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Association Agreement with the European Union could Increase Product Prices

Association Agreement with the European Union could Increase Product Prices

The Association Agreement signed between the EU and Georgia on June 27 concerns the creation of deep and comprehensive free trade area (DCFTA) as well.

What economic effect will the Association Agreement have, and specifically, what regulations must local and foreign entrepreneurs introduce? “Versia” daily  spoke to a Chief Advisor to the State Minister of Georgia on European and Euro-Atlantic Integration Eka Sepashvili.

– What is the importance of the Association Agreement from the economic point of view?

– The importance of this agreement is indeed invaluable from the economic point of view. Georgia is a small country with limited resources, that is a problem for  the business to a certain extent. The Association Agreement allows Georgian or any other business that operates in Georgia to lift these restrictions. In particular, under the Association Agreement, which integral part is a deep and comprehensive free trade agreement, gives the opportunity of unlimited access to the world’s biggest market. Approximately 500 000 000 people with the highest purchasing power live in the EU countries. The products with inscription “Made in Georgia” will be able to enter this market.

The Association Agreement, of course, envisages certain regulations as well. Association Agreement does not limit the products made in Georgia to enter the European market, on the contrary, they will  freely enter any market in the world, as the EU standardsare one of the highest in the world and if the Georgian products meet these standards, they will have no problems in  any  market.

– What specifically does the EU require from Georgian and foreign businessmen working in Georgia?

– Georgia-made food must be harmless and products safe as the protection of consumer rights is the main point of the Association Agreement, which means that products placed on the market must be safe and harmless. This will be the burden for businesses to some extent, because such regulation needs expenses but on the other hand, the goods will be competitive and meet high standards, that  ultimately will contribute to economic growth.

– It is clear that the Georgia-made products must meet the EU standards, but will the Association Agreement protect the Georgian market from substandard products?

Association Agreement, of course, will protect a domestic market from low-grade imported goods. Typically, the agreement opponents often say that the EU integration will lead to a rise in the cost of living. At a certain point the products may become more expensive, but the standard of living will increase as well, and it cannot be the main reason for which we should give up such opportunities. An improvement in quality of life means more income, having more income people will buy slightly expensive products without any problems. However, they will  know that the product is completely safe and harmless. I cannot say unequivocally that prices will rise, because no one knows what to happen. Perhaps unexpectedly the climatic conditions willworsen, the harvest will not come and a certain product will hike in  price. And this is not due to the Association Agreement. This or that product can become more expensive or fall in price due to price fluctuations in the international markets, especially when Georgia is tied to world  markets, for example, sugar, wheat, or a fuel price changes do not depend on us.