By way of further developing the country's economy, facilitating trade and liberalising its tax regime, Georgia has signed an agreement with China on the creation of free trade zones in Georgia.
The China-Georgia Free Trade Agreement (FTA) was ratified in May 2017 and the memorandum of understanding was signed by the Chinese Vice Minister of Commerce and Georgia's First Vice Prime Minister and Minister of Economy and Sustainable Development, at the Tbilisi Belt and Road Forum on November 28 2017. The FTA came into effect as of January 1 2018.
This FTA will create more scope for trade, services and investment activities within the Eurasian area covering 17 components, including trade in goods, services and intellectual property rights. It also encompasses new topics such as e-commerce, market competition and the environment.
Georgian exports to China include copper ore, iron ore, nuts, wine, spirits, gold and semi-finished products. China exports construction machinery, manufacturing equipment, steel, electronics, textiles, garments and household appliances to Georgia.
With the agreement entering into force Georgia has eliminated tariffs on 96.5% of Chinese exports, while almost 91% of China's imports from Georgia have become tariff-free immediately. A further 3% will be exempted from tariffs within five years.
As stated by Giorgi Kvirikashvili, Georgia's prime minister, "Georgia is the only country in the region which has free trade agreements with both the EU and China".
At this moment, Georgia has FTAs signed with four European countries – Iceland, Liechtenstein, Norway and Switzerland. The EU and China are among Georgia's largest trading partners. Georgia is the 11th country to have concluded an FTA with China and is the only country in the region with such an agreement with China. Other countries which have free trade agreements with China are mostly located in Western Europe or in the East Asia.
Years ago, caravans loaded with silk and spices from China travelled all the way to Europe and the British Isles. The new 'Silk Road' – by means of highways, railways and air – will carry the modern-day equivalent of silk and spices – energy, natural resources, and manufactured goods – via Georgia, thus restoring its strategic importance as a transportation-infrastructure hub in the region and a transit corridor between Europe and Asia.