“The Association Agreement will lead to Moldova’s loss of sovereignty”, “The Association Agreement will further enflame Russia-Moldova relations”, “Consumer prices will increase as a result of the Deep and Comprehensive Free Trade Area”. These are only some of the most spread hypotheses about the Association Agreement with the European Union. Are they true theories or just myths? IPN aimed to find out the answer from a number of independent experts and officials working in the addressed areas.
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"Moldova has several free trade agreements in force which the EU considers incompatible with DCFTA"
Economic expert Ion Tornea, of the Institute for Development and Social Initiative “Viitorul”, said this is a myth as the very first chapter of the DCFTA, which forms part of the Association Agreement, provides that the sides can simultaneously be party to other free trade agreements, if their provisions are compatible with the accord with the EU. “If other free trade agreements signed by Moldova do not run counter to the Deep and Comprehensive Free Trade Agreement with the EU, there is no problem,” he stated.
Ion Tornea noted that Moldova has signed several free trade agreements, but none of them runs counter to the agreement with the EU. This is true about the Free Trade Agreement within the CIS, the Central-European Free Trade Agreement, the Free Trade Agreement with Turkey or other bilateral accords with the CIS states. “None of these agreements is incompatible with the DCFTA as their provisions were studied before the initiation of negotiations. If we refer to the Russia-Belarus-Kazakhstan Customs Union, it is evident that it is not compatible with the DCFTA,” said the expert.
He also said that the incompatibility refers mainly to the import tariffs. Thus, the agreement with the EU envisions the reduction or even annulment of these tariffs, while the Customs Union demands increasing them. It is a protectionism mechanism instituted by the Customs Union in relation to other states, including the European Union. The second major contradiction is related to the delegation of powers to adopt commercial policies. These powers are delegated to a supranational organization consisting of member states of the Customs Union. In the EU, such powers are held by national bodies.
According to Ion Tornea, if Moldova forms part of the Customs Union, it will lose the right to institute the own commercial regulations. Thus, the EU will be unable to establish direct relations with Moldova. Relations will be established with the decision-making body of the Customs Union. This is against the provisions of the DCFTA with the EU.
On its website, the Delegation of the European Union to Moldova says the EU does not impose any restrictions on Moldova’s free trade agreements with other countries, and this will not change when the DCFTA is in force. On the contrary, free trade agreements, with a country such as Turkey boost trade, as companies can integrate production processes and import components more cheaply. DCFTA will be a further, very significant boost to Moldova’s growth, not a threat to it or to relations with other countries. With the DCFTA, Moldova can trade with Russia, Turkey, and other current or future FTA partners just as it does today. The DCFTA applies only to the trade relations between the EU and Moldova.
Alina Marin, IPN
