Trade in border areas:

CEFTA 2006

REPUBLIC OF CROATIAMinistry of Agriculture, Fisheries and Rural Development

Miroslav Božić, Director

East Agri Annual Meeting, Istanbul, 13-14 October 2010

“Free trade, one of the greatest blessings

which a government can confer on a people, is in almost every country

unpopular.”

Thomas Macaulay (19th century)

Contents:

– Establishment of CEFTA 2006

– Scope and objectives of CEFTA

– Experience gained: Benefits and challenges

– Future of CEFTA: Outlook into EU integration

History

CEFTA today

Future

Initiatives to promote cooperation in South-East Europe

• Launched during the 1990s with the aim to promote peace and stability in the region of SEE

• Tipically established at the initiative of other countries (eg. SECI (USA), Stability Pact (EU)) and donor funded

• Usually promoted political and different aspects of economic cooperation (trade, SMEs, energy…)

• Based on declarations rather than binding agreements

• After 2000 increased pressure on the countries of the region to undertake stronger commitments

History

CEFTA today

Future

From Visegrad to “CEFTA 2006”

• Nov 2005 – Zagreb Declaration: membership

criteria for new CEFTA

• Apr 2006 – Bucarest Declaration:

negotiating principles

• Dec 2006 – CEFTA 2006 Agreement signed

• Jan 2007 – CEFTA 2006 Agreement enters

into force

Parties to CEFTA 2006 Agreement: global perspective

World EU 27CEFTA 2006

totalas % of world

as % of EU 27

Territory km2 148.940.000 4.324.782 298.271 0,2 6,9

Population million 6.874,3 502,1 27,0 0,4 5,9

GDPmillion USD

57.843.376 16.388.122 158.648 0,3 1,0

History

CEFTA today

Future

Objectives of CEFTA 2006

• Establish a free trade area in conformity with WTO rules and procedures

• Consolidate in a single agreement the existing level of trade liberalisation

• Improve conditions for investment • Eliminate barriers to and distortions of trade• Gradually open gover. procurement markets• Provide protection of intellect. property rights• Provide effective procedures for

implementation of the agreement

Building blocks of CEFTA 2006

WTO

CEFTA + bilaterals

EUaquis

Competition rules

RoO

SPS, TBT

Liberalisation of trade in goods

Joint Declaration

New Trade Issues

Contingent Protectionism

History

CEFTA today

Future

BENEFITS …

• CEFTA is primarily a trade agreement and• CEFTA is not linked to other issues such as movement of

people or countries’ relations to other partners (eg. EU)

• Trade within CEFTA increased, however, share of trade with other partners much higher (EU) and is likely to increase

• Cumulation of origin (within Cefta and outside)• CEFTA inspired other types of cooperation between countries

(eg. Cooperation of chambers of commerce)• Better environment for foreign direct investments

… LIMITATIONS

10 0,2

16

28

Share of CEFTA in trade of non-agricultural products (%)

37

Source: CEFTA Parties trade statistics

13

7

22 0,8

40

53

Share of CEFTA in trade of agricultural products (%)

76

Source: CEFTA Parties trade statistics

38

8

History

CEFTA today

Future

Challenges in implementation

• All decisions must be made unanimously

• Implementation of decisions blocked because of political issues between Serbia and Kosovo (eg. further liberalisation in agriculture agreed but not implemented)

• CEFTA Parties in different stages of international integration missunderstanding and different interpretaiton of CEFTA provisions

WTO membership SAA signed EU accession process

Albania 2000 2006application for membership

submitted in 2009

Bosnia and Herzegovina

negotiations since 2003

2008 -

Croatia 2000 2001candidate since 2004, accession negot. to be concluded 2010/’11

Kosovo - - -

Macedonia 2003 2001 candidate since 2005

Moldova* 2001 1998 -

Montenegronegotiations since

20052007

application for membership submitted in 2008

Serbianegotiations since

20052008

application for membership submitted in 2009

* Moldova concluded Partnership and Cooperation Agreement with the EU

Outlook into EU integration

History

CEFTA today

Future

CEFTA future

• CEFTA Parties candidates or potential candidates for membership in the EU

• Accession of Parties to the EU year 20XX CEFTA ceases to exist!

THANK YOU FOR YOUR ATTENTION.

READY TO TAKE UP QUESTIONS!

Republic of CroatiaMinistry of Agriculture, Fisheries and Rural

Development

Zagreb, Ulica grada Vukovara 78

Tel. (00 385) 1 6106 600Fax. (00 385) 1 6109 200

www.mps.hr m. bozic@mps.hr