UAE signs CEPA with Georgia, deal to come into effect in Q1-24
Gulf News | 10 October 2023
UAE signs CEPA with Georgia, deal to come into effect in Q1-24
by Dhanusha Gokulan
Dubai: The UAE and the Republic of Georgia have signed a Comprehensive Economic Partnership Agreement (CEPA) that will eliminate or significantly reduce tariffs, remove non-tariff barriers and promote trade in goods, services and investment. The deal will take effect in the first quarter of next year, the countries have confirmed.
The agreement will significantly expand UAE’s export opportunities, with a minimum expectation of at least $1.3 billion in exports to Georgia over the next five years, according to Dr Thani bin Ahmed Al Zeyoudi, the UAE Minister of State for Foreign Trade. He was speaking at a press event announcing details of the CEPA between UAE and Georgia.
The two countries were able to complete negotiations and sign the trade agreement after just three rounds of talks, said Levan Davitashvili, Vice Prime Minister, Minister of Economy and Sustainable Development of the Republic of Georgia. "We started negotiations in September 2022 and concluded talks in March 2023," he said.
Reduction in tariffs
"The percentage of the tariff reductions is almost 95 per cent of the overall historical trade between us and Georgia. And 99 per cent has been given from us to their (Georgia’s) products," said the minister. Al Zeyoudi said the economic growth and benefits generated by the trade agreement are expected to offset any revenue losses from reduced tariff collections.
"So yes, there will be a reduction in tariff, but at the same time, there will be an added value in our GDP. So that is compensating the tariff reduction," he explained.
This aligns with global best practices, where countries have doubled their economies rapidly due to free trade agreements. "We are adopting a similar approach with the Georgia agreement. Many sectors are poised to benefit greatly from the liberalisation, granting market access to our companies and vice versa. This potential extends to various industries, including hospitality, business services, finance, and telecommunications," said Al Zeyoudi.
Georgia and the UAE’s bilateral non-oil trade has surged significantly in recent quarters, with trade value climbing to $468 million in 2022, an annual growth of 110 per cent.
Benefits of UAE-Georgia CEPA
The two countries are seeking to develop opportunities in priority sectors such as agriculture, renewable energy, transportation, hospitality, tourism, and digital trade. Davitashvili told Gulf News: "This is a very comprehensive document, which covers almost all aspects of trade, including customs procedures. It covers not only goods but also the service sector," he said.
Davitashvili is hopeful the trade deal will also boost public-private partnerships between both countries. "Currently, we are working with Masdar on renewable energy projects, particularly a pilot project for a solar farm in Georgia. We anticipate signing a joint venture agreement within the next month to proceed with the implementation."
In the energy sector, Davitashvili said the two countries are also exploring the integration of solar and wind energy, mainly onshore wind energy.
"In addition to energy, the hospitality and tourism sectors are vibrant parts of our economy," he said. The Vice Prime Minister expressed optimism that once CEPA is in effect, we can potentially increase the number of weekly flights between the UAE and Georgia. Currently, the two countries maintain 30-45 flights per week.
Davitashvili also hopes the CEPA will boost trade and re-export of Georgian agri-products, fruits and vegetables, meat products, and other consumer goods. "We have had great growth in 2023, but I think it will now move to the next level," he added.
Future CEPAs
The UAE is preparing to conclude CEPAs with six more countries before the end of the year, said the minister. "We are about to conclude talks with South Korea, and Thailand is almost at the last stages," said the minister. These agreements will follow with Costa Rica, Chile, Colombia, and Vietnam.
"We are also very close to concluding talks with Ukraine. We are moving at a pretty good pace with the negotiation," said Al Zeyoudi.
Commenting on plans to expand the India-UAE CEPA, Al Zeyoudi said the countries are up for a CEPA review meeting in two weeks. He told Gulf News: "We did the review just a month ago, and there is another meeting in the coming two weeks to review the agreement. Both sides are happy with the progress, and I think we just need to monitor the numbers and move on."
