion in 2014, mostly due to mining, agrochemicals (fertilizers), metal products, food processing (s uch as wine, mineral water and nuts), construction 
materials and equipment and refurbished passenger vehicles.  
4.80.  The sector is liberalized and open to inte rnational trade. Significant progress has been made 
in the large-scale privatization of state-owned enterprises, the combatting of corruption, 
simplification of the tax code and improvement in administrative procedures for starting and 
licensing a business. As a result the sector attrac ted a large amount of FDI, before the crisis in 
2008, which has resulted in improved productivity.  
4.81.  The free industrial zone (FIZ) regime was introduced in 2008, incorporating new incentives 
and opportunities to process, produce and export goods as preferential tax treatment applies to 
                                               
19 EBRD (2013b), p.34. WT/TPR/S/328 • Georgia 
 
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  companies operating in the zones, including exemption from corporate profit tax, property taxes, 
import taxes and VAT (Box 4.1 and section 3.3.5). 
4.82.  According to the Law on Free Industrial Zones, FIZs may be established by government 
initiative or upon request by a physical person or legal entity (organizer). There are currently four 
FIZs in Georgia:  
 Kutaisi FIZ (established in 2009 and dedicated to trading and services, heavy industries, 
warehousing and storage, and manufacturing activities); 
 Poti FIZ, also established in 2009 and currently developing state-of-the-art business centres, 
industries and logistics parks; 
 Kulevi, established in 2012; 
 Kutaisi’s Hualing established in 2015. 
Box 4.1 Free Industrial Zones 
In general, creation of free industri al zones is focused on the development and acceleration of the country’s 
economic growth. Liberal tax regimes and simplified admi nistrative procedures are applied to FIZs, thereby 
increasing the country's investment potential, which is important for rapid economic development. The growth 
of FDI stimulates the economy and leads to increased economic activities, which, in turn, have a positive 
impact on overall economic development of the country.  FDI growth is accompanied by a rising inflow of 
new/modern technologies, which in turn, increases empl oyment opportunities, as we ll as the demand for a 
qualified workforce. This stimulates people’s willingness to receive modern education and qualifications. 
Development of export-oriented production is import ant for export growth and diversification and for 
diminishing the country’s external vuln erabilities. Development of free indust rial zones is important for regional 
development and growth of well-being for the local popu lation (as zones are created in regions). Development 
of enterprises in the FIZ will have a positive influence on the cargo transportation volume and intensity growth, 
which with in turn have a positive impact on the country's economic development (as in the transport and 
other service sectors).  
Source: Georgian authorities.  
4.83.  In connection with the introduction of FI Zs, the Georgian Tax Code was amended to provide 
for three new types of entity: the FIZ international enterprise; the free warehouse enterprise; and the international finance company. In 2011, the tax legislation was amended to abolish free 
warehouse enterprises and to introduce special trading companies (STC), which are enterprises 
conducting their activities in warehouses that have been granted STC status for corporate income tax exemption purposes.  
4.84.  International enterprises (IE) were, up to 2012, companies operating in one of the free 
industrial zones (FIZ). In 2012,  a decision was made to abolish  the status of  international 
enterprise and replace it with the free industrial zone enterprise (FIZE). The reason for the change 
was that, according to the Georgian tax legislation, IE status holders faced several restrictions 
while running a business on the territory of free industrial zones, such as limitations on importing 
or exporting a great number of goods or rendering several types of services. Free industrial zone 
enterprises on the other hand are allowed to im port and export any type of good. Enterprises 
operating on the territory of a FIZ are exempt from: corporate income tax; VAT; import tax; 
property tax and the obligation to withhold personal income tax on salaries paid to employees. 
4.85.  Special trading companies (STCs) are entities that carry out operations in a warehouse that 
holds a permit to conduct warehouse activities and are entitled to: re-export foreign goods; supply 
foreign goods to STCs and other entities; and re-export and/or supply foreign goods purchased 
from companies without STC status, so long as the re-export is made at a price that is not less than the invoice value. STCs must comply with th e restrictions set out in the Georgian Tax Code 
related to allowed activities. In particular, they are not allowed to carry out the following activities:  
 importing goods to the territory of Georgia, other than imports of the fixed assets of this 
company; 
 purchasing goods from within Georgia for the purpose of re-supplying them; and WT/TPR/S/328 • Georgia 
 
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   delivering services to Georgian enterprises, sole proprietors or foreign enterprises 
permanently established in Georgia.  
4.86.  STCs are exempt from corporate income tax. Therefore, they are a good choice for 
companies wishing to use Georgia as their distribution hub from which to supply the region. 
According to the authorities, the success of th e STC scheme can be measured by the number of 
STC status holders; currently, around 65 companies have STC status.  
4.87.  According to several studies, Georgia offe rs a friendly business environment, competitive 
labour costs, attractive trade and tax regimes, low electricity costs and convenient trade logistics 
and transportation routes. As a result, apparel production and exports have picked up in recent years from low levels (Box 4.2), due in considerable part to Turkish firms that are using Georgia as a low-cost production location.
20  
Box 4.2 Export potential of the textile sector 
While Georgia was well known for its high quality silk and wool blend fa brics under the So viet Union, the 
textile industry faced a major crisis after 1991 and re-e merged in 2004. Attracted by its skilled and low-cost 
labour, cheap land, low energy costs and preferential access to the EU  market, several European brands 
outsourced their production to Georgia and some Turkis h companies established plants in the Adjara region, 
at the border with Turkey. 
The apparel/textile industry  is one of the fastest gr owing sectors of the Georgi an economy. In 2014, annual 
turnover increased 12-fold. In the period 2003-2014, the number of employed people in the apparel and 
textile sector increased by 65%. Georgia has a high po tential for apparel export. Apparel exports increased 
7.6-fold from 2006 to 2014, from US$11.8 million to US$89.8 million. The main export markets are: Turkey, 
CIS (including the Russian Federation) and the EU. 
The transition from GSP + status to DCFTA status with the EU is expected to further stimulate the 
development of the industry. In order to fully unleash the potential of the textile industry in terms of value 
creation, Georgia aims to develop the manufacturing of inputs as well as hi gher value products. To facilitate 
textile production and export, the government offers the follo wing investment incentives: 
 Under the Government programme “Produce in Georgia”, apparel factories are eligible to 
participate in a loan subsidy programme for expansion or creation purposes. Beneficiaries can use 
a technical assistance component of the programme, to meet company needs.  
 Enterprise Georgia is supporting apparel companie s by: organizing incoming  trade missions, twice 
a year, in the context of Tbilisi Fashion Week; and organizing (starting from 2016) participation of 
Georgian apparel factories in international trade fairs. 
Source: Information provided by Georgian authorities.  
4.88.  In the medium term, export competitiven ess needs to improve. The share of merchandise 
exports in GDP was only about 24% on average du ring the review period. While there has been 
growth in exports in absolute terms, an analysis of the composition and dynamics of the export basket reveals significant weaknesses: (i) loss of market share in key markets and products; (ii) 
stagnant and low product sophistication and quality for the country's level of development; and 
(iii) lack of product diversification with scrap metal, re-export of used cars, wine and processed food, water and tourism dominating exports.  
4.89.  However, underlying problems have persis ted during the review period. As the authorities 
point out, Georgia's exports are less diverse an d sophisticated than the country's level of 
development suggests.
21 Goods produced in Georgia score low on added value, with currently only 
the processing industry being relatively developed, which is linked to local agricultural production. 
Raw materials dominate the country's exports, and the rate of market diversification and that of new market penetration by manufactured products remain low. For the authorities, problems concerning technological sophistication and innovation are the main reason for low diversification 
and limited access to new markets. As was the case  at the time of the previous review, Georgia 
requires improvements to regulatory policies to support innovation in key tradeable activities to increase exports in existing products and diversify private sector production and exports.  
                                               
20 World Bank (2013). 
21 Government of Georgia (2014), p.24. This seems to be the main document serving as a policy 
framework for private sector/SME development. Viewed at: http://www.adb.org/sites/ default/files/linked-
documents/cps-geo-2014-2018-sd-01.pdf . WT/TPR/S/328 • Georgia 
 
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  4.90.  To support the private sector, two new agencies - the Entrepreneurship Development 
Agency (EDA) and the Innovation and Technology Ag ency - were established under the Ministry of 
Economy and Sustainable Development in 2014. They aim to promote entrepreneurship by 
improving access to finance, entrepreneurial learning, consultancy services and export promotion 
and innovation and by supporting adaptation to DCFTA requirements. The EDA will, inter alia , 
inform entrepreneurs about potential export market s and requirements existing in those markets, 
and supply international markets with information on products and services offered by Georgia. 
Georgia has listed the establishment of the EDA as a priority need in the process of implementing 
the DCFTA Action Plan 2014-2017.  
4.4  Trade in Services 4.91.  As noted in the previous review, Geor gia took GATS commitments in 119 out of 160 
services sectors. It scheduled commitments in a large number of sectors, making full 
commitments in most of them, though mode 4 remains largely "unbound". Under the GATS, 
Georgia has scheduled horizontal market access exemptions in relation to privatization and mode 4 
for persons responsible for establishment of a commercial presence, salespersons and intra- 
corporate transferees. Under national treatment, Georgia has horizontal reservations on subsidies (modes 1, 2 and 3), and real estate (mode 3). The other horizontal reservation listed by Georgia 
under the GATS refers to movement  of natural persons (mode 4).  
4.92.  Georgia's MFN exemptions under the DCFTA are in connection with subsidies, privatization 
and real estate. Georgia's commitments under the DCFTA are similar to those under the GATS, though the horizontal limitations on the purchase of real estate remain.  
4.93.  Table 4.6, identifies some of the main differences by sector between Georgia's GATS 
schedule and its sector commitments under the DCFTA: 
 Telecommunication services Georgia's commitments are improved, as compared to its GATS 
commitments, through full commitments, including for establishment. Similarly, as 
audio-visual services are excluded under the DCFTA, Georgia undertakes no commitments in 
this subsector, in contrast to its commitments under the GATS.  
 Construction services: full commitments are ma de under the DCFTA as in the GATS, with the 
exception of a reservation (mode 3) that not less than 50% of the entire staff must be Georgian citizens.  
 Financial services: Georgia gives a full mode 3 commitment (broader than GATS), with the 
sole exception of "other financial services".  
 Health services sector: full commitments are made, with only a reservation for the Georgian 
language for doctors working in Georgia. Under the GATS and DCFTA, there are no 
commitments for "other health related and social services".  
 Recreational and cultural services: except for obligations with respect to other recreational, 
cultural and sporting services, both under the DCFTA and under GATS, full commitments are 
made in most of the rest of the sector.  
 Transport services: under the GATS Georgia has partial commitments which are improved 
under the DCFTA. In relation to air tran sport services (as compared to the GATS 
commitments), Georgia's coverage is expanded under the DCFTA through the inclusion of 
ground handling services and airport operation services, for which commitments are made 
without restriction.  WT/TPR/S/328 • Georgia 
 
