# EUR-Lex - 52014PC0148 - EN

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# 52014PC0148

**Proposal for a COUNCIL DECISION on the signing, on behalf of the European Union, and provisional application of the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other part /* COM/2014/0148 final - 2014/0085 (NLE) */**

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EXPLANATORY MEMORANDUM

1.           CONTEXT OF THE
PROPOSAL/BACKGROUND

The attached proposal constitutes
the legal instrument for authorising the signature and provisional application
of the Association Agreement between the European Union and the European Atomic Energy Community
and its Member States, of the one part, and Georgia, of the other part.

Since the European
Atomic Energy Community (EAEC) is a Party to the Agreement, a separate
procedure applies to the signing and conclusion of this Agreement by the Commission
on behalf of the EAEC.

Relations between the European
Union (EU) and Georgia are currently based on the Partnership and Cooperation
Agreement which entered into force in July 1999. On 10 May 2010 the Council
authorised the Commission to open negotiations for a new comprehensive and
ambitious Association Agreement, including its Deep and Comprehensive Free
Trade Area (DCFTA) part.

The Association
Agreement aims to accelerate the deepening of political and economic relations
between Georgia and the EU, as well as to advance Georgia's gradual economic
integration with the EU Internal Market, in selected areas notably through
establishing a DCFTA.

The Agreement is a
concrete way to exploit the dynamics in EU-Georgia relations, focusing on
support to core reforms, on economic recovery and growth, governance and cooperation
in different sectors.

The Agreement also
constitutes a reform agenda for Georgia, based on a comprehensive programme of
approximation of Georgia's legislation to EU norms and standards, around which
all partners of Georgia are invited to align themselves and focus their
assistance. EU assistance to Georgia is linked with the reform agenda as it
emerges from the Agreement. In view of preparing and facilitating the
implementation of the Association Agreement, an Association Agenda has been
prepared.

Following the 14th
negotiation round in March 2013, the EU and Georgia finalised the negotiations
on the Association Agreement. Negotiations on the DCFTA were finalised in July
2013. On 29 November 2013, the EU and Georgia initialled the text of the
Association Agreement, including the DCFTA part.

In line with Article
429 of the Association Agreement, it is foreseen to provisionally apply parts
of the Agreement. The provisional application is foreseen in view of keeping
mutual economic interests and shared values in equilibrium, and the common will
of the EU and Georgia to start implementing and enforcing the eligible parts of
the Agreement in order to advance an early reform impact on sector specific
issues before the conclusion of the Agreement.

2.           RESULTS
OF THE NEGOTIATIONS

The Council has been
informed regularly and consulted in the relevant Council Working Groups,
notably in COEST and the Trade Policy Committee (TPC), at all stages of the
negotiations. The Commission considers that the objectives set by the Council
in its negotiating directives were attained and that the draft Association
Agreement is acceptable to the Union.

The final content of
the Association Agreement can be summarised as follows:

The Agreement
establishes an association between the Union and its Member States, of the one part, and Georgia, of the other part. This constitutes a new stage in the
development of EU-Georgia contractual relations, aiming at political association
and economic integration and leaving open the way for further progressive
developments.

The overall aims of the
association focus on promoting a gradual rapprochement between the parties on
the basis of common values; strengthening the framework for enhanced political
dialogue; promoting, preserving and strengthening peace and stability in both
the regional and international dimensions; promoting cooperation on peaceful
conflict resolution, advancing Georgia's gradual economic integration with the
EU internal market in selected areas; enhancing justice, freedom and security cooperation
with the aim of reinforcing the rule of law and respect for human rights and
fundamental freedoms, and establishing conditions for increasingly close
cooperation in other areas of mutual interest.

The General
Principles of the Agreement include a specific set of "essential
elements", the violation of which by one of the Parties could give rise to
specific measures under the Agreement, including the suspension of rights and
obligations. These elements are respect for democratic principles, human rights
and fundamental freedoms as defined in relevant international instruments;
respect for the rule of law; promotion of respect for the principles of sovereignty
and territorial integrity, inviolability and independence; and countering the
proliferation of weapons of mass destruction, related materials and means of
delivery.

