CEFTA as foreplay for European Union - How does application of Agreement affect Serbian economy?

- During the first two months of this year, Serbia registered surplus of 97.2m EUR in total foreign trade exchange with the CEFTA countries - it was announced in the Chamber of Commerce of Serbia at the meeting dedicated to application of CEFTA Agreement.

- Serbia's total export to the CEFTA countries in January and February 2010 remained the same as in the same period in 2009, and it amounted to 230.5m EUR, while import grew by 7% and reached the value of 133.3m EUR - said Vesna Arsić, the State Secretary for International Economic Relations.

Serbia's total surplus in the exchange of goods with CEFTA countries in 2009 amounted to 981m EUR, while import was worth 899m EUR - said Ms. Arsić and added that Serbia registered surplus in the trade with Albania, Bosnia and Herzegovina, Macedonia and UNMIK Kosovo, while deficit was registered in the exchange of goods with Croatia and Moldova.

This year, when Serbia takes over the CEFTA presidency, should be used for achievement of even better results, while problems should be resolved, primarily those concerning non-customs barriers.

What do we export the most?

Serbia exported total of 5.9bn EUR worth of goods in 2009, 19.7% less than in 2008. The value of export to the CEFTA countries in the same period amounted to 1.88bn EUR (23.4% less than one year before). The coverage of import by export was 53.4% in total exchange of goods with the world, while the coverage in the trade with CEFTA countries reached 209%.

Serbia's most important export products are agricultural products. Namely, the share of agricultural products in total export amounted to 23.1%, while their share in the export to CEFTA countries reached 33.9%. The next on the list are the products of ferrous and non-ferrous metallurgy.

When it comes to the characteristics of exchange of goods within CEFTA, what is worrying is the fact that industrial trade is at low level since that trade is the indicator of economic integration.

As the State Secretary of the Ministry of Economy and Regional Development explained, "it is impossible to more thoroughly analyze the exchange of goods because statistical data in the countries members much differ from each others. The reasons for that are: showing of smaller value, errors in classification, exchange rate differences, smuggling..."

Influence of CEFTA Agreement on Serbia's economy

The Deputy President of the Chamber of Commerce of Serbia, Mihajlo Vesović, assessed that the previous application of the CEFTA Agreement, since mid-2007, had brought good results for the economy of Serbia and pointed out that Serbia's CEFTA presidency was the most significant national and economic role of the country in 2010.

- CEFTA is a foreplay for the European Union - he said and pointed out that, if some company can not survive in the CEFTA market, its chances of surviving in the European Union are even smaller.

The Assistant Director of the Customs Administration of Serbia, Borislav Injac, said that the CEFTA Agreement had made it possible for Serbian economy to improve the competitiveness of export products and that it had increased the number of markets to which the goods can be exported free of duties or with payment of lower duties.

- The range of markets from which raw materials for production can be imported free of duties and negative influence on the preferential origin of products is now larger - said Injac.

- The Agreement made the organization of production simpler and the returns on investments in modernization of production and improvement of the quality of goods bigger - said Injac and added that the level of predictability and safety of operations was higher, as well as the interest in cooperation with the companies in the region.

Problems – What does prevent us from being better?

The State Secretary for International Economic Relations said that the liberalization in trade with the CEFTA countries enabled, among the rest, easier access to other markets, higher quality of products, growth of investments, increase in number of employees and larger export, but she also pointed out that there were still numerous non-customs barriers that made full application of the Agreement difficult.

According to her words, the most usual non-customs barriers concern the procedures on border crossings that are long, complicated and non-transparent. Other problems are working hours, classification, evaluation and origin of goods at the customs, as well as mutual non-acknowledgment of sanitary and phytosanitary measures and veterinarian checks.

The problem is also doubling and non-acknowledgment of certificates, while the processes of issuing licenses and registering products are estimated as expensive and long-lasting - she added.

What will the state do?

Ms. Arsić said that the state was working on forming an Internet portal that would ensure the transparency of regulations and procedures in the trade between the CEFTA countries. People from the Ministry of Economy point out that the works on acceleration of harmonization of regulations with the EU regulations and the rules of the World Trade Organization are underway, while the agreements on mutual acknowledgment of certificates will be signed where it is suitable.

It is necessary, according to Ms. Arsić, that further liberalization of trade in agricultural products be continued as soon as possible.

J.Đ.