Customs services. Georgia implemented impressive reforms of its customs services starting from 2004, turning one of the most corrupt and complicated customs regimes into a competitive customs system, whereby traders are treated like clients by customs officials. Georgia’s customs policy is in line with the country’s objective to become a regional hub for trade, transit and transport, given its geographical location. The policy included these specific reforms:
dramatic reduction of customs duties, whereby 84% of goods are imported customs duty-free, and a cutback of 16 different customs duties to only 3 by 2007, which are set at 0%, 5% and 12% (see chapter 4);
drastic reduction in the number of documents required for export and import from 54 to only 2;
increased transparency and the set-up of e-services with full automatisation of all customs operations;
successful introduction of the customs one-stop shops, where customs procedures are fast and efficient;
32 See “Customs cooperation with Georgia, Republic of Moldova and Ukraine” (http://ec.europa.eu/taxation_customs/customs/policy_issues/international _customs_agreements/geomoldukr/index_en.htm).
46 PART II.DEEP AND COMPREHENSIVE FREE TRADE AREA
establishment of modern customs-clearance zones, which significantly simplify clearance of goods at the border and cover the whole chain of customs clearance. Customs clearance takes on average 15 minutes where standard procedures apply;
launch of a risk management system at customs based on risk profiles, random selection and selectivity criteria, which also simplify clearance procedures. Based on the risk level, e- declarations are channelled to different risk corridors;
introduction of different risk corridors for customs procedures, streamlining the clearance of goods, more specifically,
o a green corridor, where goods are released immediately and are not subject to any checks, either documentary or physical. Approximately 82% of import declarations and 91% of export declarations are channelled through the green corridor;
o a blue corridor, where goods are examined after being released (post-clearance control). Approximately 2% of declarations are channelled through the blue corridor for both imports and exports;
o a yellow corridor, where goods are subject to full documentary checks but no physical examination. Approximately 9% of declarations for imports and 5% for exports are channelled through the yellow corridor; and
o a red corridor, where goods are subject to both documentary checks and physical examinations. Approximately 7% of declarations for imports and 2% for exports are subject to procedures through the red corridor;
establishment of a so-called ‘golden list’ of traders, which go through the green corridor;
physical upgrade and construction of modern customs facilities, and introduction of jointly operated customs checkpoints with neighbouring countries, such as Turkey; and
institutional unification of the tax and customs authorities into a single entity – the Revenue Service.
Most of the above-mentioned reforms were implemented before the provisional entry into force of the DCFTA. Georgia therefore already complies with the key principles for customs legislation and procedures defined in the DCFTA. The reforms in the customs area, notably increasing transparency, reducing customs duties, simplifying
DEEPENING EU–GEORGIAN RELATIONS:WHAT, WHY AND HOW? 47
clearance and introducing e-procedures, have led to the elimination of corruption at customs.
According to the World Bank’s latest Enterprise Survey (2013), Georgia achieves the best score in almost all areas covered by the indicator on preventing corruption.33 The percentage of firms expecting to give gifts to obtain an import licence is 0, compared with 14.6% in Eastern Europe and Central Asia; the average of all 135 countries covered by the survey is 14.7%.
According to the OECD’s Trade Facilitation Indicators (2014), Georgia performs better with respect to simplifying and harmonising documents, automation, cooperation of internal border agencies and information availability than (non-OECD) Europe on average, as well as Central Asia and lower-middle-income countries.34
Approximation process under the DCFTA. Reforms implemented before the entry into force of the DCFTA have created a solid basis for the effective fulfilment of obligations undertaken through the DCFTA and for a smooth transition to EU customs norms. Approximation of Georgian customs legislation, procedures and systems has started and is in progress. New customs legislation in accordance with EU customs regulations has been elaborated and is being discussed among governmental bodies, with the private sector and all interested parties. During the meeting of the DCFTA Customs Subcommittee (held on 20-21 April 2016), Georgia agreed to share its draft customs legislation with the EU side for review.
Georgia is working on acceding to the CTC (see above) and to the Convention on simplification of formalities in trade in goods. Efforts are underway to identify the legislative changes needed to simplify transit procedures with countries that are parties to the CTC, and to introduce the NCTS.
The Revenue Service is working on introducing an AEO institute in Georgia. An assessment of the existing situation has been completed and an action plan for launching the institution has been developed.
33 Derived from the “Enterprise Survey – Georgia”, World Bank, Washington, D.C., 2013 (www.enterprisesurveys.org/data/exploreeconomies/2013/ georgia#2).
34 See “OECD Trade Facilitation Indicators – Georgia”, OECD, Paris, 2014 (www.oecd.org/tad/facilitation/Georgia_OECD-Trade-Facilitation-
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To further streamline the risk-based customs control system, work is in progress to draw up regulations related to the Advance Passenger Information/Passenger Name Records.
In the process of implementing the DCFTA, Georgia is benefiting from various EU assistance projects, such as TAIEX and Twinning, dedicated to capacity building of the customs authority, sharing experience and best practices of EU member states, as well as approximating legislation and improving infrastructure. Georgia actively participates in Integrated Border Management, a flagship initiative of the Eastern Partnership, and its pilot projects, the Customs 2020 Programme and the training, capacity-building efforts and seminars provided by the World Customs Organization.
Customs services at a glance
Georgia implemented significant reforms in customs policy for trade facilitation well before the signature of the Association Agreement and DCFTA.
The DCFTA includes key measures to ensure fast, efficient and transparent customs services. Georgia is advancing well towards fulfilling its legislative and institutional commitments.
A high level of transparency and well-developed e-services has made Georgian customs corruption-free and one of the most efficient institutions in the country.
A well-developed and fully modernised infrastructure for customs clearance has made customs procedures easier, faster and cheaper.
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