The Revenue Service of Georgia signed yesterday an agreement with Geneva-based testing and inspection company - SGS - on carrying out cargo monitoring through three “trade corridors” between Georgia and the Russian Federation.

The contract is part of the Swiss-mediated agreement between Tbilisi and Moscow signed on November 9, 2011, which envisages deployment of sophisticated systems for tracking and auditing of “all trade in goods that enters or exits predefined corridors” - two of which run through Abkhazia and Tskhinvali Region/South Ossetia and the third one on the Zemo Larsi-Kazbegi border crossing point on the undisputed section of Georgia-Russia border.

According to the Georgian Foreign Ministry, the contract was concluded following the final round of negotiations between the Georgian authorities and the Swiss company in Bern on December 19. The Ministry reported that the delegation was led by Deputy Foreign Minister Davit Dondua, and included representatives of the ministries of Finance, Economy and Internal Affairs.

The Foreign Ministry also noted that for “practical implementation” of the 2011 agreement, it was “necessary” that the Russian side also signed a similar contract with the Swiss company, so that the sides could start “fulfilling the obligations undertaken in the contract.”

The Monitoring Mechanism

According to the 2011 agreement, monitoring should be carried out, among other means, also through the presence of company representatives at entry/exit points of the three corridors, meaning that they will be deployed outside Abkhazia and South Ossetia.

The agreement also reads that “all trade in goods that enters or exits predefined corridors shall be submitted” to the customs administration and monitoring mechanism, which consists of two main components - the Electronic Data Exchange System (EDES) and the International Monitoring System (IMS).

EDES will have to serve as an electronic exchange platform through which Russian and Georgian customs services will have to share with the private company information on “all customs and trade transactions.” The sides will have to submit the information on monthly basis to WTO’s Integrated Database.

IMS involves carrying out monitoring through placing “electronic seals on all cargo entering trade corridors,” as well as GPS/GPRS monitoring systems for tracking the movement of cargo after its entry into the trade corridors.