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REPUBLIC OF MOLDOVA’S EXPERIENCE
IN NEGOTIATING THE DCFTA WITH EU
Vadim Gumene
Program Director, Expert-Grup
vadim@expert-grup.org
WHY DCFTA…?
• The Eastern Partnership initiative was launched in 2009, with the aim of boosting the European
Neighbourhood Policy with the Eastern Partners of the EU.
• The Partnership and Cooperation Agreement, which has been in force since July 1998 and provided a rather
basic level of cooperation, no longer met the expectations and needs of both sides.
• Autonomous Trade Preference (ATP) that the EU has granted to the Republic of Moldova since 2008, could
not achieve the objective of assisting the Republic of Moldova with further reforms and modernisation.
• Moreover the ATP, was a system unilaterally granted by the EU for a limited period (2015), while DCFTA is an
agreement for an indefinite period, providing export benefits bigger than ATP-terms and a predictability in a
long run for businesses and investments.
• Thus, the Republic of Moldova had to demonstrate that it has started conducting the necessary reforms, in
order to enable future implementation of such a DCFTA. With this purpose in 2011 was developed an Action
Plan for realisation of the European Commission Recommendations.
• Following the preparatory process, the DCFTA negotiations were launched in February 2012 and closed in
June 2013. The Association Agreement, including the DCFTA component, was signed on 27 June 2014 in
Brussels.
EXPECTATIONS…
It is expected that the DCFTA will boost trade between the EU and the Republic of Moldova:
• by 16% as regards the exports of the Republic of Moldova to the EU, and by 8% on imports from
the EU.
• the prices are expected to be lowered for domestically available goods, resulting increased real
purchasing power of consumers.
• stronger domestic rules will improve the safety of consumer products and therefore of
consumers in general.
• by providing more stable and predictable trade regime, based on EU legislation, is expected to
boost the inflow of EU FDI to the country, creating more enterprises and strengthening the
competitiveness of the economy and individual sectors.
• the DCFTA as a whole is expected to improve the current account balance of the Republic of
Moldova and boost the GDP by 5,4% (142 million EUR growth in national income), provided that
the reforms are completed.
POSSIBLE CHALENGES…
• The impossibility of fulfilling the necessary conditions for export;
• Removal from the market of non-competitive domestic producers;
• The massive increase of imports from the EU;
• Inability to cope with the competitiveness of European goods;
• Uncertainty about the necessary restructuring in the real sector of the economy;
• Initiating a series of costly reforms and non-compliance with terms;
• Not meeting the expected indicators as a result of the worsening of the economic situation at
regional / international level;
• Decline in budget revenues from customs duties;
• Lack of qualified staff and equipment to ensure the implementation DCFTA.
PREPARING FOR DCFTA NEGOTIATIONS
To ensure the logistics of the negotiation process DCFTA were carried out the following
actions:
• Amending Government Decision, to ensure continuity of the negotiating team of the Association
Agreement and DCFTA;
• Creating a Task Force on DCFTA consisting of representatives of the institutions involved in
implementing the Action Plan, 5 local consultants to be funded by the UNDP project "Capacity
Transitional Support for the Public Administration of Moldova".
• Consisting of four subgroups on different topics in order to implement the EC recommendations
(market access and customs administration, trade measures and barriers, financial services and
competitive environment, consultation with the private sector and NGOs).
• Future DCFTA negotiations were conducted in the Working Group III "economic, sectorial and
financial cooperation„ of the Association Agreement, secretariat of the Group was owned by
Ministry of Economy.
OVERALL COORDINATION AND ADMINISTRATIVE CAPACITY
BUILDING
• By an internal Order the Ministry of Economy created a DCFTA Task Force responsible for the
technical coordination of the DCFTA negotiations.
• The Government Decision regarding the approval of the Action Plan included all the responsibilities
and institutions in the same document for negotiating DCFTA.
• The Ministry of Economy, as a coordinating institution for the DCFTA, was included in the list of the
key CIB (Comprehensive Institution Building Program) beneficiary institutions.
• Technical assistance needs were formulated and submitted to donors, as well as to those
authorities who agreed to support Moldova in connection with the DCFTA preparations, negotiation
and implementation (Romania, Poland, Hungary, Slovakia and the Czech Republic)
• Ministry of Economy expanded its activities for raising awareness on DCFTA among the state
institutions, the private sector and civil society
• The negotiations of the DCFTA have been discussed with the Transnistrian representatives in the
framework of the Confidence Building Measures
MARKET ACCESS
Agricultural products
Complete elimination of all import duties
excepting:
i) products subject to duty-free
tariff-rate quotas (6 quotas)
ii) products subject to entry
price for which the ad valorem
component of the import duty is
exempted (20 products)
iii) products subject to
anticircumvention mechanism (14
quotas)
Industrial products
Complete elimination of all import
duties.
Agricultural products
Complete elimination of all import duties
excepting:
i) products subject to duty-free
tariff-rate quotas (6 quotas)
ii) products subject to progressive
liberalization from 3 to 10 years (dairy
products, fruits, meat products, juice,
wine, preparations of cereals,
preparations of vegetables)
Industrial products
Complete elimination of all import duties
excepting:
i) products subject to progressive
liberalization from 3 to 5 years (textiles,
clothing)
EU Moldova
EXPORTS TO EU SUBJECT TO ANNUAL DUTY-FREE
TARIFF-RATE QUOTAS
20000
5000 5000
1000 500 220
0
5000
10000
15000
20000
25000
Apples, fresh Table
grapes, fresh
Plums, fresh Tomatoes,
fresh or
chilled
Grape juice Garlic, fresh
or chilled
Volume (t)
