WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 20 
 
 
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
(1) INTRODUCTION  
1. The November 2003 "Rose Revolution" and the ensuing election in 2004 brought to power a 
new Georgian administration, which has promoted a programme of political and economic reforms.  
Important among these were trade reforms, which in cluded modernizing and reducing the size of the 
customs control institutions, simplifying the admi nistrative requirements of customs clearance, 
unilaterally lowering import duties, and extending  Georgia's involvement in international trade 
agreements.  Substantial reforms have also been achieved in several other key areas, such as in 
improving the business and investment climate, in creasing tax revenues, reforming government and 
public finance management, and fighting corrupti on.  In 2007, domestic tensions led to 
demonstrations to which the Gove rnment responded with a brief period of martial law before early 
presidential elections were  called in January 2008. 
2. Prior to the armed conflict of August 2008, the Georgian economy had displayed robust 
growth, partly due to the success of the reform proces s but the conflict led to a fall in investment and a 
serious decline in economic growth with increasing unemployment.  It resulted in direct physical 
damage to the infrastructure – including to transpor t links, agriculture, tourism, and the environment – 
which was tangible but not large.  Although the ar med conflict lasted less than week, tensions 
remained, with Russia having occupied Abkhazia and South Ossetia – constituting approximately 
20% of Georgian territory – and declaring their de facto  separation from Georgia.    
3. In December 2008, the EU announced plans to e nhance its relationship with Georgia (as well 
as Armenia, Azerbaijan, Moldova, and Ukraine) as part of a new Eastern Partnership that would 
involve gradual integration into the EU economy for countries that are willing and able to enter into a 
deeper engagement.  The new partnership builds on the European Neighbourhood Policy framework, 
which has heavily influenced Georgian forei gn trade policy since 2006, and envisages progressive 
regulatory approximation of Georgia' s legislation and practises to the most important EU trade-related 
regulatory policy acquis, as well as the negotiation of a deep and comprehensive free-trade 
agreement .  
(2) INSTITUTIONAL FRAMEWORK  
(i) Branches of government 
4. An independent republic between 1918 and 192 1, Georgia was incorporated into the 
Soviet Union in 1922, from which it declared its independence in April 19 91.  A new constitution, 
separating government into executive, legislativ e, and judicial branches, was approved in 
August 1995 and defined Georgia as a presidential republic.   
5. The President is the Head of State, elected by popular vote for a five-year term and may not 
hold office for more than two consecutive terms.  The Constitution was amended in early 2004, 
resulting in the formation of a Cabinet and, for the first time, the creation of the post of Prime 
Minister.  The PM, together with the ministers,  is responsible for the day-to-day affairs of 
government.  The PM's Office coordinates the positi on of Georgia in certain international economic 
negotiations including with the EU. 
6. The supreme legislative body is the unicameral Sakartvelos Parlamenti (Georgian 
Parliament), which is directly elected for four years.  In March 2008, constitutional amendments 
reduced the number of deputies in the Parliament fro m 235 to 150, of whom 75 were to be elected on 
the basis of proportional representation and 75 in si ngle-member constituencies.  Parliament conducts Georgia WT/TPR/S/224/Rev.1 
 Page 21 
 
 
a vote of confidence on the presentation of the co mposition and programme of the Government and 
may impeach the President.  
7. Following the adoption of the Constitution, a new legal system  was established with a 
Constitutional Court and a three-level system of comm on courts:  (i) district (city) courts, which are 
the first instance courts under Article 15 of the Law of Georgia on Common Courts;  (ii) appellate 
courts, where appeals on decisions of the first inst ance courts are submitted;  and (iii) the Supreme 
Court of Georgia, which is the highest and final inst ance court for administering justice.  Soviet laws 
have been replaced by new civil, administrative, a nd criminal codes.  Since 2004, the Government has 
carried out a plethora of reforms concerning the j udiciary and law-enforcement agencies.  There has 
been substantial international s upport for court reform, and judges now have to pass tests before 
appointment.  However, despite ongoing reforms aime d at encouraging transparency and impartiality 
in the judiciary, according to the Heritage Foundati on and the U.S. Department of State it remains one 
of the least trusted institutions in Geor gia and held in low esteem by the public.1 
8. Parliament is responsible for ratification of in ternational treaties, while the President and the 
other executive authorities are responsible for implem entation.  Ratification was required to complete 
the national procedures relating to WTO accession.  International treaties a nd agreements ratified by 
Parliament, including the WTO Agreement, have precedence over domestic laws and other acts in Georgia other than the Constitution and constitutional law.  International ag reements have direct 
applicability in the national legal system in acco rdance with Article 6 of the Constitution and 
Article 20 of the Law on Normative Acts.  The hierar chy of normative acts in force comprises:  (i) the 
Constitution of Georgia and the Constitutional Law of  Georgia;  (ii) international treaties and 
agreements ratified by Georgia;  (iii) the Organic La w of Georgia;  (iv) laws and presidential decrees;  
(v) orders of the President of Georgia;  (vi) resolutio ns of the Parliament of Georgia;  and (vii) orders 
of a minister or head of another central government al authority of executive power.  According to the 
authorities, 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.  
(ii) Regional issues 
9. In accordance with Article 3 of the Constitu tion, Georgia's supreme national bodies have 
exclusive authority to administer several trade-related areas, including customs and tariff regimes;  foreign trade;  standards and me asurements, and sanitary measures at the border;  legislation on 
banking, credit, insurance, and taxes;  legislation on intellectual property;  and legislation on trade, 
criminal law, civil law, and administrative and labour law.  Sub-central entities within territory 
controlled by the Georgian Central Government  have no autonomous authority over issues of 
subsidies, taxation, trade policy or any ot her measures covered by WTO provisions.   
10. Georgia applies WTO provisions uniformly throughout the entire customs territory controlled 
by the central Government, including in regions enga ging in border trade or frontier traffic, special 
                                                     
