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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After the signing of the Association Agreement with the European Union, which allows for free trade between Moldova and the EU member states, the Moldovans will enjoy free trade with Turkey too as this country has the status of accession candidate. Executive director of the Independent Analytical Center “Expert-Grup” Adrian Lupusor said that it was initially planned to sign a free trade agreement with Turkey by the Vilnius Eastern Partnership Summit, where Moldova is to initial the Association Agreement with the EU. But afterward, it was decided to negotiate in parallel with Turkey and the EU.
Turkey is one of the important commercial partners of Moldova. It is evident that the liberalization of trade with this country will coincide with the natural tendencies to come economically closer to Turkey. A free trade agreement means annulment of all the tariff barriers and import customs duties put by both of the states.
Adrian Lupusor said that Turkey can be an important export market for Moldova, especially for the agrifood products that are now exported in limited quantities because this country imposes very high customs duties on them. This way Turkey protects its market. Based on the negotiated agreements, Turkey will annul the customs duties immediately, while Moldova within a transition period of 10 years so as to protect the national producers.
The expert said this relationship with Turkey will essentially boost the Turkish investments, especially in food processing, which is one of the important areas. Turkey will be able to make use of the advantages enjoyed by Moldova in the agrifood sector, including the favorable climate, the fertile soil and the relatively cheap labor force. In parallel with the opportunities of exporting to the Turkish market, many Turkish companies will be interested in opening production lines in Moldova so as to export then the products to Turkey. There are companies that can work in an active processing regime. It is now evident that a large part of the Turkish investments are made in this field. Raw material is imported into Moldova, where it is processed and the finished products are exported to Turkey.
As to the possible risks to which the home market may be exposed after the institution of free trade with Turkey, Adrian Lupusor believes that risks may appear especially for the agrifood products. Many local companies will not be able to keep up with the Turkish products that are cheaper and thus can experience financial problems. The Turkish agricultural products already occupied an important place on the local market, especially the tomatoes. After the trade is liberalized, they will become cheaper. This may lead to the bankruptcy of some of the local producers that are less competitive. But the ordinary people must understand that it is a natural for the less competitive producers to give up or to learn to produce better and cheaper products, as in the developed countries. It is the quality of the products that counts rather than their nationality.
The liberalization of trade with Turkey will lead to declines in the prices of Turkish products. Now 90% of the tomatoes brought into Moldova are Turkish. The local producers already feel certain pressure and cope with the competition with difficulty. After the trade between the two countries is liberalized, the tomatoes prices will fall by another 10%. Turkey already started to apply the quality standards of the EU so that the Moldovans can be sure about the quality of the products imported from this country and can learn to work in a similar way, where necessary, said the executive director of “Expert-Grup”.
Mariana Galben, IPN
