World Trade
Organization RESTRICTED WT/ACC/GEO/31
31 August 1999 (99-3583) Working Party on the
Accession of Georgia Original: English

REPORT OF THE WORKING PARTY ON
THE accession of georgia TO THE
WORLD TRADE ORGANIZATION

INTRODUCTION

The Government of Georgia applied for accession to the World Trade Organization in June 1996.
DOCUMENTATION PROVIDED

The Working Party had before it, to serve as a basis for its discussions, a Memorandum on the Foreign Trade Regime of Georgia (WT/ACC/GEO/3), the questions submitted by Members on the foreign trade regime of Georgia, together with the replies thereto, and other information provided by the authorities of Georgia (WT/ACC/GEO/4, WT/ACC/GEO/7 and Addendum 2, WT/ACC/GEO/10, WT/ACC/GEO/12, WT/ACC/GEO/16, WT/ACC/GEO/18, and WT/ACC/GEO/25), including the legislative texts and other documentation listed in Annex I.
In some cases, these "objects" had been transformed into limited liability companies under the laws in force at the time; in other cases blocks of assets had been sold directly and possibly subsequently incorporated in some form by the buyers.
Georgian and foreign natural and legal persons could take part in the process of privatization of enterprises with one restriction; Georgian enterprises in which the Government owned more than 25 per cent of the authorized capital could not purchase privatized property.
Excluded from privatization were land of strategic importance, minerals, water resources, territorial waters and marine economic border zones; units of historical, cultural and artistic value, State archives of historical and cultural importance, film and photo documents, State funds, State museums, archives and funds of ministries, and scientific research institutes; Georgia's treasury and monetary reserves, reserves of precious metals, funds of national value, social security, medical insurance and other national funds; mobilization reserves and State reserves; institutions of the Academy of Sciences of Georgia; roads for general use; national cemeteries and pantheons; administrative buildings of organs of State administration; and enterprises producing radioactive materials and materials for military purpose, and testing, designing and scientific institutions.
FRAMEWORK FOR MAKING AND ENFORCING POLICIES

Powers of Executive, Legislative and Judicial Branches of Government

The representative of Georgia said that the activities of executive, legislative and judicial authorities were regulated by the Constitution of Georgia, the Law on the Constitutional Court of Georgia of 31 January 1996, the Law on Constitutional Jurisprudence of 21 March 1996, the Law on the Structure of Executive Power and Rule of its Activities of 15 April 1997, and the organic Law on General Courts.
Noting that the right of appeal of administrative decisions to an independent body was a critical component of the rule of law embodied in WTO provisions, a member requested Georgia to describe in detail the process of appeal to the judiciary for traders contesting administrative rulings by executive agencies such as in the area of customs valuation, classification and duty, taxation of imports, standards and sanitary certification and inspection, application for import or export licences, measures taken against dumping and subsidized imports, and intellectual property protection.
The hierarchy of normative acts in force in Georgia comprised: (i) the Constitution of Georgia and the Constitutional Law of Georgia; (ii) international treaties and agreements ratified by Georgia; (iii) the Organic Law of Georgia; (iv) Laws and Presidential Decrees; (v) Orders of the President of Georgia; (vi) Resolutions of the Parliament of Georgia; and (vii) Orders of a Minister or head of another central governmental authority of executive power.
The representative of Georgia confirmed that from the date of accession Georgia would ensure that all its laws and regulations relating to the right to trade in goods, and all fees, charges or taxes levied on such rights would be in full conformity with its WTO obligations, including Articles VIII:1(a), XI:1 and III:2 and 4 of the GATT 1994 and that it would also implement such laws and regulations in full conformity with these obligations.
Tariff rate quotas, tariff exemptions