EXPORTS TO EU SUBJECT TO ENTRY PRICE
FOR WHICH THE AD-VALOREM COMPONENT OF THE IMPORT DUTY IS EXEMPTED
CN code 2012 Product description
07070005 Cucumbers, fresh or chilled
07099100 Globe artichokes, fresh or chilled
07099310 Courgettes, fresh or chilled
08051020 Sweet oranges, fresh
08052010 Clementines
08052030 Monreales and satsumas
08052050 Mandarins and wilkings
08052070 Tangerines
08052090 Tangelos, ortaniques, malaquinas and similar citrus hybrids (excl.
clementines, monreales, satsumas, mandarins, wilkings and tangerines)
08055010 Lemons "Citrus limon, Citrus limonum"
08083090 Pears (excl. perry pears in bulk from 1 August to 31 December)
08091000 Apricots, fresh
08092100 Sour cherries "Prunus cerasus", fresh
08092900 Cherries (excl. sour cherries), fresh
08093010 Nectarines, fresh
HS Product description
08093090 Peaches (excl. nectarines), fresh
22043092 Grape must, unfermented, concentrated within the meaning of Additional
Note 7 to chapter 22, of a density <= 1,33 g/cm³ at 20°C and of an actual
alcoholic strength <= 1% vol but > 0,5% vol (excl. grape must whose
fermentation has been arrested by the addition of alcohol)
22043094 Grape must, unfermented, non-concentrated, of a density <= 1,33 g/cm³ at
20°C and of an actual alcoholic strength <= 1% vol but > 0,5% vol (excl.
grape must whose fermentation has been arrested by the addition of
alcohol)
22043096 Grape must, unfermented, concentrated within the meaning of Additional
Note 7 to chapter 22, of a density > 1,33 g/cm³ at 20°C and of an actual
alcoholic strength <= 1% vol but > 0,5% vol (excl. grape must whose
fermentation has been arrested by the addition of alcohol)
22043098 Grape must, unfermented, non-concentrated, of a density > 1,33 g/cm³ at
20°C and of an actual alcoholic strength <= 1% vol but > 0,5% vol (excl.
grape must whose fermentation has been arrested by the addition of
alcohol)
EXPORTS TO EU SUBJECT TO ENTRY PRICE
FOR WHICH THE AD-VALOREM COMPONENT OF THE IMPORT DUTY IS EXEMPTED
EXPORTS TO EU SUBJECT TO ANTI-CIRCUMVENTION MECHANISM
130000
75000
70000
37400
7000 4500 1700 600 400
0
20000
40000
60000
80000
100000
120000
140000
Maize,
flour and
pellets
Wheat,
flour and
pellets
Barley,
flour and
pellets
Sugars Eggs in
shell
Pig meat Diary
products
Poultry
meat
Eggs and
albumins
Agricultural products
Trigger volume (t)
EXPORTS TO EU SUBJECT TO ANTI-CIRCUMVENTION MECHANISM
4200
2500
1500
1000
500
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Sugar
processed
Cereal
processed
Sweet corn Cigarettes Diary processed
Processed agricultural products
Trigger volume (t)
RM provide
a sound
justification
for the
increase of
imports
When the volume of
imports reaches
70% of the volume
indicated in Annex
XV-C, in any given
year starting on 1
January…
Following this
notification and within
14 calendar days
from the date on
which the volume of
imports reaches 80%
of the volume
indicated…
If those imports reach
100% of the volume
determined and in the
absence of a sound
justification by the RM,
the EU may
temporarily suspend
the preferential
treatment for the
products concerned.
The EU shall notify
the RM about the
volume of imports of
the product(s)
concerned.
The RM shall
provide the EU with
a sound
justification for the
increase of
imports.
Within 14
calendar days,
volume of
imports reaches
80%
Volume of
imports reaches
100%
Temporary
suspension of
preferential
treatment for 6
months
EU notifies
Republic of
Moldova about
the volume of
imports
Volume of
imports reaches
70%
ANTI-CIRCUMVENTION MECHANISM FOR AGRICULTURAL PRODUCTS AND PROCESSED
AGRICULTURAL PRODUCTS
IMPORTS OF AGRICULTURAL PRODUCTS TO MOLDOVA
SUBJECT TO TRQ’S
HS Description TRQ
0203 Porc meat 4000 t
0207 Poultry meat 4000 t
0401
0405
Milk
Butter
1000 t
1602 Meat products 1700 t
1701 Sugar 5400 t
1702 Sugar products 640 t
IMPORTS OF AGRICULTURAL PRODUCTS TO MOLDOVA
SUBJECT TO GRADUAL LIBERALIZATION
HS Description Transition period
0206 Edible offal of swine 10 years
0402 Milk and cream 10 years
0406 Cheese 3-5 years
07-08 Fruits and vegetables 5 years
1601-1602 Preparations of meat 10 years
1902-1905 Pastry 3-5 years
2002 Preparations of
vegetables and fruits
3-5 years
2007-2009 Juices 5 years
2204 Wines 5 years
IMPORTS OF INDUSTRIAL PRODUCTS TO MOLDOVA
SUBJECT TO GRADUAL LIBERALISATION
HS Description Transition period
2523 Portland cement, aluminous cement, slag cement,
supersulphate cement and similar hydraulic cements
5 years
3917
3922-3926
Plastics and articles thereof 3-5 years
5702-5705 Carpets and other textile floor coverings 5 years
6101-6110
6115
Articles of apparel and clothing accessories, knitted or
crocheted
3-5 years
6201-6006
6211-6212
Articles of apparel accessories, other than knitted or
crocheted
3-5 years
6302-6309 Other made-up textile articles; sets; clothing and worn
textile articles; rags
5 years
6402-6405 Footwear, gaiters and the like; parts of these articles 5 years
7010 Glass and glassware 5 years
9401-9403 Furniture; medical-surgical furniture; bedding and the
like; lighting apparatus not specified or included
elsewhere; lamps for illuminated signs, illuminated
signs, illuminated nameplates and the like;
prefabricated buildings
5 years
IMPORTANCE OF THE REVISION CLAUSE
• After the entry into force of this Agreement, the Parties may agree to consider
accelerating and broadening the scope of the elimination of customs
duties on trade between the Parties
• During the third year after the entry into force of this Agreement, the Parties
shall assess the situation, taking account of the pattern of trade in
agricultural products between the Parties, the particular sensitivities of such
products and the development of agricultural policy on both sides
• The Parties shall examine, in the Association Committee in Trade
configuration, on an appropriate reciprocal basis, the opportunities for
granting each other further concessions with a view to improving
liberalisation of trade in agricultural products, in particular those subject to
tariff-rate quotas (TRQs)
TRADE DEFENCE INSTRUMENTS (TDI)
• Objective
This chapter covers traditional trade defense instruments provided for in WTO legislation (anti-dumping, anti-subsidy
and safeguard measures). The key guiding principle is to re-affirm the need to respect legal rights and obligations, while
setting out disciplines to ensure that the instruments are used only where necessary and that all parties are treated
fairly.
