Source: EURLEX
Language: en
Format: md

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# 52015SC0066

**JOINT STAFF WORKING DOCUMENT Implementation of the European Neighbourhood Policy in Georgia Progress in 2014 and recommendations for actions Accompanying the document JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Implementation of the European Neighbourhood Policy in 2014 /\* SWD/2015/0066 final \*/**

  

1.
        OVERALL ASSESSMENT AND RECOMMENDATIONS FOR ACTION

This document
reports on progress made between 1 January and 31 December 2014 in the
implementation of the EU-Georgia Association Agenda. The Association Agenda
replaced the 2006 European Neighbourhood Policy (ENP) Action Plan. Developments
outside this period are considered where relevant. This is not a general
assessment of the political and economic situation in Georgia. Information on
regional and multilateral sector issues is contained in the Eastern Partnership
Implementation Report.

Georgia and the
EU signed the Association Agreement including the Deep and Comprehensive Free
Trade Area (AA/DCFTA) on 27 June 2014. Georgia ratified the AA on 18 July 2014.
The AA/DCFTA has been provisionally applied since 1 September 2014. In June
2014 the EU and Georgia agreed jointly on the Association Agenda. It provides a
set of priorities for implementing the AA/DCFTA. Political dialogue between the
EU and Georgia further intensified in 2014. An unprecedented meeting between
the Georgian Government and the College of Commissioners took place in May
2014. In November 2014 the first meeting of the EU-Georgia Association Council
took place and Georgia was the host of the Eastern Partnership Civil Society
Forum in Batumi.

The EU’s Special
Adviser on Constitutional and Legal Reform and Human Rights in Georgia, Thomas
Hammarberg, concluded his mandate in 2014 and issued recommendations for
introducing effective checks and balances into the political/constitutional system.

Georgia made
some progress on deep and sustainable democracy and human rights and
fundamental freedoms: local elections in June and July 2014 are considered to
have generally complied with international standards. Constitutional reform was
initiated with the creation of a State Constitutional Commission. The role of
parliament was strengthened and the power of the president reduced. The status
of the prosecution service is one of the most urgent issues to be decided.
Institutional reform of the Prosecutor’s Office was also launched in December
2014. Electoral reforms to prepare for the 2016 parliamentary elections have
not yet started. Media freedom improved but freedom of association and freedom
of assembly were not fully ensured during the electoral campaign. Amendments
made to the Law on Common Courts create the basis for judges to be more
independent; however, a three-year probation period for judges prior to their
life-term appointment remains problematic. In general, judicial independence
remained fragile. Georgia made some progress in the fight against corruption.

The National
Human Rights Strategy and Action Plan were adopted. The prison system and the
protection of children’s rights improved. An anti-discrimination law was
adopted; the lack of accountability for abuses by law enforcement authorities
persisted. In general, the rights of minorities were not substantially
improved. Major public administration reforms are pending, including reform of
the financing of political parties.

While the civil
society dialogue with parliament continued, civil society organisations’ room
for dialogue with the government narrowed.

Good progress
was reached in the visa liberalisation dialogue and the implementation of the
Visa Facilitation and Readmission Agreements. The second implementation phase
of the visa liberalisation process was launched.

Georgia’s economy started to recover at
the end of 2013, helped by a large fiscal stimulus in the last quarter of the
year. The recovery continued in 2014. After deflation of 0.5 % in 2013,
the economic recovery led to a resurgence of inflationary pressures. After a
significant improvement in 2013, the current account started to worsen again
and the deficit is expected to reach about 10 % at the end of 2014.
Georgia concluded a new Stand-by Arrangement with the IMF of USD 154 million in
July 2014. In October 2014 the EU concluded negotiations on a new
Macro-Financial Assistance programme amounting to EUR 46 million.

Regarding the breakaway territories of Abkhazia
and South Ossetia, the announcements by the de facto authorities in
2014 of the potential closure of a number of crossing points and more
restrictive crossing regimes caused concern in Georgia. These would further
increase the separation already caused by the erection of fences and other
obstacles on the administrative boundary lines. The signature of the ‘Treaty on
Alliance and Strategic Partnership’ between the Russian Federation and Abkhazia
and negotiations of a similar agreement with South Ossetia were severely
criticised by the Georgian Government as going against Georgia’s territorial
integrity. This assessment was shared by the EU and was expressed in statements
and the EU’s bilateral contacts with the Russian Federation. The EU remained
committed to Georgia’s territorial integrity and sovereignty and to a peaceful
resolution of the conflicts. The government implemented its strategy for
engaging with the breakaway territories. In parallel, the bilateral discussions
with the Russian Federation continued and led to progress on trade, transport
and cultural issues which the EU welcomed.

Overall, Georgia
made some progress in implementing the ENP Action Plan and the Association
Agenda, with achievements notably in the areas of human rights and fundamental
freedoms and substantial progress in the visa liberalisation process.
Constitutional reforms have been initiated. Some progress was made in the fight
against corruption. Anti-discrimination legislation was adopted. Cooperation
with civil society continued.

