General Schemes of Preference for Georgia
Generalized system of preferences GSP (Generalized System of Preferences) was created in 1968 to promote export to developing countries. This system allows exporters of these countries to pay less fees when exporting to specific countries that make the products of developing countries competitive in the developed markets.
Georgia uses GSP system with the USA, Canada, Switzerland, Czech Republic, Slovakia, Norway and Japan (2001 year), with Poland (2002 year), with Turkey (2002 year), with Estonia (2003 year), and with European Union (1995 year) – with a new scheme of GSP (EU GSP +), which is an important factor to promote exporting from Georgia.
After receiving the Beneficiary status of GSP +, Georgia has the right to export 7200 products without customs duties in the EU, including tobacco and tobacco products (commodity codes: 2401, 2402, 2403). 10 countries use GSP + system. These are: Georgia, Armenia, Bolivia, Cabo-Verde, Costa Rica, Ecuador, Mongolia, Paraguay, Pakistan and Peru.
General Schemes of Preference for Georgia with the US, Canada, and Japan have been applied for, with the result being lower tariffs on 3,400 goods exported from Georgia.
The import of tobacco and tobacco products in Canada and Norway is exempt from import tax; Tobacco products manufactured only in 2402 and 2403 commodity codes are exempt from import tax in Switzerland (2402 cigars, cigars with cut end, cigars and cigarettes; 2403 - other tobacco products and tobacco substitutes; homogenized tobacco extracts and essences); In case of Japan, tobacco and its products are not included in the list of products whose import is exempt from tax.
Criterias to grant GSP beneficiary status:
Developed countries grant developing countries the status of the GSP beneficiary country, if the country meets certain requirements that may generally be formulated as follows:
- Economy of the country or territory should be at a stage of development;
- The area must have its trade-tariff system;
- The country or territory should apply to the Government of the developed country at the request of to get the GSP customs benefits;
- The Government of the country which awarding the Preference status shall set the beneficiary country or territory in the number of ones, which may enjoy such benefits.
- In addition, the GSP Scheme of all countries individually identifies the additional requirements for which the beneficiary country is required to be satisfied.
For example, USA while granting preference to any country, together with economic criteria, takes into account certain political approaches:
- A beneficiary country shall not be the subject to influence or control of international communism;
- A beneficiary country should have a developing economy;
- A beneficiary country should have the advantage of Preferred Promotion Mode with the US;
- Being a member of the General Agreement and International Monetary Fund on trade and tariffs.
It is also considered:
- How much illegal export practices are restricted;
- Ensuring protection of the rights of workers in internationally recognized rules;
- Was there any fact of expropriation or nationalization of property of foreign investors and etc.
The basic conditions for using the preferential tariff
To export goods from the beneficiary country subject to taxation of preferential tariffs, use this tariff regime, it is obligatory to confirm its origin from this country. In addition, export must be carried out in accordance with certain requirements.
The products imported from the regional associations used by the GSP benefit from the benefits if the share of beneficiary countries is more than the percentage of the set percentage of the added value. In most cases the added value will be calculated according to the sale price of goods. This is a price that is actually paid or payable in the country where it is promoted to the exports.
Whether product replies to the requirements of the GSP origin requirements, determine the customs services of the countries which are providing the preferences.
The benefits are mainly distributed on agricultural products and it concerns only those goods exported from Georgia which have the certificate of origin (form "A").
The Certificate of Origin (Form "A") confirms the origin of the goods, which is the official document and on the basis of which customs authorities of the importing countries providing the custom benefits for the mentioned products.
Certificate of origin (form "A") shall be issued only on the basis of the submission of a written application by the exporter or person authorized by exporter. Exporter or person authorized to file with the application must submit any additional documents confirming that the exported products respond to all requirements for issuing the Certificate of Origin (for eg. Invoices, Enclosures and etc.).
The Certificate of Origin (Form "A") shall be submitted to the customs authorities of the importing countries in the period of ten months from the date of issuance by the competent state authority of the beneficiary country.
A document confirming the origin of the product in Georgia is issued by two agencies: the Georgian Chamber of Commerce and the Ministry of Economic Development of Georgia.
The Certificate of Origin (Form "A") is issued by the Ministry of Economic Development of Georgia, which confirms compliance with the criteria of origin determined by the GSP scheme. The Certificate "CT-1" which is issued by the Chamber of Commerce of Georgia is used by the CIS countries and is issued on the basis of the compliance with general rules of origin.
GSP + scheme
On June 27, 2005, the Council of Europe adopted Procurement No. 980/2005, based on which from the date 1 July of 2005, the renewed Generalized GSP + System of EU Preferences was launched and spread to Georgia along with other countries.
The new GSP + scheme is provided for the countries which have unsustainable economies (Vulnerable Countries), which require special assistance for development. It covers about 7200 types of products that are allowed on the EU market without customs duties. This is a very important circumstance, since Georgia was given the opportunity to supply only 3300 products without customs duties in the EU market and only some benefits was in force for 6900 commodities. After receiving GSP + status, Georgia has been able to export 7200 commodities to the EU. Georgia together with other beneficiaries satisfied the following three criteria:
- The volume of imports carried out in the five largest sectors by the generalized system in the European Union should be more than 75% of the total volume of imports carried out by the GSP;
- The Generalized System of Preferences shall import from these countries not more than 1% of the total volume of imports carried out by the general system of preferences in the EU;
- Preference shall be given to developing countries that have ratified and have done an effective implementation of the 16 main Conventions regulating human rights and labor rights, Effective Management and 7 (from 11) convention of Environmental Protection sphere. At the same time, the beneficiary countries took the responsibility of ratifying and effective implementation of the international conventions that have not yet been ratified by them.
In EU markets, Georgia can import goods such as hazelnut, nuts, wine vinegar, natural honey, some non-alcoholic beverages, and various industrial products (eg, ammonium nitrate). According to the new scheme, the list of agricultural goods has significantly expanded and increased the range of products such as fish, various vegetables, fruit and spices.
Some prospective export products provided by GSP + scheme:
- Conservation of various fruits and vegetables;
- Natural honey;
- Nuts / walnuts;
- Glassware (pottery, jars, bottles, etc.);
- Textile goods;
- Bay tree leaf;
Import of mineral water in the EU
The import of mineral water in the EU is exempt from customs duties. However, Georgian mineral waters should meet the requirements of the EU food safety requirements (Regulation (EC) No 178/2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety).
In terms of Georgian products access to the EU market, Georgia is committed to ensuring EU standards, which is carried out through the reforms in standardization, certification and accreditation.
You can find GSP+ scheme on the following link: text of the document