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RECOMMENDATION     
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29 January 1997
PE 220.628/fin. A4-0026/97
on the proposal for a Council and Commission Decision on the conclusion of the Partnership and Cooperation Agreement between the European Communities and their Member States, of the one part, and Georgia, of the other part (COM(96)0135 - 5872/96 - C4-0320/96 - 96/0092(AVC))
Committee on Foreign Affairs, Security and Defence Policy
Rapporteur: Mrs Magdalene Hoff
By letter of 4 June 1996 the Council requested Parliament's assent pursuant to Article 228(2) and (3), second subparagraph, of the EC Treaty to the proposal for a Council and Commission Decision on the conclusion of the Partnership and Cooperation Agreement between the European Communities and their Member States, of the one part, and Georgia, of the other part.
 A DRAFT DECISION
 B EXPLANATORY STATEMENT
 O P I N I O N
 OPINION

 By letter of 4 June 1996 the Council requested Parliament's assent pursuant to Article 228(2) and (3), second subparagraph, of the EC Treaty to the proposal for a Council and Commission Decision on the conclusion of the Partnership and Cooperation Agreement between the European Communities and their Member States, of the one part, and Georgia, of the other part.

At the sitting of 17 June 1996 the President of Parliament announced that he had referred this proposal to the Committee on Foreign Affairs, Security and Defence Policy as the committee responsible and the Committee on Budgets, the Committee on Research, Technological Development and Energy and the Committee on External Economic Relations for their opinions.

The Committee on Foreign Affairs, Security and Defence Policy had appointed Mrs Hoff rapporteur at its meeting of 22 February 1996.

It considered the draft recommendation at its meetings of 3 December 1996 and 21 January 1997.

At the latter meeting it adopted the draft decision with 42 votes in favour and 1 abstention.

The following were present for the vote: Spencer, chairman; Carrère D'Encausse, second vicechairman; Cushnahan, third vice-chairman; Hoff, rapporteur; Aelvoet, Alavanos, André-Léonard, Balfe, Bertens, Bianco, Burenstam Linder, Carnero González, Castagnetti (for Bernard-Reymond), Daskalaki, De Melo, Dillen, Donner, Dupuis, Fabra Vallés (for Fernández-Albor), Ferrer (for Galeote Quecedo), Gomolka, Graziani, Habsburg, Hänsch, Kittelmann (for Lenz), Lalumière, Lambrias, La Malfa, Lindqvist (for Cars), Linser, McMillan-Scott (for Rinsche), Newens, Oostlander, Piha, Roubatis, Sakellariou, Schroedter (for Gahrton), Stenzel, Striby, Theorin, Tindemans, Titley and Truscott..

The opinions of the Committee on Budgets and the Committee on Research, Technological Development and Energy are attached; the Committee on External Economic Relations decided on 20 July 1995 not to deliver an opinion.

The recommendation was tabled on 29 January 1997.


 A DRAFT DECISION

Decision on the proposal for a Council and Commission Decision on the conclusion of the Partnership and Cooperation Agreement between the European Communities and their Member States, of the one part, and Georgia, of the other part (COM(96)0135 - 5872/96 - C40320/96 - 96/0092(AVC))

(Assent procedure)

The European Parliament,

- having regard to the proposal for a Council and Commission Decision, COM(96)0135 - 96/0092(AVC)(1),

- having regard to the Council's request for Parliament's assent pursuant to Article 228(2) and (3), second subparagraph, of the EC Treaty (5872/96 - C4-0320/96),

- having regard to Rule 90(7) of its Rules of Procedure,

- having regard to the recommendation of the Committee on Foreign Affairs, Security and Defence Policy and the opinions of the Committee on Budgets and the Committee on Research, Technological Development and Energy (A4-0026/96),

1. Gives its assent to the proposal for a Council and Commission Decision;

2. Instructs its President to forward this Decision to the Council and Commission, and the governments and parliaments of the Member States and of Georgia.

(1)OJ


 B EXPLANATORY STATEMENT

I. INTRODUCTION

1. The Partnership and Cooperation Agreement signed on 22 April 1996 in Luxembourg between the European Communities and their Member States, of the one part, and Georgia, of the other part, in the presence of the President of Georgia, Mr Shevardnadze, falls directly within the remit of the Council negotiating directives of 5 October 1992 on signing partnership and cooperation agreements with each of the New Independent States of the former Soviet Union.