 
1 According to the U.S. Department of State, disputes over investors' rights have tended to undermine 
confidence in the impartiality of the Georgian judicial system and rule of law, and by extension, Georgia's 
investment climate.  Both foreign and Georgian investors have expressed reservations about the competence, independence, and impartiality of court decisions.  In some instances, for example, lower court decisions have 
changed control of property or of entire enterprises on questionable legal grounds and, in some cases, these 
decisions have been reversed by higher courts or government action.  See U.S. Department of State (2008), p. 10.  According to the Heritage Foundation, protection of property rights scores low, although the Georgian 
authorities point out that a new law on property legaliza tion was adopted by Parliament in June 2007 with the 
aim of enhancing conditions for the irreversibility of gr anted/acquired property rights (Heritage Foundation, 
2009). WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 22 
 
 
economic zones, and other areas where special re gimes for tariffs, taxes,  and regulations are 
established.  The autonomous regions of Abkhazia and South Ossetia are de facto  not under the 
jurisdiction of the central Government and the local authorities do not apply the national customs 
tariff and other taxes. 
11. Following the August 2008 confrontation and in  reaction to Russia's recognition of, and 
presence in, Abkhazia and South Ossetia, the Georgian  Parliament passed a law, in December 2008, 
stipulating that the territories of the Autonom ous Republic of Abkhazia and of the former 
Autonomous Republic of South Ossetia have the status  of Occupied Territories.  The law prohibits the 
following types of activities, or financing of such activities, in the territories:  (a) any economic 
activity, regardless of whether it is implemented fo r profit, income or compensation, for which under 
the Georgian legislation a licence, permit, authoriza tion, registration or agr eement is required and has 
not been granted;  (b) import and/or export of milita ry products or products that have dual purpose;  
(c) international air traffic, maritime traffic, a nd railway traffic, also international automobile 
transportation of cargo;  (d) use of natural res ources;  and (e) cash transfers.  Without such 
permission, the authorities have confirmed that any goods presented to Customs will be stopped if 
they originate from, or are destin ed for, the occupied territories. According to press reports, Georgia 
has seized several foreign ships attempting to br ing goods into Abkhazia and has detained a number 
of the ships' personnel.  
(iii) Institutional reforms:  transparency, the anti-corruption agenda, and customs reform 
12. When it became independent from the Soviet Unio n, Georgia inherited a Soviet-style system 
of Government that was corrupt, over-staffed, and in efficient.  Public disaffection with the situation 
resulted in the Rose Revolution, and the new Govern ment promised to combat corruption, bring order 
to the Budget, and to reorient the economy towards privatization, free markets, and reduced regulation.  In 2004, the Government started by ra dically reducing the size of executive Government.  
The number of ministries was reduced from 28 to 13,  many state departments were abolished, and a 
large number of staff were either fired or requi red to re-apply for thei r old jobs in smaller 
departments.  According to UNDP, the total number  of public officials (120,000 in 2003) was cut in 
half by 2005.
2  In overhauling the administrative stru cture, the Government focused on those 
departments and ministries considered most corrupt , which included the poli ce, judiciary, tax, and 
Customs.  The remarkable success of government e fforts in turning a nearly failed State into a 
maturing democracy can be seen in Georgia's rise up Transparency International's world rankings:  in 
2003, Georgia ranked 124th out of 133 countries surveyed on corruption;  by 2008 it had moved up to 
67th out of 180 countries.3  According to the World Bank's "Anti-Corruption in Transition 3" report4, 
Georgia topped the list of transitional countries in  terms of anti-corruption efforts.  The report 
reviewed the 2002-05 period and concluded that Georgia had achieved the largest reduction in 
corruption among all transition countries. 
13. The Heritage Foundation Economic Freedom In dex ranks Georgia highly in terms of 
business, trade, and fiscal freedom but much lower for the legal system and the independence of the judiciary (Table AII.1).  The European Parliament  has noted that the privatization process has had 
                                                     
 
2 UNDP (2008), p. 12. 
3 Transparency International Georgi a (2003) and (2008b).  In Transparency International's 2009 Global 
Corruption Barometer, which explores the public's view of corruption, 57% of the Georgians surveyed assessed 
the Government's actions in the fight against corruption as "effective", which is considerably higher than the average for newly independent states (21%) or even the EU  (24%).  The sector/organization considered to be the 
most affected by corruption was, by far, the judiciary (with 37%), followed by civil servants (21%), Parliament 
(16%), political parties (12%), and then business and the media. 
4 Cited in U.S. Department of State (2008), p. 13. Georgia WT/TPR/S/224/Rev.1 
 Page 23 
 
 
shortcomings in terms of transparency and irregularities and that the inflow of large amounts of donor 
funding may create additional incentives for corrupt behaviour.5  Smuggling remains a serious 
obstacle to a competitive business environment and occu rs largely as a result of the porous borders of 
the nation's separatist regions.6  Georgia is not a signatory to the OECD Convention on Combating 
Bribery of Foreign Public Officials in Internati onal Business Transactions, but it acceded to the UN 
Anti Corruption Convention in November 2008.  
14. Anti-corruption efforts have resulted in the arrest  of former officials, the radical downsizing 
of state bureaucracies, crackdowns on smuggling, and ha ve contributed to an increase in state revenue 
collections.  The notoriously corrupt traffic police were completely disbande d in mid 2004.  Georgian 
legislation provides for civil forfeiture of undocum ented assets from public officials charged with 
corruption offences.  Bribery is a criminal act unde r Georgian law, and Parliament recently accepted a 
package of constitutional amendments that make a buse of public office a criminal offence with a 
maximum penalty of 15-years imprisonme nt and confiscation of property.  
15. The Georgian Government has made a commitmen t to greater transparency and simplicity of 
regulation.  Laws and regulations are published in Georgian in the Legislative Messenger,  the official 
gazette.  The national anti-corruption strategy adop ted in June 2004 was reinforced with an action 
plan in 2005 and an implementation plan in 2006;   currently the Inter-Agency Coordination Council 
for Fighting Against Corruption is headed by the Mini ster of  Justice.  The legal framework has been 
strengthened with a new law on public procurement a nd the law on conflict of interest and corruption. 
Accountability mechanisms, such as the Chamber of Control and the Ombudsman, also help promote 
transparency and integrity in public service. 
16. In the area of customs, unofficial administra tive restrictions on trade have had negative 
effects:  such as the time taken to process paperwor k.  High official or unofficial tariffs discouraged 
imports and therefore reduced competition, and higher import prices had a negative impact on 
import-dependent sectors.  To counter such probl ems, the old Customs organization was dissolved 
after independence, and 80% of staff was recruited on the basis of short-term contracts.  In 
April 2007, the institutions of tax and customs we re further reorganized when the tax department, 
customs department and financial police were comb ined into a new State Revenue Service under the 
Ministry of Finance.  The reform was targeted at reducing corruption, making the new organization 
more administratively efficient, a nd facilitating information sharing. 
(3) TRADE POLICY AND IMPLEMENTATION  
(i) Trade laws:  key developments 
17. Within the economic and structural reforms implemented by the Government, some of the 
most noteworthy measures have been in the trade area:  tariff reform, combating corruption in 
customs;  reform of the business licensing sector;  re gulatory reform of the financial sector;  and the 
continuing adoption of trade-related legislation compa tible with European and international standards, 
                                                      
