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23 December 201116:06

Replies by MFA Spokesman Alexander Lukashevich to Questions from Interfax News Agency on Russian-Georgian Agreement in Context of Russia’s WTO Accession

2051-23-12-2011

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Question: How would you describe the results of the Russia-Georgia WTO talks?

Answer: As you know, the Swiss-mediated talks ended in Geneva on November 9, 2011. The parties signed the Agreement on the basic principles for a mechanism of customs administration and monitoring of trade in goods, which will take effect upon the date of Russia's WTO accession. Fully realized in it are the negotiation principles that Russia had followed from the outset, namely, that the accord shall remain within the scope of trade issues, that it shall not infringe on the status of Abkhazia and South Ossetia as independent states, and that it shall serve to facilitate the normalization of trade relations in the region in accordance with WTO principles. The Agreement is fully consistent with the new realities prevailing in the Caucasus after August 2008.

Even before signing the Agreement, Georgian officials, contrary to the rules of civilized international intercourse, began to publicly comment on the content of the document while at the same time grossly distorting or concealing key elements of it. Such behavior did not stop also after the Agreement was signed.

In these circumstances, we think it's necessary to inform the international community about the actual content of the document signed in Geneva.

Question: What are the main provisions of the Agreement?

Answer: If you summarize the essence, it is about the statistical treatment of intra-regional trade and having the results verified by independent audit. In this case, it does not inherently include the so-called non-commercial turnover, to which belong, inter alia, military supplies. This Agreement applies to three Russian and three Georgian customs terminals which are located in specific areas. In the text of the document these areas are marked by geographical coordinates. If you put them on the map, we will see that for Russia they are Adler (near the border with the Republic of Abkhazia), the village of Lower Zaramag (near the border with the Republic of South Ossetia) and the village of Upper Lars (near the border with Georgia). The Georgian customs terminals are sited on the left bank of the Inguri River (border with the Republic of Abkhazia), in the area north of Gori (border with the Republic of South Ossetia) and in the village of Kazbegi (Russian border).

With this geographical location of the terminals trade flows which can really pass through them are heterogeneous. This is not only the mutual trade between Russia and Georgia, but also goods exchanges between each of these two countries and Abkhazia and South Ossetia (for example, goods from Sukhum on their way through Russian customs to Krasnodar, or goods from Tskhinval heading to Tbilisi through the Georgian terminal in the Gori area).

Russia and Georgia will regularly provide the WTO base with summary statistics about all trade flows through these terminals. For Russia, this does not entail any additional obligations. After all, submission of foreign trade statistics to the WTO is the responsibility of every member state. Therefore upon accession, Russia will anyway begin to convey official statistical data to the WTO on all of its foreign trading partners, including, of course, Abkhazia, Georgia and South Ossetia.

Question: What is the implementation mechanism of the Agreement?

Answer: The task of verifying the accuracy of summary statistics forwarded by Russia and Georgia to the WTO will be entrusted to an independent private company. To this end the parties will give it the details of the customs declarations of goods passing through the terminals, and also the possibility of presence at these terminals. The company's activities will be an additional factor of transparency, which is known to be a fundamental principle of the WTO.

Apart from auditing official statistics, the company will also render analytical assistance to the customs services of each of the two countries. In the course of the work its officials may offer recommendations to customs officers, but may not interfere with their activities, which, as explicitly stated in the Agreement, shall be in accordance with national legislation.

Switzerland will choose the company in consultation with the Parties to the Agreement, and the Government of Russia and the Government of Georgia will hire it to work within the territories of their states.

There is a crucially important point here. Customs declarations and other information that the company obtains within the framework of the work under contract with each of the two governments are to be treated as strictly confidential and are not intended for transfer to the other Party to the Agreement. Thus, the Georgian side's claims that it will get detailed information about every shipment entering Abkhazia and South Ossetia from Russia are nothing more than wishful thinking. The Agreement does not provide for receipt by Tbilisi of any information about Russian trade with Abkhazia and South Ossetia in excess of normal statistical reports accessible through the WTO database.

