What is DCFTA?
The Deep and Comprehensive Free Trade Area (DCFTA) is an arrangement between the Republic of Moldova and the EU that foresees a preferential trade relationship, based on mutually advantageous treatment, giving to each other better access to their markets than that offered to other trade partners. Free Trade Agreement (FTA) foresees a removal of import (and export, if applicable) duties on trade in goods between the parties. It provides for removal of obstacles to trade in services and better access for companies to establish in respective markets.
What does the DCFTA provide?
A. "Trade only" rules
1. Tariff duties
Complete elimination of all import duties and prohibition of export duties, on all goods on the EU side. Only some agricultural goods, which are considered sensitive in the EU, are subject to monitoring of trade flows. In addition, a limited number of fruits and vegetables, which are subject to entry prices in the EU, are liberalised within TRQs, covering traditional trade flows.
As regards the Republic of Moldova, all import duties for the vast majority of products were subject to immediate elimination. A staged liberalisation process is foreseen for certain sensitive products (mostly agricultural, such as wine, certain processed agricultural goods, certain meat products and vegetables/fruits, as well as textiles/clothing among industrial goods). Certain products remained non-liberalised, managed within tariff rate quotas (poultry and pork meat, certain dairy products, processed meat products or sugar and related). The TRQs cover however the traditional trade flows between R. Moldova and EU. Overall trade liberalisation in agricultural goods can be reviewed by the parties with view to accelerating it.
2. Rules of origin
The Republic of Moldova is applying the rules of origin of the Pan-Euro-Med (PEM) Convention, as a zone of cumulation of manufacturing processes with the EU and other PEM members, and which fosters positively regional economic integration for trade in goods.
3. Services and establishment
The Republic of Moldova and the EU provide to each other market access for cross-border services in a wide range of areas, beyond the commitments inscribed in WTO/GATS.
B. The "comprehensive" aspects
1. Competition policy
The rules are more closely based on relevant EU disciplines to ensure proper implementation of domestic competition laws and prevention of monopolistic practices or abuse of dominant position. The Republic of Moldova and the EU ensure cooperation on exchange of information and enforcement of competition rules. As regards assessment of subsidies/state aid, these rules are more closely based on the EU legislation.
2. Intellectual property
The parties reinforce their engagement to protect intellectual property beyond the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) provisions. These concern the extended protection of different intellectual property rights (i.e. trademarks, patents, design, plant variety) improved cooperation and stronger (civil) enforcement of IPs, including on the border. Equally, the Agreement on Geographical Indications is entirely integrated in the DCFTA.
3. Sustainable development and transparency
These two chapters foresee that economic development in the Republic of Moldova should take place in respect of environmental, social and labour legislation, in particular the relevant international agreements that the Republic of Moldova is party to, and involving the necessary transparency in policy-making. The latter disciplines relate to close involvement of civil society, relevant experts and stakeholders in policy-making, consultations and openness in designing and implementing DCFTA-related policies.
C. The "deep" component
1. Food safety/sanitary and phytosanitary measures
These disciplines provide for the trade conditions in plants and plant products, as well as animals and products of animal origin. They further provide for the procedure to establish the equivalence of the food safety regime of the Republic of Moldova with the EU regime, which should enable the Republic of Moldova to export to the EU animals and products of animal origin.
2. Technical regulations and standards for industrial goods
Provide for progressive and comprehensive alignment of Moldovan horizontal and sectoral legislation for industrial products with the EU laws. Once the Republic of Moldova is ready and the alignment of legislation completed, the parties shall add as a Protocol to this Agreement an Agreement on Conformity Assessment and Acceptance of industrial standards in selected industrial sectors. Such an agreement would recognise the Moldovan accreditation and market surveillance policies for industrial goods, which would lower the cost of trade in industrial products for businesses on both sides.
3. Public procurement
The Republic of Moldova and the EU aim for further and gradual modernisation of the Moldovan procurement system and alignment of the legislation with the EU one. Completion of the reform process, aiming to adapt Moldovan procurement practices to the EU ones, would result in better access to the EU market on the basis of national treatment, above certain value thresholds. Once the alignment of legislation is completed, the EU and the Republic of Moldova will look into the possibility of opening their respective markets to each other below the determined value thresholds.
The reform process covers the areas of postal and courier services, international maritime transport, electronic communications and financial services. As a result, the EU may deepen the access to its market in the services area within the bilateral services commitments.
5. Customs and trade facilitation
The Republic of Moldova undertakes disciplines related to management of customs policy, of customs fraud and administrative cooperation to this effect, in line with EU legislation.
Benefits for the Republic of Moldova
The DCFTA brings benefits to the businesses and Moldovan society as a whole in a variety of ways. First of all, the DCFTA is boosting trade between the Republic of Moldova and the EU. The prices are expected to be lowered for domestically available goods, resulting increased real purchasing power of consumers. Stronger domestic rules are improving the safety of consumer products and therefore of consumers in general. The DCFTA, by providing more stable and predictable trade regime, based on EU legislation, is boosting the inflow of EU FDI to the country, creating more enterprises and strengthening the competitiveness of the economy and individual sectors.