5 The EP notes that while the share of assistance that has gone into th e pockets of corrupt officials or 
NGO activists is difficult to estimate, it is clear that ever y effort should be made to ensure appropriate use of EU 
funds (European Parliament, 2008). 
6 Georgia reasserted central control over the Black  Sea region of Adjara in May 2004, reducing illicit 
economic activity there.  However, the Georgian Government has raised concerns with Ru ssia and with the 
international community about conti nued high levels of smuggling, money laundering, and even counterfeiting 
of U.S. dollars in the areas outside its control.  Th e authorities state that Georgia's only request towards the 
Russian Federation in its WTO accession process has been the legalization and proper functioning of the 
two illegal customs check-points located on the Georgian-Russian border. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 24 
 
 
including in the area of standards and technical regulations, food safety, and competition.  A number 
of obligations, mainly under the EU-Georgia Partnership and Cooperati on Agreement (PCA) and 
European Neighbourhood Policy, have made a signi ficant practical contribution towards Georgia's 
closer integration into the global economy.7 
18. The new customs code, effective January 2007 , was designed to harmonize Georgia's customs 
legislation with EU legislation to make Georgian  customs administration consistent with European 
rules.8  The code aims to:  encourage economic growth  by increasing the volume of foreign trade, 
transit and processing on the basis of harmonized and simplified customs legislation;  and support legal businesses through simplified customs procedures and by strengthening administrative measures 
against smuggling. 
19. At the start of the review period, more than  900 activities required a specific licence.  This 
resulted in a large number of unlicensed business es and, inevitably, corruption.  In June 2005, 
Parliament passed a new law on licensing and Permits that cut 84% of existing licences and permits and reduced the number of cases where a licence is required to start or operate a business.   
20. European standards are considered the most re levant for Georgian economic development.  
Consequently, considerable work has take n place, some of it in the GEPLAC forum
9, in revising and 
harmonizing legislation as well as designing and implementing sound reform policies in several areas:  agriculture and SPS measures;  company law;  competi tion;  consumer protection;  customs;  financial 
services;  intellectual property rights;  public procurem ent;  taxation;  technical rules and standards;  
energy security;  foreign direct invest ment;  transport;  and statistics. 
(ii) Main institutions  
21. Trade policy formulation and evaluation are under the overall responsibility of a 
governmental commission headed by the Prime Minister.  The PM's office is also in charge of the 
negotiations and matters re lating to the WTO and the EU-Georgia FTA process.  Foreign trade and 
related issues fall largely under the purview of the Ministry of Economic  Development (MoED).  
Other line ministries and agencies, such as the Mini stry of Agriculture, the Ministry of Finance 
(including Customs) also play an important role in trade policy formulation and implementation.   
22. The main functions of the Department fo r Foreign Trade and International Economic 
Relations, within the MoED, include:  participating in elaboration of the foreign-economic policy;  
cooperation with international or ganizations and regional entities;  cooperation with donors in the 
framework of economic development and poverty re duction programmes;  elaborating proposals for 
development of bilateral and multilateral trade rela tions;  analysing implementation of obligations 
undertaken in international agreem ents and conventions, and prepara ting appropriate conclusions and 
proposals;  analysing implementation of  WTO commitments, and preparating proposals for trade 
                                                     
 
7 The PCA, concluded in 1996, entered into force in 1999 and forms the legal basis of EU-Georgia 
relations.  Respect for democracy, principles of interna tional law, human rights, and market economy principles 
are the essential elements on which th e EU-Georgia partnership is based. 
8 It is consistent with the customs code of the EU under the provisions of European Council 
Decree No. 2913/92, and with the EU customs code implementation provisions (Decree No. 2454/93). 
9 The Georgian European Policy and Legal Advice Centre (GEPLAC), funded by the European Union, 
renders high-level policy and legal advice to the Government and the Parliament of Georgia on a broad range of 
issues related to economic, legal, and institutional reform in the context of the implementation of the PCA 
between Georgia and the European Communities and thei r Member States.  GEPLAC online information.  
Viewed at:  http://w ww.geplac.org/eng. Georgia WT/TPR/S/224/Rev.1 
 Page 25 
 