• Key elements and challenges:
- introducing the concept of ‘public interest test’ in order to gauge the various interests at stake and examine
the possible impact of duties on operators;
- additional requirements as to notification, the disclosure of findings and opportunities for consultation;
- A bilateral safeguard clause allows either party temporarily to reintroduce its general tariffs for WTO
members where increased imports would cause, or threaten to cause, serious injury. The key differences with the global
safeguard measures is that;
i) this procedure can only be used to protect the domestic industry from unexpected consequences of the
DCFTA liberalization, and thus only targets the goods from the other party (i.e. no MFN treatment);
ii) the duty may not exceed the MFN duty applied before the DCFTA;
iii) duration of application 2 years, plus a possible extension of 2 more year;
iv) application only in the transitional period of 10 years.
TECHNICAL BARRIERS TO TRADE (TBT)
• Objective
As the customs tariffs will almost fully disappear between the EU and Moldova, non-tariff barriers such as technical standards for goods will
become the main obstacle to trade. Thus, this chapter aims to reduce ‘technical barriers to trade’ (TBT), i.e. technical regulations, standards,
conformity assessment procedures and similar requirements applying to industrial goods. Provide for progressive and comprehensive alignment
of horizontal and sectorial legislation for industrial products with the EU laws.
• Key elements and challenges:
- reforming the institutions responsible for coordinating policies of standardization, metrology and accreditation;
- approximate horizontal EU legislation known as the ‘New Legislative Framework’ (+approximate Directive on general product
safety);
- according to the Agreement, Moldova has to approximate to 20 sectoral directives, covering a wide range of products;
- has committed itself to approximate a long list of sectoral EU legislation (around 80 EU directives or regulations) covering products
that do not require CE marking;
- the Agreement requires Moldova to adopt the body of European standards, which includes, in addition to the 5,000 harmonised
standards, the 25,000 European standards (no timetable – self prioritization);
- simultaneous withdrawing conflicting standards (including GOST);
- progressively fulfil the membership conditions for the European standardization organizations (CEN, CENELEC and ETSI);
- conclude an Agreement on Conformity and Assessment and Acceptance of Industrial Products (ACAA) and incorporate into
the Agreement.
SANITARY AND PHYTOSANITARY MEASURES
(SPS)
• Objective
These disciplines provide for the trade conditions in plants and plant products, as well as animals and products of
animal origin. They further provide for the procedure to establish the equivalence of the food safety regime of the
Republic of Moldova with the EU regime, which should enable the Republic of Moldova to export to the EU animals
and products of animal origin. The reform process is established by the DCFTA and once this work is completed and
assessed positively, the Republic of Moldova will gain further access to the EU market.
• Key elements and challenges:
- an undertaking from the Republic of Moldova to bring its SPS and animal welfare legislation in line with
the EU’s and to maintain the institutional/administrative capacity to implement it;
- the list of normative acts to be transposed into the national legislation is to be drafted in terms of 3
months from the date of signing the Agreement;
- develop rapid consultation mechanism to address trade irritants in SPS-related goods;
- establish a rapid alert and early warning system for veterinary and phytosanitary emergencies;
CUSTOMS AND TRADE FACILITATION
• Objective
Enhance cooperation in customs and customs-related matters and simplify customs requirements and formalities while
at the same time preventing customs fraud, e.g. through incorrect declarations of product origin.The Republic of Moldova
has to undertake disciplines related to management of customs policy, of customs fraud and administrative cooperation
to this effect, in line with EU legislation. The DCFTA foresees approximation of selected EU legislation to this effect,
within 3 years since the entry into force (such as the EU customs code or customs enforcement of intellectual property).
Key elements and challenges:
- alignment of legislation and procedures through the use of modern, internationally endorsed customs and
trade facilitation practices and procedures, and developing a stronger legal framework (e.g. New Customs Code,
Combined Nomenclature, AEO, advance binding rulings on tariff classification and rules of origin, appeal against
customs’, etc.);
- fees and charges have to be transparent and made publically available, and should not exceed the cost of
the service provided by the customs authority.
- approval of a regulation on administration of tariff quotas on the import / export of goods and introducing
an information module for administration of tariff quotas in Customs Integrated Informational System "ASYCUDA
WORLD„;
- ensuring functionality of the diagonal cumulation of the PEM Convention.
ESTABLISHMENT, TRADE IN SERVICES
• Objective
This chapter aims to create more opportunities for EU and Moldovan businesses in the services trade and to integrate the Republic of Moldova as
much as possible into the EU services market. Thus, the objective is to go beyond the commitment included in the GATS (General Agreement on
Trade in Services) of WTO.
