BY HUSNIYE GUNGOR
Georgia is stepping up bilateral trade with Turkey, its number one trade partner. “The growth trend in bilateral trade over the past few years gives hope that the trade turnover will reach USD 3bn and may even exceed it,” said George Janjgava, Georgian Ambassador to Ankara.
The Joint Economic Commission between the two countries is working regularly to increase the list of products covered by the Free Trade Agreement signed in 2007, he said, adding that it will also further facilitate existing import-export procedures to increase trade turnover.
Ambassador Janjgava has reasons for his hope for increased bilateral trade. In April 2021, a diagonal cumulation mechanism was launched between Georgia, Turkey, and the European Union, which will significantly facilitate trilateral trade and stimulate exports to new sectors. The diagonal cumulation mechanism allows the sale of products made in Georgia with Turkish industrial raw materials in the European Union market.
Additionally, the Georgian market was fully opened for high-quality and GMP-standard Turkish medicine in January 2022 at the initiative of the Prime Minister of Georgia, Irakli Garibashvili. Turkish President Recep Tayyip Erdogan underlined the goal to increase bilateral trade up to USD 3bn by 2023 during Garibashvili’s visit to Turkey last summer.
RECORD YEAR IN TRADE: 2021
Looking at current figures, trade turnover between Georgia and Turkey increased by 34% to USD 2.14bn in 2021 compared to the previous year. “This is the highest historical index between the two countries and is about USD 550m higher than the 2020 figure, which was USD 1.59bn,” said Ambassador Janjgava, stressing that Turkey ranked first among Georgia’s top 10 trading partners with a 15% share in total trade turnover in 2021.
“In terms of imports, Turkey ranked first with an 18.1% share, while it ranked fourth after China, Russia, and Azerbaijan in exports with a 7.6% share. Exports to Turkey increased by 69% to USD 322.2m while imports from Turkey grew by 30%, reaching USD 1.8m in 2021.”
Knitted T-shirts, bathrobes, ferroalloys, ferrous metal waste and scrap, men’s clothing, and semi-finished products from carbon steel were the top five product groups Georgia exported to Turkey in 2021. In return, Turkey sold minibusses, ferrous metal pipes, clothing templates, remedies, and metal construction from ferrous metals to Georgia in the same year.
PLANS FOR 2022
Janjgava stated that the first inflow of investment from Turkey to Georgia took place in 1997 and a total of USD 1,8bn direct investment was made between 2005 and 2021.
However, the country is eager to increase investment from Turkey. 2022, the 30th year of the re-establishment of diplomatic relations with Turkey, will be a turning point, according to Janjgava. Georgia-Turkey diplomatic relations date back 100 years, but were interrupted. Diplomatic relations between the two countries were re-established 30 years ago, on May 21, 1992.
“To mark the 30 years of strong relations, we are planning a visit by the Georgian Foreign Affairs Minister Ilia Darchiashvili to Turkey. Turkish Trade Minister Mehmet
Mus is also expected to pay a visit to Georgia soon. In addition, the president of the Union of Chambers and Commodity Exchanges of Turkey, M. Rifat Hisarciklioglu, will receive an invitation from Georgia to hold an official visit to Tbilisi followed by a bilateral business forum,” the ambassador detailed.
2022 has more to offer for increased trade and economic relations. This year, the country is planning to organize the next round of the meeting of the Supreme Council for Strategic Cooperation, which will be followed by a visit by President Recep Tayyip Erdogan to Georgia. The Supreme Council for Strategic Cooperation was established in 2016 to further develop relations between the two countries and held its first meeting at the prime minister level on July 19, 2016, in Ankara. The Ankara Declaration was signed between the two countries during the meeting.
