EU now top destination for Transnistria's fast-growing exports

EU now top destination for Transnistria's fast-growing exports
Transnistria's exports in January-March 2018: sales to EU countries (blue) outstrip those to the Russian-led Customs Union (red) and third countries (green). /
By bne IntelliNews April 17, 2018

The exports of the Moldovan separatist republic of Transnistria soared by 45% y/y to €184mn in Q1, according to official data from the region’s customs agency.

Transnistria visibly derives benefits from Moldova’s free trade agreement with the European Union but its companies can export only after they register on the territory of Moldova. The new customs regime enforced in Transnistria broadly meets the requirements included in Moldova's trade agreement with the EU, Moldovan business portal Mold Street commented. For this, the separatist region replaced import duties (a significant source of revenues for budget) with excise taxes.

The region’s exports to the European Union accounted for 45% of the total in Q1, four times more than the exports going to Russia (11% of the total). Sales to Moldovan customers are counted as exports as well, and they accounted for 21% of the total (down from 42% last year). Another major export destination is neighbouring Ukraine, 

Within the EU, Transnistria’s exports go mainly to Romania ($29.8mn, or 16.3% of the total) and Poland ($22mn, or 12% of the total). The exports to Romania increased by 2.3 times y/y and those to Poland by 13 times y/y.

In terms of goods exported, Transnistria exports mainly iron and steel products, which were worth $84.5mn. Nearly two-thirds of this was sold to EU. Another key export item is the electricity sold to Moldova.

Transnistria’s exports to Russia indeed increased by 65% y/y, but they amounted to only $21mn (11.4% of the total) — a small figure given Russia’s market size and the separatist republic’s claims of integrating its economy with Russia. Transnistria has even held a referendum on becoming part of Russia, and is in the process of adopting Russian legislation.

And yet, Transnistria’s exports, mainly electricity but also energy-intensive steel products, rely on the natural gas delivered de facto free of charge by Russia under an ambiguous arrangement that includes Moldova, complicating the settlement of the dispute related to the separatist region.