Ambivalent Effects of Trade Liberalisation with the EU: Insights from Moldova and Georgia

AMBIVALENT EFFECTS OF TRADE
LIBERALISATION WITH THE EU:
INSIGHTS FROM MOLDOVA
AND GEORGIA
Julia Langbein, Denis Cenusa, I ina Gu uli
ZOiS REPORT
No.1 / 2022 · Feb ua y 2022
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
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Con en
02 ___ Summa y
04 ___ In oduc ion
07 ___ EU ade ela ions wi h Moldo a and Geo gia: The big pic u e
11 ___ Zooming in (I): Moldo a’s libe alised ade wi h he EU — Who bene i s?
13 ______ Me als and ege able p oduc s: Clea links o oliga chic ne wo ks
15 ______ Machine y: Towa ds exclusi e de elopmen ?
15 ______ Moldo a’s ex ile and wine indus y: Towa ds inclusi e de elopmen ?
17 ___ Zooming in (II): Geo gia’s libe alised ade wi h he EU — Who bene i s?
18 ______ Mine als and me als: Close links o oliga chic ne wo ks
20 ______ Ag i- ood and ex iles: Be ween exclusi e and inclusi e de elopmen
22 ___ Conclusion and implica ions
24 ___ Lis o In e iews
24 ___ Imp in
Summa y
Th ough i s new Eas e n Pa ne ship (EaP) beyond 2020 he EU aims o ‘de-
li e o all’. In economic e ms, his objec i e ansla es in o he p omo ion
o inclusi e economies ha c ea e oppo uni ies and ensu e p ospe i y o all
ci izens in he pa ne coun ies. T ade libe alisa ion is one o he ools he EU
has a ailable o p omo e inclusi e economies. Bu how e ec i e is i ?
D awing on he cases o Moldo a and Geo gia, his epo e eals ambi alen
e ec s: ade libe alisa ion has ce ainly helped o os e close ade ela-
ions be ween he EU and he wo Eas e n pa ne s and induced inc easing
g ow h a es in Moldo a’s and Geo gia’s expo s o he EU. Ye a close look a
he owne ship s uc u es o op expo sec o s o he EU e eals a mo e nu-
anced pic u e.
This epo poin s o a a ie y o e ec s in Geo gia’s and Moldo a’s op ex-
po sec o s, anging om a) inclusi e de elopmen , which bene i s a b oad
ange o economic ac o s, including small and medium-sized local en e p is-
es (SMEs); h ough b) exclusi e de elopmen , which bene i s only a na ow
g oup o economic ac o s, mainly big and o eign i ms; o c) he consolida-
ion o powe ul oliga chic ne wo ks. Fu he , we show ha a key ac o in
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
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he e ec o ade libe alisa ion wi h he EU on sec o al de elopmen in he
pa ne coun ies is he ype o coali ion be ween public and p i a e ac o s
ha domina es in he di e en expo sec o s. Gi en he sca ci y o business
s a is ics on expo pe o mance a he sec o al le el, ou analysis elies p e-
dominan ly on expe in e iews as well as on a icles and epo s published
by media ou le s and non-go e nmen al o ganisa ions. Ou indings sugges
ha :
– Wi h ega d o he op i e expo sec o s, ade libe alisa ion wi h he EU
has o e ed mo e oppo uni ies o exclusi e and e en inclusi e de elop-
men in Moldo a han in Geo gia.
– A la ge sha e o Moldo a’s expo s o he EU (abou 41 % in 2020) is p o-
duced in sec o s domina ed by exclusiona y o e en inclusiona y de elop-
men al coali ions be ween p i a e ac o s and local s a e au ho i ies. Only
abou 31 % o Moldo a’s expo s o he EU in 2020 came om sec o s clea ly
con olled by en -seeking coali ions.
– In Geo gia, libe alised ade wi h he EU p edominan ly helps o main ain
oliga chic s uc u es. Mo e han 60 % o expo s o he EU in 2020 came
om sec o s domina ed by en -seeking coali ions like mine als and me -
als, whe e he key ma ke playe s a e closely connec ed o he uling oliga -
chic ne wo k unde he leade ship o billionai e Bidzina I anish ili.
These indings hold impo an implica ions o he u u e go e nance o
ma ke in eg a ion in he con ex o he EaP. To mo e e ec i ely p omo e
inclusi e de elopmen h ough ade libe alisa ion ha ‘deli e s o all’, he
EU should:
– acili a e a be e assessmen and moni o ing o he ex en o which i ms o
di e en sizes, including SMEs, can uly eap he bene i s o access o he
EU ma ke . Eu os a and / o na ional s a is ical o ices in he pa ne coun-
ies should he e o e sys ema ically collec business s a is ics in e ms o
expo pe o mance, numbe o expo companies, hei ield o expo (e.g.
sec o s), and ype o company.
– ake in o accoun he owne ship s uc u e o op expo sec o s and he in-
ol emen o hese key owne s in en -seeking p ac ices when implemen -
ing policies and p og ammes ha aim o acili a e access o he EU ma ke
o i ms om he Eas e n pa ne s.
– make su e ha exis ing o planned EU ini ia i es, such as EU4Business and
he Economic and In es men Plan, ailo hei assis ance o enhancing ex-
po compe i i eness and in eg a ion in o Eu opean alue chains o i ms
no linked o oliga chic ne wo ks, as he la e a e a key obs acle o good
go e nance in he pa ne coun ies. Ins ead, he ocus should lie on in e-
g a ing SMEs ha a e less exposed o poli ical con ol in sec o al clus e s o
os e know-how and inno a ion.
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
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In oduc ion1
Making economies mo e inclusi e is a decla ed objec i e o he EU’s Eas e n
Pa ne ship (EaP) ini ia i e: s a egic documen s on he EaP unde line ha
inclusi e economies a e supposed o ‘deli e o all’ by c ea ing bene i s o
all people li ing in he pa ne coun ies. Along hese lines, inclusi e de el-
opmen is concei ed o as a p econdi ion o social cohesion and, ul ima ely,
poli ical s abili y in he neighbou hood.2 I is ue ha he EaP coun ies
ha e d awn close o he EU in economic e ms o e he pas decade due o
inc easing ade olumes. Wi h a iew o he new s a egy on he EaP beyond
2020, which was endo sed a he ecen EaP summi in B ussels in Decembe
2021, i is ne e heless imely o ask whe he close ade ela ions go hand
in hand wi h inclusi e de elopmen and whe he he EU’s exis ing ools and
p og ammes a e well equipped o achie e his objec i e.
The Deep and Comp ehensi e F ee T ade A eas (DCFTAs), which he EU es-
ablished in 2014 wi h Geo gia, Moldo a and Uk aine as pa o hei Associ-
a ion Ag eemen s3, a e key in his espec . In he con ex o he DCFTAs, he
EU’s main ools o p omo e inclusi e de elopmen a e ade libe alisa ion
and egula o y in eg a ion. T ade libe alisa ion aims a abolishing a i
and non- a i ba ie s4 o ade in o de o acili a e ma ke access. Regula-
o y in eg a ion o esees ha he h ee associa ed EaP coun ies ake on EU
no ms and ules in dozens o policy ields anging om ood sa e y o com-
pe i ion law in o de o imp o e he local business clima e and consume
sa e y, and enhance compe i i eness.
Compa ed o egula o y in eg a ion, which is con on ed wi h qui e some
esis ance om powe ul en -seeking g oups who o en a ou he s a us
quo,5 he immedia e de elopmen consequences o ade libe alisa ion a e
al eady isible, since he EU has almos comple ely li ed i s a i ba ie s
1 The au ho s hank Tsypylma Da ie a, Claudia Egga , Félix K awa zek, Sabine on Löwis, I ina
Mü zelbu g, S e anie O phal and Gwendolyn Sasse o hei aluable commen s on an ea lie
d a . Resea ch assis ance by Willi S iege and Ve ena de Lange is g a e ully acknowledged. The
usual disclaime applies.
