With the support of the European Commission

1

TRADE LIBERALIZATION - SERBIA(Analyses of trade liberalization and trade issues in

the framework of the SAA)

Duško Lopandić, Assitant MinisterVerica Ignjatović, Adviser

Ministry for International Economic Relations of the Republic of Serbia

With the support of the European Commission

With the support of the European Commission 2

TRADE LIBERALIZATIONIN SERBIA implemented so far

• 2 waves of unilateral trade liberalization towards all trade partners (in 2001 & 2003)

• FTAs in the South Eastern Europe• FTA with Russian Federation• Agreement between the Republic of Serbia and

the European Community on trade in textile products

With the support of the European Commission 3

TRADE LIBERALIZATION IN SERBIA expected in the coming period

• Stabilization and Association Agreement with the EU,• The WTO membership,• FTA with EFTA countries,• Further trade liberalization in the SEE,

will improve integration of Serbia into the world, European and regional markets

With the support of the European Commission 4

Serbian imports in 2004 according to trading partners

Russia13%

EFTA2%

ROW20%

EU 2555%

SEE10%

EU 25

Russia

SEE

EFTA

ROW

With the support of the European Commission 5

Trade Serbia – the world in the period 2001-2004

• Serbian exports increased at an average annual growth rate 22.9%

• Average annual growth rate of imports was 34%• Trade deficit has been increasing • Coverage of imports by exports has been

decreasing (in 2004 was just 32.8%)

In the period January-July 2005 considerably different trend was recorded

With the support of the European Commission 6

Trade Serbia with the world in the period 2000-2004

YEARTOTAL TRADE

EXPORTS

INDEX GROWTH

OF EXPORTS

IMPORTS INDEX GROWTH

OF IMPORTS

TRADE BALANCE

% COVERAGE OF

IMPORTS BY EXPORTS

2000 4,887.7 1,557.8 113.8 3,329.8 115.3 - 1,771.9 46.8

2001 5,981.4 1,720.7 110.5 4,260.8 128.0 - 2,540.1 40.4

2002 7,689.0 2,075.2 120.6 5,613.8 131.8 - 3,538.6 36.9

2003 10,227.4 2,754.9 132.8 7,472.5 133.1 - 4,717.7 36.8

2004 14,276.6 3,523.4 127.8 10,753.2 143.8 - 7,229.9 32.8

With the support of the European Commission 7

Trade Serbia – world in USD million

-10000 -5000 0 5000 10000 15000

2000

2001

2002

2003

2004

Exports Imports Deficit

With the support of the European Commission 8

Trade between Serbia and the SEE

• MoU on Trade Liberalization and Facilitation – 2001• FTAs: Macedonia 1996, BiH 2002, Bulgaria, Croatia,

Romania, Albania, Moldova in 2004,• Common characteristics of SEE countries: economic

recovery, decline in industrial production, challenge of competitiveness, high trade deficits and similar export structure,

• High level of integration of former republics of ex-Yugoslavia,

• Serbian surplus in trade with the SEE,• The major export markets BiH & Macedonia

With the support of the European Commission 9

Trade between Serbia and the SEE

TRADE EXPORTS IMPORTS TRADE BALANCE

Years 2002 2003 2004 2002 2003 2004 2002 2003 2004

TOTAL (R SERBIA) 2,075.2 2,477.4 3,701.0 5,613.8 7,324.0 11,139.2 -3,538.6 -4,846.6 -7,438.2

BiH 323.1 395.3 650.3 129.5 167.7 243.0 193.6 227.6 407.3

MACEDONIA 205.8 220.2 266.9 126.8 132.9 164.9 79.0 87.3 102.0

ROMANIA 53.3 71.3 124.3 135.9 134.2 210.1 -82.6 -62.9 -85.8

CROATIA 42.0 76.0 154.0 90.5 121.7 208.4 -48.5 -45.7 -54.4

BULGARIA 32.5 53.4 61.5 117.8 130.1 235.7 -85.3 -76.7 -174.2

ALBANIA 6.4 26.6 16.2 0.1 0.5 0.6 6.3 26.1 15.6

MOLDOVA 1.4 1.8 2.3 0.7 0.9 1.8 0.7 0.9 0.5

Total 7 SEE countries 664.5 844.6 1275.5 601.3 688.0 1064.5 63.2 156.6 211.0

Share of SEE countries in total Serbian trade (%)