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  Table 4.6 Georgia: comparison between the GATS and the AA/DCFTA specific 
commitments in trade in services 
Sectors (CPC Classification) GATS FTA 
sectoral commitments, except as indicated in Annex XIV (horizontal 
reservations) 
Cross-border supply in services  
(modes 1 and 2)  
(Annex XIV-F) 
(Annex XIV-F) 
Positive list  Establishment (Annex XIV-E)  
(mode 3) Negative list 
compared to 
GATS 
commitments Commitments 
(from 
reservations) compared to 
GATS 
commitments Commitments 
(based on 
sectoral 
coverage and 
limitations) 
1. Business services      
A. Professional services Partial  Same  Partial  Same Partial  
B. Compute r and related services  Full Same  Full Same Full  
C. Research and development services  Full Same  Full Same Full 
D. Real estate services  Full  Same  Full Same Full  
E. Rental/leasing services without  operators  Partial  Simila r Partial  Partial Partial  
F. Othe r business services Partial  Simila r Partial  Simila r Partial  
2. Communication services       
A. Postal services ----  Simila r Partial  ---- Partial  
B. Courier services Full Full Full Full Full 
C. Telecommunication services  Full Improved  Full Simila r Full  
D. Audiovisual services Partial  ---- ---- ---- ---- 
3. Construction and related engineering 
services       
A. General construction work fo r buildings Partial  Improved  Full Same Full 
B. Gene ral construction work fo r civil engineering Partial  Improved  Full Same Full  
C. Installation and assembly work  Partial  Improved  Full Same Full 
D. Building completion and finishing work  Partial  Improved  Full Same Full  
E. Other Partial  Improved  Full Same Full 
4. Distribution services      
A. Commission agents' services  Full Same  Full Simila r Full 
B. Wholesale trade services Full  Same  Full Simila r Full  
C. Retailing services Full Same  Full Simila r Full 
D. Franchising Full  Same  Full Simila r Full  
E. Other ---- ---- ---- ---- ---- 
5. Education services      
A. Primary education services Full Same  Full Same Full 
B. Secondary education services  Full Same  Full Same Full  
C. Higher education services  Full Same  Full Same Full 
D. Adult education Full  Same  Full Same Full  
E. Other education services  ---- Same  ---- ---- ---- 
6. Environmental services      
A. Sewage services Partial  Same  Partial  Same Full 
B. Refuse disposal services Partial  Same  Partial  Same Full  
C. Sanitation and similar services  Partial  Same  Partial  Same Full 
D. Other Partial  Same  Partial  Same Full  
7. Financial services      
A. All insurance and insurance-related services  Partial  Simila r Full Same Full  
B. Banking and othe r financial services Full Same  Full Same Full 
8. Health related and social services      
A. Hospital services Full Simila r Full Simila r Full 
B. Other human health services  Full Simila r Full Simila r Full  
C. Social services Full ---- ---- Same Full 
D. Other ---  ---- ---- ---- ---  
9. Tourism and travel related services       
A. Hotels and restaurants (including catering) Full  Same  Full Same Full  
B. Travel agencies and tour operators services Full Same  Full Same Full 
C. Tourist guides services Full  Same  Full Same Full  
10. Recreational and cultural and sporting 
services      
A. Entertainment services Full  Same  Full Same Full  
B. News agency services Full Same  Full Same Full 
C. Libraries, archives, museums and other cultural services Full
 Same  Full Same Full  
D. Sporting and other recreational services  Full Same  Full Same Full 
11. Transport services       
A. Maritime transport services Partial  Improved  Partial  Same  Partial  
B. Internal waterways transport  ---- Improved  Full Improved  Full  
C. Air transport services Partial  Improved  Full Improved Full 
D. Space t ransport  ----  ---- ---- Improved Full  
E. Rail transport services Partial  Same  Partial  Same Partial  
F. Road transport services Partial  Improved  Partial  Improved Partial  
G. Pipeline transport  ---- ---- ---- ---- ---- 
H. Services auxiliary to all modes  of transport  Partial  Same  Partial  Improved Full  
I. Othe r transport services  ---- ---- ---- ---- ---- 
General Note:  MFN and Horizontal limitation s, as well as mode 4 commitments/limitations excluded. WT/TPR/S/328 • Georgia 
 
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  Partial: GATS commitments subject to some limitation( s) under market access or national treatment, under 
any of the three modes. 
Full: GATS commitments not subject to limitation(s) under market access or national treatment, under 
any of the three modes. 
---: No commitments. New: New commitments under the Agreement (full or partial, with or without limitations). "New" can, in 
most but not all cases, be seen as "improved". 
Improved:Overall improved commitmen ts made under the Agreement.  
Similar: Similar commitments (Agreement vs GATS); though possibly, in specific cases, with limited 
improvements and/or limited  additional reservations. 
* Excluded from the Agreement.  Limited: Some additional limitations. Source: Georgia's Schedule of Specific Commitments (GATS/SC/129), and Annexes XIV-E and XIV-F to the 
Agreement and WTO document WT/REG354/1, 13 April 2015.  
4.94.  In terms of implementing the AA/DCFTA, ME SD was assigned a coordinating role in early 
2014 and in July of that year the Government approved a multi-annual action plan for the 
implementation of all commitments linked to the DCFTA during the period 2014-17.22  
4.4.1  Financial services 4.95.  Georgia’s financial sector is dominated by the banking sector with a small non-bank financial 
services market and an inactive private securities market. Currently, there are 19 commercial 
banks (with branch offices), 16 of which are fo reign-controlled. As of the end of 2012, the 
commercial banks accounted for more than 93% of financial system assets. Commercial banks 
play a leading role in financing the economy. Concentration in the banking system is relatively 
high with the five largest banks controlling more than 80% of total sector assets, while the top two banks—the Bank of Georgia and TBC Bank—control more than 60% of assets (Table 4.7).  
4.96.  As of the end of 2014, other institutions operating in the financial market include 17 
licensed credit unions, 70 registered microfinan ce organizations, 51 registered money remittance 
units, 1,116 registered currency exchange bureaus, 14 insurance companies, 5 pension funds, the Georgia Stock Exchange, and the Georgia Central Se curities Depository. There are eight brokerage 
companies. There are four listed companies and 128 non-listed companies admitted to the Georgia 
Stock Exchange.  
Table 4.7 Financial institutions, 2005-14 
 Unit 
value 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 
Numbe r of 
commercial 
banks unit 19 17 20  20 19 19 19 19 21 21  
Of which foreign 
controlled unit 12a 12a 14a 17a 15a 16a 18a 17a 20a 19a 
 per 
100,000 
inhabitants 0.4 0.3 0.3  0.4 0.3 0.4 0.4 0.4 0.5 0.4  
Branches unit 159 122 124 124 120 119 144 142 164 168 
Services centres unit 187 298 416  559 513 522 564 691 739 796  
Authorized 
capital of 
commercial 
banks million 
GEL 296.4 344.8 524.6  625.6  673.4  805.1  915.6  909.2 1,054.0 1,157.7  
Equity capital of 
commercial banks million 
GEL 479.5 898.4 1,471.0
 1,517.3  1,517.0  1,787.6  2,104.4  2,390.1 2,916.2 3,586.8  
Exchange 
bureaus unit 556 655 806 1,030  1,352  1,624  1,500  1,029 1,089 1,116  
 per 
100,000 
inhabitants 12.2 14.9 18.3  23.5 30.8 36.6 33.6 22.9 24.3 24.9  
Credit unions unit 40 38 24 18 18 18 18 18 17 17 
Microfinance 
organizations unit 2 3 15  27 38 49 62 62 67 70  
                                               
22 2015 National Action Plan for the Implementation of the Association Agreement between Georgia and 
the EU and Member States. Approved by Decree No. 59 of the Government of Georgia, 26 January 2015. WT/TPR/S/328 • Georgia 
 
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   Unit 
value 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 
Stock exchanges unit 1 1 1 1 1 1 1 1 1 1 
Insurance 
companiesb unit 16 14 15  13 14 16 15 15 14 14  
Pension 
schemesb unit 3 3 4 7 6 6 7 6 5 5 
a Including Branches of Non-Resident Banks.  
b Insurance supervision was separated from NBG in 2013. 
Source: National Bank of Georgia.  
4.97.  Regarding the foreign presence of banks, no distinctions are made between domestic and 
non-local banking entities within NBG’s supervisory framework, NBG cooperates with the 
supervisory authorities of those countries where the parent banks of locally-licensed foreign banks 
are incorporated. NBG has established memoranda of understanding with a number of foreign supervisory authorities.  
4.98.  The authority to supervise commercial banks
23, as well as non-bank financial institutions - 
securities market, credit unions, microfinance organizations, money remittance units, currency 
exchange bureaus, and qualified credit institutions, is vested with the National Bank of Georgia (NBG). NBG is the central bank of Georgia and an independent public body. The legal framework 
for the operation and supervision of financial institutions is primarily defined by the Constitution of 
Georgia (Articles 95 and 96); Organic Law on Georgia on the National Bank of Georgia; Law on the Activities of Commercial Banks; Law of Georgia on the Securities Market; Law of Georgia on 
Microfinance Organizations; Law of Georgia on Non-Bank Depository Institutions - Credit Unions 
and relevant by-laws.  
4.4.1.1  Banking 4.99.  According to the NBG, the financial system retains comfortable levels of capital and liquidity 
(Table 4.8). As of end-2014, the system's capita l adequacy ratio was 17% and the liquidity ratio 
39%, both well above the minimum requirements of 12% and 30%, respectively. Non-performing 
loans (NPLs), which increased by the end of 2012, have decreased in 2013 and 2014. 
Dollarization, at about two-thirds of loans and deposits, continues to be the main risk to the 
financial sector. The Georgian authorities continue to promote the use of the lari in the financial system with a view to reducing the share of dollar  deposits held by residents. The authorities are 
also conducting a study on the introduction of deposit insurance in Georgia in line with 
commitments made to the EU under the DCFTA.  
Table 4.8 Selected financia l soundness indicators, 2009-14 
 2009  2010  2011  2012 2013 2014  
Dec. Dec. Dec. Dec. Dec. Dec. 
Deposit dollarization (residents and non-residents 
in % total of deposits) 71.8 68.6 63.3 66.0 59.9 60.1  
Deposit dollarization (residents, in %) 68.8 65.0 58.6 60.4 54.1 54 
Loan-to-deposit ratio (in %) 124.2 107.6 105.3 106.7 102.9 105.3  
Credit-to-GDP ratio (in %) 29.0 29.9 31.7 33.3 40.4 50 
Capital adequacy ratio (in %)a 19.1 17.4 17.1 17.0 17.2 17.4  
Capital adequacy ratio (in %)b 25.6 23.6 25.6 25.3 25.2 25.5 
Liquidity ratio (in %)c 39.1 38.7 37.3 39.8 41.8 38.7  
Non-performing loans (in % of total loans)d 17.9 12.5 8.6 9.3 7.5 7.6 
Non-performing loans (in % of total loans)e 6.3 5.4 4.6 3.7 3.1 3.1  
a National definition. Risk weight to forex loan s was reduced from 200% to 175% in September 2008, 
and 150% in August 2009, and ra ised to 175% in January 2011. 
b Basel I definition. 
c Ratio of liquid assets to all deposits plus other liabilities with 6-month and shorter maturity. d National definition: NPLs are defined as loans in  substandard, doubtful, an d loss loan categories. 
e Standard 90-day overdue definition. 
Source: National Bank of Georgia; and IMF staff estimates, IMF (2013), Georgia: 2013 Article IV 
Consultation , IMF Country Report No. 13/264 viewed at: 
http://www.imf.org/external/pubs/ft/scr/2013/cr13264.pdf .  
                                               
