{"id":100700,"date":"2006-03-23T00:58:00","date_gmt":"2006-03-23T00:58:00","guid":{"rendered":"http:\/\/new.moldova.org\/2006\/03\/23\/russia-prepares-to-deliver-a-knockout-punch-to-the-moldovan-economy-11270-eng\/"},"modified":"2006-03-23T00:58:00","modified_gmt":"2006-03-23T00:58:00","slug":"russia-prepares-to-deliver-a-knockout-punch-to-the-moldovan-economy-11270-eng","status":"publish","type":"post","link":"https:\/\/www.moldova.org\/en\/russia-prepares-to-deliver-a-knockout-punch-to-the-moldovan-economy-11270-eng\/","title":{"rendered":"Russia prepares to deliver a knockout punch to the Moldovan economy"},"content":{"rendered":"Reading Time: <\/span> 5<\/span> minutes<\/span><\/span>

\nMarch 22, 2006 — 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.
\n<\/strong>
\nBy Vlad Spânu <\/p>\n

As a reaction to Moldova’s latest action to legalize the businesses in its breakaway Transnistrian region, the Russian Federation, the main supporter of that internationally unrecognized enclave, intends to impose severe restrictions on Russian imports of Moldovan wines. <\/p>\n

Starting March 3, Moldova and its eastern neighbor Ukraine imposed new customs regulations requiring that all Transnistrian goods bound for Ukraine are cleared by the Moldovan customs authorities. The move is strongly supported by the European Union, which in December 2005 launched a Moldova-Ukraine border monitoring mission to stop contraband there, as well as by the United States, OSCE, and Ukraine — all of them parties that mediate talks over the Transnistrian conflict between Moldova and Russia, as well as its 1990-created unrecognized statelet, the self styled Moldavian Transnistrian Republic<\/font><\/a>. <\/p>\n

If implemented, the restriction on importing wines to Russia from Moldova will hit extremely hard the already fragile Moldovan economy. Without the Russian market, the Moldovan wine industry, which contributes some 25 percent to the country’s GDP, could enter a crisis out of which it is likely that it will be very difficult to recover. According to data of the export promotion agency of Moldova some 80 percent of all Moldova-produced wine (excluding fortified wines) is exported to Russia. Moldovan wines’ popularity in Russia is due to the historical trade relations between Bessarabia that was incorporated by the Russian Empire from the Principality of Moldova (1812-1918) and between the former Soviet Moldova and the rest of the Soviet Union (1944-1991). Another major factor why Russians love the Moldovan wine is the low price — currently around an average $2.50 per bottle. Moldovan wines are especially popular among low-income consumers, which constitute the majority of the Russian population. <\/p>\n

\"\"Gennady Onishchenko, Russia’s chief epidemiologist, blamed Moldovan wines, as well as Georgian wines, for allegedly "posing health hazards" (Interfax, March 21), 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. <\/p>\n

The ban is a poorly dissimulated political tool that has nothing to do with alleged health concerns. It appears to be triggered by the Kremlin’s political ambitions to make these two countries, which expressed lately their political will to strengthen their ties with the West, obedient to Russia. As is the case of Moldova, Georgia also has a long-standing problem with Russia over two separatist enclaves — South Ossetia and Abkhazia – that entertain the ambition to become independent or join the Russian Federation. Russia maintains its troops in both Moldova and Georgia despite these two former Soviet republics’ numerous demands for Russian Federation troops to leave and despite international pressure on Russia to withdraw its weaponry and military personnel from these two countries. <\/p>\n

The announced ban will also be a hard to bear blow to Russian wine importers and to ordinary consumers. In 2005, Moldovan wines accounted for some 56 percent of all wines imports to Russia (an estimated amount of $250 million); Georgian wines currently account for about 9 percent of Russia’s wine imports. An important part of Moldova’s largest wineries are in the hands of Russian businesses, which thus will be among the first to suffer. <\/p>\n

In April 2005, the Russian government introduced a ban on imports of Moldovan meat, meat products, and plants. Moldova managed to overcome Russia’s non-tariff sanctions by redirecting these products to other markets, mainly to the Central European countries. As disclosed in later statements, the 2005 ban had also political motivations, Russia resorting to trade restrictions as a tool in its foreign policy to punish its immediate neighbors that were once part of the former Soviet Union. <\/p>\n

There are two immediate countermeasures against Russian abusive actions in case it decides to go ahead with the ban implementation. <\/p>\n

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. <\/p>\n

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. Currently, the former Soviet Union market clearly dominates Moldovan exports of wine: Russia with 82 percent, Ukraine (7percent), Kazakhstan (3.8 percent), Latvia (1.6 percent), Estonia (0.8 percent). They are followed by Romania with 0.8 percent, United States with 0.5 percent, and the rest of 3.5 percent of wine exports are supplied to Germany, Norway, Poland and a few other countries. <\/p>\n

