EU’s Trade Policy Developments and Economic Dimension of EU-Georgia Association Agreement

Abstract

EU-Georgia Association Agreement (AA), with its integral part on Deep and Comprehensive Free Trade Area (DCFTA), has been regarded as the best opportunity for Georgia to promote exports to the EU and increase investment attractiveness of the country. Georgia’s benefits from AA/DCFTA directly depend on consistency of reforms as well as on the speed and degree of legal approximation and regulatory convergence with the EU, which would support growth of Georgia’s exports to the EU as well as attractiveness of Georgia for investments from the EU member states. However, after 5 years since the provisional application positive effects of the Association Agreement on trade and investment performance are not significant. As conducted study demonstrates, despite some encouraging developments in the EU-Georgia trade relations after enactment of the Association Agreement, in 2015-2018 (post-AA/DCFTA period) annual average growth rates of Georgia’s exports to the EU and investments from the EU countries to Georgia compared to 2011-2014 (pre-AA/DCFTA period) decreased. It is clear, that already achieved progress in implementation of the Association Agreement is not sufficient for export and investment promotion and Georgia should continue reforms in all areas, envisaged by the Association Agreement. Moreover, it is high time to grant Georgia the EU membership perspective and/or advance Georgia towards membership of the European Economic Area (EEA), which will be additional incentive for the effective implementation of the European Integration related reforms.