What risks does trade agreement between Tbilisi and Beijing pose for South Caucasus?

Georgia's Economy Minister Giorgi Gakharia and China's Commerce Minister Zhong Shan signed the long-awaited free trade agreement. The Memorandum on the parties' intention to prepare such an agreement was signed in 2015 during the former Economy Minister Giorgi Kvirikashvili's visit to China, who today holds the post of Prime Minister. Within two years, Beijing and Tbilisi have harmonized each provision of the document.

The agreement provides for the abolition of customs duties for 94% of goods exported from Georgia to China. High-ranking officials and leaders of the Georgian Dream ruling party describe the agreement 'historical', claiming that opening a half-billion-dollar market for Georgian products will become a powerful stimulus for its economy. "We are entering a completely new level," Giorgi Gakharia said immediately after signing the agreement. According to the minister, the export from Georgia to China "is constantly growing." Therefore, the signing of the agreement "was an imperative and meets the interests of both states." The most noteworthy in the minister's statement was the phrase about the regional importance of the agreement between China and Georgia: "We are working to make Georgia a platform for international trade," the minister stressed. Immediately  questions have been raised about the impact of this process on the economic situation in the South Caucasus, the states of which are still closely related.

Giorgi Gakharia

The concern was expressed by the Chairman of the Parliamentary Branch Economy and Economic Policy Committee, Roman Kakulia. "Such agreements are related not only to bonuses, but also to certain risks," the MP said, clearly referring to the fact that free trade between Georgia and China does not only mean the opening of a huge Chinese market for Georgian goods, but also the opening of Georgia's markets for the flow of Chinese goods. What does it mean for Georgia and neighboring states? The economic expert Giorgi Khukhashvili, speaking to Vestnik Kavkaza in an exclusive interview, drew attention to the fact that no other country in the region signed or even attempted to sign a similar agreement with China. "Does anybody really think that Azerbaijan could not achieve it if it wanted to?" the expert asked. "But Azerbaijan has been pursuing a sound economic policy for many years, protecting its markets. Baku is well aware of the risks associated with the influx of Chinese goods".

Khukhashvili is convinced that China "is trying to turn Georgia into a springboard for trade in the entire Caucasian region," and since the economies of Azerbaijan and Georgia are connected by a multitude of threads, the possible "collapse" of Georgian markets in a number of commodity positions, including in agriculture, "will certainly force its neighbors to take tough measures". "Azerbaijan does not impede the export of products produced in Georgia, but it will certainly put a barrier to re-export, as was the case with re-export of second-hand European cars," the expert stressed.

Georgy Khukhashvili is convinced that Georgia should not expect special bonuses from exports to China, as it "has nothing to offer the Chinese, except wine, but in a miserable amount, since this drink is less popular in the Celestial Empire than in Europe."

2145 views

Read on the subject


More Georgia News

Regional energy summit kicks off in Tbilisi

Regional energy summit kicks off in Tbilisi

The regional energy summit opened in Tbilisi today. It will discuss issues related to the regional energy infrastructure necessary to facilitate trade and secure electricity supply. The summit was opened by Georgia's Energy …

Janelidze: EU always supports Georgia

Janelidze: EU always supports Georgia

The European Parliament has always strongly supported Georgia, and the current visit of Foreign Relations Committee delegation confirms this, Georgian Foreign Minister Mikheil Janelidze said. He also noted that during …

Construction of Anaklia port starts on November 15

Construction of Anaklia port starts on November 15

The first phase of construction of a deep sea port in Anaklia will start on November 15. "The beginning of construction work is scheduled for November 15. Preliminary work, within the framework of which the research was carried …

 International Bank of Azerbaijan sells its subsidiaries in Russia and Georgia

International Bank of Azerbaijan sells its subsidiaries in Russia and Georgia

The  International Bank of Azerbaijan (IBA), which is undergoing the procedure of voluntary restructuring of its loan liabilities to external lenders, started sales of its foreign assets. The bank said at its presentation organized …

US stops financial aid to Caucasus (and not only to it)

US stops financial aid to Caucasus (and not only to it)

  US President Donald Trump administration released the 2018 budget proposal, which includes massive cuts to domestic and foreign aid programs. The Budget proposes to reduce or end direct funding for …

Tbilisi, Baku and Ankara trying to work out formula for military-political and military-technical cooperation

Tbilisi, Baku and Ankara trying to work out formula for military-political and military-technical cooperation

A trilateral meeting of the Azerbaijani, Georgian and Turkish defense ministers was held in Batumi on May 23.

Georgia and Turkey to cooperate in field of culture

Georgia and Turkey to cooperate in field of culture

A government delegation of Turkey led by Prime Minister Binali Yildirim is on an official visit to Tbilisi. The delegation signed a program on cooperation between the two countries in the sphere of culture for 2017-2018. …

Georgia, Azerbaijan and Turkey discuss military cooperation

Georgia, Azerbaijan and Turkey discuss military cooperation

A trilateral meeting of the Azerbaijani, Georgian and Turkish defense ministers – Zakir Hasanov, Levan Izoria and Fikri Isik – was held in Batumi today. During the meeting …

Georgian gas stations among world#039s best top 10

Georgian gas stations among world's best top 10

Two Georgian gas stations are among the 10 most beautiful gas stations in the world, according to the London-based architecture website DesignCurial. DesignCurial has ranked the world’s 10 best, based on “design, innovation …

Georgian leaders condemn Manchester attack

Georgian leaders condemn Manchester attack

Georgian leaders are offering their condolences to the Great Britain after 22 people were killed and 59 injured in a suspected terrorist attack at Manchester Arena. Georgian Prime Minister Giorgi Kvirikashvili released …

more Georgia News