Analyst says Moldova may reply to Russia’s possible sanctions

An eventual ban against imports of Moldovan and Georgian wines that Russia plans to implement is politically motivated and it contradicts the rules of WTO, a member of which the Russian Federation desires to become, analyst Vlad Spanu says in a commentary published on the website of the Moldova Foundation, a non-government organization in the United States. Moscow decision to punish the two countries for disobeying will be a severe blow especially on Moldova, as some 80 percent of all Moldova-produced wine (excluding fortified wines) is exported to Russia If implemented, the restriction on importing wines to Russia from Moldova will hit extremely hard the already fragile Moldovan economy, but there are countermeasures against Russian abusive actions in case it decides to go ahead with the ban implementation. First, Russia is seeking to become a member of the World Trade Organization (WTO). Those international officials within WTO responsible for Russia's accession ought to take a careful look at Russia's restrictive measures against WTO members, such as Moldova, and give a strong signal to Moscow that its actions will be not tolerated by the organization or its members. Russia’s main trade partners – the European Union, China, Turkey, and Japan – should also take a stand against using of non-tariff restrictive measures by Russia as a political pressure applied to a WTO member, Spanu noted. Second, Moldovan wine exporters should see Russia’s ban as another “wake-up call”. For over a decade Moldovans are keeping getting messages that they need to diversify their wine export market, instead of relying too heavily on just one market, in this case Russia. With only 10 percent of industrially-produced wine consumed domestically, Moldova needs to craft a state strategy to redirect its own wine exports and engage in a both state and private concerted effort to promote Moldovan wines abroad, following positive examples of other wine exporters such as Chile, Argentina, Australia, and South Africa. One of the main causes of Moldova’s wine producers’ reluctance to engage in an aggressive promotion on Western markets is that the privatization of the country’s wine industry has been late in coming and typically lagging behind. Hence the lack of interest of Moldova state companies’ managers to build long-term strategies for wine exports. The situation is gradually changing and more and more private firms are giving some serious thought to how to best approach the European Union market, the United States, as well as Moldova’s immediate neighbours to the West. Spanu considers that the United States market should be particularly interesting to Moldovan wine exporters. Non-restrictive policies for wine imports, fairly transparent process for approval, relatively competitive prices, and, of course, the significant size of the American market, are among the strongest arguments why Moldovans should take a closer look at the United States as an alternative market for the products of their time-honoured wine industry. Gennady Onishchenko, Russia's chief epidemiologist, blamed Moldovan wines, as well as Georgian wines, for allegedly "posing health hazards", indicating that the Russian Federation will take "the strictest measures very shortly." Onishchenko specifically mentioned "pesticides, heavy metals and other hazardous substances" that Moldovan and Georgian wines allegedly would contain. Such a sudden accusation has little to do with reality. For more than a decade now, Moldovan and Georgian vintagers have been unable to afford the luxury of investing in pesticides. It is thus factually impossible that Moldovan wines could contain any toxins that could exceed the currently accepted standards. Under a decision of the Russian Duma, Russia will not accept the wine exports with old excise stamps starting April 1, while the procedure of issuing of new excise stamps lasts. Moldova exported wine production worth 313 million dollars in 2005, by 12 percent more than in 2004. The Moldovan wines hold about 80 percent of the Russian market, while half of wines consumed by Russian are made in Moldova. Moldova ranks the 11th place in the top of world wine exporters. Moldova exports about 150 million litres of wine a year and these supplies contribute 25 percent to GDP. Russian officials have warned that Moscow could take severe economic measures against Moldova after having recently criticized the new customs regime implemented at the Moldovan-Ukrainian border. Negotiations between Chisinau and Moscow regarding the price of Russian natural gas did not develop into a new agreement this week. The existing contract expires on March 31.