DIAGONAL CUMULATION BETWEEN GEORGIA, THE EU, AND TURKEY
“As a WTO member, Georgia’s top foreign policy priority is further trade liberalization and deeper integration into the world’s leading markets,” ambassador George Janjgava said. As a result of targeted trade liberalization efforts, Georgia already has Free Trade Agreements with the UK, Turkey, Ukraine, CIS countries, EFTA countries (Iceland, Liechtenstein, Norway, and Switzerland), China (including Hong Kong), and Deep and Comprehensive Free Trade Area (DCFTA) with the European Union (EU), which opens up tariff-free access to consumer markets with about 2.3 billion in population. The country has GSP agreements with the United States, Canada, and Japan.
Moreover, Diagonal Cumulation between Georgia, the EU, and Turkey has been in force since April 29, 2021, George Janjgava said, underlining that this enables products made in Georgia based on industrial raw materials imported from Turkey to be placed on the EU market within the Free Trade Regime. A Free Trade Agreement between Georgia and Turkey, further, was signed in 2007.
Given that Turkish citizens can travel to Georgia visa-free for up to one year stay, the country gets its highest number of visitors from Turkey. In addition, simplified procedure introduced in 2011 allows Turkish citizens crossing the border with ID cards. Thus, Turkey ranked first with 1,156,513 and 326,494 visitors to Georgia in 2019 and 2021, respectively. Turkish Airlines, Anadolujet, and Pegasus operate 53 flights a week to various destinations between Georgia and Turkey.
Georgia is also welcoming Turkish investors with its favorable investment climate, according to ambassador George Janjgava. “This is also reflected in ratings by international institutions,” he said. “Georgia ranked 7th among 190 countries in ease of doing business in World Bank’s Doing Business 2020 report. The country also took 12th place globally and 7th place in the EU region in terms of economic freedom by the Heritage Foundation in 2021. Georgia’s Fitch rating is BB stable.”
CONNECTED VIA MEGA PROJECTS
>> BAKU-TBILISI-KARS RAILWAY
Officially opened on October 30, 2017, the Baku-Tsiblisi-Kars railway connects Turkey, Georgia, and Azerbaijan, reducing the shipment period from 35 to 15-17 days and shortening the distance from Europe to Asia by 6,800 to 7,500 km. In the first stage, the capacity of the project is supposed to be 5 million tons of cargo per year, which will increase to 15 million tons and one million passengers per year.
>> BAKU-TBILISI-CEYHAN (BTC) OIL PIPELINE
The Baku–Tbilisi–Ceyhan pipeline is a 1,768 km long crude oil pipeline from the Azeri–Chirag–Gunashli oil field in the Caspian Sea to the Mediterranean Sea. On 25 May 2005, the pipeline was inaugurated at the Sangachal Terminal by the presidents of Azerbaijan, Georgia, and Turkey. The first oil that was pumped from the Baku end of the pipeline reached Ceyhan on May 28, 2006. At normal capacity, it transports one million barrels per day.
>> BAKU-TBILISI-ERZURUM (BTE) NATURAL GAS PIPELINE
The South Caucasus Pipeline (also known as Baku–Tbilisi– Erzurum Pipeline) is a natural gas pipeline that starts from the Sangachal terminal near Baku and continues through Azerbaijan and Georgia to the Georgian-Turkish border, where it is linked to the Turkish gas distribution system. Since late 2006, the pipeline has been transporting gas from Shah Deniz (Stage 1) to Azerbaijan and Georgia and starting from July 2007 to Turkey.
>> SOUTH CAUCASUS PIPELINE EXPANSION
The system has been further expanded with a new pipeline loop (constructed parallel to the existing South Caucasus Pipeline) and several facilities to export incremental Shah Deniz (stage 2) volumes to Turkey (6 billion cubic meters) and Europe (10 billion cubic meters). The expanded section of the pipeline began delivering to Turkey in June 2018 and to Europe in November 2020.
The Trans-Anatolian Pipeline (TANAP) connects directly to the South Caucasus Pipeline on the Georgia-Turkey border and the Trans Adriatic Pipeline on the Turkey-Greece border. The initial transportation capacity of the pipeline is 16.2 billion cubic meters (expandable to 30.7 bcma). TANAP’s ground-breaking ceremony was held in Turkey on March 17, 2015. The pipeline started operating on June 30, 2018.