A screengrab from a footage showing Georgia’s PM Irakli Garibashvili signing Association Agreement in Brussels on June 27, 2014. He said the agreement represents “master plan for Georgia’s modernization.”

Georgia and the European Union signed Association Agreement, including deep and comprehensive free trade area (DCFTA), on June 27 in the margins of the European Council meeting in Brussels.

The agreement was signed by Georgian Prime Minister Irakli Garibashvili, President of the European Council Herman van Rompuy, President of the European Commission José Manuel Barroso and heads of the states and governments of the EU-member states present at the ceremony.

Association Agreements, also including DCFTA, was signed with Moldova at the same ceremony and the signature process with Ukraine on economic parts of the agreement, which were left after the political ones were signed in March, was completed.

“Today Georgia is taking a big step towards free Europe,” Garibashvili said in his speech at the signing ceremony. “June 27 will be remembered as a historic and special day. There are dates in the history of each nation, which they are proud of.  Today a new big date is being written in the history of my homeland, which gives hope and which our future generations will be proud of. Many generations have spent their lives thinking about this day. And I am happy that it was honor of my generation to turn this dream of our ancestors into reality.

“It is very difficult to express in words feelings I am experiencing now,” Garibashvili said. “I am sure that everyone has this emotion in my country. Today Georgia is given a historic chance to return to its natural environment, Europe, its political, economic, social and cultural space.”

Georgian President Giorgi Margvelashvili told journalists in Batumi on June 27, that the Association Agreement will help Georgia to get closer to the EU and will “deepen further our declared foreign policy course towards EU membership.”

The agreement, which is designed for gradual approximation of signatory countries to EU standards and regulations in broad range of areas among them trade, customs procedures and quality controls, does not give a pledge to eventual membership in the EU; but the reforms and approximation process, envisaged by the agreement, are viewed as preparation for potential membership sometime in the future.

When asked at a news conference after the signing ceremony when Georgia would officially apply for membership, PM Garibashvili responded: “Unofficially we applied for membership today; officially – it depends on progress that we will make, but I can guarantee you that we will do our best to meet all the requirements of the European Union.”

“It depends on us,” Garibashvili said responding a question about how long it might take for Georgia to become EU member. “In five years, maybe in ten years – we never know. It depends on progress Georgia will make.”

In his speech at the signing ceremony, President of Ukraine Petro Poroshenko called on the EU to make a clear declaration that Ukraine will join the bloc once it is ready for membership.

President of the European Commission, José Manuel Barroso, said at the signing ceremony that these agreements “do not constitute the end point of the European Union’s cooperation with its partners.” Barroso said signing of these agreements “should not be seen as the end of the road, but as the beginning of the journey on which the European Union and these three partner countries are embarking together today.”

He stressed that “task ahead is substantial” as the three countries are embarking on the path of significant reforms requirement from their governments to show strong political will, coordination, engagement with parliaments, opposition and civil society “in order to build the national consensus in favor of the measures required to guarantee sustainable transformation.”

Speaking at the signing ceremony President of the European Council, Herman Van Rompuy, said: “These are not just any other agreements, but milestones in history of our relations and for the Europe as a whole. In Kiev and elsewhere people gave their lives for this closer link to the European Union.”

Later in the evening on June 27 the signature of the Association Agreement will be celebrated with an outdoor concert in downtown Tbilisi; President Giorgi Margvelashvili and PM Garibashvili plan to make an address at the event, according to PM’s office. The United National Movement opposition party is holding a reception at its Tbilisi headquarters to mark the event; large part of the Association Agreement was negotiated while UNM was in government.

The Georgian Parliament is expected to ratify the agreement in second half of July.
 
Although it may take several years before all EU-member states ratify the agreement, the treaty envisages provisional application parts of the agreement even before EU members and the European Parliament complete ratification process.

Following Georgian ratification of the Association Agreement, provisional application could start tentatively by October, 2014.

Before its provisional application, an institutional framework should be established, which includes setting up of the Association Council (to replace the existing Cooperation Council), as well as various committees, subcommittees and trade-related working groups; the process will also be accompanied by engagement with civil society and parliamentary cooperation to provide for the monitoring mechanisms.

The voluminous agreement is accompanied by about three dozen of annexes, which list hundreds of relevant EU legislation to be taken by Georgia by a specific date with timeframes ranging from two to ten years.

Parliament speaker Davit Usupashvili said in Tbilisi on June 27 that a “laborious work” lies ahead of the Georgian lawmakers to “reflect all the provisions envisaged by the Association Agreement in the Georgian legislation.”

“We are embarking on a lengthy process of implementation of reforms, which cover almost all the areas of political, economic and social life of Georgia,” PM Garibashvili said in Brussels after the agreement was signed and added that Georgia is “not alone in this complex process” as EU stands ready to provide its assistance.

In July the EU plans to adopt new assistance programs for Georgia worth EUR 101 million to support reforms in the justice sector and implementation of the DCFTA, as well as to fund programs for small and medium enterprises.

Meanwhile in Moscow, Russian President’s spokesperson, Dmitry Peskov, said that signing of the Association Agreements by Georgia, Moldova and Ukraine with the EU is their sovereign right, but Russia will have to take measures if it negatively affects on its economy.

In his speech at the signing ceremony in Brussels, President of the European Commission José Manuel Barroso said that these agreements are “not against anyone.”

In his speech PM Garibashvili also addressed, as he put it, “my brothers and sisters – Abkhazians and South Ossetians.” “My dears, we are all children of one country… You have the unique opportunity to enjoy benefits provided by the association with Europe,” Garibashvili said.

Georgia and the EU launched talks on the Association Agreement in July, 2010. Talks on economic part of the agreement, DCFTA, were launched later and finalized within seventeen months in July, 2013.

The Association Agreement, including DCFTA, was initialled at EU’s Eastern Partnership summit in Vilnius in November, 2013. Although initially signature of the agreement was planned for later this year, developments in Ukraine promoted EU to move the date forward. 

Trade Sustainability Impact Assessment, 2012 report commissioned by the EU, estimated that the DCFTA will increase Georgia’s exports to the EU by 12% and imports from the EU by 7.5%. Full implementation of trade-related reforms, according to this report, could increase Georgia’s long-term GDP by 4.3%.

According to the EU estimations, Georgian agricultural products will become more attractive on the EU market after the removal of EU import duties worth EUR 5.7 million on basic agricultural products and EUR 0.5 million on processed agricultural products. 
Georgian exports to the EU stood at USD 253 million in January-May 2014, a 58% year-on-year increase, according to the Georgian state statistics office, Geostat.

Georgian exports to CIS-member countries in January-May 2014 stood at USD 627.6 million of which Azerbaijan, Armenia and Russia were Georgia’s largest exporting markets with USD 240.4 million, USD 129.7 million and USD 108.3 million, respectively.