Key elements and challenges:
- the provisions on establishment apply to the service and non-service sectors alike. These commitments are subject to some
limited restrictions (in the form of a ‘negative list’ of sectors excluded from liberalisation, thus guaranteeing automatic coverage for new
services);
- a standstill clause forbids, the EU and Moldova from adopting new discriminatory regulations as regards the establishment of legal
persons of the other party by comparison with their own legal persons;
- in the sectors where market-access commitments are undertaken, the EU and Moldova are prohibited from limiting: number of
service suppliers, value of service transactions, total number of service operations. This implies amendment to national legislation;
- freedom of movement for business purposes for certain categories of natural persons (key personnel, graduate trainees,
contractual service suppliers and independent professionals – different from WTO) subject to a number of limitations and specific requirements.
It implies amendments to national legislation;
- the list of EU reservations is complicated because it includes both EU-wide and member state-specific reservations,
- also the DCFTA services provisions include a commitment from the Republic of Moldova to align its legislation on financial,
electronic commerce, postal and courier, and international maritime services with current and future EU legislation.
PUBLIC PROCUREMENT
• Objective
Provide mutual access to respective public procurement markets on the basis of the principle of national
treatment at national, regional and local levels for public contracts and concessions in the traditional sectors as
well as in the utilities sector. It covers any state, regional or local authority, including public undertakings in the
field of utilities such as state-owned enterprises and private undertakings operating on the basis of special and
exclusive rights. Defense procurement, however, is not covered by the DCFTA.
Key elements and challenges:
- submitting to the Trade Committee a ‘comprehensive roadmap’ for the implementation of this
procurement chapter, covering all reforms in terms of legislative approximation and institutional capacity-building;
- adoption of current and future EU public procurement legislation so that Moldovan and EU
suppliers and service providers have equal access to each other’s procurement markets;
- once the process of aligning the legislation is completed, the parties may consider granting each other
access to public tenders below the agreed threshold;
- enforcing the institutional capacity of the authority responsible for procurements, simultaneously
establishing the National Agency for Solving Complaints.
INTELLECTUAL PROPERTY RIGHTS
• Objective
The parties reinforce their engagement to protect intellectual property beyond the WTO Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS) provisions. These concern the extended
protection of different intellectual property rights (i.e. trade marks, patents, design, plant variety) improved
cooperation and stronger (civil) enforcement of IPs, including on the border.
• Key elements and challenges:
- the section on IPRs does not oblige to approximate a selection of the EU’s IPR legislation
annexed to the Agreement.
- however, the main text of the DCFTA is very detailed, and its provisions reflect – or sometimes
copy – several principles and procedures of the EU’s IPR legislation
- commitments go beyond the TRIPS Agreement, but the complementary measures and remedies
in the DCFTA have to be fair and equitable and should not result in additional barriers to trade;
- negotiate anD sign an Agreement on Geographical Indications with EU, incorporated into
DCFTA, also involving regular consultations to update the list of protected Gis;
- enforcement of the legal framework related to IPR, especially on the border.
COMPETITION
• Objective
The parties prohibit and commit to address certain practices and transactions that could distort free
competition and trade, e.g. cartels, abuse of a dominant position and anti-competitive mergers, which
will be subject to effective enforcement action.
• Key elements and challenges:
- maintain effective competition laws and an effectively functioning competition authority,
and to uphold procedural fairness and firms’ rights of defense;
- competition law will apply to state-controlled enterprises;
- necessity to create/enforce institutions for state aid, within 2 years from the date of entry
into force of the Agreement;
- transition period foreseen for alignment of state aid granted previously to entities.
SUSTAINABLE DEVELOPMENT
• Objective
Economic development should take place in respect of environmental, social and labour legislation, in particular
the relevant international agreements that the Republic of Moldova is party to, and involving the necessary
transparency in policy-making. Close involvement of civil society, relevant experts and stakeholders in policy-
making. Consultations and openness in designing and implementing DCFTA-related policies.
• Key elements and challenges:
- a shared commitment to effectively implement International Labour Organisation (ILO) conventions;
- a commitment to implement all multilateral environment agreements and to promote sustainable
forestry and fisheries management;
- strong monitoring mechanisms, including regular government-to-government meetings and
enhanced public scrutiny through civil society involvement.
THE MONITORING AND EVALUATION TOOL OF THE DCFTA
IMPLEMENTATION
A constant schedule for the publication of the monitoring indicators;
A set of quantitative indicators that explain comprehensively the economic and social
developments in every sector included in DCFTA after its enforcement;
Combination into one singe tool of both quantitative and qualitative monitoring indicators,
including the indicators analysing the dynamics in terms of perceptions of the potential DCFTA
beneficiaries;
Monitoring indicators are accessible not only for the institutions responsible of implementation
and experts, but also for the general public;
Graphical illustration of monitoring indicators, which will facilitate the analysis and
comprehension of developments.
THE OPPORTUNITY OF USING PERFORMANCE
INDICATORS (KPIS)
The process of developing
and applying indicators,
including the collection of
appropriate data, provides
means to:
Bring important DCFTA issues to the political agenda;
Promote national dialogue on priority capacities and needs;
Facilitate the reporting processess on the situation in the fields to decision-
makers and general public (national and international);
Assess the achievements of the commitments and objectives, as well as their
review if needed;
Facilitate the development and monitoring of action plans;
Contribute to supporting and taking into account the costs and benefits of
different types of interventions.