 
legislation in order to be in line with WTO re quirements;  cooperation with European entities and 
elaborating proposals on Georgia's economic policy in line with EU requirements.  
23. The transport  sector is under the responsibility of the Ministry of Economic Development and 
the Ministry of Regional Development and Infr astructure.  The various transport activities are 
overseen by sectoral regulatory authorities.  Th e Department for Information and Communication 
Technology within the MoED is responsible for policy in the telecommunications sector and for 
industrial policy in the field of electronic communications.  
24. Other relevant entities in, or attached to, the MoED include:  the Department of Statistics10;  
the Department of Tourism and Resorts;  and the Agency for Free Trad e and Competition, the 
Georgia National Investment Agency (GNIA)11, which provides a broad range of information and 
advice on the country to encourage foreign investor s.  The GNIA was established in 2002, under the 
National Investment Agency law, to act as a "one -stop-facility" for information about investment 
opportunities in Georgia.  The Agency is the represen tative of the State to investors and will help in 
the negotiations with local government authorities to  obtain appropriate licences and permission.  
25. The MoED also oversees the Restructuring Cent re of Privatized Enterprises (CERMA), as 
well as the National Centre for Accreditation and the Georgian National Agency for Standards, 
Technical Regulations and Metrology.  However, as of 2008, the Georgian State Procurement Agency is no longer under the auspices of the Ministry of Economy but is now accountable to the Prime 
Minister;  this change was intende d to better coordinate the work of the agency and avoid possible 
conflicts of interest as the MoED is itself a large procuring entity.  
26. Customs in Georgia is administered by the Cu stoms Department of the State Revenue Service 
in the Ministry of Finance, it was set up in Ap ril 2007, by merging the tax administration with the 
customs administration and financial police, in order to improve coordination of these agencies.
12  
27. The lead agency implementing IPR policy is the Georgian National Intellectual Property 
Centre (Sakpatenti), which deals with industrial prop erty rights, patents, and appellations of origin;  
copyrights;  and plant variety protection.  Enforcemen t is carried out by the Ministry of the Interior, 
the financial police under the Ministry of Finance,  and the Customs Department for trade-related 
matters.   
28. The Central Bank, the National Bank of Georgia (NBG), sets monetary policy.  Until 2008, it 
issued licences and supervised the activities of banki ng institutions;  these are now carried  out by the 
Financial Supervision Agency, which supervises both banks and non-bank financial institutions. 
29. The Law on Facilitation and Guarantees of Investment Activities, passed in 1996, provides 
for equal treatment of Georgian and foreign invest ors and protects foreign investors from subsequent 
                                                      
10 The relevant reform package to make it an inde pendent agency is curren tly under discussion in 
Parliament. 
11 Georgian National Investment Agency.  Viewed at:  http://www.investingeorgia.org/doing_business/ 
legislation. 
12 The Revenue Service is developing risk-based customs control and tax audit systems.  In 2009, it 
will complete the implementation of the risk-management system and will initiate risk-assessment-based tax audits.  For the full implementation of risk-based cu stom controls, a post-clearance system needs to be 
introduced.  In this regard, ame ndments to the Customs Code were passed in December 2008 and new 
regulations on customs clearance have been in force since 1 January 2009.  According to the authorities, staff were trained with the assistance of the USAI D-financed Business C limate Reform project. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 26 
 
 
legislation that alters the condition of their investments for ten years.13  Agricultural land can be 
purchased by forming a Georgian company that may be 100% foreign-owned.   
(iii) Trade policy objectives  
30. Basic Data and Directions (BDD) is the Gove rnment's key planning document and is updated 
annually under the coordination of the Ministry of Finance.14  It contains overall government strategy 
and sectoral ministries' mission statements and priorities.  The priority trade directions for 2008-11 are:  (a) creating preferential foreign trade regim es with partner countries to diversify foreign trade 
markets;  (b) developing technical regulations to ma ke them consistent with  international norms and 
thereby facilitate access to foreign markets a nd increase the competitiveness of goods and services 
produced in Georgia;  and (c) increasing the attrac tiveness of Georgia for both foreign investment and 
tourism.  According to the BDD, evaluation criteria include:  rate of growth of foreign direct investments;  diversification of foreign investment sources;  rate of increase in the number of foreign 
tourists;  and development of export diversification. 
31. The authorities consider that further regulator y streamlining on several trade-related issues 
will help Georgia increase and diversify its exports.   In this respect, the EU provides assistance on 
regulatory issues, notably technical regulations, standards and conformity assessment, sanitary and 
phytosanitary requirements, customs legislation and procedures, taxation, intellectual and industrial  
property rights, public procurements, etc.  In many ar eas, Georgian legislation is already close to that 
of the EU.  The most important challenges now are in  the implementation of the adopted legislation.  
According to the EU, Georgia still lags behind in  implementing its obligations under the ENP Action 
Plan, especially on competition policy, IPRs, pro duct standards, and food safety.  Regulatory 
convergence with European norms in these areas is of considerable importance for the reduction of 
non-tariff barriers in Georgia and for improving expor t capacity.  The Georgian Banking Strategy for 
2006-09 envisages harmonization of the Georgian banki ng framework with EU banking legislation, in 
accordance with the provisions of  the EU/Georgia Action Plan. 
(4) M
AIN TRADE AGREEMENTS AND ARRANGEMENTS  
(i) World Trade Organization 
32. In June 1996, the Government of Georgia app lied to join the World Trade Organization under 
Article XII of the Marrakech Agreement Establishing the WTO.15  Georgia acceded in June 2000, the 
fourth former Soviet Republic to become a Member  of the WTO (after the Kyrgyz Republic, Latvia, 
and Estonia).  Georgia has most-favoured-natio n trading relationships with all WTO member 
countries and benefits from the GSP schemes of the United States, Japan, Canada, Norway, and 
Switzerland and enjoys a GSP+ status with the European Union. 
                                                      
13 Related legislation that has a bearing on foreign investment includes the Constitution, the Civil Code, 
the Tax Code, and the Customs Code, the Law on Entrepreneurs, the Bankruptcy Law, the Law on Courts and 
General Jurisdiction, the Law on Limitation of Monopo listic Activity, the Accounting Law, and the Securities 
Market Law.  The legal framework governing ownership and privatization of property is established by:  the 
Civil Code, the Law on Ownership of Agricultural Land , the Law on Private Ownership of Non-Agricultural 
Land, the Law on Management of St ate-Owned Non-Agricultural Land, and the Law on Privatization of State 
Property.  Property rights in the ex tractive industries are governed by the Law on Concessions, the Law on 
Deposits and the Law on Oil and Gas.  Financial-sector  legislation includes the La w on Commercial Banks, the 
Law on National Banks, and the Law on Insurance Activities. 
14 For the latest document see Government of Georgia (2007), especially pp. 55-56. 
15 See the notification in WTO online information.  Viewed at:  http://www.wto.org/english/thewto_e/ 
countries_e/georgia_e.htm. Georgia WT/TPR/S/224/Rev.1 
 Page 27 
 
