MORE TRANSNISTRIAN LEGAL TRADE IN 2007

UNCLAS CHISINAU 000130

SIPDIS

SIPDIS

SENSITIVE

STATE FOR EUR/UMB

E.O. 12958: N/A
TAGS: PBTS PREL PGOV ETRD OSCE MD
SUBJECT: MORE TRANSNISTRIAN LEGAL TRADE IN 2007

REF: 07 CHISINAU 1300


1. (SBU) SUMMARY: Throughout 2007 the Government of Moldova (GOM)
honored its commitment to facilitate legal Transnistrian (TN) trade.
The GOM's final 2007 TN trade data document increases in certified
exports and imports, increases in the numbers of companies
registered with Chisinau, and increases in the number of Moldovan
certificates of origin issued to TN companies. Currently, 383 TN
companies are registered with Chisinau, allowing them to benefit
from Moldova's trade preferences and gain legal access to
international markets. Access to trade has helped TN's economy,
which was hit hard by the suspension of Russian financial
assistance, the summer drought and resulting inflation. END
SUMMARY.

MORE TN COMPANIES REGISTER WITH CHISINAU
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2. (SBU) According to the year-end data from the Ministry of
Reintegration, 155 TN companies registered with Chisinau in 2007 (86
temporarily and 29 permanently),increasing the total number of
registered companies to 383 (238 temporarily and 145 permanently).
According to the GOM, 91 of these companies registered after the
adoption of Special Regulation 301 in March 2007, which introduced
import controls for companies wishing access to Moldovan
preferential trade certificates.

DOCUMENTING (LEGAL) TN TRADE
--------------


3. (SBU) Total TN trade documented by the Moldovan Customs Service
(MCS) in 2007 was valued at Moldovan Lei (MDL) 9.39 billion (about
USD 745 million),increasing from MDL 6.87 billion at the end of
September. (NOTE: The average official exchange rate for 2007 was
MDL 12.14 per USD. END NOTE.) Exports totaled MDL 8 billion (about
USD 659 million) and imports equaled MDL 1.39 billion (about USD 86
million). According to the GOM, the TN imports documented by MCS
totaled only about 13% of 2005 total TN imports. The GOM suspects
TN imports in 2007 were significantly higher. (NOTE: The GOM uses
2005 as a reference because TN trade was disrupted throughout 2006.
END NOTE).

STEEL AND TEXTILES DRIVE EXPORTS
--------------


4. (SBU) Transnistria's main exports continue to be steel products
from Moldova Steel Works (MMZ),which account for 65% (MDL 5.18
billion, about USD 413 million),and light manufacturing (apparel,
textiles and footwear),which accounts for 16.7% (MDL 1.34 billion,
about USD 85 million) of the total certified exports. Other exports
include machinery (6.5%),cement (5.3%),electricity (3.4%),
agricultural products (2.0%) and alcoholic beverages (0.7%). Over
22,700 customs declarations (on exports) were filed by 90 TN
companies with the MCS in 2007. However, of the 90 companies, only
41 filed a minimum of one customs document per month, and MMZ
accounted for 62% of the total customs declarations filed.
Transnistrian imports cleared by the MCS in 2007 totaled USD 86
million, based on 5,280 customs declarations filed by 67 TN
companies. (NOTE: MMZ and Tirotex textiles filed over 3,400 customs
declarations or 65% of the total. END NOTE.)

DOCUMENTED IMPORTS, INCREASE PREFERENTIAL TRADE ACCESS
-------------- --------------


5. (SBU) The number of Moldovan certificates of origin issued to TN
companies increased throughout 2007. According to the GOM, the
Moldovan Chamber of Commerce and MCS issued 7,148 certificates of
origin to TN companies, including 1,237 Type "A" certificates for
preferential access to the EU, 2,183 Type "CT-1" certificates for
preferential access to the CIS, and 133 Type "EUR" certificates for
preferential access according to the Central European Free Trade
Agreement.

GOM CONTINUES TO FACILITATE TN ECONOMIC ACTIVITY
-------------- ---


6. (SBU) According to the Ministry of Reintegration, the
preferential access that TN companies received to the EU via
Moldova's GSP-plus agreement generated an estimated MDL 146 million
(about USD 12 million) in savings. The Ministry noted a
considerable spike in the issuance of preferential trade
certificates in the second half of 2007. In addition to
certificates of origin, the Ministry noted that the GOM facilitated
TN economic activity by providing licenses, sanitary and technical
certificates, and registering intellectual property rights for TN
companies in compliance with Moldovan law.

COMMENT
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7. (SBU) According to the TN ministry of economy, TN's industrial
output increased 53% in 2007 compared with 2006. While TN official
statistics are unreliable, the Ministry of Reintegration's trade
data indicate positive results for some TN exporters in 2007. In
comparison with 2005 (a record year for TN producers),TN exports to
the EU have increased over 18%, confirming the GOM's claims that it
is willing to facilitate legal trade for TN companies registered
with Chisinau. By no means has the process been easy, and the
complaints from the private sector in TN have been numerous.
However, for now, it seems that companies located in TN are enjoying
Moldova's international access to trade. What real contribution (if
any) this can make to a political settlement remains to be seen. TN
companies want access to European markets and now see that working
with Chisinau can make that possible. END COMMENT.

KIRBY