2 Eu opeanCommission / EEAS,Re iewo  heEu opeanNeighbou hoodPolicy,SWD(2015)
500 inal,Join Communica ion o heEu opeanPa liamen , heCouncil, heEu opeanEco-
nomicandSocialCommi eeand heCommi eeo  heRegions,18No embe 2015,h ps://
ec.eu opa.eu/neighbou hood-enla gemen /documen /download/a61891 -e1a9-4118-91cc-
4ee7e6b226a _en(p.3);Eu opeanCommission/EEAS,Eas e nPa ne shipPolicybeyond2020,
SWD56 inal,18Ma ch2020,h ps://eeas.eu opa.eu/si es/de aul / iles/1_en_ac _pa 1_ 6.pd .
(pp. 4 – 7)
3 TheDCFTAswe ep o isionallyappliedin2014(Geo giaandMoldo a)andin2016(Uk aine),al-
hough heEUopenedi sma ke basedonDCFTAp o isionsasea lyasAp il2014 o Uk ain-
ianp oduc s.TheAssocia ionAg eemen sen e edin o o cein2016(Geo giaandMoldo a)
and2017(Uk aine), espec i ely.
4 Ta i ba ie s ela e o a ax ha is imposed on a good impo ed in o a coun y, ei he as a
ixedsumpe uni o ad alo em,wheni isapplieda ape cen age a ewi h e e ence o
he alue o he impo . Non- a i ba ie s can, o example, include ules ha dic a e how a
p oduc should be manu ac u ed in e ms o p oduc quali y and sa e y o quo as ha limi
he amoun o a pa icula p oduc ha can en e a ma ke , c . h ps://s a s.oecd.o g/glossa y/
index.h m.
5 JuliaLangbein,T ansna ionaliza ion and egula o y change in he EU’s Eas e n neighbou -
hood.Uk aine be ween B ussels and Moscow(London:Rou ledge,2015);Es he Ademme ,
Russia’s impac on EU policy ans e o he pos -So ie space: The con es ed neighbo hood(London:
Rou ledge,2017).
EaP coun ies ha e
d awn close o he EU
in economic e ms.
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
 5
o impo s om he h ee DCFTA coun ies by now.6 The e o e, his ZOiS
epo ocuses on ade libe alisa ion:7 o wha ex en has libe alised ade
helped he EU o achie e i s sel -decla ed objec i e o c ea ing inclusi e
economies in he associa ed Eas e n pa ne s? In o de o e alua e he e -
ec i eness o ade libe alisa ion o inclusi e de elopmen , i is no su -
icien o analyse mac o-le el e ec s in e ms o ade lows, howe e .8 We
also need o ake a close look a he owne ship s uc u es o he pa ne
coun ies’ key expo sec o s o he EU in o de o iden i y he main bene i-
cia ies o libe alised ade wi h he EU and he espec i e consequences o
economic and poli ical de elopmen s in he pa ne coun ies.
Concep ually, ade libe alisa ion may p oduce h ee di e en ypes o de-
elopmen ou comes a he le el o expo sec o s, depending on he na u e
o he dominan sec o al coali ion be ween public and p i a e ac o s: Fi s ,
ade libe alisa ion may help o p omo e inclusi e de elopmen , which c e-
a es bene i s o a b oad ange o economic ac o s, including small and medi-
um-sized local en e p ises (SMEs).9 This ou come is mo e likely i expo sec-
o s a e domina ed by an inclusiona y de elopmen al coali ion be ween di -
e en s a e au ho i ies and a b oade se o p i a e ac o s, including i ms
o associa ions o di e en sizes.10 Second, i may lead o he eme gence o
exclusi e de elopmen , which p oduces g ow h ha is mainly bene icial o
a na ow g oup o economic ac o s, mos ly big and powe ul i ms.11 The
p esence o exclusiona y de elopmen al coali ions be ween s a e ac o s
and a na ow g oup o economic ac o s in key expo sec o s inc eases he
likelihood ha ade libe alisa ion will se hose sec o s on he pa hway o
exclusi e de elopmen . In such a con ex , big and powe ul, mos ly o eign,
i ms o en seek o capi alise on pe iphe al economies’ con enien loca ion
and cheap labou . The s a e’s ole is limi ed o accommoda ing he needs
o s ong economic ac o s and implemen ing in es men - iendly policies.12
6 Tha said, heEUs illappliessomeba ie s,suchas a i - a equo as, o ce ainag i- oodim-
po s omGeo gia,Moldo aandUk aine.C .MichaelEme sonandDenisCenusa,Deepening
EU–Moldo an Rela ions. Upda ing and upg ading in he shadow o Co id-19(B ussels:Cen e o 
Eu opeanPolicyS udies,2021);MichaelEme sonandTama aKo zi idze,Deepening EU-Geo -
gian Rela ions. Upda ing and upg ading in he shadow o Co id-19(B ussels:Cen e o Eu opean
PolicyS udies,2021).
7 This epo ispa o ala ge ZOiSp ojec on hee ec o economicin eg a ionwi h heEUon
poli ical and economic de elopmen s in he h ee associa ed Eas e n pa ne s. Fu u e esea ch
will in es iga e he ex en o which he p ocess o egula o y in eg a ion helps o b ing abou
inclusi e de elopmen . C . h ps://en.zois-be lin.de/ esea ch/ esea ch-clus e s/deep- ee- ade-
wi h- he-eu-and-i s-e ec s-on-pos -so ie - egime-s abili y.
8 See, o example,Rica doGiucci,Ve onikaMo chanandWoldema Wal e (2019)Theeconomic
e ec o  heDCFTAonUk aine,Moldo aandGeo gia.Acompa a i eAnalysis.Be linEconom-
ics;Nekhay,Olexand ,M.Ca menDelgado,andM.Alejand oCa dene e‘DoesAbolishing
Ta i sinBila e alT adeMa e  o aCoun y’sEconomicG ow h?TheImpac o  heEU-Uk aine
DCFTA’Eu ope-Asia s udies73,no. 7(2021),pp. 1257 – 1278;CEPS(2021)Ex-pos e alua iono 
heimplemen a iono  heDeepandComp ehensi eF eeT adeA easbe ween heEUandi s
Membe S a es and Geo gia and Moldo a, h ps://www.dc a-e alua ion.eu/wp-con en /up-
loads/2021/07/ex-pos _DCFTAs_D a _Incep ion_Repo _upda ed-002-incl-se ices.pd
9 SamHickey,KunalSenandBad aBukenya,The Poli ics o Inclusi e De elopmen : In e oga ing
he E idence(Ox o d:Ox o dUni e si yP ess,2017);Da onAcemogluandJamesRobinson,
WhyNa ionsFail(NewYo kCi y:C ownBusiness,2012).
10 AcemogluandRobinson(2012);JuliaLangbein,Ilda GazizullinandDmy oNaumenko,‘T ade
libe aliza ionandopeninginpos -So ie limi edaccesso de s’,Eas Eu opean Poli ics37no. 3
(2021):pp. 1 – 20.
11 Pe e E ans,‘P eda o y,de elopmen alando he appa a uses:Acompa a i epoli icalecono-
mype spec i eon heThi dWo lds a e’,Sociological Fo um4,(1989):pp. 561 – 587(p. 563).
12 And easNölke,andA janVliegen ha ,‘Enla ging he a ie ieso capi alism:Theeme gence
o dependen ma ke economiesinEas Cen alEu ope’,Wo ld Poli ics61,no. 4,(2009):
pp. 670 – 702;Pe Pa línek,Dependen g ow h: Fo eign in es men and he de elopmen o he
au omo i e indus y in Eas -Cen al Eu ope(Be lin:Sp inge ,2017).

ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
6
Thi d, ade libe alisa ion may con ibu e o consolida ing he powe po-
si ion o en -seeking eli es. I is a global end ha big business ends o
bene i mos om ade libe alisa ion, as la ge companies ind i easie o
access new ma ke s and alue chains due o economies o scale.13 Howe e ,
in less-de eloped economies, including he Eas e n pa ne s, big i ms a e
o en owned by economic eli es who use hei p i ileged access o economic
and poli ical esou ces o he sake o p i a e gains. The dominance o en -
seeking coali ions in key expo sec o s he e o e inc eases he likelihood
ha ade libe alisa ion will help o consolida e en -seeking beha iou .14
Taking a close look a he bene icia ies o libe alised ade wi h he EU
and hei embeddedness in di e en ypes o coali ions wi h public and / o
o he p i a e ac o s is hus key o e ealing po en ial posi i e bu also (un-
in ended) nega i e consequences o educed ade ba ie s be ween he EU
and he h ee associa ed pa ne coun ies. To his end, ou s udy ocuses
on wo associa ed Eas e n pa ne s, Moldo a and Geo gia, o which an in-
dep h analysis o he bene icia ies o libe alised ade wi h he EU is s ill
lacking.15
Pa s o ou empi ical esea ch o his epo ely on s a is ical da a om
Eu os a , he Moldo an Na ional Bu eau o S a is ics and he Na ional S a-
is ics O ice o Geo gia as well as on go e nmen documen s. I u ned ou
o be mo e di icul han ini ially assumed o ge access o da a showing he
sha e o SMEs is-à- is la ge i ms in o al expo s o he EU o mos o he
op Geo gian o Moldo an expo sec o s. Tha is because nei he he EU
no na ional s a is ical o ices sys ema ically collec business s a is ics by
sec o and size class (i.e. numbe o employees and alue-added) in e ms o
expo pe o mance. Fu he , he owne ship s uc u es o economic sec o s
in Moldo a and Geo gia and en -seeking p ac ices a he le el o pa icu-
la sec o s o i ms a e an ex emely unde - esea ched opic in he schol-
a ly li e a u e. The e o e, we conduc ed semi-s uc u ed expe in e iews
in 2020, and ex ensi ely e iewed o he p ima y and seconda y sou ces,
p edominan ly a icles and epo s published by media ou le s and non-
go e nmen al o ganisa ions, such as T anspa ency In e na ional Geo gia,
he Cen e o In es iga i e Jou nalism o Moldo a, o sec o al business as-
socia ions. In mos cases, especially wi h ega d o he disclosu e o a i m’s
ies o oliga chic s uc u es o hei in ol emen in en -seeking p ac ices,
we we e able o secu e a leas wo sou ces o an empi ical obse a ion.
Howe e , some imes only one sou ce o in o ma ion, such as da a om an
expe in e iew, a newspape a icle o a epo published by a NGO, was
a ailable.
13 DaniRod ik,‘Impe ec compe i ion,scaleeconomies,and adepolicyinde elopingcoun ies’.
InBaldwin,RE.(ed)T adepolicyissuesandempi icalanalysis(Chicago:Uni e si yo Chicago
P ess,1988),pp. 109 – 144.Economieso scale e e  o hephenomenon ha  hecos  o p o-
ducing a pa icula uni o ou pu dec eases wi h an inc easing magni ude o ou pu .
14 Langbein,GazizullinandNaumenko(2021).
15 Anin-dep hanalysiso  hecaseo Uk aineisp esen edinLangbein,GazizullinandNaumenko
(2021).Thea icleshows ha , hus a , helibe alisa iono  adebe ween heEUandUk aine
hasp oducedambi alen e ec s:sinceUk aine’smainexpo sec o s o heEUa edomina ed
by i mswi hclose ies ooliga chics uc u es, adelibe alisa ionbe ween he wopa ieshas
so a helped o consolida e he powe posi ion o en -seeking eli es. Only in some sub-sec o s
o Uk aine’s opexpo sec o s,suchasag i- oodandmachine y,whe edominan ma ke 
playe sdono enjoy ies ooliga chics uc u es,has adelibe alisa ionyieldedbene i s o a
b oade g oup o economic ac o s.
Owne ship s uc u es
o economic sec o s
in Moldo a and
Geo gia a e an unde -
esea ched opic.
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
7
Ou epo is s uc u ed as ollows: We i s look in o gene al ends ega d-
ing EU ade ela ions wi h Moldo a and Geo gia ha sugges a posi i e de-
elopmen since he ea ly 2000s in e ms o ade olumes, he signi icance
o he EU as an expo ma ke o he wo pa ne coun ies, and he numbe s
o local companies expo ing o he EU. We hen zoom in on Moldo a’s and
Geo gia’s key expo sec o s, hei owne ship s uc u es and he quali y o
sec o al coali ions, e ealing a mo e ambi alen pic u e: On he one hand,
ade libe alisa ion wi h he EU (unin en ionally) con ibu es o s eng hen-
ing he powe posi ion o en -seeking coali ions in bo h coun ies, albei
o a highe deg ee in Geo gia han in Moldo a. On he o he hand, EU ade
libe alisa ion o e s oppo uni ies o a leas exclusi e and in some cases
e en inclusi e de elopmen in some sec o s o Moldo a’s economy and o a
a mo e limi ed deg ee in Geo gia. We conclude by discussing he implica-
ions o ou indings o he u u e go e nance o ma ke in eg a ion in he
con ex o he Associa ion Ag eemen s and DCFTAs.
EU ade ela ions wi h Moldo a and Geo gia:
The big pic u e
T ade s a is ics sugges ha ade libe alisa ion has hus a gone hand in
hand wi h close economic ela ions be ween he wo Eas e n pa ne s, Mol-
do a and Geo gia, and he EU.
Asymme ical ade libe alisa ion be ween he EU and Moldo a began in
he la e 1990s and has ga he ed pace since 2006.16 Be ween 2004 and 2007,
Moldo a’s expo s o he EU mo e han doubled. Bu i was only once he
DCFTA be ween he EU and Moldo a en e ed in o o ce in 2014 ha he EU
libe alised impo s om Moldo a o almos all goods, excep o some ag i-
ood p oduc s.17 As a esul , Moldo a’s expo s o he EU inc eased by 61 %
be ween 2013 and 2019 ( FIGURE1). Wha is mo e, o e he pas 15 yea s,
he EU has u ned in o Moldo a’s mos impo an expo des ina ion, while
o he pa ne s like he Commonweal h o Independen S a es (CIS), abo e all
Russia, los hei signi icance as expo ma ke s ( FIGURE2). In e ms o in-
clusi eness, he numbe o Moldo an companies expo ing o he EU in 2019
was, a o e 1 800, 32 % highe han in 2015.18 Tha said, i is di icul o say
whe he his end also implies g ea e di e si ica ion as ega ds he size
o expo companies, since i was no possible o ob ain s a is ical da a on
he a io o SMEs o la ge i ms in Moldo a’s o al expo olumes o he EU
in ecen yea s. Acco ding o expe assessmen s, howe e , Moldo an SMEs
play a mo e limi ed ole when i comes o eaping he bene i s o inc easing
ade libe alisa ion wi h he EU, especially in e ms o expo s.19
16 In1998,Moldo abecameabene icia yo  heGene alizedSys emo P e e ences(GSP), ol-
lowedbysubsequen a angemen s esul ingin u he libe alisa ionin2006(specialincen i e
a angemen  o Sus ainableDe elopmen andGoodGo e nance,GSP+)and2008(Au ono-
mousT adeP e e ence,ATP).
17 Eme sonandCenusa(2021).
18 Au ho s’in e iewwi hano icial om heEUdelega ion oMoldo a,20Decembe 2021,
online.
19 Ins i u ulpen uPoli icișiRe o meEu opene(IPRE),OnlineConsul a ionMee ingonEx-pos 
e alua iono EU-Moldo aAA / DCFTAimplemen a ion,17Decembe 2021.
O e he pas 15 yea s,
he EU has u ned
in o Moldo a’s mos
impo an expo
des ina ion.
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
8
Moldo a'skeyexpo des ina ions
Table 1: Moldo a’s key expo des ina ions (sha e in Moldo a’s o al expo s)
*Geo giano coun edasCIS om2009on
*Uk aineno coun edasCIS om2014on
*Theda adono  e lec  heimpo /expo o  heT ansnis ian egion
*Theda a o  heEUin2004don' includeRomania,Bulga ia,andC oa ia
No e:Geo giaisno coun edasCIS om2009on.Uk aineisno coun edasCIS om2014on.Theda adoesno  e lec impo /expo o T ansdnies ia.EUda a akesshi ingmembe shipsin oaccoun .
Sou ce:Moldo anNa ionalBu eauo S a is ics.
