Trade Policy Review: Georgia
The second Trade Policy Review of Georgia has allowed us to have a better understanding of Georgia's trade and investment policies since the previous review in 2009, as well as the challenges that it faces. Our discussion was greatly facilitated by the constructive participation of the Georgian delegation, headed by Mr Genadi Arveladze, Deputy Minister of Economy and Sustainable Development, by the valuable comments made on behalf of the discussant, the Permanent Representative of Poland to the WTO, Mr Michal Chyczewski and from the interventions by Members. Georgia's timely response to written questions was greatly appreciated by Members and we look forward to answers to any outstanding questions no later than one month after this meeting.
As in the previous Trade Policy Review of Georgia, in this review Members commended Georgia for its broadly open, transparent and predictable trade and investment regimes. Members highlighted that Georgia's customs procedures had been further simplified and that the MFN tariff rate of 2% was one of the lowest in the world, while almost 80% of Georgia's imports were duty free.
During the review period, Members noted that Georgia had undertaken an impressive range of reform initiatives aimed at streamlining, liberalizing and simplifying trade regulations and their implementation. Members also noted that Georgia's economy had performed well in recent years, as it continued to meet the challenges posed by the slowing economies of its main trading partners and the depreciation of their currencies. Georgia's resilience in this regard was demonstrated by a relatively healthy GDP growth rate, a good and improving international ranking in terms of ease of doing business, and prudent macroeconomic policies.
Some Members, however, recognized that reduced exports and remittances have led to increasing external vulnerability during the review period, and that further structural reforms are required in order to: strengthen Georgia's resilience to shocks, attract additional foreign direct investment, diversify its industrial production, improve productivity, increase exports and thereby sustain growth. In this regard, Members noted the exceptional performance of the tourism sector for which there remained considerable growth potential for attracting tourists beyond those coming from neighbouring countries.
Georgia's trade openness and its commitment to the multilateral system through its responsible contribution to the work of the WTO were highlighted during the review. Members commended Georgia for the ratification of the Trade Facilitation Agreement, which would benefit Georgia's role as a trade transit corridor in the region, and the related notification to the WTO of Category A, B and C commitments. Members also noted that Georgia was an observer to the Government Procurement Agreement and was currently assessing the prospects for joining the Agreement. Members welcomed the announcement that Georgia was considering joining the expanded Information Technology Agreement, which would constitute a significant step forward for attracting further investment.
Members commended Georgia's efforts to integrate into the world economy as evidenced by the progressive liberalization of its trade regime and its active participation in numerous multilateral, regional and bilateral trade agreements. It was noted in this regard that reforms to Georgia's trade and investment regime have been largely driven by the commitment of the Georgian government to align its legislative and regulatory framework to that of the European Union. Some Members expressed the view that WTO-consistent implementation of the commitments in the Association Agreement with the EU, including provisions of the Deep and Comprehensive Free Trade Agreement, would improve Georgia's trade and investment environment.
While there were many positive trade and economic developments during the review period, it was important to note a number of areas where Members, in their statements and written questions, had concerns and thought improvement was possible. Notably, in the area of food safety, Members were interested in further discussing how Georgia would ensure that its regulatory system would be implemented according to WTO obligations in the SPS Agreement, which calls on WTO Members to base their regulations on international standards and science. Also in the SPS area, Georgia was encouraged to further advance the regulatory framework and infrastructure for animal health control as well as to improve efficiency and hygiene and quality standards in agro-processing. Other areas where Members required further information and discussion included the issue of auctions for spectrum allocation in telecommunications, aspects of the new Tax Code affecting investors in Georgia, and technical issues regarding the launch of an e-visa portal for tourists wishing to visit Georgia.