The member-states of the Eurasian Economic Union (EAEU) have endorsed Moldova’s application for observer status within the organization, Kyrgyz President Almazbek Atambayev said at the meeting of the Supreme Eurasian Economic Council on Friday.
“It has been decided to welcome and endorse Moldova’s application,” he said, adding that the decision on granting the country a new status “has been approved under the established procedure.” The Presidents of Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, and Russia are participating in the meeting of the Supreme Eurasian Economic Council in Bishkek.
Although it is a relatively small nation, Moldova could in future represent another potential access point to the European Union for the EAEU as it shares a border with Romania. It is also an ex-Soviet nation and therefore shares historical and cultural empathy with the EAEU members. The country became independent in 1991.
Interestingly, Moldova’s economy is dominated by the services industry, which makes up 60 percent of its economy. Even if the country has some of Europe’s lowest per capita GDP, in future it could become a hub for e-commerce and IT.
While the country is landlocked, an agreement reached with Ukraine in 2005 gave Moldova access to the Black Sea via a 600 km stretch of the Danube. It can be expected that this may now be further expanded in terms of facilities. The Giurgiulesti Port has seen a huge increase in traffic over the past three years, and is also operated as a Free Trade Zone, meaning goods destined for the EU can be imported and warehoused – duty free – until called upon for shipment into the EU.
Moldova’s position next to the EU, should port facilities expand and it eventually joins the EAEU as a full member, has wide ranging implications. It could provide the EAEU with another direct border with the European Union. This takes on particular significance when taking into account China, India, and other Asian nations such as Singapore, Iran, and Turkey, which are all in the process of establishing free trade agreements (FTAs) with the EAEU, and if ratified, will bring their goods, duty free, right to the borders of the European Union. China is currently in the process of studying its own bilateral FTA with Moldova, and has also loaned the country US$1 billion for IT infrastructure development projects. Moldova has, in time, the potential to become a Southern version of Estonia should it get its development plans right, and learn to coordinate with Chinese and Russian services demand in e-commerce.
Chris Devonshire-Ellis is the Founding Partner and Chairman of Dezan Shira & Associates. He is based in Europe. The firm provides European businesses and governments with strategic, legal, tax and operational advisory services to SMEs and MNCs investing throughout Asia and has 28 offices across China, India and the ASEAN nations as well as St. Petersburg and Moscow. Please contact the firm at email@example.com or visit the practice at www.dezshira.com
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