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The EU-Georgia Association Agreement entered into force in July 2016 and strives for political association and economic integration between the EU and Georgia. The EU and Georgia have also entered into a Deep and Comprehensive Free Trade Area (DCFTA), while Georgian citizens have benefitted from visa free travel to the Schengen area since 28 March 2017. The EU is Georgia's largest trading partner and provides over €100 million to Georgia annually in technical and financial assistance.
Georgia is an important partner for the European Union both within the European Neighbourhood Policy (ENP) and its eastern dimension under the Eastern Partnership (EaP). The 2015 ENP review reconfirmed the EU's long-term engagement with partner countries, in particular with partners, such as Georgia, wishing to pursue deeper relations with the EU. Differentiation and joint ownership being the hallmarks of the new ENP, the policy continues to build ties with and encourage Georgia to further approximate with European legislation and standards. The 2016 EU Global Strategy acknowledged Georgia as an example of state and societal resilience in the eastern neighbourhood.
The EU Monitoring Mission in Georgia, which was deployed in line with the Agreement of 12 August 2008, along with the EU Special Representative for the South Caucasus and the crisis in Georgia, embody the EU's engagement on conflict resolution and its full commitment to Georgia's territorial integrity within its internationally recognised borders.
By signing the Association Agreement (AA) in June 2014, relations between the EU and Georgia were brought to a new level. The AA, with its Deep and Comprehensive Free Trade Area, foresees far reaching political cooperation and economic integration with the EU by significantly deepening mutual ties and bringing Georgia closer to the EU. The provisional application of the DCFTA part of the Agreement began on 1 September 2014, and the Agreement (as a whole) entered into force on 1 July 2016.
In 2016, the EU was Georgia's (GE) key trading partner, with a 31% share in its total trade (27% before the entry into force of the DCFTA), followed by Canada (15%), Turkey (around 13%), Russia (about 7%), China (6%) and Azerbaijan (over 5%). Trade with Georgia accounts for 0.1% of the EU's total trade. The main EU importers from Georgia are Bulgaria, Italy and Germany.
In 2016, total bilateral EU-Georgia trade slightly decreased by 2.3% year-on-year. EU imports from Georgia decreased by 25%, and amounted to €551 million, whereas the value of EU exports to Georgia increased by 6.7% to €1.96 billion. The decrease in EU imports from Georgia is nominal and mainly driven by changes in the prices of certain Georgian exports. Those four products account for almost 60% of total Georgian export to the EU. In the first six months of 2017, imports from Georgia increased by 56% compared to the same period in 2016 by 56%.
As a direct result of the DCFTA, new Georgian exports to the EU are materialising. Georgian kiwis, blueberries, nuts, garlic and wine are exported to the EU and copper and petroleum oils have seen sizable increases of exports. Exports of honey have been authorised since December 2016 and Georgia has also been able to export Black Sea fish to the EU since June 2017. The EU also supports the development of new business in Georgia, most recently through the introduction of credit lines.
The EU-Georgia Association Agenda helps Georgia fully enjoy the benefits of the Association Agreement. Georgia has adopted over 7,000 European standards in areas like health, safety and environmental protection with EU support. This means safer products for Georgian citizens and increased export opportunities for Georgian businesses.
The DCFTA does not apply in the Georgian breakaway regions of South Ossetia and Abkhazia. The territorial clause in the Agreement permits, however, that the DCFTA starts applying in these two regions once the conditions for its implementation are put in place.
Visa liberalisation for Georgian citizens entered into force on 28 March 2017. This means that Georgian citizens holding a biometric passport can now travel visa-free to the Schengen area for short-stays of up to 90 days. Visa liberalisation for Georgian citizens entered into force on the same day as the revised visa suspension mechanism, allowing the EU to react rapidly to increased irregular migration or security risk by suspending visa-free travel for any of the visa free countries, if necessary.
Since the start of the EU-Georgia visa liberalisation dialogue in 2012, Georgia had taken all the necessary reforms to meet the benchmarks set under the Visa Liberalisation Action Plan. Previously, the EU-Georgia Visa Facilitation and Readmission Agreements had entered into force in March 2011 and remain in force (Visa Facilitation is applicable to non-holders of biometric passports).
The Mobility Partnership launched in 2010 remains the political framework for cooperation on migration and mobility issues between the EU and Georgia. About 15 projects are currently being carried out in this field.
The EU supports Georgia’s reform agenda through financial and technical cooperation. More than 100 projects are currently being carried out in Georgia. The EU and Georgia agreed on the priorities for EU cooperation for the period of 2017-2020 with an indicative financial allocation in the range of €371 – €453 million.
