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Association Agreement with the European Union could Increase Product Prices

Georgian Companies not Rushing to Enter European Market

Georgian companies are preparing to enter the European market. After the enactment of the Deep and Comprehensive Free Trade Agreement with the EU, the Georgian business plans to enjoy benefits envisaged in the agreement. However, local companies need time, additional financial resources and investment to  prepare for the entry into the market,  .

Director of Marneuli food factory Irina Gaprindashvili explains  to “Commersant”  that the company plans  to export its products  to the EU countries, however, active talks are not held with partners yet. At this stage, the company is studying the EU market. The factory’s  products are likely to be sold on  a 500- million market next  September.

Until the end of the year, a green producing company “Herbia” also plans to increase the export.

The company’s Director Zurab Janelidze states  that  “Herbia” management plans to expand exports to Europe  at the end of 2014.

“To export to Europe, the product must conform to the international standard” Global Gap “, which includes a number of factors,such as food safety, environmental condition, etc. We will try to fulfill all the necessary conditions until the end of the year. We exported greens to the European Union before, but now we have the opportunity to expand exports, “- the businessman notes.

Georgian business does not enjoy the benefits provided by the Association Agreement with the European Union. The enactment of the Deep and Comprehensive Free Trade Area Agreement has not affected export figures to the countries of the EU. Despite the fact that from September 1 Georgia can export its products to the European Union’s market of 500 million consumers without additional charges, an increase has not been observed compared with the same period of the previous year.

According to the Customs Department  of  the Revenue Service, from  the beginning of September  till September 24, the value of goods exported from Georgia to EU countries amounted to  GEL  66 816 241. Last September a total value of the goods exported to EU countries made GEL 75 495 895.

Note: All essential elements of the Association Agreement temporarily came into effect from September 1. To define this more accurately, before the deal is completely implemented in Georgia, its 80 percent including a part on the Deep and Comprehensive Free Trade Area (DCFTA) will come into force. Within the agreement, almost all Georgian products will be exempted from taxes; however some previous regulations on them will still remain in force.

The negotiations on completing the Association Agreement between Georgia and the EU were launched in July, 2010, while the negotiations on the Deep and Comprehensive Free Trade Area – in December, 2011.

In the process of negotiations, between the two parties as many as 14 plenary sessions were held on the political section of the agreement, 6 rounds of talks — regarding the DCFTA and around 100 video conferences.

The negotiations were wrapped up in July, 2013; the deal was initialed in November, 2013 at the Vilnius Summit and was signed on 27 June, 2014. Before the document is completely implemented, the national parliaments of all EU member countries must ratify it.