Opening remarks EC-president Barroso at the Moldova Investment Conference
European Commission
[Check Against Delivery]
President of the European Commission
Opening remarks at the Moldova Investment Conference
Moldova Investment Conference
Chisinau, 12 June 2014
Prime Minister Leanca,
Deputy Prime Minister Lazar,
Ladies and gentlemen,
It is a pleasure to be with you here today two years after my last visit to Moldova. In two years we have brought our relations into a new higher level.
We have done it in a spirit of cooperation and mutual respect, cooperation because this is the way the European Union works with its neighbours and partners and respect because you are a sovereign and independent nation. But we also did it with a great sense of conviction and determination, the conviction that Moldova’s European future is the best way to guarantee a united, democratic modern and prosperous Moldova.
There is no doubt that Moldova is a European country. So there can be no doubt about the European Union's special commitment to it.
In a few weeks' time we will sign the long-awaited Association Agreement between Moldova and the European Union. This will be another milestone in our political relationship, while the Deep and Comprehensive Free Trade Area included will add tremendously to the momentum in our economic partnership.
So this is the right time to see what it will mean for all of you - the business people and investors who will need to breathe real life into this agreement, but also the Moldovan citizens at large who stand to gain from increased prosperity and well-being - and what we can do from the political side to help you in that effort.
We are eager to make this work, not only because of the potential economic impact but also because the importance goes far beyond trade and investment.
For the European Union, both internally and internationally, economic and political integration has always been a means to bring people, societies and countries closer together, with an end to promote values of democracy and the rule of law, to establish peace and cooperation.
These same values and principles are enshrined in this Association Agreement and, from our side, we sincerely hope that Moldova joins in a few weeks a virtuous circle stability and prosperity. That is what the Association Agreement is really about.
Ladies and gentlemen,
We believe in your future, in a free and open society, in a prosperous and open economy, in supporting the next generation of Moldova's citizens taking the future into their own hands. And we are willing to invest in it - in you - through the genuine and comprehensive partnership that this Agreement offers.
A genuine partnership, because it places Moldova's interests on the same level as those of the European Union. And a comprehensive partnership, because it establishes the whole framework of our cooperation and the values, rights and freedoms on which it is based.
Almost a decade has now passed since we launched our joint EU-Moldova Action Plan [February 2005]. Since then, your country has made stunning progress. Let me congratulate all those who have contributed to this reform process. We knew it was essential, but we also knew it was difficult, and we can now build on its success to go one step further.
Six weeks ago the citizens of the Moldova have received the right to enter freely, without visas, the countries of the European Union. They - you - became the first among the 76 million of citizens living in the Union's Eastern neighbourhood countries to get this possibility. At the same time, as our common aviation area is coming into place, air travel is becoming cheaper, lowering the barriers between us both for people and for businesses.
Such initiatives are only the beginning. Much more will be needed to unlock the untapped potential within Moldova's economy. Only you can really make that happen but we, as European Union, can help you do so.
I will not go into the technical details of the agreement - today's expert discussions should convince you of the potential benefits and answer any possible questions - but let me underline two things:
First, the Association Agreement is much more than a trade agreement only.
Indeed, to achieve the larger objective of our relationship - to assist Moldova as an independent, stable partner and on the path to a free, prosperous society - it cannot be a trade agreement only. To bring lasting development, to create real jobs, trade needs to grow on the foundations of a rules-based economy and value-based institutions. Corruption needs to be countered vigorously. The legal system has to be independent. Governance has to be effective and accountable. Business has to respect governance and transparency rules, under the supervision of powerful regulators independent from political influence.
The transformative power of integration needs to be unleashed fully, and embedded into this agreement.
Such an agreement is above all an opportunity. It opens possibilities where before there were few.
But let me say upfront that it is not in itself an answer to all your problems. It remains up to Moldovan businesses to reap its full potential, and it remains up to the Moldovan government to make sure they can do so. Transformation and modernisation can only come from inside and not the outside. Ownership of the process matters. The EU offers tools and expertise. We do not export ready-made solutions - we offer a helping hand.
So there is a lot left to do. A better functioning of the justice sector is key for investor confidence. Independence of the judiciary is a fundamental pillar of a thriving democracy and an essential component of a good investment climate. Transparency in the banking sector is also crucial. Strengthened and functioning regulatory agencies, for instance of the National Bank of Moldova over the financial sector, are also crucial. So, in short, competition needs to be incentivised and nurtured, monopolies need to be broken down, and the right regulation needs to be put in place.
All this will not happen automatically, simply as a result of our strengthened partnership. Only through continued reform momentum in Moldova can you make it happen. If that momentum slows down, the results of the Agreement too will remain a dead letter. So this is a starting point, much more than an end point.
Second, what will the agreement mean for you?
Above all, of course, free trade. Import duties will be eliminated - immediately where the European market is concerned, and gradually for the Moldovan market, on which sensitive sectors will be protected through substantial transition periods and adequate assistance. Export duties will be eradicated. This way, Moldova will receive full and direct access to the European market, the largest single market in the world. Similarly, Moldovan service providers will also receive the possibility to directly sell their services in the European Union in the conditions agreed. As a result, independent studies point out that savings to companies on both sides will be considerable: mutual trade will substantially increase; Moldovan exports can increase by 16%; while the impact on public finances will be gradually offset thanks to the substantial improvement of business activity.