23 As of August 2015, a bill detaching banking superv ision from the NBG has passed parliament and is 
awaiting the president's signature. WT/TPR/S/328 • Georgia 
 
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  4.100.  Banking in Georgia is regulated under the National Bank of Georgia (NBG) Act. The NGB is 
responsible for the supervision of commercial banks. Among the post-crisis measures which contributed to Georgia's recovery as of 2010 is the strengthening of the risk-based supervision and regulation of financial institutions by the NBG. The IMF-World Bank Financial Sector Stability 
Assessment Program (FSAP) conducted in 2014 concluded that the NBG's regulatory and 
supervisory framework is robust.
24 Banking regulation and supervision in Georgia is broadly in line 
with international standards. The authorities note that NBG's supervisory powers and legal 
framework are updated in accordance with international developments and international practice.  
4.101.  In 2014, important changes were introduced  to the legislative and institutional framework 
concerning the banking sector.25 Moreover, an updated regulation on capital adequacy in 
accordance with Basel III is being gradually introduced as of 2014. Currently, banks are in the 
transition process and are required to comply with both the old and new regulations; however, 
starting in 2015, the old regulation will be gradually phased out.  
4.102.  Regarding the prudential requirements. Th e NBG sets capital, liquidity and concentration 
limits, including: the minimum equity capital required for establishing a bank is GEL 12 million, 
which must be fully paid-up cash.  
4.4.1.2  Other financial services 
4.103.  The insurance market remains relatively small with a premiums-to-GDP ratio of under 2%, 
nearly all of which is in the non-life segment. Few complex products and very few life products are offered in the market. The Georgian insurance market has become more concentrated with the top three companies accounting for an estimated 55% of the market.  
4.104.  In 2009, according to the Law of Georgia on Insurance, insurance supervisory functions 
were transferred to the National Bank of Georgi a. In 2013, according to further amendments of 
the law, and the Georgian Government Decree of 2 May 2013, the Insurance State Supervision 
Service of Georgia was established as an indepe n d e n t  L E P L  ( L e g a l  E n t i t y  o f  P u b l i c  L a w ) .  T h e  
Service has assumed the former duties and respon sibilities of the National Bank of Georgia 
concerning insurance activity and non-state pension scheme supervision issues. The Service is 
authorized to carry out the supervisory functions in  terms of on-site and off-site regimes. It also 
supervises the prevention of illicit income legalization in the insurance system. The Service is authorized to develop by-laws on insurance and to control performance. It also issues licenses for 
insurance activities and registers the insurance brokers. 
4.105.  In terms of developing the insurance market in the country, compulsory insurance 
schemes are under development, in particular for motor third-party liability and an agricultural insurance pilot programme, under which insurance co mpanies perform agricultural risk insurance.  
4.106.  The NBG regulates the securities mark et, which includes the following licensed 
participants: a stock exchange, a central securiti es depository, eight brokerage companies and six 
registrars. Market participants submit their reports in line with international standards. All listed 
companies must make public filings, which are then uploaded on the NBG website, allowing users 
to evaluate the company's standing. The Georgian Stock Exchange (GSE) is the only organized securities market in Georgia and operates un der a legal framework that complies with good 
international practices in securities trading. There are no regulations authorizing private firms to 
restrict foreign partners' investment activity or limit foreign partners' ability to gain control of 
domestic enterprises.  
4.107.  The securities market is at an early stage of development, and has a narrow investor base 
and shallow market liquidity. Savings mobilizati on is poor, because private pension funds are 
voluntary and underdeveloped. Non-contributory pensions constitute the largest social spending 
                                               
24 IMF (2015), p.42. 
25 For example, the regulation regarding the operatio nal risks of commercial banks was adopted, which 
primarily addresses the questions of business continuity  management, outsourcing, and independent IT audit 
requirements. In addition, the NBG has issued a simplified regulation on trading books and new guidelines for 
country risk management at commercial banks, furthe r pursuing well-established international standards, 
among them the Basel Core Principles (BCP). Also, a ba nking bill has been under discussion to transfer the 
NBG's supervisory functions to a new agency.  WT/TPR/S/328 • Georgia 
 
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  item in the state budget, accounting for 18% of  public expenditure in 2013 and 4% of gross 
domestic product (GDP) a cost that is likely to increase as the population ages.  
4.108.  In order to further develop the Georgian capital market according to international best 
practices as well as to increase access to long-term and affordable investment resources, the 
Government is working on capital market reform.  
4.4.2  Telecommunication services 4.109.  Fuelled by the launch of important e-government projects in cooperation with the private 
sector, Georgia is envisaging becoming an ICT hub for the Caucasus-Caspian region. Georgia’s 
Innovation and Technology Agency (GITA) is the main facilitator in this process. There are some important components for developing ICT in Ge orgia, including skills and capacity building 
development. GITA is holding different types of training programmes on the most in demand IT 
program, conducting practice-oriented training for trainers in the high-tech field to enhance 
capacity building of private companies and science skills development for promoting 
commercialization of innovation. The goal of GITA, as laid down in Georgia 2020,  is to have 40,000 
IT specialists in the high-tech field by 2020. Georgia is developing an innovation infrastructure, 
featuring technology parks with business incubators, accelerators and innovation and fabrication laboratories. Currently three I-Labs (university-based) focus on: programming for mobile 
platforms; computer games development and computer graphics/visual effects; there are also two 
Fab-Labs working on engineering and creative science.  
4.110.  The telecommunication segment dominates the ICT market in Georgia. It is well 
penetrated by service providers, most of them international companies and investment is capital 
intensive. Telecommunications are regulated by  the independent and self-financed Georgian 
National Communications Commission (GNCC), which is subject to comprehensive rules on independence and transparency. The Commission sets  up regulation fees for authorized holders, 
and initial prices for auctions, regulates the radio frequency spectrum and the interconnection of 
the telecommunication networks and provides certification, standardization and metrology services. The regulatory framework is relatively well developed and largely aligned with EU 
requirements although there are still challenges, such as ensuring that the regulator has sufficient 
powers to enforce market access requirements or in the area of universal service regulation.  
4.111.  During the review period, amendments were made to the laws on Electronic 
Communications and Broadcasting as well as to relevant normative acts. These cover, inter alia : 
completion of deployment of a new numbering system, implementation of number portability in 
mobile networks, as well as for fixed networks, and implementation of 4G broadband services allowing customers access to high-speed internet . The process of digital switchover started on 
1 July 2015. The process is executed region by  region and was planned to be completed by 
25 August 2015. 
4.112.  Regarding market structure, the State does not have any outstanding ownership stakes in 
the telecom operators. The capital-intensive telecom industry is well penetrated by international 
service providers. By 2013, mobile penetration had reached 111% (compared to 69% in 2009) and despite signs of a faltering economy, the mo bile market continues to grow although the 
annual rate of growth has moderated and become more predictable. All mobile operators have 
started provision of 4G broadband services. Despite a rather erratic growth pattern, the fixed-line 
network in Georgia reached a teledensity of 27% in 2013 (up from 19% in 2009) but this appears to be declining. Although the interest in internet in Georgia is high, subscription numbers remain 
modest at 579,000 in 2013, representing a density of 13%.  
4.113.  Mobile subscriptions have grown strongly in recent years, driven primarily by increased 
competition and pressure on prices as well as limi ted access to fixed-line services in rural areas. 
The mobile segment is led by four international operators:  
 Geocell (owned by Finnish-Swedish company TeliaSonera) with 34% of the market (as of 
December, 2013); 
 MagtiCom (owned by Telcell Wireless LLC/ITC LLC, USA) with 43% market share (as of 
December, 2013); WT/TPR/S/328 • Georgia 
 
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   Mobitel/Beeline (owned by Russia's VimpelCom)  with 22% of the market (as of December, 
2013); 
 Silknet (CDMA) (owned by Rhinestream Holdings Limited) with 0.6% market share.  
4.114.  Not all mobile operators use the GSM system (Silknet uses WCDMA). There were close to 
5 million mobile phone subscribers (defined by the number of active SIM cards) by the end of 
2013, compared to 800,000 in 2005. Mobile network coverage is provided to virtually the whole of Georgia and mobile communication systems have increased in importance as the fixed-line 
networks are outdated in many places, including in mountainous areas. Since the regulator 
awarded three 3G mobile licences in 2006, there has been a significant uptake of new generation subscriptions, the 3G subscriber base accounting fo r an estimated half of all mobile subscribers to 
date. Also, the introduction of mobile number port ability contributed to mobile subscriber growth, 
as well as tariff reduction.  
4.115.  In the fixed-line segment, the incumbent Silknet (formerly United Telecom of Georgia, sold 
by the Government to a Kazakh-Georgian consortium BST Holding in 2006, and now owned by 
Rhinestream Holdings Ltd) still has a large market share, estimated at 63% in 2013. There are two 
other players-Akhtel (11.4%) and Akhali Kselebi (19.6%), both privately-owned domestic companies which together have about 31% of th e market share. More than 50% of Georgia's 
fixed-line services are concentrated in the capital Tbilisi.  
4.116.  The total number of companies authorized  to provide internet services was 186 (as of 
end-2013), amongst them 152 active, out of which 112 were wi-fi operators. The two largest ISPs are: Silknet (involved in IP TV) with 43% market share and Caucasus Online (also involved in IP 
TV) with 29% market share, at end-2013. In the face of internet connections with insufficient 
bandwidth to meet the needs of their customers, the demand for better quality is expected to grow. ISPs are expected to drive TV digitalization.  
4.117.  The Georgian market offers internet serv ices through: all fixed networks (DSL, and fibre 
optic cables); wireless fixed network (CDMA, Wimax, WIFI, LTE) and mobile communication networks. Fibre optics is the most common technology for internet access, which is significantly 
higher in the capital and other big cities than in  the regions where it remains limited. The number 
of mobile internet users is growing, led by MagtiCom. As of 2015 LTE services are available and 3G services have widespread coverage. 
4.4.3  Transport 
4.4.3.1  Regulatory framework 
4.118.  The Ministry of Economy and Sustainable Development (MoESD) is charged with 
coordinating and regulating four modes of transport (road, rail, sea, and air) and formulating a 
national transport policy (Table 4.9). Regarding implementing units, the Transport Policy 
Department oversees road and maritime transport, railways, and civil aviation. The Land Transport Agency, the Maritime Transport Agency, and the Civi l Aviation Agency are the technical regulators. 
Georgian Railways is a state-owned and vertically-integrated company, and controls core railway 
business (infrastructure, passenger, freight, etc.). All seaports and two major airports (Tbilisi and 
Batumi) are either owned or operated by private companies. A state-owned enterprise, United Airports of Georgia, operates the international airport in Kutaisi and all smaller airports. Pipeline 
transport regulation rests with the Georgian Oil and Gas Corporation, a joint stock company of the 
Government.  
4.119.  The Ministry of Regional Development and Infrastructure (MRDI) is responsible for 
developing and maintaining the road network, except local roads, which fall under the jurisdiction 
of local authorities. The Roads Department implements and manages the infrastructure. Construction and maintenance works are outsourc ed and the environment is competitive. Road 
user charges are enough to cover maintenance and rehabilitation costs.  
4.120.  The Ministry of Energy is in charge of pipeline transport. WT/TPR/S/328 • Georgia 
 