Based on the
assessment of its progress in 2014 on implementing the ENP Action Plan and the
Association Agenda, Georgia should focus its work in the coming year on:

·
ensuring
adequate separation of powers and checks and balances between executive,
legislative and the judicial powers in the framework of constitutional reform;
ensuring that constitutional amendments continue to be subject to comprehensive
consultations, including with the EU and the Venice Commission of the Council
of Europe;

·
improving
the political climate by avoiding political retribution, confrontation and
polarisation and ensuring space for opposition and cross-party dialogue in the
interest of consolidating democracy, focusing on priorities such as economic
development and urgent social concerns;

·
addressing
remaining shortcomings in the legislative framework and administration of
elections, as identified by the Organisation for Security and Cooperation in
Europe’s Office for Democratic Institutions and Human
Rights (OSCE/ODIHR), before the start of the cycle leading to
the next parliamentary elections in 2016;

·
reforming
the justice system to ensure the full independence of the judiciary, bringing criminal
justice policies and practices into line with Council of Europe standards;
developing a judicial reform strategy and action plan with clear benchmarks;

·
ensuring
that criminal investigations and prosecutions are conducted in a transparent
and impartial
manner,
free of political motivation, and following up on the OSCE/ODIHR
recommendations in this regard;

·
ensuring
that reform of the Prosecutor's Office is completed and that the office is
independent from political influence and is publicly accountable;

·
ensuring
that pre-trial detention is used only as an exceptional measure, in line with
the
law,
to safeguard, inter alia, the principle of the presumption of innocence;
revising rules on administrative detention in compliance with fair trial norms;

·
increasing
the accountability and democratic oversight of law enforcement agencies;
establishing an independent and effective complaints mechanism and
addressing complaints on property rights violations, torture and ill treatment,
and misuse of the plea bargaining system; investigating abuses — particularly
by law enforcement officers — and implementing reforms and effective monitoring
of the prison system;

·
continuing
to advance sectoral reforms, completing the accession to the Energy
Community Treaty and ensuring a high standard of approximation to the
EU acquis in order to successfully implement the AA/DCFTA;
raising public awareness and visibility of
the AA/DCFTA and the merits of political association and economic integration
with the EU;

·
participating
constructively in the Geneva International Discussions; strengthening Georgia’s
policy of engaging
with the breakaway regions and take pragmatic steps to further open channels
of communication and encourage trade, education, travel and investment across
the administrative boundary line; reviewing the law on occupied territories and
other related legislation and administrative acts; continuing close
cooperation with the EU Special Representative (EUSR) for the South Caucasus
and the Crisis in Georgia and the EU Monitoring Mission in Georgia (EUMM);

·
strengthening
media pluralism and independence and freedom of expression and opinion;
improving and ensuring the protection of privacy rights; tackling illegal
surveillance by revising the surveillance legislation in line with
international standards and in consultation with the Venice Commission, and
investigating abuses;

·
implementing
anti-discrimination legislation effectively; providing sufficient resources to
the Public Defender’s Office to exercise its
new role as an equality body; ensuring that the rights of people belonging
to minorities, including religious minorities, are respected;

·
implementing
the human rights strategy and action plan effectively, concentrating on the
main human rights priorities, and reflecting the recommendations of the Public
Defender’s Office in policy-making;

·
ensuring
that civil society and the social partners continue to have sufficient scope to
exercise their roles, including under the AA/DCFTA.

2.         POLITICAL DIALOGUE AND REFORM

Deep and sustainable democracy

The 2014 municipal elections took place
in a more competitive atmosphere than the elections in 2013. Several amendments
were adopted to bring the relevant legislation into line with the new code of
local self-government. Particularly instrumental was the decision to increase
the number of self-governing municipalities to 12, allowing for direct
elections of mayors, along with the increase in the election threshold in the
first round from 30 to 50%. The Inter-Agency Commission for Free and Fair
Elections continued to issue recommendations but these were not always
successful in preventing cases of alleged intimidation. The pre-electoral
campaign was marked by a number of violent incidents against and pressure on
the opposition.

In the absence of the Organisation
for Security and Cooperation in Europe’s Office for Democratic Institutions and Human
Rights (OSCE/ODIHR),
the municipal elections were observed by a large number of domestic and other
international election observation organisations. The elections were found to
be in line with international standards, with only minor procedural violations
reported. These were not deemed to have influenced the outcome.

Discussions on electoral reform have not
restarted yet. There are a number of issues which remain to be addressed
arising both from previous OSCE/ODIHR recommendations, like improving the
‘equality of the vote’, and from legislative amendments passed recently, such
as the provision allowing for a majority of local council members to impeach a
directly-elected mayor. If the electoral reform starts without delay, it can apply
to the parliamentary elections in October 2016.

