{"id":444029,"date":"2017-06-27T11:54:42","date_gmt":"2017-06-27T11:54:42","guid":{"rendered":"http:\/\/www.moldova.org\/en\/?p=444029"},"modified":"2017-06-28T12:10:35","modified_gmt":"2017-06-28T12:10:35","slug":"three-years-since-signing-association-agreement-moldova-eu-one-step-back-two-steps-forward","status":"publish","type":"post","link":"https:\/\/www.moldova.org\/en\/three-years-since-signing-association-agreement-moldova-eu-one-step-back-two-steps-forward\/","title":{"rendered":"Three years since the signing of the Association Agreement Moldova-EU: One step back, two steps forward"},"content":{"rendered":"Reading Time: <\/span> 6<\/span> minutes<\/span><\/span>

Three years ago, in Brussels, the Republic of Moldova signed the Association Agreement with the European Union – an agreement that set a new legal framework for the advancement of the relations between Moldova and the Union. Enthusiastic, Moldova became at that time the “success story” of the Eastern Partnership.<\/p>\n

The situation radically changed in 2015, when the frauds in the banking sectors and the succession of the governments made the EU to suspend the direct budget assistance to Moldova. After the Filip Government was put into work in January 2016, some actions in addressing lacks in reform implementation are undertaken. But where were the real benefits of the Association Agreement (AA) and where Moldova is lagging behind?<\/p>\n

Experts see the Association Agreement as a complex document with provisions in economic and political sectors, being the main instrument through which the European Union tries to get the Eastern Partnership states closer to its standards.<\/p>\n

\"\"Dionis Cenu\u0219\u0103, program director at Chi\u0219in\u0103u-based “Expert-Grup” think-tank, thinks that some sectors were reformed for the first time since independence with the help of the AA. “The industry is a good example- I mean the norms, the technical requirements, food safety and the consumer protection”, explains Cenu\u0219\u0103.<\/p>\n

The Association Agreement signed by Moldova was a preferential one because it involves a Deep and Comprehensive Free Trade Area (DCFTA). Moldova has now access to a market of 12,9 trillion euros with more than 500 million consumers. In the meantime, it is obliged to harmonize its legislation and standards with the European ones, as well as eliminating the import and export taxes with the EU. Thus, Moldova could and can export some quotas of food products without having them taxed when entering the Union. If the quotas are overused, some preferential taxes or renegotiated quotas apply.<\/p>\n

\"\"According to the Moldovan Economy Ministry, between 2014 and 2016, the Republic of Moldova used or overused the quotas for corn, wheat, sugar and alcohol, but failed in making use of the quotas for grapes, apples and plums.<\/p>\n

Since 2014, the European Union became the main trading partner of Moldova. More than 63% of Moldovan exports are now directed to the EU and half of them come from the EU. And there’s a positive trend in this. In January-April 2017, Moldova exported goods worth 430 million euros to the EU, 16% more than in the same period of 2016. “The diversification of exports and the consolidation of the European path in the external trade of Moldova is the main success”, says Cenu\u0219\u0103. “The European market is stable, predictable respectively, comparing to the Russian one, which is dependent on the decisions from Kremlin”, continues the expert.<\/p>\n

\"\"Mariana Rufa, executive director of the European Business Association, believes that the state could have stimulated more the exports. “Exporting means producing and producing implies investment. You cannot count only on the annulment of the custom taxes, which is a result of the process. To benefit from these, the economic agent should have something to export and the products should be of European quality. All of these imply investment”, <\/em>explains Rufa.<\/p>\n

\"\"To be more competitive, the economic agents must invest in equipment, producing machinery and in “know-how”- technologies and technological processes. According to EBA director, the initial investment is an impediment for some potential entrepreneurs. “The access to financing is limited, the interest rates are high. From the point of view of the banking environment, Moldova is not a credible country. It cannot connect to those international programs that exist in the worldwide banking sector that would allow a bank from Moldova to get a low interest rate loan. To fully benefit from the accord, the state should invest more in the legal framework of the banking sector and in subsidies, that would allow the economic agent to offer a competitive price.<\/p>\n

The same opinion is shared by Alexandru Slusari, former head of the Farmers Association UniAgroProtect, organization that reunites approx. 1600 agricultural producers. “Instead of being busy with the frauds and devaluation of the banking sector, the state could have increased the subsidies for the local farmers, the situation would be better”, declares Slusari. Nevertheless, he confirms that several economic agents were capable of exporting to the European market. Slusari gave the example of the juice and jam producer Orhei-Vit that increased its sales by at least 20% after the signing of the Association Agreement.<\/p>\n

The change of the electoral system puts real reforms in shadow<\/strong><\/h2>\n

According to the Government of Moldova, approximately 73% of the AA Implementation Action Plan for 2014-2016 were fulfilled. At the same time, an alternative report of the Institute for European Policy and Reforms found that the implementation rate of the Plan is actually lower- 63%.<\/p>\n

Most of the actions undertaken in 2014-2016 were of legislative nature. At the same time, a series of important reforms were implemented with delay or in a deficient manner. For example, the reform of the procedure of appointing the judges has not been finalized and the integrity package is delayed.<\/p>\n

Denis Cenu\u0219\u0103 thinks that the political topics dominate the agenda. “The change of the electoral system eclipses over a series of important reforms that have to take place, but are not undertaken because of the interest of the government to promote a specific project”, adds Cenu\u0219\u0103. All of these despite the fact that the Association Agreement does not include the change of the electoral system and the Venice Commission considers the modification is unnecessary.<\/p>\n

\"\"In her turn, Mariana Rufa says that the low skilled personnel of the Ministries also make an impediment for the reform implementation. “We hope that the reform of the Government will not be only a fusion of the institutions, but it will underline the competences of the human resources and the attractive salaries”, thinks the EBA director.<\/p>\n

A third of a billion for Moldova<\/strong><\/h2>\n

During 2014-2016, the European Union launched development projects worth 310 million euros. The main domains of European investment were the public administration, agriculture and the development of rural areas. “If one goes into details, one can see palpable projects. For example, the EU supported important project for energy efficiency”, stresses Cenu\u0219\u0103.<\/p>\n

With the help of the European funds, 225 public institutions (kindergartens, schools, city councils) benefit from biomass heating system and 15000 people have access to drinking water. According to EU estimations, the European projects created more than 20000 jobs in Moldova.<\/p>\n

It is important to mention that the Gagauzia Autonomy and Transnistria have also been involved in the European policy-making and indirectly, in the Association Agreement. Starting from 2016, all producers, including the Transnistrian ones, benefit from preferential trade with the EU. “To make the regulations seem acceptable, the Transnistrian administration called them “technical aspects for opening the European market for Transnistrian producers”. It is useful for the region’s propaganda and acceptable for Russia”, explains Cenu\u0219\u0103. While the AA provides only trade provisions for Transnistria, in the case of Gagauzia, the European Union opened up special loans so that producers from there are encouraged to increase their producing capacities and export to the European market.<\/p>\n

The successes and the failures mentioned above are just some of the changes in Moldova in the last three years. The potential of the Association Agreement is also hard to challenge. Nevertheless, President Igor Dodon repeatedly said that the Association Agreement did not bring benefits to the Republic of Moldova, but mean losing the Russian market.<\/p>\n

“President Dodon is lying when he makes such statements, because losing the Russian market and having the restrictions imposed by Russia were not determined by the European Union, but were adopted from political and geopolitical considerations of the Russian Federations”, argues Expert-Grup representative.<\/p>\n