 
33. In addition to the mandatory WTO agreemen ts, Georgia joined a number of sectoral 
initiatives, which stipulated zero import tariffs in:  civil aircraft and information technology, 
pharmaceutical products, metal products , wood products and agricultural machinery.  Georgia also 
agreed to start negotiations on joining the Govern ment Procurement Agreement.  To accelerate the 
accession process, Georgia agreed to have no trans itional period for the TRIPS Agreement or the 
GATS.  Under the GATS, Georgia applied its domest ic regulations to, and did not discriminate 
against, foreign suppliers in, inter alia,  banking, insurance, securities trade, auditing, legal services, 
and tourism.  Also, Georgia negotiated the Aggregat e Measure of Support for agriculture at 5% of 
agricultural GDP, corresponding to the obligations of a developed country. 
34. Georgia's main interest in the DDA negotiations is a fair, inclusive, and predictable trading 
environment where trade-distorting measures, especia lly in the agriculture sector are eliminated.  At 
the same time, Georgia attaches importance to non- agriculture market access;  it has not made an 
initial offer in the services negotiations, cons idering that it undertook extensive unilateral 
liberalization at the time of its accession.  Protection of the rights of Georgian wine producers is a 
priority and in this respect Georgia actively supp orts proposals in the DDA framework to establish a 
multilateral register of geographical indi cations, of which Georgia is co-sponsor.16    
35. As a Member, Georgia is required to make periodic notifications under the various WTO 
Agreements (Table AII.2).  Notifications are process ed mainly in the Ministry of Foreign Affairs. 
(ii) Commonwealth of Independent States (CIS)  
36. Georgia has a free-trade regime with members of Commonwealth of Independent States (CIS) 
whose other members are:  Azerba ijan, Armenia, Belarus, Kazakhsta n, Kyrgyzstan, Moldova, Russia, 
Tajikistan, Turkmenistan, Uzbekistan, and Ukrain e.  The CIS countries have traditionally been 
Georgia's largest trade partners and although their shar e of trade with Georgia has declined, they still 
accounted for 36% of exports and 33% of imports in 2008.  In August 2009, Georgia terminated its 
membership of the CIS organization17 while maintaining its right to remain a member of the CIS 
free-trade-area arrangements and the bilateral agreements.  
37. In 1994, Georgia signed an FTA with other CIS member states that envisaged the trading of 
goods without customs tariffs.  It was ratified by all the CIS member countries except Russia.18  
However, the FTA remained ineffectual and, as a result, preferential trading relations among CIS 
countries have been established a nd determined in bilateral free- trade agreements.  Georgia has 
bilateral FTAs with Russia, Azerbaijan, Turkmenistan , Armenia, Ukraine, and Kazakhstan (all ratified 
and notified to the WTO), and Moldova and Uzbekist an (neither ratified nor notified).  The Georgia-
Russia FTA has been suspended since October 2006 when Russia closed its land frontier and civil 
aviation connections with Geor gia and banned the import of wines and agriculture products.  
38. The bilateral agreements are more or less id entical and provide for duty-free trade in goods 
(both industrial and agricultural);  exemptions are contained in the protocols to the FTAs and can be 
changed annually.  The FTAs do not cover trade in se rvices, investment or government procurement.  
They contain provisions on contingent prot ection measures, including quotas, export taxes, 
safeguards, and anti-dumping measures, which countries can apply unilaterally.  
                                                      
16 WTO documents TN/C/W/52 and Add.2. 
17 Georgia terminated its membership  of the 1991 Agreement on the formation of the CIS, the 1993 
CIS Charter, and the 1993 Agreement on the creation of economic relations.   
18 Georgia notified the WTO on 2 April 2003. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 28 
 
 
(iii) European Union (EU) 
39. Relations between the EU and Ge orgia started in 1992, when Georgia regained its sovereignty 
after the break-up of the Soviet Union, and bilatera l relations have further in tensified since 2004.  The 
legal foundation for EU-Georgia re lations is the Partnership a nd Cooperation Agreement (PCA), 
negotiated at the same time as Georgia's WTO acces sion, and entering into force in 1999.  According 
to Article 1 of the PCA, the agreement is ai med at fostering cooperation, on trade, political, 
environmental, and cultural issues.  The PCA regulates political dialogue, trade, investment, 
economic, legislative, and cultural cooperation.  It envisages progressive regulatory approximation of 
Georgia's legislation and practises to the most important EU trade-related regulatory acquis .  This is 
aimed at ensuring better access for Georgian produc ts to the EU market.  Through the PCA, which 
also eliminates trade quotas and strengthens the prot ection of intellectual, industrial and commercial 
property rights, the parties have accorded each ot her MFN treatment, and Georgia benefits from the 
EU's General System of Preferences (GSP).  
40. In 2005, the EU provided Georgia with an e xpanded opportunity to make use of tariff 
privileges (under GSP plus), enabling Georgia to e xport about 7,200 items to the EU market with 
zero tariff rates.  Previously Georgia was allowed to expor t only 3,300 products without any customs 
duty and 3,900 products under certain preferences.  Georgia qualifies for the enhanced preferences for 
good governance and sustainable deve lopment and, in order to con tinue benefiting from the system 
after January 2009, Georgia ratified the two outst anding conventions liste d in GSP regulations, 
namely the UN Convention on Anti-Corruption, and th e Cartagena Protocol on Biosafety.  As a result 
Georgia was granted the Special Incentive Arrangements under GSP Plus for 2009-11. 
41. In June 2004, Georgia joined the European Neighbourhood Policy (ENP) and in 
October 2006 an ENP Action Plan for Georgia was agreed for a period of five years.19  T h e  
implementation of the ENP has been guided and monitored on the basis of annual implementation 
tools, which set out comprehensive priorities and time lines agreed jointly by the EU and Georgia.  
According to the Office of the State Minister of Ge orgia for European and Euro-Atlantic Integration, 
"today Georgia's foreign policy more than ever is di rected towards the EU, which is largely perceived 
as guarantor of peace, democracy, development, stability, territorial integrity and human rights 
protection".20  In July 2004, the Georgian Government adopted a decree establishing a Commission 
for Georgia's integration into the EU, chaired by the Prime Minister.  The Commission's aims are, 
inter alia, to facilitate PCA implementation a nd participation in the ENP.   
42. In July 2007, the European Commission and Georgia started the negotiation process for an 
agreement on protection of geographical indications  of agricultural products and foodstuff, and in 
April 2008, reached agreement on mutual recogniti on and protection of agri cultural products and 
other foodstuffs.  According to the authorities, the agre ement is expected to be finalized in the fourth 
quarter of 2009.  
43. In December 2008, the European Commission a nnounced plans to enhance its relationship 
with Georgia (as well as Armeni a, Azerbaijan, Moldova, and Ukrain e) as part of a new Eastern 
Partnership that would involve th e gradual integration into the EU  economy for Eastern Partnership 
countries that were willing and able to  enter into a deeper engagement. 
44. Based on the progress made in the ENP, the Eastern Partnership – consisting of EU27 and 
Armenia, Azerbaijan, Belarus, Georgia, Republic of  Moldova, and Ukraine – offers both bilateral and 
                                                      
