The Role of EUGBC in the Process of Georgia’s Integration into the European Union

The European Union-Georgia Business Council (EUGBC) is a non-profit association established in Brussels in 2006 by Georgian and European companies. Since September 2013, EUGBC has maintained a representative office in Tbilisi. The primary objective of the EU-Georgia Business Council is to promote investment and trade activities between the European Union and Georgia. This involves aiding its members in navigating various aspects of business establishment and production in both Georgia and the European Union. The Council actively supports the development of business connections, addresses challenges related to market access, and provides assistance in diverse areas.

EUGBC’s membership comprises the representatives from a wide spectrum of economic sectors, including but not limited to oil and gas, banking, shipping, industry, media, trade, tourism, construction, and small and medium-sized enterprises (SMEs).

In the context of Georgia’s integration into the European Union, EUGBC plays a crucial role. The Council is of the belief that the European Union’s conferral of candidate status upon Georgia represents a significant milestone, offering substantial prospects for the country even before formal membership of the alliance, as it entails receiving new forms of assistance. Along with fostering good governance, inclusive growth, and sustainability, it addresses the issues related to the rule of law, democracy, and human rights, all of which contribute to shaping the economic climate of the country.

The objective of EUGBC is to encourage investment and trade between the European Union and Georgia. Could you, please, tell us more about your activities in this regard?

One of the primary goals of EUGBC is to support business development and to foster business-to-business ties between the member companies and the potential partners in Georgia and the EU. Furthermore, we assist and advise companies on all questions related to setting up and doing business in Georgia and the EU, through building business links, solving market access difficulties and overcoming regulatory obstacles. EUGBC also provides its members with the information on investment-related regulations and can serve as liaison between the business sector and the Government of Georgia, EU Institutions and EU Member States.

EUGBC has been very active during the last years, by organizing series of Georgian Business Delegation visits to the EU Countries, Business Forums, Expos, Trade Seminars and Publications, as well as the high-level meetings with the senior officials of the Government of Georgia and the EU institutions. In close cooperation with the Ministry of Foreign Affairs of Georgia, EUGBC organized the visits of the Georgian Business Delegations to Baku (June 29, 2022) Amsterdam (November 1, 2022), Brussels (November 3, 2022) and Nicosia (October 11, 2023).

For the purposes of promoting and strengthening the cooperation among the Black Sea countries and other interested partner countries in economic direction, “the Black Sea Platform” (BSP) has been established last year – an initiative, launched by the EU-Georgia Business Council and supported by the USAID Economic Governance Program. BSP has the function of strengthening the public-private dialogue between the countries of the Black Sea region, provide expertise and support for the new projects related to logistics and energy and other innovative initiatives provided by the business communities from the Black Sea countries.

What are the main challenges and opportunities that the private sector currently faces while exporting to the EU?

It is widely believed that the economic impact of the EU-Georgia Association Agreement and DCFTA will not be immediate and in short-term its implementation is challenging.

In recent years, the Government of Georgia has developed a number of support mechanisms for Georgian producers. In terms of export promotion, amongst the other support activities, I wish to underline the Authorized Economic Operator (AEO) program which is an important instrument for trade facilitation, based on the partnership between customs and business. Companies with AEO status, benefit from the reduced inspections on goods and quicker clearance times at borders. One of the tangible indirect benefits is a mutual recognition of the status with other countries.

Despite the efforts, the DCFTA is not used at its fullest.

In order to further boost export from Georgia to the EU, detailed analysis could be made on the needs and challenges of private sector. This may include:

• Financing of working capital for export.
• Export guarantee schemes.
• Establishment of Georgian product’s warehouses in the EU Countries, co-financed by donors and government etc.

Foreign investment plays a crucial role in Georgia’s economic growth, how investors’ trust can be built, and how government can leverage all available opportunities to attract investments into the country?

I fully concur that attracting more FDIs is central for long term economic development. Stability and democratic institutions play an important role in this process; it is easier for the investors to make a positive decision when property rights protection is ensured and there is a lower policy reversal hazard. All parties, be it private sector or the government, should make the best use of liberal investment policy framework and favourable trade regimes with EU as well as its advantageous geographic location connecting central Asian countries to the EU and vice versa.

What role do business associations play in promoting sustainable financing, and what strategies can they employ to encourage sustainable investments and more sustainable business practices?

First and foremost, business associations can be useful tools for raising awareness and spreading information; in many cases, there is a lack of knowledge, rather than lack of will. Business associations can spread a word effectively within its members about its importance. In addition, business associations can utilize their advocacy skills for reshaping regulatory environment for promoting sustainable financing. Furthermore, associations can provide knowledge and expertise required for getting relevant certificates.

How well the private sector is prepared to transform their business models into sustainable business models and what are the main challenges in this regard?

While, I believe many acknowledge the importance of sustainability in businesses, there are quite a few challenges that they need to overcome to this end, first and foremost, it comes to financing. Although in long term run sustainability if effective, it requires initial investments and many of the companies in Georgia simply don’t have access to put cash into this direction. This is particularly hard for SMEs. There is also an issue of limited skills and access to technologies.

How can SMEs keep up with sustainability regulatory advances and align to the actual and upcoming international requirements?

It is important for business sector to remain vigilant and follow the changes via designated platforms. In addition, international organizations’ and donors’ support in implementing the new requirements will be crucial for local businesses.

What measures or incentives could be promoted by large companies to ensure that SMEs in their supply chains are committed to sustainability?

Biggest incentive would be if large companies pledge to work only with those SMEs that adhere to certain social and environmental standards. This would hopefully give a stimulus to smaller companies to ask the same from their suppliers, thus creating a chain reaction benefitting all. However, we also acknowledge that such a practice is extremely hard to bring into action in our reality. There can also be beneficial offers made during procurement process to those SMEs that favor sustainable practices.

On December 15, we hope that the EU will grant candidacy status to Georgia; what will be new opportunities for the private sector?

From the outset, I would like to stress that this is a historic decision for our country, which brings us back to the European family, where we inherently belong.

Candidate Status opens the doors to the pre-accession assistance, supporting its beneficiaries to transform their societies, economies and legal frameworks. Along with assistance directed at achieving good governance, inclusive growth and sustainability, it also covers other key areas such as rule of law, democracy and human rights which are also affecting economic climate of the country.

While private sector is already enjoying the access to the EU market through DCFTA, candidate status will bring even closer business ties, confidence and credibility to our relations.

What are your recommendations for businesses and governments in terms of sustainable finance and implementation of SDG Agenda 2030?

Private sector investments are key for achieving the Sustainable Development Goals (SDGs). Despite commitments made, more concentrated efforts are required from the businesses to make a solid footprint. As a step forward, I would recommend Georgian companies to make public commitments and take actions. A good way to start is to report on the SDGs, set its small, but measurable commitments and assess their impacts. As for the Government it has prepared a comprehensive National Document for the SDGs, implementation of which will bring us closer to attaining set goals.