The two sides are deepening their relations with the EU-Moldova Association Agreement, which was signed in June 2014. The Association Agreement including a Deep and Comprehensive Free Trade Area provides for stronger political association and economic integration between the EU and the Republic of Moldova and has created constantly growing trade between the partners since 2014. The EU’s assistance and support of democratic reforms have delivered tangible benefits to Moldovan citizens. Since 28 April 2014, Moldovan citizens benefit from visa free travel to the Schengen area.
The EU seeks to improve democracy, the rule of law and human rights in the Republic of Moldova, including in joint programmes with the Council of Europe. The Union also supports efforts to achieve Transnistria settlement
On 27 June 2014, the EU and Moldova signed an ambitious and innovative Association Agreement, including a Deep and Comprehensive Free Trade Area (DCFTA). The agreement contains binding, rule-based provisions and provides for enhanced cooperation to promote political association and economic integration, going further than in traditional agreements and covering all areas of relevance. The Agreement was provisionally applied from 1 September 2014 until completion of the ratification process, which allowed the full application of the Association Agreement from 1 July 2016.
The EU considers the implementation of the Association Agreement as a key priority to consolidate and promote shared values and principles, notably democracy, the rule of law and human rights. The EU firmly supports the sovereignty and territorial integrity of Moldova within its internationally recognised borders. Other priorities for relations with Moldova include strengthening state institutions, reforming the judiciary, improving business climate, ensuring respect for freedom of expression, improving health and social conditions and cooperating on issues such as border management, migration and the fight against trafficking, organised crime, corruption and money laundering.
The implementation of the Association Agreement is regularly monitored through Association Implementation Reports (the latest issued on 19 October 2021), and reviewed in several bilateral dialogue formats provided for under the Association Agreement:
- EU-Moldova Association Council (latest on 28 October 2021)
- EU-Moldova Association Committee (latest on 19 February 2020)
- EU-Moldova Association Committee in Trade Configuration (last meeting on 20-21 October 2021)
- Various Sub-committees, including the Sub-committee on Justice, freedom and security, as well as a Human Rights Dialogue
The EU also cooperates with Moldova in the area of foreign and security policy. The agreement on establishing a framework for Moldova’s participation in EU crisis management operations was signed on 13 December 2012 (entered into force in July 2013). Since 2014 Moldova participates in the EU crisis management missions (EUTM Mali, EUMAM RCA) with officer currently deployed in EUTM Mali. Consultations on security and defense with Moldova take place since 2014 (last on 6-8 June 2018 in Chisinau) to discuss cooperation on tackling hybrid threats, cyber security, strategic communication, training and capacity building for CSDP missions, support to security sector reform. Moldova is also an active participant in the Eastern Partnership Panel on Security, CSDP and Civil Protection as well as CSDP related courses, conferences and workshops.
The EU is by far the largest donor in Moldova, supporting political and economic reform, and providing humanitarian aid
EU is the biggest provider of aid to Moldova. Over the last 7-year period, Moldova benefitted from more than half a billion euro (€518.15 million) of grants in bilateral assistance, and had access to €200 million (loans and grants) under macro-financial assistance programmes. The European Neighbourhood Instrument (ENI) is the EU financial instrument dedicated to the Neighbourhood for the period 2014-2020. For more information see here.
In this same period, EU support to civil society amounted to €29.3 million. Blending of EU grants with loans leveraged a total of €1404.45 million for investment projects in transport, energy, water management and health sectors. Programming of strategic priorities for EU support to Moldova for the period 2021-2027 is ongoing. The EU assistance is based on strict conditionality, and is linked to the satisfactory progress in reforms and the respect of the rule of law, effective democratic mechanisms and human rights.
On 2 June 2021, responding to the request for support by President Sandu, the Commission announced an Economic Recovery Plan for the Republic of Moldova, which will mobilise up to €600 million over the next three years in macro-financial assistance, grants and investments, supported by blending and financial guarantees. The plan builds on five pillars: public finance management and economic governance; competitive economy, trade & SMEs; infrastructure; education & employability; and the rule of law & justice reform. The Economic Recovery Plan is subject to strict conditionality. Investments will be made based on a ‘more-for-more' approach: progress on structural reforms, in the field of justice and fight against corruption notably will be a prerequisite for financial assistance.
Moldova continues to benefit from a range of regional programmes covering economic development and market opportunities; strong institutions and good governance; connectivity, energy efficiency, environment and climate change; mobility and people-to-people contacts; and a number of cross-cutting issues such as gender equality, media freedom, and civil society.
In addition to the ENI, Moldova is eligible for funding under the EU thematic programmes: the European Instrument for Democracy and Human Rights, Instrument contributing to Stability and Peace, Civil Society Organisations and Local Authorities, Human Development and Migration & Asylum.
