In the context of the European Neighbourhood Policy, the EU and Georgia are in the process of negotiating an Association Agreement (AA) to replace the current Partnership and Co-operation Agreement (PCA). A Deep and Comprehensive Free Trade Agreement (DCFTA), underpinned by regulatory approximation, will be part of this AA. This study supports the negotiation process by analyzing how the trade and trade-related provisions of the DCFTA will affect economic, social, and environmental developments in the EU and in Georgia.

The main objective of this Trade Sustainability Impact Assessment (TSIA) is to assess the potential economic, social, environmental, and human rights impacts of a Deep and Comprehensive Free Trade Agreement (DCFTA) to be negotiated between the EU and Georgia. This TSIA combines quantitative and qualitative research, in line with the general methodology designed for TSIAs by DG Trade. This methodology covers the following elements: screening and scoping analysis, scenario analysis and quantitative modeling, additional quantitative and qualitative social, human rights and environmental impact analysis, causal chain analysis, and sectoral analysis.

In addition, throughout the study, we engage extensively in stakeholder consultations. We employ five main consultation activities to gather inputs from key stakeholders: (1) electronic consultation and documentation (discussion forum, websites, feedback forms); (2) public meetings with civil society in the EU; (3) TSIA workshops in Georgia; (4) visiting other relevant conferences and workshops; (5) and personal interviews with individual stakeholder representatives, and targeted surveys.

It is important to note that this study takes an incremental approach, i.e. the impact of the DCFTA is analyzed by comparing a specified liberalization/integration scenario encompassing the DCFTA, with a baseline scenario that assumes no DCFTA in place. The only difference between the two scenarios is thus the DCFTA. Specifically, and important for the interpretation of all results presented in this report, no additional policy measures have been included in the scenarios. Nonetheless, such accompanying measures are likely to be taken, both on the EU and Georgian sides, in order to maximize and enhance gains from trade integration and/or mitigate potential negative effects. Indeed, one of the objectives of this study is to highlight areas in which it is advisable to consider policy action.