SETimes | May 20, 2013

Kosovo looks to EU trade agreement

By Muhamet Brajshori

By launching a free trade regime with the EU, as part of its Stabilisation Association Agreement, Kosovo is hoping to increase the amount of agricultural products that it exports to the 27 member countries in order to improve revenues.

Arta Istrefi, an advisor to the trade minister of Kosovo, said that the ministry’s analysis on the economic impact of the trade agreement with the EU reflects the current state of economy and the potential effects of trade liberalisation with the Union.

“For the first time we have a preliminary list of sensitive sectors and products that should have our attention while negotiating the agreement with the EU. The preliminary list identifies agricultural products as the most important [to maximise] state revenue [under] the agreement,” Istrefi told SETimes.

The analysis shows that under the agreement, state revenue will lose 65.7 million euros due to the restructuring of funds under the deal, but the government expects this amount to be offset by foreign direct investments generated through EU trade liberalisation.

Kosovo is currently a beneficiary of an autonomous preferential agreement with the EU until 2015, allowing the country to export its products to the EU without a charge, except for wines with quotas, beef, meat and sugar.

“Still, Kosovo exporters are not taking full advantage of this [trade] benefit, so the situation does not reflect Kosovo’s export capacity, and justifies the signing of the free trade agreement with the EU,” Istrefi said.

Other countries in the region have reaped benefits from signing the agreement.

Serbia signed the stabilisation and association agreement in 2008. The agreement has been highly beneficial for the state economy, analysts and officials said.

“The agreement is the basis for a free trade exchange within the EU, and [trade] agreements with Turkey, [European Free Trade Association] and [Central European Free Trade Agreement] states,” Vladimir Medjak, assistant director at the Serbia’s EU integration office, told SETimes.

Medjak added that the agreement allows domestic products to be made in Serbia, while some of their components are produced in other countries.

EU ratified a stabilisation and association agreement with Albania in 2009.

Ervin Qafmolla, an economy analyst at Tirana’s JAVA magazine, told SETimes that the implementation of the agreement brought better quality and cheaper goods to the Albanian market, but caused trade deficit growth. Customs income dropped, as did the domestic production.

“There were immediate [adverse] effects, especially in agriculture, due to lack of follow-up measures to protect domestic production. Unlike European or regional farmers, Albanian farmers don’t receive government subsidies, and their products had no fair competition,” Qafmolla said.

According to the Albanian ministry of economy, in 2010 Albanian exports grew by 32 percent and imports by 7 percent since to 2009.

The European Commission recommended that agreement negotiations for Kosovo start in June, pending the EU members’ decision.

Correspondents Ivana Jovanovic in Belgrade and Erl Murati in Tirana contributed to this report.