The run-up to the 2014 municipal elections was marked by
polarisation, and most violations of freedom of assembly and association occurred in this
period. In addition to disruption of some opposition gatherings by ruling party supporters, authorities failed to
protect opposition members from occasional violent attacks and/or to adequately
investigate assaults on politically active individuals. The Prosecutor’s Office
received 80 complaints of alleged pressure to
withdraw opposition candidacies but started criminal investigations in only
four cases.

In contrast with the previous year, when a violent mob
assaulted peaceful lesbian, gay, bisexual, transgender and intersex (LGBTI)
activists who had to be evacuated by police, in 2014
the LGBTI community decided not to gather outdoors to mark International Day
against Homophobia and Transphobia.

In 2014 the media environment continued to improve and
became more diverse, albeit also more polarised. Media ownership became more transparent. Georgia’s
ranking in the annual Freedom House survey of global press freedom improved
slightly. There were a few cases
of interference in journalistic activities. Occasionally, authorities
demonstrated a hostile attitude towards critical
reporting by the media. Media freedom, in particular for
investigative journalism, and impartiality remained precarious.

In August 2014 parliament amended the
Law on Common Courts, setting criteria of ‘good faith’ and ‘competence’
for the three-year probation period all judges must serve before their
appointment for life. The law also established a new chamber of the Supreme
Court (the Qualification Chamber), mandated to review appeals against refusals
by the High Council of Justice to make lifetime appointments of judges.

In March 2014 the State Commission for Constitutional
Reform discussed the powers and competences of the judicial branch of the
government and the powers of other constitutional actors. The 58-member
commission composed of members of the parliamentary majority and opposition,
representatives of non-parliamentary parties and civil society and legal
experts, was tasked with drafting constitutional amendments and defining the
new constitutional status of the Prosecutor’s Office. Parliament extended the
mandate until March 2015.

Institutional reform of the
Prosecutor’s Office, aimed at increasing its independence and
accountability, began in December 2014. Government agencies, parliament, the
Public Defender and civil society organisations participated in drafting the
reform plan.

In September 2014 parliament delayed the
start of jury trials for all criminal offences carrying imprisonment from
October 2014 until October 2016.

Investigations and trials of
former officials continued. To date, 35 officials of the previous government
have been charged with criminal offences; five have fled the country and at
least 10 have been convicted, three of whom were pardoned by then-President
Saakashvili. In addition, charges have been brought against a considerable
number of former civil servants.

The Public Defender and non-governmental
organisations (NGOs) denounced procedural violations, including violation of
the presumption of innocence and intimidation during questioning, and raised
concerns about prolonged pre-trial detentions. Court monitoring is carried out
by the OSCE and by domestic NGOs. In December OSCE/ODIHR published the trial
monitoring report which makes specific recommendations not only to the
judiciary but to all branches of the government. The monitoring of high-profile
cases did not reveal grave violations of due process during trials. In general,
judges were said to have demonstrated greater diligence in ensuring
standards of proof at different levels of proceedings in high- profile cases
than in ordinary cases.

In November 2014 political turbulence
erupted within the government after several officials of the Ministry of
Defence were arrested or questioned by the State Prosecutor in relation to
corruption charges. After the dismissal or resignation of several
ministers and deputy ministers, the Prime Minister succeeded in stopping a wave
of further resignations and maintained a majority in parliament. A new
government was formed without the party of Free Democrats.

According to the findings of the OSCE/ODIHR
and the Council of Europe, Georgia’s Criminal Procedure Code (CPC)
generally complies with international standards and best practice.
Recommendations on increasing judicial supervision of plea bargaining,
improving victims’ rights and on the right of the defence to request some
investigative measures were partially addressed through the amendments to the
CPC adopted in 2014.

While pre-trial detention has not been
fully abolished, the August 2014 amendment to the Code of Administrative
Offences, which reduced the maximum length of administrative detention from 90
to 15 days, is to be seen as an interim step towards strengthening the
protection of human rights.

The European Judicial Training Network
(EJTN) granted the status of observer to the High School of Justice of Georgia
in June 2014.

Progress was made in improving
the quality of the prison system, in particular in healthcare. Prisons
remain a key area for EU support and the government’s priority in its criminal
justice reform. The presidential pardons and large-scale amnesty granted in
early 2013 cut the prison population by half. This reduction, together with a
budget increase and changes in staff and control methods, allowed the
administration to focus on healthcare reform and initiate work on
rehabilitation and re-socialisation. The prison mortality rate has decreased
significantly to a level comparable with some EU Member States. However,
incidents of alleged ill treatment and violence continued and were noted by the Public Defender’s
Office. Discussions held by the government since early 2013 on establishing an
independent external prison monitoring system by NGOs, in addition to the
existing national preventive mechanism under the UN Optional Protocol to the
Convention against Torture, are stalled.

