The effect of the DCFTA on Georgian exports to the EU
Georgia and the EU established a deep and comprehensive free trade area (DCFTA), which came into force in 2014. In a recent comparative study, which also includes Ukraine and Moldova, we look at the effect of the DCFTA on Georgian exports to the EU.
Between 2013 and 2018, exports to the EU – as defined in our study – increased by a rather moderate 9% in US dollar terms. However, in the same period prices for key Georgian export products declined heavily. In real terms, i.e. using constant prices of 2013, Georgian exportsto the EU increased by 115%. Having said that, the EU was not able to increase its share as an export destination for Georgian products: the share remained flat at 16%. All in all, we conclude that the DCFTA had a positive, but moderate effect on Georgian exports to the EU. At the same time, we found out that the DCFTA had a very positive effect on the commodity composition of Georgian exports. New products account for 12% of total exports to the EU, which is quite high. Furthermore, the concentration of exports declined from 2013 to 2018 by 43% and the share of processed goods increased from 34% to 61%. Thus, despite Georgia’s focus on exports of services (mainly tourism) and its distance from EU markets, the DCFTA had a positive effect on exports of goods, in particular with regard to its commodity composition. Time will tell, if the improved export structure will also lead to more exports in the future.
