On 14 February 2015, on air on Imedi TV, businessman, Levan Vasadze, stated that Georgia has been exercising an open door policy for foreign products for the past 30 years. As an example of this, Mr Vasadze talked about customs duties. According to him, in order to export tomatoes from Georgia to Turkey, one must pay a 300% levy whilst for tomato import from Turkey, the levy is 0%.

took interest in this statement and verified its accuracy.

We attempted to find out the nature of Georgia’s policy towards imported goods and what kind of trade relations Georgia and Turkey have. According to the information on the website of the Ministry of Economy and Sustainable Development of Georgia, as of today, Georgia maintains one of the most liberal external trade policies in the world which includes simplified foreign trade regimes and customs procedures together with low import tariffs and minimum non-tariff barriers.

It should be noted that free trade is considered to be the most efficient way of creating wealth in the contemporary world. Tariffs, quotas and other factors hindering free trade only facilitate the loss of wealth for states. However, despite the fact that economists agree about the efficiency of free trade, there still remain some tariffs and quotas between states which are mainly the result of political decisions made by governments. There are several reasons for this: 1. increasing state budget revenues, 2. Protecting local manufacturers which ultimately results in the reduction of national savings but is a good populist stunt and 3. Using these barriers for political leverage.

A free trade agreement is in place between Georgia and Turkey which facilitates trade between the signatories and abolishes the customs duties on import and other fees of equivalent effect (Article 4.1). According to the document, the signatory parties are not to impose new levies on import from the day of the enactment of the agreement (Article 4.2). It should be noted that according to the agreement, not all goods fall under the category of free trade. The annex to the agreement lists the products which are not subject to free trade.

It should also be noted that according to the agreement, both fresh and frozen tomatoes, imported from Turkey to Georgia, are exempt from the free trade regime from 1 June to 31 October every year. This is Georgia’s tomato harvest season. The exemption from free trade means that all tomatoes imported from Turkey to Georgia during the aforementioned harvest season are subject to levy which is 12% of the total value of the product as determined by Chapter 28 of the Tax Code of Georgia.

As for the regulations on import from Georgia to Turkey, tomatoes are not exempt from free trade which means that they are not subject to customs duties in any period of the year. However, it should also be noted that Turkey has a quota for tomatoes imported from Georgia which reaches 600 tonnes.

In order to find out specific results of the aforementioned agreement we looked into the statistics of export and import of tomatoes during the past three years.

As the tables make clear, in the period when tomatoes are subject to customs duties, a total of 1,396 tonnes of tomatoes were imported from Turkey to Georgia in 2014, 517 tonnes in 2013 and 944 tonnes in 2012 which constitute a very small amount (7.3% to 9%) of the overall yearly tomato imports from Turkey to Georgia. From July to September, during the tomato harvest period in Georgia, the amount of tomato imports from Turkey is very small.

Despite the fact that the average annual export of tomatoes from Georgia has amounted to 125 tonnes in the past three years, Georgia has not exported its tomatoes to Turkey as of yet. Hence, the Turkish quota on tomato imports from Georgia is practically conditional as the quota amounts to 600 tonnes whilst there are no exports of tomatoes from Georgia to Turkey.

Our study found that the customs duties on exports of tomatoes from Georgia to Turkey are not 300% but 0%. The customs duties on tomato imports from Turkey to Georgia are 0% for seven months from November to May when the local production in Georgia is low. The customs duties on imported tomatoes from Turkey amount to 12% from June to November.

Turkey has a 600 tonne quota on tomato imports from Georgia; however, the aforementioned quota is no limiting factor for Georgian exports as Georgia does not export tomatoes to Turkey at all.

As for the country’s external trade policy, it does indeed include low import tariffs and minimum non-tariff regulations. The very first free trade agreement for Georgia on creating the free trade zone of the Commonwealth of Independent States was signed 21 years ago in 1994 whilst the majority of tariffs were abolished nine years ago in 2006. In addition, the liberal trade policy is clearly beneficial for the Georgian economy and facilitates the growth of exports and the economy in general.