On reform
of the security and law enforcement sector, structural
administrative measures have improved the Ministry of Internal Affairs’
internal monitoring mechanism. The complaints handling procedure was
upgraded and a 24/7 hotline for individual complaints introduced. The
Inter-Agency Council on Combating Torture and Ill treatment established
a working group to reform investigation mechanisms to ensure thorough,
transparent and independent investigation of allegations of torture and ill
treatment.

The
lack of accountability for abuses committed by law enforcement authorities
remained a problem in 2014; there is still no effective and independent
investigation mechanism. The Public Defender and NGOs reported a lack of prompt
and proper investigation of ill treatment of prisoners, allegations of which
were reported again in 2014 after a halt in 2013. The lack of prompt and
effective investigation of attacks on opposition figures risks sending the
unfortunate signal that such assaults are tolerated.

The fight against corruption remains high on the
government’s agenda and there was continued success in eradicating petty
corruption. The implementation of major reforms of the public administration
remained pending, such as the adoption of the revised
anti-corruption strategy and action plans, measures to strengthen institutional
capacity, the reform of the political party financing legislation and decisions
on the mechanisms to tackle and prevent elite corruption. Transparency
International ranked Georgia 52nd out of 175 countries in its 2014 Corruption
Perception Index, a slight improvement over 2013 when it came 55th out of 177
countries.

Civil society organisations (CSOs)
continued to monitor government activities closely. In general, civil society
representatives perceive that room for dialogue with the government is
narrowing. Civil society dialogue with parliament remains strong.

Other
human rights and fundamental freedoms

The EU-Georgia Association Agreement and its related Association Agenda contain provisions to advance governance and
human rights. In 2014, the Georgian Parliament unanimously adopted a national human rights
strategy, largely based on recommendations made by EU Special Adviser Thomas
Hammarberg in his report ‘Georgia in Transition’. The
implementation of selected areas of the strategy and its action plan will be
supported by EU funding.

The Public Defender’s Office (PDO) continued to
monitor the human rights situation independently, increasing its leverage vis-à-vis not only the government but also parliament.
The PDO National Preventive Mechanism was renewed. The parliamentary committees
on human rights and legal issues played a proactive role in supporting the PDO
and adopting laws in sensitive areas like
surveillance and anti-discrimination.

In 2014, the number of complaints filed
at the European Court of Human Rights dropped. There were fewer complaints of
ill treatment (mainly linked to poor prison healthcare). The authorities
continued seeking to settle cases out of court.

Since 2012, the number of cases of intolerance against
religious minorities has increased. In several cases Muslims have been
prevented from gathering or praying. While senior officials, the PDO and NGOs
publicly condemned these incidents, the relevant
authorities failed to investigate them properly or prosecute offenders.

Despite controversy and prevailing social prejudices, in
May 2014 parliament unanimously adopted the Anti-Discrimination Law, which covers all
modern grounds for discrimination and provides for
embedding an anti-discrimination mechanism in the PDO. The adoption of this law
brought Georgia closer to the next level in the visa liberalisation process.
The ban on homosexual men donating blood was declared unconstitutional.

A national action plan on gender
equality (2014-16) was adopted and all existing gender and women’s rights
action plans were integrated into the human rights action plan (2014-15). In
June, Georgia signed the Council of Europe’s Istanbul Convention on preventing
and combating violence against women and domestic violence. Inter-sectoral
coordination and cooperation remained a challenge for the government. There is
a continued need to step up efforts to combat violence against women, address
the needs of women from different minority groups and introduce special
measures to enhance women’s participation in politics. In 2014, at
least 26 women died as a result of domestic violence. The Ombudsman noted the
problem of girls marrying early and dropping out of school.

The Welfare
Monitoring Survey conducted by the UN Children’s Fund (UNICEF) revealed that child
poverty in Georgia was on the rise. The level of poverty among children is 50 %
higher than among the general population. The government, with the support of
the EU and UNICEF, developed services and systems to address the needs of the most
vulnerable children, especially children living and working on the streets.
There were a number of positive developments in the protection of children’s
rights. In 2014, legal changes were initiated to ensure the protection of
children’s rights and their full access to education, health and social
services. The government also drafted a new Juvenile Justice Code
which covers all issues related to children in conflict with
the law, as well as child victims and child witnesses.

The institutional arrangements to
protect labour rights remained unchanged. There is a broad consensus
between the government and the social partners about inspections of safety at
work, but the creation of broader labour inspections (linked to the AA/DCFTA)
remained a contentious issue. Changes made in February 2014 to the law on
public service were considered by trade unions as a violation of the labour
rights of employees in the public service. Unions also complained that public
employers in the education, postal and railway sectors established ‘yellow’
unions backed
and organised by the employers’ side.

On property rights, in 2012
parliament imposed a moratorium on land acquisition by foreigners and
foreign-owned legal entities until the end of 2014. A court decision of June
2014 declared the moratorium unconstitutional. The Ministry of Justice
therefore drafted a new package of amendments that were approved by the
government on 29 December and submitted to parliament. Complaints about
violations of property rights before the change of power in 2012 remained
largely unaddressed.

