PROSPECT OF DEEP AND COMPREHENSIVE FREE TRADE AREA (DCFTA) - IS THERE A EUROPEAN WAY FOR GEORGIA?

Tamar Khuntsaria

Abstract


The negotiations on a Deep and Comprehensive Free Trade Area (DCFTA) with the European Union (EU) are an important element of the current agenda of the EU-Georgia relations. Political dialogue between the Government of Georgia and the European Commission on DCFTA commenced soon after the August war in 2008 and aimed at opening official negotiations on DCFTA once structural and policy reforms set forth as preconditions by the EU were launched in Georgia. Early in 2010, official Tbilisi asserted that it had made a substantial progress with respect to the Commission’s preconditions. Nonetheless, the Commission postponed the opening of official negotiations to January 2012 and announced DCFTA to be an integral part of the projected Association Agreement (AA) with Georgia – a far reaching and ambitious, and therefore, a lengthy document to conclude.

This paper offers analysis of the possible impediments to concluding a DCFTA with Georgia. My arguments are based on three major factors hindering the process:  First and foremost, Georgia’s long term economic development model is uncertain. The country’s ruling elite up until 2012 parliamentary election, dominated by an influential libertarian group, has maintained the government’s ambivalent attitude towards the two fundamentally different ‘European’ and ‘Singaporean’ models of country’s development. It is argued here that becoming a second Singapore is an obscure prospect for Georgia and that the best possible alternative for the country’s long-term sustainable development is to follow the European path. Second, the Government of Georgia under the President Michael Saakashvili has been unenthusiastic about implementing the EU preconditioned ‘deep and comprehensive’ regulatory reforms due to high convergence costs. Instead of targeting long-term sustainable economic growth, official Tbilisi has proceeded with marginal reforms and used the possibility of the EU approximation as a political tool to sustain the EU’s political support and aid. Third, the EU’s ‘enlargement-lite’ and technocratic policy along with its limited conditionality and lenience towards unfulfilled reforms in Georgia has further encouraged the government’s “selective convergence” and hesitance to decide firmly and ultimately on the European way.


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