Free trade agreements between Georgia and other countries

There are a number of factors that make Georgia attractive for foreign investors. These include simple and transparent tax laws, a stable banking system, and a high level of financial information confidentiality. But manufacturers planning to start production on the Georgian territory will be interested to learn which countries of the world have made free trade agreements with Georgia. Such agreements allow exporting Georgia made products without paying export duties. This fact will let foreign business people enter the markets of the countries that have not made such agreements with their home countries yet.

Free trade agreements facilitate access of goods to the markets of the agreement parties. They usually serve to abolish customs fees and duties as well as do away with other obstacles in the traders’ way. At the current moment, Georgia has free trade agreements with the EU countries, the UIS countries (including Ukraine), Turkey, China, Hong-Kong, and the EFTA countries (Lichtenstein, Switzerland, Norway, and Iceland). 

Export of Georgian goods to the EU countries has been on the rise for the last two years. Thus, in 2018 the proceeds from sales to the European Union reached US$ 730 million, which is 11.5% more than in 2017. The best trade partner for Georgia in the EU is Bulgaria (35.4% of total sales to Europe).

Trade with the UIS countries brought Georgia US$ 1.67 billion in 2018. The dynamics is also positive here: a 40.9% increase in sales in comparison to the previous year. Among the UIS countries, the following three were Georgia’s leading trade partners in 2018: Azerbaijan (US$ 502.7 million, +84.7% to 2017), Russia (US$ 437.3 million, +10.2%), and Armenia (US$ 277.8 million, +32.1%).

Proceeds from sale deals with other countries amounted to US$ 954.7 million in that year. Export of goods to the USA brought US$ 159.6 million (+31.3% to 2017), to China US$ 198 million (-1.8%, a slight decrease), and to Turkey US$ 232.7 million (+7.4%).

In 2019, the Georgian government plans to extend the list of countries it has free trade agreements with. Negotiations on introducing Georgian products to the markets of Israel, Great Britain, Japan, India, and Persian Gulf countries are in progress.

In addition to that, the Georgian government hopes to make the conditions of the existing free trade agreement with Turkey even more liberal.

 Opening a corporate bank account on a personal visit to the Bank of Georgia

Trade with Israel generated US$ 9.3 million in income for Georgia in 2018. This sum is comparatively small but over the nearest five years, the Government is planning to substantially increase the volume of trade with this country. The authorities of the two countries are currently conducting costs and benefits examinations for drafting a free trade agreement between them. At the moment the major commodity exported from Georgia to Israel is oil and oil products, and Israeli companies supply agricultural chemicals in return.

Export of goods and services to Great Britain brought Georgia US$ 17.2 million in 2018, which is 30.5% more than in the previous year. However, the British government is currently busy with the Brexit procedure, so trade negotiations with the UK have had to be postponed until later time.  

The Indian market looks very promising for Georgian products but as it stands now, exports to this country generated only a modest sum of US$ 5.67 million in 2018. At the same time, Indian imports came up to US$ 42.5 million. The free trade agreement between these countries should improve the situation. Early in 2019, the parties completed the agreement viability evaluation procedure that started in April 2017. Their examinations confirmed that deepening cooperation between Georgia and India would be beneficial for both countries. When the agreement is signed, the following commodities will flow from Georgia to India: ores, coal, metal products, medicines, wines, and processed agricultural products. In its turn, India intends to export concrete (cement), electric appliances, and plastic products to Georgia.  

The bilateral trade between Georgia and Japan reached almost US$ 91 million in 2018 with the export-import balance heavily biased towards the Country of the Rising Sun: last year Japan exported US$ 79.59 million worth of goods to Georgia. In March 2019, the Georgian government expressed a desire to start free trade negotiations with Japanese authorities. On March 15, Georgia and Japan signed an agreement with NEXI insurance company that is expected to make investments into Georgian economy more attractive for Japanese companies. This agreement insures business agents from possible risks that export operations and investments may entail. Japan is interested in receiving larger quantities of Georgian wines, and Georgia, in its turn, is interested in Japanese technologies.

The markets of Persian Gulf countries (Oman, the UAE, Saudi Arabia, Qatar, Bahrein, Iran, Iraq, and Kuwait) are attractive and promising for Georgian manufacturers too. During 2018, Georgia exported US$ 147.6 million worth of goods to these countries. The highest revenues were gained from trade with Iran (US$ 74.16 million), the UAE (US$ 45.5 million), and Iraq (US$ 21.5 million). Free trade agreements between Georgia and these countries would allow developing the Persian Gulf – Black Sea trade route.

Georgia is certainly interested in enlarging the number of countries it can export its goods to duty free, as this will contribute to the growth of the economy. Georgian manufacturers will be able to boost their sales because with free trade agreements they can put more competitive price tags on their products. But the large number of such agreements that Georgia already has should make foreign investors interested too. They can register their companies in Georgian Free Industrial Zones where there is virtually no taxation and sell their products abroad as products made in Georgia, that is, without paying any export duties.

Should you have any further questions about Georgian free trade agreements, please do not hesitate to contact us via e-mail: info@offshore-pro.info. We will also gladly provide consultations and other services related to establishing a business company in a Georgian Free Industrial Zone. With our assistance, doing business in this country is very easy!