Furthermore, additional “more for more” funds could be – and have been – made available under the incentive-based approach. 2014-2016 cooperation was focused on reforming public administration and justice sectors, as well as on agriculture and rural development, thus contributing to economic resilience and diversification, with complementary support for capacity development in support of EU-Georgia agreements as well as for civil society. Cooperation as of 2017 will focus on economic development and market development, strengthening institutions and good governance, connectivity, energy efficiency, environment and climate change and mobility and people-to-people contacts.
The European Commission, jointly with the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) has put in place the DCFTA Facility for small and medium-sized enterprises to respond to their needs. The main objectives of the 'EU4Business' initiative are to help enterprises seize new trade opportunities with the EU as well as improve their access to finance. This facility, by providing €200 million of grants, is expected to leverage €2 billion in loans.
Additionally, the Neighbourhood Investment Facility (NIF) is a financial mechanism whereby the EU grants support investments from European Financial Institutions. The instrument is used in Georgia for infrastructure financing in different fields, such as water and sanitation, roads, energy, and the environment, as well as for funding small enterprises and agriculture holdings. The NIF has now become the Neighbourhood Investment Platform as part of the External Investment Plan.
Georgia is also benefiting from €46 million of EU macro-financial assistance (MFA), half of which is in grants. The first tranche of €23 million was disbursed in 2015 and the second in May 2017. On 29 September 2017, the European Commission proposed new Macro-Financial Assistance (MFA) to Georgia, worth up to €45 million. If adopted by the European Parliament and the Council, this assistance would help Georgia cover part of its external financing needs.
Georgia participates actively in the regional programmes, which are addressed to all Eastern Partnership countries. This includes EU4Energy, which replaces INOGATE and supports the country in the implementation of its accession to the Energy Community, as well as substantial regional programmes on transport safety and transport connectivity, on environment, climate change and green economy, on energy security, renewable energy and energy efficiency, as well as Cross-Border Cooperation, where Georgia is part of the sea-crossing Black Sea Programme. Under thematic cooperation, more than 50 projects amounting to more than €14 million have been funded in Georgia over the past four years, mainly benefitting local civil society.
The EU continues to support Georgia’s efforts to overcome the consequences of internal conflicts in Georgia’s breakaway regions of Abkhazia and South Ossetia dating back to the early 1990s, as well as to stabilise the situation following the outbreak of hostilities in August 2008. The EU remains firmly committed to its policy of supporting Georgia’s territorial integrity within its internationally-recognised borders, as well as engagement with the breakaway regions of Abkhazia and South Ossetia in support of longer-term conflict resolution. The EU appointed in July 2003 an EU Special Representative for the South Caucasus (EUSR) (since 2011, "EU Special Representative for the South Caucasus and the crisis in Georgia"). This underpins the EU's commitment to actively contribute to the peaceful resolution of conflicts and to confidence-building efforts in the South Caucasus, while reaffirming Georgia's territorial integrity and sovereignty. The EUSR co-chairs together with the UN and OSCE the Geneva International Discussions, launched following the outbreak of hostilities in August 2008.
The EU also deployed a civilian mission in the immediate wake of the August 2008 hostilities, the EU Monitoring Mission (EUMM) in Georgia, with a mandate to monitor parties' compliance with the Agreement of 12 August 2008. The most visible component of the EUMM's stabilisation work is patrolling the areas adjacent to the Administrative Boundary Lines with the breakaway regions. The EUMM contributes to de-escalation through a hotline and to confidence building in regular Incident Prevention and Response Mechanisms and through its confidence-building project facility. The EUMM informs EU policymakers and the Geneva International Discussions.
Programmes involving the breakaway regions aim to foster engagement with these entities and follow a human rights-based approach, which puts people's needs at the centre of development. The Instrument contributing to Peace and Stability programmes (IcSP VI amounting to €7.5 million) foster people-to-people contacts, direct channels between stakeholders and societies on both sides of the boundary lines and supports opportunities resulting from such dialogues.
European Neighbourhood Initiative programmes build on and complement such political initiatives, aiming at socio-economic development on a participatory and community-based level. This is the logic of the European Neighbourhood Programme for Agriculture and Regional Development (ENPARD) II component for the breakaway region of Abkhazia (€4 million, to be followed up with an ENPARD III component of the same size) and the Joint EU-UNDP Civil Society Support Programme. Another programme on Vocational Education and Training (VET) is in the programming phase. While of a less political nature, these actions intrinsically also support the exchange of ideas, people and expertise.
A Framework Agreement on Georgia's participation in the EU's Common Security and Defence Policy operations entered into force in March 2014 and since then Georgia has already made remarkable contributions to several operations. Their biggest contribution so far, a company of around 156 staff, was to the EUFOR RCA operation in the Central African Republic. Currently Georgia is involved in the EU Military Training Mission in the Central African Republic, and the EU Training Mission in Mali. Since 2014 the EU and Georgia hold staff-to-staff talks on Common Security and Defence Policy.