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  Table 4.9 Transport regulatory framework 
 Roads Services  Maritime 
Transport Aviation Road  Rail 
Strategic 
planning Ministry of Regional 
Development and Infrastructure Ministry of Economy and Sustainable Development 
Regulato ra Roads Department Commercial: Land 
Transport Agency 
 
Motor traffic: 
Ministry of Internal 
Affairsb Georgian Railway  Maritime 
Transport Agency Georgian Civil 
Aviation Agency 
Infrastructure 
supply and management Construction and 
maintenance by private sector Bus terminals: 
Municipalities and the private sector  
Freight logistics 
centres: Private sector Construction and 
maintenance by private sector Ports:
 
Poti-APM 
Terminals  
Batumi-Batumi 
Industrial Holdings  
Supsa-British 
Petroleum  Kulevi-State Oil Company of 
Azerbaijan 
Republic Airports: 
Kutaisi International and Mestia domestic 
airports-United 
Airports of Georgia  Tbilisi International 
and Batumi 
International-TAV Airport Holdings 
Services Not applicable Freight:  
Private sector 
 
Intercity and 
international 
passenger: 
Private sector Georgian Railway  Shipping:  
Private sector 
 
Freight forwarding 
Private sector Airlines: 
Private sector 
a The scope of regulation provided by these agenci es is mainly technical. Economic regulation is 
limited and undefined.  
b The Patrol Police Department of the Ministry of In ternal Affairs handles moto r vehicle administration.  
Source: ADB (2014), Georgia Transport Sector Assess ment, Strategy, and Road Map , p. 5. Viewed at: 
http://www.adb.org/sites/default/files/institutional-document/34108/files/georgia-transport-
assessment-strategy-road-map.pdf .  
4.121.  Over the past decade, successive governments in Georgia have revised rules and updated 
regulations on the supply of transport infrastructure and services. They have restructured 
institutions and delegated to line agencies the authority for modernizing the transport system. This 
has helped draw private investment into aviation (airports and airlines), maritime services (ports and shipping), road transport (all freight and intercity passenger), and pipelines (oil and gas from 
Azerbaijan and Kazakhstan). The railway is now a state-owned enterprise with the authority to 
raise capital in the open market, leaving the road  network as the only physical asset owned and 
operated in a traditional, public-sector manner. 
4.122.  In its development strategy to 2020, the Government undertakes to further streamline 
transport infrastructure and develop logistical centres. In particular, the completion of the East-
West Highway and the Baku-Tbilisi-Kars railway line as well as the development of an international airport in Kutaisi and the construction of a deep water port (in Anaklia) are currently the country's 
biggest priorities.
26  
4.123.  In the transport field, Georgia has continued to align its legislation with that of the EU. 
Georgian Railways has developed a strategy for brin ging its railways closer to EU standards. The 
implementation of the EU-Georgia Common Aviation  Area Agreement continues to be monitored by 
the European Aviation Safety Agency. In the maritime sector, Georgia brought itself into line with international standards on training and certification of seafarers allowing the EU to resume recognition of seafarers' certificates issued by Georgia. Moreover, significant progress was made in 
terms of flag state performance. Pursuant to legi slative changes, a new registration procedure was 
introduced which is in line with EU standards. He nce, in 2013 the detention ratio of ships flying the 
Georgian flag was reduced in comparison with previous years and in July 2014 the Georgian flag 
was moved from the black to the grey list under the Paris MOU.  
                                               
26 Government of Georgia (2014), p. 34. WT/TPR/S/328 • Georgia 
 
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  4.4.3.2  Transport modes 
Road 4.124.  Both domestic and international passenger  transport is heavily road-based with 99% of 
passengers transported by road during the review period. Regarding transportation of cargo, which 
amounted to 46.4 million tons in 2014, roughly 62% goes by road and 38% by rail. The 20,250 
km road network (of which 1,528 km is international and managed by the Roads Department) is the most significant component of the transpor t system. The 400-km East–West Highway (EWH) is 
the main road link, providing the fastest surface access from the east to the west. It plays a 
strategic role and nearly 60% of international trade crossing Georgia moves on the EWH. Traffic on this road is increasing at around 10% a year, in part due to road improvements, streamlined border-crossing procedures, and harmonized standards and documents.  
4.125.  One of the main projects for the Government is the East-West Highway construction and 
rehabilitation project, which is of great importance for Georgia and its neighbouring countries and for the EU as a strategic transit route between Europe and Central Asia. Better transport links are 
crucial to improving Georgia’s economic cooperation with neighbouring countries and its other 
trading partners, strengthening the competitiveness of the region and increasing transport safety and capacity. As a member of the EU-backed Tr ansport Corridor Europe-Caucasus-Asia (TRACECA) 
scheme, Georgia is working to streamline transport tariffs on all major types of cargo; TRACECA 
corridor development remains a transport policy priority for Georgia.  
4.126.  Currently, according to the authorities, approximately 112 km of high-speed highway has 
been constructed, which has been financed by th e central budget of Georgia, the World Bank, ADB 
and JICA. In 2015 construction works are planned for an additional 129 km of central highway. 
After the finalization of the works, the highway will have four lanes with the capacity to serve 50,000 vehicles per day.  
Rail  
4.127.  Rail cargo volumes are constrained in western Georgia because of technical issues such as 
limited track capacity and lack of access to Russi an markets because of the conflict in Abkhazia. 
Georgian Railways depends heavily on the transport of petroleum products to the Black Sea ports 
from Azerbaijan. Construction on new railway (the Baku-Tbilisi-Kars Railway) from Akhalkalaki (Georgia) to Kars (Turkey) began in 2008 and main works are scheduled to be finished in 2015. The project will effectively open a new rail corrid or from the Caspian Sea to Europe via Turkey.  
Maritime 
4.128.  The Maritime Transport Agency was established in April 2011 as an independent authority 
within MOESD. MTA is the technical regulator of the maritime field. The main functions of the MTA 
include: seafarers education and certification, flag state performance, port state control, maritime 
search and rescue, maritime safety, security and environmental protection. MTA was created with a specific mandate to establish a sustainable system  of capacity building by employing experienced 
seafarers and consultants, and intensify cooperation with the maritime authorities of other 
countries. Shipping services are provided by a fe w foreign companies that have dedicated services 
in the Black Sea. The largest operator in the container market is the Mediterranean Shipping Company (45.1%), which provides global trans-shipment and relay services mainly through 
Istanbul. Important container volumes are transported by Maersk (18.5%), Evergreen (9.9%), 
CMA-CGM (8.9%), Zim (6.6%), Norasia (3.5%), Arkas (3.5%), UASC (0.9%), Hapag Lloyd (0.8%), and others (2.2%). Scheduled passenger services operate, several of them directly, from 
Batumi and Poti to Bulgaria, Romania, Turkey, and Ukraine.  
4.129.  The Deep and Comprehensive Free Trade Area (DCFTA) envisages progressive reciprocal 
liberalization of establishment and trade in services in various fields, including in transport. The 
DCFTA will further facilitate effective application of the principle of unrestricted access to cargoes 
on a commercial basis, the freedom to provide international transport services, as well as national treatment in the framework of the provision of such services. The DCFTA envisages the obligation 
for Georgia to implement 23 maritime-related direct ives and regulations, maritime safety, security 
and environmental protection. WT/TPR/S/328 • Georgia 
 
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  4.130.  Since independence Georgia has signed bilateral intergovernmental agreements in 
maritime transport with 14 states. In 2013-2014 Georgia signed bilateral maritime transport agreements with Poland; Korea, Republic of; and Cyprus. These Agreements will serve as the legal 
basis for merchant shipping between ports of Georgia and respective states. 
4.131.  Georgia actively cooperates with the International Maritime Organization, the Black Sea 
Memorandum of Understanding on Port State Control and the International Hydrographic Organization. In 2014 Georgia became an  Observer in the Danube Commission. 
Ports  
4.132.  The two major Black Sea ports are located in Poti and Batumi, with a depth of 11 and 12 
metres and capacity of handling 10 million and 17 m illion tons of cargo, respectively. Georgia has 
rail ferry links with Ukraine, Romania, the Russian Federation and Bulgaria.  
4.133.  Poti handles most container shipments and some bulk and is owned and operated by APM 
Terminals, a subsidiary of Maersk Shipping of Denmark, which secured 80% of shares from RAK 
Investment Authority (RAKIA) of the United Arab  Emirates. RAKIA purchased the port from the 
Government in 2009 and invested in port infrastructure and the adjacent Poti Industrial Free Zone.  
4.134.  Container cargo constitutes 44.1% of the volume handled while general cargo, liquid cargo 
and break bulk make up 20.7%, 8.5%, and 26.7% respectively. Around 40% of the cargo is 
import traffic while transit and exports make up 39% and 21% respectively. Since 2009 the 
number of containers handled increased by 123% from 172,000 TEUs to 384,992 TEUs in 2014. 
Its current capacity for containers is estimated at 550,000 TEUs. In 2014, the port handled 8.6 million tons of cargo. APM Terminals have plans to invest US$100 million over a five-year 
period in expanding and modernizing the port.  
4.135.  The port of Batumi handles dry bulk, containers and oil; it is operated by Batumi Industrial 
Holdings (BIH) Ltd., a subsidiary company of KazTransOil of Kazakhstan under an agreement 
signed with the Government in 2008 for a period of 49 years. It has eleven berths for oil, 
containers, rail ferry, dry cargo, and passengers.  The agreement requires the port to handle 6 
million tons of cargo per year.  
4.136.  Two other ports are at Supsa (operate d by BP) and Kulevi (owned by Azeri Socar 
Company) exclusively to handle oil products.  
4.137.  Port dues and tariffs are set by private operators. The Government strives to enhance 
competition by improving port infrastructure. For this purpose, particular importance is attached to 
the construction of a new deep sea port in Anaklia, which should have certain competitive 
advantages: strategic location; capacity to receive Panamax type vessels; one stop shop solutions; simple and fast procedures and all-year-round safe navigation. Construction of the new port is 
strategically important and is planned to result in a significant increase in cargo turnover through 
Georgia. Currently, the Government is working to se lect the investor for the implementation of the 
project. 
Aviation  
4.138.  In recent years, Georgia has gone through a comprehensive review of the air transport 
sector, including a reorganization of the institutional framework to separate the functions of policy making, technical regulation, and operation of infrastructure. Along with the reform, the country 
has been experiencing an increase in demand for aviation services, which has generated an 
increase of interest from foreign carriers to access the Georgian international market.  
4.139.  The Transport Policy Department in MoESD is responsible for all policy matters including 
the definition of access to markets, and conducting negotiations of air service agreements, which 
cover the designation of airlines, points of entry at each country, services beyond, traffic rights, air fare control, etc. In addition, the Department is responsible for defining policies and assuring their 
implementation. WT/TPR/S/328 • Georgia 
 
