131340 11/23/2007 14:40 07CHISINAU1384 Embassy Chisinau UNCLASSIFIED//FOR OFFICIAL USE ONLY VZCZCXYZ0009 RR RUEHWEB DE RUEHCH #1384/01 3271440 ZNR UUUUU ZZH R 231440Z NOV 07 FM AMEMBASSY CHISINAU TO RUEHC/SECSTATE WASHDC 5938 INFO RUEHBM/AMEMBASSY BUCHAREST 4241 UNCLAS CHISINAU 001384
STATE FOR EUR/UMB AND EEB/TPP/ABT/ATP STATE PASS USTR
E.O. 12958: N/A TAGS: ECON, ETRD, WTO, PGOV, PREL, MD SUBJECT: NEW MOLDOVAN REGULATION TO IMPEDE TRADE
SENSITIVE BUT UNCLASSIFIED; PLEASE PROTECT ACCORDINGLY
1. (SBU) SUMMARY: Side-stepping Parliament and filters intended to give the business community a voice in new regulations effecting them, the Government of Moldova (GOM) adopted a decision requiring a state commercial stamp on all containers of non-alcoholic beverages sold in Moldova. Ostensibly a consumer-safety and quality-control measure, we doubt that imported soft drinks from the EU pose a threat to Moldovan consumers. While the GOM lauds efforts to harmonize its legislation with the EU, the adoption of this quasi-fiscal measure raises questions about the GOM's true intentions. Multiplied by the hundreds of millions of bottles and cans imported into Moldova annually, the sale of stamps will be very lucrative for the GOM. END SUMMARY.
BACKGROUND ON DECISION 934
2. (SBU) On August 15, the GOM adopted government decision 934, creating a "State Registry for mineral, natural and potable water and non-alcoholic bottled beverages." The decision was subsequently published in the GOM's Official Monitor on August 24. Media reports note that this decision is based on a similar law in Belarus, the only country in the CIS to have such a measure. The decision establishes sanitary norms for mineral, natural and potable water; sets regulations on the quality, labeling and marketing of soft-drinks; and requires a state commercial stamp for all bottled non-alcoholic beverages sold in Moldova. The stamps will be produced by the Ministry of Information Development and sold by the State Tax Inspectorate.
3. (SBU) The measure enters into force on January 1, 2008, although the publication of the implementing regulation, which was due October 1, has been delayed. A stamp will cost 20 bani (about 1.8 U.S. cents), which is the same as the cost of state commercial stamps for wine. Multiplied by the hundreds of millions of bottles of non-alcoholic beverages imported annually into Moldova, the sale of stamps becomes very lucrative, albeit at the expense of consumers.
INTERNATIONAL AND BUSINESS PRESSURE MOUNTS...
3. (SBU) On October 4, we sent a letter to Prime Minister Tarlev, noting our concerns about the decision as it relates to Moldova's WTO obligations. We expressed our concern that the measure created an unnecessary obstacle to international trade. On October 5, the EU raised the issue with the GOM during the meeting of the MD-EU Cooperation Council's Sub-Committee on Trade and Investment in Chisinau. Following the meeting, the GOM promised to send an official notification to the WTO.
4. (SBU) On November 6, Econoff met with representatives from Coca-Cola Romania, which covers Moldova. Post also received letters from the Romanian National Soft Drinks Association (ANBR) and the Romanian Mineral Water Employers Association (APEMIN), noting their concerns about this non-trade barrier. On November 15, we received a letter from Prime Minister Tarlev, assuring us of equal treatment for domestic producers and imported products, and promising WTO notification. Tarlev said that Moldovan non-alcoholic beverages would also require the stamp; thus the GOM would not treat foreign beverages differently than it treated those bottled in Moldova.
...CAUSING GOM TO DELAY IMPLEMENTATION
5. (SBU) On November 16, Econoff met Octavian Calmac, Director General of Trade of the Ministry of Economy, noting U.S. and industry concerns about the measure. Calmac said the GOM had prepared the WTO notifications, which would be filed the week of November 19 by the Moldovan Embassy in Geneva. In addition to the U.S., he noted mounting pressure from the EU and foreign and domestic producers. Calmac acknowledged that the pressure had caused a delay in finalizing the implementing regulations stipulated by the government decision.
6. (SBU) Calmac said the GOM was awaiting comments and questions from trading partners and a final determination from the WTO before moving forward. He noted that internal pressure was also building and that Speaker of Parliament Marian Lupu, responding to industry pressure, had recently asked the Executive to re-evaluate the measure. Calmac asked Econoff to contact the Ministry of Health and deliver similar points regarding our concerns about trade barriers. He said this would help better inform the GOM's internal debate.
7. (SBU) Responding to international and industry pressure, the GOM has delayed development of the implementing regulations for this unhelpful decision pending a WTO determination. Sources note that the Minister of Economy is trying to broker a solution. However, the involvement of the Minister of Information Development indicates the interest of the Executive in this measure. Quality-control measures for water products are necessary in Moldova, because of the high levels of ground-water contamination. However, this measure appears to be more about generating revenue than protecting consumers. It may actually harm rural populations, which need access to safe bottled water, by increasing prices and reducing competition in the market. It will also alienate much-needed foreign investors.