Russian government plans to adopt a decree suspending bilateral free trade agreement with Georgia signed twenty years ago.
The move comes after Georgia signed late last month deep and comprehensive free trade agreement with the EU; provisional application of large part of this treaty, which is part of the Association Agreement, will start from September 1.
A draft of the Russian government’s decree, which is going through final stages of procedures before being adopted, reads: “Accept a proposal by the Russian Ministry of Foreign Affairs, which has been agreed with the Ministry of Economic Development and Ministry of Justice, on suspension of the February 3, 1994 free trade agreement between governments of the Russian Federation and Georgia.”
A technical expert-level consultation was held in Prague on July 7 between Georgia and Russia on potential effects of Georgia’s deep and comprehensive free trade agreement with the EU on bilateral Georgian-Russian trade. The meeting was welcomed by both Tbilisi and Moscow as “constructive” and “useful”.
After meeting Georgian PM’s special representative for relations with Russia, Zurab Abashidze, in Prague on July 9, Russian Deputy Foreign Minister Grigory Karasin said that Georgia’s free trade agreement with the EU would definitely have an impact on trade between Georgia and Russia, but the issue needed a thorough examination, including in the context of customs duties, in order to avoid “negative surprises.”
“I think that there is no need to threaten neither ourselves nor partners in advance with measures and sanctions; what is needed is to sit down calmly in mutual respect and thoroughly calculate in which areas and to what extent changes may occur in trade and economic ties between our countries following the recent signature by Georgia of the Association Agreement with the EU,” Karasin said on July 9.
Georgian PM’s special envoy for relations with Russia, Zurab Abashidze, said after the meeting on July 9 that “no dramatic changes are expected in our trade relations” with Russia.
Georgia’s bilateral trade with Russia increased 35.4% in the first five months of 2014, compared to the same period of last year, mostly due to 3.5-fold increase in Georgian exports to Russia.