Other General
Principles of the Agreement relate to the principles of a free market
economy, good governance, the fight against corruption, the fight against
trans-national organised crime and terrorism, the promotion of sustainable
development and effective multilateralism.

The Agreement sets out
the aims of a strengthened political dialogue promoting gradual
convergence on foreign and security matters. The Agreement further provides for
dialogue and cooperation on domestic reform based on the common principles set
out by the Parties. There are also provisions for intensified dialogue on
foreign and security policy, including the Common Security and Defence Policy,
for the promotion of peace and international justice by implementing the Rome
Statute of the International Criminal Court, and for joint efforts on regional
stability, conflict prevention, crisis management, anti-terrorism,
anti-proliferation and disarmament and arms control. The Parties shall in
particular work towards peaceful settlement of the unresolved conflicts in the
region.

In the field of justice,
freedom and security, the Agreement pays particular attention to the rule
of law and to the reinforcement of judicial institutions and practices. The
Agreement sets out the framework for cooperation on migration, asylum and
border management, on personal data protection, money laundering and terrorism
financing and on anti-drugs policy. The Agreement contains provisions on
movement of persons, including on readmission, on visa facilitation and on the
gradual steps towards a visa-free regime in due course provided that relevant
conditions for well-managed and secure mobility are in place. The commitment to
combat crime, corruption and other illegal activities and the further
development of judicial cooperation in civil and criminal matters is also
covered - making full use of relevant international and bilateral instruments.

The Association
Agreement also foresees a wide range of sector cooperation, focusing on support
to core reforms, economic recovery and growth, governance and sector
cooperation in 28 areas, such as: energy, transport, environmental protection
and promotion, industrial and small and medium enterprise cooperation,
agriculture and rural development, social policies, justice, civil society
cooperation, consumer policy, public administration reform, education, training
and youth as well as cultural cooperation. In all of these areas, enhanced cooperation
starts from the basis of current frameworks, both bilateral and multilateral,
with the aim of more systematic dialogue and exchange of information and good practice.
Key to the sectoral cooperation parts of the Agreement is a comprehensive menu
of gradual approximation with the EU acquis set out in annexes to the
Agreement. Specific schedules for approximation and implementation by Georgia of selected parts of the EU acquis will provide a focus for on-going cooperation, and
will form the core of Georgia's domestic reform and modernisation agenda.

The Agreement includes
an updated institutional framework encompassing cooperation and dialogue fora.
Specific decision-making roles are foreseen for an Association Council, and by
delegation, for an Association Committee, which may also meet in a specific
configuration to address trade issues. Fora for civil society and parliamentary
cooperation are also foreseen. The Agreement also includes provisions on
monitoring, fulfilment of obligations and dispute settlement (including
separate provisions for trade-related issues).

With regard to the DCFTA
part of the Agreement, the Commission has reached the objectives set out in the
negotiating directives to dismantle import duties on substantially all trade,
while providing a strong binding framework to ban all arbitrary
trade-restrictive measures, including export duties and quantitative export
restrictions. The DCFTA contains an anti-circumvention mechanism for imports of
sensitive agricultural products.

In terms of technical
barriers to trade, Georgia will progressively adapt its technical regulations
and standards to those of the EU. Negotiations for an Agreement on Conformity
Assessment and Acceptance of Industrial Products (ACAA) may be launched, with
view to ensuring that in specific sectors Georgian legislation and market
surveillance systems is in line with those in the EU, so that trade between the
Parties can take place under the same conditions as between EU Member States.

As regards trade in
animals, plants and their products the DCFTA will provide for the alignment of Georgia's sanitary and phyto-sanitary and animal welfare legislation to the EU's SPS and
animal welfare legislation which would consequently lead to further trade
facilitation. The DCFTA will ensure the setting up of a rapid consultation
mechanism to solve SPS-related trade irritants, including a specific rapid
alert and early warning system for veterinary and phyto-sanitary emergencies.