These guidelines were confirmed at the Edinburgh European Council (11 and 12 December 1992). Partnership constitutes a long-term commitment to bring together the nations concerned in the course of the generation to come and to integrate them into the world political and economic system.

2. Alongside the Partnership and Cooperation Agreement with Georgia, similar agreements have been signed with the other two Transcaucasian states, Armenia and Azerbaijan. Moreover, provision has been made for Interim Agreements with a view to bringing forward the entry into force of the commercial parts of the partnership agreements. The Interim Agreement with Georgia was thus signed on 5 October 1996.

II. MAJOR PROVISIONS

3. The Partnership and Cooperation Agreement with Georgia comprises both a prominent political chapter - which distinguishes these agreements from agreements on trade and commercial cooperation - and a section dealing with economic and commercial matters which is intended to provide the framework for cooperation between the Parties in this field.

Political provisions

4. The preamble recognizes and supports Georgia's wish to establish close cooperation with the European institutions, on the basis of the common values that they share, and further favours 'a gradual rapprochement between the Republic of Georgia and a wider area of cooperation in Europe and neighbouring regions and its progressive integration into the open international system'. It also recognizes that 'support of the independence, sovereignty and territorial integrity of Georgia will contribute to safeguarding of peace and stability in Europe', which, in the context of the crises in Abkhazia and South Ossetia, is of quite particular concern.

5. Article 1 states that the objectives of the partnership are:

- to provide an appropriate framework for the political dialogue between the Parties allowing the development of political relations;

- to support the Republic of Georgia's efforts to consolidate its democracy and to develop its economy and to complete the transition into a market economy;

- to promote trade and investment and harmonious economic relations between the Parties and so to foster their sustainable economic developments;

- to provide a basis for legislative, economic, social, financial, civil scientific, technological and cultural cooperation.

6. Article 2 refers to the general principles which constitute the essence of the partnership: respect for democracy, principles of international law and human rights as defined in particular by the United Nations Charter, the Helsinki Final Act and the Charter of Paris for a New Europe, as well as the principles of market economy including those enunciated in the documents of the CSCE Bonn Conference. These principles underpin the internal and external policies of the Parties.

Article 3 states that it is essential for the New Independent States to maintain and develop cooperation among themselves in compliance with the principles of the Helsinki Final Act and with international law and in the spirit of good neighbourly relations; the Parties should make every effort to encourage this process.

7. Article 4 establishes a political dialogue between the Parties which will:

- strengthen the links between Georgia and the European Union;

- bring about an increasing convergence of positions on international issues of mutual concern, thus increasing security and stability in the region and promoting the future development of the Independent States of the Transcaucasus,

- encourage cooperation on matters pertaining to the strengthening of stability and security in Europe, the observance of the principles of democracy, and the respect and promotion of human rights, particularly those of persons belonging to minorities. The Parties shall hold consultations, if necessary, on relevant matters.

8. It is stated that political dialogue will take place within the Cooperation Council (Article 77), which will meet at Ministerial level once a year in the presence of the Commission, or at any other time by mutual agreement. The Cooperation Council is to be assisted in the performance of its duties by a Cooperation Committee.

Political dialogue may also take other forms (Article 6):

- regular meetings at senior official level between representatives of the Community and its Member States on the one hand, and representatives of Georgia on the other;

- taking full advantage of diplomatic channels between the Parties including appropriate contacts in the bilateral as well as the multilateral field;

- any other means, including the possibility of expert meetings which would contribute to consolidating and developing the political dialogue.

9. At parliamentary level, Article 82 establishes a Parliamentary Cooperation Committee as a forum for members of the Georgian Parliament and the European Parliament. The two parliaments are responsible for deciding on the make-up and the operating arrangements. The Parliamentary Cooperation Committee may request relevant information regarding the implementation of the Agreement from the Cooperation Council and make recommendations to it.