30.1%
15.1%
35.9%
1.2%
0.01%
17.7%
46.8%
12.0%
26.0%
5.2%
0.3%
9.6%
66.5%
3.7%
8.8%
7.0%
0.5%
13.6%
EU
CIS
Russia
Tu key
China
O he s
2004 2013 2020
Sou ce: Moldo an Na ional Bu eau o S a is ics. The da a do no e lec T ansnis ian impo s / expo s.
Sou ce: Moldo an Na ional Bu eau o S a is ics
FIGURE1
T ade lows be ween Moldo a and he EU
2004 – 2020(inmlnUSD)
FIGURE2
Moldo a’s key expo des ina ions
(sha einMoldo a’s o alexpo s)
Tu no e Expo Impo
2004
2020
2013
Compa ed o Moldo a, Geo gia was a on unne in e ms o ade libe ali-
sa ion wi h he EU. As ea ly as 2006, 90 % o Geo gia’s ade u no e wi h
he EU was a ze o a i due o a decision by he Geo gian go e nmen o
sc ap mos a i s on EU impo s.20 The EU, o i s pa , ex ended a i p e -
e ences o Geo gia om 1999 unde i s Gene alised Scheme o P e e ences
(GSP) as pa o a special incen i e a angemen o ewa d de elopmen and
20 The Geo gian go e nmen did he same wi h mos a i s on impo s om he es o he wo ld.
No e: Geo gia is no coun ed as CIS om
2009on.Uk aineisno coun edasCIS
om2014on.Theda adoesno  e lec 
impo  / expo o T ansdnies ia.EUda a
akes shi ing membe ships in o accoun .
Figu e 1: T ade lows be ween Moldo a and EU, 2004-
2020 (in mln USD)
Millions,USD 2004 2005 2006 2007 2008 2009
Expo 297 443 537 679 820 667
Impo 775 1039 1219 1681 2105 1421
Tu no e 1072 1482 1756 2360 2925 2088
Julia:Ich indedieseabe ohneZahlen,abe mi Besch i ungde y-Achseambes en(MillionUS$-im e ikalenSch i zug)
S e anie:ichweißnich ,wa umdieVe knüp ungzudenDa ennich angezeig wi d.HabedieG a ikausde Tabellee s ell .
Sou ce: Moldo an Na ional Bu eau o S a is ics.
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Tu no e 
Impo 
Expo 
MillionUS$
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
 9
good go e nance (GSP+).21 Be ween 2005 and 2007, Geo gia’s expo s o he
EU inc eased by 63 %. When he DCFTA be ween he EU and Geo gia was
p o isionally en o ced in 2014, i s immedia e impac on bila e al ade was
he e o e limi ed: Geo gia’s expo s o he EU inc eased by ‘only’ 32 % om
2014 o 2019 ( FIGURE3). Unlike o Moldo a, he EU is Geo gia’s second mos
impo an expo des ina ion, whe eas he CIS, including Russia, is s ill he
mos impo an expo ma ke o Geo gian p oduc s. Fu he , China has
gained signi icance as a ading pa ne o Geo gia a e he F ee T ade
Ag eemen be ween he wo pa ies came in o o ce in 2018 ( FIGURE4).
21 EconomicPolicyResea chCen e ,Eu opeanUnion’sAg eemen onDeepandComp ehensi eF ee
T adeA eaandGeo gia,EPRC,2014,h ps://ep c.ge/wp-con en /uploads/2022/01/eu_eng_web.
pd ? bclid=IwAR36E5e_NCSXhbTZaAmpw44oZ K_S7KKJCiidCsN0yjdnpxzxM1s2PipEO8.
Tu no e Expo Impo
Sou ce: Geos a
FIGURE3
T ade lows be ween Geo gia and he EU
2004 – 2020(inmlnUSD)
Sou ce: Geos a
FIGURE4
Geo gia’s key expo des ina ions
(sha einGeo gia’s o alexpo s)
Geo gia’skeyexpo des ina ions
2004 2013 2020
EU 15.00% 20.00% 21.00%
CIS
(excl.
Russia)
35.00% 49.00% 32.00%
Russia 16.00% 7.00% 13.00%
Tu key 18.00% 6.30% 5.70%
China 0.20% 1.20% 14.00%
O he s 15.80% 16.50% 14.30%
Sou ce:
Geos a
No e: Uk aine
is no coun ed
as CIS om
2014 on. EU
da a akes
shi ing
membe ships
in o accoun .
Julia:Ge äll mi ,nu dasLayou de Zahlenmüss e onde G a ike in ielleich nochmale wasnachgebesse we den.
15.0%
35.0%
16.0%
18.0%
0.2%
15.8%
20.0%
49.0%
7.0%
6.3%
1.2%
16.5%
21.0%
32.0%
13.0%
5.7%
14.0%
14.3%
EU
CIS
(excl.
Russia)
Russia
Tu key
China
O he s
2004 2013 2020
2004
2020
2013
No e:Uk aineisno coun edasCIS
om2014on.EUda a akesshi ing
membe ships in o accoun .
Tu no e Expo Impo
Figu e2:T ade lowsbe weenGeo giaandEU,2004-2020(inmlnUSD)
Millions,USD 2004 2005 2006
Expo 111 165 158
Impo 604 627 948
Tu no e 716 793 1106
Sou ce: Geos a Julia:Ich indedie ech eG a ikambes enohnedieAngabede Zahlen.Esgeh meh umT ends,dieZahlenmachenesunübe sich lich.
Ich indedieseabe ohneZahlen,abe mi Besch i ungde y-Achseambes en(MillionUS$-im e ikalenSch i zug)
0
500
1000
1500
2000
2500
3000
3500
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Tu no e  Expo  Impo 
MillionUS$
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
16
The owne ship s uc u e o Moldo a’s ex ile indus y is di e se: apa om
a ew la ge companies, he majo i y o p oduce s a e SMEs.47 The sec o ep-
esen s a pa hway owa ds inclusi e de elopmen as i is cha ac e ised by a
ema kable le el o inclusiona y sec o al o ganisa ion. Mos ex ile companies
a e membe s o he Ligh Indus y Employe s Associa ion (APIUS). Toge he
wi h Moldo an go e nmen agencies, he Technical Uni e si y o Moldo a,
and wi h he suppo o USAID, APIUS ini ia ed se e al public-p i a e pa ne -
ships (PPPs) om 2012 onwa ds o boos compe i i eness and p omo e he in-
eg a ion o Moldo a’s ex ile indus y in o Eu opean alue chains. Moldo a’s
S a e Agency on In ellec ual P ope y (AGEPI) ac i ely suppo ed he p ojec ,
in pa icula by aining pa icipa ing companies in he use o in ellec ual
p ope y (IP) sys ems o p o ec hei b ands and designs. Acco ding o indus-
y ep esen a i es, he join p omo ional campaign ‘F om he Hea — B ands
o Moldo a’, which s a ed in 2012, con ibu ed o changing pe cep ions o
Moldo an b ands by bo h o eign in es o s and local consume s.48 Fu he ,
he ZIPHouse Cen e o Excellence and Accele a ion in Design Technologies,
es ablished in 2015, se es as a pla o m o inno a ion and en ep eneu ial
de elopmen in he indus y.49
Moldo a’s wine sec o occupies a iny place in o al expo s o he EU, ac-
coun ing o abou 2 o 3 % o he coun y’s o al expo s o he Eu opean
ma ke . In ac , Russia’s impo ban on Moldo an wine in Sep embe 2013
seems o ha e helped o b ing abou a coali ion be ween s a e au ho i ies
and local wine p oduce s o a ac new ma ke s in he EU. To begin wi h,
he Na ional Vine and Wine O ice (NVWO) s a ed o enhance anspa ency
and quali y p o ec ion by in oducing an elec onic wine egis e in 2013
wi h he help o he Czech De elopmen Agency and USAID. Wes e n dono s
also helped smalle companies o o m associa ions like he Associa ion o
Small Wine P oduce s o Moldo a, which oday con ols abou one- hi d o
he ineya ds.50 The ac ha hund eds o wine ies and dozens o p oduce s
and expo e s o ganised hemsel es in sec o al business associa ions p e-
en ed he es ablishmen o monopolies and he subsequen de elopmen o
en -seeking schemes.
