At the Vilnius Eastern Partnership Summit of November 29, 2013, Moldova will enter a new stage of relations with the European Union. What will it bring and how will it influence the life of the Moldovans from the country and from abroad? What will each of us gain and what should we do for this benefit to become possible? How will the new conditions affect Moldova’s relations with other countries? The IPN Agency aims to look for answers to these and other questions worrying society, together with you, within the series of articles “Association with the EU to everyone’s understanding
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The Association Agreement with the EU will enable Moldova to enter the largest market of the world. This means that Moldova will have access to a predictable market that cannot impose embargoes on Moldovan products overnight. Director of the Resource Center for Human Rights (CReDO) Sergiu Ostaf said the EU market is a common market and the intervention of certain authorities on behalf of a state must be every time justified. “The sanitary authority of Poland for example can penalize a certain producer or can impose a penalty, but cannot fully bar products’ access to the European market. The products will not be banned according to political criteria. It will not be possible to impose a ban on all the Moldovan products or to declare that all the Moldovan wines are of a poor quality. There will be individual bans, in particular cases. The actions will be predictable,” he stated.
According to the CReDO director, from the economic viewpoint, we cannot say that we lose a market or another by associating ourselves with the EU. It’s true that the access to the eastern market may be difficult. However, the 10% of Moldovan wines sold on the EU market bring incomes equal to those earned by selling the 80% of the wines on the Russian market. “Our products will certainly become less competitive on the eastern market, but this will happen after the Customs Union is created in 2017 and there will be a relevant political decision,” said Sergiu Ostaf.
The association with the EU opens access to the largest market of the world, with 550 million people. The annual income per capital in the EU is €18,000-20,000 on average. Thus, the purchasing power is enormous. The EU market is larger than the U.S. market, which has 300 million people with a purchasing power. If the Moldovan products meet the quality standards, they will find a niche in the European market. The economic studies show that the beneficial cumulative effect of the access to the European market will increase the economic growth in Moldova by about 7% a year.
The Moldovans will be able to export goods to Europe, but will be unable to work there. The employment in the EU forms part of a mobility partnership that will be discussed and initialed separately.
Sergiu Ostaf said the agreement with the EU envisions strengthening the institutions that promote loyal competition. These institutions must create a competition environment in Moldova. This means that there won’t be areas monopolized by certain public or private service providers or producers of goods. Thus, the prices of goods and services will be lower and this is a clear benefit. There will be ensured a transfer of modern technologies from the EU in the process of providing services and producing goods. The Association Agreement with the EU will fundamentally transform the way the public institutions of Moldova manage the economic sphere, including the public procurement process.
The agreement’s effect on the Transnistrian region will come with a delay of at least one year. “If the Transnistrian authorities want to benefit from these concessions, they must incorporate the guarantees of a competitive economy on the left bank of the Nistru. There are several companies that have a monopoly on service provision there. In the mobile telephone sector for example, there is only one provider. On the right bank of the Nistru, there are three providers. In Transnistria, there is one monopolized chain of shops. On the right bank, we have 7-8 store chains. The people in Transnistria suffer because of these monopolies,” said the CReDO director.
If the situation in Transnistria does not change, the companies working there will be unable to export products and services to the EU. The agreement that Moldova will sign envisions a grace of 1-2 years for the Transnistrian region. The Transnistrian administration will have to create additional mechanisms for ensuring loyal competition and limiting monopolies. Only then will the Transnistrians be able to benefit from other economic rights enjoyed from the association with the EU.
“There will be a permanent dialogue between Moldova, including Transnistria as a component part, and the EU on the progress made in ensuring the freedom of expression, the social and economic rights. The EU will impose certain standards and the Moldovan authorities will have to comply with them. Furthermore, they will have to ensure the functionality of institutions and the transparency of decisions,” said the CReDO director. The EU proposes a whole set of actions for developing the infrastructure, repairing the roads, subsidizing agriculture, etc. The impact on Moldova will be substantial and incomparable with the offers existing in the eastern area.
According to experts, the simplified visa regime will generate mass migration. Such a risk exists, but it is reduced and manageable, said Sergiu Ostaf. The same is true about the economic segment. “Certainly, the industries and enterprises in the EU are much more developed. On a short-term, certain negative influences may be exerted on the national industries. In general, Moldova’s economy will grow by 5%-6% in addition to what we already achieved as a result of the opening of the EU,” stated Sergiu Ostaf.
He added that the economic sectors and industries will be reorganized. The inefficient industries will disappear. In certain industries, the number of workplaces will be reduced, while in others will be increased. The Government must analyze which of the industries will be affected and offer the people re-qualification possibilities or financial support until they find a job. Certain political groups may speculate on the reduction in the number of workplaces and will magnify these risks compared with the benefits. Moldova’s economy is rather rigid and this will be a serious challenge for the authorities.
Alina Marin, IPN
