The European Union announced on Monday it would start talks in early 2012 on a free trade area with Georgia and Moldova, a move it said offered its two eastern neighbours scope to grow their economies by pulling in foreign investment. The move comes less than a month after Georgia dropped its resistance to Russia entering the World Trade Organisation, following pressure from the EU and the United States.
Both countries already have preferential access to the EU market but the 27-nation bloc said they had made enough progress on regulatory reforms to negotiate greater access. "A deep and comprehensive free trade area will help Georgia and Moldova to become more competitive and enjoy the benefits of the EU single market," EU Trade Commissioner Karel De Gucht said in a statement.
The EU is already the main trading partner of both countries and while existing import duties are low, the statement said they could see further gains in foreign direct investment. "Both countries need to continue their work toward stability, transparency and predictability of the legislative regimes ... At the end of this process the two countries could see their gross domestic products significantly enhanced," the statement said.
The EU is the world's largest trading bloc and is pursuing an ambitious programme of bilateral trade negotiations as hopes fade for a global trade accord at the World Trade Organisation. Deals with its neighbours to the east have the potential to rile Russia, but offer improved access to farm and energy sectors. The EU concluded negotiations on a trade pact with Ukraine in October. The EU had sought reforms from Georgia to address concerns over corruption. The promise of a trade pact with the EU was seen softening Georgia's resistance to Russia's WTO accession although Georgian negotiators denied any link.