The representative of Georgia said that tariff exemptions were authorized in accordance with the Law "on Customs Tariff and Duty" of 20 March 1998 (Article 18) for: (i) goods for export; (ii) re-exports (against payment of customs duty, subsequently refunded, or deposition of a bank guarantee or imported goods of equal value with the Georgian Customs Department; the conditions are described in further detail in paragraph 88); (iii) goods in transit; (iv) imported goods placed in customs warehouses (dutiable upon withdrawal from the warehouse or under the terms of other customs regimes); (v) goods imported in relief due to natural disasters, accidents and catastrophes, or as humanitarian aid; (vi) goods financed by grants or concessional credits of a foreign governmental body or international organization, including a grant element of at least 25 per cent (defined by the Ministry of Finance); (vii) goods designated for official and personal use by foreign diplomatic and similar missions and their staff, and property imported from Georgia's diplomatic missions; (viii) goods imported temporarily into the territory of Georgia; (ix) imported raw materials and semi-finished products designated for the production of exported products,
The representative of Georgia confirmed that the fees described in paragraphs 51 and 52 were the only fees for services related to imports and exports, and that, from 1 January 2000 and from the date of accession, Georgia would apply the customs declaration fee as described in paragraph 51, and would impose any fees or charges for services rendered related to importation or exportation only in conformity with Article VIII of the GATT 1994.
Exempt from VAT (Article 101 of the Tax Code as recently amended) were postage stamps (except for collection); Georgian and foreign currency (except for numismatic purposes) and securities; valuables confiscated or with no known owner, and valuables inherited by the State; gold to be transferred to the National Bank of Georgia; imported books and journals on science, art and fiction written by Georgian citizens; school books approved by the Ministry of Education in agreement with the Ministry of Finance; goods given to State bodies of Georgia as humanitarian assistance or charity,
The representative of Georgia confirmed that, from the date of accession, Georgia would not use minimum values, including domestic wholesale prices or any other domestic prices, for the application of its domestic taxes to imports, and would apply its domestic taxes, including those on products listed in paragraphs 54 to 61 and Table 2, in strict compliance with Article III of the GATT 1994.
According to this member, Georgia's laws and regulations failed to address the following critical areas: (i) the provisions for assists/"goods and services" found in Article 8 and the Interpretative Notes in Annex I to the Customs Valuation Agreement did not appear to be fully implemented; (ii) the royalty provision and proceeds of subsequent resale, disposal or use provision of Article 8 of the Customs Valuation Agreement were merged with the provision for assists/"goods and services"; (iii) the related party provisions in Article 1 and the Interpretative Notes in Annex I to the Customs Valuation Agreement did not appear to be fully implemented; (iv) Georgia did not provide for Article 4 of the Customs Valuation Agreement, allowing only the importer to reverse the order of use of deducted or computed valuation methods; (v) Georgia did not include the provision concerning objective and quantifiable data and no additions other than those provided for to be included in the price actually paid or payable (Article 8(3) and (4)); (vi) Georgia did not include several prohibited methods of appraisement required by Article 7 of the Customs Valuation Agreement, as well as the obligation to inform the importer in writing of the method of appraisement used by Customs; (vii) the obligation to publish laws,
The representative of Georgia confirmed that from the date of accession, Georgia would fully apply the WTO provisions concerning customs valuation without recourse to a transition period, including in addition to the Agreement on the Implementation of Article VII of the GATT 1994, Annex I (Interpretive Notes) and the provisions on the Treatment of Interest Charges in Customs Value of Imported Goods and for the Valuation of Carrier Media Bearing Software for Data Processing Equipment (Decision 4.
that for non-preferential and preferential rules of origin, respectively, its customs authority or preshipment inspection authority acting on its behalf will provide upon request an assessment of the origin of the import and outline the terms under which it will be provided.
In addition to verifying the price of imports, the PSI firm would also be expected to verify quantity and quality in some cases, and indicate the proper customs classification.
The representative of Georgia confirmed that after accession to the WTO, Georgia intended to minimize the use of export taxes and any such taxes applied would be in accordance with the provisions of the WTO Agreement and published in the Official Journal.
Export licences would be granted for all types of logs cut in conformity with the requirements of the State Forest Department, which required information on the forest, farm, region and section where the wood was to be cut; quantity, date and type of cutting; and information on the forest user, all in accordance with regulations issued by the State Forestry Department.
Georgia was requested to complete a "Statement of Implementation" on technical barriers to trade and to provide specific information on the move from domestic to international standards; the provision of an operational enquiry point; acceptance of the TBT Code of Good Practice by Georgia; information on the procedure and terms for issuing certificates of conformity,
Georgia would also reduce further the number of categories of imported products subject to mandatory certification prior to the end of 1999, notifying the revised list to the WTO by 1 January 2000, and would complete the process of conversion to voluntary certification in accordance with the timetable outlined in WT/ACC/GEO/28.
Traded goods covered by quarantine regulations included agricultural products, timber, seeds and seedlings, plants and plant parts, and plant products that could carry infectious diseases; hides and unprocessed wool; mushrooms, bacteria, viruses, nematodes and insects on living cultures; collections of insects, which could bring plant diseases; herbaria and seed collections; agricultural machinery, aggregates for land development, vehicles, vessels, packaging materials and industrial plants; and soil samples which could carry plant diseases.
A member sought a commitment from Georgia to abide by the requirements outlined in the SPS Agreement as of the date of accession to the WTO, adding that the establishment of a certification system for imports that did not present unnecessary barriers to trade prior to accession would be a fundamental factor in completing Georgia's accession process.
The representative of Georgia
confirmed that if Georgia established any free zones or special economic areas, it would administer any such areas in compliance with WTO provisions, including those addressing subsidies, TRIMs, and TRIPS, and that goods produced in these zones under tax and tariff provisions that exempt imports and imported inputs from tariffs and certain taxes would be subject to normal customs formalities when entering the rest of Georgia including the application of tariffs and taxes.
With the assistance of European Communities counterpart funds (CPF), the Government provided - through the commercial banking system - short term working capital to traditional suppliers of inputs of fertilizers, seeds, and energy products, as well as to grain producers and traders.
According to an Agreement with the European Communities (1993), Georgia's exports of textile and clothing (HS Chapters 50 to 63) could become subject to quantitative restrictions in the European Communities' market if the exported volume exceeded 0.
Participation in international intellectual property agreements

