GRAIN AND OIL TERMINALS AT GIURGIULESTI INTERNATIONAL FREE PORT PHOTO BY KRISTEN HARTPENCE FOR USAID

PRELIMINARY TRADE CORRIDOR ASSESSMENT Moldova Structural Reform

DISCLAIMER This report is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The contents are the responsibility of Nathan Associates Inc. and its subcontractors and do not necessarily reflect the views of USAID or the United States Government.

TABLE OF CONTENTS

EXECUTIVE SUMMARY 1 1. INTRODUCTION TO TRADE CORRIDORS AND TRADE CORRIDOR ASSESSMENTS 1 INTRODUCTION TO TRADE CORRIDORS 1 ASSESSING TRADE CORRIDOR PERFORMANCE 0 PURPOSE OF THIS REPORT 2 2. CONTEXT OF MOLDOVA’S TRADE CORRIDORS 4 MOLDOVA’S TRADE COMPOSITION 4 OVERVIEW OF MOLDOVA’S TRADE CORRIDORS 8 MOLDOVA’S TRADE CORRIDOR INFRASTRUCTURE, SERVICES AND REGULATIONS 13 3. PRELIMINARY ASSESSMENT OF MOLDOVA’S TRADE CORRIDORS 29 OVERVIEW OF PERFORMANCE 29 KEY CHALLENGES AND POTENTIAL OPPORTUNITIES 33 4. FULL TCA METHODOLOGY 36 APPROACH 36 METHODOLOGY 39

FIGURES Figure 1. Typical Logistics Chain ...... 1 Figure 2. Map of Moldova’s Trade Corridors ...... 2 Figure 3. Moldova’s Import Values by Region, USD, 2010-2016 ...... 5 Figure 4. Structure of Moldova’s Imports, 2016 ...... 6 Figure 5. Moldova’s Export Values by region, USD, 2010-2016 ...... 7 Figure 6. Structure of Moldova’s Exports, 2016...... 8 Figure 7. TRACECA Routes Through Moldova ...... 10 Figure 8. Black Sea Ring Highway Map ...... 11 Figure 9. Map of European Agreement on main international traffic arteries (AGR) ...... 12 Figure 10. Moldova Railway Map ...... 13 Figure 11. GIFP Traffic, 2007-2016 ...... 16 Figure 12. GIFP Traffic Composition by Volume, 2016 ...... 17

TABLES Table 1.Moldova’s Top 5 Import Countries by Value, 2016 ...... 5 Table 2: Moldova’s Top 5 Export Countries by Value, 2016 ...... 7 Table 3. Preliminary Comparison of Selected Ports and Routes serving Moldova...... 18 Table 4. World Bank International LPI, Moldova ...... 29 Table 5. World Bank International LPI, Moldova and Regional Countries, 2016 ...... 30 Table 6. Domestic LPI, Moldova and Other Countries, 2016 ...... 32 Table 7. Representative List of Potential Products to Assess in Full TCA ...... 37 Table 8. Proposed Corridors to Assess in Full TCA ...... 38

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 2 ACRONYMS AEO Authorized Economic Operator AGR European agreement on main international traffic arteries BCP Border Crossing Point (Customs Post) CFM Calea Ferata din Moldova (Moldovan Railways) CEMT Conférence européenne des ministres des Transports (European Conference of Ministers of Transport) DCFTA Deep and Comprehensive Free Trade Area EBRD European Bank for Reconstruction and Development EFTA European Free Trade Association EU European Union EUBAM EU Border Assistance Mission to Moldova and Ukraine FDI Foreign direct investment FEZ Free Economic Zone FTA Free Trade Agreement GIFP Giurgiulesti International Free Port IRU International Road Union BRITE Business Regulatory, Investment, and Trade Environment CEFTA Central European Free Trade Agreement CIS Commonwealth of Independent States LPI Logistics Performance Index MCC The Millennium Challenge Corporation Ro-Ro Roll-on/Roll-off TCA Trade Corridor Assessment TEN-T Trans-European Transport Networks TFA Trade Facilitation Agreement TIR Transports Internationaux Routiers (International Road Transport) TRACECA Transport Corridor Europe-Caucasus-Asia USAID United States Agency for International Development WTO World Trade Organization

PRELIMINARY TRADE CORRIDOR ASSESSMENT

EXECUTIVE SUMMARY Moldova is a landlocked country, reliant on its trade corridors for access to imported goods and for exporting its products. Trading through trade corridors allows for economies of scale, network effects and concentration of resources for transport sector improvements. Corridors provide landlocked countries with important access to ports, which are critical for trade.

Despite Moldova’s reliance on its trade corridors, many issues exist in terms of infrastructure, services and regulations. Reducing transport costs and increasing the ease of access to markets by improving Moldova’s trade corridor infrastructure could fuel economic growth. The country maintains a very high trade imbalance and therefore current account deficit. This is fueled by a variety of factors, including increased consumption and imports funded by remittances despite low employment and industry levels, as well as an increase in imports of goods for use by Moldova’s national industry. Much of the country’s development strategy is based on export-led growth, focusing on value-added products in seven priority sectors including textiles, agrifood (value added/processed), ICT, business process/outsourcing, electrical equipment, automotive, and manufacturing of machinery and parts. As Moldova is able to grow its industries, its trade deficit will fall due to the combination of an increase in exports plus a reduction of imports as the country is able to domestically fill more of its own consumption needs. But first, the country needs to make it easier for businesses to move goods.

Much progress has been made in improving Moldova’s trade corridors in recent years, with large infrastructure projects rehabilitating roads, improvements to customs laws, institutional and regulatory reforms as part of DCFTA implementation, etc, However, challenges still remain. For example, delays at the border with Romania threaten the reliability of automotive parts and other exports; poor road conditions limit imports through Moldova’s only port at Giurgiulesti; overloaded vehicles damage trucks and roads; and a shortage of authorizations limits the ability of Moldovan trucking companies to transport goods to/from Ukrainian ports.

Moldova’s infrastructure investment needs are well known by the government and development partners. There are many ambitious plans to rehabilitate roads, border posts, railway tracks and to purchase locomotives. But a $150 million investment in a road to save an hour of driving time has minimal impact on overall transport times if a truck sits idle two days waiting to cross the border. This is where complementary reforms to service markets and regulations are essential to increasing trade corridor performance. Nonetheless, when funds are constrained, it is difficult for governments and development partners to prioritize investment needs, and often “soft” reforms (such as services and regulatory issues) are overlooked.

This is the first in a series of two reports aimed at assessing Moldova’s trade corridor performance and providing prioritized recommendations on improving it. In this preliminary report, we provide an introduction to trade corridors and set the context of Moldova’s trade corridors, trade and transport infrastructure. We discuss our preliminary thoughts on potential constraints, which will be further validated and assessed in the full report. Finally, we provide an overview of our proposed methodology for the full trade corridor assessment. The assessment is timely as we are halfway into Moldova’s 2013-2022 National Transport and Logistics Strategy, which is an appropriate time to perform a midterm assessment and stocktaking, realigning priorities to fit present realities. The result of these studies will provide the government, USAID, and other development partners with a road map and action plan for improving the competitiveness of Moldova’s trade corridors.

i | PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV

1. INTRODUCTION TO TRADE CORRIDORS AND TRADE CORRIDOR ASSESSMENTS

INTRODUCTION TO TRADE CORRIDORS Trade corridors are comprised of routes connecting centers of economic activity, which can be regions, countries, cities, industrial areas or farmlands. These routes consist of a network of links and nodes, as graphically depicted in Figure 1:

 Links are connectors including roads, railways, inland waterways, and marine shipping.  Nodes consist of areas where costs are incurred or time is spent along the route including transport and trade infrastructure points (ports, inland container depots, rail depots, border posts, weighbridges, checkpoints), and areas of economic activity (cities, warehouses) which are often the origin or destination point but also may be stopping points for drivers or areas of congestion. Figure 1. Typical Logistics Chain

Source: FastPath User Manual. The components of a trade corridor extend beyond the infrastructure components of the links and node system, and also include transport and logistics services and trade and transport regulations. Often it is these overlooked aspects of a trade corridor that are the causes of bottlenecks.

In Moldova, trade corridors carry both national and transit cargo, and consist of both road and rail links. Moldova’s key trade corridors for national trade (imports and exports) typically go to/from its main economic centers of Chisinau and Balti to/from anchors at ports including Odessa, Chornomorsk, Giurgiulesti, Constanza and economic hubs such as Bucharest, Vienna, Hamburg, etc. A single Pan-European corridor1 crosses Moldova: Pan-European corridor IX linking Helsinki, the capital city of Finland, to the Mediterranean Sea at Alexandroupoli in Greece, via Moscow, Kiev, Ljbasivka (in Ukraine on the Kiev–Odessa motorway), Chisinau and Bucharest. Moldova is also crossed by the Transport Corridor Europe-Caucasus-Asia (TRACECA) and Trans-European Transport Networks (TEN-T) international road corridors, which follow the exact same routes spreading in all directions from Chisinau. Moldova is crossed by several European routes as per the European Agreement on main international traffic arteries (AGR): E583, E584, E58, E581. Moldova

1 The ten Pan-European transport corridors were defined at the second Pan-European transport Conference in Crete, March 1994 as routes in Central and Eastern Europe that required major investment .

1 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV also signed the memorandum on the Black Sea Ring Highway on July 27, 2007, and is now on the list of the beneficiaries of Black Sea Ring corridor development.

Figure 2 presents a map of Moldova’s trade corridors and infrastructure, and more detail on Moldova’s trade corridors is included in Section 2.

Figure 2. Map of Moldova’s Trade Corridors

Source: Nathan 2018 for USAID.

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 2

ASSESSING TRADE CORRIDOR PERFORMANCE Trading through trade corridors allows for economies of scale, network effects and concentration of resources for transport sector improvements. Corridors also provide landlocked countries with important access to ports, which are critical for trade. But high trade and transport costs constrain growth. Therefore, it is important that trade corridors operate smoothly, efficiently and without delay. Corridor improvements can reduce trade and transport costs, which can lead to increased trade, lower prices to consumers, and more competitive businesses. Trade corridor assessments can be used to measure corridor performance.

Corridor performance is important for determining the competitiveness of different routes and systems. Some traffic is considered captive to a corridor, meaning that traders only have that one option for going from point A to B. But in many instances, shippers, traders and transporters have multiple route options. This is especially true as distances increase—for example, a trader will have more options shipping from Chisinau to China than from Chisinau to Bucharest. Transit cargo typically has even more options than national cargo; in addition to choosing which route through Moldova to take, a shipper can choose to bypass Moldova altogether. But even a trader shipping items from Chisinau to Bucharest has options regarding which route they take to leave their warehouse, which border post to traverse etc. Traders will typically make these decisions and choose routes based on a combination of time, cost and reliability, with competitiveness being determined by the weakest link in the logistics chain.

The definition of corridor performance, and consequently how to measure it, varies based on who is asking the question:

 From a transporter’s point of view, corridor performance is how fast and efficiently goods can be moved through the entire logistics chain from the origin to destination. In a competitive market, transporters have little control over their costs or tariffs, so the main focus is really time. As transporters will be receiving the same tariff regardless of how long a trip takes, they want the trip to be as fast as possible so that they can make as many trips as possible in a given month.

 From a trader’s point of view, cost and reliability matters, with time/reliability sometimes being the most important aspect as they strive to meet delivery deadlines and avoid penalties. For example, in our interviews we heard that if automotive parts are delayed in arriving at their destination, the whole assembly could stop, in which case the shipper is fined Euro 20,000 per minute. Therefore, reliability is one of the most important factors to traders, and shippers may be willing to pay more or take a longer route in order to ensure that their products are always delivered on time.

 Road agencies are concerned with traffic volumes which affect road capacity; truck weight, which affects road maintenance and quality; and bottlenecks on the roads, which affect the competitiveness of the mode compared to other modes and routes.

 For rail authorities, traffic volumes are key because of the relationship between traffic volumes and cost. Rail is typically slower than road, but price sensitive customers will normally choose the railway as it is typically much cheaper than the road over long distances.

 A Government’s perspective typically includes concerns about revenue and budget, which is essential not only for building and maintaining transport infrastructure, but also for the budget to provide services in the country. Even more important than items like road usage fees is revenue collection at the border. In many countries, customs is a main source of Government revenue; in

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 0 Moldova customs remains the primary source of State revenue and it is therefore crucial that these revenues are properly collected.

