Doing Business in Georgia

The EU first introduced the Generalized System of Preferences (GSP) in 1971 and after that implants it in different forms. The EU’s Generalized System of Preferences is the system of preferential trading arrangements through which the European Union extends preferential access to its markets to developing countries and economies in transition. The EU’s GSP is the most generous of all developed country GSP systems. The volume of imports to the EU from developing countries under the GSP is greater than the volume of imports under the US, Canadian and Japanese GSP systems combined.

With the Council Regulation No 980/2005 of 27 June 2005 (see attached) the EU introduced a new GSP+ scheme (the special incentive arrangement for sustainable development and good governance) that envisages additional tariff privileges. GSP+ scheme includes about 7.200 descriptions of goods that are admitted to the EU market without customs taxes and is valid as from 1 January 2006 until 31 December 2008

The new GSP+ scheme envisages granting of trade preferences to the vulnerable countries:

·        those are satisfying certain requirements for sustainable development and good governance;
·        those have ratified and effectively implemented the 16 basic conventions for protection of core human and labor rights out of the necessary 27 international conventions, as well as at least 7 conventions out the remaining 11 conventions related to the environment and governance principles and commits itself to ratify and effectively implement all the 27 conventions by expiration of the validity period of GSP+ scheme, that is until December 31, 2008;
·        those are not classified by the World Bank as a high income country during three consecutive years, and whose five largest sections of its GSP-covered imports to the EU represent more than 75 % in value of its total GSP-covered imports, and
·        whose GSP-covered imports to the EU represent less than 1 % in value of total GSP-covered imports to the EU.

In case of violation of the given conditions (including violation of the convention’s principles), a beneficiary country will be removed from the GSP+ scheme.

A beneficiary country shall be also removed from the GSP+ scheme when it has been classified by the World Bank as a high-income country, and when the value of imports for the five largest sections of its GSP-covered imports to the EU represent less than 75 % of the total GSP covered imports of the beneficiary country to the EU.

According to the Commission Decision No 2005/924/EC of 21 December 2005 (see attached) Georgia is among the 15 beneficiary countries that were given the right of using GSP+ scheme from January 1, 2006. It is noteworthy that besides Georgia only Moldova is on the list of the aforementioned countries from the post soviet space.

To benefit from the GSP+ scheme, following conditions must be fulfilled by importing the goods on the EU market:

·        As provided by the EU’s GSP Rules of Origin (see attached), the goods exported to the EU must originate from beneficiary country that means:

o       it has been wholly obtained in beneficiary country;
o       if it has not been wholly obtained in beneficiary country, the product must have gone sufficient working or processing in beneficiary country;

·        The goods must be directly transported from beneficiary country to the EU;
·        Valid proof of origin must be submitted (e.g. The Certificate of Origin Form A – see attached).