Georgia and Russia signed a bilateral agreement finalizing Russia’s entry terms in the World Trade Organization (WTO) in Geneva on November 9. Tbilisi labeled the deal as a “diplomatic victory” for Georgia. Moscow also hailed the agreement, terming it a “huge success” driving Georgia in the “right direction.”

The agreement, mediated by Switzerland, envisages the establishment of “a mechanism of customs administration and monitoring of trade in goods consisting of an International Monitoring System (IMS) and an Electronic Data Exchange System (EDES),” the Ministry of Foreign affairs of Georgia reports. Under the terms of the agreement, three “trade corridors” – two in the breakaway regions Abkhazia and South Ossetia and one at Zemo Larsi-Kazbegi (an undisputed Georgian-Russian border crossing point) – will be established. Corridors identified by their geographic coordinates will be monitored through an international private company. A contractor company hired by a third party will deploy two groups of monitors at a time at the end of the corridors on the Russian and Georgian sides. However, the agreement does not envisage deployment of monitors inside the territories of the breakaway. The monitors will attend the procedures of checking documentation, goods and cargo to avoid illegal trade between the two countries. For this purpose, the introduction of EDES will provide observers with a common electronic data base enabling them to pursue accurate risk management and auditing.

In light of these tasks, the Georgian-Russian WTO deal includes three sets of documents. The first is a bilateral agreement covering key principles for a mechanism upon which the custom administration and monitoring should be conducted. The second is a Memorandum of Understanding endorsing Switzerland as a neutral third party empowered to select international monitors, who will be accountable to the Swiss government. The third defines general rules for international monitors who must not be Georgian or Russian citizens, thereby establishing the Terms of Reference for a neutral private company.

Importantly, at the onset of the WTO talks Georgia’s principle precondition for allowing Russia to enter the organization was to enable Georgian custom officials to control and monitor the turnover of cargo throughout the territories of Abkhazia and South Ossetia. The demand, however, was resolutely resisted by Russia triggering consequent changes in Georgian position. Tbilisi agreed on the deployment of international monitors, instead of Georgian officials, and later on the presence of an international private company to control and monitor the border check points.

Despite the concessions, Tbilisi claims that it was able to realize its ambitions. President Mikheil Saakashvili stated that “…for the first time after Georgia's independence, international monitoring of the movement of goods will begin within the internationally recognized borders of Georgia.” Thus, Tbilisi thinks that the deployment of an international monitoring company will highlight the illegitimacy of the breakaway territories’ current status, and views this as a primary achievement of Georgian diplomacy. Nevertheless, Russia’s Foreign Ministry claims that “the agreement does not infringe on the status of Abkhazia and South Ossetia as independent states.” 

Meanwhile, the U.S. and EU hailed the steps taken by both sides to allow one of the largest economies in the world to enter the global rule-based trading system. Western officials claim that the deal will benefit Georgia by ensuring transparency of trade from Russia and providing opportunities for using the WTO’s impartial dispute mechanisms against Moscow in case of disagreement.

In contrast to the Western posture, representatives of some of the Georgian opposition parties have a negative view of the deal. Under pressure from the U.S. and EU aimed at securing Russia’s accession to the WTO, Georgia had to make the most concessions and softened its original position little by little, they asserted. For instance, Bidzina Ivanishvili, the recently emerged billionaire-turned politician, discarded the significance of international monitors. According to him, restoring the export of wine and mineral waters – Georgian products currently banned on the Russian market – should have been a key precondition for Russian membership in the WTO. The leader of “Free Georgia,” Kakha Kukava, went even further saying that the proposal allegedly presented by the Swiss government was in fact elaborated by the Ministry of Economic Development of the Russian Federation. The Western allies disguised the proposal as a Swiss offer to maintain Saakashvili’s image, he said. David Berdzenishvili, a member of the Republican Party took a more moderate stance, saying that though accepting the Swiss proposal was a right decision, the deal itself can hardly be defined as a “diplomatic victory.”

Whereas the Georgian government is seemingly exaggerating the significance of the deal and its potential implications, it should be acknowledged that given the interest of western allies to include Russia in the rule-based trading system, Georgia had little possibility to maintain its initial stance. However, Tbilisi managed to secure the third best option, which is at least something.