In the period 2017-2020, Moldova has benefited from two macro-financial assistance programmes:
- The 2017-2020 programme of EUR 100 million (EUR 40 million in grants and EUR 60 million in in medium-term loans at favourable financing conditions). The first instalment of EUR 30 million was released in October 2019. The second instalment of EUR 30 million was released in July 2020. The third and final instalment of the programme was cancelled, as the availability period of the programme ended in July 2020.
- An EUR 100 million emergency MFA programme in the context of the COVID-19 pandemic was approved in August 2020 as part of a wider package to 10 enlargement and neighbourhood partners. The first disbursement of EUR 50 million was made on 25 November 2020, and, following significant progress made with respect to the fulfilment of the policy conditions, the Commission disbursed the second instalment of EUR 50 million in loans on 7 October 2021.
All disbursements under the MFA are tied to the political pre-conditions regarding the respect of democratic mechanisms, the rule of law and human rights, as well as to Moldova's track record under the IMF programme and the fulfilment of the specific policy conditions (in such areas as public governance, financial sector governance, energy sector reforms and tackling corruption) laid down in the respective Memorandum of Understanding.
Economic relations, trade, investments and financial assistance
Deep and Comprehensive Free Trade Agreement
The EU and Moldova signed a Deep and Comprehensive Free Trade Area (DCFTA). This provides substantially improved access to the EU market of over 500 million consumers for Moldovan goods and services, as well as improved investment opportunities. Economic cooperation extends to numerous individual sectors. The agreement had been provisionally applied since 1 September 2014, and applies to the full territory of Moldova, including Transnistrian region. This preferential trade system has allowed Moldova to benefit from reduced or eliminated tariffs for its goods, an increased services market and better investment conditions.
Autonomous trade preferences provide duty-free and quota-free access for almost all Moldovan goods to the EU market.
On 1 July 2016, the EU-Moldova Association Agreement with its Deep and Comprehensive Free Trade Area (DCFTA) came into full force.
In 2020, the EU remained the main trade partner of Moldova, accounting for 53% of its total trade (approx. 67% of total exports and 45% of Moldova’s total imports).
The EU is also working to ease air travel and agricultural trade with Moldova.
Mobility and people-to-people contacts
Policy tool contributing to a stronger Europe
The visa liberalisation entered into force on 28 April 2014. The visa free regime with Moldova has been facilitating travel, business and people-to-people contacts. It is an example of progress achieved on enhancing mobility with EaP partners.
According to the data by Moldovan authorities, from 28 April 2014 (the start date of visa liberalisation) until 31 December 2020, some 2 366 647 Moldovan citizens made almost 9 million trips to the Schengen area under the visa-free regime. Moldova benefits from a Mobility Partnership with the EU as a framework for cooperation in the field of migration, including areas such as legal migration, development and fighting against illegal migration. Around 40 initiatives are currently being implemented within the Mobility Partnership between the EU and Moldova. For more information see here.
The EU assistance in the area of higher education continued to be provided via Erasmus+, with 1 179 short term mobilities for higher education students, staff and researchers, 4 large Capacity Building for Higher Education projects and 4 Jean Monnet projects in 2020. Under Horizon’s Marie Skłodowska-Curie Actions (MSCA) 2014-2020, 62 Moldovan researchers have received funding for training, mobility and career development.
Solidarity for Health: support to fight the Covid-19 pandemic
The European Union continues to provide support to the Republic of Moldova in the fight against COVID-19. From the beginning of the pandemic, the EU has developed an assistance and support strategy for the Eastern Partnership countries. The EU reacted fast and responded to the urgent needs of EaP countries during the COVID-19 pandemic.
As part of Team Europe, the EU has mobilised an ambitious support package totalling over €980 million to help tackle immediate needs, such as support to the health sector and vulnerable communities, as well as short-term needs to support the social and economic recovery of the six countries. A tailor-made COVID-19 response package for Moldova worth over €127 million of grants is being mobilised using a combination of existing and new funds to deliver concrete support to people.
In addition to the COVID response package, an emergency COVID-19 macro-financial assistance programme for Moldova, worth €100 million in loans on highly favourable terms, was adopted in April 2020. The first instalment of €50 million was disbursed in November 2020. The second tranche is set to be disbursed in 2021 if the relevant conditions are met. In collaboration with local civil society organisations and international organisations, the EU has taken a number of actions to mitigate the COVID-19 crisis, protect frontline workers, vulnerable people, and rehabilitate the business environment.
As part of the EU’s global response to the outbreak of the COVID-19 pandemic, the EU committed a total of EUR 127 million in bilateral grant support to Moldova to deliver protective equipment, strengthen the healthcare system, and support recovery. As part of this support, EUR 36.4 million in budget support was disbursed on 28 September 2021 to mitigate the consequences of COVID-19 and support the polic reform. Moldova has been the second largest beneficiary of COVID-19 vaccine donations from Team Europe, receiving more than 1 million doses of vaccines from Team Europe and from COVAX.
More information on this support is available here.