THE KEY ELEMENT - DASHBOARD
• Informs about the state of the managed field;
Informing function
• Warns about certain unfavourable situations, about some deviations from the
norm;
Warning function
• Assesses the outcomes obtained by fulfilling the objectives and, implicitly, the
quality of the decisions made and of the actions taken for their implementation;
Evaluation function
• Meaning that the relevant information that was sent immediately to manager on
different hierarchical levels allows to substantiate and make appropriate
decisions
Decisional function
COMPARING INSTRUMENTS…
VS.

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Republic of Moldova’s experience in negotiating the DCFTA with EU

  • 1. REPUBLIC OF MOLDOVA’S EXPERIENCE IN NEGOTIATING THE DCFTA WITH EU Vadim Gumene Program Director, Expert-Grup vadim@expert-grup.org
  • 2. WHY DCFTA…? • The Eastern Partnership initiative was launched in 2009, with the aim of boosting the European Neighbourhood Policy with the Eastern Partners of the EU. • The Partnership and Cooperation Agreement, which has been in force since July 1998 and provided a rather basic level of cooperation, no longer met the expectations and needs of both sides. • Autonomous Trade Preference (ATP) that the EU has granted to the Republic of Moldova since 2008, could not achieve the objective of assisting the Republic of Moldova with further reforms and modernisation. • Moreover the ATP, was a system unilaterally granted by the EU for a limited period (2015), while DCFTA is an agreement for an indefinite period, providing export benefits bigger than ATP-terms and a predictability in a long run for businesses and investments. • Thus, the Republic of Moldova had to demonstrate that it has started conducting the necessary reforms, in order to enable future implementation of such a DCFTA. With this purpose in 2011 was developed an Action Plan for realisation of the European Commission Recommendations. • Following the preparatory process, the DCFTA negotiations were launched in February 2012 and closed in June 2013. The Association Agreement, including the DCFTA component, was signed on 27 June 2014 in Brussels.
  • 3. EXPECTATIONS… It is expected that the DCFTA will boost trade between the EU and the Republic of Moldova: • by 16% as regards the exports of the Republic of Moldova to the EU, and by 8% on imports from the EU. • the prices are expected to be lowered for domestically available goods, resulting increased real purchasing power of consumers. • stronger domestic rules will improve the safety of consumer products and therefore of consumers in general. • by providing more stable and predictable trade regime, based on EU legislation, is expected to boost the inflow of EU FDI to the country, creating more enterprises and strengthening the competitiveness of the economy and individual sectors. • the DCFTA as a whole is expected to improve the current account balance of the Republic of Moldova and boost the GDP by 5,4% (142 million EUR growth in national income), provided that the reforms are completed.
  • 4. POSSIBLE CHALENGES… • The impossibility of fulfilling the necessary conditions for export; • Removal from the market of non-competitive domestic producers; • The massive increase of imports from the EU; • Inability to cope with the competitiveness of European goods; • Uncertainty about the necessary restructuring in the real sector of the economy; • Initiating a series of costly reforms and non-compliance with terms; • Not meeting the expected indicators as a result of the worsening of the economic situation at regional / international level; • Decline in budget revenues from customs duties; • Lack of qualified staff and equipment to ensure the implementation DCFTA.
  • 5. PREPARING FOR DCFTA NEGOTIATIONS To ensure the logistics of the negotiation process DCFTA were carried out the following actions: • Amending Government Decision, to ensure continuity of the negotiating team of the Association Agreement and DCFTA; • Creating a Task Force on DCFTA consisting of representatives of the institutions involved in implementing the Action Plan, 5 local consultants to be funded by the UNDP project "Capacity Transitional Support for the Public Administration of Moldova". • Consisting of four subgroups on different topics in order to implement the EC recommendations (market access and customs administration, trade measures and barriers, financial services and competitive environment, consultation with the private sector and NGOs). • Future DCFTA negotiations were conducted in the Working Group III "economic, sectorial and financial cooperation„ of the Association Agreement, secretariat of the Group was owned by Ministry of Economy.
  • 6. OVERALL COORDINATION AND ADMINISTRATIVE CAPACITY BUILDING • By an internal Order the Ministry of Economy created a DCFTA Task Force responsible for the technical coordination of the DCFTA negotiations. • The Government Decision regarding the approval of the Action Plan included all the responsibilities and institutions in the same document for negotiating DCFTA. • The Ministry of Economy, as a coordinating institution for the DCFTA, was included in the list of the key CIB (Comprehensive Institution Building Program) beneficiary institutions. • Technical assistance needs were formulated and submitted to donors, as well as to those authorities who agreed to support Moldova in connection with the DCFTA preparations, negotiation and implementation (Romania, Poland, Hungary, Slovakia and the Czech Republic) • Ministry of Economy expanded its activities for raising awareness on DCFTA among the state institutions, the private sector and civil society • The negotiations of the DCFTA have been discussed with the Transnistrian representatives in the framework of the Confidence Building Measures