Building on current
cooperation on customs matters, the Protocol on mutual administrative
assistance in customs matters provides a stronger legal framework to ensure the
correct application of customs legislation and the fight against customs fraud.

As regards
establishment, the DCFTA provides for national treatment and most favoured
nation treatment of companies, subject to limited reservations. With regard to
trade in services, the DCFTA foresees a wide market access, as well as the
possibility to liberalise further the market access, including as a result of
approximation by Georgia with the EU acquis in the fields of financial,
telecommunications/electronic commerce, postal and courier, and international
maritime transport services.

The DCFTA will provide
high levels of protection for all EU agricultural Geographical Indications
(GIs), not only those relating to wines and spirits, and any new products added
to the list of protected GIs. The Agreement includes the provisions of the
EU-Georgia Agreement on Geographical Indications which entered into force on 1
April 2012, including its annexes. It foresees a mechanism enabling full
protection of new indications which may be added to the Agreement on
Geographical Indications before the Association Agreement enters into force. Moreover,
the DCFTA includes provisions on copyright, designs (including unregistered
ones), and patents which complement and up-date the TRIPS Agreement and include
provisions for the enforcement of Intellectual Property Rights based on the
EU's internal rules.

In terms of integration
of the public procurement markets, the DCFTA will allow access of Georgia, a non-EEA Member to the EU public
procurement market for bids above certain value thresholds, following a period
of transition during which Georgia will approximate current and future EU
legislation on public procurement. Further access to the EU procurement market
for bids below the value thresholds may be discussed once approximation has
been successfully completed. As a result, suppliers and service providers will
have mutual market access to the public procurement markets, with an exception
made for the defence sector.

Through the DCFTA, Georgia will ensure implementation of comprehensive competition laws.

The section on
subsidies ensures that transparency principles will be adhered to by Georgia, and contains appropriate reporting obligations to this effect.

On trade-related energy
issues, the DCFTA introduces binding provisions on uninterrupted transit of
energy goods and access to energy transport facilities with a view to ensuring
the security of supply, on the independence of regulatory authorities in the
energy field, and to clarify the relationship with Georgia's future commitments
under the Energy Community Treaty.

Commitments to pursue sustainable development in
trade and to abide by multilateral commitments in this respect are provided
for, while ensuring the right to regulate own levels of domestic environmental
and labour protection. DCFTA includes a commitment to refrain from waiving or
derogating from such standards in a manner that affects trade or investment
between the parties.

Effective settlement
procedures based on the model of
the WTO Dispute Settlement Understanding will provide for swift resolution of bilateral
trade disputes, including by
allowing the affected party to impose proportionate sanctions, with even faster
procedures for urgent disputes on trade-related energy matters.

Specific provisions on
transparency and dialogue with the civil society and stakeholders have also
been agreed to ensure consultative, open and predictable nature of
policy-making in trade-related areas. Furthermore, the DCFTA contains
disciplines facilitating the conduct and assessment of approximation process in
trade-related areas,

In perspective, Georgia's closer economic integration with the EU through the DCFTA will be a powerful
stimulant to the country's economic growth. As a core element of the
Association Agreement, the DCFTA will create business opportunities in both the
EU and Georgia and will promote real economic modernization and integration
with the EU. Higher standards of products, better services to citizens, and
above all Georgia's ability to compete effectively in international markets
should be the result of this process.

3.           LEGAL
ELEMENTS OF THE PROPOSAL

On the part of the Union, the legal basis for the signature and provisional application of this Agreement is
Article 217, in conjunction with Article 218(5) and the second subparagraph of
Article 218(8), as well as Article 218(7) of TFEU. A separate legal instrument
applies to the European Atomic Energy Community.

The attached proposal
constitutes the legal instrument for the signature and provisional application
of the Association Agreement.

In light of the
above-mentioned results of negotiations, the European Commission proposes that
the Council decides that the Association Agreement between the European Union
and the European Atomic Energy Community and their Member States, of the one
part, and Georgia on the other part should be signed on behalf of the Union and
establishes appointment of the person(s) duly empowered to sign on behalf of
the Union.

