The economic impact after 4 years of implementation of the Association Agreement RM-UE

The economic impact after 4 years of implementation of the Association Agreement RM-UE
Sursa foto: DCFTA.MD

On 1 September 2014, the Association Agreement between the Republic of Moldova and the European Union entered into force, on a provisional basis, inclusively the Deep and Comprehensive Free Trade Area (DCFTA) between both parties has been established.

Even before the signing of the Association Agreement and the direct creation of the DCFTA, there existed many expectations, some being optimistic and other pessimistic. Optimistic expectations consisted merely from the boosting of the trade between Moldova and the EU, which would resulted in the increase of investments, jobs, wages and, finally, an economic growth of about 6,4% . Certain negative effects of the trade liberalization would affected some of the less competitive branches of the agro-industrial sector but would be compensated by the benefits of other industries, the migration of production factors from uncompetitive sectors to competitive ones, together with the rather generous transition periods, up to 10 years, in order to allow domestic producers to adapt themselves.

After 4 years of DCFTA implementation, it is appropriate to estimate its preliminary impact on Moldova's economy. It has been short but sufficient time to understand the preliminary impact of the DCFTA and to test what expectations have been achieved and what expectations have been proved to be erroneous. This would allow the Government to understand rigorously how beneficial the DCFTA is and if some adjustments are needed to prevent potential risks for Moldovan economy in order to make more use of its opportunities. Finally, these estimates would serve as an important source of information for the media, development partners, EU officials and the general public regarding the importance of DCFTA for the Moldovan economy.

Therefore, the purpose of this study is to estimate the preliminary impact of DCFTA on bilateral trade between Moldova and the EU, as well as on Moldovan economy, in general.

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