  • 7. MARKET ACCESS Agricultural products Complete elimination of all import duties excepting: i) products subject to duty-free tariff-rate quotas (6 quotas) ii) products subject to entry price for which the ad valorem component of the import duty is exempted (20 products) iii) products subject to anticircumvention mechanism (14 quotas) Industrial products Complete elimination of all import duties. Agricultural products Complete elimination of all import duties excepting: i) products subject to duty-free tariff-rate quotas (6 quotas) ii) products subject to progressive liberalization from 3 to 10 years (dairy products, fruits, meat products, juice, wine, preparations of cereals, preparations of vegetables) Industrial products Complete elimination of all import duties excepting: i) products subject to progressive liberalization from 3 to 5 years (textiles, clothing) EU Moldova
  • 8. EXPORTS TO EU SUBJECT TO ANNUAL DUTY-FREE TARIFF-RATE QUOTAS 20000 5000 5000 1000 500 220 0 5000 10000 15000 20000 25000 Apples, fresh Table grapes, fresh Plums, fresh Tomatoes, fresh or chilled Grape juice Garlic, fresh or chilled Volume (t)
  • 9. EXPORTS TO EU SUBJECT TO ENTRY PRICE FOR WHICH THE AD-VALOREM COMPONENT OF THE IMPORT DUTY IS EXEMPTED CN code 2012 Product description 07070005 Cucumbers, fresh or chilled 07099100 Globe artichokes, fresh or chilled 07099310 Courgettes, fresh or chilled 08051020 Sweet oranges, fresh 08052010 Clementines 08052030 Monreales and satsumas 08052050 Mandarins and wilkings 08052070 Tangerines 08052090 Tangelos, ortaniques, malaquinas and similar citrus hybrids (excl. clementines, monreales, satsumas, mandarins, wilkings and tangerines) 08055010 Lemons "Citrus limon, Citrus limonum" 08083090 Pears (excl. perry pears in bulk from 1 August to 31 December) 08091000 Apricots, fresh 08092100 Sour cherries "Prunus cerasus", fresh 08092900 Cherries (excl. sour cherries), fresh 08093010 Nectarines, fresh
  • 10. HS Product description 08093090 Peaches (excl. nectarines), fresh 22043092 Grape must, unfermented, concentrated within the meaning of Additional Note 7 to chapter 22, of a density <= 1,33 g/cm³ at 20°C and of an actual alcoholic strength <= 1% vol but > 0,5% vol (excl. grape must whose fermentation has been arrested by the addition of alcohol) 22043094 Grape must, unfermented, non-concentrated, of a density <= 1,33 g/cm³ at 20°C and of an actual alcoholic strength <= 1% vol but > 0,5% vol (excl. grape must whose fermentation has been arrested by the addition of alcohol) 22043096 Grape must, unfermented, concentrated within the meaning of Additional Note 7 to chapter 22, of a density > 1,33 g/cm³ at 20°C and of an actual alcoholic strength <= 1% vol but > 0,5% vol (excl. grape must whose fermentation has been arrested by the addition of alcohol) 22043098 Grape must, unfermented, non-concentrated, of a density > 1,33 g/cm³ at 20°C and of an actual alcoholic strength <= 1% vol but > 0,5% vol (excl. grape must whose fermentation has been arrested by the addition of alcohol) EXPORTS TO EU SUBJECT TO ENTRY PRICE FOR WHICH THE AD-VALOREM COMPONENT OF THE IMPORT DUTY IS EXEMPTED
  • 11. EXPORTS TO EU SUBJECT TO ANTI-CIRCUMVENTION MECHANISM 130000 75000 70000 37400 7000 4500 1700 600 400 0 20000 40000 60000 80000 100000 120000 140000 Maize, flour and pellets Wheat, flour and pellets Barley, flour and pellets Sugars Eggs in shell Pig meat Diary products Poultry meat Eggs and albumins Agricultural products Trigger volume (t)
  • 12. EXPORTS TO EU SUBJECT TO ANTI-CIRCUMVENTION MECHANISM 4200 2500 1500 1000 500 0 500 1000 1500 2000 2500 3000 3500 4000 4500 Sugar processed Cereal processed Sweet corn Cigarettes Diary processed Processed agricultural products Trigger volume (t)
  • 13. RM provide a sound justification for the increase of imports When the volume of imports reaches 70% of the volume indicated in Annex XV-C, in any given year starting on 1 January… Following this notification and within 14 calendar days from the date on which the volume of imports reaches 80% of the volume indicated… If those imports reach 100% of the volume determined and in the absence of a sound justification by the RM, the EU may temporarily suspend the preferential treatment for the products concerned. The EU shall notify the RM about the volume of imports of the product(s) concerned. The RM shall provide the EU with a sound justification for the increase of imports. Within 14 calendar days, volume of imports reaches 80% Volume of imports reaches 100% Temporary suspension of preferential treatment for 6 months EU notifies Republic of Moldova about the volume of imports Volume of imports reaches 70% ANTI-CIRCUMVENTION MECHANISM FOR AGRICULTURAL PRODUCTS AND PROCESSED AGRICULTURAL PRODUCTS
  • 14. IMPORTS OF AGRICULTURAL PRODUCTS TO MOLDOVA SUBJECT TO TRQ’S HS Description TRQ 0203 Porc meat 4000 t 0207 Poultry meat 4000 t 0401 0405 Milk Butter 1000 t 1602 Meat products 1700 t 1701 Sugar 5400 t 1702 Sugar products 640 t
  • 15. IMPORTS OF AGRICULTURAL PRODUCTS TO MOLDOVA SUBJECT TO GRADUAL LIBERALIZATION HS Description Transition period 0206 Edible offal of swine 10 years 0402 Milk and cream 10 years 0406 Cheese 3-5 years 07-08 Fruits and vegetables 5 years 1601-1602 Preparations of meat 10 years 1902-1905 Pastry 3-5 years 2002 Preparations of vegetables and fruits 3-5 years 2007-2009 Juices 5 years 2204 Wines 5 years
  • 16. IMPORTS OF INDUSTRIAL PRODUCTS TO MOLDOVA SUBJECT TO GRADUAL LIBERALISATION HS Description Transition period 2523 Portland cement, aluminous cement, slag cement, supersulphate cement and similar hydraulic cements 5 years 3917 3922-3926 Plastics and articles thereof 3-5 years 5702-5705 Carpets and other textile floor coverings 5 years 6101-6110 6115 Articles of apparel and clothing accessories, knitted or crocheted 3-5 years 6201-6006 6211-6212 Articles of apparel accessories, other than knitted or crocheted 3-5 years 6302-6309 Other made-up textile articles; sets; clothing and worn textile articles; rags 5 years 6402-6405 Footwear, gaiters and the like; parts of these articles 5 years 7010 Glass and glassware 5 years 9401-9403 Furniture; medical-surgical furniture; bedding and the like; lighting apparatus not specified or included elsewhere; lamps for illuminated signs, illuminated signs, illuminated nameplates and the like; prefabricated buildings 5 years