To sum up, Moldo a’s ade libe alisa ion wi h he EU has so a c ea ed mo e
oppo uni ies o exclusi e and e en inclusi e de elopmen han o consoli-
da ing he powe posi ion o en -seeking eli es. In 2020, machine y, ex iles
and wine accoun ed o a ound 41 % o Moldo a’s expo s o he EU. An exclu-
si e de elopmen al pa hway cha ac e ises he machine y sec o , whe e o -
eign in es o s om EU coun ies ha e been he main bene icia ies o libe al-
ised ade wi h he EU hanks o an exclusiona y de elopmen al coali ion wi h
47 Uni edNa ionsEconomicCommission o Eu ope(UNECE)(2021),‘UNAlliancesuppo s
Moldo a’se o s o u ni s ashionindus yin oad i e o sus ainablede elopmen ’,h ps://
unece.o g/media/news/356784.
48 Oc a ianApos olandLilianaVie u,‘B andso Moldo a:acu abo e’,WIPOMagazine,Oc obe 
2016,h ps://www.wipo.in /wipo_magazine/en/2016/05/a icle_0009.h ml.
49 Bjö nVogle ,‘Po en ialsandKeyFea u eso Pilo -Clus e S uc u esin heAu omo i eSup-
plyandTAFL(Tex ile,Appa el,Foo wea andLea he Goods)Indus yinMoldo a’,Ge man
EconomicTeamMoldo a,PolicyPape Se ies,No. PP / 03 / 2017,Oc obe 2017,h p://www.
ge -moldau.de/wo dp ess/wp-con en /uploads/2017/11/PP_03_2017_en.pd .
50 Ma iaGheo gi aandCo neliaC uce escu,‘TheImpac o Coope a ionModelso Moldo-
anCompanieson heG owingo AddedValue’, Jou nal o Social Science1,no.1(2018):
pp. 126 – 132;P essReleaseo Wine-and-Spi i s.md,‘Associa iono smallwinep oduce s om
Moldo a:10yea so success’,WineandSpi i s,1May2020,h ps://wine-and-spi i s.md/ o/
asocia ia-micilo -p oduca o i-de- inu i-din-moldo a-10-ani-de-succese/.
Hund eds o Moldo an
wine ies and dozens
o p oduce s and
expo e s o ganised
hemsel es in sec o al
business associa ions.

ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
17
Moldo a’s s a e au ho i ies. By con as , Moldo a’s ex ile and wine indus ies
seem o be on ack owa ds inclusi e de elopmen by i ue o inclusiona y
sec o al coali ions be ween business associa ions, uni e si ies and s a e au-
ho i ies. Ne e heless, as o 2020, almos one- hi d (31 %) o Moldo a’s o al
expo s o he EU came om sec o s ha a e in he hands o o closely linked
o oliga chic ne wo ks. While he impo ance o me al expo s as a sou ce o
e enue o Moldo a’s big business is sh inking, oliga chic ne wo ks ha e en-
c oached upon Moldo a’s ege able p oduc ion. EBRD loans ha e e en helped
hose ne wo ks o sho e up hei monopoly posi ion.
Zooming in (II): Geo gia’s libe alised ade
wi h he EU — Who bene i s?
As in he case s udy o Moldo a, we begin ou analysis o key bene icia ies
o Geo gia’s libe alised ade wi h he EU by looking a how he s uc u e o
he coun y’s expo s o he EU has changed since ade libe alisa ion began
in 2006.
The signi icance o indi idual sec o s s a ed o change a e 2007 ( TABLE3),
he only excep ion being mine als, which main ained i s op posi ion. Wi h-
ou a doub , ag i- ood (mainly nu s, mine al wa e s and wine, acco ding o
Geos a da a) was he sec o ha ecei ed he g ea es boos om EU ade
libe alisa ion. Chemicals and ex iles we e able o inc ease hei expo
sha e, bo h in pe cen and olume. Me als, s one and glass los in signi i-
cance, while machine y did no wi ness sus ainable g ow h pe spec i es.
Since s a is ical da a on he expo pe o mance o di e en i m sizes in
Geo gia’s op i e expo sec o s o EU is no a ailable (as in he case o Mol-
do a), ou analysis o key Geo gian expo e s again elies on company web-
si es, expe in e iews, and epo s by he media and NGOs.
The b oade poli ical economy con ex o Geo gia is simila o ha in Mol-
do a; he e oo, oliga chic ne wo ks con ol access o economic and poli ical
esou ces. This is despi e imp o emen s o Geo gia’s go e nance capaci y
a e he 2006 Rose Re olu ion, which pu i in a be e posi ion o deal wi h
oliga chs han Moldo a and o he Eas e n Pa ne ship coun ies. Back hen,
he igh agains pe y co up ion was imp essi e. Howe e , p ope y igh s
iola ions and high-le el co up ion emained widesp ead.51 In 2012, bil-
lionai e Bidzina I anish ili, who uni ed a ious opposi ion pa ies in he
coali ion Geo gian D eam (GD), won he elec ions and managed o concen-
a e powe in his hands. He no longe held an o icial posi ion a e 2013,
bu had a s in as GD chai pe son in he un-up o he 2018 elec ions be o e
esigning om all du ies. I anish ili’s weal h is es ima ed a 6 billion USD,
mos ly buil on Russian asse s.52 He owns a huge ne wo k o companies and
51 Es he Ademme ,JuliaLangbeinandTanjaBö zel,‘Va ie ieso Limi edAccessO de s:The
nexusbe weenpoli icsandeconomicsinhyb id egimes’,Go e nance 33,no. 1(2019):
pp. 191 – 208.
52 C is inaGhe asimo ,‘Poli icalEli eRenewalinGeo gia,Moldo aandUk aine’,Cha hamHouse
RussiaandEu asiaP og amme,Resea chPape 5 / 2019,May2019,h ps://www.cha ham-
house.o g/si es/de aul / iles/2019-05-14-Poli ical%20Eli e%20Renewal.pd .
Geo gia’s ag i- ood was
he sec o ha ecei ed
he g ea es boos om
EU ade libe alisa ion.
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
18
uses con ol o e he judicia y and o he s a e ins i u ions o p o ec his and
his allies’ powe and weal h.53
Simila o he case o Moldo a, we would he e o e expec libe alised ade
wi h he EU o mainly bene i oliga chic ne wo ks, as hey con ol access
o poli ical and economic esou ces in Geo gia. Fo each op expo sec o
o he EU, we he e o e ake a close look a he i ms domina ing expo s
o he EU, iden i y hei key owne s, and in es iga e whe he he la e a e
embedded in en -seeking o (inclusiona y o exclusiona y) de elopmen al
coali ions.
Mine als and me als: Close links o oliga chic ne wo ks
Mine als (in pa icula coppe o e) we e Geo gia’s key expo commodi y
o he EU in he pe iod om 2004 o 2020. Rich Me als G oup (RMG) Cop-
pe is Geo gia’s mos impo an expo e o coppe o e. Acco ding o Geos a
da a, he company was among he op 50 expo e s e e y yea om 2004 o
2019. Since 2019, RMG coppe has been owned by Mining In es men s LLC,
53 WojciechKononczuk,DenisCenusaandKo nelyKakachia,‘Oliga chsinUk aine,Moldo aand
Geo giaaskeyobs acles o e o ms’,3DCFTAs,Ma ch2017,h ps://www. esea chga e.ne /pub-
lica ion/317596551_Oliga chs_in_Uk aine_Moldo a_and_Geo gia_as_key_obs acles_ o_ e o ms.
