EMERSON & KOVZIRIDZE & EMERSON The signing of the Association Agreement and DCFTA between Georgia and the European Union in 2014 was a strategic political act to deepen the realisation of Georgia’s ‘European choice’. Of all the EU’s eastern neighbours, Georgia has distinguished itself by pushing ahead in the years since the Rose Revolution of 2003 with the most radical economic liberalisation and reform agenda. It has notably DEEPENING succeeded in reducing corruption and establishing a highly favourable business climate. The Association Agreement and DCFTA thus build on a most promising base. The purpose of this Handbook is to make the legal content of the Association EU-GEORGIAN RELATIONS Agreement clearly comprehensible. It covers all the significant political and economic chapters of the Agreement, and in each case explains the meaning of the commitments DEEPENING EU-GEORGIAN RELATIONS RELATIONS EU-GEORGIAN DEEPENING made by Georgia and the challenges posed by their implementation. What, why and how? A unique reference source for this historic act, this Handbook is intended for professional readers, namely officials, parliamentarians, diplomats, business leaders, lawyers, consultants, think tanks, civil society organisations, university teachers, trainers, students and journalists. The work has been carried out by two teams of researchers from leading independent think tanks, CEPS in Brussels and the Reformatics policy consulting firm in Tbilisi, with the support of the Swedish International Development Agency (Sida). It is one of a trilogy of Handbooks, with the other two volumes examining similar Association Agreements made by the EU with Ukraine and Moldova. CEPS EDITED BY MICHAEL EMERSON AND TAMARA KOVZIRIDZE An affiliate of Rowman & Littlefield A Trilogy of Handbooks: Understanding the EU’s Association Agreements and Deep www.rowmaninternational.com www.ceps.eu and Comprehensive Free Trade Areas (DCFTAs) with Georgia, Moldova and Ukraine Deepening EU–Georgian Relations Deepening EU–Georgian Relations What, why and how? Edited by Michael Emerson and Tamara Kovziridze CEPS contributors Reformatics Steven Blockmans contributors Michael Emerson Giorgi Akhalaia Hrant Kostanyan David Bolkvadze Guillaume Van Der Loo Zaza Chelidze Gvantsa Duduchava Lali Gogoberidze Alexandre Kacharava Helen Khoshtaria Tamara Kovziridze Vakhtang (Vato) Lejava Natia Samushia George Zedginidze One of a trilogy of Handbooks explaining the EU’s Association Agreements and DCFTAs with Georgia, Moldova and Ukraine Centre for European Policy Studies, Brussels Reformatics, Tbilisi Rowman & Littlefield International, London Published by Rowman & Littlefield International, Ltd Unit A, Whitacre Mews, 26-34 Stannary Street, London SE11 4AB www.rowmaninternational.com Rowman & Littlefield International Ltd is an affiliate of Rowman & Littlefield 4501 Forbes Boulevard, Suite 200, Lanham, Maryland 20706, USA With additional offices in Boulder, New York, Toronto (Canada), and Plymouth (UK) www.rowman.com Copyright © 2016 CEPS CEPS Place du Congrès 1, B-1000 Brussels Tel: (32.2) 229.39.11 E-mail: [email protected] Website: http://www.ceps.eu Illustrations by Constantin Sunnerberg ([email protected]) The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without written permission from the publisher, except by a reviewer who may quote passages in a review. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-78660-167-4 Paperback 978-1-78660-168-1 Hardback 978-1-78660-169-8 Ebook The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials, ANSI/NISO Z39.48-1992. Printed in the United States of America CONTENTS List of Tables, Figures and Boxes vi Abbreviations vii Preface ix Summary 1 Part I. Political Principles, the Rule of Law and Foreign Policy 8 1. Political principles 9 2. Rule of law and movement of people 19 3. Foreign and security policy 25 Part II. Deep and Comprehensive Free Trade Area 30 4. Market access for goods 31 5. Trade remedies 39 6. Customs and trade facilitation 42 7. Technical standards for industrial goods 49 8. Food safety regulations 59 9. Services 67 10. Public procurement 76 11. Intellectual property rights 88 12. Competition policy 95 13. Statistics 100 Part III. Economic Cooperation 104 14. Macroeconomic context and financial assistance 105 15. Financial services 110 16. Transport 118 17. Energy 127 18. Environment 136 19. Digital sector 145 20. Consumer protection 153 21. Company law 157 22. Agriculture 162 23. Employment and social policy 167 24. Education, training and culture 174 25. Science