  • 17. IMPORTANCE OF THE REVISION CLAUSE • After the entry into force of this Agreement, the Parties may agree to consider accelerating and broadening the scope of the elimination of customs duties on trade between the Parties • During the third year after the entry into force of this Agreement, the Parties shall assess the situation, taking account of the pattern of trade in agricultural products between the Parties, the particular sensitivities of such products and the development of agricultural policy on both sides • The Parties shall examine, in the Association Committee in Trade configuration, on an appropriate reciprocal basis, the opportunities for granting each other further concessions with a view to improving liberalisation of trade in agricultural products, in particular those subject to tariff-rate quotas (TRQs)
  • 18. TRADE DEFENCE INSTRUMENTS (TDI) • Objective This chapter covers traditional trade defense instruments provided for in WTO legislation (anti-dumping, anti-subsidy and safeguard measures). The key guiding principle is to re-affirm the need to respect legal rights and obligations, while setting out disciplines to ensure that the instruments are used only where necessary and that all parties are treated fairly. • Key elements and challenges: - introducing the concept of ‘public interest test’ in order to gauge the various interests at stake and examine the possible impact of duties on operators; - additional requirements as to notification, the disclosure of findings and opportunities for consultation; - A bilateral safeguard clause allows either party temporarily to reintroduce its general tariffs for WTO members where increased imports would cause, or threaten to cause, serious injury. The key differences with the global safeguard measures is that; i) this procedure can only be used to protect the domestic industry from unexpected consequences of the DCFTA liberalization, and thus only targets the goods from the other party (i.e. no MFN treatment); ii) the duty may not exceed the MFN duty applied before the DCFTA; iii) duration of application 2 years, plus a possible extension of 2 more year; iv) application only in the transitional period of 10 years.
  • 19. TECHNICAL BARRIERS TO TRADE (TBT) • Objective As the customs tariffs will almost fully disappear between the EU and Moldova, non-tariff barriers such as technical standards for goods will become the main obstacle to trade. Thus, this chapter aims to reduce ‘technical barriers to trade’ (TBT), i.e. technical regulations, standards, conformity assessment procedures and similar requirements applying to industrial goods. Provide for progressive and comprehensive alignment of horizontal and sectorial legislation for industrial products with the EU laws. • Key elements and challenges: - reforming the institutions responsible for coordinating policies of standardization, metrology and accreditation; - approximate horizontal EU legislation known as the ‘New Legislative Framework’ (+approximate Directive on general product safety); - according to the Agreement, Moldova has to approximate to 20 sectoral directives, covering a wide range of products; - has committed itself to approximate a long list of sectoral EU legislation (around 80 EU directives or regulations) covering products that do not require CE marking; - the Agreement requires Moldova to adopt the body of European standards, which includes, in addition to the 5,000 harmonised standards, the 25,000 European standards (no timetable – self prioritization); - simultaneous withdrawing conflicting standards (including GOST); - progressively fulfil the membership conditions for the European standardization organizations (CEN, CENELEC and ETSI); - conclude an Agreement on Conformity and Assessment and Acceptance of Industrial Products (ACAA) and incorporate into the Agreement.
  • 20. SANITARY AND PHYTOSANITARY MEASURES (SPS) • Objective These disciplines provide for the trade conditions in plants and plant products, as well as animals and products of animal origin. They further provide for the procedure to establish the equivalence of the food safety regime of the Republic of Moldova with the EU regime, which should enable the Republic of Moldova to export to the EU animals and products of animal origin. The reform process is established by the DCFTA and once this work is completed and assessed positively, the Republic of Moldova will gain further access to the EU market. • Key elements and challenges: - an undertaking from the Republic of Moldova to bring its SPS and animal welfare legislation in line with the EU’s and to maintain the institutional/administrative capacity to implement it; - the list of normative acts to be transposed into the national legislation is to be drafted in terms of 3 months from the date of signing the Agreement; - develop rapid consultation mechanism to address trade irritants in SPS-related goods; - establish a rapid alert and early warning system for veterinary and phytosanitary emergencies;
  • 21. CUSTOMS AND TRADE FACILITATION • Objective Enhance cooperation in customs and customs-related matters and simplify customs requirements and formalities while at the same time preventing customs fraud, e.g. through incorrect declarations of product origin.The Republic of Moldova has to undertake disciplines related to management of customs policy, of customs fraud and administrative cooperation to this effect, in line with EU legislation. The DCFTA foresees approximation of selected EU legislation to this effect, within 3 years since the entry into force (such as the EU customs code or customs enforcement of intellectual property). Key elements and challenges: - alignment of legislation and procedures through the use of modern, internationally endorsed customs and trade facilitation practices and procedures, and developing a stronger legal framework (e.g. New Customs Code, Combined Nomenclature, AEO, advance binding rulings on tariff classification and rules of origin, appeal against customs’, etc.); - fees and charges have to be transparent and made publically available, and should not exceed the cost of the service provided by the customs authority. - approval of a regulation on administration of tariff quotas on the import / export of goods and introducing an information module for administration of tariff quotas in Customs Integrated Informational System "ASYCUDA WORLD„; - ensuring functionality of the diagonal cumulation of the PEM Convention.
