RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/GEO/16
18 December 1998
(98-5107)
Working Party on the
Accession of GeorgiaOriginal:  English
ACCESSION OF GEORGIA
Developments in the Accession of Georgia to the  World Trade
Organization Since  the Second Working Party Meeting (September 1998)
The following communication, concerning developments in Georgia since the second
Working Party meeting, has been received from the Permanent Mission of Georgia with the request
that it be circulated to members of the Working Party.
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I. BACKGROUND
Georgia submitted its application for accession to the World Trade Organization in July 1996.
Observer status was granted, and a Memorandum on the Foreign Trade Regime was submitted on
7 April 1997.  Responses to a large number of questions submitted by Members were submitted on
13 October 1997, and market access offers were submitted 2 February 1998 (services) and19 February 1998 (goods).  Working Party I in March 1998, and Working Party II in October 1998,
together with bilateral negotiatio ns with a number of interested Members, have made substantial
progress towards completing market access negotiations on tariffs and services and on bringing
Georgia’s foreign trade regime into compliance with WTO requirements.
This report summarizes developments since the conclusion of Working Party II.
II. LEGISLATIVE AND REGULATORY ACTIONS
The following specific actions have been taken to  enact or revise legislation or regulations to
meet specific WTO requirements:
Customs Valuation Regulations:
Working with technical assistance from IRIS, the Ministry of Finance prepared detailed
regulations to guide the Customs Department in a pplying the provisions of the WTO Agreement on the
Implementation of Article VII of the GATT 1994 ("Cu stoms Valuation Agreement").  These regulations
have been recently revised to incorporate the Decisions of the WTO Customs Valuation Committee
concerning ‘Valuation of Carrier Media Bearing So ftware”  and “Treatment of Interest Charges”
(WTO/VAL/6 and 8).  Issuance of these regulations has been delayed by reorganization of the Ministry
of Finance and the Customs Department, but it is expe cted that they will be formally issued by the
Ministry of Finance in the very near future.  A training seminar to introduce the new regulations to
Customs officials was presented by the Crown Agents valuation expert from 6-10 July 1998.WT/ACC/GEO/16
Page 2
Rules of Origin Regulations:
Also with technical assistance from IRIS, the Mi nistry of Finance prepared detailed regulations
for the Customs Department covering the requireme nts of the WTO Agreement on Rules of Origin.  As
with the Customs Valuation Regulations, issuance of the Rules of Origin regulations has been delayed,
but is expected in the near future.
Antidumping, Countervailing Duties, and Safeguards Regulations:
The Government of Georgia has continued its polic y of not proceeding with detailed legislation
in these areas.  While Georgia retains the right to appl y these measures at some point in the future, it will
not do so until detailed legislation and implem enting regulations fully consistent with WTO
requirements have been prepared.
Presidential Decree on Mana ging the WTO Relationship:
The Ministry of Trade, working with IRIS technical assistance, has prepared a draft presidential
decree assigning the responsibilities for managing va rious aspects of the relationship between Georgia
and the WTO after accession is achieved.  Having such a decree in place will help Georgia to transition
smoothly from the accession to the post-accession phase.  Final issuance of this decree depends on
further discussions in the Government.
Excise and VAT Taxes:
IRIS has had extensive discussions with the Mi nistry of Finance concerning the need for
revisions to the excise and VAT tax systems in order to meet WTO standards.  Under current legislation,
the excise rates for domestic and imported products, except for cigarettes, will become the same as of
1 January1999.  VAT on excisable products other than cigarettes will also become consistent under
current law on 1 January, the 20 per cent ad valorem VAT rate will be applied to the wholesale price
plus excise for domestic products, and to the customs value plus duty and excise in the case of imports.
IRIS has prepared detailed memoranda and discu ssed with the Ministry the need for consistent
duty, excise and VAT taxation of all spirits, following the recent WTO panel decisions in Japan II and
Korea - Alcoholic Beverages.  The Ministry is prepar ing amendments to the tax code, for enaction in the
spring Parliament, to meet this requirement.
Under current law, the special treatment of imported cigarettes expires on 1 April 1999. At that
time, imports will come under the same excise and VAT provisions as domestic products.  The question
of differential excise treatment of high- and low- quality cigarettes is under review; IRIS is collecting
price data to determine whether the differential specifi c rates are in fact consistent when viewed in terms
of ad valorem equivalents.