Other
governance-related issues

There were widespread reports of
allegedly illegal dismissals of public servants from municipalities or
pressure on them to resign. The employees concerned must be granted legal means
to appeal.

Cooperation on foreign and security
policy, regional and international issues, conflict prevention and crisis
management

In 2014 Georgia aligned
itself with 23 out of the 49 EU Common Foreign and Security Policy (CFSP)
declarations (47 %) that it was invited to support (against 15 out of 32 —
also 47 % in 2013).

A framework agreement on
Georgia’s participation in the CFSP took effect in March 2014. Georgia is currently contributing to the EUFOR RCA
operation in the Central African Republic with a light infantry company of 156
military personnel and agreed to prolong its deployment for three months until
March 2015. In addition, Georgia offered two officers to the EU Mali training
mission and is ready to donate military equipment to the Malian armed forces.

The EU remained committed to supporting Georgia’s territorial
integrity and sovereignty. The EU is also actively supporting Georgia’s efforts
to resolve conflicts peacefully through the work of the EU Special
Representative for the South Caucasus and the Crisis in Georgia and the EU
Monitoring Mission. In 2014, Georgia continued to
promote the full implementation of the August 2008 Six-Point Agreement and
related implementing measures.

Georgia continued in 2014 to show full commitment to the Geneva
International Discussions as the only available forum to discuss security and
humanitarian issues with all relevant participants. The EU welcomed its
commitment and underlined the importance of a pragmatic and results-oriented
approach by all participants.

There were no new developments regarding the functioning of the incident
prevention and response mechanisms (IPRM). The meetings on South Ossetia
continued to take place regularly but the usual positions were kept and hence
the meetings often resulted in stalemate. The IPRM meetings in Gali did not
resume. Both IPRMs are essential tools to address security issues on the ground
and ensure continued confidence-building between the security actors.

The government started to review the law on occupied territories.
The draft amendments aimed to relax the regime for sanctioning illegal entry
into the breakaway regions. While certainly a step in the right direction, the
amendments were still limited in character and not yet in line with the opinion
of the Venice Commission. A more substantial review of this law
was needed to increase contacts and economic activities and maximise the
benefits of the AA/DCFTA.

Georgia continued to
implement its strategy for engagement with the breakaway territories by taking
steps, albeit modest ones, to make it more effective. Ongoing efforts yielded
positive results in the areas of healthcare provision and, to a lesser extent,
educational opportunities. The EU also welcomed a positive change
in rhetoric and language towards the breakaway regions. These efforts were widely appreciated. The EU contributed to
confidence-building through projects in and with the breakaway regions. Among
other things, these strengthened people-to-people-contacts and facilitated
academic exchanges with the EU.

The government continued to implement the strategy and action plan
on internally displaced persons (IDPs). This was supported by a comprehensive
EU programme that includes durable housing solutions, a strong livelihood
component and technical support to base assistance more on needs and less on
status. A recent change in the management of the ministry responsible helped
identify lasting solutions for IDPs. These solutions were more tailored to the
individual needs of IDPs and aimed at genuine socioeconomic integration.

3.         ECONOMIC REFORM AND SOCIAL
REFORM AND DEVELOPMENT

In 2014 GDP
growth rebounded to 4.7%[1]
from 3.3% in 2013 as a result of a fiscal stimulus package that supported
household consumption and investment. Fiscal and monetary policy, coupled with
a significant depreciation of the local currency, led to a resurgence of
inflationary pressures, with the average CPI inflation expected to reach
3.1% (following deflation during the previous two years). The general
government deficit rose considerably during the year, although from a
relatively low level, as a result of a strong increase in social spending. This
development was linked to the limited scope for increasing
revenues, following the entry into force in January 2014 of the Liberty Act.
This act requires tax increases (other than for excise duties) to be approved
by referendum.

The external
situation remained a major risk for the Georgian economy. Recovering domestic
demand and weakening regional exports led to a strong deterioration of the
current account deficit to an estimated 8.5% in 2014, from 5.9% in 2013. At the
same time, net FDI rose by nearly 20% year-on-year in the first three quarters.
Gross international reserves slightly recovered, following a sharp decline in
late 2013 and early 2014, due to exchange rate interventions to counter
depreciation pressures (related, in turn, to the fiscal stimulus package and
the resulting rise in imports).

Unemployment
remained high at around 14.1 % (14.6 % in 2013), with an estimated 30 %
of 15-24-year-olds remaining outside education, training and employment. A
significant share of the population remained dependent on remittances, which
declined in 2014 as a result of a considerable decrease in money transfers from
Russia.

The draft
budget for 2015, which was presented in October, would slightly increase
the allocation to the Ministry of Labour, Health and Social Assistance. Almost half
of this would be used for the payment of pensions, which would represent
17.2 % of total budget expenditure in 2015. The health
insurance schemes for teachers and people living below the poverty line were
merged with the universal healthcare scheme. As of September, state health
insurance covered 92 % of the population, while the remaining
386 000 people had private or corporate insurance.