19 EC Commission (2006). 
20 Office of the State Minister of Georgia for European and Euro-Atlantic Integration (2009), p. 2. Georgia WT/TPR/S/224/Rev.1 
 Page 29 
 
 
multilateral measures for enhanced cooper ation.  According to the Commission21, Georgia, as well the 
other partner countries, can align themselves more closely to the EU, depending on their individual 
capabilities and time frames with the signing of A ssociation Agreements also planned in this 
framework.  Regarding trade and regulatory approximation, the Commission is proposing, inter alia:  
assistance concerning administrative capacity develo pment in areas such as SPS rules, customs and 
trade facilitation, taxation, intellectual and industri al property rights, public procurement, competition, 
and services, including financial services;  support fo r the creation of a network of bilateral deep and 
comprehensive free-trade areas with  partner countries;   cooperation on enforcement of IP protection, 
in particular as regards counterfe ited and pirated goods;  explorati on of possibilities for partners to 
participate in a system of diagonal cumulation of  origin;  and increased cooperation on customs and 
trade facilitation and border management to ensure  a smooth flow of goods and enhance security and 
safety, and to combat customs fraud.   
45. On the possibility of setting up a deep and co mprehensive free-trade agreement between the 
EU and Georgia, the European Commission tendered an independent feasibility study in 2007, which 
concluded that Georgia would benefit from such an agreement and needed to make further efforts in 
trade-related areas to prepare for th e far-reaching liberalization involved.22  Following the 
extraordinary European Council of 1 September 2008, which concluded that "the EU should step up 
relations with Georgia, including the possible estab lishment of a full and comprehensive free-trade 
area as soon as the conditions are met" a preparat ory process has been launched to help Georgia 
achieve the necessary level of prepar edness for the DCFTA negotiating process.23    
(iv) Turkey 
46. GSP plus privileges granted by Turkey were  replaced by a free-trade agreement between 
Georgia and the Republic of Turkey, which was signed on 21 November 2007 and entered into force 
on 1 November 2008.  The Agreement was notifie d to the WTO under Article XXIV of the GATT 
1994 on 18 February 2009.24  According to this agreement, cust oms tariffs on industrial products have 
been fully eliminated but a number of agricultural products are excluded by both parties and some are 
subject to tariff quotas by Turkey.  Furthermore,  it does not cover services and investment, and does 
not go beyond WTO requirements on regulatory issues.  The FTA is set to facilitate the development 
of trade and economic relations between the two coun tries, encourage entrepreneurs to gain access to 
new markets, and support implementation of investment projects. 
(v) United States 
47. In June 2007, Georgia and the United States signed a Trade and Investment Framework 
Agreement (TIFA) to address trade issues and build tr ade and investment relations.  The TIFA sets up 
a joint U.S.-Georgia Council on Trade and Investme nt that will address a wide range of trade and 
investment issues including trade capacity building, intellectual property, labour, and environment.  
The Council will also help to increase commercia l and investment opportunities by identifying and 
working to remove impediments to trade and investment flows between the United States and 
Georgia.  A GSP statute was granted by the United States to Georgia, and in January 2009 Georgia signed the Georgia-US Charter on Strategic Partnership which, inter alia,  will update the bilateral 
                                                     
 
21 EC Commission (2008). 
22 CASE (2008). 
23 EC Commission (2009).  In this regard, the Ge orgian authorities have stated that European 
Commission fact-finding mission visited Georgia in October 2008 to discuss trade issues.  Based on the 
mission's recommendations, the Georgian Government has created an FTA task force, headed by the PM's 
office, to take specific actions to be pr epared for the start of DCFTA negotiations. 
24 WTO document WT/REG26/N/1, 24 February 2009.   WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 30 
 
 
investment treaty, expand Georgian access to the GSP, and explore the possibility of a free-trade 
agreement.   
(vi) Other agreements 
48. A key economic policy objective for Georgia is to capitalize on its strategic geographic 
location between the Caspian and the Black Sea,  linking Asia and Europe.  Major oil and gas 
pipelines, such as the BTC and South Caucasus pipe line, roads, railways, and communications along 
the East-West corridor transit Georgian territory an d are considered important assets for its future 
prosperity.  To this end, Georgia is a member  of the Black Sea Economic Cooperation Pact and a 
four-country grouping of Georgia, Uk raine, Azerbaijan, and Moldova (GUAM).25  GUAM is 
important for Georgia as it plays a role in strengt hening regional cooperation, a role that has been 
enhanced since Georgia applied to leave the CIS.  
49. Georgia has two key regional cooperation prioriti es:   transport and trade facilitation;  and 
energy trade.  Firstly, Georgia has prioritized its  participation in the Eurasian transport corridor 
project supported by the European Union. The pr oject links Central Asia and Europe through the 
Caucasus. Development of these corridors will enab le Georgia to realize its full transit economy 
potential.  The Government’s objective is to co mbine high-quality transport infrastructure (roads, 
railways, ports) with trade facilitation, including ha rmonization of border crossing procedures, transit 
fees, and tariffs.  Secondly, Georgia, Azerbaijan, and Turkey cooperate on energy security and energy 
transportation. In this context, Georgia has signi ficant hydro-energy potential and export opportunities 
and is seeking private investment in this sector.   
(5) TRADE DISPUTES AND CONSULTATIONS  
50. Georgia has not been involved in any direct or indirect trade disputes in the WTO between 
1995 and March 2009.  However, Georgia's trade rela tions with Russia have been problematic since 
2004, severely limiting trade and transport betw een the two.  In 2005 and 2006, Russia banned 
imports of Georgian agricultural products, minera l water, and wine, for which Russia was Georgia's 
largest market.  In September 2006, Russia cut all di rect transport links with Georgia. Gazprom, the 
Russian gas monopoly, doubled the price of natura l gas supplied to Georgia but new supplies of 
natural gas from Azerbaijan and increased hydroe lectric generating capacity are making Georgia 
much less dependent on Russian energy sources. 
(6) FOREIGN INVESTMENT REGIME  
51. Georgia's investment legislation aims to open the Georgian economy to increased 
international business activity, and to help cr eate a business environment favourable to foreign 
investment.  The 1996 Law on Investment Activity Promotion and Guarantees ensures that foreign 
investors may invest on a national-treatment basis in any sector open to private investment with up to 
                                                      
