Assessment of Potential Economic Effect of Free Trade Agreement between RM and EU in the Context of the Existence of Other Similar Agreements in the Area

Abstract

This study is focused on the changes in import into a market of the Republic of Moldova as well as produced by this the social and an economy effect when there is reformed a trade policy. In this context, under the trade policy reforming we understand the liberalization of trade of the Republic of Moldova with EU induced by adoption of Free Trade Agreement as well as with Turkey because it is a condition of the EU. Proposed effect is generated by elimination of custom duties in the mutual trade and will be expressed in cheaper price of import from EU and Turkey. For government, it is important to estimate and foreseen the impact of this trade policy option.In this study impact of trade reform, that includes assessment of import increasing, tariff revenue change, welfare effects for the population, was defined at the SMART model – Software for Market Analysis and Restriction on Trade. Results of this study can be used to anticipate the economic effects of trade policy adopted, such as: distribution of the potential benefits and losses from policy changes. This will assist in identifying the sensitive commodity goods where negotiating efforts should be focused as well the evaluation adjustment costs dealing with trade reform implementation.