Serbia still to reap maximum benefit from CEFTA

Serbia still to reap maximum benefit from CEFTA

With a market of some 30 million consumers, CEFTA was meant to offer a greater selection of goods at lower prices, and the opportunity for manufacturers and exporters to sell their products throughout the region under considerably improved terms.

However, because of delays in the agreement’s implementation, and unilateral introduction of duty by certain countries, Serbia’s results in the first year have been only moderate.

The CEFTA zone, which includes Albania, Bosnia-Hercegovina, Montenegro, Croatia, Macedonia, Moldova and Serbia, was created as a first step towards the integration of the markets of south-east European countries who see their future in the European Union.

Serbia and Bosnia-Hercegovina were the last to ratify the treaty in September and November respectively, when it began to be officially implemented throughout the territory of all the signatory states.

Director of the Chamber of Commerce’s Bureau for Regional Cooperation Milivoj Miletić told B92 that Serbia had increased exports to the zone by 20 percent since signing the agreement.

“In terms of our international export, 32.4 percent of Serbia’s total is to CEFTA countries, and in terms of import, 7.7 percent,” Miletić said.

“Within the CEFTA zone, Serbia enjoys a trade surplus, which is very significant and shows that this is a market where we have certain advantages and benefits,” he added.

“Our total surplus for the first nine months of 2007 with CEFTA countries was USD 163bn, while otherwise, it is well known that Serbia suffers from a trade deficit with the rest of the world, which this year might reach USD 8bn,” Miletić explained.

However, Director of the Free Trade Center Miroslav Prokopijević told B92 that even before CEFTA, Serbia enjoyed a trade surplus in the region, and that one could not say with certainty that signing the agreement had influenced the increase in 2007.

Prokopijević explained that cooperation between the zone’s member-states faced several challenges. “It’s still not a completely free trade zone, since certain countries, like Moldova and Macedonia, have exemptions on particular goods until 2009,” he pointed out.

“Another factor is that, within CEFTA, ad hoc exemptions are used, so that some countries ask for certain products to receive privileged status,” he added.

“A third factor, which cannot be seen currently, but which is a problem for the EU, is the presence of non-customs barriers, which mean that the passage of goods within the free trade zone is not the same as between, let’s say, Kragujevac and Niš,” said Prokopijević.

Since entering CEFTA, Serbia has settled its dispute with Croatia over cigarette imports by setting equal excise tariffs on domestic and foreign tobacco.

Negotiations with Bosnia-Hercegovina on removing duty on meat and milk that Bosnia unilaterally imposed in breach of the agreement, are in their final stages and the duty is expected to be removed early this year.

Prokopijević said that governments in the region were still hesitant over greater use of CEFTA, though he believed that this would soon change.

“Generally, it should move forward. A free trade zone is a great idea, and preparation for all these countries going towards the EU for the one giant purgatory that the EU market is and the opportunities that reign therein,” he explained.

“Therefore, it seems matters are progressing, though maybe not at the rate initially expected,” Prokopijević concluded.

Under the CEFTA agreement, it is planned to create a south-east European free trade zone by December 31, 2010, which involves removal of customs and trade barriers, and complete liberalization of the market.

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