On October 22nd, 2021, Zura Makharadze, one of the hosts at “Alt-Info,”discussed the trade agreement signed between Georgia and the European Union. Makharadze noted that the agreement only allows Georgia to export only specific products in the EU, namely honey, nuts and wine, in limited quantities. He further claimed the terms of the agreement do not allow the Georgian entrepreneurs to export and sell other goods, such as cars.
Zura Makharadze, Host at Alt-Info: “It [DCFTA] specifies what kind and in what quantity Georgia can sell in the EU. We can only export honey, nuts and wine. If Georgia launches, let’s imagine, let’s fantasize, a factory to assemble normal middle-class cars. If a Georgian manufacturer asks, “How to end up on the German car market”, everyone will laugh. No one will ever let us do that.”
The claim that Georgian producers can export only certain types of products to the EU market is disinformation. The Deep and Comprehensive Free Trade Agreement between Georgia and the EU abolishes the customs duty on any goods produced in Georgia upon entry into the European market, with the sole exception of garlic.
The EU and Georgia signed the Association Agreement in June 2014. The agreement came into force two years later, in July 2016. The Deep and Comprehensive Free Trade Agreement (DCFTA) is one of the most essential parts of the Association Agreement, as it aims to integrate Georgia into the EU common market and bring the country’s existing regulations closer to European standards. The agreement facilitates trade between Georgia and the EU by abolishing the vast majority of tariffs and simplifying customs procedures.
In order to receive benefits on the exported products, it is necessary to prove theirGeorgian origin. The product must be manufactured either entirely on the territory of Georgia or must be made of material imported from abroad that has undergone the proper processing specified in the contract in Georgia.
The agreement prohibits the imposition of tariffs and quotas on all other agricultural products except garlic. The DCFTAobliges Georgian producers to import only up to 220 tons of garlic a year to the EU without tariff duties.
Some agriculturalproducts, such as tomatoes, cucumbers and tangerines, are also subject to the “entry price” system. If the invoice price of Georgian importer products is lower than the fixed price set by the European Union, then the Georgian importer will have to pay the difference. Noteworthy, the “entry price”applies to only 0.3% of the products in the complete tariff list.
In addition, to prevent other countries from benefiting from the agreement between Georgia and the European Union, some agricultural productshave an anti-counterfeiting mechanism. If the quantity of any product imported from Georgia to the EU exceeds a predetermined norm, Brussels can impose low tariffs on these goods. However, it should be noted that when the quantity of imported goods reaches 70% of the specified figure, the EUnotifies the Georgian government. The Georgian side can prove that these products were produced on the territory of Georgia, and its excess import to the EU is due to some specific reason, such as low productivity or increased production. In this case, Georgian importers will import more than a certain number of products without customs tariffs. The anti-counterfeiting mechanismapplies to 3% of products on the complete tariff list, for example, meat, eggs and dairy products.
DCFTA completelyabolishes trade tariffs on industrial goods. Industrial goods are all products that are not used for food. For example, electrical goods, building materials and so on. However, these types of products need to meet the relevant standards to enter the EU market.
The EU is Georgia’s leading trading partner. In 2020, 23% of goods exported from the country came from the 27 EU member states. Goods exported from Georgia to the EU in 2020amounted to 763 million euros. The vast majority of it, about 82%, were industrial goods. Georgia’smain exports to the EU are fuel and mining products, agricultural products, clothing and chemicals.
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