08.Jan .2022 16:30

Will free trade with the UAE help boost Georgian exports?

Will free trade with the UAE help boost Georgian exports?
views 318
Back

Georgia intends to start negotiations with the United Arab Emirates (UAE) to conclude a free trade agreement. EastFruit analysts figured out how to maximize the benefits of Georgian producers of berries, nuts, fruits and vegetables from the new opportunities that will open up thanks to the cancellation of tariffs.

The UAE is a center of trade in the Middle East and a very attractive market that is growing, striving for diversification and has a very high purchasing power, thanks to a GDP per capita of $43 000 (2019). Imports of fruits, nuts and vegetables have been growing over the past two decades, and in total reached about $3 billion per year, excluding 2020 with a slight decline due to the pandemic.

In the UAE, imports of agricultural products are taxed on average 6% for WTO members, among which is Georgia. Despite this low tariff and high demand for imported products, Georgia did not export much to the UAE. Georgian exports of fruits, nuts and vegetables to the UAE totaled only $3.2 million over the past 8 years. Annual exports peaked in 2021 at $1.1 million, with 72% coming from the export of hazelnut kernels and fresh blueberries. The two main factors holding back imports are expensive logistics and insufficient product quality for the demanding UAE market.

As key Georgian exporters to the Middle East explain, so far the only way to deliver fruits, nuts and vegetables from Georgia to the UAE is by plane. Of course, this is very expensive, but the problem is much more serious: there are no cargo planes. Georgian exporters have to put their goods to the luggage compartment of passenger flights that are not intended for the carriage of perishable goods such as fruits and vegetables and do not have a temperature and humidity control. This limits the volume of exports, and increases the risk of deterioration in product quality during transportation.

However, there were the first attempts to export table grapes by land to Qatar in refrigerated container through Azerbaijan and Iran last year. Also promising is the opening of a new transport corridor to connect the Persian Gulf with the Black Sea.

In addition to logistics problems, it is usually difficult for Georgian exporters to obtain export-quality products in large volumes. They say that there is demand from the Middle East and importers are ready to sign contracts, but local suppliers will not be able to provide them with products of the required volumes and quality.

At the same time, many Georgian products are in demand in the UAE. Moreover, these trade positions have one of the highest growth rates among imports of fruits, nuts and vegetables to the UAE. Georgia could also export these products to the UAE in higher volumes.