 From a regional economic community perspective, corridor performance is reflective of trade, the balance of trade, types of commodities flowing through the corridor, and impact on employment and economic growth.

As time, cost and reliability are the key factors in determining corridor competitiveness, measuring them in a consistent manner across corridors and modes, is an important step in a trade corridor assessment. This part of the assessment is quantitative, but understanding why corridors are performing as they are requires a more qualitative assessment. This includes conducting interviews with a wide array of stakeholders along the logistics chain.

In the case of apparent delays or bottlenecks—for example, at the border—there are many possible explanations for the delay. In some instances, the issues may be due to poor infrastructure; for instance, many of Moldova’s border posts need additional infrastructure investment to develop separate lanes, and the roads accessing the border posts need rehabilitation. Other issues could be service related. For instance, traders could face issues receiving competitive trucking quotes or with the professionalism of drivers. Others could have issues finding a customs brokers with available guarantee limits. The reason for the delay could also be regulatory. Why are unprofessional drivers allowed to operate? Are the licensing requirements too lenient—or non-existent? Why are customs brokers short of guarantee funding? Is customs taking too long to release their guarantees? Or are the guarantee requirements too stringent? And in general, are the delays at the border due to customs or border police operations or regulations? Could these processes be moved inland, away from the borders? The answers are typically complicated, and may involve multiple issues.

Often, improving the regulatory environment can provide more cost-effective solutions for alleviating bottlenecks than costly infrastructure investments. Governments and development partners often focus on costly projects developing hard infrastructure and overlook soft dimensions such as the regulatory framework, which can provide good value. This is not to say that infrastructure investments are not important. Without functioning roads, railways, and ports, increasing trade is a non-starter. However, while a well-functioning infrastructure is a necessary condition for trade, it is not a sufficient condition. A government can invest $150 million in rehabilitating the roads along a corridor, but if trucks spend two days at the border, the corridor is no more competitive than before the investment. It is now possible to use the road, and captive traffic will use it, but traders and transporters that have other options will not. Understanding the situation and why bottlenecks exist is the first step to developing action plans for improving trade corridor performance, which has the potential to unleash latent economic activity and trade.

1 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV PURPOSE OF THIS REPORT Trade corridor assessments have been conducted in other regional countries in recent years: Ukraine in 2017 by USAID2 and Romania in 2013 by the EU.3 In Moldova, a national transport and logistics strategy was developed in 20124 as well technical reports supported by the World Bank on aviation strategy,5road6, rail7, and port8. This was followed by a logistics and waterways of the sea master plan by the EU in 2013,9 various border post studies such as one of Palanca by the UNDP in 2014,10 and most recently an assessment of customs at Giurgiulesti port funded by EUBAM, Moldova Customs and USAID-BRITE in 2016.11 However, Moldova has not had a comprehensive transport sector study since its national logistic plan in 2012.

A [trade corridor] diagnostic takes three main forms: determining the development and trade context, assessing corridor-length performance, and conducting a detailed diagnostic at specific locations, or chokepoints, along a corridor to identify practical intervention measures. The diagnostic process collects quantitative and qualitative data to identify the major impediments to trade facilitation and the capacity within the public and private sector for removing them.12

This preliminary trade corridor assessment (TCA) focuses on the first part of the assessment— determining the context—and provides a road map for the next two steps—assessing performance and diagnosing bottlenecks. As part of the preliminary TCA, a small team comprised of the project’s Deputy Chief of Party Aurelia Ieseanu, Logistics Specialist Kristen Hartpence, and Local Logistics Specialist Radu Cornea conducted initial interviews with some stakeholders in Chisinau and Giurgiulesti in November-December 2017. Stakeholders included USAID, the Ministry of Economy (Trade, Transport and MIEPO), Moldova Customs, Danube Logistics, the World Bank, a customs broker, two freight forwarders, and several associations; a list of interviews and meetings is included in Appendix A. The team also reviewed relevant studies including those listed above, and began to request and review data.

2 Turdzeladze, Giorgi. 2017. TRADE POLICY PROJECT: Trade Corridor Assessment and Efficiency. USAID. 3 ROMANIA WEST REGION COMPETITIVENESS ENHANCEMENT AND SMART SPECIALIZATION Trade and Transport Facilitation and Logistics Infrastructure: Key challenges and opportunities: Intermediate Report. 2013. EU. 4 Government of the Republic of Moldova Transport and Logistics Strategy – 2013-2022: Draft Final Report. 2012. 5 Joint Venture Kocks Consult GmbH, Koblenz – TransCare, Wiesbaden – Universinj LTD. Support to the Government of Moldova for the Preparation of a Transport and Logistics Strategy: TECHNICAL REPORT – AVIATION. 2012. World Bank. 6 2012 – MOLDOVA, ROAD SECTOR REPORT (WB): HTTPS://COLLABORATION.WORLDBANK.ORG/DOCS/DOC- 24352 7 2012 – MOLDOVA, RAIL SECTOR REPORT (WB): HTTPS://COLLABORATION.WORLDBANK.ORG/DOCS/DOC- 24351 8 2012 – MOLDOVA, PORT SECTOR REPORT (WB): HTTPS://COLLABORATION.WORLDBANK.ORG/DOCS/DOC- 24330 9 Egis International / Dornier Consulting. Logistics Processes and Motorways of the Sea II LOGMOS Master Plan – Annex 9.1 Country Profile MOLDOVA. 2013. EU. 10 Construction of jointly operated border crossing point Palanca on the territory of the Republic of Moldova. UNDP Project Document. 2014. 11 Gazeley, Colin. Giurgiulesti International Free Port Study. 2016. EUBAM, Customs Service of the Republic of Moldova, USAID-BRITE. 12 EMPHASIS ADDED. CARRUTHERS, ROBIN; KUNAKA, CHARLES. 2014. TRADE AND TRANSPORT CORRIDOR MANAGEMENT TOOLKIT. WASHINGTON DC; WORLD BANK GROUP.

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 2 The remaining sections of this report include: Section 2 provides context, describing Moldova’s trade corridors and flows; Section 3 provides our preliminary assessment and initial thoughts; and Section 4 details the proposed methodology for the full trade corridor assessment.

3 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV 2. CONTEXT OF MOLDOVA’S TRADE CORRIDORS

MOLDOVA’S TRADE COMPOSITION

TRADE AGREEMENTS Moldova has a liberal trade regime, being a full-right member of the World Trade Organization (WTO) since 2001. On 24 June 2016, it accepted the Protocol of Amendment to insert the WTO Trade Facilitation Agreement (TFA) into Annex 1A of the WTO Agreement. Recently the Government adopted an Action Plan to implement the TFA.

Moldova has signed free trade agreements with 43 countries, among them member states of the Commonwealth of Independent States (CIS), the Central European Free Trade Agreement (CEFTA), European Union (EU) and Turkey. The EU-Moldova Association Agreement includes the creation of a Deep and Comprehensive Free Trade Area (DCFTA), laying down the legal framework for the advancement of relations between Moldova and the EU towards a higher quality level – political association and economic integration with the EU. DCFTA goes beyond a classical free trade agreement (FTA), aiming to cover domestic policies related to procurement, competition, intellectual property and sustainable development. Currently there are also ongoing negotiations to sign an FTA with China and initial steps launched within the European Free Trade Association (EFTA).

TRADE BALANCE AND TRENDS During the last 7 years (2010-2016), Moldova’s international trade recorded a negative balance, with imports far exceeding exports. However, the import/export ratio decreased from 2.5:1 in 2010 to 2:1 in 2016, with exports increasing by 33% and imports only by 4%.13 This ratio still remains high compared to other countries such as Romania (1.2:1), Ukraine (0.95:1), USA (1.6:1).14 Such a trade deficit has an impact on the competitiveness of the economy, depreciation of the national currency, and lower savings of the population. At the same time, inflows of FDI in some sectors of the economy like manufacturing (automotive) have triggered larger imports required for the production of these goods.

An important drop of both imports and exports was registered in 2015-2016 that was caused by political instability together with the less favorable national/regional economic situation. This includes Moldova’s banking crisis, theft of the billion dollars from the banking system, MDL devaluation, US dollar appreciation, unfavorable climatic conditions, and decrease in the international prices for some export products. Additionally, earlier restrictive tariff and non-tariff measures imposed by the Russian Federation against Moldova, as well as the regional geopolitical tensions (armed conflict in eastern Ukraine, economic sanctions and mutual trade restrictions between the EU and the Russian Federation) had a negative impact on the country’s trade performance.

13 National Bureau of Statistics of the Republic of Moldova 14 World Bank Group, Trade Statistics 2016 at https://wits.worldbank.org/countrystats.aspx?lang=en

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 4 Further details on imports and exports are described below.

IMPORTS In 2016, imports registered a value of around $4 billion, decreasing from the peak of nearly $5.5 billion in 2013 (Figure 3). As shown in the figure, imports from CIS countries fell by 18% within the same period of time, while those from EU increased by 16%. Moldova’s largest import trading partner is Romania (Table 1), which joined the EU in 2007. Imports from other countries grew by 14%, with large increases in imports from China and Turkey.15 This is due to the bilateral FTA signed with Turkey and the ongoing FTA negotiations with China.

Figure 3. Moldova’s Import Values by Region, USD, 2010-2016 6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

- 2010 2011 2012 2013 2014 2015 2016

CIS EU Other

Source:National Bureau of Statistics Of The Republic of Moldova Table 1.Moldova’s Top 5 Import Countries by Value, 2016

COUNTRY IMPORT USD

Romania $551,498,927

Russia $535,201,170

China $393,689,123

Ukraine $383,892,497

Germany $316,441,291

Source: National Bureau of Statistics of the Republic of Moldova

The structure of Moldova’s imports in recent years has been led by petroleum products (included in the Minerals category) and the demand of the national industry (electric circuits and textiles

15 National Bureau of Statistics of the Republic of Moldova

5 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV industry) for goods destined for production, such as machinery and electrical equipment, chemicals, textiles etc. See Figure 4.

Figure 4. Structure of Moldova’s Imports, 2016

Source:National Bureau of Statistics of the Republic of Moldova

EXPORTS Moldova’s exports were slightly more than $2 billion in 2016, increasing by 4% compared to 2015, but down$0.5 billion compared to the highest values registered in 2013.16 Since 2000, Moldova’s export trend has been largely positive due to entry into new markets and product diversification. Still, it was less dynamic than the growth of imports and the gross domestic product.

The geographic coverage of exports has shifted from CIS countries towards the EU, with 65% of total exports ($1.3 billion) to the EU in 2016, as shown in the figure below. Four of five of Moldova’s main export trading partners are currently EU members, including Romania, Italy, Germany, and the United Kingdom17 (see Table 2). Exports to CIS countries have decreased in recent years, representing 20% of the total exports in 2016. Russia continues to be Moldova’s main trading partner from this region, followed by Belarus and Ukraine. Some of the emerging export destinations are China, Israel, and Malaysia.

16 National Bureau of Statistics of the Republic of Moldova 17 Noting that the United Kingdom is planning on exiting the EU in 2019.

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 6 Figure 5. Moldova’s Export Values by region, USD, 2010-2016

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

- 2010 2011 2012 2013 2014 2015 2016

CIS EU Other

Source: National Bureau of Statistics of the Republic of Moldova Table 2: Moldova’s Top 5 Export Countries by Value, 2016

COUNTRY EXPORT USD

Romania $513,034,743

Russia $233,177,413

Italy $197,804,654

Germany $126,623,901

United Kingdom $114,311,172

Source: National Bureau of Statistics of the Republic of Moldova The structure of Moldova’s exports has changed over the last 15 years, with higher exports of machinery and fruits and vegetables at the cost of foodstuffs and textiles. In 2016, exports of vegetables (26%) accounted for the largest share of total exports (see figure below). Foodstuffs and alcohol represented 16% of exports ranked at the second place, while textiles were third place. Compared to 2015, there was an increase of exports of cereals and cereal products (+ 34.0%), seeds and oil fruits (+ 13.6%), furniture and its parts (+25.1%), yarns, fabrics and textiles (+ 41.6%), clothing and accessories (+ 6.7%), road vehicles (2.3 times), organic chemicals (2.9 times), processed metal products (+ 36.3%), footwear (+ 21.7%), alcoholic and non-alcoholic beverages (+ 2.2%), sugar, honey (+ 9.9%), dairy products and poultry eggs (+ 29.4%), which contributed to an increase of 9.9% in total exports.18

18 National Bureau of Statistics of the Republic of Moldova

7 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV Figure 6. Structure of Moldova’s Exports, 2016

Source: National Bureau of Statistics of the Republic of Moldova

TRANSIT Presently there are no data available to the team regarding the volumes or values of transit cargo traversing Moldova. According to the methodology of the National Bureau of Statistics, “Goods in transit on the territory of the Republic of Moldova (for transport reasons), entering or leaving the country exclusively for the purpose of their delivery to a third country, shall not be subject to statistical evidence if they are not added to the stock of material resources from the country or do not diminish this stock.”19 Moldova Customs should have the data necessary for us to make these calculations, but have not yet provided this data to us. We hope to receive and analyze this information for the Full TCA.

