Georgia Needs Commitment on its Long Journey to the EU

On Monday, March 21st, European Commissioner for Trade, Cecilia Malmström visited ISET for a discussion of EU-Georgian economic relations, with an emphasis on DCFTA (Deep and Comprehensive Free Trade Area). She was accompanied by Janos Herman, Ambassador of the European Union to Georgia, and Natalie Sabanadze, Georgia’s Ambassador to the EU.

In her address, Ms. Malmström explained the benefits of open markets and improved regulations for Georgian consumers. According to her, economic openness brings two types of benefits. On the one hand, it implies greater competition and a broader variety of products available in the domestic market; on the other, it also brings opportunities to increase exports. For these opportunities to materialize, Georgia would have to create a stable and business-friendly environment that would attract potential investors, foreign and domestic.

Ms. Malmström went on to emphasize Georgia’s exceptional potential in the field of agriculture, specifically nuts, fruit and vegetables. In the medium term, after investing in food safety and environmental regulations, the country will also be able to export animal products, such as honey and fish. Importantly, the EU has committed 410 million EUR to partially offset the cost of regulatory approximation in the coming years.

During the Q&A session, moderated by ISET’s President Eric Livny, Ms. Malmström dealt with questions concerning the cost of EU-style regulations and their relevance for small developing countries like Georgia. Lasha Labadze, an ISET graduate and Executive Director with ISET Policy Institute, suggested that food safety requirements may cause a hike in consumer prices. Ms. Malmström explained that it will be impossible for Georgia to isolate itself. According to her, the country has a fantastic potential of balancing out whatever negative consequences of integrating with the EU by attracting investment, increasing its exports, and adding to its income and budget revenues. EU is willing to assist Georgia in minimizing the risks associated with the DCFTA and speeding up the arrival of tangible benefits.

Florian Bierman, a professor at ISET, noted that some EU regulations appear to shield European producers from international competition. Ms. Malmström agreed that food safety or environmental protection could be used as camouflage for measures serving industrial or agricultural lobbies. It may be tricky to identify such regulations, but the EU is working hard to address this issue.

Eric Livny noted excessive eagerness of Georgian policymakers to quickly adapt new regulations, which often results in costly mistakes and policy reversals that are blamed on the EU. In response, Ms. Malmström emphasized the need for civil society to play a more active role in scrutinizing proposed policy measures.

As a former EU Commissioner for Migration and Home Affairs, Ms. Malmström expressed her hope that Georgia’s resolve to continue on the path of European integration will be further strengthened by more intensive people-to-people contacts helped by the EU Commission’s recent decision to allow visa-free travel for Georgian citizens.

In closing, Ms. Malmström alluded to the earliest mentioning of Georgia in Western sources, namely the epic of Jason and the Argonauts. In her words, “the path of economic and political reform is a little less exciting than this quest, and hopefully, less violent, but it is a long road”. The same kind of commitment and discipline is required of Georgia in order to achieve its long-term goals with the EU.