Rank P e-GSP+ 2004 expo
sha e,
o al expo olume
inmln€
Pos -GSP+ / P e-C isis
2007 expo sha e,
o al expo olume
inmln€
Pos -C isis 2011 ex-
po sha e,
o al expo olume
inmln€
P e-DCFTA 2013 ex-
po sha e,
o al expo olume
inmln€
Pos -DCFTA 2020
expo sha e,
o al expo olume
inmln€
1. Mine al p oduc s
(58.4 %;183.7)
Mine al p oduc s
(55,8 %;256,0)
Mine al p oduc s
(63.2 %;388.5)
Mine al p oduc s
(57.3 %;382.0)
Mine al p oduc s
(60 %;460.0)
2. Me als
(13.3 %;41.9)
Ag i- ood
(19,2 %;87,9)
Ag i- ood
(14.6;89.5)
Ag i- ood
(18.4 %;122.9)
Ag i- ood
(18.2 %;139.3)
3. Ag i- ood
(10.7 %;33.5)
Me als
(11,9 %;54,5)
Chemicals &
Allied Indus ies
(10.1 %;62.0)
Me als
(7.9 %;52.8)
Tex iles
(6.8 %;52.0)
4. Chemicals &
Allied Indus ies
(6.6 %;20.6)
Chemicals &
Allied Indus ies
(4.29 %;19.7)
Me als
(6.8 %;41.5)
Chemicals &
Allied Indus ies
(6.7 %;44.6)
Chemicals &
Allied Indus ies
(5.5 %;42.0)
5. S one/Glass
(3,8 %;11.8)
Machine y
(2.4 %;11.1)
Tex iles
(1.8 %;11.2)
Tex iles
(3.6 %;23.7)
Me als
(3.4 %;25.8)
Sou ce: Eu os a da a se ies ‘EU ade since 1988 by HS2-4-6 and CN8’ (DS-645593), au ho s’ calcula ions.
TABLE3
Geo gia’s op i e expo sec o s o he EU
(sha ein o alexpo s o heEUin%/sha ein o alexpo  olume o heEUinmln€)
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
 19
which is con olled by Russian billionai e Dmi iy T oi skiy.54 Toge he wi h
o he Russian businessmen, T oi skiy had al eady con olled RMG B.V., he
p e ious owne o RMG Coppe . The Geo gian NGO G een Al e na i e has
documen ed close links be ween RMG and Bidzina I anish ili’s ne wo ks.55
A case in poin is he decision aken by he Geo gian Minis y o Cul u e in
2013 o e oke he s a us o he wo ld’s oldes gold mines in Sakd isi as a
p o ec ed his o ical si e. As a esul , RMG was allowed o s a mining op-
e a ions he e.56 Fu he , Geo gia’s go e nmen au ho i ies u n a blind eye
o RMG’s en i onmen ally and socially ha m ul mining ope a ions.57 Indi-
iduals di ec ly o indi ec ly connec ed wi h RMG epo edly dona ed mo e
han 800 housand GEL (app ox. 192,000 eu os) o he uling pa y Geo gian
d eam, which is close o I anish ili, in he un-up o he 2020 pa liamen a y
elec ions.58
The me als sec o is also closely linked o Geo gia’s uling eli es. I s signi i-
cance o expo s o he EU declined, howe e , in pa icula a e he DCFTA
en e ed in o o ce ( TABLE3). Geo gian Manganese LLC (GM) is Geo gia’s
leading p oduce and expo e , acco ding o he company’s websi e.59 F om
2006 o 2013, 75 % o GM’s sha es belonged o he Uk ainian P i a G oup.
P i a G oup is one o he mos closed and non- anspa en Uk ainian hold-
ings. I s ounde s Igo Kolomoisky and Henadiy Boholyubo a e among he
i e iches people in Uk aine.60 In 2013, P i a G oup ans e ed GM o he
US-Ame ican Holding Geo gia Ame ican Alloys, an o sho e company as-
sumed o be egis e ed in Luxembou g.61
GM has a dubious ack eco d. I has aced epea ed accusa ions o exploi a-
i e labou p ac ices and pollu ion: he company was ined on a ew occa-
sions up o 2017 o en i onmen al damages and ax e asion. The paymen
o hese ines ensu ed ha GM was discha ged om liabili y o he en i-
onmen al damages.62 Such deals i s became legal in 201263 and used o be
conside ed a p ominen en -seeking ac i i y in Geo gia.64 In 2017, Nikoloz
54 G eenAl e na i e,‘RichMe alG oup.CompanyP o ile’,G eenAl e na i e,Ma ch2021,h ps://
g eenal .o g/app/uploads/2021/05/RMG_Eng_2021.pd .
55 SeealsoAlexande Kupa adze,‘In o malGo e nanceandCo up ion — T anscending heP in-
cipalAgen andCollec i eAc ionPa adigms’,BaselIns i u eonGo e nance,July2018,h ps://
baselgo e nance.o g/si es/de aul / iles/2019-04/geo gia.in o malgo e nance.coun y_ epo .
pd .
56 Alexande Kupa adze,‘Poli icalco up ioninEu asia:Unde s andingcollusionbe weens a es,
o ganizedc imeandbusiness’,Theo e ical C iminology19,no. 2(2015):pp. 198 – 215.
57 JesseSwann-Quinn,‘Mining hehomeland:imagining esou ces,na ion,and e i o yin he
Republico Geo gia’, Eu asian Geog aphy and Economics,60,no. 2(2019):pp. 199 – 151.
58 Ins i u e o De elopmen o F eedomo In o ma ion,‘Poli icalDona ions:F eewillo Business
In es men ?’,Ins i u e o De elopmen o F eedomo In o ma ion,24June2020,h ps://id i.
ge/en/id is- esea ch-poli ical-dona ions.
59 h ps://www.gm.ge/en/.
60 HeikoPleines,‘Thepoli ical oleo businessmagna esincompe i i eau ho i a ianRegimes’,
Jah buch ü Wi scha sgeschich e60no. 2(2019):pp. 299 – 334.
61 NinoGuja aidze,‘Geo gianManganese — CompanyP o ile’,G eenAl e na i e,2019,h ps://
g eenal .o g/app/uploads/2021/04/GM_Eng_2019.pd .
62 Ch isKa anagh,‘Geo gianManganese acing$160m ine,managemen shakeup’,Fas ma ke s
MB,19May2017,h ps://www.me albulle in.com/A icle/3718531/Geo gian-Manganese-
acing-160m- ine-managemen -shakeup.h ml;NinoGuja aidze,‘Geo gianManganese — Com-
panyP o ile’,G eenAl e na i e,Ma ch2021,h ps://g eenal .o g/app/uploads/2021/05/
GM_Eng_2021.pd .
63 TheLawonMakingAmendmen s oSomeLegisla i eAc so Geo gia(Sou ce:www.ma sne.
go .ge, egis a ioncode:360000000.05.001.016640).
64 NinoGuja aidze,‘Sec e lyConcludedAg eemen sAgains  heEn i onmen ’,G eenAl e na-
i e,2013,h p://g eenal .o g/wp-con en /uploads/2013/04/sec e ly_concluded_ag eemen s_
agains _ he_en i onmen .pd . The p ac ice is no longe applied oday.
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
20
Chiko ani was appoin ed special manage a GM. Chiko ani is a p o égé o
he Geo gian D eam Pa y and was ins alled o neu alise claims by en i-
onmen al ac i is s ha GM was b eaching en i onmen al and wo k sa e y
s anda ds. In ac , unde Chiko ani’s managemen no hing has changed and
GM s ill ope a es unsa e mine qua ies and con inues o damage he en i-
onmen .65
In sum, he p e ious discussion shows ha mo e han 60 % o Geo gia’s ex-
po ed goods a e p oduced in sec o s whe e en -seeking coali ions domi-
na e. Leading companies a e owned by Russian oliga chs o enjoy close e-
la ionships o he p o-go e nmen camp led by he Geo gian D eam Pa y
ha is close o oliga ch Bidzina I anish ili, and use hese ies o ecei e
p e e en ial ea men by s a e au ho i ies.
Ag i- ood and ex iles: Be ween exclusi e and inclusi e
de elopmen
Geo gia’s ag i- ood and ex ile indus ies made up oughly 25 pe cen o he
coun y’s expo s o he EU in 2020. The owne ship s uc u es o hese sec-
o s a e mo e di e se han in he case o mine als: a ew la ge o eign and
domes ic companies domina e, wi h an inc easing numbe o SMEs. S ill,
he bene i s o ade libe alisa ion a e e y unequally dis ibu ed, in pa -
icula in he case o ex iles.
An exclusiona y de elopmen al coali ion has eme ged in he ex ile sec o ,
se ing i on a pa h owa ds exclusi e de elopmen . Accommoda ing s a e
policies help o p oduce p o i s o a ew in e na ional b ands and la ge
local companies a he expense o high social cos s o he local wo k o ce.