10. The Committee on Foreign Affairs, Security and Defence Policy would draw particular attention to Title VII of the Agreement, which concerns cooperation on matters relating to democracy and human rights. This cooperation will take the form of technical assistance programmes intended to assist, inter alia, in the drafting of relevant legislation and regulations, the implementation of such legislation, the functioning of the judiciary, the role of the State in questions of justice, and the operation of the electoral system.

This eminently constructive Article will be implemented all the more effectively if the partner country is sincerely committed to democracy, which it is in the case of Georgia. The European Union, possibly in cooperation with the Council of Europe, will of course be able to share with the partner country its experience of government based on the rule of law. Clauses of this kind should have a place in other cooperation agreements.

11. With regard to the possibility of a dispute relating to the application or interpretation of the Agreement, Article 88 provides for the Parties to refer the matter to the Cooperation Council, and provision is also made for a conciliation procedure.

If either Party considers that the other has failed to fulfil an obligation under the Agreement, it may take appropriate measures, while informing the Cooperation Council, which is to seek a solution to the dispute. Measures taken by either party should disturb the functioning of the Agreement as little as possible (Article 94).

12. The Agreement is a mixed agreement which requires the assent of the European Parliament and the approval of the national parliaments of the European Union and the Georgian Parliament. Once it comes into force, it will replace the Agreement on Trade and Commercial and Economic Cooperation signed with the former USSR on 18 December 1989, which has hitherto provided the legal basis for relations between the European Union and each of the New Independent States of the former Soviet Union.

Economic and other provisions

13. The Agreement contains a range of economic, commercial and other provisions which provide scope for developing the partnership, the broad outlines of which are set out below.

14. Trade in goods is governed by Title III of this non-preferential agreement. The Parties accord one another most-favoured-nation treatment. During a transition period, to end no later than 31 December 1998, Georgia may grant more advantages to the other Independent States of the former USSR.

A safeguard clause (Article 13) includes the principle of consultation. Emergency measures may be taken without prior consultation where the circumstances justify this. The 'state trading country' formula has been retained, and the safeguard clause may be applied where any product is being imported in such quantities or under such conditions as to prejudice domestic producers. Antidumping measures may also be taken.

If necessary, trade in nuclear materials may be negotiated with Georgia. For ECSC products, the option of quantitative restrictions is upheld. Finally, specific agreements on textile products have been initialled with Georgia and the two other Transcaucasian states, and have been in force on a provisional basis since 1 January 1993.

15. As regards labour conditions (Articles 19 - 21), the Agreement seeks to avoid any discrimination by either Party with regard to nationals of the other Party legally employed in its territory.

16. With regard to conditions affecting the establishment and operation of companies (Articles 22 - 29), Georgia grants Community companies either national treatment or most-favoured-nation treatment, whichever is more favourable. For its part, the Community grants most-favoured-nation status for the establishment of Georgian companies, and national treatment, with certain exceptions, in respect of their operation.

17. With regard to services (Articles 30 - 33), the Agreement seeks to progressively liberalize the supply of cross-border services between the Parties. Special provisions are made for international maritime transport.

18. With regard to current payments and capital (Article 41), transactions are free, particularly if they concern commercial operations or direct investment.

19. With regard to intellectual, industrial and commercial property protection (Article 42), Georgia will continue its efforts to provide, by the end of the fifth year after the entry into force of the Agreement, for a level of protection similar to that existing in the Community.

20. Legislative cooperation (Title V) is intended to encourage the approximation of legislation, with particular reference to economic cooperation. The Community will provide Georgia with technical assistance in this matter.

21. Economic cooperation (Title VI) seeks to contribute to the process of economic reform and recovery and sustainable development of Georgia.

Economic cooperation covers numerous sectors: cooperation in the field of trade in goods and services, industrial cooperation (including converting the military industrial sector), investment promotion and protection, public procurement, industrial standards, mining and raw materials, cooperation in science and technology, education and training, agriculture and the agro-industrial sector, energy, environment, transport, postal services and telecommunications, financial services, regional development, social cooperation, tourism, SMEs, information and communication, consumer protection, customs, statistics and economics. In the case of Georgia and Azerbaijan, cooperation is also provided for in the construction industry (Article 46 bis) and monetary policy (Article 67 bis).

