Download Quid 1

Deep and
Comprehensive
Free Trade Area
EU-Republic of Moldova
Impact on agriculture and other
industries, and services sectors
DCFTA in a nutshell
(1/2)
• First-generation comprehensive agreement
• Free trade for goods with the market of 500
million consumers
• Better than the Autonomous Trade Preference
• Opens the markets to establishment of new
companies/branches
• Opens up the services and procurement markets
• Provides a roadmap for reforms
• Stable relationship with a predictable partner
DCFTA in a nutshell
• Expected economic impact on Moldova is
positive:
• +8% growth of Moldovan imports from the EU
• +16% growth of Moldovan exports to the EU
• Boost to GDP by +5.4%
• Exports to the EU: already 53% of total
Moldovan exports to the world
• But reforms are key to competitiveness
(2/2)
Impact on agricultural sector
• Vast trade potential
• Export already almost duty-free under ATP
• Some entry prices + quotas remain
 Quid 1: compliance with EU sanitary and
phytosanitary norms
 Quid 2: further reductions of duties
 Quid 3: cost of reform
(1/4)
Impact on agricultural sector
(2/4)
 Quid 1: compliance with EU sanitary and
phytosanitary norms
• Any country that wants to export to the EU has to
comply
• Not all Moldovan products admitted – compliance key
• Market proximity and close ties with EU market
• DCFTA is roadmap to reform to export more (meat and
dairy products, fish)
Impact on agricultural sector
(3/4)
 Quid 2: further reductions of duties
• DCFTA better than ATP: duty-free access to the EU
market
• Monitored import of selected agricultural products
• Better access for fruits and vegetables (duty-free quota)
• Gradual elimination of duties by Moldova (ie wine, meat,
dairy)
• So no flooding of Moldovan market with EU products
Impact on agricultural sector
(4/4)
 Quid 3: cost of reforms
• € 41 million in 2011-13 to support DCFTA-reforms in
general
• Specific sector budget support ongoing since 2010 - €
42 million direct budget support
• Agriculture to be a key focus for 2014-20
• Investment, not a cost – in the long-term interest of
Moldova
• Business saves the cost of import duties
Impact on industries
(1/3)
• Under ATP already duty-free import to the EU
• Under DCFTA –Moldova reduces its duties too
• EU aware of development of Moldovan industry –
gradual liberalisation in sensitive sectors
• So no flooding of Moldovan market with EU products
 Quid 1: competitiveness
 Quid 2: diverging standards, procedures, transparency
Impact on industries
(2/3)
 Quid 1: competitiveness
• More quality inputs at a lower cost from the EU =
reduced production costs
• Cheaper diffusion of technology
• End objective: lower cost of production, more
technology, more trade with abroad
• Technical assistance ongoing: DCFTA-specific and
sector-specific
Impact on industries
(3/3)
 Quid 2: diverging standards, procedures,
transparency
• Moldovan technical regulations differ from the EU ones –
modernisation needed and ongoing
• DCFTA is a roadmap for reform (selected sectors)
• End-objective: the same technical requirements as in
the EU  more trade at lesser cost, more technology
• Swifter approval of conformity, transparent rules, EUlike approach
Impact on services sectors
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(1/3)
No open services market now
DCFTA offers a wide-ranging opening – almost all sectors
Modes 1 and 2 - cross-border services
Mode 4 - presence of natural persons for business purposes
Mode 3 – establishment – but opening goes beyond
services, any company in any sector can set up in the EU
or Moldova (except defence)
• Roadmap for reform: electronic commerce, postal and
courier, transport, financial services
Impact on services sectors
(2/3)
 Quid 1: why read the annexes on services?
• They will tell you what service you can provide in which
EU country
• Some EU Member States apply exceptions, or
conditions, ie licence or registration
• Example: If you want to set up a company in Germany,
check the sectoral requirements, and whether you can
bring qualified personnel from Moldova and under which
conditions
Impact on services sectors
(2/3)
 Quid 2: What benefit of reform?
• Moldova's industry needs modern rules and
infrastructure
• Alignment with EU law will bring modernisation and
unify rules in place to facilitate business
• Open services markets will bring technology, ie in IT, ecommerce
• Once alignment completed, more market access can be
granted
Some statisctics
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Share exports to EU 52% (45% in 2013)
Share exports to CIS 33% (40% in 2013)
Share exports to Russia around 23%
Share agrifood products in exports 44% (37%
in 2013)
Conclusion
 DCFTA means:
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more trade
better and cheaper products, quality services
competitiveness through reform
more transparency, predictable rules for business,
better investment climate and competition framework
boost to international position and more FDI
financial support
= Unique opportunity to boost trade and
modernise the Moldovan economy
Thank you for your attention