American market with unused potential - Serbian businessmen enabled duty-free export of more than 4.600 products

Last year, Serbia recorded exports to U.S. of USD 98.42 mill making this country the 24th for placement of products from our country. Judging by the announcements on a trip of Fiat 500L across the Atlantic, which is measured in tens of thousands of cars, America will significantly climb this ladder.

According to the information received from the Serbian Chamber of Commerce (SCC), in the structure of exports to the U.S. manufactured goods, machinery and transport equipment, food - vegetables, fruits, non-ferrous metals, and rubber products are most common.

- Although last year, exports increased by 20% compared to previous years, current economic cooperation cannot be estimated as satisfactory, since it is far behind the real capabilities of the two parties. There is a number of reasons for these differences such as market size, lack of satisfactory capacity and continuity of the export volume to the U.S. market, transport costs due to distance which causes price and competitiveness reduction in the U.S. market. Certainly the global economic crisis has affected the reduction of trade with America. Regardless of the large deficit, U.S. is a very important country in trade exchange with Serbia – Mihajlo Vesovic, the Vice President of the Serbian Chamber of Commerce says for eKapija.

RB Global famous for the Stara sokolova brand is among the companies which have successfully paved the way to America. Uzice-based company exports about 10% of total production to the USA market.

(Photo: Stara sokolova)

Ivan Bogdanovic, "RB Global", says that key to success in this demanding market is “good quality, good package at a competitive price with appropriate marketing support."

- Most of the buyers of our products are from the former Yugoslavia, as well as members of the Eastern European countries and the Jewish people.

Bogdanovic said that in America, their most wanted products are plum and pear brandy, and points out increasing demand of apricot and quince brandy recently present in this market.

In 2011, Gornji Milanovac-based company Metalac began exports to the United States and products are sold through a major U.S. catalog sales companies Fiongerhut which has more than five million customers. However, we were told that company is not easy to break into on such a large and demanding market.

- We have had 15 years to penetrate the American market i.e. until 2005 when we found a buyer. Later we decided to organize mutual sales with a partner in that market. Frankly, the results are modest but growing. It is very difficult to operate in the U.S. market for variable-dollar exchange rate. Also, it is difficult to get into their retail chains. Our products are of average higher quality, and cheap goods and best-known brands are the easiest to sell - Petrasin Jakovljevic, director of Gornji Milanovac-based Metalac said for eKapija.

Duty- free export to US

Although in 2005 duty-free exports was allowed to our country, to USD 1.3 trillion worth U.S. market, for more than 4,650 products, companies in Serbia underuse Generalized System of Preferences. Preferential trade means that the U.S. can import products from more than 140 countries, duty-free or with minimal customs.

As the Serbian Investment and Export Promotion Agency (SIEPA) said for our portal, the conditions for the application of the general system of preferences are: the product qualified for duty-free imports, produced in Serbia and that the value of invested non-material origin is less than 35% value of the product, which means that companies founded by American companies can use these benefits if they meet the above requirements.

RB Global representatives say they use benefits of the Generalized System of Preferences for export to America.
- Our company takes advantage of this system though is the duty of an importer to pay attention to these benefits in order to use them. Generalized System of Preferences for export to the United States provides an opportunity for our products to be cost-competitive with products from other countries - the director of the company said.

The director of Metalac says the company is using the benefits of duty-free exports to the U.S., but points out that this does not mean much because they compete with cheap goods from China.

In SIEPA they explain why our entrepreneurs underuse general system of preferences:

- One of the main reasons is ignorance. It is necessary to inform Serbian businessmen about the benefits of general system of preferences.

Serbian businessmen have to identify the products qualified for exports and find among them their products or consider an option of some new products which would be competitive in the U.S. market. They must find and attract potential customers and introduce them to the general system of preferences because the U.S. companies are also unfamiliar with this system. Of course, presence at trade shows in the U.S. will also greatly help promotion and development of trade networks – SIEPA states.

The Serbian Chamber of Commerce also stresses out that trade benefits through GSP system is not sufficient exploited in Serbian economy.

- The prevailing reason is the fact that what Serbia can export to the U.S., that is. where potential of exports is, is unfortunately not listed in the GSP system. The thing that is missing is strategies to promote Serbian economic cooperation with the United States, given that the U.S. is an important political partner of our country – Vesovic said.

When it comes to exploitation of GSP benefits system in Serbia, according to the statistics of SCC, the situation shows that for the period up to October last year, 2012 saw the exports of only 11.61% of the products with customs preferential out of total exports.

List of products included in the GSP program is analyzed and changed twice a year with the participation of U.S. manufacturers. A complete list of products included in the GSP program can be found on the website of the U.S. list of Harmonized tariff (Harmonized Tariff Schedule of the United States - HTSUS) http://www.usitc.gov/tata/hts/. List of products included in the Generalized System of Preferences can be downloaded here.

S.O.