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  4.140.  Responsibility for assuring safety and security resides with the Georgian Civil Aviation 
Agency (GCAA). The body is empowered to oversee al l technical aspects of the civil aviation sector 
according to the norms and recommendations of the Chicago Convention of 1944 and its Annexes. As such, the responsibilities of the GCAA include all technical aspects related to oversight and 
enforcement of compliance with local and international norms, such as ICAO Standards and 
Recommended Practices (SARPs). This involves, inter alia, certification of aircraft airworthiness, 
maintenance facilities, licensing of all aviation personnel (flight and cabin crews), certification of 
airports, air navigation services, air cargo terminals and of all service providers related to air 
transportation. The GCAA is a “legal entity of public law” and is financially independent via the collection of certification and licensing fees.  
4.141.  Georgia has bilateral air service agreements, and is part of the Common Aviation Area 
Agreement with the European Union. Georgia is a member of the European Organisation for the 
Safety of Air Navigation.  
4.142.  To liberalize air transport, Georgia has pursued an open sky policy on the basis of bilateral 
agreements with its partners. Georgia abolished restrictions that limit the number of passengers, 
destinations and flight frequency. Georgia has adopted a complete liberalized environment in the aviation sector (Order of President No. 211 adopted 23 March 2005). Not only is the Government 
willing to grant access to foreign carriers with no restriction on capacity (measured in terms of 
frequencies and type of aircraft), number of airlines, po ints of entry or air fares, it is also willing to 
grant traffic rights to foreign carriers between poin ts within Georgia. According to the GCAA, there 
are currently 26 foreign and one national airline companies offering regular flights to and from 
Georgia.  
4.143.  Georgia’s four airports are state-owne d by United Airports of Georgia, which has 
outsourced the operations of the Batumi and Tbilisi airports to TAV Airports Holding Co. of Turkey. 
The airports have attracted new airlines such as Pegasus, Qatar Airlines, Ukraine International 
Airlines and Alitalia. The third International airport of Kutaisi and the domestic airport in Mestia are being refurbished and operated by the Government, through the 100% state-owned enterprise 
United Airports of Georgia LLC. 
Pipelines  4.144.  Four main pipelines go through the territory of the country, which make it the region's 
energy hub. The pipelines transit gas from Azerba ijan to Turkey and from the Russian Federation 
to Armenia and oil from Azerbaijan to Turkey. Georgia continues to support the initiatives related 
to the transportation of hydrocarbon resources in the framework of the Southern Gas Corridor. The pipelines ensure the availability of gas for the country and play a role in strengthening energy 
security. Investments made during the construction and operation period supported employment 
growth and fundraising for the state budget by means of fees.  
4.145.  Georgia hosts two international oil pipelines: the Baku–Supsa line connected to the Supsa 
terminal, with a capacity of about 7 million tons of oil per year, and the Baku–Tbilisi–Ceyhan line, 
connected to Kulevi. The transport cost of using these two lines, which form the western route for moving Azerbaijan’s oil to world markets, is reportedly half that of the northern route via the Russian Federation. This competitive edge, through transit fees and in-kind payments in gas, has 
been a source of non-tax revenue for the country. 
4.4.4  Logistics 4.146.  The most active logistical operation is used vehicle trading. Georgia serves as a 
marketplace for used vehicles, imported mainly from Germany, for buyers in Azerbaijan and 
Armenia. This has created informal jobs and help ed keep export figures high. Other logistical 
operations are limited to trucking, shipping, and port handling, provided mainly by foreign 
companies.  
4.5  Tourism 4.147.  Natural beauty, varied topography, a pleasa nt climate and rich culture is said to help 
Georgia to attract millions of tourists and visitors. The authorities emphasize that Georgia is WT/TPR/S/328 • Georgia 
 
- 105 - 
 
  renowned for the Caucasus Mountains, the Black Sea coastline, curative climate, healing mineral 
waters, national parks and UNESCO Heritage Sites. Georgia has significant resources for further development, with more than 103 resorts and 182 resort areas, 10 national parks (e.g. the Borjomi-Kharagauli National Park, the biggest in  Europe), 2,400 mineral water springs and 12,000 
historic and cultural monuments, meaning the country can offer a variety of experiences for all 
types of visitors.  
4.148.  Regarding administration, the Georgian National Tourism Administration (GNTA) is the 
legal entity of public law under the Ministry of  Economy and Sustainable Development responsible 
for devising and implementing tourism development policy, promoting sustainable tourism, attracting foreign visitors and supporting domestic tourism by positioning the country as a unique travel destination. Key legislation in the sector comprises: the 1997 Law on Tourism and Health 
Resorts (amended in 2013); the 1998 Law on Sanitary Zones of Resorts (as amended in 2015); 
and the 1998 Law on Regulating Accounting of In coming and Outgoing Tourists. The 2010 Law on 
Facilitation of Development of Free Tourist Zones (FTZs), as amended in 2012, offers 
concessionary terms to potential investors. The Georgian National Tourism Administration is 
planning to revise and develop a new Law on Tourism.  
4.149.  During the review period, Georgia has experienced growth in the number of visitors, with 
the number of international arrivals exceeding th e five million mark in 2014 and with 5.8 million 
expected in 2015. This has generated a considerable increase in tourism receipts, rising from US$954 million in 2011 to US$1.8 billion  in 2014. The great bulk of visitors to Georgia are from 
neighbouring countries (Azerbaijan, Armenia, Tu rkey and the Russian Federation), which suggests 
that there is potential for improvement in diversifying into higher spending tourist markets from 
OECD and other countries across the world.  
4.150.  To further facilitate tourism, MoESD, Georgia National Tourism Administration (GNTA) and 
the World Bank are currently finalizing the ne w National Tourism Development Strategy 2025, 
reflecting the importance of the tourism sector in the country's socio-economic development. In 
accordance with the document, within the next few years, the Georgian National Tourism 
Administration will progressively work to divers ify markets, raise awareness about the country 
throughout the world, assist the private sector in creating higher quality and niche tourist products, further stimulate the domestic tourism market, and conduct training and capacity building exercises to improve the service quality. The National Tourism Strategy is therefore an 
instrument designed to take full advantage of Georgia's potential and position it globally as a rich, 
diversified and high-quality destination.
27  
4.151.  Today, the country has undertaken significant steps to further develop wine, adventure, 
cultural, leisure, gaming (gaming is partially or completely banned in many countries within and in 
adjacent regions), MICE (meetings, incentives , conferences and events) and other forms of 
tourism.  
4.152.  Furthermore, in order to address tourism infrastructure needs and support development of 
the sector, the Government, with the support of  the World Bank, started implementing in 2012 
regional investment activities, specifically regional development programmes that support rehabilitation and expansion of tourism infrastructure region by region, helping each to become a 
new quality destination based on its own unique endowment and tourism offerings. Two projects 
(focusing on the Kakheti and the Imereti region s) are under implementation. A third project, 
focusing on two more regions (Samtskhe-Javakheti and Mtskheta-Mtianeti) is due to be carried out 
in 2015. The projects focus on benefitting the local residents of each region, including restoration 
of historical houses with traditional architecture, urban regeneration, improved municipal services and infrastructure, support car tourism SMEs and job creation, and development of attractive, 
varied and safe tourism circuits. Each project is expected to boost the volume of private sector 
investment in the region; and increase points of sales (tourism-related enterprises) in renovated culture heritage sites and historic cities. 
                                               
27 See press release of 3 December 2014: The Govern ment of Georgia and the World Bank discuss the 
National Tourism Development Strategy 2025, online information viewed at: 
http://www.worldbank.org/en/news/press-release/2014/12/03/the-government-of-georgia-and-the-world-
bank-discuss-the-national-tourism-development-strategy-2025 . WT/TPR/S/328 • Georgia 
 
- 106 - 
 
  4.153.  To further stimulate investment in the tourism sector the country has initiated an incentive 
scheme – “Free Tourism Zones” which are special zones located on the sea side resorts of Kobuleti, Anaklya and Ganmukhuri. These zones attract investors by offering incentives, including: land for a nominal price (GEL 1), free hotel master plan, no profit and property taxes for several 
years, fully provided engineering utility network and corresponding outdoor infrastructure such as 
electricity, gas, water and new roads. For hotels with more than 100 rooms a casino licence is provided free of charge for 10 years.  
4.154.  The Government upholds a favourable visa regime, maintaining a visa-free policy with 94 
nations and with resident permit holders of 50 stat es. An electronic visa portal, which requests the 
applicant to only submit their passport and an application to receive a visa was launched in February 2015.  WT/TPR/S/328 • Georgia 
 
