Moldova, a landlocked country, is one of the poorest in Europe, with a per capita GDP of USD 4,551. (2020). The economy grew at an annual rate of 4.6 percent during the preceding two decades, but the COVID-19 epidemic and one of the worst droughts in Moldova’s history caused a 7% decline in 2020. The agricultural and food industries dominate the economy, with remittances accounting for 10% of yearly GDP. Foreign trade has expanded significantly since independence.
The former Soviet Republic of Moldova is a WTO member since 2001. Moldova joined CEFTA in December 2006. (CEFTA). It was signed in June 2014 by Moldova and the EU (AA). The AA has a ten-year plan to create a Deep and Comprehensive Free Trade Area (DCFTA). The DCFTA reduces import taxes and promotes regulatory convergence between Moldova and the EU. In 2014, Moldova and Turkey agreed on an FTA.
EU and Moldova
The European Union and the Republic of Moldova signed an Association Agreement in June 2014, which has been in full force since July 2016.
Moldova has benefited from a (DCFTA) with the EU from the Agreement’s preliminary application in September 2014.
Moldova has benefited from decreased or eliminated tariffs on its goods, a larger services market, and better investment conditions as a result of its preferential trade regime.
The DCFTA, which is part of the Association Agreement, establishes a free trade zone between the EU and Moldova.
The DCFTA allows for the following:
- The elimination of import tariffs on the majority of goods exchanged between the EU and Moldova.
- Allows both partners to have extensive mutual access to service trade.
- Non-discriminatory establishment of a subsidiary or branch office is possible for both EU and Moldovan enterprises.
Aligning Moldovan trade-related laws to selected EU legislative acts is an important part of the DCFTA. Moldova’s adoption of EU policy-making approaches aims to improve governance, strengthen the rule of law, and expand economic prospects by opening up the EU market to Moldovan goods and services.
Moldova – Turkey
The Republic of Turkey and the Republic of Moldova signed a Free Trade Agreement (FTA) on September 11, 2014, in Chisinau, which went into effect on November 1, 2016.
The FTA controls a variety of topics, including sanitary and phytosanitary measures, intellectual property, rules of origin, internal taxes, anti-dumping and countervailing measures, safeguards, and balance of payments measures, in addition to abolishing tariffs and non-tariff barriers.
Turkey reduced customs for industrial items when the FTA went into effect, under the FTA. Similarly, Moldova abolished customs tariffs upon entering into effect, except for the items mentioned in Annex II, which were permitted to be phased out until November 2020.
In the case of agricultural products, the parties exchanged reciprocal concessions in the form of tariff quotas or on an unlimited basis subject to MFN duty reduction or exemption for specified categories. Annex III of the Agreement contains reciprocal concession lists for agricultural items.
US – Moldova
Moldova will benefit from US government aid to build democratic institutions, increase prosperity, secure internationally recognized boundaries, and integrate with Europe and the Euro-Atlantic community. Moldova has received nearly $1.4 billion in aid from the United States since 1992. Moldova’s Millennium Challenge Corporation agreement for economic growth and investment projects in irrigation infrastructure, high-value agricultural production, and road restoration, worth $262 million over five years, expired in 2015.
Moldova benefits from liberalized trade and investment as a small market and aims to increase exports of its goods and services. In 1992, the United States and Moldova signed a trade agreement granting bilateral most-favored-nation tariff treatment. An agreement with the Overseas Private Investment Corporation (OPIC) was struck the same year, boosting US private investment in Moldova through direct loans and loan guarantees. In 1993, a bilateral investment deal was concluded. Moldova was awarded a universal system of preferences status by the United States in 1995, and Eximbank coverage became available that same year.
