GEORGIANS ADVANCE PROPOSAL TO SOLVE WTO BORDER

C O N F I D E N T I A L SECTION 01 OF 04 TBILISI 003098 SIPDIS SIPDIS STATE FOR EUR/CARC AND EEB/TPP/MTA STATE PASS USTR FOR BURKHEAD AND KLEIN E.O. 12958: DECL: 12/14/2017 TAGS: ETRD PREL WTO USTR GG RU SUBJECT: GEORGIANS ADVANCE PROPOSAL TO SOLVE WTO BORDER CROSSING ISSUE WITH RUSSIA REF: TBILISI 1386 Classified By: Ambassador John F. Tefft, reason 1.4(b) and (d). ¶1. (C) Summary: On December 13, Econoff met with Tamar Kovziridze, Deputy Minister of Economic Development and Georgia's lead negotiator on WTO issues. Kovziridze shared the text of a proposal by the Georgian government for solution of the impasse over border crossings that is the basis of a disagreement with the Goverment of Russia that is preventing completion of Georgia's bilateral agreement with Russia for accession to the WTO. The agreement envisages a joint Russian-Georgian presence at two border crossings in Abkhazia and South Ossetia, with international monitoring. Realization of such an agreement will be difficult because it directly challenges Abkhaz and South Ossetian claims to sovereignty and Russia's ambiguous policy toward the breakaway regions. End Summary. ¶2. (C) In July 2006, the Government of Georgia reopened negotiations with the Government of Russia on their 2004 bilateral agreement for WTO accession. Border crossings into Russia in the breakaway regions of Abkhazia and South Ossetia are operating without Georgian permission and Georgia contends their operation violates a Russian promise to regularize the border crossing's status in the bilateral agreement. WTO procedures require that all bilateral agreements be concluded before the accession process can move on to multilateral negotiations and finalization of the accession. Although the Russian negotiator, Max Medvedkov, has made statements suggesting that Russia can begin the multilateral negotiations even if the bilateral agreement with Georgia is outstanding, the GOG will oppose any such move. Russia has heretofore claimed that the border crossings issue is a political, not a WTO issue. The issue is a sensitive one that will not be easy to solve, because it directly touches on Georgia's ability to assert sovereign control over areas that are as a practical matter under the control of the de facto governments in Sokhumi and Tskhinvali. SIPDIS ¶3. (C) Kovziridze met with Medvedkov and Russian delegation in Geneva on November 22, continuing negotiations that began in January 2007. She told Econoff that the WTO secretariat has supported the GOG in its conviction that the border crossing issue is a WTO matter, and the GOR has begun to concede the point, at least privately. The latest negotiations began to focus on how to solve the problem. Georgia presented the Russian delegation with a document outlining basic principles and mechanisms for legalization of the border crossings (Roki-Lower Zaramag and Gantiadi-Adler). The GOG is now waiting for a Russian response and expects to hold further discussions in January 2008. ¶4. (C) Georgia is not the only country with which Russia is negotiating on a bilateral basis. Saudi Arabia recently opened discussions with the Russians after determining that it has issues of interest. The EU also has concerns about Russia's adherence to promises made in its bilateral agreement, including issues related to timber exports. At the same time, Kovziridze said, the WTO accession working group chair is holding informal multilateral "consultations" to keep Russia's accession process moving forward. Normally, according to Kovziridze, such consultations are used to resolve procedural issues only, but the chair is working on some substantive issues. The GOG is not happy with this, but is participating in order to ensure that its interests are protected. ¶5. (C) The text of the Georgian proposal for resolving the border crossing issue follows at paragraph six. Realistically, resolution of the border crossings issue presents significant problems. The Abkhaz and South Ossetian de facto governments are certain to reject the presence of Georgian customs officers on what they regard as their sovereign territory. The proposal is also a challenge to the Russian side's ambiguous policy of official respect for Georgia's territorial integrity and unofficial support for the separatists. ¶6. (C) Begin text of Georgian proposal (please protect): PROPOSAL OF GEORGIA TO THE RUSSIAN FEDERATION ON THE BASIC PRINCIPLES AND MECHANISMS FOR LEGALIZATION AND WTO-CONSISTENT ADMINISTRATION OF THE CUSTOMS CHECK-POINTS ROKI-LOWER ZARAMAG AND GANTIADI-ADLER ON THE BORDER BETWEEN GEORGIA AND THE RUSSIAN FEDERATION IN THE FRAMEWORK OF RUSSIA'S WTO ACCESSION PROCESS TBILISI 00003098 002 OF 004 November 2007 Tbilisi, Georgia Background Information The present paper was prepared as a follow up to the last bilateral negotiations between Georgia and the Russian Federation on the 19th of October 2007, Geneva, Switzerland, WTO HQ where the sides agreed that Georgia would present a proposal on the basic principles and mechanisms of legalization and administration in a WTO-consistent manner of the customs check-points, Roki-Lower Zaramag and Gantiadi-Adler, on the border between Georgia and the Russian Federation. The above-mentioned meeting between the negotiating teams of Georgia and the Russian Federation took place in the framework of Russia's accession process to the WTO and was coordinated by the Head of the WTO Accessions division, Mr. Arif Hussein. In summer 2006 Georgia reopened bilateral negotiations with the Russian Federation in the latter's accession process to the World Trade Organization. In this framework, Georgia's only request towards the Russian Federation is the legalization and proper functioning of the two illegal customs check-points located at Gantiadi-Adler and Roki-Lower Zaramag, on the Georgian-Russian border. The above-mentioned check-points are listed in the Agreement between the Government of Georgia and the Government of the Russian Federation on Check Points across the Customs Border, which was signed on 8 October 1993. Article 4 of this Agreement explicitly states that the Parties will administer the opening and closing of the check points across the customs border based on mutual agreement. Currently, Gantiadi-Adler and Roki-Lower Zaramag check-points are operated by Russia without any prior agreement with Georgia. Georgia's position vis-a-vis Russia results from the obligation taken by the Russian Federation towards Georgia in the bilateral protocol on the completion of negotiations on Russia's accession to the WTO, signed in May 2004, and Russia's general WTO obligation