Excise stamps for cigarettes and alcoholic beverages, both domestic and imported, are
scheduled for introduction on 1 February 1999, under current law.  This date is likely to be delayed to1 March.  Detailed regulations governing the administration of excise stamps has yet to be prepared;
IRIS will monitor this area.
Intellectual Property Rights:
Work has continued in many areas related to the TRIPs Agreement  In particular:
1. On 20 August 1998, Georgia formally adhered to the Protocol of the Madrid Agreement on the
International Registration of Marks.WT/ACC/GEO/16
Page 3
2. The draft patent law was submitted to the fall Parl iament and has passed the first reading.  The
second reading is scheduled for February 1999.  Th e law, prepared in cooperation with foreign
experts, is available in English for re view by WTO Member s.  (WT/ACC/GEO/15)
3. The draft copyright law, which will supplement the provisions of the Civil Code on copyright,
has been submitted to Parliament; consideration is scheduled for the spring session.  This lawhas been prepared in cooperation with WIPO expe rts, and is available in English for review by
WTO Members.  (WT/ACC/GEO/15)
4. The draft trademark law has passed the first reading in Parliament, and is scheduled for the
second reading in February.  An English translation of the draft as it stands at this point is being
prepared for WTO review.
5. A draft law on Geographic Indica tions and Appellations of Origin has been prepared for
submission to the spring Parliament.  An Englis h translation is being prepared for WTO review.
6. Amendments to the criminal code and the codes of  criminal, civil, and administrative procedure
designed to improve enforcement of intelle ctual property rights are in preparation.
7. The President approved the regulations establishi ng the National Center of Intellectual Property.
Land Privatization:
A new Law on Administra tion and Disposal of State-ow ned Non-Agricultural Land, which
provides for the privatization of non-agricultura l land throughout Georgia has been approved by
Parliament and implemented.  Large numbers of indi viduals and enterprises are now in the process of
privatizing the land they have until now occupied but not owned.
Capital Markets:
A law establishing a stock market and providing for securities registration and regulation,
prepared by USAID-supported experts, was enacted during the fall session of Parliament.  Amendments
to the law on entrepreneurs, providing for impr oved stockholder protection and other provisions
necessary to encourage the development of a securitie s market in Georgia have also been approved by
Parliament.
Log Exports:
The Law on Regulation of Forest Exploitation in the Territory of Georgia was adopted by
Parliament at the end of June 1998.  This law provides  that exports of logs will be allowed, subject only
to licenses issued by the Ministry of Trade and Foreign Economic Relations.  These licenses will be
granted in all cases in which the logs in question ha ve been cut in conformance with the requirements of
the State Forest Department.  The Law on Export License Fee for Wood Raw Products of
31 March 1998 has been abolished.  The purpose of the export licence requirement is to prevent the
export of logs taken from Georgia's forests in viol ation of the environmental protection regulations.
Scrap Exports:
The Law of Georgia on Regulation of Export a nd Re-export of Scrap and Waste of Black and
Colored Metals was passed by Parliament at the e nd of June 1998, and was signed by the President in
June.  This law requires an export license and the payment of a special duty, set at 28 Laries
(approximately US$21) per ton for scrap other than  copper or aluminum; at 475 Laries (approximately
US$355) per ton for copper, and at 320 Laries (appr oximately US$240) per ton for aluminum.  The newWT/ACC/GEO/16
Page 4
law is effective from 1 July 1998, and abolishes the prohibition on scrap exports contained in the Law of
Georgia #637-II of 21 February 1995.
Business Licensing Law:
A new draft law concerning li censing of businesses has been prepared and was formally
considered by Government (the final stage befo re submission to Parliament) in early December.
Parliamentary consideration is scheduled for February 1999.  The law will apply equally to both
domestic and foreign-owned businesses in Georgia.  Th e draft is quite favorable to business in that it
restricts the authority of ministries to control businesses through the issuance of licenses to those
situations involving safety, consumer protection, en vironmental protection, or national security issues.
Accounting Law:
A draft Law on Bookkeeping and Accounting has passed first reading in the Parliament.
Administrative Procedure Act:
A general Administrative Procedure Act, which wi ll establish the procedures by which judicial
appeal of administrative actions may be pursued, ha s been prepared and will be formally submitted to
Parliament on 22 December.  Parliamentary approval is expected in the spring session.  The law has
been prepared with the assistance of experts provided by USAID and European donors.  Although
certain rights of appeal are contained in specific laws or regulations (for instance, there is a specific right
of appeal contained in the customs valuation and rules of origin regulations), the Administrative
Procedure Act will systematize such rights in all ar eas, thus covering such additional WTO-related areas
as business licensing, appeal of export or import licen se denials, etc.  An English translation will be
available in mid-December.