OVERVIEW OF MOLDOVA’S TRADE CORRIDORS Moldova is a small south-eastern European country without any maritime borders other than a 430m stretch along the Danube River. Moldova borders Romania to the West and Ukraine to the North, East and South. Due to its landlocked geographic location, its trade corridors are critical to the economy.

The country’s freight transport and logistics sector is small, and has recently experienced some recovery signs, with total freight volumes rising from 27.78 million tonnes in 2010 to 36.99 million tonnes in 2016. The road and rail shares in transport are 90.2% and 9.4% of volumes respectively.20 The air and river modes together accounted for less than 0.37% of total freight transport traffic,

19 Methodological specifications and data sources http://statbank.statistica.md/pxweb/Resources/PX/Databases/40%20Statistica%20economica/21%20EXT/EXT010/serii%20tri mestriale/Comert_exterior.pdf 20 National Bureau of Statistics of the Republic of Moldova, 2016 data: http://statistica.gov.md/

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 8 despite the presence of two Moldovan inland waterways (Dniester and Prut Rivers) and an international airport at Chisinau.

MAIN ROAD CORRIDORS IN MOLDOVA Moldova’s key trade corridors for national trade (imports and exports) typically go to/from its main economic centers of Chisinau and Balti to/from regional ports or economic centers. The majority of cargo (90.2% in 2016)21 is transported by road.

National cargo transported to regional sea ports is then shipped to/from overseas locations such as China, Turkey, Middle East, USA, etc. Major corridors include:

 Chisinau/Balti- Odessa, UA-overseas destinations  Chisinau/Balti -Chornomorsk, UA- overseas destinations; and  Chisinau/Balti - Giurgiulesti-Constantza, RO- overseas destinations

Most of the goods are transported, mainly by road, to/from regional economic centers:

 Chisinau/Balti - Sculeni, MD/Sculeni, RO(BCP)- Bucharest/Budapest/Vienna/Prague/Hamburg/other EU destinations  Chisinau/Balti - Leuseni, MD/ Albita, RO(BCP)- Bucharest/Budapest/Vienna/Prague/Hamburg/other EU destinations  Chisinau/Balti - Criva, MD/ Mamaliga, UA(BCP)- Warsaw/Budapest/Bratislava/Prague/Hamburg/other EU destinations  Chisinau/Balti - Giurgiulesti, MD/ Galati, RO(BCP)- Bucharest/Sofia/Athena/other EU destinations  Chisinau/Balti - Otaci, MD/ Mohyliv-Podilskyi, UA(BCP) – Kiev/Minsk/Moscow/other CIS destinations(Kazakhstan, Uzbekistan, Kyrgyzstan)  Chisinau/Balti - Tudora, MD/ Starokazacie, UA(BCP) – Odessa/Kiev/Tbilisi/Baku/Erevan, other CIS destinations(south Russia)

Most routes avoid Transnistria, which means that cargo to/from Ukraine has to be transported via the southern BCP: Tudora, MD/ Starokazacie, UA or northern Otaci, MD/ Mohyliv-Podilskyi, UA. A joint border post is being constructed at Palanca, but a bridge in Ukraine at Mayaki is in bad condition so there are currently restrictions on heavy truck access to this route.

With its location between Europe and the CIS countries, Moldova also sees some transit cargo, however, data have not yet been provided to discern the share of transit vs national cargo being transported through Moldova by road. Key trade corridors transiting Moldova are described below.

There is one Pan-European corridor crossing Moldova, the Pan-European corridor IX linking Helsinki, the capital city of Finland, to the Mediterranean Sea at Alexandroupoli in Greece, via Moscow, Kiev, Ljbasivka (in Ukraine on the Kiev–Odessa motorway), Chisinau and Bucharest.

21 National Bureau of Statistics of the Republic of Moldova: http://statistica.gov.md/

9 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV Moldova is also crossed by the TRACECA and TEN-T international road corridors, which follow the exact same routes spreading in all directions from Chisinau (see Figure 7).

Figure 7. TRACECA Routes Through Moldova

Source: http://www.traceca-org.org/fileadmin/fm- dam/TAREP/58jh/EXPERT_GROUP_MODEL_GIS/MOLDOVA_07_11_2011_300DPI.png

The three main TRACECA road corridors traversing Moldova include:

 The South–North (SN) corridor linking the border with Romania at Giurgiulesti/Galati in the extreme South of Moldova, to the border with Ukraine, at Soroka in the northeast of Moldova via Chisinau, the capital city; this corridor passes through Vulcanesti at the border with Ukraine, Cimislia, Chisinau and Orhei; the total length of this corridor is about 380 km-long, of which there is 100 km of dual carriageway road around Chisinau;  The Southeast–Northwest (SE/NW) corridor linking Kucurhan, in Transnistria, at the border with Ukraine in the Southeast of the country, to Lipcani/Mamaliha at the border with Ukraine at the extreme northwest of Moldova; this corridor does not pass through Chisinau, but crosses the SN corridor 10 km north from Chisinau; the SE/NW corridor passes through Balti and Edinet; the SE/NW corridor is about 370 km-long; its Southern portion provides the most direct road link to the Ukrainian ports of Odessa and Iliychevsk; nevertheless, due to the political situation in Transnistria there is no freight traffic transiting between Ukraine and Moldova on this corridor.  The East-West (EW) corridor linking the border with Ukraine near Dubasari, in Transnistria, to Albita at the border with Romania; this corridor does not pass through Chisinau, but crosses the SN corridor 10 km north from Chisinau; this corridor is the Moldovan section of the Pan- European corridor IX mentioned above (Helsinki–Moscow–Kiev–Chisinau–Bucharest–

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 10 Mediterranean Sea at Alexandroupoli in Greece); this corridor is about 150 km-long; as along the SE/NW corridor, due to the political situation in Transnistria, there is no freight traffic transiting between Ukraine and Moldova on this corridor.

The total length of the TRACECA road corridors in Moldova is about 890 km, equivalent to 27% of the length of the main network. Out of these 890 km, 150 km (17% of the total length of the TRACECA roads) follow Pan-European corridor IX. The road from Chisinau to the border of Romania at Ungheni is also part of the TEN-T network, although it is not included in the TRACECA network.

The Black Sea Ring Road, which involves building a four-lane highway system connecting the countries surrounding the Black Sea, is a substantial project, a highway that will measure some 7,140km in all. Among the countries participating in the project are Turkey, Georgia, Russia, Ukraine, Moldova, Romania, Greece and Bulgaria. At the same time Armenia, Azerbaijan, Albania and Serbia will also be connected to the road through additional routes. The route will pass through several major cities: Istanbul and Edirne in Turkey; Batumi and Poti in Georgia; Novorossiysk, Rostov-on-Don and Taganrog in Russia; Mariupol, Melitopol and Odessa in Ukraine; Chisinau in Moldova; Bucharest in Romania; Haskovo in Bulgaria; Komotini and Alexandroupolis in Greece. The project does not have a single budget, as each country will pay for its own section using its own sources. In addition, some of the funding for the project is expected to be provided by the EU, as well as some EU banks and other international sources including the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD), as well as the World Bank (WB). The new road is expected to be officially commissioned in 2019-2020.

Figure 8. Black Sea Ring Highway Map

Note: Circle of Moldova added. Source: http://www.blacksearing.org/fileadmin/images/MAPS/BSRH_GIS_6th_StC- Rostov_27-09-11.jpg

Moldova is crossed by following European routes as per the AGR:

 European route E583 is a European B class road in Romania, Moldova and Ukraine, connecting the cities Roman and Zhytomyr.  European route E584 is a European B class road in Romania, Moldova and Ukraine, connecting the cities Poltava and Galati.

11 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV  European route E58 is a road part of the International E-road network. It begins in Vienna, Austria and ends in Rostov-on-Don, Russia. It is approximately 2,200 km (1,400 mi) long.  European route E581 is a European B class road in Romania, Moldova and Ukraine.

Figure 9. Map of European Agreement on main international traffic arteries (AGR)

SOURCE: https://www.unece.org/fileadmin/DAM/trans/doc/2015/wp5-eatl/3_WP5_GE2_13th_session_Mr_Mindra.pdf

MAIN RAIL CORRIDORS IN MOLDOVA The Moldovan railway network, as presented in Figure 10, covers 1,157 km of track over three main international railway lines, which cross the territory of the country from East to West (1 line) and South to North-East (2 lines). Major routes include:

 Northern: Ungheni to Balti then: o northeast to Slobidka in Ukraine o northwest to Ocnita and then Ukraine via Mohyliv-Podilskyi and Chelmenti, and Romania via Mamaliga  Central: east-west from Ungheni through Chisinau, Bender-2, and Tiraspol (in Transnistria) to Odessa and Chornomorsk in Ukraine; currently not operational for freight from Bender-2 to Ukraine  Southern: northeast via two branches: o Cantemir on the Romanian border  o Galat-Giurgiuestli/Reni-Giurgiuestli meeting at Basarabeasca on the Ukrainian border, and then on to Chornomorsk and Odessa from the South.

The Southern railway route (via Basarabeasca to Ukraine) is important since it provides a link to the Ukrainian ports of Odessa and Chornomorsk and the mineral regions of Ukraine. The Central route via Tiraspol remains closed to freight traffic.

Other national lines include:  a branch that continues north from Basarabeasca, connecting to Chisanau and Bender 2

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 12  a new line from Giurgiulesti to Cahul, which connects to the southern line near Cantemir and goes on to Basarabeasca

Figure 10. Moldova Railway Map

Source: CFM.

MOLDOVA’S TRADE CORRIDOR INFRASTRUCTURE, SERVICES AND REGULATIONS

13 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV MARITIME AND INLAND WATERWAY SECTOR Moldova, as a landlocked country, has a high level of dependence on neighboring countries with direct access to the sea and well developed port facilities. This includes Black Sea ports such as Ukraine’s Odessa and Chornomorsk ports, as well as Romania’s Constantza port. In recent years, Moldova has also benefitted from access to a national port on the Danube River through Giurgiulesti International Free Port (GIFP), which began operations in 2005. GIFP also competes with river ports such as Reni and Galati for non-containerized cargo.22 Additionally, Moldova’s water transport system includes two key inland waterways (IWW): the Dniester and Prut Rivers, although IWW transport is very limited due to lack of dredging which limits the ability of barges to navigate the rivers. Ports and IWWs serving Moldova are further described below.

Odessa Port, Ukraine

The port of Odessa is one of the largest ports of the Black Sea and among the ports of Ukraine. It also handles the largest portion of Moldova’s cargo arriving by sea, according to our preliminary understanding.23 The port has 55 berths covering 10,200 meters and can handle vessels up to 330m long with up to 13m draught.24 The port’s technical capacities allow handling of more than 25 million tons of dry and 25 million tons of bulk cargoes annually.25 Two container terminals provide handling of over 900,000 TEU per year.26

The well-developed transport infrastructure allows delivering of cargoes into the port by automobile, railway, marine and river transport. In order to efficiently handle containers, a dry port is being developed27, and there is a special overpass allowing access to the port for cargo motor transport bypassing the city highways. A transit - freight logistics terminal opened in 2005 and has a storage area of 51,500 m2.28 Related to goods to/from Moldova, the only mode of transport available for transshipment via Odessa is by truck crossing the borders at BCP: Tudora, MD / Starokazache, Ukraine, which is about 65 km from Odessa. Cargo can be transported from Odessa to Chisinau (and vice-versa) within a day, provided there are no issues at the border. While rail connections are available, they run through Transnistria so are not used.

