Explanatory Memorandum to COM(2023)245 - Temporary trade-liberalisation measures supplementing trade concessions applicable to Moldovan products under the EU/Moldova Association Agreement - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2023)245 - Temporary trade-liberalisation measures supplementing trade concessions applicable to Moldovan products under the EU/Moldova ... |
|---|---|
| source | COM(2023)245 |
| date | 02-05-2023 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
Russia’s unprovoked and unjustified military aggression against Ukraine under way since 24 February 2022 continues to have a profound negative impact on the Republic of Moldova’s (‘Moldova’) ability to trade with the rest of the world. This is notably because Moldova’s exports relied on transit through Ukrainian territory and on Ukrainian infrastructure, which are still largely unavailable. In this difficult situation, Moldova has asked the EU to put in place the conditions to enable the country to redirect to the EU some of its trade with the rest of the world. This would further deepen its trade relations with the EU and support its economy. Possible measures include increasing the degree of market liberalisation through Regulation (EU) 2022/1279 of the European Parliament and of the Council of 18 July 2022 on temporary trade-liberalisation measures supplementing trade concessions applicable to products from Moldova under the Association Agreement between the EU and the Republic of Moldova (‘the Association Agreement’)1 establishing a deep and comprehensive free trade area (DCFTA). This Regulation entered into force on 23 July 2022 and will remain in force until 24 July 2023. These measures provide flexibility and certainty for Moldovan producers.
Given Russia’s continued military aggression against Ukraine and the ongoing impact on Moldova, and considering that Moldova was granted EU candidate status in June 2022, the Commission is proposing a Regulation of the European Parliament and of the Council that will renew these trade-liberalisation measures for a period of 1 year as of the date the current measures expire (i.e. as of 25 July 2023). The measures should take the form of a temporary suspension of all outstanding tariffs under Title V of the Association Agreement. This concerns fruits and vegetables subject to the entry-price system and to tariff-rate quotas.
Under Annex XV-A of the Association Agreement, seven agricultural products from Moldova are subject to tariff-rate quotas. These are: tomatoes, garlic, table grapes, apples, cherries, plums and grape juice. For all these products, it is appropriate to suspend all tariffs and the entry-price system to temporarily support the redirection of the export of these products to the EU.
These temporary and exceptional measures will ensure that the existing trade flows from Moldova to the EU can continue, which will support Moldova’s economy. This is in line with a key objective of the Association Agreement, namely to establish conditions for enhanced economic and trade relations leading towards Moldova’s gradual integration in the EU internal market, and contribute to the strengthening of democracy and to political, economic and institutional stability in Moldova.
The trade-liberalisation measures set out in this proposal for a Regulation are in line with Article 2 of the Association Agreement which commits to respecting democratic principles, human rights and fundamental freedoms as well as to countering the proliferation of weapons of mass destruction, related materials and their means of delivery. In addition, under the same Article, the Parties commit in particular to respecting the rule of law and good governance, the fight against corruption, criminal activities, organised or otherwise, including those of transnational character, and terrorism, as well as the principles of sustainable development and effective multilateralism. The trade-liberalisation measures themselves would need, as a prerequisite, to respect these essential elements and general principles.
Furthermore, the trade-liberalisation measures outlined in this proposal aim to ensure, in accordance with Article 207(1) of the Treaty on the Functioning of the European Union (TFEU), that the EU’s common commercial policy is conducted in line with the principles and objectives of the EU’s external action set out in Article 21 of the Treaty on European Union (TEU).
Expedited safeguard procedures will apply on the basis of regular monitoring allowing for the potential reintroduction of customs duties.
• Consistency with existing policy provisions in the policy area
These trade-liberalisation measures are consistent with the Agreement and in particular with Title V establishing a DCFTA, which provides that Parties will progressively establish a free trade area over a transitional period of a maximum of 10 years starting from the entry into force of that Agreement (Article 143 of the Agreement).
In addition, Regulation (EU) 2022/1279 has demonstrated the EU’s strong commitment to economically support Moldova by means of international trade in the context of Russian agression against Ukraine. The renewal of the trade-liberalisation measures would be a logical development of this policy.
Also, Moldova requested in 2022 to activate the review under Article 147 of the Agreement in order to consider accelerating and broadening the scope of the elimination of customs duties between Moldova and the EU. Discussions to this end are currently under way.
• Consistency with other Union policies
The EU has strongly condemned the Russian aggression against Ukraine and has taken significant steps to support Moldova in this exceptional situation, including providing additional humanitarian and border support, macro-financial assistance and measures to facilitate trade during this challenging time. In addition, Moldova was granted EU candidate status in June 2022. The proposed Regulation would therefore comply with the EU’s obligation under Article 21(3) TEU to ensure consistency between the different areas of its external action, as well as with Article 207(1) TFEU which provides that the common commercial policy is to be conducted in line with the principles and objectives of the EU’s external actions.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The legal basis for the proposal is Article 207(2) TFEU.
• Subsidiarity (for non-exclusive competence)
The common commercial policy, in accordance with Article 3(1)(e) TFEU, is defined as an exclusive EU competence. Therefore, the subsidiarity principle does not apply.
• Proportionality
This proposal is necessary to implement the common commercial policy and to support Moldova economically in its current difficulties, also in the area of trade with the EU.
• Choice of the instrument
This proposal is based on Article 207(2) TFEU and falls within the EU’s common commercial policy.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
Not applicable.
• Stakeholder consultations
Not applicable.
• Collection and use of expertise
Not applicable.
• Impact assessment
To ensure that the trade-liberalisation measures for Moldova continue after the expiry of Regulation (EU) 2022/1279 on 24 July 2023, it is important that the Regulation enters into force on 25 July 2023. Given this necessity and the resulting urgency of this proposal, no impact assessment was carried out for the measure at hand. However, the trade and trade-related provisions of the Association Agreement have been subject to a sustainability impact assessment commissioned by DG Trade and issued in 2012 which fed into the DCFTA negotiation process. That study confirmed that implementation of trade and trade-related provisions would have a positive economic impact for the EU as well as for Moldova.
In addition, import flows under the Regulation (EU) 2022/1279 are regularly being monitored and reported.
• Regulatory fitness and simplification
The measure does not increase regulatory burden for companies.
• Fundamental rights
These measures would respect the basic principles enshrined in the Association Agreement. In particular, respect for democratic principles, human rights and fundamental freedoms (Article 2 of the Association Agreement).
The measures would also be in accordance with the European Charter on Fundamental Rights.
4. BUDGETARY IMPLICATIONS
According to an estimate based on Moldova’s imports of the products concerned in 2021, which was the last year before autonomous trade measures were introduced, the EU will see a loss of customs revenue corresponding to around EUR 0.3 million per year. Therefore, the impact on the EU’s own resources will be very limited.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
Online reporting on the evolution of bilateral EU-Moldova trade is available on dedicated web pages of the European Commission (europa.com).
• Explanatory documents (for directives)
Not applicable.
• Detailed explanation of the specific provisions of the proposal
In view of the crisis situation in Moldova as a result of the Russian invasion of Ukraine, the Regulation aims to increase the trade flows for all imports from Moldova by suspending all outstanding tariffs and import duties applied to Moldovan products. The trade-liberalising measures would be granted in the form of full suspension of import duties on all products.