The proposal foresees
that parts of the Agreement will be applied provisionally by the Union without it prejudicing the allocation of competences in accordance with the Treaties.

The fact that the
Commission has submitted its proposal as an agreement of the Union and its Member States and Georgia is related to the genesis of this Agreement under the rules of the
Treaty before the entry into force of the Treaty of Lisbon.

2014/0085 (NLE)

Proposal for a

COUNCIL DECISION

on the signing, on behalf of the European
Union, and provisional application of the Association Agreement between the
European Union and the European Atomic Energy Community and their Member
States, of the one part, and Georgia, of the other part

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the
Treaty on the Functioning of the European Union, and in particular Article 217,
in conjunction with Article 218(5) and the second subparagraph of Article
218(8) thereof, as well as Article 218(7) thereof,

Having regard to the
proposal from the European Commission,

Whereas:

(1)       On 10 May 2010, the
Council authorised the Commission to open negotiations with Georgia for the conclusion of a new Agreement between the European Union and Georgia to replace the
Partnership and Cooperation Agreement.

(2)       Taking into account the
close historical relationship and progressively closer links between the
Parties as well as their desire to strengthen and widen relations in an
ambitious and innovative way, the negotiations on the Association Agreement
were successfully finalised by the initialling of the Agreement on 29 November 2013.

(3)       Therefore, the Agreement
should be signed on behalf of the Union and applied on a provisional basis in
accordance with its Article 429, pending its conclusion at a later date.

(4)       Article 429 of the
Agreement provides for the provisional application of the Agreement before its
entry into force,

(5)       Pursuant to Article 218(7)
of the Treaty on the Functioning of the European Union, it is appropriate for
the Council to authorise the Commission to approve modifications to be adopted
by the Sub-Committee on Geographical Indications pursuant to Article 179 of the
Agreement.

(6)       It is appropriate to set
out the relevant procedures for the protection of geographical indications
which are given protection pursuant to the Agreement.

(7)       The Agreement shall not be
construed as conferring rights or imposing obligations which can be directly
invoked before Union or Member State courts and tribunals.

HAS ADOPTED THIS DECISION:

Article 1

The signing of the
Association Agreement between the European Union and the European Atomic Energy
Community and their Member States, of the one part, and Georgia, of the other part is hereby approved on behalf of the Union, subject to the conclusion of
the said Agreement.

The text of the
Agreement to be signed is attached to this Decision.

Article 2

The Council Secretariat
General shall establish the instrument of full powers to sign the Agreement,
subject to its conclusion, for the person(s) indicated by the negotiator of the
Agreement.

Article 3

1.           Pending its entry into force, in accordance with Article 429 of the Agreement and subject to the
notifications provided for therein, the following parts of the Agreement shall
be applied provisionally between the Union and Georgia:

–
Article 1;

–
Title I;

–
Title II;

–
Title III: Articles 13-19;

–
Title IV;

–
Title V: Chapters 3 (Article 285) and 4 (Article 291);

–
Title VI: Chapters 1, 2 (with the exception of Article
298 (k)), 3, 4, 6-8, 10, 11, 13,  and 20, as well as Articles 354 and 357;

–
Title VII;

–
Title VIII: with the exception of Article 420(1),
to the extent that the provisions of this Title are limited to the purpose of
ensuring the provisional application of this Agreement as defined in this
paragraph;

–
Annexes I, II-XXI, XXII-XXIII, XXIV-XXXI, and
XXXIV, as well as Protocols I to III.

2.           The date from which the Agreement
will be provisionally applied will be published in the Official Journal of
the European Union by the Council General Secretariat.

Article 4

For the purposes of Article
179 of the Agreement, modifications of the Agreement through decisions of the
Sub-Committee on Geographical Indications shall be approved by the Commission
on behalf of the Union. Where interested parties cannot reach agreement
following objections relating to a geographical indication, the Commission
shall adopt such a position on the basis of the procedure laid down in Article
57(2) of Regulation (EU) No 1151/2012 of the European Parliament and of the
Council of 21 November 2012 on quality schemes for agricultural products and
foodstuffs[1].

