DCFTA: BENEFITS AND SUCCESS IN GEORGIA

However, more than 90 percent of Georgia's trade turnover with the EU was at zero-tariff even before DCFTA under the EU Generalized System of Preferences (GSP) program since 1999 and the GSP+ regime since 2005. Therefore, any expectations that the DCFTA would bring any significant additional results in a one-year period are not realistic. The DCFTA initiates Georgia's gradual economic convergence with the EU and introduces Georgian products to EU markets. Unlike other free trade agreements, the DCFTA assumes various degrees of changes in domestic policy and the business environment affecting trade and investment. The agreement provides for gradual approximation of Georgian legislation and institutions to that of the EU in various trade-related areas over the course of 10-12 years. Furthering the level of integration via DCFTA involves a thorough elimination of non-tariff and technical barriers to trade, which are often more restrictive than tariff barriers. The DCFTA is expected to realize benefits over time (5-10 years) through the elimination of non-tariff barriers. According to a DCFTA impact study, elimination of non-tariff barriers will boost trade between the EU and Georgia. Exports are estimated to increase by 9% and 12% in the short and long term, respectively; the GDP of Georgia is projected to increase by 4.3% (EUR 292 million in national income), and average wages in Georgia are projected to increase by 3.6% over the long run. Despite the positive trends in exports (increase in hazelnuts export by 20%, wine by 5%, and mineral and still water by 13%) as well as a FDI increase by 4.8%, there is no data evidencing that these increases are attributable to DCFTA. Georgia has previously benefited from EU preferential tariff treatment under the Generalized System of Preferences (GSP) program since 1999 and the GSP+ regime since 2005. The evaluation of the utilization of the EU's trade preferences, conducted in 2010, showed that Georgia already had a very high level of preference utilization (92.52%), meaning that more than 90 percent of trade turnover with the EU was at zero-tariff rate. Tariff liberalization is considered to be a minor benefit of the agreement, and the DCFTA is expected to bring its major benefits, including the elimination of non-tariff barriers, over time (5-10 years) once the regulatory convergence of Georgia with the EU takes place. Therefore, most of the post-DCFTA enactment facts and figures are inconclusive. An impact assessment in 2017 would produce a more relevant review of DCFTA's impact in Georgia. The DCFTA provides for gradual approximation of Georgian legislation and institutions to that of the EU in various trade-related areas over the course of 10-12 years. This process involves a thorough elimination of non-tariff and technical barriers to trade, which are often more restrictive than tariff barriers. The elimination of non-tariff barriers is expected to boost trade between the EU and Georgia, with exports estimated to increase by 9% and 12% in the short and long term, respectively. Georgia's trade turnover with the EU was already at a high level before the DCFTA, with more than 90 percent of trade being at zero-tariff rate. The DCFTA is expected to bring its major benefits, including the elimination of non-tariff barriers, over time (5-10 years) once the regulatory convergence of Georgia with the EU takes place. Therefore, most of the post-DCFTA enactment facts and figures are inconclusive.