A Trilateral Commission for Social
Partnership was inaugurated in May 2014 but has not met since then. This effectively
meant that there was no functioning tripartite social dialogue at the
national level.

The 2015-17 regional development
programme was approved by the government in June. A substantial EU budget
operation was launched to support implementation of the programme, building
upon previous EU support in this area. Methodology for the development of nine
region-specific action plans was approved by the government in September.

4.         TRADE-RELATED ISSUES, MARKET
AND REGULATORY REFORM

The EU-28 remains Georgia’s first trading
partner with a trade volume of EUR 2.57 billion in 2014. 2014 trade data
indicated that the EU's imports from Georgia remained stable as in 2013, at EUR
657 million, whereas EU products exported to Georgia decreased slightly in
value (by 5.9%), to EUR 1.9 billion. Since the implementation of the DCFTA on 1
September 2014, Georgia's exports towards the EU have increased by 7% for
September-December 2014, compared to the same period in 2013. The exports of
petroleum oils, which rose by 52.3% in that period, contributed to a large
extent to this increase.

The reformed EU Generalised Scheme of
Preferences (GSP) was applied from January 2014, with Georgia qualifying for
the Special Incentive Arrangement for Sustainable Development and Good Governance,
GSP+.

In February 2014 the government adopted
a decree assigning the Ministry of Economy and Sustainable Development a
coordinating role in implementing the AA/DCFTA, and in July it approved a
multiannual action plan for implementing the AA/DCFTA during the period
2014-17. Georgia
removed all import duties on products from the EU. Georgia and the EU started
exchanging information on the recent updates to the EU acquis covered by
the reform process, and prepared the institutional aspects of implementing the
AA/DCFTA. In January 2015 the National
Action Plan was approved by the government, setting the timeframe for
implementing all commitments of Georgia linked to the DCFTA.

As of September, the government assigned
to the customs authorities competence for issuing the certificates necessary to
apply for AA/DCFTA-based duty-free access to the EU market. Centralising this
responsibility, previously shared between four different state institutions and
agencies, brought Georgia’s arrangements into line with the EU customs policy
and AA/DCFTA provisions. The customs
authorities also
finalised the draft new Customs Code in line with AA/DCFTA provisions. A
system of prior notification for imported goods which are subject to
phytosanitary and veterinary control was introduced, and simplified customs
clearance procedures for group consignments came into force.

A law on competition broadly in
line with EU competition legislation was adopted in March 2014 and an
independent Competition Agency was created in April to oversee its
implementation. The agency was given further supervisory responsibilities in
October, though the low level of funding allocated to it could limit its
capacity for enforcement.

Preparations for EU support to
strengthen institutional and administrative capacities of the Technical and
Constructions Supervision Agency and its market surveillance responsibilities
were finalised. The agency currently focuses on training and staff development
as well as procedures and requirements for market surveillance, in particular
concerning legislation to implement EU technical regulations. In
September the
Georgian Accreditation Centre applied for membership of the European
Cooperation for Accreditation Multilateral Agreement.

Georgia amended its Food Safety,
Veterinary and Plant Protection Code to bring it into compliance with EU
requirements. The National Food Agency was awarded a second EU grant to help
establish an effective food safety and sanitary and phytosanitary management
system in line with EU standards and legislation.

In the services area, the
government prepared a draft law on postal services as a first step towards
approximating with the EU postal acquis.

A new law on investment funds was
passed and the National Bank of Georgia issued an order on rules and
circumstances of registering investment funds in the bank. The new law imposed
new requirements on investment funds which may increase transparency and
accountability.

In June Georgia adopted a socioeconomic
development strategy for the period until 2020, which reaffirmed the need for a
good business climate and placed strong emphasis on enhancing the
private sector’s competitiveness. Significant progress was also made in
developing the country’s strategy and related action plan on small and medium-sized
enterprises (SMEs), which are expected to be adopted by the end of 2015. Both
strategies are required for the EU to provide funding of EUR 51 million in
support of the DCFTA implementation process. Two agencies, for entrepreneurship
development and for innovation and technology, were created to support
entrepreneurship, consultancy services and the adaptation of SMEs to EU norms.
The government also launched the ‘Produce in Georgia Programme’ to support
local agri-processing and industrial production through concessional loans,
infrastructure support and the provision of consulting services.

In October the government created the Agriculture
Cooperatives Development Agency which, under the EU’s European Neighbourhood
Programme for Agriculture and Rural Development, conducted information and
awareness campaigns on market-oriented cooperatives among small farmers. An
agriculture sector strategy for the period 2014-20 was published but not yet
adopted by the government.

The State Revenue Service, with support
from an EU Twinning project, conducted an assessment of Georgia’s tax
legislation.

Georgia launched a review of its
statistical law to bring it in line with European standards, and the
National Statistics Office introduced modern methods of disseminating
statistics. A population census was conducted in November and will provide
information for future planning.

