Monday, September 29, 2014

Georgians Have High Hopes but Little Information about the Association Agreement with the EU

Optimism abounds with regards to the recently signed Georgia-European Union Association Agreement (AA). Most Georgians, however, lack information about the EU and its relation to the country, including the details of the agreement which directly concern the future of Georgia’s economy. The AA covers many areas including national security, migration, human rights and the rule of law but is primarily a free trade agreement with potentially major implications for employment.

Surveys have consistently shown that Georgian citizens are primarily concerned with unemployment and other economic problems, but academic opinions are divided on whether the AA’s impact on unemployment will be positive or negative; Messerlin, Emerson, Jandieri and Le Vernoy  (2011) emphasize the “extremely onerous” costs of complying with EU regulatory standards while Kakulia (2014) argues that short-term costs will be more than offset by augmented inward foreign direct investment and expanded export volumes. This blog post analyzes public opinion surveys as well as academic research on the Association Agreement and finds discordance within the attitudes of the public. While much of the public have high hopes about the country’s integration with the EU, close ties may not improve the employment situation, which the majority of citizens see as Georgia’s most pressing problem.

Georgians tend to view potential EU membership positively, with the CRRC 2013 Caucasus Barometer survey finding that when asked “To what extent would you support Georgia’s membership in the EU?” 34% of adults responded “fully support” and 31% “rather support.” While demonstrating optimism most citizens are ill-informed about the EU and what closer ties mean for the country’s future. For example, in the Eurasia Partnership Foundation’s Knowledge and attitudes toward the EU survey in 2013 only 23% of the population reported familiarity with the Eastern Partnership, (a crucial forum for EU-Georgia dialogue) and only 19% responded “Yes” to the question “Have you heard or not about the Association Agreement with the European Union?

While Georgians overwhelmingly see EU integration in a positive light, their focus rests primarily on the problem of stubbornly high unemployment, which could be profoundly impacted by the conditions of the AA. The 2013 Caucasus Barometer confirmed a series of studies emphasizing public awareness of the unemployment problem, finding that 54% of adults in Georgia view it as the “most important issue facing Georgia,” dwarfing such options as “unsolved regional conflicts” and “problematic relations with Russia.” That should not come as a surprise, as recent numbers from the National Statistics Office of Georgia give the unemployment rate at 14.6%, high by almost any standard, while some studies have found that the actual figure is upwards of 30%.

EU-Georgia relations and unemployment are closely intertwined because the AA includes a Deep and Comprehensive Free Trade Agreement (DCFTA), meaning that in addition to dissolving tariffs on all imports from EU member states the country will have to adopt EU regulatory standards on products. Academic opinions are split as to whether this will be helpful or harmful to the employment situation. In the words of Vato Levaja of the Free University of Tbilisi, “we need to adjust to the EU regulations, which are, to put it in a nutshell, the luxury of a richer community…you have to pay for it.” This adjustment could be especially difficult for agriculture producers who must bear the financial burden of meeting stricter food safety standards. Some manufacturers will also need to make costly investments in order to improve the quality of their products. Higher operating costs combined with increased foreign competition (due to the removal of tariffs) could hurt the profitability of some firms, putting downward pressure on employment, at least in the short term.

Proponents of the agreement argue that by improving its regulatory standards Georgia will attract more foreign investment and be able to export products to a wider range of foreign markets. More stringent regulation means better products and more productive industries, thereby increasing national wealth and employment opportunities. That may well happen, but the process will be difficult and likely only bear fruit in the long-term. However, as Georgians see unemployment as the biggest issue facing the country it is important that citizens become better informed about the Association Agreement’s economic implications. While Georgians tend to expect positive outcomes from integration the jury is out on whether deeper ties with the EU will help expand employment opportunities.

For additional insights relating to Georgian attitudes toward EU integration refer to this July post concerning expectations for the Association Agreement or take a look at our data using the CRRC’s Online Data Analysis tool. The website of the EU Delegation to Georgia offers a wealth of information on the Association Agreement.

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