Georgia : An Integrated Trade Development Strategy
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Washington, DC
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Georgia became a member of WTO in June
2000. It has low import tariffs and no quantitative
restrictions. The VAT (20 percent) and excise taxes are
equally applied to imports and domestic output. However, the
implementation of trade policies is undermined by corruption
and poor customs and tax administration. Moreover, a new
tariff schedule adopted in January 2003 increased the number
of tariffs from four to 22! and the top duty rate from 12 to
30 percent. Although the weighted average tariff will go up
only by a fraction of a percent and the new tariffs are in
line with the upper bounds agreed with the WTO upon
accession, such a schedule is a step back from the previous,
simpler schedule. Georgia faces no significant trade
barriers in world markets and main export destinations
include the Commonwealth of Independent States (CIS) region
(45 percent)-e.g., Russia, Azerbaijan, Ukraine, and Armenia-
where Georgia enjoys duty-free access, followed by Turkey
(20 percent), and the EU (18 percent)-mainly Germany. Like
most CIS countries, the cost of doing business in Georgia is
high and adds significant investment risk. Not surprisingly,
outside of two large energy project, foreign direct
investment (FDI) in Georgia has been insignificant.
According to the 2002 Business Environment and Enterprise
Performance Survey (BEEPS) conducted in Georgia, taxation
and corruption are the main obstacles to doing business.
Along with crime, these problems are somewhat worse in
Georgia than its regional counterparts. Issues relating to
regulations, the judiciary, infrastructure, and access to
finance while still problematic appear more or less the same
across the CIS region. More specifically, the industry case
studies conducted for this study identified several
institutional constraints which significantly undermine the
export competitiveness of Georgian firms and create barriers
to entry, a critical issue for a transition economy.
Notably, exporters do not have assured access to inputs at
world prices, particularly of those procured in the domestic
market, because of the lack of a functioning VAT refund mechanism.
Palabras clave
AGRICULTURE, BANK LOANS, BANKING SECTOR, BANKING SECTOR DEVELOPMENT, BUSINESS ENVIRONMENT, COMMERCIAL BANKS, COMPARATIVE ADVANTAGE, COMPETITIVENESS, CPI, CURRENCY, CUSTOMS, DEBT, DEVELOPMENT STRATEGY, DOMESTIC MARKET, ECONOMIC ACTIVITY, ECONOMIC COOPERATION, ECONOMIC GROWTH, EMPLOYMENT, EXCHANGE RATE, EXPORT CREDIT, EXPORT GROWTH, EXPORT OPPORTUNITIES, EXPORTERS, EXPORTS, EXTERNAL TRADE, FISCAL YEAR, FOOD EXPORTS, FOREIGN DIRECT INVESTMENT, FOREIGN INVESTMENT, FORESTRY, GDP, GROSS DOMESTIC PRODUCT, IMPORT TARIFF, IMPORTS, INCOME, INDUSTRIAL PRODUCTS, INDUSTRY, INSURANCE, INTEREST RATES, INTERNATIONAL PRICES, INVESTMENT FLOWS, LDCS, MARKET ACCESS, MARKET INTEGRATION, NATURAL RESOURCES, PREFERENTIAL ACCESS, PRIVATIZATION, PRODUCTIVITY, PROFIT MARGINS, PROPERTY RIGHTS, PROVEN RESERVES, REAL GDP, REGIONAL TRADE, SMALLHOLDER AGRICULTURE, TARIFF SCHEDULE, TAXATION, TECHNICAL ASSISTANCE, TIMBER, TOURISM, TOURISM DEVELOPMENT, TRADE, TRADE DEVELOPMENT, TRADE FACILITATION, TRADE POLICY, TRADE REGIME, TRANSPORT, TRANSPORT COSTS, UNEMPLOYMENT, UNEMPLOYMENT RATES, VALUE ADDED, WAGE RATES, WORKING CAPITAL, WORLD TRADE, WORLD TRADE ORGANIZATION, WTO IMPORT TARIFFS, TRADE DEVELOPMENT, IMPORTS, OUTPUT, CUSTOMS DUTIES, TRADE ARRANGEMENTS, FOREIGN INVESTMENT, TAXATION RATES, CORRUPTION IN GOVERNMENT, CRIME, EXPORT COMPETITIVENESS, TRANSITION ECONOMY, DOMESTIC MARKET, VALUE ADDED TAXES, TRANSPORTATION COSTS, ECONOMIC GROWTH, AGRICULTURE, EMPLOYMENT, POVERTY, INEQUALITY, WELFARE ACTIVITIES