32.02 34.09 34.46 10.71 9.39 9.56

With the support of the European Commission 10

Trade Serbia – SEE in 2004

BiH

MACEDONIAROMANIA

CROATIA

BULGARIAALBANIA

MOLDOVA BiH

MACEDONIA

ROMANIA

CROATIA

BULGARIA

ALBANIA

MOLDOVA

With the support of the European Commission 11

Free trade liberalization in the SEE is expected to:

• Improve economic development of the region,• Increase economic integration in SEE,• Increase trade, • Improve ability of the SEE to attract FDIs,• Improve efficiency of domestic economies,

With the support of the European Commission 12

Trade between Serbia and the EU 25

• Exceptional trade measures of the EU since 2000,• Textile Agreement in 2005,• Major trading partner 54% of total Serbian trade,• Imports are growing faster than exports,• High trade deficits,• Coverage of imports by exports 31,5% in 2004,• New trend evident since beginning of 2005

With the support of the European Commission 13

Trade between Serbia and the EU 25in USD million

YEARTOTAL TRADE EXPORT

INDEX GROWTH

OF EXPORTS

IMPORT

INDEX GROWTH

OF IMPORTS

SALDO

%COVERAG

E OF

IMPORTS BY

EXPORTS

% SHAREOF

TRADE WITH EU IN TOTAL

TRADE

2000 2,391.56 802.33 124 1,589.23 107 - 786.90 50.49 48.9

2001 3,082.16 946.81 118 2,135.35 134 -1,188.54 44.34 51.5

2002 4,258.71 1,149.10 121 3,109.61 146 - 1,960.51 36.95 55.4

2003 5,451.83 1,351.35 118 4,100.48 132 - 2,749.13 32.96 53.3

2004 7,901.90 1,892.27 140 6,009.63 147 - 4,117.36 31.49 53.7

2005 I-VII

4,147.38 1,394.82 162 2,752.56 98 - 1,357.74 50.67 51.8

With the support of the European Commission 14

Trade Serbia – EU 25 in USD million

-6000

-4000

-2000

0

2000

4000

6000

8000

2000 2001 2002 2003 2004 2005/7m

Exports Imports Deficit

With the support of the European Commission 15

The SAA negotiations for SMN

• Negotiations are formally opened• Twin track approach for SMN – separate annexes

for 2 republics• Twin track negotiations with the EU and the WTO

accession• Main aim – Free trade area with the EU at the end

of transitional period• Asymmetrical character of the SAA

With the support of the European Commission 16

In the framework of SAA Serbia will negotiate for trade liberalization

issues:

• Products that will be liberalized immediately• Number and content of list of sensitive products• Length of transitional periods• Dynamics of liberalization for each category of

sensitive products

With the support of the European Commission 17

Challenges of the SAA implementation for Serbia

• Increase of imports,• Increase of trade deficit, • Lower customs revenues• Various costs of adjustment of Serbian economy to

increased competition from the EU

In the short run costs are expected to exceed

benefits

With the support of the European Commission 18

Benefits of the future Free Trade Area with the EU

• Long term contractual preferential access to the EU market,

• Increase of FDI inflow• Specialization of Serbian economy,• Modernization of legal and institutional framework

for trade cooperation• Facilitation of restructuring and privatization of

enterprises

With the support of the European Commission 19

Conclusions

• Regional integration (multilateralisation of FTA in the region of SEE)

• Integration into the EU (only Croatia and Macedonia has concluded the SAA)

• Integration to the world economy – the WTO membership (BiH, Serbia, Montenegro are not members yet)

→ growth of trade and investment in SEE!!