Insurance Legislation:
Amendments to the Law on Insurance, adopted 30 October 1998, provide that the restriction
limiting foreign ownership of insurance companies to  49 per cent is abolished, the provision to become
effective upon Georgia’s accession to the WTO.
Government Procurement Legislation:
A new law on government procurement, ba sed on the UNCITRAL model law and prepared
with the help of European experts through GEPLAC, passed Parliament on 11 December 1998.  An
English translation will be made available to th e WTO in the near future.  Further work will be
undertaken to amend this law in order to be fully compliant with the Agreement on Government
Procurement.  A list of the government entities to wh ich the law will apply will be provided to the WTO
shortly.
III. ADMINISTRATIVE ACTIONS
Information Technology Agreement:
Georgia has prepared the necessary schedules for accession to the Information Technology
Agreement, and will submit these to the WTO s ecretariat for review in the near future.WT/ACC/GEO/16
Page 5
Pre-Shipment Inspection:
The Government, following discussions with the World Bank and the IMF, has decided to
invite companies providing PSI and related services  to propose ways to improve customs collection in
Georgia, including imposing a pre-shipment inspec tion requirement on exporters.  The tender is to be
issued in January; the target date for implementation is 1 April 1999.  A Presidential Decree announcinga tender to select a contractor was signed in early December.
In order to ensure that any decision on PSI is ta ken with consideration of the implications for
Georgian accession to the WTO, IRIS has translated  the Agreement on Pre-Shipment Inspection and the
December 1997, Report of the Working Party on Pre-Shipment Inspection into Georgian for use by the
Ministry of Finance.  When the outline of the syst em becomes clear, IRIS will assist in drafting the
necessary regulations.
Customs User Fee:
The existing Customs User Fee of 0.3 per cent will be reduced to 0.2 per cent on
1 January 1999, and further reduced to 0.15 per cent upon accession to WTO.  A study has been
undertaken to develop data to determine the allowabl e level for the Customs User Fee, and the final fee
level, with appropriate minimum and maximum levels, will be established based on this study.
Sanitary and Phytosanitary Measures:
Based on discussions with the Mi nistries of Foreign Affairs and of Agriculture, IRIS provided
short-term technical assistance to assist the various  ministries concerned with sanitary and phytosanitary
import control measures to revise their procedures to meet WTO requirements.  A detailed working plan
was prepared to bring Georgian procedures into conformance with WTO requirements.   An "Enquiry
Point" has been established as required by WTO.  An Interministerial Coordinating Body for SPS
Implementation ("ICB") has been established, chaired by the Deputy Minister of Agriculture responsible
for international issues.  A working-level body has been established under the ICB, with representatives
of each concerned agency identified.  A Project Dir ector and staff have been  appointed, and an office
provided and equipped. As of July 1988, the enquiry point was in full operation.
Agricultural Subsidies:
With technical assistance from GEPLAC and IRIS , Georgia’s agricultural subsidies during the
period 1995-97 have been reviewed and the necessary documents submitted to WTO for analysis.
Georgia believes that all identified subsides fit eas ily within the "G reen Box" category under the criteria
of Annex 2 to the WTO Agreement on Agriculture.
Technical Barriers to Trade:
A Presidential Decree on Measures Implementing the Requirement of the WTO Agreement on
Technical Barriers to Trade was adopted on 5 December 1998.  In addition, agreement  has beenreached with Japan to provide technical assistance to  bring Georgia's procedures for enforcing technical
standards into conformance with WTO requirements.  A Georgian delegation was in Tokyo in
November and early December for training on TBT issues.WT/ACC/GEO/16
Page 6
IV. PREPARATION OF MARKET ACCESS OFFERS
Tariff Offer:
A completely revised tariff offer has been prepared in HS96 format at the six and eight-digit
level.  This offer substantially responds to tariff re quests made by negotiating partners in the bilateral
negotiations, including the Sectoral Initiatives.
Services Offer:
On the basis of previous bilateral negotiations, Georgia’s market access offer in the services
area has been revised to meet the requests of negotiatin g partners.  Georgia believes that this offer meets
all requests for revision put forward at previous negotia ting sessions.  It is expected that negotiations on
services will be substantially concluded with all partners in December 1998.
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