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 neighbors to the West. <\/p>\n

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-honored wine industry. <\/p>\n

—
\nVlad Spânu<\/a> is the president of the Moldova Foundation, a non-government organization in the United States.<\/p>\n\n","protected":false},"excerpt":{"rendered":"

Reading Time: <\/span> 5<\/span> minutes<\/span><\/span>An eventual ban against imports of Moldovan and Georgian wines that Russia plans to implement is politically motivated and it contradicts rules of the WTO, a member of which the Russian Federation des<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-100700","post","type-post","status-publish","format-standard","hentry","category-politics"],"content_social_share":"Reading Time: <\/span> 5<\/span> minutes<\/span><\/span>

\nMarch 22, 2006 — 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.
\n<\/strong>
\nBy Vlad Spânu <\/p>\n

As a reaction to Moldova’s latest action to legalize the businesses in its breakaway Transnistrian region, the Russian Federation, the main supporter of that internationally unrecognized enclave, intends to impose severe restrictions on Russian imports of Moldovan wines. <\/p>\n

Starting March 3, Moldova and its eastern neighbor Ukraine imposed new customs regulations requiring that all Transnistrian goods bound for Ukraine are cleared by the Moldovan customs authorities. The move is strongly supported by the European Union, which in December 2005 launched a Moldova-Ukraine border monitoring mission to stop contraband there, as well as by the United States, OSCE, and Ukraine — all of them parties that mediate talks over the Transnistrian conflict between Moldova and Russia, as well as its 1990-created unrecognized statelet, the self styled Moldavian Transnistrian Republic<\/font><\/a>. <\/p>\n

If implemented, the restriction on importing wines to Russia from Moldova will hit extremely hard the already fragile Moldovan economy. Without the Russian market, the Moldovan wine industry, which contributes some 25 percent to the country’s GDP, could enter a crisis out of which it is likely that it will be very difficult to recover. According to data of the export promotion agency of Moldova some 80 percent of all Moldova-produced wine (excluding fortified wines) is exported to Russia. Moldovan wines’ popularity in Russia is due to the historical trade relations between Bessarabia that was incorporated by the Russian Empire from the Principality of Moldova (1812-1918) and between the former Soviet Moldova and the rest of the Soviet Union (1944-1991). Another major factor why Russians love the Moldovan wine is the low price — currently around an average $2.50 per bottle. Moldovan wines are especially popular among low-income consumers, which constitute the majority of the Russian population. <\/p>\n

\"\"Gennady Onishchenko, Russia’s chief epidemiologist, blamed Moldovan wines, as well as Georgian wines, for allegedly "posing health hazards" (Interfax, March 21), 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. <\/p>\n

The ban is a poorly dissimulated political tool that has nothing to do with alleged health concerns. It appears to be triggered by the Kremlin’s political ambitions to make these two countries, which expressed lately their political will to strengthen their ties with the West, obedient to Russia. As is the case of Moldova, Georgia also has a long-standing problem with Russia over two separatist enclaves — South Ossetia and Abkhazia – that entertain the ambition to become independent or join the Russian Federation. Russia maintains its troops in both Moldova and Georgia despite these two former Soviet republics’ numerous demands for Russian Federation troops to leave and despite international pressure on Russia to withdraw its weaponry and military personnel from these two countries. <\/p>\n

The announced ban will also be a hard to bear blow to Russian wine importers and to ordinary consumers. In 2005, Moldovan wines accounted for some 56 percent of all wines imports to Russia (an estimated amount of $250 million); Georgian wines currently account for about 9 percent of Russia’s wine imports. An important part of Moldova’s largest wineries are in the hands of Russian businesses, which thus will be among the first to suffer. <\/p>\n

In April 2005, the Russian government introduced a ban on imports of Moldovan meat, meat products, and plants. Moldova managed to overcome Russia’s non-tariff sanctions by redirecting these products to other markets, mainly to the Central European countries. As disclosed in later statements, the 2005 ban had also political motivations, Russia resorting to trade restrictions as a tool in its foreign policy to punish its immediate neighbors that were once part of the former Soviet Union. <\/p>\n

There are two immediate countermeasures against Russian abusive actions in case it decides to go ahead with the ban implementation. <\/p>\n

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. <\/p>\n

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. Currently, the former Soviet Union market clearly dominates Moldovan exports of wine: Russia with 82 percent, Ukraine (7percent), Kazakhstan (3.8 percent), Latvia (1.6 percent), Estonia (0.8 percent). They are followed by Romania with 0.8 percent, United States with 0.5 percent, and the rest of 3.5 percent of wine exports are supplied to Germany, Norway, Poland and a few other countries. <\/p>\n

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 neighbors to the West. <\/p>\n

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-honored wine industry. <\/p>\n

—
\nVlad Spânu<\/a> is the president of the Moldova Foundation, a non-government organization in the United States.<\/p>\n\n

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