Article 5

1.           A name protected under Sub-Section
3 “Geographical Indications” of Chapter 9 of Title IV of the Agreement may be
used by any operator marketing agricultural products, foodstuffs, wines,
aromatised wines or spirits conforming to the corresponding specification.

2.           In accordance with Article 175 of
the Agreement, the Member States and the institutions of the Union shall
enforce the protection provided for in Articles 170 to 174 of the Agreement,
including at the request of an interested party.

Article 6

This Agreement shall
not be construed as conferring rights or imposing obligations which can be
directly invoked before Union or Member State courts and tribunals.

Article 7

This Decision shall
enter into force on the day following that of its adoption.

Done at Brussels,

For
the Council

The
President

[1]               OJ L 343 14.12.2012, p.1

PROTOCOL III

ON A FRAMEWORK AGREEMENT

BETWEEN

THE EUROPEAN UNION

AND GEORGIA

ON THE GENERAL PRINCIPLES

FOR THE PARTICIPATION OF GEORGIA

IN UNION PROGRAMMES

Article 1

Georgia shall be allowed to participate in all current and future
programmes of the Union opened to the participation of Georgia in accordance with the relevant provisions adopting those programmes.

Article 2

Georgia shall contribute financially to the general budget of the EU
corresponding to the specific programmes in which Georgia participates.

Article 3

Georgia's representatives shall be allowed to take part as observers and,
for the points which concern Georgia, in the management committees responsible
for monitoring the programmes, to which Georgia contributes financially.

Article 4

Projects and
initiatives submitted by participants from Georgia shall, as far as possible,
be subject to the same conditions, rules and procedures pertaining to the
programmes concerned as those which apply to Member States.

Article 5

The specific
terms and conditions regarding the participation of Georgia in each specific
programme, in particular the financial contribution payable, as well as
reporting and evaluation procedures, shall be determined by agreement between
the European Commission and the competent authorities of Georgia on the basis of the criteria established by the programmes concerned.

If Georgia
applies for external assistance of the Union to participate in a given Union
programme pursuant to Article 3 of Regulation (EC) No 1638/2006 of
the European Parliament and of the Council of 24 October 2006
laying down general provisions establishing a European Neighbourhood and
Partnership Instrument or pursuant to any similar legislative act of the Union
providing for external assistance of the Union to Georgia that may be adopted
in the future, the conditions governing the use by Georgia of external
assistance of the Union shall be determined in a financing agreement, complying
in particular with Article 20 of Regulation (EC) No 1638/2006.

Article 6

Each agreement
concluded pursuant to Article 5 of this Protocol, shall stipulate, in
accordance with Regulation (EU, EURATOM) No 966/2012 of the European
Parliament and of the Council of 25 October 2012 on the
financial rules applicable to the general budget of the Union and repealing
Council Regulation (EC, Euratom) No 1605/2002, that financial control or
audits or other verifications, including administrative investigations will be
carried out by, or under the authority of, the European Commission, the Court
of Auditors and the European Anti‑Fraud Office.

Detailed
provisions shall be made on financial control and auditing, administrative
measures, penalties and recovery enabling the European Commission, the Court of
Auditors and the European Anti‑Fraud Office to be granted powers
equivalent to their powers with regard to beneficiaries or contractors
established in the Union.

Article 7

This Protocol
shall apply while this Agreement is applicable.

Either Party may
denounce this Protocol by written notification to the other Party.

Termination of
the Protocol following denunciation by either Party shall have no influence on
the checks and controls to be carried out, where appropriate, in accordance
with the provisions laid down in Articles 5 and 6 where appropriate.

Article 8

No later than
three years after the date of entry into force of this Protocol, and every
three years thereafter, both Parties may review the implementation of this
Protocol on the basis of the actual participation of Georgia in Union
programmes.