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http://www.adb.org/sites/default/files/projec t-document/76108/44183- 012-geo-tacr-01.pdf . 
ADB (2015), Asian Development Outlook 2015 , Financing Asian's Future Growth , Manila. Viewed 
at: http://www.adb.org/sites/default/files/publication/154508/ado-2015.pdf .  
Bertelsmann Stiftung (2014) BTI 2014 - Georgia Country Report . Gütersloh: Bertelsmann Stiftung. 
Viewed at: http://www.bti-project.de/uploads/tx_ itao_download/BTI _2014_Georgia.pdf .  
EBRD (2011), Public Procurement Assessment – Review of Laws and Practices in the EBRD Region . 
Viewed at: http://www.ebrd.com/downloads/l egal/procurement/ppreport.pdf .  
EBRD (2013a), 9th Procurement knowledge Exchange Platform , On the Way to WTO GPA 
accession: Georgia, FYR Macedonia, May. Viewed at : 
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1361916263967/9063192-1367604746938/9169182-1367867487240/EBRD-Georgia-and-
Kazakhstan-case-studies.pdf .  
EBRD (2013b), Strategy for Georgia . Viewed at: 
http://www.ebrd.com/downloads/c ountry/strategy/georgia.pdf .  
European Commission (2015), Joint Staff Working Document: Implementation of the European 
Neighbourhood Policy in Georgia Progress in 2014 and Recommended Actions . Viewed at: 
http://eeas.europa.eu/enp/pdf/2015/ georgia-enp-report-2015_en.pdf . 
ECORYS (2012), Trade Sustainability Impact Assessment in Support of Negotiations of a DCFTA 
between the EU and Georgia and the Republic of Moldova, Final Report , October. Viewed at: 
http://trade.ec.europa.eu/doclib/d ocs/2012/november/tradoc_150105.pdf . 
Geostat/The World Bank (2013), Fostering Entrepreneurship in Georgia , Washington. Viewed at: 
http://www-
wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/08/27/000356161_20130
827152554/Rendered/PDF/806730PUB0Fost00Box379809B00PUBLIC0.pdf .  
Government of Georgia (2014), Socio-Economic Development Strategy of Georgia  (Georgia 2020), 
Tbilisi. Viewed at: http://www.adb.org/sites/de fault/files/linked-docum ents/cps-geo-2014-2018-
sd-01.pdf .  
IMF (2014), Georgia Request for Stand-By Arrangement , IMF Country Report No.14/250. Viewed 
at: http://www.imf.org/external/pubs/ft/scr/2014/cr14250.pdf . 
IMF (2015), Georgia: First Review under the Stand-By Arrangement , IMF Country Report 
No. 15/17. Viewed at: http://www.imf.org/external/pubs/ft/scr/2015/cr1517.pdf . 
MOA (2015), Strategy for Agricultural Development in Georgia 2015-2020 . Viewed at: 
http://moa.gov.ge/fileman/Uploads/STRATEGIA_ENG_print.pdf .  
OECD (2015), Energy Policies Beyond IEA Countries: Caspian and Black Sea Regions  2015, Paris: 
http://www.oecd-ilibrary.org/energy/energy-policie s-beyond-iea-countries-caspian-and-black-sea-
regions-2015_9789264228719-en;jsessionid=kjil9teif4v2.x-oecd-live-02 .  
PWC (2011), Georgia Pocket Tax Book 2011 . Viewed at: 
http://www.pwc.com/ge/en/assets/p df/GE_Pocket_Tax_Book_2011_.pdf . 
Transparency International Georgia (2009), Food Safety in Georgia . Viewed at: 
http://transparency.ge/sites/default/files/FOOD%20SAFETY%20ENG.pdf . WT/TPR/S/328 • Georgia 
 
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  Transparency International Georgia (2013), Georgia's Public Procurement System , June, Tbilisi. 
Viewed at:  http://transparency.ge/en/node/3117 .  
The World Justice Project (2014) Rule of Law Index 2014 , Washington. Viewed at: 
http://worldjusticeproject.org/sites/default/f iles/files/wjp_rule_of_law_index_2014_report.pdf .  
U.S. Department of State (2013), Doing Business in Georgia: 2013 Country Commercial Guide for 
U.S. Companies . Viewed at: http://photos.state.gov/libraries/georgia/749756/zavrashviliex/2013-
CCG-Georgia.pdf .  
World Bank (2013), Georgia-Sustaining Rapid Economic Growth – Country Economic 
Memorandum , July. Viewed at: 
https://openknowledge.worldbank.org/bitst ream/handle/10986/15983/795320ESW0P127000PUBL
IC00Box379794B.pdf?sequence=1 .  
World Bank (2014a), Country Economic Memorandum - Georgia: Seizing the Opportunity to 
Prosper . Viewed at: http://www-
wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2015/01/26/000477144_20150
126123837/Rendered/PDF/896080ESW0whit0P14734400PUBLIC00CEM.pdf .  
World Bank (2014b), Country Partnership Strategy for Georgia FY2014 - FY2017 , April 9, 2014. 
Viewed at: http://www-
wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/04/17/000371432_20140
417112902/Rendered/PDF/852510CAS0P144080Box385177B00OUO090.pdf .  
World Bank (2014c), Doing Business 2015 – Going beyond Efficiency - Economy Profile 2015 
Georgia . Viewed at: 
http://www.doingbusiness.org/~/me dia/giawb/doing%20business/d ocuments/profiles/country/GE
O.pdf .  
World Bank (2014d) Doing Business – Going beyond Efficiency – Index, Washington, October. 
Viewed at: http://www.doingbusiness.org/reports/gl obal-reports/doing-business-2015 .  
World Bank (2014e), Georgia: Winds of Optimism . Viewed at: http://www-
wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/10/24/000469252_20141
024153834/Rendered/PDF/916970NWP0Georgia0ER0Box385342B00PUBLIC0.pdf . 
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http://www.worldbank.org/content/dam/Wor ldbank/document/Ge orgia-Snapshot.pdf . 
 
 WT/TPR/S/328 • Georgia 
 
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  5  APPENDIX TABLES 
Table A1. 1 Balance of payments, 2009-14 
(US$ million) 
 2009  2010  2011  2012 2013 2014  
Current account -1,139.3  -1,196.0  -1,840.2  -1,850.9 -927.0 -1,605.9  
Goods and services balance -2,065.1 -2,079.8 -2,745.9 -3,111.5 -2,084.3 -2,879.0 
Goods balance -2,416.7 -2,628.1 -3,499.6 -4,226.1 -3,506.2 -4,240.1 
Exports 1,853.7 2,393.3 3,223.0 3,459.1 4,190.8 3,995.2 
Imports 4,270.4 5,021.3 6,722.6 7,685.2 7,697.0 8,235.3 
Services balance 351.7 548.3 753.7 1,114.6 1,421.9 1,361.1 
Receipts 1,329.3 1,640.8 2,018.9 2,562.0 2,983.8 3,043.5 
Payments 977.6 1,092.5 1,265.2 1,447.4 1,561.9 1,682.4 
Income balance -41.7 -214.7 -422.9 -147.0 -308.3 -158.5 
Credit 489.3 556.6 758.0 1,077.5 922.1 980.6 
Debit 531.0 771.3 1,181.0 1,224.5 1,230.4 1,139.0 
Current transfers 967.5 1,098.5 1,328.7 1,407.6 1,465.6 1,431.6 
Credit 1,038.5 1,183.4 1,458.5 1,515.9 1,584.6 1,567.0 
Worker remittances 317.4 416.6 617.7 712.4 786.0 761.1 
Debit 71.0 85.0 129.9 108.3 119.0 135.5 
Worker remittances 1.5 1.3 0.8 0.6 0.5 0.5 
Capital and financial account  1,104.4  1,228.9  1,825.2  1,873.7 954.6 1,655.5  
Capital account 177.6 198.3 145.8 131.6 132.5 112.8 
Financial account  926.8 1,030.6 1,679.3 1,742.1 822.1 1,542.7 
Direct investment 677.4 678.7 901.6 614.3 829.0 1,077.4 
Foreign direct investment in Georgia 652.9 869.1 1,084.3 831.3 956.3 1,273.7 
Georgia's direct investment abroad -24.5 190.4 182.7 216.9 127.3 196.3 
Portfolio investment  10.5 250.5 133.4 848.4 -36.6 209.9 
Assets 1.1 0.6 0.0 33.1 -6.0 36.9 
Liabilities 11.7 251.1 133.4 881.5 -42.5 246.8 
Financial derivatives 0.6 0.8 5.1 5.4 -2.4 8.2 
Assets -1.1 -1.8 -12.1 -10.7 -5.1 -11.6 
Liabilities -0.5 -1.0 -7.0 -5.2 -7.5 -3.4 
Other investment  854.7 308.6 1,211.6 312.2 -13.1 213.8 
Assets -117.2 411.0 -205.2 349.2 173.5 133.1 
Liabilities 737.5 719.6 1,006.4 661.4 160.3 346.9 
Reserve assets  -616.4 -208.0 -572.4 -38.2 45.2 33.4 
Net errors and omissions 34.9 -33.0 15.0 -22.8 -27.6 -49.6 
Source: National Bank of Georgia online information.  
 WT/TPR/S/328 • Georgia 
 
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  Table A1. 2 Merchandise exports by product group, 2009-14 
 2009  2010  2011  2012 2013 2014  
Total exports (US$ million) 1,133.6  1677.5  2,189.1  2375.4 2908.5 2,861.2  
 (% of total) 
Total primary products 47.6  41.0  34.9  31.2  37.7  42.9  
Agriculture 29.4  20.3  18.2  21.9  27.1  29.4  
Food 27.7  19.5  17.5  21.3  26.5  28.7  
0577 Edible nuts fresh, dried 6.2  4.0  5.9  3.5  5.7  6.4  
1121 Wine of fresh grapes (including 
fortified wine) 3.0  2.6  2.6  2.8  4.5 6.4  
1110 Non-alcoholic beverages, n.e.s. 3.1  2.8  2.9  3.4  4.3  5.8  
1124 Spirits 4.8  3.4  3.1  3.4  3.4  3.3  
0011 Bovine animals, live 1.5  1.0  0.0  1.7  1.6  1.1  
0012 Sheep and goats, live 1.5  0.5  0.7  0.8  0.5  0.7  
Agricultural raw material 1.7  0.9  0.7  0.6  0.6  0.7  
Mining 18.2  20.6  16.8  9.2  10.6  13.5  
Ores and other minerals 14.0  15.9  13.1  6.9  7.9  10.5  
2831 Copper ores and concentrates 5.5  4.5  3.9  2.3  5.6  8.7  
2882 Other non-ferrous base metal 
waste and scrap, n.e.s. 2.3  3.6  3.1  2.4  1.6  1.3  
Non-ferrous metals 0.3  0.4  0.3  0.2  0.3  0.3  
Fuels 3.9  4.4  3.3  2.1  2.4  2.7  
3330 Crude oils of petroleum and 
bituminous minerals 1.9  1.9  1.7  1.1  1.4  1.3  
3510 Electric energy 1.8  2.3  1.5  0.7  0.5  1.0  
Manufactures 41.7  53.4  57.7  63.6  59.6  55.5  
Iron and steel 12.0  19.5  14.9  14.1  13.2  14.6  
6715 Other ferro-alloys (excl. radio-
active ferro-alloys) 11.3  16.6  11.6  11.0  7.9  9.8  
6762 Bars/rods (not 676.1) iron/steel, 
hot-rolled, etc. 0.1  2.2  2.8  2.1  2.1  2.2  
6726 Semi-finished iron/steel products 
<0.25% carbon 0.0  0.2  0.0  0.5  2.0  1.6  
Chemicals 9.3  8.0  10.6  11.3  9.1  10.4  
5621 Mineral or chemical fertilizers, 
nitrogenous 5.3  4.6  6.6  5.8  4.5  4.8  
5429 Medicaments, n.e.s. 1.7  1.8  1.7  2.0  1.6  2.8  
Other semi-manufactures 3.7  1.7  2.6  3.7  3.2  2.8  
Machinery and transport equipment 13.4  21.1  27.2  31.1  30.4  23.1  
Power generating machines 0.1  0.3  0.0  0.1  0.1  0.4  
Other non-electrical machinery 1.6  1.0  1.1  1.5  1.2  0.6  
Agricultural machinery and tractors 0.0  0.1  0.0  0.0  0.0  0.0  
Office machines and telecommunication 
equipment 0.4  0.3  0.3  0.5  0.7  0.6  
Other electrical machines 0.4  0.4  0.5  0.7  0.6  0.8  
Automotive products 7.5  15.4  22.3  26.8  26.4  19.6  
7812 Motor vehicles for the transport of 
persons, n.e.s. 6.9  14.4  20.6  24.7  24.2  18.1  
7821 Goods vehicles 0.1  0.9  1.3  1.8  1.7  1.0  
Other transport equipment 3.4  3.7  2.9  1.4  1.4  1.0  
7911 Rail locomotives, external powered 1.2  1.1  0.3  0.7  1.0  0.8  
Textiles 0.1  0.1  0.0  0.1  0.1  0.0  
Clothing 2.1  1.8  1.2  1.9  2.1  3.2  
8454 T-shirts, singlets and other vests, 
knitted or crocheted 0.1  0.3  0.3  0.5  0.7  1.3  
Other consumer goods 1.2  1.2  1.2  1.4  1.4  1.3  
Other 10.7  5.6  7.4  5.2  2.7  1.7  
9710 Gold, non-monetary (excl. gold 
ores and concentrates) 10.2  5.4  5.0  3.7  2.5  1.4  
Source: UNSD, Comtrade database (SITC Rev.3).  
 WT/TPR/S/328 • Georgia 
 
