As an integral part of the Soviet Union, Georgian trade was conducted almost exclusively within the USSR. On the eve of the country's independence, 95.7 percent of Georgia's exports and 72.3 percent of its imports were from trade with other Soviet Republics. In the decade following independence, Georgia had to seek out new trading partners because most of the former Soviet republics were poor and the new government did not wish to rely on Russia. In 1997, Russia accounted for 27.4 percent of exports and 15.2 percent of imports; 2 years later these figures had been further reduced to 12.4 percent and 7.1 percent, respectively.
Trade with the EU and Turkey has replaced much of the trade with Russia. In 2000, Georgia exported US$68.3 million to the EU and imported goods to the value of US$167.1 million. Though this meant that Georgia had a trade deficit of US$95.8 million, the figure represented a dramatic improvement on the 1998 figure when the trade imbalance was US$273.8 million. Germany has emerged as Georgia's largest trading partner among the EU member states. In 1999, Georgian exports to Germany amounted to US$24.5 million while it imported US$44.2 million of German produce. Despite improving the trade balance in 1999, Georgia still had a trade deficit with all EU member states except Spain.
At the beginning of 2000, Georgia had a trade deficit with 70 trading partners and enjoyed a trade surplus with 18 countries, the most significant of which were Turkey and Syria. Reducing the trade deficit is one of the key priorities of the Georgian government but its efforts are hampered by the conflict in Abkhazia and the de facto independence of South Ossetia and Adjara. The defeat of Georgian forces in Abkhazia resulted in the loss of the rail route to Russia and Europe. The independent regions are popular smuggling routes, depriving the government of revenues and hindering its regulation of trade.