The representative of Georgia said that Georgia was a member of WIPO and a party to the Paris Convention for the Protection of Industrial Property (18 January 1994); the Patent Cooperation Treaty (18 January 1994); the Berne Convention for the Protection of Literary and Artistic Works (15 May 1995); and the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (20 August 1998).
The law on copyright and neighbouring rights included specific provisions on economic rights (Article 16), the rights of producers of phonograms (Article 39), the rights of producers of videograms (Article 40), the distribution of phonogram and videograms (Article 41), and the rights of broadcasting organizations (Article 42), as well as certain provisions which were not reflected in the Civil Code, for example on rental rights in respect of computer programs, cinematographic works and phonograms (drafted on the basis of the EC Directive of 14 May 1991 on the Legal Protection of Computer Programs), and cable transmission rights (Article 16(g)).
It was expected that the provisions in the civil Code would eventually be revoked, but that this probably would not happen until a general revision of the Civil Code was undertaken.
A sign could be a word; combination of words (including personal name, letters and numerals); figure; design sound mark; or three-dimensional configuration, including the shape of goods or their packaging as well as colours and combination of colours.
Special border measures

The representative of Georgia said that the Law on Intellectual Property Related Border Measures provided that goods infringing copyright or trademark under Georgian law could, upon order of the court based on an application of the copyright or trademark holder, be detained for up to ten days.
Concerning specific services sectors, he said that a Law on Business Licensing, enacted on 14 May 1999, provided the framework for licensing the sectors of insurance, banking, securities, air and maritime transport, auditing services, construction and design, and private education services, including licensing agency and uniform procedures to be followed.
The regulatory regime in the tourism sector comprised the Tourism Chart and Tourism Code (September 1995), the Law "on Tourism and Resorts" of 6 March 1997, and Amendments and Changes to the Law on Tourism and Resorts of 20 March 1998.
Reminding Georgia that Article X and several WTO Agreements required laws, regulations, judicial decisions, and administrative rulings of general application dealing with trade to be published in a manner which permitted governments and traders to become acquainted with them, and in some cases for comment prior to finalization, this member requested Georgia to review its current diffuse publication strategy and to consider focusing its publication requirements on WTO issues in a relatively small number of publications.
The Coal and Metal Association Agreement, signed by 11 CIS countries, provided for the establishment of a Eurasian Association for Coal and Metal to further rational development of the coal and metal-producing industries, coordination of scientific, technical and investment policies, and promotion of beneficial conditions of supply and terms of sale.
70 44 26 Oil Products 33 27 6 Transport 110 110 0 Social Svcs 42 31 11 Energy 91 47 44 Seaports 0 0 0 Total 1,156 2 108 204 214 273 128 0 929 227
Privatization of enterprises, 1 January 1993 – 15 May 1999

(b) Small enterprises ("Objects") sold without conversion to Joint Stock Companies

Originally 1993 1994 1995 1996 1997 1998 1999 Total Remain Total: 12,088 1,310 1,370 4,701 2,247 1,474 1,910 136 13,148 405 By Sector: Industry: 345 26 35 103 50 30 22 3 269 76 Construction 224 11 70 67 58 40 35 3 284 2 Food/Agric.
20 5 Other fermented beverages (apple cider, perry, mead); mixtures of fermented beverages, mixtures of fermented and non-alcoholic beverages not elsewhere specified 2206 1 Liter 2.
 744 of 30 November 1995 of the Cabinet of Ministers of Georgia, the Law of Georgia on Regulation of Forest Exploitation of 26 June, 1998, and the Law of Georgia of Export of Scrap Metals of 26 June, 1998, export of the following is prohibited or licensed as indicated:

Prohibited: HS 97019703, 9706 Artwork and antiques of museum value HS 9301, 9302, 9305, 9306 Weapons and gunpowder Subject to licensing: HS 9705 Collection materials of biology, mineralogy, archaeology, paleontology, ethnography and numismatics: Licence is granted in agreement with the Ministries of Finance, Protection of Environment and Natural Resources, Culture and the Department of Geology respectively.
Group 15 8 Meat and fish ready for use products Group 16 9 Sugar and sugar confectionery Group 17 10 Cocoa and cocoa preparations Group 18 11 Preparations of cereals, flour, starch or milk; pastrycooks’ products Group 19 12 Preparations of vegetables, fruit, nuts or other parts of plants Group 20 13 Miscellaneous edible preparations Group 21 14 Beverages, spirits and vinegar Group 22 15 Prepared animal food Group 23 16 Tobacco and tobacco products Group 24 17 Edible salt 2501 00 910 18 Organic and non-organic sands 2505, 2517, 2518.
51 67 Electric generating sets and rotary converters 8502, 8504 68 Basic elements and batteries 8506 69 Electric accumulators including their apparatus of different shapes 8507 70 Electrical engine operated manual electricmechanical instruments with indulged 8508 71 Electrical engine operated household electric mechanical machines 8509 72 Electrical engine operated electric shavers and hair cutters; 8510 73 Alarm and lighting equipment 8512 74 Other electric household items 8516 75 Tape players and similar devices 8519 76 Tape recorders and other recording devices with or without players 8520
77 Video recording and playing devices 8521 78 Fire and safety electronic alarms 8531 79 Electric devices for turning on/off the electricity, contacts, with voltage over 100 V (switches, switchboards, power reducers, fluctuation reducers, electric load, using equipment, etc.
2-166 of 19 June 1997 On Approval of the Regulation for Use of Paid Service Tariff of the State Inspection of Phytosanitary Quarantine;
- Law on Agricultural Quarantine of 15 May 1997;
- Law on Government Procurement of 9 December 1998;
- Civil Code of Georgia of 26 June 1997;
- Law on Copyright and Neighbouring Rights of 22 June 1999;
- Law on Trademarks of 5 February 1999;
- Law on Appellations of Origin and Geographical Indications of 22 June 1999;
- Law on Patents of Georgia of 5 February 1999;
Law on Layout Designs of Integrated Circuits of 22 June 1999;
Articles 194/201of the Draft Criminal Code of Georgia (May 1999);
Law on Intellectual Property Related Border Measures of 25 June 1999;
Law on Protection of Selected Achievements of 18 October 1996;
- Law on Protection of Consumer Rights of 20 March 1996;
- Law on Monopolistic Activities and Competition of 25 June 1996;
- Law on Advertising of 18 February 1998;
- Law on Audit of 7 February 1995, as amended to 27 June 1997;
- Law on the National Bank of Georgia of 23 June 1995, as amended to 13 October 1998;
- Law on Activities of Commercial Banks of 23 February 1996, as amended to 24 December 1998;
- Law on Insurance of May 2, 1997, as amended to 30 October 1998;
Law on the Securities Market of 24 December 1998;
- Free Trade Agreement between Georgia and Armenia of 14 August 1995;
- Free Trade Agreement between Georgia and Azerbaijan of March 1996;
- Free Trade Agreement between Georgia and the Russian Federation of 3 February 1994;
- Free Trade Agreement between Georgia and Ukraine of 4 June 1996;
- Free Trade Agreement between Georgia and Uzbekistan of 4 September 1995;
Agreement on Establishment of the Inter-State Euro-Asian Corporation of Coal and Metallurgy of 24 September 1993;
Agreement between the European Communities and the Republic of Georgia on Trade in Textile Products;
- Law on Statistics of 12 November 1997;
- Statistical data on foreign trade of Georgia by commodity groups (1996); and
- Statistical data on foreign trade of Georgia by HS (1996-1997).
PROTOCOL OF ACCESSION OF GEORGIA
TO THE MARRAKESH AGREEMENT ESTABLISHING THE
WORLD TRADE ORGANIZATION
Draft
The World Trade Organization (hereinafter referred to as the "WTO"), pursuant to the approval of the General Council of the WTO accorded under Article XII of the Marrakesh Agreement Establishing the World Trade Organization (hereinafter referred to as "WTO Agreement"), and the Republic of Georgia (hereinafter referred to as "Georgia"),
Taking note of the Report of the Working Party on the Accession of Georgia to the WTO in document WT/ACC/GEO/31 (hereinafter referred to as the "Working Party Report"),
Having regard to the results of the negotiations on the accession of Georgia to the WTO,
Agree as follows:
Part I - General
1.