On top of that, Moldovan citizens will be able to set up businesses or branches directly across the European Union, and companies will have direct access to European public procurement markets. Overall, Moldova's GDP could gain an additional 5.4% in the medium term.
Consumers, investors and entrepreneurs will profit directly, through increased business opportunities, higher quality goods at lower prices and so on. But this will also consolidate Moldova's sovereign institutions through reforms - and by showing that reforms bring tangible results.
Indeed, Moldova will be fully able to reap the benefits from the agreement if it completes the reforms necessary to ensure, for instance, that the cost of customs procedures is lowered, or that Moldovan export production meets the European Union's quality standards or, importantly, that the rule of law is duly respected and guaranteed in the conduct of business relations.
Ladies and gentlemen,
Despite these obvious benefits, there is also controversy around the Association Agreement.
Some of the arguments that are used by the detractors of the Agreement are often spurious, sometimes irrational, and unduly politicised, but we have to take them seriously and provide convincing arguments to counter them.
So let me make myself very clear about a few basic aspects:
The European Union is not involved in Moldovan politics. We are interested in policy outcomes, which is a different thing; in seeing that our cooperation yields the positive outcomes that Moldovan citizens look for.
Ultimately the reforms that this Agreement entails are not meant to please Brussels but to benefit the country and its people. And I can say that much progress has been made in this regard: in the last six years, Moldova's gross domestic product has grown by 4% on average; trade between us has risen by 33%, despite the global economic crisis; Moldova has climbed 9 positions in the World Bank's "Ease of doing business" ranking; and in the Transparency International corruption index, Moldova has significantly improved its position (from 109th to 102nd). Those are the kind of results we seek. That is the direction we want to go together with you. No more. No less.
The Association Agreement is a positive agreement meant to add more momentum to Moldova's established international relations, not to compete with or intrude on Moldova's relations with any of its other partners, in particular Russia.
It is perfectly compatible, for instance, with Moldova's free trade agreement with the Commonwealth of Independent States. Indeed, a more stable, secure and prosperous Moldova would greatly benefit Russian producers and investors as well as European and Moldovan ones.
So I call upon Russia to take advantage of the new opportunities and not to take punitive measures further to the upcoming signature and implementation of the Agreement with Moldova. There is no economic reason nor legal justification for such behaviour. We stand ready to continue our bilateral consultations with Russia in this regard.
This Agreement will apply to the whole Moldovan territory as we recognise it. Transnistria can also benefit from it provided the right dispositions are in place. I therefore encourage Transnistrian operators to learn more about the opportunities that are there to be seized.
With the Association Agreement, Moldova will not relinquish an inch of its sovereignty. The Association Council that will be set up will be the simple successor to our existing Cooperation Council; it will not be able to make any decision without Moldova's agreement.
Yet with it, Moldova will be stronger. Together with the Moldovan government, we have many instruments to help realise as much as possible the opportunities the Association Agreement will open up for investors.
Our bilateral cooperation is strong and getting stronger still. Bilateral assistance reached more than €560 million in the 2007-2013 period and is expected to increase in 2014-2020. €131 million euros of assistance are planned for 2014 alone, including an exceptional top-up programme of €30 million to help the government and companies prepare for the DCFTA and facilitate Moldova's integration in the EU market. Moldova is already the EU's largest per-capita aid recipient worldwide.
I have just signed with Prime Minister Leanca today additional assistance programmes on the implementation of the visa liberalisation, reforms in the energy sector and support to rural areas.
On top of that comes the new DCFTA Facility that we will run together with the European Investment Bank and the European Bank for Reconstruction and Development. By mobilising up to €150 million of grants, it will make up to €1 billon of credit available to support the modernisation of small and medium-size enterprises in countries that have signed DCFTAs.
The Neighbourhood Investment Facility can also be used, on a grant basis, to support access to loans from European financial institutions and provide expertise to private businesses. It has already helped many infrastructure projects in Moldova, for instance road repairs or the construction of the Iasi-Ungheni gas interconnector.
And last but not least, business organisations can play a vital role. They bring investors from both sides together and can do a lot to ease access to the European market.
Let me thank, in this respect, the European Business Association that we helped set up in Moldova a couple of years ago, and of course the ‘East Invest’ programme that brings together business support organisations from the EU and its six Eastern Partners and has been key to the successful organisation of today's event.
Ladies and gentlemen,
Moldova has invested heavily in its future and is eager to do more.
We, in the European Union, share your faith and energy and want to work together in this effort.
We too see opportunities for more trade, more investment, more jobs and more growth. We too see the potential from stronger institutions, the rule of law, deeper integration and improved governance.
So let me stress once again our unwavering friendship and support.
The signature of this landmark agreement next month will be a symbolic moment for Moldova’s recent history. It will be a logical continuation of the Moldovan choice made more than to two decades ago to be an independent country. It will be the culmination of the work launched almost 10 years ago with EU-Moldova Action Plan. And it is the desired outcome of our Eastern Partnership launched 5 years ago.