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Trade

Trade: Overview

 

Since 2003, there has been a high growth rate in the foreign commodity turnover of Georgia. For the last few years, there has also been an upward trend in the number of Georgia’s trading partners, now standing at 125 countries.  

In 2006 the foreign trade turnover (excluding non-organized trade) amounted to 4 674.2 ml USD, where the export was 993 ml. USD (7.7% increase) and import – 3 681.2 ml. USD (47.8% increase). In 2006 the negative trade balance of Georgia was equal to 2 688.2 ml. USD. The ratio of import coverage by export was 27 per cent.

Georgia has been a member of the World Trade Organization since 14 June 2000. It has joined major plurilateral agreements within the WTO, like Information Technology Agreement, Agreement on Civil Aircraft, also many sectorial initiatives.

Georgia is pursuing a liberal trade policy marked by:

 

·        Low Import Duties

On September 1, 2006 one additional and significant step was made towards trade liberalisation, when the Law of Georgia on \"Customs Tariff” came into force.

The new law provides for the reduction of tariff rates up to 0%, 5% and 12%, instead of the existing 16 tariff rates (0%, 4%, 5%, 6%, 7%, 8%, 10%, 12%, 14%, 15%, 16%, 17%, 18%, 20%, 25%, 30%) used till 1 September of 2006. The law stipulates a further liberalization of the Georgian customs tax system and envisages transition to the Harmonized Commodity Description and Coding System HS 2002.

The adoption of the new law aims at improvement of investment climate and protection of customer’s rights through trade liberalization.

According to the Law of Georgia on \"Customs Tariff” all existing tariffs were reduced from 12-30% to 12%, from 5-12% - to 5%, and from 0-5% - to 0%.

It should be emphasized that except for construction materials, all kinds of raw materials and equipment delivered to Georgia will be totally exempted from custom fees.

Today Georgia’s tariff rates are the second lowest worldwide. The Government of Georgia plans to achieve phased reduction of all existing tariff rates by 2007 and exemption from customs fees of all imported products to Georgia by 2008.   

 

·        No Quantitative Restrictions 

Georgia has no quantitative restrictions (quotas) on trade.

 

·        Equal Excise Tax and VAT on Imported and Local Goods

Excise tax and VAT apply equally on both import and local products.

 

·        Very Limited Number of Export/Import Licenses

Only medical products, firearms and explosives, radioactive substances and industrial waste, and a few types of agricultural chemical products are subject to import/export licensing. In 2005, the number of permits for import and export was reduced from 14 to 8.

 

Trade Regimes Applicable for Georgia:

 

  • MFN Tariffs with WTO Members

Most of Georgia’s trade partners are the members of the World Trade Organization (WTO). Trade relations with them are based on Most Favored Nation (MFN) trade status, which provides lower tariffs for WTO members.

  • Preferential Tariffs with the USA, Canada, Switzerland and Japan

In addition to enjoying MFN tariffs with other WTO members, Georgia also benefits from a Generalized System of Preferences (GSP) when trading with the USA, Canada, Switzerland and Japan. Accordingly, lower tariffs are applied on goods exported from Georgia to those countries.

  • One of Only Two Countries in the CIS enjoying GSP Plus with the EU and Turkey

In July 2005, Georgia became one of the only two beneficiaries (besides Moldova) of the new EU GSP Plus scheme in the entire CIS and one of the 15 beneficiaries in the world. This is an important factor in terms of facilitating export from Georgia. Under the old scheme Georgia was allowed to import only 3300 products to the EU market without any customs duty and 6900 products under certain preferences. After being granted the GSP Plus beneficiary status, Georgia can import 7200 products to the EU market duty free. From January 1, 2006, Georgia enjoys GSP Plus beneficiary status with Turkey as well.

·        Recognition of OECD Technical Regulation in Trade

Georgia has recognized technical regulations of European Council, Organization for Economic Cooperation and Development (OECD), and its main trading partner countries and permitted their comparable activities, which will consequently promote the development of business environment and the reduction of technical obstacles in trading.

 
 
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