Chornomorsk Port, Ukraine

22 We do not further discuss these river ports in the Preliminary TCA, but during the Full Assessment will determine whether it is relevant to assess them, which will be determined through outcomes of interviews and analysis of Custom’s data on the port of entry. 23 There are no official statistics of the source of Moldova’s cargo by port. We understand that Moldova Custom’s captures some of this data, but not always consistently—however, Customs has not yet provided data to us for review. Better understanding the flows and port of entry is a goal of the Full TCA. But our understanding to date of the industry is that Odessa has been traditionally the preferred port of Moldovan freight forwarders. 24 Odessa Sea Port Authority: http://www.port.odessa.ua/en/about-port/technical-characteristics 25 Odessa Sea Port Authority : http://www.port.odessa.ua/en/ 26 Ibid. 27 Odessa Sea Port Authority : http://www.port.odessa.ua/en/partners/dry-port 28 Odessa Sea Port Authority : http://www.port.odessa.ua/en/component/content/article/215-of-gp- ampu/english/infrastructure/10645-logistics-terminal

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 14 The port of Chornomorsk (formerly Illyichevsk) is located 19 km to the southwest of Odessa in Ukraine on the Black Sea. It is a multipurpose port, transporting metals, grain, and containers. The port operates a multimodal (rail to ferry and Roll-on/Roll-off or Ro-Ro) complex, which is the only rail to ferry terminal in Ukraine and one of the largest on the Black Sea. 29 The terminal allows for loading of railway wagons and trucks directly onto a ferry for transportation across the Black Sea. The port handled 1.8 million tons of cargo in 2016, and has an annual capacity of 4.5 million tons of railway cargo, 35,000 heavy duty trucks and 250,000 vehicles.30

The Port of Chornomorsk is used similar to Odessa port for transshipment of containerized goods from overseas origins on imports and movement to diverse destinations: Far East, Middle East, USA, etc for goods from Moldova on export. The inland deliveries of containers to/from Moldova are performed by trucks, the service being provided by Moldovan and Ukrainian haulers on a demand basis.

Port of Constantza, Romania

The Port of Constantza in Romania is important to Moldova in two ways: 1) some container traffic is transshipped from Constantza to GIFP in Moldova by feeder or barge, and 2) cargo can move through Constantza to Moldova by road. While the latter is currently not competitive compared to Ukrainian ports in terms of price and time due to the longer distance, having the option is important to Moldova due to political considerations with Ukraine and the changes in trade flows from east to west.

The Port of Constantza is located at the crossroads of the trade routes linking the markets of the landlocked Eastern European countries to the Trans Caucasus, Central Asia and the Far East. The port has good connections with the Central and Eastern European countries through the European Corridor IV (rail and road), Corridor VII - Danube (inland waterway, to which it is linked by the Danube-Black Sea Canal), and Corridor IX (road, which passes through Bucharest). Constanta Port has a handling capacity of over 100 million tons per year and 156 berths, of which 140 berths are operational. The total quay length is 29.83 km, and the depths range between 8 and 19 meters.31

Constantza Port is both a maritime and a river port. Facilities offered by the port allow accommodation of any type of river vessel. The connection of the port with the Danube River is made through the Danube-Black Sea Canal, which represents one of the main strengths of Constantza Port. Important cargo quantities are carried by river between Constantza and Central and Eastern European countries including Moldova, Bulgaria, Serbia, Austria, Slovakia and Germany. In 2016, the port of Constantza total traffic consisted of 59,424,821 tonnes, gross weight for containerized cargo being figured at 6,897,354 tonnes with total number of containers of 434,439(TEU = 711,339).32

29 https://mtu.gov.ua/en/content/proekt-koncesii-zaliznichnoporomnogo-kompleksu-dp-morskiy-torgovelniy-port- chornomorsk.html 30 Ibid. 31 Constantza Port : http://www.portofconstantza.com 32 Ibid.

15 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV Containers to Moldova are typically transshipped by a feeder or barge weekly service to Giurgiulesti International Free Port, where from the goods are on-forwarded by truck or rail modes to main destinations such as Chisinau, Balti, etc. It is understood that little traffic is currently moved to Moldova by truck from Constantza due to the high price and time of inland trucking compared to transport from Ukrainian ports, which is half the distance.

Giurgiulesti International Free Port (GIFP)

Giurgiulesti International Free Port is located in southwestern Moldova on the Danube and Prut rivers. The general investor and operator of GIFP is Danube Logistics, which is financed by the EBRD (65%) and Danube Logistics Holding BV (35%).33 In December 2004, Danube Logistics signed an investment agreement with the Government of Moldova for the construction of GIFP. GIFP’s entire territory has a status of a free economic zone until 2030 confirmed by primary legislative act – Law no. 8 as of 2005.

In 2016, the port handled 445 vessels, up 34% from 2015 (Figure 11). Volumes of containerized cargo increased 10%, which non-containerized cargo saw a 3.6% increase.

Figure 11. GIFP Traffic, 2007-2016

800 700 600 500 400 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Volume of Non-Containerized Cargo (thousands of tonnes) Volume of Containerized Cargo (thousands of tonnes) Number of Vessels

Source: General Presentation of Giurguilesti International Free Port dated January 2017

GIFP facilities include terminals for diverse types of cargo handling including an Oil Product Terminal, Grain Terminal, Vegetable Oil Terminal, Bulk Cargo Terminal, and a General Cargo Terminal and Container Terminal that began operations in January 2012. In 2016, port volumes were led by grain and seeds (44%) and oil products (29%), as shown in Figure 12.

33 General Presentation of Giurguilesti International Free Port dated January 2017 from http://www.gifp.md/en/page/106/DOWNLOADS

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 16 Containerized cargo represented 13% of port volumes in 2016, with containers imported from 39 countries and exported to 4334 countries via a weekly container feeder service from Constantza to GIFP. The Container Terminal’s open storage area of about 2 ha is directly connected to the railway and has a total of 48 plug-in points for reefer containers. The equipment of the terminal consists of a 70 ton Sennebogen mobile harbor crane, a Kalmar reachstacker and two fork lifts. The minimum water depth at the terminal is 5m.35 A Ro-Ro Terminal is in prospective development plans.

Figure 12. GIFP Traffic Composition by Volume, 2016

13% 2% 29% Oil Products 7% Vegetable Oil Grain and Seeds Construction Material 5% Other Containers 44%

Source: General Presentation of Giurguilesti International Free Port dated January 2017

One of important achievement of GIFP is the Mixed Gauge Railway Terminal, which connects Moldovan, Romanian and Ukrainian railways and has been in operation since September 2014. Being Moldova’s first privately held mixed-gauge rail terminal, the facility allows transshipment of liquid as well as dry cargo, including containerized cargo by railway directly from/to Moldova, CIS and EU countries. The port is connected to Chisinau and norther Moldova by road and rail, both connections which are in poor repair.

Comparison of Ports Serving Moldova

Based on preliminary desk research and interviews, the table below provides a comparison and mainly qualitative, preliminary assessment of regional ports serving Moldova. Based on this initial study, it appears that the Ukrainian ports of Odessa and Chornomorsk are more attractive in

34 Ibid. 35 GIFP : http://www.gifp.md/en

17 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV serving goods transshipped from/to Moldova based on factors including proximity, cost, transit time and ease of operations for goods in transit operations both at the harbors and border crossing customs points. A more detailed, validated and quantitative study will be undertaken during the Full TCA.

Table 3. Preliminary Comparison of Selected Ports and Routes serving Moldova

METRIC GIFP-CHISINAU CONSTANTZA-CHISINAU ODESSA/CHORNOMORSK- CHISINAU

Distance (km) 233 km 525km (via Albita); 477 km Approx. 200 km (via (via Cahul) Tudora)/205 km (via Palanca)

Port Cost High: Constantza + $400- Low/Med: Similar to Odessa Low: Similar to Constantza but $500(20’-40’) but in Euro in USD

Inland Transport Low: $450-500 road; $300 High: €1000-1150 ($1180- Low: $450-$500 Cost rail $1360)

Corridor High: 3-7 days Medium: 3-5 days Low: 1-2 days Transport Time

Reliability Low: feeder only weekly and Medium: Port ok but 2-4 day High: currently no delays occasional delays due to delay at BP port equipment or poor roads; rail very low

Border Crossing Giurgiulesti FEZ Customs Albita, RO / Leuseni, MD Tudora, MD / Starokazache, Post(BCP) UA Palanca JBP in progress

Border High: Normal and fast Low: long wait in RO and High: Normal and fast Post/Customs operations physical inspections by RO operations customs

Rail Cheaper but slow Not available Same price and very slow (avoid Transnistria)

Road Poor road condition, under Mostly good condition but MD ok, Ukraine side now ok in rehabilitation longest route most areas but a few pockets needing repair

Competitiveness Avoids Romania/Ukraine Currently not competitive due Currently best price and customs when feeder but to higher inland cost and quickest so preferred route longer time and higher cost longer time than Ukrainian ports

Source: Interviews conducted by the project team in November/December 2017.

Inland Waterways

Moldova’s water transport system includes two key inland waterways: the Dniester and Prut Rivers as well as a 430 m bank on the Danube River on which GIFP (mentioned above) operates. The Dniester and Prut Rivers are suitable for waterborne transport only at certain segments due to the natural sedimentation and lack of regular dredging works.

 At present, the Dniester River is not quite actively used for local transport needs; international (passenger and freight) traffic is limited to two ferry stations at Soroca and Koseuts.  In 2012, the navigation on Prut River resumed after 25 years. Only the 83 km stretch between Giurgiulesti and Cahul is practical for use. The Prut River is used for transporting

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 18 construction materials, e.g. sand, ballast, gravel and coal destined for the rehabilitation of roads in the South-West of Moldova.

The naval conditions of the Dniester and Prut Rivers allow for the transportation of cargo on barges or barge convoys with a total DWT of 1,000t and 600t, respectively. According to the data from the Water Transport Direction of the Ministry of Transport and Road Infrastructure of the Moldovan Republic (for 2012), 50 vessels were operating along Moldavian IWW. In total, 378 vessels navigate along Moldavian IWW and at sea under the Moldavian flag. Most vessels are in poor technical condition and do not meet international norms and standards.

Moldova’s IWW transport infrastructure includes one sea-river port on the Danube at GIFP, 3 river ports on the Dniester (which currently do not offer loading services), one cargo area at Varnitsa (located on the Dniester River, which also does not offer loading services), and one river port in Ungheni (located on the Prut River). Moldova’s major port hub of is located in Giurgiulesti, thereby providing access via the Danube to the Black Sea region, open seas and international destinations.

Regulatory Framework

The Code of Commercial Maritime Navigation No 599 of 30 September 1999 regulates relations in the field of commercial maritime navigation, rights and obligations, permissive acts required to undertake this activity. The recent amendments to the Code envisage the establishment of a Naval Agency in Moldova that will implement the policy in the area of shipping and overseeing compliance by natural and legal persons with the regulatory framework in this area to ensure navigation and security of ships and port facilities.

Law No. 8 on Giurgiulesti International Free Port entered into force on 4 March 2005 stipulates that the Port is being established for 25 years (by 2030) and the competition legislations is not being applied to the General Investor of the Port. Residents are exempt from VAT or excise and/or customs fee for certain goods/services.

The legislation on maritime and river shipping is currently undergoing deep changes to ensure compliance with international rules and European standards. A new law on inland waterways navigation to regulate transport operation and set up a fair and transparent business framework has been drafted.

ROAD SECTOR Infrastructure As of 2016, according to the National Bureau of Statistics, the Moldovan road network was composed of 9,386 km of roads including 3,346 km of national roads and 6,040 km of local roads. Almost 95% (8,894 km), of Moldova's public roads are paved, though still not in good condition compared to EU road standards. Most roads cross Chisinau, running either North-South or East- West.

While many of Moldova’s roads have been in poor condition, a number of projects have been launched in recent years with the assistance of International Funding Institutions to remedy the condition of the national and local roads. The roads are presently in varying conditions, with some areas rehabilitated and others remaining in poor condition. Appendix B contains a map of road rehabilitation projects planned for the period of 2011-2019 made public by The State Road

19 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV Administration with financial support from national budget, road fund and technical and financial assistance of external development partners (EBRD, WBG, EIB, etc).

 Trucking and Freight Forwarding Services

The road trucking and freight forwarding industries are privately operated by national and foreign companies. Development of the freight transportation market was based on former soviet state owned enterprises, but after the collapse of Soviet Union, the niche was filled by private operators. Currently, the trucking market is fragmented and not uniformly developed, with most of the service providers having just a few trucks (1 to 10), and some with larger fleets of trucks (10 to 100). The number of national carriers is subject of further assessment in the Full TCA, as public information is not available to date. There are no nationwide carriers in Moldova (i.e. carriers that cover the whole country), let alone multi-national carriers. However, while they do not have offices in Moldova, foreign carriers do operate routes to/from Moldova. Further, many Moldovan carriers have moved their registration to Romania (where they have easier access to the EU market) or Ukraine (where they get around Ukrainian authorization quotas) and these foreign carriers compete with Moldovan- registered carriers for Moldovan cargo.

