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Georgian Products to Offer Competitive Prices and Quality on Turkish Market

Georgia-Turkish free trade agreement will be revised and specified by the end of 2017, Turkish ambassador in Georgia noted. We remind you that the question is of exports of Georgian products to Turkey without tariffs and reduction of trade quotas.

In 2007 we signed a free trade agreement with Georgia. I believe this agreement works very well. That’s why Turkey is Georgia’s number one trade partner. Currently, Ministers of Economy negotiate the agreement revision details. By the end of this year we will have agreement on how to correct the free trade agreement. These decision will increase Georgian products exports to Turkey and Turkish products exports to Georgia», Turkish Ambassador in Georgia Zeqi Levent noted.

As reported, Turkey is Georgia’s major trade partner. According to the 2016 indicators, trade turnover with this country in total exports marked 8%.

International Investors Association of Georgia

Osman Chalikshan-Mzhavanadze, head of International Investors Association of Georgia, explains that the agreement revision issue was negotiated  in previous years too. We will only welcome if the agreement is revised. Osman Chalikshan-Mzhavanadze explained that Georgia’s exports ratio in Turkey is very small. Therefore, the mentioned initiative will incentivize Georgian entrepreneurs in their business activities, he said.

 «For example, there is a filbert processing plant in Zugdidi that manufactures oil from lower-quality filbert. The product is exported to Turkey. I believe Georgian wines, mandarins, orange, lemon and many other agriculture products may be exported to Turkey in increased volumes», Chalikshan-Mzhavanadze said.

Georgia has potential to manufacture products and export them to Turkey or to Europe via Turkey, he said.

Georgian products, including Nabeghlavi and Borjomi mineral waters are very popular in Turkey. Georgian wines are also in-demand products, but currently they are exported in limited volumes, Head of International Investors Association of Georgia noted.

In 2015 Turkish imports’ ratio in Georgia marked 1.5 billion USD. The figure made up 1.4 billion USD in 2016.

As to exports, Georgian exports in Turkey made up 186 million USD in 2015 and 174 million USD in 2016.

How Georgia-Turkey free trade agreement is. What problems and challenges the country is facing in this respect. How Georgia has employed its exports potential and what processes we should expect after revision of this bilateral trade agreement.

Under the joint research work conducted by PMC research center and Konrad Adenauer foundation, the agreement enacted in 2007 and 2008 has positively affected trade relations between two countries, however, certain problems were outlined. According to researchers, key challenges are related to tariff barriers, Georgia’s unemployed quotas and taxation mechanisms.

Economic Expert Akaki Chargeishvili:

We knew that negotiations were underway, but I had no information about this statement by the Turkish ambassador, economic expert Akaki Chargeishvili said.

The wider Georgia-Turkey trade agreement is employed, the more Georgian business will realize that Georgian party has unequal positions in the Agreement. Namely, under the agreement, Georgian party had more limits than Turkish party. That’s why Georgia was expressing complaints regarding this factor for a long period, Chargeishvili said.

‘For example, we have limited quotas on wines. We are authorized to export only 1 million bottles to Turkey and even this quota is regulated by Ministry of Agriculture. Naturally, similar barriers restrict Georgia’s potential to grow exports in Turkey and placing Georgian products on Turkish market. Moreover, after Georgia enacted DCFTA agreement with EU, based on its conditions, the issue of Georgia-Turkey trade agreement revision was actualized. It is necessary to reshape certain issues in a new manner, especially  the processing of imported products in Georgia and then exports to Europe. Raw materials of Georgian production should dominate here. Otherwise, Georgian product will not be admitted to European market», Chargeishvili said.

As to the demand and Georgia’s potential to manufacture international standard products, which would be competitive on Turkish market, and to fully employ the existing quotas, Chargeishvili explained that Georgian entrepreneurs aspire to export products to Turkey, including meat, honey, wines and so on, however, Georgian businessmen face problems with penetrating Turkish market because of the mentioned barriers.

Turkish products have been represented on Georgian market for many years. Georgia is able to make products with competitive prices and quality for Turkish market, including Georgian tomato, honey and so on. They are natural products with high prices, but Turkish citizens give preference to Georgian products anyway in this segment thanks to qualitative advantage”, Chargeishvili said.

Economic Expert Paata Sheshelidze:

Economic expert positively appraises  Georgia-Turkey free trade agreement revision perspectives. All barriers should be removed so as Georgia export products  without obstacles, he said.

Compliance of Georgian products with international standards should become questionable. Everything depends on individual cases, Paata Sheshelidze noted.

“Some products may satisfy these standards, others not. We should not say –  Georgian products do not fit. Windows should be open. People should be allowed to export their products to foreign markets. Economy needs freedom”, Sheshelidze pointed out.

Further liberalization of the agreement will bring only positive effects. Some products will be exported, some products will be imported and this is a good process. These decisions will boost market competition in the country and incentivize domestic entrepreneurs to offer lower prices and higher quality and make their products competitive on both domestic and global markets, Paata Sheshelidze said.

We remind you that Georgia and Turkey signed a free trade agreement on November 21, 2007. The agreement came into force on November 1, 2008. After the agreement enforcement, customs taxes on imports were abolished, as well as their equivalent duties. The Parties agreed to introduce neither new customs taxes in the mutual trading regime, nor their equivalent duties.

The agreement was enacted on November 1, 2008. The agreement annulled all customs taxes between two countries, excluding several ones. The agreement also calls for full liberalization of industrial goods and offers serous preferences to the agriculture field, namely, at this stage, it is possible to export more than 1 million bottles without customs taxes to Turkey.

Moreover,  4 000 tons of mandarins and oranges are not taxed by customs tax of more than 50%, zeroed customs taxes refer to 2 000 tons of apple and other agriculture products.

At the same time, Georgia has used the free trade agreement and imports of dairy products, tomato, citrus, natural honey, filbert, grapes, apple, tinned vegetables and other agriculture products are taxed by customs tax, because production of the mentioned products have been developed in Georgia.