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  Table A1. 3 Merchandise imports by product group, 2009-14 
 2009  2010  2011  2012 2013 2014  
Total imports (US$ million) 4,500.2  5,257.1  7,065.3  8,049.5 8,025.7 8,596.3  
 (% of total) 
Total primary products 36.7  39.4  27.1  35.6  37.3  35.7  
Agriculture 18.1  18.9  13.2  16.8  16.7  15.6  
Food 17.5  18.2  12.4  16.0  16.1  14.8  
0412 Other wheat (including spelt) 
and meslin, unmilled 2.3  3.4  0.0  3.0  2.3  1.7  
1222 Cigarettes containing tobacco 1.3  1.5  1.2  1.2  1.2  1.3  
0123 Poultry, meat and offal 0.9  0.9  0.9  0.9  0.9  0.8  
0989 Food preparations, n.e.s. 0.8  0.8  0.7  0.6  0.7  0.7  
1124 Spirits 0.3  0.2  0.5  0.4  0.5  0.6  
Agricultural raw material 0.7  0.7  0.8  0.8  0.7  0.7  
Mining 18.6  20.5  13.9  18.8  20.6  20.1  
Ores and other minerals 0.6  1.8  1.1  1.2  2.7  3.1  
2831 Copper ores and concentrates 0.0  0.0  0.0  0.0  1.4  1.9  
Non-ferrous metals 0.3  0.4  0.6  0.5  0.4  0.4  
Fuels 17.6  18.2  12.2  17.1  17.5  16.7  
3432 Natural gas, in the gaseous 
state 3.4  2.4  3.1  3.0  3.7  4.1  
Manufactures 56.3  60.2  61.9  63.9  61.9  63.8  
Iron and steel 2.6  3.7  3.5  3.9  3.4  3.3  
6762 Bars/rods (not 676.1) iron/steel, 
hot-rolled, etc. 0.7  1.0  0.7  0.6  0.7  0.7  
Chemicals 10.7  10.4  9.2  9.5  10.5  10.6  
5429 Medicaments, n.e.s. 3.4  3.1  2.5  2.7  3.2  3.4  
Other semi-manufactures 9.2  10.3  9.9  10.6  10.3  10.5  
6911 Iron or steel structures, for use 
in structures 0.4  1.0  1.4  1.2  0.8  1.1  
6429 Articles of paper pulp, paper, 
etc., n.e.s. 0.7  0.7  0.1  0.6  0.7  0.7  
6624 Non-refractory brick, tiles, 
pipes, etc. 0.6  0.7  0.7  0.6  0.6  0.6  
Machinery and transport equipment 23.7  24.2  28.3  30.3  28.6  28.4  
Power generating machines 0.5  0.4  0.5  0.7  0.5  1.4  
7148 Gas turbines, n.e.s. 0.0  0.0  0.0  0.0  0.0  0.7  
Other non-electrical machinery 6.2  5.3  6.2  7.1  6.2  5.7  
Agricultural machinery and tractors 0.3  0.4  0.4  1.4  0.7  0.4  
Office machines and 
telecommunication equipment 4.8  5.4  5.0  5.0  5.1  5.5  
7643 Radio or television transmission 
apparatus 0.9  1.2  1.0  1.0  1.6  1.9  
7611 Colour television receivers 0.5  0.6  0.6  0.6  0.8  0.9  
7522 Data processing machines 0.3  0.4  0.6  0.8  0.7  0.8  
Other electrical machines 3.8  4.1  5.3  5.3  4.0  4.8  
7731 Insulated wire, cable etc.; 
optical fibre cables 0.5  0.6  1.1  0.9  0.6  0.7  
Automotive products 7.6  8.2  9.7  10.9  11.1  10.3  
7812 Motor vehicles for the transport 
of persons, n.e.s. 5.8  6.1  7.2  8.4  9.0  8.3  
7821 Goods vehicles 0.8  0.9  0.9  0.9  1.0  0.8  
Other transport equipment 0.9  0.9  1.5  1.4  1.7  0.7  
Textiles 1.4  1.4  1.4  1.2  1.2  1.5  
Clothing 1.9  2.5  2.3  1.4  1.5  2.2  
Other consumer goods 7.0  7.7  7.3  7.0  6.4  7.3  
Other 7.0  0.4  11.0  0.4  0.8  0.5  
Source: UNSD, Comtrade database (SITC Rev.3).  
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  Table A1. 4 Merchandise expo rts by destination, 2009-14 
 2009  2010  2011  2012 2013 2014  
Total exports (US$ million) 1,133.6  1,677.5  2,189.1  2,375.4 2,908.5 2,861.2  
 (% of total) 
America 13.7  19.0  14.4  16.1  8.5  10.0  
United States 3.3  11.2 6.6  9.5  4.7  7.3  
Other America 10.4  7.8  7.8  6.6  3.8  2.7  
Canada 10.3  7.1  5.2  4.4  2.8  1.7  
Europe 41.4  31.5  29.9  21.4  27.3  30.6  
EU(28) 21.0  18.5  19.4  14.9  20.9  21.7 
Bulgaria 7.3  4.0  4.3  2.9  5.2  5.7  
Italy 2.1  1.6  3.4  2.2  2.8  3.0  
Spain 1.4  1.9  1.1  0.7  2.3  2.5  
Germany 2.0  2.1  2.2  1.6  2.5  2.4  
Belgium 1.2  1.3  1.5  2.5  2.1  1.5  
Lithuania 0.9  0.7  0.8  0.8  0.7  1.1  
The Netherlands 0.8  1.1  0.8  0.5  0.8  1.1  
France 0.5  0.7  1.3  0.7  1.2  0.9  
United Kingdom 0.7  1.1  0.6  0.9  1.0  0.9  
EFTA 0.3  0.0  0.1  0.5  0.1  0.5  
Turkey 19.9  12.9  10.4  6.0  6.3  8.4  
Commonwealth of Independent 
States (CIS) 36.7  40.3  48.1  52.4  55.7  51.2  
Azerbaijan 14.6  15.3  19.5  26.4  24.4  19.0  
Armenia 7.8  9.9  10.2  10.9  10.8  10.1  
Russian Federation 1.9  2.1  1.7  2.0  6.6  9.6  
Ukraine 7.4  6.6  6.5  7.0  6.6  4.9  
Kazakhstan 1.8  3.0  7.2  2.6  3.6  3.1  
Uzbekistan 0.5  0.5  0.6  0.7  0.8  1.9  
Belarus 1.2  1.4  1.3  1.4  1.4  1.2  
Africa 0.8  1.3  0.4  1.7  1.4  0.9  
Middle East 4.7  3.9  3.8  4.6  4.5  2.8  
Iran Islamic Rep. 0.6  0.9  0.7  0.8  1.6  1.0  
United Arab Emirates 1.5  1.7  1.8  1.6  2.4  1.0  
Asia 2.4  4.0  3.4  3.6  2.4  4.4  
China 0.5  1.6  1.3  1.1  1.2  3.2  
Japan 0.4  0.5  0.1  0.2  0.1  0.1  
East Asian 0.9  0.8  0.8  0.5  0.2  0.5  
Other Asia 0.6  1.1  1.2  1.8  0.9  0.6  
Other 0.0  0.1 0.1  0.0  0.0  0.0  
Source: UNSD, Comtrade database.  
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  Table A1. 5 Merchandise imports by origin, 2009-14 
 2009  2010  2011  2012 2013 2014  
Total imports (US$ million) 4,500.2  5,257.1  7,065.3  8,049.5 8,025.7 8,596.3  
 (% of total) 
America 7.5  5.9  5.7  4.9  5.2  5.2  
United States 5.1  3.4  3.5  2.6  3.2  3.3  
Other America 2.3 2.4  2.2  2.3 2.0  1.9  
Brazil 1.7  1.5  1.6  1.5  1.2  1.3  
Europe 48.2  45.5  48.0  49.4  46.7  48.4  
EU(28) 29.8  28.0  29.1  30.2  28.3  27.6  
Germany 6.7  6.3  6.8  6.7  5.6  5.4  
Romania 2.6  2.7  2.7  3.2  4.0  3.6  
Italy 2.9  2.6  2.6  3.4  2.8  2.6  
Bulgaria 3.4  2.5 3.6  3.4 2.5  2.4  
The Netherlands 2.3  2.0  1.9  1.8  1.5  1.7  
France 1.5  1.4  1.4  1.3  2.0  1.5  
Greece 1.4  1.4  0.9  0.6  0.7  1.4  
United Kingdom 1.3  1.3  1.3  1.4  1.1  1.1  
Poland 1.0  1.1  0.9  1.1  1.1  1.1  
Spain 0.5  0.6  1.2  1.1  1.1  1.1  
Austria 1.2  1.0  1.1  1.0  0.8  0.8  
EFTA 1.0  0.8  0.8  1.0  0.9  0.8  
Turkey 17.5 16.9  18.1  18.3  17.6  20.1  
Commonwealth of Independent 
States (CIS) 28.9  30.2  27.5  25.6  27.2  24.7  
Azerbaijan 9.1  9.2  8.6  8.6  8.1  7.4  
Russian Federation 6.5  5.5  5.5  5.9  7.3  6.7  
Ukraine 9.4  10.7  10.0  7.4  7.5  6.4  
Armenia 0.9  0.9  0.8  0.9  2.3  2.4  
Africa 0.8  0.7  0.7  0.7  0.4  0.7  
Middle East 4.8  4.5  4.7  4.0  4.7  4.3  
United Arab Emirates 2.5  3.0 3.2  2.3  2.6  2.3  
Iran Islamic Rep. 0.7  1.0  0.9  1.2 1.6  1.4  
Asia 9.5  13.0  13.0  15.1  15.5  16.3  
China 3.9  6.4  7.4  7.6 7.6  8.5  
Japan 2.4  3.2  2.5  3.9  4.0  4.3  
East Asian 2.1  1.7  1.8  2.0  2.5  2.3  
Hong Kong, China 0.7  0.5  0.5  0.5  0.7  0.9  
Other Asia 1.2  1.7  1.5  1.6  1.5  1.2 
Other 0.3  0.7  0.3  0.3 0.4  0.1 
Source: UNSD, Comtrade database.  
 
