Friday, August 1, 2014

Georgia underwhelmed by Russian proposal to scrap free trade

01.08.2014. A top Georgian official on Thursday said Russia's possible cancellation of a decades-long free-trade agreement between the two countries came as no surprise and in the end "will not be a tragedy," (see also here).

"Naturally, when Georgia signed the association agreement with the European Union, we analyzed future trade relations with Russia and did not rule out the possibility that Russia could make a decision like this," said Zurab Abashidze, the Georgian prime minister's special representative in relations with Russia.

"[The decision] will create certain problems in our trade system, but I do not see any tragedy in this," Abashidze said. Georgia is no stranger to Russian trade restrictions: Just last year, Russia finally lifted a ban on imports of Georgian wine, fruit and mineral water that had been in place since 2006.

The Russian government published an unsigned resolution on its legal portal Wednesday that would abolish a 20-year-old free-trade regime between the two countries. The document cites a law stipulating that international agreements can be terminated "according to the conditions of the agreement itself and to international legal norms."

The proposal comes amid a battery of punitive trade measures Russia has rained on former Soviet states Georgia, Ukraine and Moldova in recent months, which picked up pace after the EU's agreement Tuesday to impose sector-wide sanctions on Russia over its policy in Ukraine.

The three countries all signed association agreements with the EU earlier this year, which among other measures to boost cooperation will create deep and comprehensive free-trade areas between the countries and the 28-state bloc — a prospect that has been met with hostility in Russia, where politicians claim the zones pose a threat to the Russian economy.

Ukraine, Georgia and Moldova already have free-trade zones with Russia, but as this latest proposal shows, the zones may be the price they pay for closer ties with Europe.

The Moldovan parliament ratified the agreement on July 2 — making it the first of the three countries to do so — shortly after which Russia's food safety and consumer protection watchdogs began to slap bans on Moldovan imports.

The Georgian parliament ratified the agreement on July 18.

Bans on Ukrainian imports have also accumulated as relations nosedive amid Russia's alleged support for the pro-Russia separatist insurgency in Ukraine's east.

Ukraine's juice exports to Russia were banned on Thursday, joining a list that already includes dairy products and preserved fruits and vegetables.


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