  • 22. ESTABLISHMENT, TRADE IN SERVICES • Objective This chapter aims to create more opportunities for EU and Moldovan businesses in the services trade and to integrate the Republic of Moldova as much as possible into the EU services market. Thus, the objective is to go beyond the commitment included in the GATS (General Agreement on Trade in Services) of WTO. Key elements and challenges: - the provisions on establishment apply to the service and non-service sectors alike. These commitments are subject to some limited restrictions (in the form of a ‘negative list’ of sectors excluded from liberalisation, thus guaranteeing automatic coverage for new services); - a standstill clause forbids, the EU and Moldova from adopting new discriminatory regulations as regards the establishment of legal persons of the other party by comparison with their own legal persons; - in the sectors where market-access commitments are undertaken, the EU and Moldova are prohibited from limiting: number of service suppliers, value of service transactions, total number of service operations. This implies amendment to national legislation; - freedom of movement for business purposes for certain categories of natural persons (key personnel, graduate trainees, contractual service suppliers and independent professionals – different from WTO) subject to a number of limitations and specific requirements. It implies amendments to national legislation; - the list of EU reservations is complicated because it includes both EU-wide and member state-specific reservations, - also the DCFTA services provisions include a commitment from the Republic of Moldova to align its legislation on financial, electronic commerce, postal and courier, and international maritime services with current and future EU legislation.
  • 23. PUBLIC PROCUREMENT • Objective Provide mutual access to respective public procurement markets on the basis of the principle of national treatment at national, regional and local levels for public contracts and concessions in the traditional sectors as well as in the utilities sector. It covers any state, regional or local authority, including public undertakings in the field of utilities such as state-owned enterprises and private undertakings operating on the basis of special and exclusive rights. Defense procurement, however, is not covered by the DCFTA. Key elements and challenges: - submitting to the Trade Committee a ‘comprehensive roadmap’ for the implementation of this procurement chapter, covering all reforms in terms of legislative approximation and institutional capacity-building; - adoption of current and future EU public procurement legislation so that Moldovan and EU suppliers and service providers have equal access to each other’s procurement markets; - once the process of aligning the legislation is completed, the parties may consider granting each other access to public tenders below the agreed threshold; - enforcing the institutional capacity of the authority responsible for procurements, simultaneously establishing the National Agency for Solving Complaints.
  • 24. INTELLECTUAL PROPERTY RIGHTS • Objective The parties reinforce their engagement to protect intellectual property beyond the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) provisions. These concern the extended protection of different intellectual property rights (i.e. trade marks, patents, design, plant variety) improved cooperation and stronger (civil) enforcement of IPs, including on the border. • Key elements and challenges: - the section on IPRs does not oblige to approximate a selection of the EU’s IPR legislation annexed to the Agreement. - however, the main text of the DCFTA is very detailed, and its provisions reflect – or sometimes copy – several principles and procedures of the EU’s IPR legislation - commitments go beyond the TRIPS Agreement, but the complementary measures and remedies in the DCFTA have to be fair and equitable and should not result in additional barriers to trade; - negotiate anD sign an Agreement on Geographical Indications with EU, incorporated into DCFTA, also involving regular consultations to update the list of protected Gis; - enforcement of the legal framework related to IPR, especially on the border.
  • 25. COMPETITION • Objective The parties prohibit and commit to address certain practices and transactions that could distort free competition and trade, e.g. cartels, abuse of a dominant position and anti-competitive mergers, which will be subject to effective enforcement action. • Key elements and challenges: - maintain effective competition laws and an effectively functioning competition authority, and to uphold procedural fairness and firms’ rights of defense; - competition law will apply to state-controlled enterprises; - necessity to create/enforce institutions for state aid, within 2 years from the date of entry into force of the Agreement; - transition period foreseen for alignment of state aid granted previously to entities.
  • 26. SUSTAINABLE DEVELOPMENT • Objective Economic development should take place in respect of environmental, social and labour legislation, in particular the relevant international agreements that the Republic of Moldova is party to, and involving the necessary transparency in policy-making. Close involvement of civil society, relevant experts and stakeholders in policy- making. Consultations and openness in designing and implementing DCFTA-related policies. • Key elements and challenges: - a shared commitment to effectively implement International Labour Organisation (ILO) conventions; - a commitment to implement all multilateral environment agreements and to promote sustainable forestry and fisheries management; - strong monitoring mechanisms, including regular government-to-government meetings and enhanced public scrutiny through civil society involvement.
  • 27. THE MONITORING AND EVALUATION TOOL OF THE DCFTA IMPLEMENTATION A constant schedule for the publication of the monitoring indicators; A set of quantitative indicators that explain comprehensively the economic and social developments in every sector included in DCFTA after its enforcement; Combination into one singe tool of both quantitative and qualitative monitoring indicators, including the indicators analysing the dynamics in terms of perceptions of the potential DCFTA beneficiaries; Monitoring indicators are accessible not only for the institutions responsible of implementation and experts, but also for the general public; Graphical illustration of monitoring indicators, which will facilitate the analysis and comprehension of developments.
  • 28. THE OPPORTUNITY OF USING PERFORMANCE INDICATORS (KPIS) The process of developing and applying indicators, including the collection of appropriate data, provides means to: Bring important DCFTA issues to the political agenda; Promote national dialogue on priority capacities and needs; Facilitate the reporting processess on the situation in the fields to decision- makers and general public (national and international); Assess the achievements of the commitments and objectives, as well as their review if needed; Facilitate the development and monitoring of action plans; Contribute to supporting and taking into account the costs and benefits of different types of interventions.
  • 29. THE KEY ELEMENT - DASHBOARD • Informs about the state of the managed field; Informing function • Warns about certain unfavourable situations, about some deviations from the norm; Warning function • Assesses the outcomes obtained by fulfilling the objectives and, implicitly, the quality of the decisions made and of the actions taken for their implementation; Evaluation function • Meaning that the relevant information that was sent immediately to manager on different hierarchical levels allows to substantiate and make appropriate decisions Decisional function