Time for an FTA? – Analysis – Eurasia Review

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By Wilder Alejandro Sanchez

A letter at the end of 2021 from several members of the United States Congress calls on US Trade Representative Ambassador Katherine Tie to increase trade and investment with Georgia. While greater trade will not alter the complicated dynamics of the Caucasus, bilaterally, strengthening this sector is essential for Washington-Tbilisi relations and will have clear positive repercussions for the Georgian economy. The signing of a free trade agreement between the two countries is a necessary first step for this process to occur.

Call for more trade

The letter highlighted the importance of Georgia and how the country has been a reliable ally of the United States for the past three decades since gaining independence from the Soviet Union. “Georgia is an essential ally of the United States. As an evolving democracy, Georgia needs to make significant political and economic reforms that will enhance stability in the Caucasus region, and the prospect of enhanced trade relations with the United States could catalyze these reforms, the letter explains. , which was signed by various representatives, including Gerry Connoly (D-VA), jimmy gomez (D-CA), Adam Kinzinger (R-IL), Carol Miller (R-WV) and Steve Womack (R-AR). Several of these representatives visited Georgia in September.

The letter outlines how increased trade will have a trickle-down effect on the Georgian economy and help promote American-made products and strategies. “Greater economic engagement with the United States at the right time could further propel Georgia’s market reforms and investment-friendly policies and give U.S. goods and services a greater presence in the South Caucasus, l ‘Central Asia, Turkey and Eastern Europe,’ the signatories of the letter said. argue, which was partially reproduced by the Georgian Embassy in Washington and by Georgian Information Services.

After meeting Georgian Prime Minister Irakli Garibashvili in September, Rep. Mooney also called for more talks. He is cited like saying, “we talked about free trade, [and] increase trade and economic relations between the United States and Georgia.

Undoubtedly there is plenty of room to grow like nowadays Trade between Washington and Tbilisi is not particularly strong. According to US government figures, trade reached $587.7 million in US exports and $158.7 million in imports in 2021. The amount is slightly higher than in 2020, when exports reached 436 million and imports, $148.8 million. The main American exports are vehicles, meat (poultry), machinery and minerals, while Georgia’s main imports are iron and steel, inorganic chemicals and beverages (wine). In a recent development, a California-based company, Catapult VC, reportedly invest in “technology companies, [and] will launch a fund dedicated to investing in the innovative Georgia startup. If this venture goes ahead, it will help diversify the trade and investment initiatives that exist between the two countries. Georgia is the 100th trading partner of the United States, which places it higher than neighboring Armenia (166th partner) and Azerbaijan (125th) but still far from Central Asian states like Kazakhstanwhich is the 81st partner of the United States.

A legal framework between the two nations to enhance trade and investment includes the United States-Georgia Trade and Investment Framework Agreement and a Bilateral Investment Treaty (BIT). Nevertheless, as the letter indicates, Washington does not have a free trade agreement (FTA) with Tbilisi. On the issue of the FTA, a June 2021 report from the United States Congressional Research Service explains, “Since 2012, the United States and Georgia have periodically discussed the possibility of a free trade agreement. The Georgia Support Act (HR 923), if enacted, would express Congressional sentiment that “the U.S. Trade Representative should make progress in negotiations with Georgia” on a free trade agreement. However, at the time of this writing, there is no indication that an FTA will be signed during US President Joe Biden’s tenure.

Current relationships

Georgia has sought to strengthen its relationship with the United States since the 2008 war, which meant the loss of control over Abkhazia and South Ossetia. Although Georgia is not a member of NATO, the US military aims to have a larger presence in the Black Sea. Georgia has become a critical partner in achieving this goal, as last November the Blue Ridge-class command and control ship USS Mount Whitney (LCC-20) and the Arleigh Burke-class guided-missile destroyer USS Porter (DDG -78) docked in Georgian Port of Batumi. In 2021, the US State Department approved a potential sale of eighty-two (82) Javelin FGM-148 missiles and forty-six (46) Javelin Command Launch Units (CLUs) to Georgia, a deal worth $30 million.

From a diplomatic point of view, Georgia participated in the meeting of President Biden summit for democracy end of 2021. Additionally, senior US officials like the US Secretary of State Antoine Blinkenand U.S. Under Secretary of State Wendy Shermanhave recently expressed their support for Georgia, especially vis-à-vis Russia’s ambitions and activities.

That said, Washington did not give the Georgian government a blank check for its contribution to the promotion of American interests in the region. Although certainly more democratic than other states in the region, Georgia’s democracy, free and fair elections and respect for opposition political parties are cause for concern. As CRS explains, “with respect to the 2020 Georgian legislative elections, U.S. officials shared the international observer mission’s assessment that the elections “were competitive and, overall, fundamental freedoms were upheld”. Georgia expressed concern over the irregularities and alleged abuses which “while not sufficient to invalidate the results, continue to blight Georgia’s electoral process and are unacceptable “, adds the report.

These statements refer to the Georgian parliamentary elections, when Prime Minister Giorgi Gakharia won a third term and the ruling Georgian Dream party won the most seats. Opposition parties boycotted the elections and there were violent demonstrations in the streets. Early 2021, a top leader of the opposition, Nika Melia, was arrested on charges of “inciting violence during street protests in June 2019”. Ironically, PM Ghakaria resigned on Melia’s detention orders, but her successor, current Prime Minister Garibashvili, followed through on the arrest order anyway. US Ambassador to Georgia Kelly Degnan recently commented on the state of democracy in the country. “As far as the Central Election Commission is concerned, it is obvious that there is already a lack of trust in the electoral process, we have seen this in the last elections,” she noted.

Sign an FTA

One wonders to what extent the letter from the US members of Congress will affect bilateral trade and investment with Georgia. Ambassador Tai, the U.S. Trade Representative, and Ambassador Degnan, can certainly help organize US business delegations to visit Tbilisi. However, investment negotiations and the actual construction of investment-related infrastructure are long-term processes, so it would take years to see results. Trade could improve in the short term, but it all depends on what Georgia has to offer the US consumer market, industries and businesses. For example, while Georgian wine at a strong fan base in the United States, the volume can always increase.

The obvious first step should be for Washington and Tbilisi to sign an FTA. This trade agreement would create a legal framework that would facilitate future trade and investment initiatives requested by members of the US Congress and which the Georgian government and the business community would certainly like to see.

The opinions expressed in this article belong to the author and do not necessarily reflect those of Geopoliticsmonitor.com or any institution with which the author is associated.

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