An EU twinning project for the State
Audit Office, aimed at strengthening institutional capacities in line with
international standards, started in November.

A procurement training
centre was set up and began providing training on procurement legislation.

5.         COOPERATION
ON JUSTICE, FREEDOM AND SECURITY

The
2014-18 state border management strategy and a corresponding action plan
were adopted in 2014. A border migration administration and
reporting system was introduced. In June a Joint Maritime Operations Command
Centre was created. Georgia participated in four joint
operations in cooperation with Frontex[2].

Implementation of the EU-Georgia Mobility
Partnership continued. Georgia and Germany elaborated a tailored ‘circular’
migration scheme. Thirty Georgians (75 % of them women) were selected for
employment in Germany and 23 members of the Georgian diaspora in Germany were
employed in development-relevant positions in the public and private sectors in
Georgia.

In the field of migration,
including visa and asylum issues, a new organic law on citizenship and a
new law on the legal status of aliens and stateless persons came into force in
June and September respectively. A temporary identification card and the rules
for its issuance were approved for asylum-seekers and stateless persons
in Georgia. Since September a new Migration Department has been operational
within the Ministry of Internal Affairs. An ‘overstayers alert system’ was
launched in September and a temporary accommodation centre for irregular
migrants opened. The government approved the ‘procedure for removing irregular
aliens’. Georgia has yet to establish a ‘unified migration analytical system’
to strengthen the analytical capacities of migration management agencies and
institutionalise reintegration mechanisms for Georgian citizens. To accelerate
its development, a working group was created in February. It is expected that
the system will become operational by mid-2016.

Regarding the visa
liberalisation action plan, Georgia successfully met the first-phase
requirements of the visa dialogue related to the legislative and policy
framework. The second phase, where the effective implementation of this
framework is scrutinised by the European Commission, was launched in October.
Implementation of the visa facilitation and readmission agreements has
continued in a satisfactory way, with an overall positive impact.

Implementation
of the national
strategy and action plan for combating organised crime continued.
Georgia concluded agreements with Romania and Armenia on the exchange and
mutual protection of classified information and with Germany on cooperation in
combating organised crime, terrorism and other serious criminal offences.

The amount of drugs
entering Georgia and the consumption of ‘traditional’ drugs declined. However, a sharp increase in imports of codeine-containing preparations was
noted.

The government continued to consolidate the legislative and policy
framework in the area of preventing drug use following the adoption of the
2014-15 national drug strategy and action plan. New provisions on the misuse of
legal pharmaceutical products for the production of homemade stimulants came
into force in March 2014. The Law on New Psychoactive Substances, criminalising
the possession and use of a number of new psychoactive substances, came into
force in May 2014. A standing monitoring commission was established in May. Two
programmes were launched to improve professional competences based on EU best
practices.

On data protection, Georgia brought its legal and
institutional framework further into line with European standards. In August
parliament adopted a number of amendments to the Law on Personal Data
Protection and other related laws, extending the mandate of the Personal Data
Protection Inspector (PDPI) to data processing in the police sector and
submitting private companies to PDPI supervision from November on. New
regulations concerning covert surveillance and the access of security agencies
to telecommunications service providers were also adopted in November. The
possibility of directly accessing telecommunication data falls in the remit of
the Ministry of Interior and, following a Court order, is only possible with
the agreement and technical release of data by the PDPI. The Georgian Public
Defender and civil society have challenged the provisions of the surveillance
legislation that enables the Interior Ministry to retain direct access to
telecommunication operators' networks, thus violating citizen's constitutional
right to privacy, and a lawsuit at the Constitutional Court was filed by the
Public Defender's Office. An assessment of the new surveillance law by the
Venice Commission of the Council of Europe would be necessary.

Legal provisions
criminalising the participation in international terrorist activities
and membership in terrorist organisations were added to the criminal code. In
February 2014 the government adopted the national strategy to reduce chemical,
biological, radiological and nuclear (CBRN) threats. A threat reduction
strategy and an Inter-agency Coordination Council on Combating CBRN Threats
were established.

6.         TRANSPORT,
ENERGY, ENVIRONMENT, CLIMATE CHANGE,  INFORMATION SOCIETY, RESEARCH AND
DEVELOPMENT AND INNOVATION

Regarding transport policy,
Georgia became the 40th member of EUROCONTROL.

Negotiations of the terms of Georgia's
accession to the Energy Community Treaty were launched in
February 2014, but the process was not completed in 2014 and the relevant
actions were not prioritised in Georgia's Action Plan on the implementation of
its AA/DCFTA. Nevertheless, at high-level meetings
towards the end of the year, Georgia confirmed its readiness to resume negotiations
in 2015. There was no tangible development with regard to the adoption
of legislation on energy efficiency and renewable energy. A new project to
interconnect electricity grids with Armenia was approved for support through
the Neighbourhood Investment Facility. The new electricity interconnection
between Georgia and Turkey became technically operational, with the first
exports recorded in July 2014. However, these stopped the following month due
to an increase in domestic demand.