and technology 178 26. EU agencies and programmes 181 27. Cross-border cooperation 186 28. Civil society 189 Part IV. Legal and Institutional Provisions 193 29. Dispute settlement 194 30. Institutional provisions 199 v List of Tables, Figures and Boxes Table 4.1 Trade turnover between Georgia and EU countries ($ mn), 2008–15 34 Table 4.2 EU–Georgia trade structure by commodity (top ten products by volume), exports, 2015 35 Table 4.3 EU–Georgia trade structure by commodity (top ten products by volume), imports, 2015 35 Table 4.4 Georgia’s trade structure by country or region ($ mn), 2013 and 2015 36 Table 9.1 Reservations with regard to national treatment or MFN for establishment in service sectors 69 Table 9.2 Reservations with regard to market access and national treatment for cross-border supply of services 70 Table 10.1 Thresholds for the application of public procurement rules 77 Table 10.2 Indicative time schedule for approximation of public procurement rules 81 Table 14.1 Georgia’s main economic indicators, 2005–16 106 Table 21.1 EU company law directives applicable to Georgia 159 Table 22.1 Agriculture as a share of GDP, sown area and livestock numbers, 1990–2015 164 Table 22.2 Food imports to Georgia, 2000–15 165 Table 22.3 Food exports from Georgia, 2000–15 166 Table 25.1 Main thematic priorities of Horizon 2020 179 Figure 22.1 Real growth rate of agriculture in Georgia 164 Box 9.1 Summary of commitments and reservations of the EU and Georgia for service sectors 73 Box 17.1 European-funded investment in the Georgian energy sector 132 Box 23.1 Relationship between EU employment and social directives and ILO conventions 170 Box 26.1 EU agencies open to Ukraine, Moldova and Georgia 181 Box 26.2 EU programmes open to Ukraine, Moldova and Georgia 182 Box 27.1 Selected Georgia–Armenia cross-border projects 187 vi ABBREVIATIONS ACAA Agreement on Conformity Assessment and Acceptance of Industrial Products AEO Authorised economic operator CAA Civil Aviation Agreement CCC Community Customs Code CE Conformité Européene CEN European Committee for Standardisation CENELEC European Committee for Electrotechnical Standardisation CFSP Common Foreign and Security Policy CIS Commonwealth of Independent States CJEU Court of Justice of the European Union CSDP Common Security and Defence Policy DCFTA Deep and Comprehensive Free Trade Area DRB Dispute Resolution Board DSM Dispute settlement mechanism EaP Eastern Partnership EASA European Aviation Safety Agency EaTCP Eastern Partnership Territorial Cooperation Programme EBRD European Bank for Reconstruction and Development EDA European Defence Agency EEA European Environment Agency EFTA European Free Trade Association EIA Environmental impact assessment EIB European Investment Bank EMCDDA European Monitoring Centre for Drugs and Drug Addiction EMSA European Maritime Safety Agency ENP European Neighbourhood Policy vii ETSI European Telecommunications Standards Institute EU European Union FDI Foreign direct investment FSA Financial Supervision Agency FTA Free trade agreement GATS General Agreement on Trade in Services GATT General Agreement on Tariffs and Trade GI Geographical indications GOST Gosudarstvenny Standart (State Standard) GPSD General Product Safety Directive ICT Information and communications technologies IMF International Monetary Fund INTERREG Inter-regional cooperation programmes of the EU IPR Intellectual property rights MFN Most favoured nation MoU Memorandum of Understanding NBG National Bank of Georgia NGO Non-governmental organisation NIF Neighbourhood Investment Facility ODIHR Office for Democratic Institutions and Human Rights OECD Organisation for Economic Cooperation and Development OSCE Organization for Security and Cooperation in Europe PEM Pan Euro-Mediterranean System of Rules of Origin PESI Pan-European infrastructure PLLC Public limited liability companies SMEs Small and medium-sized enterprises SPA State Procurement Agency SPS Sanitary and phytosanitary (food safety) regulations TBT Technical barriers to trade (industrial product standards) TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights VLAP Visa Liberalisation Action Plan WTO World Trade Organisation viii PREFACE his Handbook seeks to explain the contents of a long and complex treaty, the Association Agreement, including the Deep and Comprehensive Free Trade Area (DCFTA), between TGeorgia on the one hand, and the European Union (EU) and its 28 member states, on the other. Like most complex legal texts, it cannot be read like a book. The purpose here is