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REPORT     
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6 February 1997
PE 220.134/fin. A4-0038/97
on the proposal for a Council decision on the Interim Agreement on trade and trade-related matters between the European Community, the European Coal and Steel Community and the European Atomic Energy Community, of the one part, and Georgia, of the other part (COM(96)0322 - 8890/96 - C4-0566/96 - 96/0180(CNS))
DOCEN\RR\319\319418 PE 220.134/fin.
Committee on External Economic Relations
Rapporteur: Mr Peter Kittelmann
By letter of 21 October 1996 the Council consulted Parliament on the proposal for a Council Decision on the Interim Agreement on trade and trade-related matters between the European Community, the European Coal and Steel Community and the European Atomic Energy Community, of the one part, and Georgia, of the other part.
 A DRAFT LEGISLATIVE RESOLUTION
 B EXPLANATORY STATEMENT

 By letter of 21 October 1996 the Council consulted Parliament on the proposal for a Council Decision on the Interim Agreement on trade and trade-related matters between the European Community, the European Coal and Steel Community and the European Atomic Energy Community, of the one part, and Georgia, of the other part.

At the sitting of 11 November 1996 the President of Parliament announced that he had referred this proposal to the Committee on External Economic Relations as the committee responsible and the Committee on Foreign Affairs, Security and Defence Policy and the Committee on Research, Technological Development and Energy for their opinions.

At its meeting of 25 July 1996 the Committee on External Economic Relations had appointed Mr Kittelmann rapporteur.

At its meeting of 5 February 1997 it considered the draft report.

At the latter meeting it adopted the draft legislative resolution unanimously.

The following took part in the vote: Castellina, chairman; Moniz, 1st vice-chairman; Sainjon, 2nd vicechairman, Kittelmann, 3rd vice-chairman and rapporteur; Chesa, Elchlepp, Ferrer, Kreissl-Dörfler, Papakyriazis, Posselt (for Porto), Smith, Sturdy (for Schwaiger) and Van der Waal (for Souchet).

The Committee on Foreign Affairs, Security and Defence Policy and the Committee on Research, Technological Development and Energy will not deliver an opinion.

The report was tabled on 6 February 1997.


 A DRAFT LEGISLATIVE RESOLUTION

Legislative resolution embodying Parliament's opinion on the proposal for a Council Decision on the Interim Agreement on trade and trade-related matters between the European Community, the European Coal and Steel Community and the European Atomic Energy Community, of the one part, and Georgia, of the other part (COM(96)0322 - 8890/96 - C4-0566/96 - 96/0180(CNS))

(Consultation procedure)

The European Parliament,

- having regard to the proposal for a Council Decision (COM(96)0322 - 96/0180(CNS)),

- having regard to the trade agreement initialled by the Commission (COM(96)0322),

- having regard to Articles 113 and 228 (2), first sentence of the EC Treaty,

- having been consulted by the Council (8890/96 - C40566/96),

- having regard to article 90(7) of its Rules of procedure,

- having regard to the report of the Committee on External Economic Relations (A4-0038/97),

1. Approves the conclusion of the agreement;

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


 B EXPLANATORY STATEMENT

Introduction

The aim of the interim Agreement on trade and traderelated matters between the European Communities and Georgia is to ensure the rapid development of trade relations between the parties, pending ratification of the Partnership and Cooperation agreement signed on 22 April 1996 by the European Communities and their Member States, of the one part, and Georgia, of the other part.

The interim agreement will, therefore, implement the provisions of the Partnership and Cooperation agreement concerning trade and trade-related matters, which do not fall under the competence of the Member States and do not require the completion of national ratification procedures. This agreement is the successor to the agreement on Trade and Commercial and Economic Cooperation signed on 18 December 1989 between the Communities and the USSR, and replaces the relevant provisions of that treaty.

Structure of the Treaty

The standard "human rights/democratic clause" is contained in Article 1; Title II (trade in goods) provides for the reciprocal concession of MFN treatment in all areas with respect to customs duties, taxes and other internal charges, payments and distribution.

The exceptions are, as usual, preferential treatment under customs unions and free-trade areas, advantages in favour of developing countries, frontier traffic. Paragraph 3 of article 2 provides, however, for special, transitional treatment for advantages granted by Georgia to other former USSR States.

The main GATT/WTO rules apply to the fundamental principles of liberalization (suppression of quantitative restrictions, anti-dumping and countervailing duties) while article 7 provides for safeguard action.

Trade in ECSC products is covered by the agreement, while trade in textiles is governed by a separate agreement(1)) and trade in nuclear materials will be subject, if necessary, to a specific Agreement to be concluded.

Title III provides for liberalization of current payments connected with the movement of goods, concertation in the field of competition and includes the undertaking by Georgia to afford, by the fifth year after entry into force of the agreement, a level of protection similar to that provided in the Community for intellectual, industrial and commercial property rights.

Finally, the Joint Committee set up by the 1989 agreement is entrusted with a series of functions with regard to implementation of the interim agreement, until the Cooperation Council provided for in the Partnership and Cooperation Agreement is established.

Customs co-operation is dealt with in a separate protocol on mutual assistance between administrative authorities.

Evaluation

The situation of Georgia's economy, over the last years, has been very serious. Following the break-up of the USSR and the subsequent periods of civil war (in particular the South-Ossetia and Abkhazia conflicts) general insecurity and economic and social disorganization, it is estimated that industrial production in 1995 was about 20% of 1991.

The agricultural sector has fared slightly better, with 1995 and 1996 being reported as years of positive evolution, following also progress in land privatization.

In 1995 and 1996, trade and construction have also shown positive trends and, in fact, the World Bank and the IMF are forecasting for the economy a growth rate of around 10-13% for 1996. The new currency (lari) was successfully introduced in October 1995 and enjoys comparative stability.

Prospects therefore, if the political situation remains stable, are quite positive, considering that Georgia has also a certain wealth in natural resources (oil, natural gas, manganese, gold) which could be developed, given adequate capital input. A positive element is also constituted by the excellent degree of qualification of the work-force, especially at high level.

Giorgia's external trade has also shown, recently, some rights of recovery.

The EU is now Georgia's main trading partner (around 20% of total trade in 1995), with Russia, however, recovering some of the lost ground, at 15% and Turkey maintaining strong links (13%).

The European Union, therefore, which is already active in Georgia through its humanitarian assistance and its technical assistance programme (TACIS), should try to reinforce, through trade liberalization, the positive trends in the Georgian economy.

It is in the European Union's interest not only to increase its trade with Georgia and its economic presence in view of investment possibilities, in particular in the natural resources sector, but also to contribute to economic and political stability in this delicate region.

The interim agreement, therefore, should receive a positive opinion by the European Parliament and enter into force as soon as possible.

(1) )Initialled on 22 December 1995, applied provisionally.

Last updated: 27 March 1999Legal notice