There are three main ways of utilizing cargo transport services in Moldova: 1) via a company’s own dedicated fleet, 2) directly with a trucking company, and 3) through a freight forwarder. Even though there are transportation companies and drivers that can be hired to provide transportation of goods, Moldovan companies tend to use their own transport for distribution or supply of their goods. Moldova is a relatively small market without challenging terrain, and therefore those wishing to conduct trucking activities do not need face extensive investment requirements in developing distribution logistics. According to a World Bank technical report from 2012 on the road sector36, the majority of Moldovan firms use their own transport for distribution. The high share reflects the low quality of services available and the low initial investment in own equipment and transport staff.

Alternatively, shippers can use trucking and freight forwarding services. On one hand there are the carriers, or trucking companies, that can be directly engaged. However, many companies are small, with only a few trucks, so it is understood that shippers face difficulties in bidding out quotes and finding trucking companies that are able to handle their business, especially if they ship to/from a variety of destinations. On the other hand, there are freight forwarding companies whose business is strictly freight forwarding, i.e. dispatching and booking space for shipments on carrier companies. This type of company can specializes in just one mode of transport such as air, rail, or road. Others combine their core business with trucking by contracting private carriers or running their own truck fleet. A smaller number of companies also have sea freight forwarding by carriers operating at the nearby ports of Ukraine and Romania. Some forwarding companies combine all four modes of transport, but have just one mode of transport as its core business. In recent years, many Moldovan forwarding companies have also become providers of customs brokerage services.

36 Support to the Government of Moldova for the Preparation of a Transport and Logistics Strategy, Technical report - Road sector, WB 2012 : https://collaboration.worldbank.org/docs/DOC-24352

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 20 A few forwarding companies are known to also provide warehousing services. However, warehousing services are generally separated from the forwarding or transportation business. A distributor will have to consider the warehousing aspect separately from the other links in the supply chain. The available warehouses are old Soviet-type facilities that do not fit Western storage standards, often lacking proper heating, ventilation or humidity control. A few underwent some type of modernization; for example, Chisinau has a number of specialized warehouses for frozen products. Such warehouses as a rule are run by specialized companies, such as meat processors, that provide overcapacities for rental. By some accounts, the warehouse space currently available in Chisinau is insufficient, but this will be further investigated in the Full TCA.

The regional trucking markets are not liberalized and operate under quota or authorization schemes. CEMT (Conférence européenne des ministres des Transports or European Conference of Ministers of Transport) multilateral authorizations are issued to road haulers conducting international freight journeys on the territory of CEMT Member States with transport units with a maximum total mass of over 12 tonnes and complying with the technical and safety standards for the classification categories corresponding to the CEMT category concerned. CEMT multilateral authorizations are awarded to the Republic of Moldova annually,37 according to the decision of the International Transport Forum, an inter-governmental organization within OECD,38 to facilitate international freight transport and more efficient use of motor vehicles. Upon the discussion with some transport and freight forwarding companies, the issue with availability and fair distribution to the haulers of the CEMT is subject of interpersonal relationship or even sometimes informal payments to public servants from the agency that could influence and solve the issuance problem, thus obviously for this domain upon full TCA must be further discussed possible solutions with stakeholders (agency and business). The shortage of available authorizations is a factor for trucking companies to move the registration of the companies and fleet of trucks to Romania for example, in order to avoid blockage of activity due to lower number of authorizations granted to the Republic of Moldova. As consequence, the Moldovan carriers compete with Ukrainian, Romanian carriers for national and regional traffic.

In recent years, the Moldovan trucking industry has faced a shortage of drivers due to higher wages in neighboring countries, which has become a substantial problem for national companies in retaining or hiring the new staff. The commercial struggle for market by carriers has led to a phenomenon of overloading by shippers of the trucks, those willing to lower the costs for transportation per unit of goods, with a definitely negative impact on technical damages both of the trucks and roads.

Regulatory Framework

The Road Transport Code No150 of 17July 2014 establishes the legal framework for the organization and performance of road freight and passenger transport, as well as activities related to road transport on the territory of the Republic of Moldova, safety and quality conditions, observing

37 Distribuition of ECMT multilateral quota as of 01 January, 2018 for Moldova: https://www.itf- oecd.org/sites/default/files/mld_3.pdf 38 International Transport Forum within OECD : https://www.itf-oecd.org/

21 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV the principles of free competition and measures of environmental protection, rights and legitimate interests of natural and legal persons. Transport services are subject to licensing that is issued by the National Road Transport Agency (NRTA). Additionally authorizations are required for those offering international trucking services. These are subject to the limited stock available at the NRTA in accordance with Resolution CEMT/CM (2005).

Based on the Government Decision No. 1073 of 1 October 2007 a Special Transport Authorization on public roads is required for vehicles exceeding the maximum admissible laden weight, maximum axle weight and/or the maximum admissible dimensions, according to the requirements established by the Road Transport Code no. 150 of 17.07.2014. This authorization (permit) is issued by the NRTA. In late 2017, there were apparent regulatory discrepancies related to total gross weight and allowed weight per axle in the Road Law no. 509 as of 22.06.1995, annexe no.3 and Government decision no. 979 as of 19.10.2010 "to amend and supplement the Regulation on authorization, control and performance on public roads of weights and / or gauge loads that exceed the limits accepted." This problem was raised starting in December 2017, due to modifications and transfer of responsibilities from Moldovan Customs to NRTA for control of overweight and oversized transport vehicles. Consequently, there were noticeable blockages and delays at border crossing posts. This issue will be further reviewed in the Full TCA.

The current legal framework provides mandatory licensing only for carriers; freight forwarding and logistics operations are not regulated. This has led to the presence of a large number of small (home run offices) that are providing intermediary services linking the shippers with carriers on a reward basis. Due to the absence of regulation in this area, professionalism of the actors is diverse. Carriers are trying to lobby via business associations the design and approval of the government decision, promoting the ideas for the introduction of licensing for freight forwarding companies that has no own fleet, with the intention of eliminating small (possible nonprofessional operators) and re- distribution of the market shares as consequence.

On December 15, 2017, the Parliament of the Republic of Moldova examined and approved the draft law39 for the accession of the Republic of Moldova to the Additional Protocol to the Convention on the contract for the international carriage of goods by road (CMR), on the electronic consignment note, drawn up in Geneva on 20 February 2008. The electronic consignment note is a consignment note issued by electronic means by the carrier, the consignor or any other party interested in the performance of a contract of carriage to which the said Convention applies, including the logically associated details of electronic communication by attachment or by other means of communication electronically at or after its issue, for inclusion in the electronic consignment note.

Transit Cargo

There are several regimes which govern transit cargo, imports, and exports including the TIR (Transports Internationaux Routiers) convention and T1 transit documents. The TIR convention was

39 http://gov.md/sites/default/files/document/attachments/intr07_130.pdf

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 22 developed in the 1940s and has been led by the United Nations as a public-private partnership since 1959.40 The UN uses the International Road Transport Union (IRU) to manage the international guarantee chain, produce, and distribute TIR carnets through its member associations to final beneficiaries (shippers/buyers) via carriers. In Moldova, the member association is AITA (Asociaţia Internaţionala a Transportatorilor Auto or International Association of Road Transport), which has 455 members.41 With TIR, goods are contained in sealed load compartments, and the contents are detailed in a TIR Carnet. This essential document accompanies the driver and the cargo along its journey. Customs simply has to verify the Carnet and that the seals are intact, rather than spend time to open the container and physically check the load. At certain points of a journey, under the control of Customs, the seal can be broken and new goods loaded as per the TIR Carnet declaration with a new seal put in place. This makes TIR an easy and reliable way to transport goods around the world, with the legal certainty that comes from the United Nations TIR Convention and IRU’s international financial guarantees. Citing IRU, an EU Law update increased TIR guarantee limits from 60,000 EUR to 100,000 EUR42 of customs obligations (taxes and duties). However, Moldova is yet to approve this increase so the 60,000 EUR limit remains for goods on import and transiting Moldova.

An alternative to the TIR Carnet guarantee for road transport is the T1 transit document, which is issued by customs brokers under their global financial guarantee to the relevant Customs Authority. For goods originating from the EU to Moldova, for example, the broker has to issue 1) an intra-EU T1 document that must be closed upon the exit customs point from EU, and 2) an additional national T1 transit document that is issued at the entrance customs point in Moldova and lasts to the final import customs post exit BCP for goods in transit. Goods in transit crossing Moldova and then entering, for example, Ukraine, would then need a third guarantee. The price and frequency of usage comparison of TIR carnet and T1 transit documents is an issue that should be investigated during full TCA by interviewing the stakeholders.

RAIL SECTOR Infrastructure and Services

The rail freight sector is second in importance in terms of freight volumes, after the road sector. Statistical data published by Railways of Moldova for year 2016 indicates that 3.49 million tonnes43 of freight were transported by the railway in 2016, which is a little less than 10% of Moldova’s traffic. Of this, the majority (43%) was transit cargo, followed by imports (34%), exports (12%), and local traffic (11%).44 The only operator and owner of the railway tracks, locomotives and rail depots is a state enterprise CFM (Calea Ferată din Moldova’).45

Moldova’s railway network is generally in poor technical condition and is not electrified. Railway sleepers are in poor condition and need repair. There are shortages of rolling stock and

40 https://www.iru.org/tir/about-tir 41 AITA : http://aita.md/index.php/ro/despre-aita/membrii . Not all Moldovan carriers are part of the TIR convention or AITA. 42 IRU : https://www.iru.org/resources/newsroom/rise-eu-guarantee-limits-tir 43 Stat data Railways of Moldova, 2016 : http://railway.md/content/ro/2-Company/3- Indicators/2016/Activitatea%20CFM%202016.pdf?rand=882394165 44 Ibid. 45 Rolling stock is owned by both CFM and shippers.

23 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV locomotives, and existing equipment is in poor shape, prone to breakdowns. Works carried out some years ago to upgrade the track between Chisinau and GIFP have not yet achieved the required quality level. As a result, the weight of the trains, number of wagons and operational speed have all been reduced, which means on certain segments now the speed does not exceed 10-15 km/h.

Most Moldovan railway tracks have CIS gauge (1,520 mm), presenting gauge compatibility issues with rail travel to the EU. At GIFP, there is a dual railway track (of 1,520 mm and 1,435 mm in width) allowing goods going through the port to arrive or depart at either of Moldova’s neighboring countries without subsequent bogey exchange or unloading/reloading. For other traffic a bogey exchange operates at Ungheni, near the Romanian border.

There is capacity to handle 20’ containers at Ungheni and Chisinau. The Chisinau railway depot has gantry cranes capable of lifting 20’ containers. Some are inoperable at present but could be repaired or replaced. There is a Soviet-era warehouse with a rail line to allow goods to be loaded onto and unloaded from railway wagons. There is no special provision for temperature controlled cargo or hazardous cargo. The diesel locomotive park is quite old and recent measures have been taken to reduce illegal trade with fuel.

CFM struggles with funding and sources of investment. In 2016, its freight profit was positive, but overall profit was negative due to losses on the passenger transport side. The high costs of rehabilitating and maintaining the tracks, rolling stock and locomotives has led to railway tariffs in Moldova that are generally high when compared to neighboring countries and road transport. This, along with inefficient and unreliable operations and political problems with Transnistria, has led to underutilization of the extensive rail network by national cargo as it is uncompetitive with road transport for all but dangerous and heavy cargo. For example, from GIFP, oil and construction materials are sometimes transported by rail but most other cargo is moved by road. The majority of traffic is transit cargo that has no choice but to traverse Moldova.

However, there is optimism for the sector’s recovery due to significant investment plans and a planned restructuring. The EBRD has planned investments of EUR116.5 million to finance the acquisition of new multi-purpose locomotives and for conducting priority investments in rail infrastructure rehabilitation.

Regulatory Framework

Rail Transport Code No309 of 17 July 2003 establishes the legal, organizational and economic framework of the railway transport, its peculiarities, role in the economy of the country, regulates its relations with the central and local public administration authorities with other types of transport. It regulates the relations between the railway and the freight forwarders, the consignees of goods, the passengers, other natural and legal persons that benefit of the railway transport services, establishes their rights, obligations and liability. The Code regulates the basic conditions of passenger transport, goods, luggage and messengers, establishes the general rules for the operation of the access to railways.

