კონფერენცია

∘ Ramaz Putkaradze ∘
EUROPEAN FREE TRADE ASSOCIATION (EFTA) AND GEORGIA

Summary

There is lack of studies of European Free Trade Association (EFTA) in Georgian economic literature. The present paper studies historical aspects of this association, its member states and their role, as well as trade and economic cooperation between EFTA and Georgia.

The European Free Trade Association is a free trade organization between four European countries: Iceland, Liechtenstein, Norway and Switzerland. The main goal of the organization is to encourage trade relations and economic integration between the member states. There are no custom taxes between the member states but foreign trade tariffs with third countries are maintained.

EFTA was one of the reasons why its founding countries did not want or could not join the European Union. In the frames of the free trade agreement gradual abolition of the trade tariffs on manufactured goods was intended, however, foreign trade tariffs were not abolished. The member states thought that such integration would allow them to strengthen their positions with respect to the European Union and other countries or organizations.

EFTA member states are quite highly developed countries. They take leading positions in different sectors in the world. EFTA is actively cooperating with the countries of international community and is trying to further deepen and simplify trade and economic relations. It also actively cooperates with international organizations. Currently, EFTA has free trade agreements with many countries around the world (including Canada, Chile, Egypt, Macedonia, Israel, Mexico, Singapore, Turkey and others). Negotiations on free trade agreement are still being held with different countries.

It is noteworthy that with the purpose of deepening further economic cooperation between the parties, on June 27, 2016 Free Trade agreement between Georgia and European Free Trade Association was signed in Bern, Switzerland.

The EFTA member states actively support Georgia's territorial integrity and sovereignty and the Euro-Atlantic integration of the country. Consequently, relations between the parties are intensively developing in different directions. Cooperation in trade, economic, technical, financial and other fields is deepening.

According to the preliminary data of 2016, Georgian export to EFTA amounted to 82 million USD (3.9% of total export), while import amounted to 60.5 million USD (1% of total imports). Therefore, Georgia has a positive trade balance with EFTA in the reporting period. The volume of FDI invested by the EFTA countries in Georgia is very small and amounted to only 6.6 million USD in 2016 (0.4%), while the volume of FDI invested by the EFTA countries amounts to 1.3 billion USD.

EFTA member states have leading competitive economy and therefore, one of the main problems of Georgia is low competitiveness of its economy. Therefore, Georgia can use the experience of these countries. On the other hand, increasing trade and economic links will lead to improving the competitiveness of Georgia’s economy. The EFTA member states provide an example that a European country might not be a member of the European Union, but it can be as developed as a EU member country.

Ivane Javakhishvili Tbilisi State University Paata Gugushvili Institute of Economics International Scientific C O N F E R E N C E S "ECONOMY – XXI CENTURY"

E ISSN 2587 - 4691	∘ Ramaz Putkaradze ∘ EUROPEAN FREE TRADE ASSOCIATION (EFTA) AND GEORGIA Summary There is lack of studies of European Free Trade Association (EFTA) in Georgian economic literature. The present paper studies historical aspects of this association, its member states and their role, as well as trade and economic cooperation between EFTA and Georgia. The European Free Trade Association is a free trade organization between four European countries: Iceland, Liechtenstein, Norway and Switzerland. The main goal of the organization is to encourage trade relations and economic integration between the member states. There are no custom taxes between the member states but foreign trade tariffs with third countries are maintained. EFTA was one of the reasons why its founding countries did not want or could not join the European Union. In the frames of the free trade agreement gradual abolition of the trade tariffs on manufactured goods was intended, however, foreign trade tariffs were not abolished. The member states thought that such integration would allow them to strengthen their positions with respect to the European Union and other countries or organizations. EFTA member states are quite highly developed countries. They take leading positions in different sectors in the world. EFTA is actively cooperating with the countries of international community and is trying to further deepen and simplify trade and economic relations. It also actively cooperates with international organizations. Currently, EFTA has free trade agreements with many countries around the world (including Canada, Chile, Egypt, Macedonia, Israel, Mexico, Singapore, Turkey and others). Negotiations on free trade agreement are still being held with different countries. It is noteworthy that with the purpose of deepening further economic cooperation between the parties, on June 27, 2016 Free Trade agreement between Georgia and European Free Trade Association was signed in Bern, Switzerland. The EFTA member states actively support Georgia's territorial integrity and sovereignty and the Euro-Atlantic integration of the country. Consequently, relations between the parties are intensively developing in different directions. Cooperation in trade, economic, technical, financial and other fields is deepening. According to the preliminary data of 2016, Georgian export to EFTA amounted to 82 million USD (3.9% of total export), while import amounted to 60.5 million USD (1% of total imports). Therefore, Georgia has a positive trade balance with EFTA in the reporting period. The volume of FDI invested by the EFTA countries in Georgia is very small and amounted to only 6.6 million USD in 2016 (0.4%), while the volume of FDI invested by the EFTA countries amounts to 1.3 billion USD. EFTA member states have leading competitive economy and therefore, one of the main problems of Georgia is low competitiveness of its economy. Therefore, Georgia can use the experience of these countries. On the other hand, increasing trade and economic links will lead to improving the competitiveness of Georgia’s economy. The EFTA member states provide an example that a European country might not be a member of the European Union, but it can be as developed as a EU member country.