Transnistria’s exports to EU will fall by 25% without DCFTA, study

05.12.2014 14:12
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2 minute(s)

Transnistria’s exports to the European Union will decrease by over 25% if Tiraspol further refuses to implement the provisions of the Deep and Comprehensive Free Trade Agreement (DCFTA) between Moldova and the EU. The region’s total exports will decline by over 7% and this will lead to a series of economic problems in the region, Adrian Lupusor, executive director of the think tank “Expert-Grup”, said when presenting the study “Economic implications of the Association Agreement with the EU for the Transnistrian region: solutions for overcoming challenges”, IPN reports.

Adrian Lupusor said that now the companies from the Transnistrian region benefit from trade in preferential conditions with the EU. Therefore, 60% of the region’s exports are aimed at the EU market. When these conditions are liquidated, the region’s economy will be directly affected if Tiraspol rejects the DCFTA between Moldova and the EU.

According to the study, the elimination of the tariff and non-tariff barriers in the trade with the EU will lead to an increase of over 3% in exports. The rise will stimulate investments in the region, which are projected to grow by 2%. The Transnistrian economy is dependent on investments and their growth is beneficial.

However, the implementation of the DCFTA in Transnistria can lead to a 20% decrease in the local budget incomes because this budget consists mainly of import and export taxes. Also, Russia could withdraw its financial support for the region, while the local companies will experience a competition-related shock because they are not at all competitive on the EU market. The rejection of the DCFTA will lead to the region’s isolation

Nevertheless, the liberalization of trade brings a lot of benefits for the region’s economy. In the long run, the GDP will rise by 3.6%, stated Adrian Lupusor.

Attending the roundtable meeting, Vladimir Bilcik, the representative of the Foreign Policy Association of Slovakia, said it is very important to resolve the Transnistrian dispute and to implement the provisions of the DCFTA with the EU all over the country.

The study was made by the Independent Analytical Center “Expert-Grup” in concert with Berlin Economics, with financial support form the Ministry for Foreign Affairs of Germany.