The Government approved in October 2017 the Concept of Restructuring the Railway Sector and the State Enterprise “Moldova Railway” 2018-2021. It is envisaged that a Railway Agency will be created that will be the regulatory body and accident investigation authority. The railway market will be opened up for private market players and attracting new railway operators. The State Enterprise will be restructured and transformed into a joint-stock company with organizational and financial separation of passenger transport, freight transport and infrastructure.

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 24 AIR SECTOR Infrastructure

Air cargo still represents a small percentage of Moldova’s external trade. There are 3 international airports in Moldova, but only 1 of which is currently fully operational for international passengers and cargo flows (Chisinau International Airport). Moldova’s other airports include Marculesti International Airport in northern Moldova and Cahul in southwestern Moldova.

Chisinau International Airport is Moldova's main international airport, located 13 km southeast of the center of Chisinau, and operating 24 hours per day. It serves as headquarters for Air Moldova, the country's national airline. The airport is managed by private company JV "AVIA INVEST" through a concession from November 1, 2013, according to a government decree RM. Essential reconstruction works were completed in 2017, including on the airport’s one runway and light beacon system. Despite current ongoing projects for renovation of the airport building for passengers, runways and other infrastructure components, neither the cargo handling terminal nor customs bonded warehouse has been reconstructed. Both have limited capability and capacity for cargo handling and storage, and are not safe for sensitive cargo operations like Valuables, Perishables, IMO goods, etc.

Marculesti International Airport is a former military airport 28km from Balti. On 10 July 2008, the Parliament of the Republic of Moldova approved the Law on Free International Airport "Marculesti". The document provides for the creation of a Free Economic Zone (FEZ), in which the infrastructure and the territory of the airport will be used. Both the airport and the FEZ are managed by the State Enterprise "Marculesti International Airport" as General Investor. The law provides for customs, fiscal, etc. facilitations, which will ensure a favorable investment climate for attracting investors and implementing economic projects in Free Airport. Currently, there are 12 residents, 10 local and 2 foreign. They specialize in such activities as: air cargo transportation, logistics operations, construction and reconstruction of objects, servicing the airport infrastructure. The take-off / landing route from Marculesti Airport differs from other Moldavian flight paths, allowing for heavy aircraft landing. Due to the benefit of tax and customs facilities, as well as the runway, Marculesti Airport, could become an important transit center of goods, subject of identification for prospect investors.

Cahul International Airport is 8 km away from Cahul on the border of Romania. According to the Government Decision no. 467 of August 28, 1996 Cahul Civil Aviation Airport was sent to the local public administration. In 2002, the airport was given the status of an international airport and there were several routes to Ukraine, Russia and Turkey. After 2003, the Cahul International Airport underwent renovations. However, the airport did not obtain a proper operating license from the State Civil Aviation Administration and airport activity was stopped in 2004 by the Civil Aviation Authority due to the fact that the airport did not meet the requirements for flight safety. Being nonoperational, the airport will not be considered during the full TCA.

Services

Air Cargo services are typically performed via passenger aircrafts due to low demand(~0.001% from total cargo volumes in 2016), mostly used for carriage of urgent deliveries like postal courier services, medications/medical equipment, valuables and perishables where the time sensitive requirements for transportation prevail even on higher costs in comparison with other modes of transport.

There are also some technical issues that could be considered as constraints for dispatch of the goods by air freight services to/from Moldova:

25 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV • Limits of the shipment size due to aircraft door size limitations

• Subject of space availability on the commercial carriers with priority given to: luggage, diplomail/mail, cargo by airlines.

Alongside regular airlines services, there is also unscheduled service (i.e. DHL aviation) to Chisinau based on demand, and dispatch to regional hubs such as Bucharest and Vienna from where cargo is trucked to destinations. DHL Moldova also has one scheduled direct express service per day shared with UPS/FedEx postal courier providers.

Freight forwarding providers are also considering multi-modal cargo on-forwarding especially for large volumes(weight/dimensions) , on imports – by air from overseas origins, further on-forwarding by truck i.e. Vienna/Bucharest to Chisinau or on exports – by truck ex MD origins to nearest international airports Bucharest/Vienna/Frankfurt & further dispatch by air on cargo freighters.

Regulatory Framework

Civil Aviation Law No.1237-XIII of 09.07.1997 regulates the relations that arise in connection with the use of the airspace of the Republic of Moldova and with the activity in the field of civil aviation on the territory of the Republic of Moldova. The Law applies to all natural and legal persons involved in civil aviation activities on the territory of the Republic of Moldova, to all aircraft in the airspace of the Republic of Moldova, as well as to aircraft registered in the Republic of Moldova regardless where they are located.

BORDER POSTS Infrastructure

Customs posts appear to have a reasonable level of equipment overall, but that the Full TCA will assess its suitability in more detail. The access to customs posts appears to have some issues, with some roads in a bad condition, like for example, the one to Giurgiulesti.

The current financial means are insufficient to ensure operational capacity, lack of maintenance of technical equipment and inadequate premises at some working locations. At some Customs Posts, suitable facilities exist, while at others, conditions are evaluated to be at a very low level. Sufficient parking and waiting areas are in place at many Customs Posts, ensuring a smooth flow of traffic at the border area. However, at others the geographic location and infrastructure places a restriction on their availability. The size and quality of inspection areas also varies, and will be further assessed in the Full TCA in terms of whether inspection areas are properly protected from the elements, allow for inspection of refrigerated goods etc. The needs of the trade operators and customs officers are discussed and considered, but a lack of financial resources often prevents implementation.

Joint customs controls with Ukrainian authorities have been established at Criva-Mamaliga, Larga- Kelmenti, Briceni-Rossosani, Kuchiurgan-Pervomaisk and recently at Palanca-Maiaki-Udobnoe border crossing point. Further discussions are ongoing with the Romanian counterparts to consider similar joint customs controls in near future.

There are two ongoing EU-funded infrastructure projects to modernize customs posts Palanca (EUR 5.6 million), Leuseni-Albita and Giurgiulesti-Galati (EUR 10 million). They are expected to be fully functional by 2018.

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 26 Customs Services and Procedures

In recent years, the Customs Authority has initiated a number of major trade facilitation reforms related to customs clearance procedures, controls and services. These reforms are driven in part by Moldova’s implementation of the EU Association Agreement and the requirements of the WTO Trade Facilitation Agreement. Customs has been supported by external development partners including the WCO, WBG, IFC, EU (including the EUBAM mission as well as a number of other projects), UNDP, and the USAID Brite Project (2012-2016). They include:

 adoption of risk management for customs control, including automated risk management;  implementation of electronic submission of customs declarations on Export regimes(piloting project autumn 2013, fully operational as of 01 March 2014) & on Import regime (piloting project autumn 2014, fully operational as of 01 March 2015);  implementation of electronic submission for customs declarations in national Transit regime as of September 2017;  establishment of regular consultations or partnerships with business associations and trade groups for two-way exchange of information;  introduction of an authorized economic operator (AEO) program and simplified clearance procedures (including domicile clearance);  building Customs post-clearance audit capacity;  increasing transparency and understanding of customs requirements (e.g., publication of guides for businesses);  establishing and developing partnerships with the business environment through the Private Sector Advisory Board;  establishing the joint controls in a few Border Crossing Points both with Ukraine and Romania Customs Authorities, that provides faster clearance procedures for business operations and physical persons at the borders;  enhancing infrastructure and access roads to Border Crossing Points with financial support from EU, in customs posts with major traffic to/from EU: Sculeni/Sculeni, Albita/Leuseni, Giurgiulesti/Galati, subject of confirmation by EU, with estimations for start of operations as of May 2018; and  ongoing plans for implementation of Twinning projects for elaboration and implementation of the Single Window and NCTS modules in the Customs Integrated Information System ASYCUDA World, as well as upgrading of the ASYCUDA system to the latest version, with financial support from EU and technical implementation by UNCTAD, starting with 2018.

Communication between business and Customs Authority upon the goods clearance stage is provided through the Customs brokers. Most of micro and SMEs are using the services of the Customs Brokers for submission of the declarations to the Customs under financial Guarantees of these operators (customs brokers). Customs declarations must be submitted for goods in Transit regime thus require presence of operational offices of the brokers in the Border Crossing Points 24h upon the arrival of trucks with goods into the borders, as well for the final Import regime, Export regime and other Suspensive customs regimes (i.e. temporary import, re-export, inward processing, and customs bonded warehouse).

For the goods in transit under TIR carnet coverage of customs obligations provided by the road haulers, submission of the TIR document in the Customs Integrated Information System ASYCUDA

27 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV World is provided also by the customs brokers at the BCP for imports and internal customs posts for goods on export along with submission of Export customs declaration.

At the time being, Chisinau, Balti and other internal customs posts are operating on the area rented from the private companies: parking area, customs offices and warehouse facilities. Opposite, the border crossing posts are assets of the Customs Authority from whom the Border Police, Food Safety Agency and other border agencies, inclusive the private customs brokers are renting the spaces for operational offices.

Considering the evolution of the increasing goods traffic on import and export, Customs Authority in partnership with Ministry of Economy and Infrastructure, are considering the opportunity of the feasibility study and further identification for resources to establish public-private partnership for construction of the regional multimodal Customs and Logistics HUBs(North, Center and South).

Customs Regulations

The customs legislation of Moldova consists of the Customs Code no.1149-XIV of 20.07.2000, the Law on Customs Tariff no.1380-XIII of 20.11.1997, the Law on bringing in/out the goods on the territory of the Republic of Moldova by natural persons no.1569-XV of 20.12.2002, Law on the Approval of the Combined Nomenclature no.172 of 25.07.2014, Law no. 440 of 27.07.2001 on Free Economic Zones, GD no. 501 of 14.08.2009 on the Integrated Customs Tariff(TARIM), GD no. 561 of 18.05.2007 on the Integrated Customs Information System ASYCUDA World, other legislative and normative acts elaborated for the execution of the mentioned legislative acts and a series of legislative or normative acts that also contain rules related to customs legislation.

In order to improve the gaps in the current customs legislation and fulfill the commitments under Article 201 of the EU-Moldova Association Agreement on the harmonization of customs legislation, a new draft Customs Code was prepared by the Customs Service with support from the World Bank Group – IFC Investment Climate Reform project and EUBAM. The draft has been screened by a number of international experts, including a TAIEX mission to Moldova.

Ministry of Economy and Infrastructure, Customs Service and other state bodies developed during year 2017, the National Action Plan for Trade Facilitation on period of 2018 till 2020 being assisted by technical experts (international and national) from World Bank Group, IFC - Investment Climate Reform project. Total estimated budget for all activities as per action plan is about of 100 million EUR, most of this with direct aim for renovation of border crossing points (Customs ~ 50 million EUR, Food Safety Agency ~ 5 million EUR), substantial part of estimated budget required for IT solutions (Customs, Food Safety Agency, Road Transport Agency, Border Police, etc.) in order to assure with efficient electronic data exchange between stakeholders (state bodies and business entities).

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 28 3. PRELIMINARY ASSESSMENT OF MOLDOVA’S TRADE CORRIDORS In November and December 2017, the team conducted a series of preliminary meetings and interviews with stakeholders in Chisinau and Giurgelisti, Moldova. The team also began conducting desk research and gathering relevant reports and statistics. Based on these inputs, we have described our preliminary assessment of Moldova’s trade corridor performance, key challenges, and potential opportunities. While this report is by no means comprehensive and contains many hypotheses which still need to be validated, in this section we present our initial thoughts, which will be used to frame our methodology and action plan for the full assessment.

OVERVIEW OF PERFORMANCE While the full TCA will conduct a detailed assessment of Moldova’s trade corridor performance, for this preliminary assessment we provide an overview of the country’s logistics performance as measured by the World Bank Logistics Performance Index (LPI). The LPI is a benchmarking tool that reports on two LPIS: an international LPI and a domestic LPI. The international LPI is based on qualitative evaluations by the country’s trading partners, and repots on 6 dimensions: efficiency of clearance processes by border control agencies, quality of trade and transport infrastructure, ease of arranging competitively priced shipments, competence and quality of logistics services, ability to track and trace shipments, and timeliness of scheduled shipment times. The domestic LPI qualitative and quantitatively evaluates logistics performance by logistics professionals in the country. The domestic LPI typically contains performance, time and cost data, but for Moldova unfortunately does not report on cost. Both systems use a 1(worst) to 5 (best) scoring system.

