Why Does Georgia Fail to Make Use of Valuable DCFTA Opportunities?
Georgia fails to take advantage of valuable DCFTA opportunities, the German Ambassador to Georgia, Hubert Knirsch, noted.
To boost the potential of production and exports, first of all, businesses should determine a targeted direction for production, make an appraisal of the relevant segments, and appraise the results.
‘At the same time, the Government should determine priority sectors, and take efforts to develop these sectors and eradicate the current obstacles. This refers to the transportation and logistics sectors in general, seaports and sea freights with the EU, as well as the infrastructure for laboratory examination of products and exports”, the German Ambassador noted.
As reported, the DCFTA provides multilateral commercial opportunities with the agreement’s member countries and exempts companies from customs tax, and offers the same conditions for domestic commercial organizations. Despite this, Georgian businesses fails to make progress.
This may be the result of a lack of information about DCFTA opportunities, and on the other hand, complicated regulations. These complications should be overcome to actively penetrate the EU market.
The Caucasus Business Week has inquired whether Georgian entrepreneurs agree with the German ambassador, and how simple it is to manufacture exports products and sell them.
The Glebner company, which runs a refrigerator complex in Kareli, faces problems with the export of frozen fruits. The company owner, Rafael Maghalashvili, says that it is impossible to carry out valuable laboratory analysis of fruits and therefore, laboratory tests are made in Israel, and then further exported products to the USA. Therefore, the company has to take huge expenses, Maghalashvili said.
Glebner receives orders from Switzerland, Romania, Israel and the USA for frozen strawberries, raspberries and blackberries, but the company cannot launch exports without food safety documents. The company also faces problems with buying natural and high-quality products in Georgia, and the company has to import the required products from neighboring countries, he said.
“In 2018, I prepared products worth 600,000 EUR, but failed to export them. At this stage, I am importing 30 shipments of strawberries from Turkey, because it is impossible to buy high-quality products in Georgia. Domestic strawberry production does not fit in either Kakehti or Marneui, nowhere. The tests shows that a human should not eat Georgian strawberries. I bought 18 tons of domestic strawberries earlier, and I had to throw away 5 tons. We have problems with tests, too. They issue certificates, but these documents are not to international standards. Each test takes 2-3 weeks, and eventually, even these tests are carried out erroneously. I have to spend money and send plans to Israel. It is impossible to start exports without tests.
Products are examined by the Health Ministry in all normal countries. There are serious problems with product quality control. Therefore, the due certificates are strictly required”, Maghalashvili said.
Giorgi Kepashvili, Head of the Board of the Beekeepers’ Guild, noted Georgia really does fails to make use of valuable DCFTA opportunities. The country assumed obligations as part of the association agreement to cope with problems related to food products examination.
Kepashvili explains that, to promote exports, accredited international laboratories are required that would examine honey exports with professionalism and relevant qualifications.
Georgian honey meets all exports standards in terms of quality. However, Georgian honey is still sent to Riga to check for pesticide waste and antibiotic waste. And we have to pay extra expenses. This problem has been around for many years, and the Breti honey production company had to suspend operation, he said.
“I have no idea why this problem is not resolved, but the authorities have all the necessary mechanisms to tackle this issue. They may allocate a grant and attract additional funds. The private sector cannot do this, because expensive equipment is required”, Kepashvili said.