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Activity of the Business Community in the Transnistrian Region in the Conditions of the Unsettled Conflict

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Activity of the business community in the Transnistrian region in the conditions of the unsettled conflict Author Valeriu Chiveri June 2016 1 Table of contents Introduction ........................................................................................................................................... 3 1. Trade activity of Transnistrian economic operators ...................................................................... 4 1.1 Customs stamp “story” ...................................................................................................... 4 1.2 Registration of Transnistrian companies ......................................................................... 5 1.3 Current economic and trade situation of the region ........................................................ 6 2. Working groups on confidence building ......................................................................................... 8 3. DCFTA as a part of Association Agreement RM-EU: opportunities for the reintegration .................................................................................................................................... 9 3.1 Background for negotiations ............................................................................................. 9 3.2 Approaches of the parties involved ................................................................................ 11 3.2.1 The European Union .............................................................................................. 12 3.2.2 The Republic of Moldova ....................................................................................... 12 3.2.3 The Transnistrian region ........................................................................................ 13 4. DCFTA Implementation ................................................................................................................ 14 4.1 The state of affairs: the Republic of Moldova ............................................................... 14 4.2 The state of affairs: the Transnistrian region ................................................................. 16 Conclusions ........................................................................................................................................ 16 2 Introduction Along with other important aspects, the economic and business relations are among the key elements of a “puzzle” named comprehensive settlement of the Transnistrian conflict. Trade and economic component of the conflict has always been under strong political pressure both from internal and external point of views. Although in difficult situations business communities from both banks of Nistru River found solutions for co-operation, displaying a greater understanding that the two sides are economically interdependent. Business issues in a conflict context have always at least two components - internal co-operation of business entities and external trade. The latter requires compliance with the Moldova's commitments in the field of international trade and customs regulations and, therefore, caused permanent tensions and misunderstandings of the conflict sides. The Transnistrian side usually claimed its “right to unilaterally establish and maintain international contacts in the economic, scientific-technical and cultural spheres, and in other spheres by agreement of the Parties”1, treating selectively certain provisions of the 1997 Moscow Memorandum. In line with this approach, over the entire settlement process there were many attempts to separate the political aspects from economic co-operation. This position continues to be promoted by certain actors. From obvious reasons it has not been supported by Chisinau, which rightly believes that all components of the settlement have to be examined in their total complexity. Co-operation between Moldova and EU in shaping the trade regime for Transnistrian companies is of utmost importance for Tiraspol as the Transnistrian economy seriously depends on the export of a few main products, such as electricity to the right bank of the Republic Moldova, and steel and textiles to the EU market. In such a situation, the EU association process, including entering into force of the Deep and Comprehensive Free Trade Area (DCFTA) with the EU not only shaped profound changes in the context of the Moldova-EU trade regime, but also led to trade restrictions 1 Memorandum on the Basis for Normalization of Relations Between the Republic of Moldova and Transnistria http://www.osce.org/moldova/42309?download=true 3 applied by the Russian Federation to Moldovan companies, as well as to transit difficulties as a result of the conflict in Ukraine. These issues cannot be examined separately from certain elements of the settlement process and the interaction of business communities from the both banks. 1. Trade activity of Transnistrian economic operators The economic and commercial cooperation between the two banks of Nistru River, as well as the activity of the Transnistrian business community have experienced several phases which reflected to large extent the situation in the conflict settlement process and were closely linked to the Moldova-Ukrainian and Moldova –Russian relations in terms of trade cooperation and export operations of the Transnistrian companies. 1.1 Customs stamp “story” In February 1996, the Moldovan authorities, in an attempt to speed up the settlement process, signed the Protocol decision on solving the exiting problems in the activity of customs services of the Republic of Moldova and Transnistria. According to the document, the “customs check points” installed at the entrance to the Transnistrian region were supposed to be liquidated, “joint customs points” were planned to be installed at the border with Ukraine and customs authorities of the region to be provided with new Moldovan type of stamps. Thus, the provisions of the document to unify the customs area and ensure joint customs control on the Transnistrian segment of the Moldovan-Ukrainian border was considered a significant step in the settlement process. However, the document was only partly implemented, since Tiraspol treated it selectively. Refusing to ensure joint customs activates as stipulated in the protocol, Tiraspol used the opportunity to get Moldovan customs stamps and to legalize its foreign trade. The stamps were successfully used more than five years allowing the Transnistrian authorities promoting business interests of the Transnistrian entrepreneurs. However, this concession as considered by Chisinau, did not have any real positive effect on the settlement process. On 1 September 2001, with an official motivation on the Moldova’s accession to WTO (May 2001), the Government of Moldova decided to withdraw the stamps imposing new conditions for export of Transnistrian goods. The decision was strongly criticized by Tiraspol and Moscow, 4 being qualified as “economic blockade” of the Transnistrian region. In practical terms, the Transnistrian region immediately imposed initially a 20% tax and afterwards a 100% duty on Moldovan goods. Respectively, the economic ties between the two banks suffered as well: over nine months of 2002 commercial exchanges being reduced by 1.5 times towards the region and by 35.1% from the region to the right bank versus the same period of previous year.2 In this context, from late 2001 until May 2003, relations between the Republic of Moldova and Ukraine went through a difficult period since Ukraine allowed export of goods produced in the Transnistrian region through the Ukrainian border without Moldovan customs stamps and documentation. As a result, the Republic of Moldova appealed to international actors such as the OSCE, the EU and the US complaining and asking for support in adjusting accordingly the Ukrainian position. 1.2 Registration of Transnistrian companies In May 2003, the Republic of Moldova and Ukraine with the support of international partners agreed on introducing new customs rules, including for Transnistrian goods export operators. This step could be considered a starting point for registration of Transnistrian enterprises by the State Registration Chamber of the Republic of Moldova and receiving certificates of origin in the Chamber of Commerce and Industry of the Republic of Moldova. This decision overturned even more the atmosphere in the settlement process. Registration process went with many difficulties, Tiraspol leaders describing again the step as “economic blockade”. The implementation process of the document lasted for about one year and was marked by mutual accusations between the parties to the conflict related to the general context of the Transnistrian conflict settlement. Finally, the customs agreement was unilaterally cancelled by Chisinau authorities, in retaliation for provocative actions taken by Tiraspol during summer 2004 in relation with the Latin script Moldovan schools in the Transnistrian region. In a reaction to Chisinau authorities’ decision, on 15 August 2004, Ukraine stopped implementing the customs agreement and began to accept Transnistrian goods without Moldovan customs documentation, clearing them as “third country goods”.3 2 http://docplayer.net/1057989-Research-paper-on-transnistria.html 3 http://www.undp.org/content/dam/undp/documents/projects/MDA/00048695_EUBAM-8-2of6-Description%20of%20Actions.pdf 5 The 2004 Presidential elections in Ukraine brought changes in the relations between Moldova and Ukraine and re-launched the border cooperation and re-implementation
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