22. Cooperation is also provided for with regard to matters concerning the third pillar (Title VIII), seeking to prevent illegal activity in the economic sphere, including corruption, illegal transactions involving various goods, including industrial waste, and counterfeiting. This cooperation also covers money laundering, drugs and illegal immigration.

23. Cultural cooperation (Title IX) covers exchange of information and experience in the sphere of conservation and protection of architectural legacy and in the museums sector, cultural exchanges and translations of literary works.

24. Financial cooperation in the field of technical assistance (Title X) will be covered within the framework of TACIS.

III. REPORT BY THE OBSERVERS OF THE ELECTIONS

25. Before passing any final judgment on the Partnership and Cooperation Agreement with Georgia, it is essential to take into account the report (PE 215.520) of the EP 'ad hoc' Delegation, which visited the country during the presidential and legislative elections of 5 November 1995.

In its conclusions, the delegation underlined that 'they were conducted according to the highest standards possible; they were well prepared and organized, throughout the electoral process, on a basis of seriousness and fair play'.

The delegation further stressed that 'the elections of 5 November 1995 represent the culmination of the process of political and economic stabilization which began at the end of 1994'.

With regard to Abkhazia and South Ossetia, which are not under central government control, the delegation said that the EU should take a firmer stand within the relevant international bodies, especially the OSCE, to ensure that Georgia regains control over all its territory.

Finally, the delegation hoped that 'the partnership and cooperation agreement [now being[ negotiated with Georgia will be speedily concluded, in such a way as to enable the EU to offer the country both political and economic support and make it possible to create more solid relations with Georgia, given its close cultural and historical ties to Europe'.

26. The observations made at that time by the 'ad hoc' delegation remain highly relevant and justify taking a positive approach to the Partnership Agreement.

At the political level, Georgia now enjoys civil peace. However, the current criminal proceedings against the supporters of the former President, Mr Gamsakhurdia, and members of the opposition cast a shadow over the democratic advances achieved since Mr Shevardnadze's return to power, and the EP voiced its concern in this connection in its resolution of 14 November 1996(1). In this matter, the Georgian authorities must fully respect the rights of the accused, and show clemency, particularly by commuting any death sentences which may be handed down, in a spirit of national reconciliation.

The sole black mark continues to be the absence of political solutions to the Abkhazia and South Ossetia crises, which would allow Georgia to recover its territorial integrity and to resolve the refugee problem. The EP stated its position on the situation in Abkhazia in a resolution of 14 November 1996, calling for a political situation to be found within the framework of Georgian territorial integrity. That call was echoed by the Heads of State and Government of the OSCE Member States when they met in Lisbon on 2 and 3 December 1996.

Unfortunately, Georgia is not in sole possession of the key to the Abkhazian and Ossetian crises, and the talks within the OSCE have not made any progress. Even if Georgia were to state that it is ready to grant autonomy - including cultural autonomy - to these two regions, there is no guaranteeing that this would make it any easier to find a political solution to these conflicts, since there are other interests, particularly strategic ones, lurking in the background. In this context, we would refer to Mrs Carrère D'Encausse's report (A4-0279/96) on the Commission communication on developing a European Union strategy with regard to the Transcaucasian Republics(2), which begins by highlighting the complexity of the regional and international interests which are at stake in that part of the world. These geopolitical considerations make it all the more imperative to approve the Partnership Agreement between the European Union and Georgia.

As far as the economy is concerned, the delegation's impressions have been confirmed, and the Georgian economy has emerged from its period of recession. The European Union must help Georgia in its efforts to implement economic reforms so as to enable it to establish a social market economy.

IV. CONCLUSIONS

27. Georgia, a country with a European culture, demonstrated in the last round of elections that it is committed to democracy and to economic reform. There is nothing so far to indicate any deviation from this path, but the court cases currently in progress should be closely monitored. It should be borne in mind that, since 28 May 1996, Georgia has had special guest status in the Council of Europe, which provides confirmation, if any were needed, of its European orientation and its desire to forge closer links with European democratic institutions.

