Bloomberg News

Obama Says U.S. May Explore Free Trade Accord With Georgia

February 07, 2012

(Updates with Obama comments beginning in paragraph three and trade statistics beginning in eighth paragraph.)

Jan. 30 (Bloomberg) -- President Barack Obama said the U.S. supports Georgia’s aspirations to join NATO and is willing to explore the “possibility” of a free-trade agreement.

Following a meeting with Georgian President Mikheil Saakashvili at the White House, Obama said the U.S. is ready to help Georgia’s free-market development and promised to continue a dialogue on “how we can continue to strengthen trade relations between our two countries, including the possibility of a free-trade agreement.”

Obama, in his public comments, didn’t make any commitment to sell arms to Georgia as the country has requested.

Obama said he expects “fair and free elections” in Georgia’s parliamentary elections later this year and presidential contest in 2013. Saakashvili pledged a more “diversified and pluralistic political scene” and said Georgia will not revert to corruption or less democratic principles.

Georgia’s government is striving to recapture the 10 percent or more economic growth it achieved before losing a five-day war with Russia in 2008.

Its economy grew 8.7 percent in 2011, according to preliminary data cited by Georgia’s statistics office. Standard & Poor’s raised its credit rating one level last month to BB-, three short of investment grade, citing “improving public finances.” Fitch followed suit Dec. 15.

Increasing Trade

The two nations signed a framework agreement in 2007 aimed at building commercial and investment relations. The U.S. sent $506 million in exports to Georgia last year through November, an 84 percent increase from the same period in 2010, led by cars and meat products, according to data compiled by the Commerce Department. The U.S. imported $175 million from Georgia, with iron alloys and fertilizer topping the list.

Saakashvili said outside the White House that there was no timetable for working on a free-trade agreement.

He also said a working group from the two nations would be addressing his administration’s request for the U.S. to sell or provide heavy weapons to Georgia.

Obama today made a commitment to Georgia’s right to self- defense, which represents an “elevation” of the U.S.-Georgia relationship, Saakashvili said.

Relations With U.S.

Saakashvili’s visit comes as Georgia, which has 935 troops serving in 50-nation coalition fighting the war in Afghanistan, is seeking membership in NATO. The Georgian president said he was “incredibly grateful” for U.S. support for the bid.

Lawrence Sheets, South Caucasus project director for the International Crisis Group in Tbilisi, said Saakashvili’s visit would have been politically difficult for the U.S. a year ago while Washington and Moscow were working on a so-called “reset” in their relations. Russian-American ties have since worsened.

Saakashvili and Russian President Dmitry Medvedev have yet to restore diplomatic relations between their two nations. Saakashvili is calling for Russia to remove “illegal embassies” from two occupied regions, while Medvedev has declined to meet or speak with Saakashvili.

Resolving a disagreement with Georgia was one of the final obstacles to Russia gaining acceptance into the World Trade Organization last year. Obama agreed to allow Russia to join the WTO after the nation accepted a compromise on international monitoring at the borders.

NATO Bid

Sheets said there is “genuine U.S. gratitude” for Georgia’s commitment in Afghanistan. Still, he said, the U.S. should signal that relations could suffer if Georgia’s elections process later this year appears to be tainted.

Even with U.S. support, Georgia faces hurdles in getting approved for membership in the North Atlantic Treaty Organization, said Damon Wilson, a former NATO adviser and senior director for European affairs at the White House National Security Council.

It probably won’t be settled when the alliance holds its summit in May in Chicago, he said.

“There is an effort to keep enlargement off the table,” Wilson, executive vice president of the Atlantic Council, told reporters in Washington today.

NATO Secretary General Anders Fogh Rasmussen said during a November visit to the Georgian capital Tbilisi that, while Georgia had come “a lot closer” to joining the alliance, “further reforms will be” needed.

Georgia is among a group of countries that U.S. Defense Secretary Leon Panetta wants to link more closely to NATO because of their consistent contributions to alliance missions such as the war in Afghanistan or the Libya operation last year, Wilson said. The other countries include Australia, Qatar, the United Arab Emirates, Sweden and Finland.

--With assistance from Eric Martin and Viola Gienger in Washington. Editors: Joe Sobczyk, Jim Rubin.

To contact the reporters on this story: Margaret Talev in Washington at mtalev@bloomberg.net; Helena Bedwell in Tbilisi at hbedwell@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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