regarding customs administration. In the Georgia-Russia protocol Russia undertook to solve problems related to customs regulation and administration related to trade in goods. However, no progress was seen for more than two years in the resolution of these problems and Russia has yet to comply with its general WTO obligation on customs administration. The existence of unregulated trade through illegally functioning check-points - operated by the unilateral decision of the Russian Federation - severely violates numerous articles of WTO rules and raises serious concerns in this respect about WTO compliance. This paper presents Georgia's view on how to ensure legalization and proper functioning of the two illegal customs check-points of Gantiadi-Adler and Roki-Lower Zaramag and is meant to serve as a basis for discussion. Georgia's Proposal In the framework of Georgian-Russian bilateral negotiations on Russia's accession to the World Trade Organization (WTO) and with the purpose to legalize and ensure WTO-consistent administration of customs check-points Roki-Lower Zaramag and Gantiadi-Adler, the Georgian side proposes to establish joint control and monitoring over the above-mentioned customs check-points. In addition to bilateral efforts aimed at the legalization of trade flows through these two check-points, an appropriate level of international involvement should be established to ensure compliance with agreed principles. (Note: International involvement in this document means involvement of the European Union, OSCE or UN, or joint efforts by these organizations.) Steps to be taken in order to establish a joint monitoring mechanism for check-points: -- Submission of the official proposal of the Georgian side to the Russian side on the establishment of the joint monitoring mechanism on the two check-points at the Georgian-Russian border. -- Reaching of an agreement between the Georgian and Russian TBILISI 00003098 003 OF 004 sides on establishing the joint monitoring mechanism. -- Preparation of the joint request by the Governments of Georgia and the Russian Federation and its submission to international partners in order to ensure their support and adequate of level participation in joint efforts. -- Signing of a trilateral document between Georgia, the Russian Federation and an international partner. The document should be legally binding and will serve as a legal basis for the joint monitoring without right of withdrawal based on a unilateral decision. -- The parties will exchange diplomatic Notes on the legal functioning of Roki-Lower Zaramag and Gantiadi-Adler customs check-points in order to create a bilateral legal basis for the functioning of these check-points. The exchange of notes will take place only after the signature of a trilateral document mentioned above. Basic principles of joint monitoring: ¶1. The functioning of the jointly controlled customs check-points should be monitored by an international Joint Monitoring Mission. ¶2. Customs clearance on the Georgian part of the customs check-points will be implemented according to the Georgian legislation. ¶3. Customs clearance on the Russian part of the customs check-points will be implemented according to the legislation of the Russian Federation. ¶4. The customs administrations of the Russian Federation and Georgia should ensure that only economic agents registered in accordance with Russian and Georgian legislation are allowed to import goods into the respective territories. In Georgia's case, this entails, among other things, the presentation of a certificate of origin issued according to Georgian legislation. ¶5. In case of re-export the parties will only accept customs and shipping documents certified only with mutually recognized stamps, seals and official signs. ¶6. In order to simplify customs procedures the registration of economic agents and issuance of the certificates of origin and other customs documents will be carried out by various branches of respective state institutions. Conditions to be fulfilled for successful functioning of joint monitoring: -- Safety, security and escort of the Joint Monitoring Mission's personnel located on the territory of Georgia should be guaranteed based on existing legal and security arrangements, specificities of which can be subject to further discussion between the parties. -- tri-lateral commission should be created in order to assess and evaluate the implementation of joint monitoring and produce monthly reports. This commission should be composed of Georgian and Russian officials and representatives of international organizations. -- Free movement of the Joint Monitoring Mission's personnel should be ensured through creation of the so-called "green corridors". -- Infrastructure (institutional, personnel, equipment) for preventing trafficking, money laundering, and smuggling of radioactive and other types of goods should be established and maintained. -- The Government of Georgia accepts the obligation to finance the construction of the customs facilities on its territory. The Mandate of the Joint Monitoring Mission: -- The first Joint Monitoring Mission will last for 2 years with the possibility of extension based on mutual agreement among parties. -- Joint Monitoring Mission will be staffed with Georgian and Russian representatives and experts from international organizations. TBILISI 00003098 004 OF 004 -- The location of the Head office of the Mission to be discussed. -- Two Field offices will be located on Roki-Lower Zaramag and Gantiadi-Adler customs check-points. Functions of the Joint Monitoring Mission: -- Ensure that customs rules and procedures are administered in accordance with the relevant legislation of Georgia and the Russian Federation, and consistent with WTO rules. -- Prevent trafficking, money laundering, smuggling of radioactive and other types of goods. -- No independent enforcement responsibilities. -- Ensure transparency and uniformity of customs administration via permanent monitoring. On the Georgian side, the administration of the concerned check-points will be integrated in the system of overall monitoring of the flow of goods in Georgia. -- Oversee customs services as requested by means of checking documentation and records (including computer databases). -- Check suspicious cargo and passengers as requested by either side. -- Introduce customs check-point management and share experience in accordance with international standards. -- Assist in prevention of smuggling (through capacity building, special training, and provision of equipment). -- Carry out risk analysis and provide training regarding the same upon request. TEFFT