Table 4 reports on Moldova’s International LPI score and rank from 2007 through 2016. While Moldova’s score has increased from 2.31 in 2007 to 2.61 in 2016, the ranking has only improved by 10 since 2007 and both the score and rank have stagnated since 2014. This indicates that Moldova’s improvements in recent years have kept up with the pace of global improvements, but have not outpaced them. The relatively low score of 2.61 also indicates that Moldova is not viewed by its trading partners as having a well-performing logistics market.

Table 4. World Bank International LPI, Moldova

METRIC 2007 2010 2012 2014 2016

Score 2.31 2.57 2.33 2.65 2.61

Rank 103 104 132 94 93

Source: World Bank International LPI, Moldova Scorecard, 2016. But what really matters is how Moldova compares with other regional countries, especially those with which it competes for traffic. Table 5 compares Moldova’s international LPI score from 2016 with those of the region’s best performer (Germany) and selected regional countries. As shown in the table, Moldova performs worse than its immediate neighbors Ukraine and Moldova, and only better than regional Belarus. In terms of customs, Moldova performs better than Ukraine but worse than Romania according to the LPI, but this is surprising based on our preliminary interviews which indicated that most of the delays at Moldova’s borders were on the Romanian side. Of the sub- indicators, Moldova performs best in terms of timeliness, but this indicator just reports on reliability of expected time, not whether shipments are speedy, and could indicate that Moldova’s shipments are reliably fast or slow. Moldova’s international LPI scoring indicates that its trade corridors are not

39 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV competitive with its neighboring countries, which implies that when they can, shippers and transporters will chose competing routes through Ukraine/Romania instead of traversing Moldova, which requires passing through its border posts twice.

Table 5. World Bank International LPI, Moldova and Regional Countries, 2016

COUNTRY LPI LPI CUSTOMS INFRA- INT’L LOGISTICS TRACKING TIMELI- RANK SCORE STRUCTURE SHIPMENTS COMPE- & NESS TENCE TRACING

Germany 4.23 1 4.12 4.44 3.86 4.28 4.27 4.45

Hungary 3.43 31 3.02 3.48 3.44 3.35 3.40 3.88

Romania 2.99 60 3.00 2.88 3.06 2.82 2.95 3.22

Ukraine 2.74 80 2.30 2.49 2.59 2.55 2.96 3.51

Moldova 2.61 93 2.39 2.35 2.60 2.48 2.67 3.16

Belarus 2.40 120 2.06 2.10 2.62 2.32 2.16 3.04

Source: World Bank International LPI 2016. The domestic LPI indicates perceptions of Moldova’s logistics performance from within the country—like a self-evaluation.

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 30 Table 6 reports on the domestic LPI results from 2016. Noticeable results include Moldova’s import and export time and cost / port or airport supply chain results which are 32 and 25 days respectively—much higher than Ukraine and Romania which are both 2-3 days for both imports and exports. This highlights both issues with Moldova’s geographical position which is nearly landlocked with only access to river ports, and also the deficiencies with Moldova’s air cargo market which is not very developed and requires trucking from hubs in Vienna and Bucharest. Also of note, Moldova has more documentation requirements than Romania and its physical inspection rate is 6x higher than Romania and 4.5x higher than Ukraine, and adds a day of time as well. Further, 50% of Moldovan domestic respondents said that there were often or nearly always delays with Compulsory warehousing/transloading, pre-shipment inspection, and that there were issues with criminal activities such as stolen cargo.

31 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV Table 6. Domestic LPI, Moldova and Other Countries, 2016

METRIC MOLDOVA REGION: INCOME: ROMANIA UKRAINE EUROPE & LOWER MIDDLE CENTRAL ASIA INCOME

EXPORT TIME AND COST / PORT OR AIRPORT SUPPLY CHAIN

Distance (kilometers) 3500km 492km 594km 377km 923km

Lead time (days) 25 days 3 days 4 days 3 days 3 days

EXPORT TIME AND COST / LAND SUPPLY CHAIN

Distance (kilometers) 1250km 997km 1134km 701km 2904km

Lead time (days) 3 days 5 days 6 days 3 days 8 days

IMPORT TIME AND COST / PORT OR AIRPORT SUPPLY CHAIN

Distance (kilometers) 3500km 591km 533km 212km 750km

Lead time (days) 32 days 4 days 5 days 3 days 2 days

IMPORT TIME AND COST / LAND SUPPLY CHAIN

Distance (kilometers) 1250km 872km 916km 1024km 2092km

Lead time (days) 3 days 6 days 8 days 4 days 5 days

OTHER METRICS

Shipments meeting quality 87.50% 81.50% 68.78% 89.71% 92.13% criteria (%)

Number of agencies - exports 3 2 4 1 4

Number of agencies - imports 4 2 4 1 4

Number of documents - 3 4 4 2 5 exports

Number of documents - 4 4 4 2 5 imports

Clearance time without 1 days 1 days 2 days 1 days 1 days physical inspection (days)

Clearance time with physical 2 days 2 days 4 days 1 days 1 days inspection (days)

Physical inspection (%) 18% 7.93% 76.10% 3.09% 4.24%

Multiple inspection (%) 6.25% 2.84% 89.87% 1.44% 2.50%

Declarations submitted and 100% 84.82% 88.08% 60% 100% processed electronically/on- line (%)

Importers use a licensed 100% 79.90% 90.43% 80% 100% Customs Broker (%)

Source: World Bank Domestic LPI, Performance, 2016

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 32 KEY CHALLENGES AND POTENTIAL OPPORTUNITIES This section briefly highlights key challenges that we understand present constraints to Moldova’s trade corridors. In some instances, we also present potential opportunities for the project or full TCA. This list is a preliminary assessment based on the initial research and interviews and will be further validated and investigated during the full TCA.

1) The swing of export trade from east to west has put pressure on western border post infrastructure, especially the limited border posts with a combination of good border post infrastructure, access road infrastructure and services—such as Sculeni, MD/Sculeni, RO; Leuseni, MD / Albita, RO; and Giurgiulesti, MD / Galati, RO. Coupled with labor shortages at Romanian customs and the complexity of T1 processing, amongst other things, this has meant long delays at Romanian borders (cited as currently being 2+ days). The Full TCA will investigate these bottlenecks and what could be done to make alternate routes/border posts more accessible.

2) Increased trade flows to the EU, along with higher wages in Romania, easier registration and access to the EU market has meant that many Moldovan trucking companies and truckers have migrated across the border. This has negative implications on Moldova’s employment, GDP, tax revenues etc. This trend may be expected to continue due to the fact that significant growth rates of haulers are registered in Central and Eastern European Member States coupled with greater demand for drivers from non-EU countries as a result of driver shortage in EU. Reducing transport time and delays could have a positive impact on the bottom line of Moldovan trucking companies.

3) On the other hand, the situation with Ukrainian roads and customs has greatly improved over the last year, making Ukrainian ports the apparent preferred import route, at least for non- European traffic which still comprises 50% of imports (from CIS, Turkey, China). But Moldovan truckers have faced shortages of authorizations for travel to Ukraine which increases reliance on Ukrainian trucks and leads to corruption as truckers fight to obtain the scarce resource or find alternate means of crossing the border. A liberalized trucking market could solve this problem, but would require bilateral negotiations to end the protectionist policies. The Full TCA will aim to provide case studies and examples of trucking market liberalization.

4) Moldova has economic free zones but it is hard to access them due to poor road infrastructure conditions both between Comrat and Giurgiulesti and Ungheni and Balti. Planned road rehabilitation projects should increase access to these zones. We will investigate whether any other constraints exist.

5) Many of the products exported by Moldova are heavy, which puts stress on the trucking industry and roads. Trucking companies have issues with overweight vehicles: on one hand they don’t like potential new regulations limiting overweight vehicles to Ukraine which limits their ability to use that corridor, but on the other, they recognize that overweight shipments in general damage their trucks. Further, overloading degrades the roads and increases road maintenance costs. Stronger regulation, enforcement and fines could be used to make it so overloading is no longer the norm. However, this would then increase the transport cost per ton. The Full TCA could look at benchmarks and norms in other countries to see what ton limits are typically enforced and what enforcement mechanisms have proven to be effective.

6) Moldova’s exports have been recently facing a shortage of available empty containers. The reason for this needs to be further investigated but could be due to a variety of factors: a general increase in exports, an increase in containerized exports, uneven combination of bulk vs containerized import/export flows, seasonality concentrating exports all during one period, poor

33 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV planning and placement of empty containers, shipping line policies prohibiting backhaul or requiring that containers are returned to the port of entry, demurrage charges, etc. A dry port or inland container depot could help coordinate and plan the use of resources, but would require shipping line buy-in as they own the containers.

One thing that is clear is that with imports exceeding exports by 2:1, there should not be a shortage of export containers in a market with proper planning and information sharing—but this is not the case in Moldova. The trucking market is fragmented and increasingly abroad, there are no multinational trucking companies in Moldova, routes are fragmented across multiple countries, and only one shipping line has an office in Moldova. This makes it hard for trucking companies to invest in technology that allows for route planning. Further, neither the government nor associations keep or disseminate detailed statistics that would increase the information flow. The full TCA will investigate whether a dry port is warranted, or whether there are more cost-effective solutions— i.e. technology or freight exchanges—that could improve the process at a lower cost.

7) Logistics hub(s) could also allow SMEs to consolidate pallets/LCLs into more affordable shipments.

8) Technology could improve the experience at the congested borders. We will provide recommendations and case studies of technology uses in other countries—such as apps or billboards advertising the border waiting time (which is currently accessible via a website).

9) Customs brokers noted constraining issues with the guarantee system. The current system puts financial strain on the customs brokers and risks unnecessary delays at the border waiting for guarantee limit to free up. We will look into potential solutions which could include a) policy change to reduce the guarantee requirements for AEO or authorized exporters from 100% to a discounted amount; b) a policy change to release the guarantee when the truck enters the customs area instead of when it is transferred to another customs regime; c) systems changes to Asycuda which allow customs brokers to have access to their own guarantee limits on a real-time basis.

10) Air cargo is currently limited to 0.001% of volumes. In some ways it is a chicken and egg problem—there is little demand so there are few services, but without frequent services there is little demand. But there must be more demand than that which is currently flowing through Moldova’s airports, as there are air services to Bucharest and Vienna for Moldovan cargo—this means that there are probably other constraining factors such as high costs of air cargo and infrastructure issues in Moldova that are preventing the cargo from coming directly into the country by air. For example, there are also apparent infrastructure issues with the air cargo terminal in Chisinau (to be further investigated). We will further investigate potential air cargo demand to figure out why it is not being realized and provide recommendations to overcome these constraints. Increasing access to air cargo could lead to increased exports of high value and/or time sensitive cargo.

11) Despite Moldova’s extensive rail network, rail only represents 10% of volumes due to the railways poor performance—long transit times, unreliable transit times, and relatively high tariffs. This is due to poor track condition and a shortage of locomotives and rolling stock. However, there are investment programs in place that could increase the competitiveness of the railway in the future. We will investigate which products could incur cost savings by switching to the railway when it is rehabilitated and whether there are any other constraints that are not being addressed.

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 34 12) GIFP, like the air cargo sector, faces issues such with demand which are partly due to infrastructure issues. Both road and rail links to the port are in poor condition which along with the additional cost and time of the feeder service, reduces the competitiveness of the port. However, despite these limitations, certain cargoes such as fuel and grains have been able to develop efficient operations at the port. We will investigate whether there are operational constraints limiting volumes (such as use of barges instead of the feeder). We will investigate whether other export products could improve operations, reduce time or cost by using the port—for example, textile or automotive from the free zone. We will also investigate why import volumes are lower than export volumes in a country where imports exceed exports by 2:1; increasing imports and balancing the trade flows could reduce costs and in turn prices.

13) Outside of GIFP port, there are border posts on both sides. The combination of the port and two border posts leads to long lines and congestion. Could a truck staging area, parking lot, and/or trucking appointment system ease traffic flows?

14) In terms of regulations, the freight forwarders market is currently unlicensed and unregulated, which affects the professionalism and profitability of the industry. Regulations and licensing could improve this.

15) Customs brokers could also potentially benefit from a training and licensing program.

16) It is our understanding that customs warehouses need rehabilitation and/or construction. For example, the customs warehouse at Chisinau airport is reportedly in poor condition. Moldova Customs also is interested in developing hubs in North, Central and South Moldova. These issues will be further investigated in the next report.

