Deep and Comprehensive Free Trade Area EURepublic of

Deep and Comprehensive Free Trade Area EU-Republic of Moldova Impact on agriculture and other industries, and services sectors

DCFTA in a nutshell (1/2) • First-generation comprehensive agreement • Free trade for goods with the market of 500 million consumers • Better than the Autonomous Trade Preference • Opens the markets to establishment of new companies/branches • Opens up the services and procurement markets • Provides a roadmap for reforms • Stable relationship with a predictable partner

DCFTA in a nutshell (2/2) • Expected economic impact on Moldova is positive: • +8% growth of Moldovan imports from the EU • +16% growth of Moldovan exports to the EU • Boost to GDP by +5. 4% • Exports to the EU: already 53% of total Moldovan exports to the world • But reforms are key to competitiveness

Impact on agricultural sector • Vast trade potential • Export already almost duty-free under ATP • Some entry prices + quotas remain Quid 1: compliance with EU sanitary and phytosanitary norms Quid 2: further reductions of duties Quid 3: cost of reform (1/4)

Impact on agricultural sector (2/4) Quid 1: compliance with EU sanitary and phytosanitary norms • Any country that wants to export to the EU has to comply • Not all Moldovan products admitted – compliance key • Market proximity and close ties with EU market • DCFTA is roadmap to reform to export more (meat and dairy products, fish)

Impact on agricultural sector (3/4) Quid 2: further reductions of duties • DCFTA better than ATP: duty-free access to the EU market • Monitored import of selected agricultural products • Better access for fruits and vegetables (duty-free quota) • Gradual elimination of duties by Moldova (ie wine, meat, dairy) • So no flooding of Moldovan market with EU products

Impact on agricultural sector (4/4) Quid 3: cost of reforms • € 41 million in 2011 -13 to support DCFTA-reforms in general • Specific sector budget support ongoing since 2010 - € 42 million direct budget support • Agriculture to be a key focus for 2014 -20 • Investment, not a cost – in the long-term interest of Moldova • Business saves the cost of import duties

Impact on industries (1/3) • Under ATP already duty-free import to the EU • Under DCFTA –Moldova reduces its duties too • EU aware of development of Moldovan industry – gradual liberalisation in sensitive sectors • So no flooding of Moldovan market with EU products Quid 1: competitiveness Quid 2: diverging standards, procedures, transparency

Impact on industries (2/3) Quid 1: competitiveness • More quality inputs at a lower cost from the EU = reduced production costs • Cheaper diffusion of technology • End objective: lower cost of production, more technology, more trade with abroad • Technical assistance ongoing: DCFTA-specific and sector -specific

Impact on industries (3/3) Quid 2: diverging standards, procedures, transparency • Moldovan technical regulations differ from the EU ones – modernisation needed and ongoing • DCFTA is a roadmap for reform (selected sectors) • End-objective: the same technical requirements as in the EU more trade at lesser cost, more technology • Swifter approval of conformity, transparent rules, EUlike approach

Impact on services sectors • • • (1/3) No open services market now DCFTA offers a wide-ranging opening – almost all sectors Modes 1 and 2 - cross-border services Mode 4 - presence of natural persons for business purposes Mode 3 – establishment – but opening goes beyond services, any company in any sector can set up in the EU or Moldova (except defence) • Roadmap for reform: electronic commerce, postal and courier, transport, financial services

Impact on services sectors (2/3) Quid 1: why read the annexes on services? • They will tell you what service you can provide in which EU country • Some EU Member States apply exceptions, or conditions, ie licence or registration • Example: If you want to set up a company in Germany, check the sectoral requirements, and whether you can bring qualified personnel from Moldova and under which conditions

Impact on services sectors (2/3) Quid 2: What benefit of reform? • Moldova's industry needs modern rules and infrastructure • Alignment with EU law will bring modernisation and unify rules in place to facilitate business • Open services markets will bring technology, ie in IT, ecommerce • Once alignment completed, more market access can be granted

Some statisctics • • Share exports to EU 52% (45% in 2013) Share exports to CIS 33% (40% in 2013) Share exports to Russia around 23% Share agrifood products in exports 44% (37% in 2013)

Conclusion DCFTA means: • • more trade better and cheaper products, quality services competitiveness through reform more transparency, predictable rules for business, better investment climate and competition framework boost to international position and more FDI financial support = Unique opportunity to boost trade and modernise the Moldovan economy

Thank you for your attention