There is still no comprehensive policy
to prevent and mitigate climate change in Georgia. EU expert support in
this area is provided through the regional Clima East project, in particular to
strengthen the capacity of policy makers and develops mitigation policies.

There was only limited progress on environment policy. The draft
Law on Biodiversity was finalised and the framework Law on Waste Management was
adopted in parliament in January 2015. An EU twinning project to strengthen the
capacities of the Ministry of Environment Protection and Natural Resources
(MENRP) in waste management, which ended in June 2014 helped to prepare the new
waste management code. The modernisation of water sector infrastructure is
supported through the EU Neighbourhood Investment Facility.

Regarding information society and
audiovisual policies, the Georgian National Communications Commission
(GNCC) was authorised to give away licences for free to regional and local
analogue broadcasters. The digital switchover was scheduled for June 2015. In
July 2014, the GNCC issued licences to build three multiplexes for terrestrial
digital TV broadcasting. The GNCC planned to reform the use of licences in
accordance with EU regulations and use the EU’s recommended approach of
spectrum valuation to calculate the reserve price of spectrum and the licence
fees. As part of its work on a comprehensive e-government strategy, the Data
Exchange Agency published the consultation paper ‘A Digital Georgia’ on its
website for public comments.

A ‘science screening’ to identify the
most promising ‘research clusters’ was launched. In February 2014 an Innovation
and Technology Agency was established by the Ministry of Economy and
Sustainable Development to coordinate efforts to encourage innovation and
technology development. In October Georgia formally requested association
to the EU Horizon 2020 programme and negotiations are due to begin during 2015.

7.
        PEOPLE-TO-PEOPLE CONTACTS, EDUCATION AND HEALTH

The Ministry of Education and Science
started an overall assessment of the education sector with a view to
elaborating a new, holistic strategy to improve the quality of education. The
implementation of the action plan for the 2014-20 national vocational
education and training (VET) strategy continued. The development of new VET
programmes using a modular approach and the evaluation of the National
Qualification Framework continued. The National VET Council was not approved
yet. The Ministry of Sports and Youth elaborated a youth strategy and
action plan.

Georgia
participated in the Tempus programme with 35 ongoing projects out of
which 5 are coordinated by a Georgian higher education institution. 491
students and staff were selected in 2014 for mobility within partnerships
supported by Erasmus Mundus and two students were selected for joint master's
degree. 19 researchers and 132 staff members
benefited from Marie Curie actions and
two applications were selected for funding under the Marie
Skłodowska-Curie actions (MSCA) under 'Horizon 2020'. Georgia
also participated in the eTwinning plus action with 68 schools. Young
people and
youth organisations benefited from Erasmus+, with 2 111
participants in mobility projects and 145 taking part in the action for young
people and decision-makers in the field of youth.

Georgia was
involved in 12 regional projects within the Eastern Partnership Culture programme
as leader or partner. The Programme also supported the Ministry's
efforts to
elaborate an inclusive cultural policy. The
Ministry of Culture and Heritage Protection expressed interest in Georgia
participating in the Creative Europe Programme.

Over 250
participants from the Eastern Partnership countries and the EU took part in the
6th Annual Assembly of the Eastern Partnership Civil Society Forum in
Batumi in November. Civil society representatives, officials and experts
discussed ‘EU Integration and Common Security: Making it Happen’.

The work concept
for the new health strategy for 2014-20 was completed and submitted to
the government, but not adopted in 2014. Primary healthcare infrastructure in
the regions was strengthened, with 82 new clinics established. Almost all of
the country’s rural population has free access to primary healthcare, including
visits to village doctors and free provision of some basic medicines. The
monthly salaries of village medics were increased, to GEL 600 for doctors and
GEL 455 for nurses (some EUR 270 and EUR 210 respectively). Amendments to
Georgia’s legislation on tobacco control, on advertising and broadcasting, and
on the tax and administrative codes were submitted to parliament but not yet
adopted. The main national coordination body for HIV, AIDS and tuberculosis was
restructured and its action plan adopted.

Georgia
continued its technical cooperation with the European Centre for Disease
Prevention and Control (ECDC) in the framework of an EU-funded regional project
on preparatory measures to support the participation of ENP countries in ECDC
activities. Georgia nominated a national correspondent for relations with the
ECDC and participated in the first national ECDC correspondent meeting
organised by the ECDC in May 2014. It also attended technical workshops on
food- and water-borne diseases and vaccine-preventable diseases as well as the
annual European Scientific Conference on Applied Intervention Epidemiology.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[1]
For sources and detailed figures, see Statistical Annex accompanying the
reports; figures without sources are forecasts by Commission services.

[2] European
Agency for the Management of Operational Cooperation at the External Borders of
the Member States of the European Union (Frontex)

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