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Georgia forced to comply with WTO rules2009-10-30 16:32
Ukrainian tobacco producers urge Georgia to lower excise duties on imported cigarettes. The case was submitted to the World Trade Organization that asked Georgia to comply with free trade rules threatening to stop the country's membership. Before that Georgian tea vanished from the Ukrainian market and the sales of Georgian wines went down.
Georgia won't be expelled from the World Trade Organization (WTO) for high excise duties on imported tobacco, deputy Finance Minister Zaza Chelidze assured the startled press adding the government was already working on the issue. In what way? Seems like it's lowering the import duty.
The WTO and the EU call for it threatening of expulsion from the WTO. As Caucasus Press reports the international structures have already submitted relevant recommendations to the government of Georgia.
The issue was raised by Ukrainian competitors of Georgian producers, British American Tobacco Ukraine, to be precise. By the way a line producing these British cigarettes operates in Georgia too, on Georgia Tobacco Manufacturing plant.
As Ukrainian media report the parties have completed unofficial consultations and are getting ready for official ones in order to send a request to WTO structures dealing with resolution of such disputes on discrimination against imported goods.
Discrimination against Ukrainians means that since 2002 the excise duty on imported tobacco products has been 60 tetri (0.6 lari or 0.358 dollars) and 40 tetri (0.4 lari or 0.239 dollars) for domestically produced cigarettes.
Remarkably, this summer when introduction of new tobacco advertising limitations were discussed in Georgia tobacco producers were assuring that the excise on their goods amounts up to 90 tetri. This business is a "gravy train" for the state budget. There is no reason to let it down.
Now the Georgian Tobacco says equal tax rates will lead to local rundown since domestic products won't be able to compete with foreign produce. But the difference in excise rates is in violation of both the WTO rules and the Ukrainian-Georgian free trade agreement. So it's obvious Tbilisi will have to make concessions.
At the time of the crisis the WTO perfectly showed whose interests it protects. Counteracting protectionism in 20G states turned out to be much more difficult than in small countries unable to assert their rights.