A separate question is the Agreement's provision for the use of electronic cargo seals. During the talks we made it clear that although equipping trade cargoes with these or any other devices at a Russian or Georgian customs terminal is no problem, neither Russia nor Georgia can be responsible for the operation of the devices within the territories of Abkhazia and South Ossetia. These states are not parties to the Agreement, and of course it imposes no obligations on them.

Question: What does the signed document envisage in respect of Georgia's trade with Abkhazia and South Ossetia?

Answer: Tbilisi carefully pretends that the measures of customs administration and monitoring provided by the Agreement apply only to Russia. Meanwhile, absolutely symmetrical measures are provided for Georgia. This has important political implications.

Thus, according to the Agreement, customs terminals are set up in the trade corridors leading from Georgia to Abkhazia and South Ossetia, with customs clearance procedures applicable to all the goods passing through them (including filling out customs declarations), and with the corresponding statistics being transferred by Georgia to the WTO database (which is known to contain information only about international, and not on internal trade). Clearly, all these are important attributes of the status of Abkhazia and South Ossetia as autonomous customs areas and of the status of Georgia's border with them as a customs boundary similar to the Russia-Georgia border in the Upper Lars – Kazbegi area.

To the public Georgian officials now present matters as if the goods heading from Georgia to Abkhazia and South Ossetia, as well as in the opposite direction, are not subject to customs clearance. However, this is directly contrary to the provisions of the Agreement, as well as its underlying major WTO principle of the uniformity of customs administration.

We will see to it that Tbilisi does not violate the Agreement in this respect. Such a possibility is available to us – through the independent private company that will work on the Georgian side and regularly report to the Joint Committee composed of representatives of Russia, Georgia and Switzerland.

Very important is the provision written down in the Agreement stating that "nothing in the legislation of the Contracting Parties shall represent an obstacle to the implementation of the present Agreement." This directly applies to a number of provisions of the notorious Georgian "Law on Occupied Territories," for example, the prohibition of international traffic and international automobile transportation of cargo. Being inconsistent with the norms of the Agreement, these prohibitions upon its entry into force shall not be applied. Those in Tbilisi who present the Agreement as "a first step towards the return of Georgian customs officers to Psou and the Roki tunnel" (i.e. to the previous, "pre-August" borders of Georgia) are frankly disingenuous. In reality the opposite is true: for the first time since August 2008 Georgia signed an international agreement which clearly indicates the places where its customs service is to work. Recall that these are the left bank of the Inguri River (the border with the Republic of Abkhazia), the area north of Gori (the border with the Republic of South Ossetia) and the village of Kazbegi on the Georgian Military Highway (the border with the Russian Federation). Georgian customs officers have not and will not ever have any other places.

Question: What are current trade flows on the border of Georgia with Abkhazia and South Ossetia?

Answer: At present, the movement of goods across the Abkhazia-Georgia and Georgia-South Ossetia borders is insignificant in size and takes place without proper regulation, having a largely "informal" character. The reason is that Georgia, unfortunately, so far does not want a civilized trade with its neighbors. But sooner or later a normal Georgian-Abkhazian and Georgian-South Ossetian trade will resume and then the commitments Georgia assumed under the Agreement with Russia of November 9, 2011 will constitute an adequate benchmark for the final international legal formalization of trade relations in the region.

The recent decision by the Abkhazian leadership for its part to regularize trade with Georgia by introducing proper customs clearance at the border with the country appears very appropriate in this context.

All of the preceding shows that the November 9, 2011 Agreement is certainly not a "victory for Georgian diplomacy" in the sense how they speak of this in Tbilisi, but nor is it a loss for Georgia. Indeed, if trade relations in the region are built on the recognition of new realities rather than phantoms, everyone will benefit from it in the end.

December 23, 2011

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