 WT/TPR/S/328 • Georgia 
 
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  Table A3. 1 Georgia's tariff summary, 2015 
  Number of 
lines Average 
(%) Range 
(%) Standard 
deviation Duty free 
(%) 
Total 10,255 (7)  2.0 0-70.3  4.3 79.6  
HS 01-24 2,279 (7) 6.1 0-70.3 6.1 45.4 
HS 25-97 7,976 0.8 0-12 2.8 89.3 
By WTO category      
WTO agricultural products 2,086 (7) 6.7 0-70.3 6.0 40.4 
Animals and products thereof 322 8.5 0-12 5.2 24.8 
Dairy products 157 5.3 0-12 5.0 39.5 
Fruit, vegetables, and plants 521 10.0 0-12 4.5 16.5 
Coffee and tea 49 5.0 0-12 5.2 44.9 
Cereals and preparations 242 6.3 0-22.6 6.3 49.2 
Oils seeds, fats, oil and their products 173 0.1 0-12 0.9 99.4 
Sugars and confectionary 49 11.0 0-12 3.3 8.2 
Beverages, spirits and tobacco 280 (7) 9.7 0-70.3 5.9 4.3 
Cotton 6 0.0 0-0 0.0 100.0 
Other agricultural products, n.e.s. 287 0.3 0-12 2.0 97.2 
WTO non-agricultural products  8,169 0.7 0-12 2.8 89.6 
Fish and fishery products 336 0.0 0-0 0.0 100.0 
Minerals and metals 1,564 2.0 0-12 4.5 83.1 
Chemicals and photographic supplies 1,367 0.8 0-12 2.5 87.6 
Wood, pulp, paper and furniture 447 2.8 0-12 5.1 76.5 
Textiles 867 0.1 0-5 0.6 98.6 
Clothing 333 0.0 0-0 0.0 100.0 
Leather, rubber, footwear and travel goods 347 0.0 0-0 0.0 100.0 
Non-electric machinery 1,035 0.1 0-12 1.2 99.0 
Electric machinery 559 0.1 0-5 0.5 98.9 
Transport equipment 561 0.9 0-1.7 0.9 50.3 
Non-agricultural products, n.e.s. 706 0.1 0-12 0.8 99.6 
Petroleum 47 0.0 0-0 0.0 100.0 
By ISIC sector      
ISIC 1 - Agriculture, hunting and fishing 644 3.4 0-12 5.4 72.0 
ISIC 2 - Mining 124 7.3 0-12 5.9 39.5 
ISIC 3 - Manufacturing 9,486 (7) 1.8 0-70.3 4.2 80.6 
Manufacturing excluding food processing 7,767 0.7 0-12 2.6 90.0 
ISIC 4 - Electrical energy 1 0.0 0-0 0.0 100.0 
By stage of processing      
First stage of processing 1,142 3.1 0-12 5.3 73.8 
Semi-processed products 2,949 1.0 0-12 3.1 89.7 
Fully processed products 6,164 (7) 2.2 0-70.3 4.6 75.8 
By HS section      
01 Live animals and products 740 4.6 0-12 5.5 56.8 
02 Vegetable products 570 5.6 0-12 6.0 53.5 
03 Fats and oils 127 0.1 0-12 1.1 99.2 
04 Prepared food, beverages and tobacco 842 (7) 8.7 0-70.3 5.8 21.9 
05 Mineral products 255 4.1 0-12 5.7 65.9 
06 Chemicals and products thereof 1,237 0.2 0-12 1.2 97.4 
07 Plastics, rubber, and articles thereof 376 2.6 0-12 3.7 60.1 
08 Raw hides and skins, leather, and its products 219 0.0 0-0 0.0 100.0 
09 Wood and articles of wood 204 6.2 0-12 6.0 48.5 
10 Pulp of wood, paper and paperboard 216 0.0 0-0 0.0 100.0 
11 Textiles and textile articles 1,168 0.0 0-0 0.0 100.0 
12 Footwear, headgear, etc. 112 0.0 0-0 0.0 100.0 
13 Articles of stone, plaster, cement 267 3.2 0-12 5.3 73.4 
14 Precious stones and metals, pearls 63 2.5 0-12 4.9 79.4 
15 Base metals and articles thereof 1,013 1.3 0-12 3.7 89.4 
16 Machinery, electrical equipment, etc. 1,635 0.0 0-5 0.3 99.6 
17 Transport equipment 580 0.8 0-1.7 0.9 51.9 
18 Precision equipment 371 0.0 0-0 0.0 100.0 
19 Arms and ammunition 28 0.0 0-0 0.0 100.0 
20 Miscellaneous manufactured articles 225 0.0 0-0 0.0 100.0 
21 Works of art, etc. 7 0.0 0-0 0.0 100.0 
Note: Figures in brackets refer to the number of sp ecific rates, where no AVEs were provided and are 
hence excluded from the calculations.  
Source: WTO Secretariat calculations, based on data prov ided by the authorities of Georgia. Including AVEs, 
as available.  
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  Table A4. 1 Trade balance of agriculture products, 2009 and 2014 
(US$ '000) 
Commodity Description 2009  2014 
Export Imports  Balance  Exports  Imports Balance  
Total 1,133,622  4,365,699  -3,232,077  2,861,189  8,596,279  -5,735,090  
Agriculture 333,122  791,478  -458,356  840,145  1,338,947  -498,802  
Food 314,408  762,924  -448,517  820,912  1,274,932  -454,020  
00 - Live animals 33,985  2,135  31,850  51,390  11,345  40,046  
01 - Meat and meat 
preparations 311  79,063  -78,752  2,619  145,315  -142,696  
02 - Dairy products and 
birds' eggs 1,310  25,512  -24,201  3,350  54,913  -51,563  
03 - Fish, crustaceans, 
molluscs, prep. thereof 4,526  31,219  -26,693  4,549  43,683  -39,133  
04 - Cereals and cereal 
preparations 4,923  164,641  -159,718  21,475  240,673  -219,198  
05 - Vegetables and fruit 97,029  57,249  39,780  236,590  143,675  92,915  
06 - Sugars, sugar prep. 
and honey 1,107  62,758  -61,651  804  86,396  -85,592   
07 - Coffee, tea, cocoa, 
spices, manuf. thereof 5,154  73,576  -68,422  10,955  105,817  -94,862  
08 - Animal feedstuff 11,727  20,889  -9,161  28,662  53,855  -25,192  
09 - Misc. edible products 8,379  67,638  -59,260  5,004  115,061  -110,056  
11 - Beverages 123,776  31,310  92,466  445,015  91,757  353,258  
12 - Tobacco and manuf. 
thereof 10  79,311  -79,301  1,641  125,306  -123,665  
22 - Oil-seeds and 
oleaginous fruit 21,773  31,379  -9,606  788  8,923  -8,135  
41 - Animal oils and fats 1  2,171  -2,171  6,113  3,728  2,385  
42 - Fixed vegetable fats 
and oils 397  31,354  -30,957  1,898  42,562  -40,664  
43 - Animal, vegetable 
fats/oils n.e.s. 0  2,719  -2,719  59  1,926  -1,867  
Source: UNSD Comtrade database, SITC Rev.3.  WT/TPR/S/328 • Georgia 
 
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  Table A4. 2 Domestic support measures: measures exempt from the reduction 
commitment – "Green Box", 2009-13 
(GEL thousand) 
Measure Type Description 2009  2010  2011 2012 2013  
General services 
Para 2 (b) Epizootic reliability 8 250 221.6 3,217.9 5,685.8 
 Food safety, plant protection and 
epizootic safety     14,238 
 Diagnosis of food production, 
animal and plant diseases     1,402.7 
 Food safety, plant protection and 
epizootic reliability programme 
management and administration     5,716.5 
 Plant protection and 
phytosanitary reliability 2,190 765 600.8 1,513.4 1,070 
Para 2 (c) Support measures for agricultural 
cooperatives     329.1 
Para 2 (d) Intensification of agricultural 
production  100  46,957 3,862 
 Promotion of modern technology    2,685  
 Development of viticulture    1,504.2  
Para 2 (e) State control of food safety    74.7 300 
 Food stuff laboratory testing 
programme 455.5 200 117.1   
 Laboratory testing of Wine  100   50 
Para 2 (f) Agriculture exhibition measures 
programme 556.7 150    
 Measures for promotion of 
Georgian wine products 332.4 500 651.8 1,746.7 1,298 
 Measures for promotion of 
Georgian agriculture products, 
wine and kitchen    576.2 300 
Para 2 (g) Agricultural support programme    3,432.7 191,588 
 Rural development programme in 
regions  13,600 49,546  6,133.8 
 Development of viticulture and 
winemaking     35,673 
 Rehabilitation of amelioration 
system 12,840 1,970  13,850 61,477 
 Renewal of agrarian machinery 5.2  2,999.6 74,750 65,523 
 Amelioration system operation 
support measures 1,565 50    
Domestic food 
aid (para 4) Seed provision for the victims of 
Russian aggression 455.2     
Decoupled 
income support (para 6) Substitution measures for hybrid 
plants 93.7 400    
 Wine making development 3,000     
 Mineral fertilizer (ammonium 
saltpetre) provis ion to residents 
of municipality Settlements 23,808     
 Grape harvest support measures 5,609.6  8,828.3 42,960 32,553 
Support of 
agriculture land 
utilization in 
regions     23,000  
Total  50,919  18,085  62,965 216,267 427,201  
Source: WTO documents G/AG/N/GEO/13, 8 October 2014; G/AG/N/GEO/11, 5 November 2013; and 
G/AG/N/GEO/10, 14 February 2013.  
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