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Georgia - An Integrated Trade Development Strategy (English)

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.

Details

  • Document Date

    2003/11/05

  • Document Type

    Foreign Trade, FDI, and Capital Flows Study

  • Report Number

    27264

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Georgia,

  • Region

    Europe and Central Asia,

  • Disclosure Date

    2010/07/01

  • Doc Name

    Georgia - An Integrated Trade Development Strategy

  • Keywords

    Business Environment and Enterprise Performance Survey;european conference of ministers of transport;Automated System for Customs Data;enforcement of intellectual property right;Poverty Reduction & Economic Management;free float exchange rate regime;Small and Medium Scale Enterprise;real effective exchange rate;Sanitary and Phytosanitary Measures;real exchange rate movement;participation of government official;protection property right;foreign investment advisory service;Cost of Doing Business;food and agriculture organization;Trade and Transport Facilitation;energy sector reform program;access to finance;competitive exchange rate;source of income;source income;intellectual property rights;world trading system;foreign direct investment;economies of scale;export credit agencies;incidence of poverty;access to fertilizer;poverty reduction program;impact of conflict;social security tax;mining and mineral;weights and measure;certified organic farmer;primarily due;share of export;barrier to entry;unit labor costs;factor of production;agricultural support service;codes of practice;Letter of Credit;opportunities for corruption;free trade agreement;direct foreign investment;rules of origin;industrial property right;development of market;improvement of road;delegation of power;medium term program;poor road condition;political risk;average interest rate;cost of access;interest rate subsidy;banking sector development;cross country comparison;agriculture and industry;economic growth rate;business environment issues;cost for transport;external debt burden;oil producing country;export activity;firm level;transportation cost;Tax Administration;Transition economies;world market;market segment;transition economy;light manufacturing;tax authorities;tax authority;mineral water;wood processing;Technology Transfer;comparative advantage;investment climate;raw material;Financial Sector;credit line;real gdp;credit bureaus;illegal import;internal market;Tax Code;vat refunds;tariff schedule;power supply;scrap metal;export base;enrollment rate;financial instrument;foreign buyer;Learning and Innovation Credit;tax environment;customs administration;institutional weakness;world price;import category;import tariff;preferential treatment;labor legislation;industry characteristic;industrial mineral;Business Climate;foreign investor;rural area;wood product;agricultural product;constant price;market access;intraregional trade;food import;international reserve;unemployment rate;domestic output;business growth;external environment;stabilization program;macroeconomic risk;Investment Flow;excise tax;financial crisis;working capital;partner country;tax purpose;duty-free access;investment risk;weighted average;Commercial Banks;profit margin;tourist destination;annual sale;industrial product;technology design;monetary indicator;product differentiation;dry cargo;Trade Policies;small area;electricity situation;Consulting services;outstanding debt;packaging industry;forestry resource;power outage;mineral reserve;domestic economy;perennial crop;political climate;personal security;tariff regime;macroeconomic framework;extension service;mass production;cheap energy;Flexible Production;management skill;food safety;economic distortion;Management Systems;worker safety;adverse consequence;infrastructure problem;potential trade;political pressure;product certification;market condition;food testing;commodity export;organic certification;unilateral action;testing laboratory;global market;import duty;product testing;regional market;product price;legal system;legal professional;enforcement efforts;weak enforcement;private company;consumer awareness;local company;software producers;foreign software;source code;dual system;voluntary standard;informal operators;enforcement function;tax base;international benchmarks;food product;transition countries;transition country;electricity companies;export growth;tax official;small-scale activity;qualitative information;refund mechanism

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Citation

Georgia - An Integrated Trade Development Strategy (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/528081468770989628/Georgia-An-Integrated-Trade-Development-Strategy