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Regional free trade agreement looms, Serbia and Montenegro

Regional free trade agreement looms

10 April 2006

BUCHAREST — BUCHAREST, (B92) - Croatia, Bosnia-Herzegovina, Serbia-Montenegro, Kosovo, Albania, Macedonia and Moldavia are expected to become a unique free trade zone by the end of 2007.

Every single product made anywhere within this zone would be sold under the same conditions in the entire zone.

Politicians are still arguing about the cause of the former Yugoslavia’s breaking apart. The economy, however, has its own answer: Yugoslavia broke apart when the same happened to the common market in 1989, when the Serbian government proclaimed a boycott of merchandise from Slovenia. The European Union is predicting that, by the end of 2007, the unique market that includes former the Yugoslav territories (minus Slovenia, plus Albania and Moldavia) should begin to function. Romania and Bulgaria were also mentioned, but by the end of 2007, they should enter the European Union anyway.

Mini-European Union

In Bucharest, on April 4, the presidents of nine south-eastern European countries and representatives of UNMIK initialled the agreement that includes the forming of a common market. This agreement should be signed by the end of 2006 and become active on the first day of 2007. In the meantime, Bulgaria and Romania are expected to become members of the EU, so the zone of free trade would cover the territories of the former Yugoslavia (minus Slovenia, plus Albania and Moldavia).

This would mean extinguishing all customs charges. Every product, made anywhere within the zone, would be sold under the same conditions within the zone. And, what is most important, there would be free movement of work labour and products.

Misa Brkic, the assistant director of the Economist magazine says, “The important thing is that the merchandise and the people will have the freedom of movement. Imagine that due to the lack of labour in Leskovac, Bosnia sends workers. Maybe specialized workers from Belgrade will be sent to Croatia. The movement of workers and capital, which has already begun, will show the advantages and disadvantages at this area.”

What does the larger market mean?

To a normal person, a consumer, it is hard to understand such abstract things as common markets, unique economic territory, and freedom of movement. One of the examples is this is the fate of the Yugo automobile, when the common market broke apart. Branimir Soldatovic, the director of the car factory at the time said, “We had good cooperation with those such as Jugoplastik from Split. Practically the entire insides of the car were brought in from Croatia. Our other cooperatives were Iskra from Kranj. When all of those contacts broke apart we started working with inadequate materials and technology and everything went downhill.”

Momcilo Micic, a former worker at the car factory, said that the destroying of the free market caused both the quality and quantity to decline in the Zastava factory.

“The final product itself was of bad quality from the start, even though technologically it was well made. The market was going downhill and the prices as well. Also, the personal incomes started to fall. People found themselves in bad situations.”

“These territories have great potential, not only with Zastava. We had cooperation with Volkswagen, especially in Bosnia. There was also cooperation with Croatia and Slovenia, with Opel.” Soldatovic said.

Is this an economic restoration of Yugoslavia?

The first problem, a bit irrational, is the answer to the following question: Is this some kind of restoration of Yugoslavia?”

Lidija Cehuljic, Political Science professor in Zagreb, said that there is no political integration.

“The principle of the EU originated in 1951 under the name of Community for carbon and steel, and is an embryo of the EU we all know today. That means that we all unite together because of our own private interests. That is the biggest trump of the EU, because of the interest of the ruling economic plan. Throughout history the EU spread by establishing certain programs, functional regional cooperation, which tended to bring the potential future members closer to standards of what used to be the forerunner of the EU. At first, that was the Community for carbon and steel, later the European Economic Community, and then the European Union. The EU offered, and still offers, similar functional, regional cooperation programs to all of the post-Socialist countries.” Cehuljic said.

Slavo Kukac, a sociology professor at the Mostar University, also thinks that this is not about a Yugoslavian renewal.

“If the world was interested especially for preserving Yugoslavia, it would have done it long before.

The world needs a different atmosphere than the one it has now. This atmosphere is not interesting to the market. It is not even geopolitically interesting. This territory is like a virus, threatening to destabilize other parts of Europe. It should be integrated as soon as possible.”