Moreover, owing to its geographical situation, Georgia will be able to act as a link in trade between the European Union and countries of Central and Eastern Europe and the other Transcaucasian states. Nonetheless, the country will remain fragile until a political solution has been found to the Abkhazian and South Ossetian crises. In the case of Georgia, consolidation is not merely an internal matter; it also concerns the regional context, in which Georgia is an important stabilizing factor. The partnership and cooperation agreement may help foster consolidation.

Finally, the European Union must boost its presence in Transcaucasia, a region of obvious geopolitical importance. This was pointed out in the aforementioned Carrère D'Encausse report, and the partnership agreement with Georgia, like those with Armenia and Azerbaijan, takes account of that objective.

28. The Committee on Foreign Affairs, Security and Defence Policy, aware that the Agreement will strengthen Georgia both politically and economically and thus consolidate its independence, therefore recommends that Parliament give its assent to the Partnership and Cooperation Agreement with Georgia, which will add a new, long-term dimension to relations between the European Union and that country.

(1)See also the letter of the Georgian Ambassador to the European Communities (PE 219.896).
(2)See also Parliament's resolution of 17 January 1997, adopted on the basis of this report.


 O P I N I O N

(Rule 147 of the Rules of Procedure)

of the Committee on Budgets

for the Committee on Foreign Affairs, Security and Defence Policy

on the Proposal for a Council and Commission Decision on the conclusion of the Partnership and Cooperation Agreement between the European Communities and their Member States, of the one part, and Georgia, of the other part (COM(96)0135 - C4-0320/96 - 96/0092(AVC))

Draftsman: Mr John Joseph McCartin

At its meeting of 24 June 1996, the Committee on Budgets appointed Mr John Joseph McCartin draftsman.

At its meeting of 23/24 July 1996 it considered the draft opinion.

At that meeting of 23/24 July 1996 it unanimously adopted the conclusions as a whole.

The following were present for the vote: Samland, chairman; Tillich and Willockx, vice-chairmen; McCartin, draftsman; Bösch, Campos (for Dankert), Colom i Naval, Elles, Gredler, Jöns (for Ghilardotti), Kellett-Bowman (for Böge), Mayer (for König), Waidelich and Wynn.

At its meeting of 23/24 July 1996 the Committee on Budgets considered the above proposal and examined its budgetary aspects.

Firstly, the general trade and economic policy framework of the Agreement was welcomed, as was the fact that relations with Georgia in this area will be subject to mutually binding arrangements.

The scope of the Agreement extends over a broad range of trade and economic policy activities, such as trade in goods, the establishment and operation of companies, the cross-border supply of services, payments and capital, competition, and economic and financial cooperation.

The relevant budgetary implications in this connection concern both the revenue and the expenditure side of the Union's budget.

The implications on the revenue side - despite being unquestionably significant - cannot be quantified at present and are difficult to estimate overall, particularly in view of the fact also that this aspect was omitted by the Commission in its explanatory memorandum. It should be assumed that, for example, the arrangements in the area of economic cooperation and trade in goods will lead to increased imports into the Union, which may result in revenue losses or higher compensation payments, particularly in agriculture but also in trade and industry. It remains to be seen whether and to what extent such revenue losses will be offset by revenue from increased economic activity and an increase in GNP. The Committee on Budgets will call on the Commission in due course to submit the appropriate analyses. It should be stressed that, as has already been the case as a result of the new GATT agreements, any extensive liberalization of trade will alter the make-up of the Union's own resources by increasing the proportion accounted for by the fourth resource (GDP transfer) at the expense of the first and second resources (agricultural levies and customs duties). Such shifts are increasingly weakening the nature of the Union's own resources.

With regard to expenditure, the text is as precise as it is concise: 'This financial assistance shall be covered within the framework of the TACIS programme foreseen in the Community's relevant Council Regulation.'. In other words, the Union's payments will be regulated under TACIS legislation and the amounts laid down in the relevant budgets.

For the financial year 1996, the budgetary authority has authorized a total of ECU 510 m in commitment appropriations and ECU 480 m in payment appropriations for the TACIS programme. Furthermore, the agreement stipulates that the contracting parties must ensure that these resources are coordinated with resources from other sources, such as direct financial assistance from the Member States, other countries and/or international financial institutions.

