European Commission - Press release
EU launches trade negotiations with Georgia and Moldova
Brussels, 05 December 2011 - The EU decided to launch negotiations on a deep and comprehensive free trade area with Georgia and Moldova in order to boost economic growth and investment with the Eastern European partners. The negotiations will tackle a broad range of trade and economic issues so as to achieve a closer economic integration with the EU.
"We want to establish a stable and solid framework for closer economic ties with Georgia and Moldova" said EU Trade Commissioner Karel De Gucht. "A deep and comprehensive free trade area will help Georgia and Moldova to become more competitive and enjoy the benefits of the EU Single Market."
"This kind of economic integration is one of the cornerstones of our relations with countries of Eastern Partnership," Commissioner for Enlargement and European Neighbourhood Policy Štefan Füle said. "Moldova and Georgia have achieved sufficient progress with the necessary reforms and have fulfilled a set of conditions to be able to proceed further in the gradual economic integration with the EU internal market."
These free trade areas will be part of the Association Agreement, under negotiation with Georgia and Moldova since July 2010 and January 2010, respectively, in the framework of the Eastern Partnership and the European Neighbourhood Policy.
The EU aims to enhance political stability and security in these two countries by means of closer economic integration with the EU. The free trade areas are expected to diversify and strengthen Georgia and Moldova's export capacity and effectively open the EU market of 500 million consumers.
Both countries need to continue their work toward stability, transparency and predictability of the legislative regimes. These are essential to improve foreign direct investment inflows, bring jobs and long-term growth. Projected gains for Georgia and Moldova lie therefore behind the border and as such will impact their long-term development perspective. At the end of this process the two countries could see their GDPs significantly enhanced.
Both countries currently enjoy preferential access to the EU market through autonomous lower import duties through the Generalised System of Preferences with further incentives for good governance ("GSP+") (Georgia) and Autonomous Trade Preferences (Moldova).
In the framework of the Eastern Partnership and the European Neighbourhood Policy, the EU has been negotiating Association Agreements with Georgia and Moldova since 2010. The future Deep and Comprehensive Free Trade Areas will be part of these Agreements, which aim to closely associate both countries to the EU both in economic and political terms, in line with the Eastern Partnership objectives. The future trade relations will therefore expand significantly beyond the scope of current cooperation, set out in the Partnership and Cooperation Agreements, in force since July 1998 (Moldova) and July 1999 (Georgia).
Although the Council authorised the Commission to start the Association Agreement negotiations in 2010 with both countries, the launch of the trade negotiations was conditioned upon Georgia and Moldova fulfilling a set of "key recommendations". These were issued in March 2009 and December 2010, respectively, and covered necessary reforms in key regulatory areas related to trade and investment, in order to prepare Georgia and Moldova for further negotiations.
Substantial reforms were required notably in the fields of technical regulations, sanitary and phytosanitary measures, intellectual property rights protection and competition rules. The EU assisted both countries in this process, including by means of technical assistance in the framework of the European Neighbourhood Partnership Instrument and the Comprehensive Institution Building programme, since 2009, as well as with the EU Member States' support.
The Commission has now assessed that sufficient progress has been achieved in these preparations and reported to the Council's Trade Policy Committee, recommending the launch of negotiations. The Committee gave the Commission the green light in this regard on 2 December.
The parties will now engage in preparations for the first negotiating round to take place in early 2012.
Current trade relations
The EU is Georgia's and Moldova's first trading partner. Bilateral trade in goods amounted to €1.7 billion with Georgia and €2.1 billion with Moldova in 2010.
The fact that both countries already benefit from preferential access to the EU market (Georgia through the Generalized System of Preferences Plus and Moldova through the Autonomous Trade Preference (ATP) mechanism) means that existing import duties are already very low, so the benefits of the future deep and comprehensive free trade area lie predominantly behind the border, in the regulatory area.
For further information:
On EU trade relations with the South Caucasus countries including Georgia:
On EU trade relations with Moldova:
John Clancy (+32 2 295 37 73)
Helene Banner (+32 2 295 24 07)