25 The Black Sea Economic Cooperation (BSEC) agr eement became operational in 1999.  It comprises 
Georgia and ten other members:  Al bania, Armenia, Azerbaijan, Bulgar ia, Greece, Moldova, Romania, Russia, 
Turkey, and Ukraine.  Although the BSEC provides for cooperation in various fields, it does not provide for preferential tariff concessions.  The areas of cooperation include banking and finance, and exchange of 
statistical data and economic information regarding ener gy, transport, telecommunicat ion, trade and industry, 
agriculture and agri-industry, environmental protection, tourism, and science and technology.  GUAM is designed to foster favourable trade conditions among me mber states and strengthen economic links between 
them.  In May 2006, Ukraine and Azerbaijan announced plans to further develop GUAM member relations by 
renaming the organization GUAM Organisation for Democr acy and Economic Development and establishing its 
headquarters in the Ukrainian capital.  Georgia WT/TPR/S/224/Rev.1 
 Page 31 
 
 
100% foreign ownership;  the few strategically si gnificant exceptions include defence and security.26  
Georgian law guarantees the right of an investor to  convert and repatriate capital and profits after 
payment of all required taxes, and provides a ten- year guarantee against adverse legislative changes 
and the possibility to apply international practice in dispute resolution.27  In addition, the Law on State 
Promotion of Investments covers investments of  over GEL 8 million, or those having significant 
influence on economic or infrastructure development.28 
52. Investors' rights are detailed in Georgia's bila teral investment agreements.  According to the 
authorities, Georgia has negotiated bilateral ag reements on investment promotion and mutual 
protection with Armenia, Austria, Azerbaijan, Be lgium, Bulgaria, China, Egypt, France, Germany, 
Greece, Iran, Israel, Italy, Kazakhstan, Kyrgy zstan, Latvia, Lithuania, Moldova, Netherlands, 
Romania, Turkey, Turkmenistan, Ukraine, United Kingdom, United States, and Uzbekistan.  Internal 
procedures have been completed and drafts ar e being negotiated with the Governments of 
Bangladesh, Bosnia, Croatia, Cyprus, Czech Repub lic, Denmark, Herzegovina, Iceland, India, 
Indonesia, Kuwait, Lebanon, Malta, Norway, Phili ppines, Saudi Arabia, Slovak Republic, Slovenia, 
Switzerland, and Tajikistan. 
53. According to the Ministry of Finance as of July 2009, Georgia has 26 double taxation treaties 
in force (with 17 EC countries and with Armenia,  Azerbaijan, China, Iran, Japan, Kazakhstan, 
Turkmenistan, Ukraine, and Uzbekistan). Four treaties await ratification (with Russia, Turkey, 
Luxemburg, and Ireland), and nine  are being negotiated (with Swit zerland, Malta, Spain, Kuwait, 
Cyprus, Singapore, Israel, Slovenia, and Hungary).   
(7) TECHNICAL ASSISTANCE    
(i) Assistance provided 
54. According to the joint WTO/OECD database,  from 2001 to 2007, Georgia benefited from 
trade-related assistance funded by international in stitutions and bilateral d onors, to the tune of 
US$119.1 million.29  Assistance was significantly increased in 2006 when Georgia received almost 
US$47 million, mainly in the form of grants and concessional loans, with a major contribution from 
the United States through its business climate reform  project.  Beyond WTO-related trade issues, 
Georgia receives assistance from, inter alia,  the United States, the Eur opean Union and international 
institutions to promote democratic reform, resolv e regional conflicts, foster energy independence, 
assist economic development, and reduce poverty.  In  addition, Georgia attaches great importance to 
targeted assistance to help strengthen human resource  capacities in the private sector and diversify its 
economy, focusing on high-value products, optimiza tion of energy resources, and development of 
telecommunications, transport, and infrastructure. 
                                                      
26 Investment prohibitions concern: creation, produc tion, and proliferation of WMDs and construction 
of their test ranges; import of nuclear and toxic waste materials;  scientific work related to human cloning;  and 
production of drugs.  Investments permitted only for the State include production of money and postal stamps;  
and production of and trade in drugs for medical purposes.  
27 See Articles 15 (Guarantees during amendment of legislation) and 16 (Procedure for dispute 
resolution) of the Law of Georgia on Investment Activity Promotion and Guarantees.  Viewed at:  
http://mfa.gov.ge/files70_9428_624394_60_69_132776_LawonInvestm.Prom.pdf.   
28 See Georgian National Investment Agency online information.  Viewed at:  http://www.invest 
ingeorgia.org/ doing_business/legislation/. 
29 Joint WTO/OECD TRTA/CB database, Beneficiary Country: Georgia .  Viewed at: http://tcbdb.wto. 
org/benef_country.aspx. WT/TPR/S/224/Rev.1 Trade Policy Review 
Page 32 
 
