Georgia : An Integrated Trade Development Strategy
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 unde...
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| Format: | Foreign Trade, FDI, and Capital Flows Study |
| Language: | English en_US |
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Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2003/11/2821196/georgia-integrated-trade-development-strategy http://hdl.handle.net/10986/14356 |
| Summary: | 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. |
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