Page 19 - GEORptDec17

GUAM pursues relevance by vowing to set up free trade zone
imports - 7.4% y/y to $5.62bn. However, imports are a much more significant part of foreign trade, therefore even high relative increases in exports fail to counterbalance them.
The small country's economy is reliant on imports of oil and gas and added-value goods like machinery, therefore a high trade deficit financed partly through borrowing and investment continues to be a problem for Tbilisi, even as its economy has flourished.
In the first nine months of 2017, the foreign trade deficit amounted to $3.68bn, or 49% of the total foreign trade balance.
Despite small variations in imports and exports since 2012, the foreign trade deficit has remained relatively flat.
During a summit in Tbilisi on October 8, the foreign ministers of Georgia, Azerbaijan, Ukraine and Moldova (GUAM) announced that their four countries had agreed to create a free trade zone that will boost economic cooperation and strengthen the role of the region as a transport node.
Founded in 2001 to facilitate cooperation among its four members, GUAM has made little progress to date and many observers regard the organisation as just another regional forum. Setting up a free trade zone would be its most significant accomplishment yet.
However, it is unclear how the feat will be achieved, seeing how three of the four countries have association agreements with the EU that include free trade stipulations, while Azerbaijan does not. A common free trade zone would require that all four countries met similar standards in production and the offering of goods and services.
The focus of this new agreement, however, appears to be turning the region into a transport node between Europe and Asia, one of Georgia's long-standing ambitions. According to Georgian Foreign Minister Mikheil Janelidze, "the transport corridor can bring welfare, stability and development to the entire region. To achieve this, we of course welcome every interested party from both the east and the west".
19 GEORGIA Country Report December 2017 www.intellinews.com