 
55. Since its accession to the WTO (to mid 2009) Geor gia has participated in 132 trade-related 
technical assistance activities organized both by th e WTO and partner institutions. At the regional 
level, Georgia has participated in over 70 activities organized either by the WTO or other partners like 
the Joint Vienna Institute, the Black Sea Economic  Cooperation organization, the OECD, the World 
Bank, the Asian Development Bank, and the Intern ational Development Law Organisation.  Subjects 
covered in these regional activities included:  agricu lture;  trade negotiation skills, NAMA, services, 
trade facilitation, trade and environment, governme nt procurement, TRIPS, RTAs, rules of origin, 
TBT, dispute settlement, and international trade la w.  In addition, Georgia benefited from the 
Netherlands Trainee Programme in 2005.  
56. Georgia has also benefited from a number of  TA activities on TRIPS.  Recent activities 
include participation in a regional seminar in 2006 related to the TRIPS Agreement and public health, 
designed to assist Georgia and the economies of the region in implementing and making effective use of the mechanism established under the WTO Decisi on on Paragraph 6 of the Doha Declaration on 
the TRIPS Agreement and Public Health, as recently  transposed into the Protocol amending the 
TRIPS Agreement.  In June 2008, a workshop for Central and Eastern European and Central Asian 
and the Caucasus (CEECAC) countries covered topics such as public health, biotechnology, 
biodiversity, traditional knowledge, and geographical indications.  Furthermore, Georgia is currently 
cooperating with UNDP to study the circulation of  pirated and counterfeit products in Georgia for 
which accurate data is lacking.  Georgia has be nefited from the EU-funded Technical Assistance and 
Information Exchange (TAIEX) project in terms of study visits and seminars on various IP subjects. 
57. Georgia participated in regional seminars on competition policy organized in the CEECAC 
region in 2000 and 2003.  In 2006, Georgia be nefited from a development grant of US$9.6 million 
from the Millennium Challenge Corporation, ai med at supporting and reinforcing competition 
institutions as well as providing assistance in preparing draft legislation on competition.  Georgia has also benefited from TA activities related to public procurement and the GPA, and has participated in 
the WTO global seminars on GPA, most recently in 2008.
30  Georgia has expressed particular interest 
in ongoing training on supervision, monitoring, and ad ministrative reviews of  public procurement,  
including e-procurement procedures. 
58. In the context of assistance given to Georgia on trade facilitation, several organizations and 
donors provided support in the area of customs va luations and tariff reform, including the IMF, 
UNCTAD, the United States, and the EU.  These pr ojects cover essentially the modernization of the 
custom administration by improving efficiency through the upgrading of the customs infrastructure 
and the training of customs officers.  
59. Georgia has benefited from TA delivered by organizations and bila teral donors on standards-
related issues.  In 2002 and 2003, for example,  UNDP provided a grant of US$400,000 to support 
Georgian exporters through improvement of quality control and certification systems, including the 
introduction of ISO standards to help Georgian expor ters meet international quality requirements and 
environmental standards.  In 2006, the USAID SME Support Project provided technical assistance 
and financial support to improve standards for the export goods. 
60. More generally, Georgia has benefited from a number of WTO training courses for 
government officials in the form of the short trad e policy course for CEECAC countries;  specialized 
                                                      
30 The objectives of this global workshop organized at the WTO headquarters are:  (i) to enhance 
participants' knowledge and awareness of the concepts, principles, and obligations as well as the coverage-
related aspects of the Agreement on Government Procurement (including both the existing Agreement and the 
provisionally revised text of Decem ber 2006 (GPA/W/297));  and (ii) to  facilitate policy development and 
decision-making at the national level. Georgia WT/TPR/S/224/Rev.1 
 Page 33 
 
 
courses on a number of WTO issues;  and the regional trade negotiating course.  Georgia wishes to  
continue to benefit from such training to enhan ce trade capacity within government ministries and 
agencies involved in trade policy formulation and the negotiation of trade agreements.   
(ii) Technical assistance needs 
61. Georgia is currently carrying out a comprehens ive assessment of its technical assistance needs 
in the trade area, not only in the context of its WT O membership but also within the framework of its 
evolving trading relationship with the EU.  New obligations for implementation arising out of the 
DDA may further challenge already stretched res ources. Support from the international community 
could assist Georgia in achieving greater integration into the multilateral trading system.    
62. Georgia's concerns relate, inter alia,  to implementation issues attributed to constraints in 
capacity, know-how, and skills in the various agencies involved.  Two prominent areas are 
standards/SPS measures and intellect ual property protection.  Georgia could benefit from technical 
assistance to help develop its resources and furthe r develop its standards in stitutions.  As it moves 
further towards international practices for sta ndards, technical regulations, and conformity 
assessment, the authorities indicated the need to increase the level of expertise to enhance their 
participation in regulatory and international standard-setting activities, including effective 
participation in the TBT Committee.  Officials invol ved in the development of national standards, for 
instance, could benefit from improved traini ng, monitoring and surveillance capacity, and 
performance in the area of notifications in both TBT and SPS matters.  Assistance is needed to 
increase capacities to submit notifications on SPS me asures more effectively and to establish better 
communication channels with relevant stakeholde rs.  The authorities have also emphasized the 
importance of having a dedicated physical location (enquiry point) with appropriate equipment based 
at the Ministry of Agriculture to ensure proper handling of notifications.   
63. While Georgia has enacted a great deal of the legislation necessary to be fully compliant with 
the TRIPS Agreement, limited administrative capacity in a number of IPR-related areas is a significant obstacle to implementation. Additional tr aining on TRIPS, in particular on issues 
pertaining to parallel imports for products other th an pharmaceuticals, and how this is regulated by 
other WTO Members, and on enforcement issues, w ould be beneficial.  Georgia needs to raise  
awareness among the different IP right-holders a nd improve training for enforcement officials 
(customs officers, judges, etc.).   
64. Other areas that would likely benefit from short-term targeted technical assistance and 
capacity-building programmes include (in no particular order of priority):  need for additional support 
in training customs officers in identifying pirated and counterfeit goods at the border as well as specialized training in audit techniques and post clea rance control;  upgrading of the reference centre 
(RC), established in 2001 in the Ministry of Forei gn Affairs, in order to use it for accessing official 
WTO information as well as to train officials via the WTO e-training course.