Subject to future budgetary decisions or modifications to the budgetary endowment of the TACIS programme the Committee on Budgets endorses the proposed Agreement.


 OPINION

(Rule 147 of the Rules of Procedure)

of the Committee on Research, Technological Development and Energy

for the Committee on Foreign Affairs, Security and Defence Policy

Letter from the committee chairman to Mr Gerardo Fernàndez Albor, chairman of the Committee on Foreign Affairs, Security and Defence Policy

Brussels, 2 October 1996

Subject: Proposal for a Council and Commission Decision on the conclusion of the Partnership and Cooperation Agreement between the European Communities and their Member States, of the one part, and Georgia, of the other part (COM(96)0135 - C4-0320/96)

Dear Mr Fernàndez Albor,

At its meeting of 2 October 1996 the Committee on Research, Technological Development and Energy considered the proposal for a Council and Commission Decision on the conclusion of the Partnership and Cooperation Agreement between the European Communities and their Member States of the one part, and Georgia, of the other part and approved the following conclusions.

In the draft ten year Partnership and Cooperation Agreement various provisions are devoted to matters relating to energy policy and technological development.

With regard to energy policy, Article 54 is the most significant.

This article firstly sets cooperation on energy policy within the principles of the market economy, the existing cooperation agreements (including the Energy Charter) and the progressive integration of the energy markets in Europe. The article also outlines a very wide range of areas for cooperation. Lastly, a separate paragraph is devoted to the exchange of information on promoting investment in the energy sector, in particular the construction of oil and gas pipelines.

Article 55 is also important as regards energy policy. Article 55 covers cooperation with regard to environmental aspects, referring to the relevant provisions of the European Energy Charter and indicating that promotion of sustainable, efficient and environmentally effective production and use of energy and the provision of technical assistance in solving the problem of radioactive pollution are aims of the cooperation.

With regard to policy on scientific research and technological development Article 51 is of great importance.

This article opens up opportunities for all forms of cooperation, both in relation to exchange of information and the establishment of joint RTD projects and programmes for the training and exchange of scientists and technicians.

The Committee on Research, Technological Development and Energy welcomes this draft agreement.

The European Union has considerable interest in sustainable economic development of the Republic of Georgia, also with a view to the continuing restoration of the political stability of the region.

The Republic of Georgia has in particular considerable potential as a transit country for gas and oil exports via pipelines from the neighbouring country of Azerbaijan and countries on the Caspian Sea. The Georgian ports of Poti and Batumi are also important for the future development of trade in energy with Western Europe.

The Republic of Georgia can thus fulfil a significant role in the energy supply strategy of the European Union.

However with this in mind very large investments must be made in the necessary infrastructure. These investments require in particular a clear and legally secure financial and legal framework, based on market operation and integration.

The relevant provisions from the draft Partnership and Cooperation Agreement together with the European Energy Charter will provide an important basis.

The Committee on Research, Technological Development and Energy hopes that the requirement for a majority holding by the Georgian state in the capital of companies with foreign participation involved in the operation of oil and gas pipelines, as formulated in the reservation of the Republic of Georgia in accordance with Article 22(4), will not make the necessary investments referred to above too difficult.

It is also clear that assistance in supporting energy efficiency and the use of renewable sources of energy will benefit the development of the Republic of Georgia, in part by reducing the bill for energy.

Lastly the Committee on Research, Technological Development and Energy considers that Article 51 of the draft agreement offers great opportunity for increased cooperation in scientific and technological areas and it hopes that the material conditions will also be created for this cooperation to gain practical content in the interests of both parties.

In conclusion, the Committee on Research, Technological Development and Energy, convinced of the importance for both parties and in view of the great potential as regards the areas falling within its competence, strongly recommends the speedy conclusion of this draft Partnership and Cooperation Agreement.

Yours sincerely,

Umberto SCAPAGNINI

The following took part in the vote: Scapagnini, chairman; Adam and McNally, vice-chairmen; Estevan Bolea, de Gaulle, Herman (for Soulier (Rule 138(2)), Holm, Izquierdo Collado, Jouppila, Linkohr, Malerba, Pompidou, Rothe, Rovsing, Stenius-Kaukonen (for Marset Campos), Tannert, W.G. van Velzen and West.

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