Time for a Georgia-U.S. Free Trade Agreement

Ariel Cohen / Bryan Riley /

President Obama and President of the Republic of Georgia Mikheil Saakashvili recently announced that the two countries should start free-trade negotiations. Let’s hope both presidents are serious. Presidents Obama and Saakashvili should instruct the appropriate government agencies to expedite preparation of the agreement.

The most recentU.S.trade agreements, with Colombia, Panama, and South Korea, each took more than five years to get from inception to implementation. This deal could get done in a fraction of that time. Both countries are already relatively open to international trade and investment, and the volume of trade between the United States and Georgia that would be affected by an FTA is relatively small.

Both countries are members of the World Trade Organization (WTO), and they already have a bilateral investment treaty that has been in place since 1997. Georgia is part of a free trade area including Azerbaijan, Armenia, Belarus, Moldova, Kazakhstan, Russia, Ukraine, Uzbekistan, Tajikistan, and The Kyrgyz Republic, although trade relations with Russia are hampered by punitive measures that Moscow imposed before and after the 2008 Russia–Georgia War. TheUnited States has FTAs with 20 countries. These agreements can easily provide templates for a U.S.–Georgia agreement.

In 2010, the United States collected just $226,000 in tariffs on imports from Georgia on $193 million in imports, making our average tariff on imports from Georgia far less than 1 percent. Georgia is our 113th-biggest trading partner, ranking just between Iceland and Benin. Many imports from Georgia enter the United States duty-free under our Generalized System of Preferences (GSP) program, but not all items are eligible, and Georgia’s GSP status is not permanent. Indeed, the AFL-CIO recently asked the Obama Administration to withdraw Georgia’s eligibility for GSP trade status.

An FTA would be a win-win for theUnited StatesandGeorgia. It would benefitGeorgia, which gained independence in 1991, by making the country a more attractive destination for international investment. It would also send a signal toRussiathatGeorgiais viewed byWashingtonas an important friend.

Georgia has greatly contributed to the U.S.and allied security by participating in the international peacekeeping missions in Afghanistan and Iraq. Georgia and the United States have important bilateral interests: The United States sought and received Georgia’s consent regarding Russia’s accession to the WTO, while Georgia is waiting for the United States’ greater involvement in security issues, including the North Atlantic Treaty Organization’s Membership Action Plan promised to Tbilisi at the North Atlantic Alliance’s Bucharest summit.

This is not an easy task. Russia launched the war against Georgia in August 2008 for highly valued strategic and geopolitical objectives, which included de facto annexation of Abkhazia, weakening or toppling the Mikheil Saakashvili regime, and preventing NATO enlargement to include Georgia.

The Russian politico-military elites had focused on Georgia since the days of the presidency of Eduard Shevardnadze. Russian post-communist security establishments also viewed the attractive Abkhaz coast line and illicit business opportunities provided by lawless secessionist territories of Abkhazia and South Ossetia as additional incentives for deep involvement along the metropolitan periphery. Things only got worse after pro-American, pro-NATO, andEurope- oriented Mikheil Saakashvili was elected president.

According to the 2012 Index of Economic Freedom, published by The Heritage Foundation and The Wall Street Journal, Georgia already has one of the world’s best trade-freedom scores along with a high investment-freedom score. In addition, Georgia has entered into free-trade talks with the European Union (EU), which reportedly could be concluded as early as next year.

Moving in a timely manner to implement a Georgia–U.S. FTA would promote economic freedom and prosperity in both countries and would serve U.S. security goals in Eurasia.