35 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV 4. FULL TCA METHODOLOGY

APPROACH In Section 1, we provided an introduction to trade corridor assessments. The full TCA will be based on those principles. Here we build on the introduction to further detail the implementation of the full TCA. The focus of the TCA will be on assessing the time, cost and reliability of Moldova’s primary international trade corridors, comparing performance to benchmarks, diagnosing bottlenecks, and providing prioritized action plans and recommendations.

In setting proposed parameters for the study, we analyzed which products and corridors to use as proxies for our study and analyze in detail. Based on this preliminary TCA, we propose assessing the following products and corridors, as listed in Tables 7 and 8 below. This will be confirmed through more detailed assessment in the next phase of the project, and the proposed commodities and routes will be validated at a stakeholder workshop.

At the product level, the first part of the assessment will focus on times and costs of general containerized goods as containers provide a standardized unit of measure for assessing performance against benchmarks. Recognizing that much of Moldova’s trade is not containerized,46 we may also look at bulk items through the commodity analysis. In Table 7Table 7 we present categorization and ratings of potential products considered for the commodity analysis. We assessed potential commodities based on a multiple criteria analysis of the following factors: flow, type of product, trade value, strategic importance, whether they are value-added, whether they are perishable, and whether they are a USAID project focus. While both imports and exports will be assessed, the focus will be on exports as increasing exports would improve Moldova’s trade balance and even out transport flows. Taking into consideration a balance of budget constraints and product representativeness, we decided to select 5 potential products proposed for analysis:

1. Imports of inputs to the automotive and/or ICT sector including base metals and articles of base metals and/or Insulated wire and cable, optical fiber cable imports: these products are imported as inputs to key industries for export including production for the automotive, electrical and ICT industries, some of which are supported by the USAID Competitiveness Project 2. Textile imports and exports: represents a significant portion of both import and export trade and is a value-added industry with USAID-support 3. Wine exports: important to export trade and since Russian ban, must seek new markets; also is a value-added industry with USAID-support 4. Automotive part exports: high-value product that could potentially be traded by air due to importance of transport time and reliability; also is a value-added industry with USAID-support. 5. Stone fruit exports: perishable, emerging export product with USAID-support

46 To date, the team has been unable to find statistics on the percentage of Moldova’s trade that is containerized.

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 36 When applicable and possible, we will analyze prospective trade routes, as well as current ones, to see if removing transport constraints could lead to new markets.

Table 7. Representative List of Potential Products to Assess in Full TCA PRODUCT FLOW TYPE TRADE 2016 (USD MILLION) STRATEGIC IMPORTANCE HIGH VALUE VALUE- ADDED PERISHABLE USAID PROJECT CHOSEN

Petroleum Import Liquid Bulk 630 High Yes N/A No No No

Base metals and Import Container 274 Med No N/A No Yes Maybe articles of base metals

Plastic materials Import Container 122 Med No N/A No No No

Insulated wire and Import Container 84 High No N/A No Yes Maybe cable, optical fiber cable

Pesticides Import Dry Bulk 61 High No N/A No Yes No

Textiles Import Container 346 High Yes Yes No Yes Yes and Import/ Export 307 Export

Wine Export Container 107 High Yes Yes No Yes Yes

Automotive Parts Export Container 27 High Yes Yes No Yes Yes

Fruit and vegetable Export Container 26 High No Yes Some Yes No juices or Reefer

Apples Export Reefer 24 Med- No No Yes Yes No High

Stone fruits Export Reefer 15 Med- No No Yes Yes Yes High

Honey Export Container 9 Med No No No Yes No

Dried fruits Export Container 8 Med No Yes No Yes No or Reefer

Walnuts Export Container 2 High No No No Yes No

Note: proposed commodities in red. Source: Trade data from United Nations Commodity Trade Statistics Database https://comtrade.un.org.

In Table 8 we propose origin-destination pairs of corridors for which we will aim to assess performance, provided data is available. These routes were selected based on current and anticipated traffic volumes and include both trade to/from Moldova and transit cargo. While transit cargo is significant as it brings revenue in terms of customs fees, road use fees, trucking income, hospitality service income etc, national traffic is typically more important for economic development of a country. It is only when value-added services are conducted, for example at a distribution center, that transit traffic really begins to bring value. Therefore we focus on origin-destination pairs that include Moldova as either the origin or destination.

37 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV In terms of mode, we will focus on road transport, as road transport comprises 90% of traffic. Rail transport is limited due to the poor current state of rail infrastructure. Further, its potential in the short-medium term is limited:

 Rail is typically only cost effective for long distances, with a common benchmark being more than 600 km; this limits rail transport to Odessa or Giurgiulesti which are less than 300 km.  For rail to be an efficient means of transport, cargo should be moved in block trains. Moldova does not currently have the economies of scale for scheduled block trains from one supplier.  Neither high value nor time sensitive goods consider using the railway, which excludes most perishables, automotive parts etc.  Railway volume potential in Moldova is therefore limited mainly to dangerous and heavy goods, as well as those traveling a long distance from Moldova to abroad.

Therefore, our time and cost assessment will be limited to Giurgiulesti to Chisinau in terms of assessing rail transportation.

Air cargo volumes are also very small at present. We will investigate whether there is low demand for air cargo in general, or whether there are bottlenecks preventing the air cargo market from materializing. However, as air cargo is prospective, our time and cost assessment will be limited to commodity-specific analysis (as warranted) in terms of assessing air transportation.

Table 8. Proposed Corridors to Assess in Full TCA

POINT A [A] POINT B MODE(S) APROX. DISTANCE

Chisinau Bucharest, Romania Road 470 km

Chisinau Constantza, Romania Road, Feeder+Road 500 km

Chisinau Vienna, Austria Road 1400 km

Chisinau Odessa / Chornomorsk, Ukraine Road 200 km

Chisinau Kiev, Ukraine Road 600 km

Chisinau Giurgiulesti, Moldova Road, Rail 235 km

Chisinau Istanbul, Turkey Road+Ship, Road 750 km

Chisinau Milan, Italy Road 2300 km

Chisinau Hamburg, Germany Road 2100 km

Chisinau Shanghai, China Road+Ship, Air 8,000 km/air, 16,000 km/sea+road47

47 Route distance calculator(web source): https://www.searoutes.com/portdistance?fromName=Odessa&fromLocode=UAODS&toName=Shanghai&toLocode=CNS HA

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 38 [a] In general, we will assess time/cost to/from Chisinau to/from foreign origins/destinations. For some commodities, we will also assess routes to/from other origins/destinations. For example, we will look at imports and re-exports of automotive parts to/from Balti.

METHODOLOGY

STAKEHOLDER WORKSHOP AND FIELDWORK The full TCA will start with a stakeholder workshop in Chisinau, anticipated for March or April 2018. While many stakeholders are aware of our TCA from our initial work under this preliminary study, the workshop will provide an official introduction which will facilitate cooperation and our team’s access to data and information. The workshop will also allow us to validate our proposed products and routes.

Immediately after the workshop, the team will conduct semi-structured interviews with shippers, transporters, freight forwarders, and operators in Moldova, Ukraine and Romania.48 During these interviews, we will collect information and data on transport route choices, transport times, reliability, tariffs, and bottlenecks. Meeting with multiple companies and various sides of a transaction (i.e. both the shipper and transporter) allows for triangulation and validation of information.

ANALYSIS AND ASSESSMENT For each corridor and product, we will quantity time, cost and reliability when data are available.

 Time will be measured as the typical time (defined as the time it takes 90% of the time) from origin to destination, broken down (where applicable) by: overseas shipping time, time in the port for port activities, time in the port for customs clearance, road link time, rail link time, road node time, rail node time.  Cost is the total price paid by the shipper from origin to destination including: overseas shipping (if available), customs, port costs, and inland transport costs. Inland transport costs will be broken down by road link, road node, rail link, rail node, and border post costs if possible. Further, costs will be broken down by formal and informal fees.  Reliability will be measured quantitatively or qualitatively depending on the availability of information.

These estimates will be based on a combination of secondary data and primary data from interviews. For the time calculations, GPS data is the most accurate data source, but it is unclear at this time whether GPS data will be available to the team. For arriving at accurate cost/tariffs, it may also be necessary to submit generic quote requests to transporters and/or freight forwarders.

For the corridor assessments of containerized products, we will compare performance between different routes and modes, when multiple options exist. We will also compare performance to benchmarks/norms.

48 It is our understanding that many key trucking companies and freight forwarders are located outside of Moldova, as are the major ports servicing Moldovan cargo.

39 PRELIMINARY TRADE CORRIDOR ASSESSMENT USAID.GOV Based on the assessment of performance, we will diagnose key bottlenecks, i.e. areas of high time, cost or unreliability. Bottlenecks may be found in both links and nodes, and the reason for the constraint may be due to issues with infrastructure, services, or regulations and policies. Part of the assessment will look into whether a dry port or logistics hub is warranted in Chisinau or elsewhere; this was specifically requested by Customs and other stakeholders.

RECOMMENDATIONS Finally, we will present action items for the Government of the Republic of Moldova, the Moldova Structural Reform project, USAID, and other development partners to consider. These action items will include infrastructure investment recommendations and recommendations for the Moldova Structural Reform Component 4 grant fund, as well as regulatory and policy recommendations (including potential work for the Moldova Structural Reform program). The recommendations will be prioritized by 1) potential impact and 2) political feasibility of implementation. It is envisioned that both the impact ratings and political feasibility ratings will be qualitative (i.e. high, medium, low).

The draft final report and action plan will be presented to USAID and the Ministry of Economy and other stakeholders for review. The final report, taking into consideration their comments, if any, will then be presented to stakeholders during a second workshop. The assessment and recommendations will also be communicated as per the project’s Component 3 communication plan.

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT 40 APPENDIX A. FIELD WORK MEETINGS

MEETINGS CONDUCTED IN NOVEMBER/DECEMBER 2017

ORGANIZATION NAME POSITION

World Bank Group/IFC Lily Begiashvili Project Manager, Moldova Investment Climate Reform 28/11 Project Radu Cornea Short-term consultant

Customs Service Iurie Ceban Deputy Director 28/11 Vasile Girbu IT Director Sergiu Scripca Head of Strategic Planning and Quality Management Unit; Strategic Management and Customs Cooperation Vladislav Svet Customs Control and Trade Facilitation Department

Customs Control and Trade Tatiana Moraru Facilitation Department

Ministry of Economy and Mihaela Gorban Head of International Cooperation Infrastructure Department

29/11 Adviser, International Olga Volcov Cooperation Department Rogovei Radu Transport Department Slanina Andrei Transport Department Table

AEM-Trans Freight Forwarders Serghei Taran President and Customs Brokers Association Valentin Armas Counselor 29/11

DHL Moldova Eugeniu Ababii Manager 30/11

Danube Logistics, GIFP Grigore Talpa Dep. Operational Director and Head of oil terminal 01/12 Tatiana Kyrjeleanu Manager vessels

Customs Posts Giurgiulesti Nicolae Fridjoi Head of Giurgiulesti Port customs office 01/12 Tatiana Fridjoi Deputy Head of Giurgiulesti-Galati office

Chamber of Commerce and Natalia Calenic Deputy President Industry Valentin Armas Head of Custom Clearance and 04/12 Certification Services, ATA Unit

International Association of Road Anatolie Gozun Vice-president Hauliers of Moldova (AITA) Petru Mititiuc Head of Foreign Relations 04/12

A-1| | RTMA QUARTERLY REPORT, JULY–SEPTEMBER 2017 USAID USAID.GOV MSC Mediterranean Shipping Emilia Chitoroga Office Manager Company 04/12

FPC Valah SRL Customs Broker Dumitru Popescu General Manager 05/12

Via-Multima-Moldova SRL Iulian Golub Director 05/12

Cargo-Master SRL Vasile Degtiarenco Director 05/12

MIEPO Vasile Soldan Investment Attraction Expert 07/12

Moldova Railway Grigore Condurache Deputy Director 08/12 Alina Diacenco Director, Strategies and International Relations Division

USAID Moldova Corneliu Rusnac Senior Project Manager Specialist 08/12

USAID.GOV PRELIMINARY TRADE CORRIDOR ASSESSMENT || A-2 APPENDIX B. MAP OF ROAD REHABILITATION PROJECTS

Source: The State Road Administration(under the Ministry of Economy and Infrastructure) at http://www.asd.md/page/drumpodlucru 

B-1| | PRELIMINARY TRADE USAID.GOV