To begin wi h, a i elimina ions in he con ex o GSP+ and he DCFTA,
along wi h o he a ou able go e nmen decisions, helped o boos o eign
di ec in es men in Geo gia’s ex ile indus y om 2006 onwa ds. In his
espec , he go e nmen ’s decision o c ea e special economic zones and he
launch o he ‘P oduce in Geo gia’ p og amme in 2014 ce ainly played an
impo an ole in a ac ing in es o s wi h educed ax a es, compe i i e
labou cos s, good anspo a ion links, and a mo e a ou able in es men
en i onmen .66 Indeed, Geo gia’s ex ile and appa el indus y has wi nessed
a conside able inc ease in p oduc ion (up 30 % since 2008) and expo ol-
umes (up 24 % in he pe iod om 2009 o 2015). Bu he go e nmen ’s enden-
cy o gi e in es o s and la ge local ex ile p oduce s a ee ein, especially
when i comes o labou s anda ds, comes a a high social cos o he local
wo k o ce.67
The key bene icia ies o hese de elopmen s a e mainly in e na ional
b ands, which engage in ha dly any echnological ans e o upg ading,
65 Guja aidze(2019);BusinessandHumanRigh sResou ceCen e ,‘Geo gianManganese.Com-
panyP o iles’,BusinessandHumanRigh sResou ceCen e ,June2021,h ps://www.business-
human igh s.o g/documen s/36051/Geo gian_Manganese.pd .
66 OECD‘OECDIn es men PolicyRe iews:Geo gia’,OECDIn es men PolicyRe iews,2020,
h ps://doi.o g/10.1787/0d33d7b7-en.;In es inGeo gia(2016)In es men Oppo uni iesin
Appa el and Tex ile Indus y o Geo gia. A ailable a h ps://www.in es ingeo gia.o g/en/ajax/
downloadFile/821/In es men .
67 TamunaChka euli,‘InsideGeo gia’s ex ileindus y:Ajou nalis icin es iga ion,’F ied ich
Ebe -S i ungandOCMedia,2020,h p://lib a y. es.de/pd - iles/bue os/geo gien/17505.pd .
Mo e han 60 % o
Geo gia’s expo ed
goods a e p oduced
in sec o s whe e en -
seeking coali ions
domina e.
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
21
and la ge local playe s. Mo e p ecisely, Geo gia has become an a ac i e
low-cos p oduc ion base o some leading wo ld-class b ands like Adi-
das and Moncle . O e 98 % o Geo gia’s ex ile expo s go o Tu key and
Ge many, whe e hey a e u he p ocessed o be in eg a ed in o EU alue
chains. These in e na ional b ands wo k closely wi h he local appa el in-
dus y, which comp ises a ound 200 en e p ises. Geo gia’s ma ke leade
in appa el p oduc ion is Ime i, which — as he only appa el p oduce — has
been anked among he coun y’s op 50 expo e s i een imes be ween
2004 and 2019 acco ding o GeoS a da a. Ime i does no seem o ha e di ec
pe sonal connec ions o I anish ili’s ne wo k. Howe e , in he pas , Ime i
bene i ed om a ew simpli ied p ocu emen s, which allowed he company
o bypass e- ende p ocedu es. Such p ocedu es a e usually assumed o in-
c ease he isk o co up ion.68
An unequal dis ibu ion o he bene i s o EU ade libe alisa ion also cha -
ac e ises pa s o Geo gia’s ag i- ood indus y. He e, nu s and wine a e he
main expo commodi ies.
Two la ge companies, Diosku ia XXI and Wes nu , domina e Geo gia’s nu
expo s o he EU. Russian ci izen Nona Kha eba a owns Diosku i XXI.
Wes nu is owned by Geo gian businessmen and UK-based companies. Wes -
nu ecei es i aw ma e ials om app oxima ely 2 000 a me s. Howe e ,
mos small Geo gian nu p oduce s expo hei p oduc ion h ough in e -
media y companies ( ade s). This p ac ice indica es a pa hway owa ds
exclusi e g ow h ha mainly bene i s in e media ies om Tu key o he
a ge ed EU coun ies. In e media ies o la ge companies ake ca e o he
egula o y and expo p ocedu es, he eby p o iding small p oduce s wi h
a be e chance o inc easing hei sales. Ye , his p ocedu e diminishes
he bene i s o Geo gian p oduce s, since in e media ies o e much lowe
p ices ela i e o he p ice o which hey will la e sell he nu s on he EU
ma ke s.69
As o Geo gia’s wine indus y, wo la ge companies, Tbil ino and Tela i
Wine Cella , domina e he ma ke . Leading company igu es seem o enjoy
some poli ical connec ions o he uling Geo gian D eam Pa y. Fo exam-
ple, Zu ab Nakeu i, who si s on Tbil ino’s supe iso y boa d, is also he
Di ec o Gene al o Maes o TV, which in 2017 became pa o he Imedi
Holding — a p o-go e nmen (p o-Geo gian D eam) media ou le .70 Fu he ,
Kakha Zukakish ili, a membe o Tela i’s supe iso y boa d, made se e al
68 Ins i u e o De elopmen o F eedomo In o ma ion,‘Assessmen o  heexecu iono  helaw
on anspa encyo publicp ocu emen ’,Ins i u e o De elopmen o F eedomo In o ma ion,
2017,h ps://id i.ge/public/upload/IDFI_Pho os_2017/ pp /PPL_Implemen a ion_Assessmen _
Geo gia_geo.pd . In ac , inqui ies by T anspa ency In e na ional e ealed a ela ionship be-
weenpa ydona ions o I anish ili’sGeo gianD eamPa yandsuccesswi hpublic ende s
(Sou ce:T anspa encyIn e na ionalGeo gia,‘Co up ionandAn i-Co up ionPolicyinGeo gia:
2016 – 2020’,T anspa encyIn e na ionalGeo gia,21Oc obe 2020,h ps://www. anspa ency.
ge/ge/pos /ko upcia-da-an iko upciuli-poli ika-saka eloshi-2016-2020-clebi.)
69 Eu ope o Geo gia,‘Expo Po en ial o Ag i oodando he Nichema ke sinEU’,Eu ope o 
Geo gia,6May2016,h p://eugeo gia.in o/ka/a icle/433/saeqspo o-po encialis-mqone-
ag op oduq ebi-da-nishu i-baz ebi-e oka shi shi/;Eas F ui ,‘Geo gia iskslosingmo e han
$80milliononhazelnu sexpo s’,Eas F ui ,2Ap il2021,h ps://eas - ui .com/en/ho icul u e-
ma ke /ma ke - e iews/geo gia- isks-losing-mo e- han-80-million-on- he-expo -o -hazelnu s/.
70 T anspa encyIn e na ionalGeo gia,‘WhoownsGeo gia’smedia?’,T anspa encyIn e na ional
Geo gia,2018,h ps:// anspa ency.ge/en/pos /who-owns-geo gias-media.
Geo gia has become
an a ac i e low-cos
p oduc ion base o
some leading wo ld-
class ashion b ands.

ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
22
dona ions o he uling Geo gian D eam Pa y in 2017 and 2020.71 Unlike
he mine als and me als sec o s, Geo gia’s wine indus y is, howe e , no
con olled by a en -seeking coali ion. And SMEs make up a highe ma ke
sha e han in he nu s and ex ile indus ies. Indeed, he numbe o SMEs
ope a ing in he wine indus y is also on he ise (In e iew 3). The ac ha
mos o he 300 wine companies expo ing be ween 2017 and 2020 we e
SMEs sugges s a pa h owa ds inclusi e de elopmen . Go e nmen agencies
and business associa ions help o boos hei compe i i eness. The Na ional
Wine Agency ( ounded in 2014) and he Geo gian Wine Associa ion ( ound-
ed in 2010) played an impo an ole in di e si ying he indus y’s owne -
ship s uc u es. They helped local wine p oduce s o o e come in o ma ion
asymme ies, ini ia ed ce i ica ion p ocedu es o expo companies, and
os e ed pa icipa ion a in e na ional ai s, which inc eased b and awa e-
ness o Geo gian wines.72 EU winning ini ia i es acili a ed exchange be-
ween Geo gian au ho i ies and hei EU coun e pa s.73 All o hese meas-
u es ha e pa ed he way o an inclusiona y de elopmen al coali ion. None-
heless, i should be emembe ed ha Geo gia’s wine sec o only accoun s
o 3.5 % o o al expo s o he EU.
All in all, Geo gia’s ade libe alisa ion wi h he EU has so a c ea ed mo e
oppo uni ies o consolida ing he powe posi ion o en -seeking eli es
han o exclusi e — le alone inclusi e — de elopmen al pa hways.
Conclusion and implica ions
This ZOiS epo has examined how e ec i e libe alised ade wi h he EU has
hus a been in achie ing one o he decla ed objec i es o he EaP, namely
he p omo ion o inclusi e economies in he pa ne coun ies. By d awing on
he cases o wo associa ed EaP coun ies, Moldo a and Geo gia, ou analysis
sugges s ha he e ec s o ade libe alisa ion wi h he EU on economic de el-
opmen in he wo pa ne coun ies a e ambi alen and shaped by he quali y
o dominan coali ions in di e en expo sec o s. Wi h ega d o he op i e
expo sec o s, ade libe alisa ion wi h he EU has o e ed mo e oppo uni-
ies o exclusi e and e en inclusi e de elopmen in Moldo a han in Geo gia.
Tha is because a la ge sha e o Moldo a’s expo s o he EU (41 %) is cu en ly
p oduced in sec o s domina ed by exclusiona y o e en inclusiona y de elop-
men al coali ions be ween p i a e ac o s and local s a e au ho i ies, while only
abou 31 % o Moldo a’s expo s o he EU come om sec o s clea ly con olled
by en -seeking coali ions. By con as , mo e han 60 % o Geo gia’s expo s o
he EU cu en ly come om sec o s like mine als and me als whe e he key
ma ke playe s a e closely connec ed o he uling oliga chic ne wo k unde
he leade ship o billionai e Bidzina I anish ili. Tha said, gi en he sca ci y
71 T anspa encyIn e na ionalGeo gia,‘Pa yDona ions’,T anspa encyIn e na ionalGeo gia,
2021h ps://www. anspa ency.ge/poli icaldona ions/ge/en ep eneu ial-ac i i y/7336.
72 TheFinancial,‘Geo gianWineMa ke ing:ASuccessS o y,o No Ye ?’,TheFinancial,4July
2016,h ps://www. inchannel.com/in e iews/58418-geo gian-wine-ma ke ing-a-success-s o y-
o -no -ye ;Vinoge,‘TheChai mano  heNa ionalWineAgencyabou  heRegula iono Ce i-
ica ion’,Vinoge,18Feb ua y2015,h p://en. inoge.com/news/chai man-na ional-wine-agen-
cy-abou -new- egula ion-ce i ica ion.
73 EU4Business,‘Tu ningan8,000-yea WineT adi ionin oSuccessinGeo gia’,EU4Business,11
Oc obe 2016,h ps://eu4business.eu/success-s o ies/ u ning-an-8-000-yea -wine- adi ion-
in o-success-in-geo gia/.
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
23
o s a is ical da a on he signi icance o SMEs o o al p oduc ion and expo s
o he EU a he le el o key expo sec o s, u u e esea ch should engage in
a mo e ine-g ained sec o al analysis o he expo pe o mance o di e en
i m sizes, in pa icula SMEs.
No wi hs anding hese limi a ions, ou indings hold impo an implica ions
o e ec i ely p omo ing inclusi e economies h ough ade libe alisa ion in
he con ex o he EaP:
Fi s , a be e assessmen and moni o ing o he ex en o which i ms o di e -
en sizes, including SMEs, can uly eap he bene i s o access o he EU ma ke
is needed. This would also aise mo e awa eness, bo h among policymake s
and he public, o he hus a limi ed ole local SMEs play when i comes o
bene i ing om ade wi h he EU, especially in e ms o expo oppo uni-
ies. Eu os a and / o na ional s a is ical o ices in he pa ne coun ies should
he e o e sys ema ically collec business s a is ics in e ms o expo pe o -
mance, numbe o expo companies, hei ield o expo (e.g. sec o s), and
ype o company.
Second, when implemen ing policies and p og ammes ha aim o acili a e
access o he EU ma ke o i ms om he Eas e n pa ne s, he EU is well
ad ised o ake in o accoun he owne ship s uc u e o op expo sec o s and
he in ol emen o hese key owne s in en -seeking p ac ices. Fo example,
du ing u u e nego ia ions on he ex ension o a i - a e quo as (TRQs) o
p oduc g oups ha ha e al eady eached he p e-de e mined limi o expo s,
he EU should ex end TRQs i s and o emos in sec o s ha a e no domina ed
by i ms wi h links o oliga chic s uc u es. This would ce ainly inc ease ex-
po oppo uni ies o he SMEs ope a ing in hese indus ies.
Thi d, exis ing o planned EU ini ia i es, such as EU4Business and he Eco-
nomic and In es men Plan, which is pa o he new EaP, ob iously need o
pu g ea e emphasis on c ea ing and / o s eng hening sec o al clus e s and
p og ammes o os e coope a ion be ween a di e se se o p i a e and public
ac o s in p omising sec o s and whe e i ms no linked o oliga chic ne wo ks
a e impo an ma ke playe s (e.g. Moldo a’s and Geo gia’s ex ile indus y
and wine p oduc ion). As p e ious expe ience in Cen al and Eas e n Eu ope
has shown, coope a ion among i ms, business associa ions, consul an s, e-
sea ch ins i u ions, and egula o y au ho i ies plays a i al ole in acili a ing
( echnological) inno a ion and upg ading and equipping local i ms wi h he
necessa y know-how o ind hei niches in Eu opean supply chains.74
Taken oge he , hese measu es will b oaden access o ade and en ep e-
neu ial ac i i ies o a wide g oup o economic ac o s, he eby laying he
basis o mo e inclusi e expo -led de elopmen in he associa ed Eas e n
pa ne s.
74 Ge göMed e-Bálin andVe aŠćepano ić,‘EU unds,s a ecapaci yand hede elopmen o 
ansna ionalindus ialpoliciesinEu ope’sEas e npe iphe y’,Re iew o In e na ional Poli i-
cal Economy 27,no. 5,(2020):pp. 1063 – 1082;VisnjaVuko ,‘Eu opeanin eg a ionandweak
s a es:Romania’s oad oexclusiona yde elopmen ’,Re iew o In e na ional Poli ical Economy
27,no. 5(2020):pp. 1041 – 1062;OlgaMa kiewicz,‘S uckinsecondgea ?EUin eg a ionand
hee olu iono Poland’sau omo i eindus y’,Re iew o In e na ional Poli ical Economy 27
no. 5(2020):pp. 1147 – 1169.
The EU should ake in o
accoun he owne ship
s uc u e o op expo
sec o s and in ol emen
o key owne s in
en -seeking p ac ices.
ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
24
Lis o In e iews
In e iew 1:
Dumi u Alaiba, Membe o Pa liamen o he Republic o Moldo a, ep e-
sen ing he Ac ion and Solida i y Pa y (PAS) pa liamen a y g oup, 20 Janu-
a y 2021, online.
In e iew 2:
Igo Mun eanu, esea che in poli ics and go e nance and lec u e on pub-
lic policy a he Academy o Economic S udies in Chisinau, o me Membe
o Pa liamen o he Republic o Moldo a and o me Ambassado o Mol-
do a o he US, 25 Janua y 2021, online.
In e iew 3:
Gio gi Gudabandze, Expo De elopmen Associa ion o Geo gia, 22 Janua y
2021, online.
Imp in
Au ho s
Julia Langbein, Denis Cenusa, I ina Gu uli
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Julia Langbein, Denis Cenusa, I ina Gu uli: ‘Ambi alen
E ec s o T ade Libe alisa ion wi h he EU: Insigh s om
Moldo a and Geo gia’, ZOiS Repo 1 / 2022,
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2022.pd )
ISSN 2627-7233
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Yuko S ie
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ZOiS Repo 1 / 2022 Ambi alen E ec s o T ade Libe alisa ion wi h he EU: Insigh s om Moldo a and Geo gia
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