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Respect For Differences Until A Consensus

Even after ten years, the Economic community of the countries of Central Europe respects diversity and fosters tolerance and compromise

After ten years as a member of the Central European Free Trade Association, CEFTA, Serbia is satisfied with relations, procedures and projects, which undoubtedly ease the country’s path towards the EU. That which we do in respecting this agreement, the procedures we learn from and apply, are all good preparation for integration into the EU.

A lot has been done in a decade and it could only be noticed that the enthusiasm of the first few years of the organisation has a little faded and that now the member states pay more attention to protecting the interests of their own countries, which is perhaps normal, but of course not at the expense of others, says Bojana Todorović, Assistant Minister at the Serbian Ministry of Trade, Tourism and Telecommunications.

This year formally marks the tenth anniversary of the signing of the CEFTA 2006 Agreement. In your opinion, to what extent has this agreement fulfilled the initial expectations?

– Given that I have been included in the activities of CEFTA from day one, I think this is the very good realisation of a positive initiative, which is fortunately still continuing. Much has already been done. We have been unable to do some things to date, but I really think the result is positive, especially for Serbia.

Due in particular to the major trade deficit we have with the outside world, especially with the EU, the surplus of between 1.5 and 1.8 billion euros that we have with CEFTA, and which is growing from year to year, provides us with a significant balance. Seen from a broader perspective, it can be seen that, in addition to its major regional significance, CEFTA’s share in Serbia’s trade is falling, while trade with the EU is increasing as the country’s EU integration process progresses.

CEFTA also has its own political function – stimulating cooperation and dialogue in the region, as well as a multi-layered economic role.

– It should also be noted that all decisions in CEFTA are taken by consensus, which is good training for negotiating, tolerance and respecting the diversity of member states. At some moments it seemed like an agreement would never come, but in time we have all grown accustomed to dialogue and now there is much less wrangling than at the beginning and decisions are made much more quickly. Of course, as time progresses, each country wants primarily to meet its own targets, but also to find a compromise for that.

All decisions in CEFTA are taken by consensus, which is good training for negotiating, tolerance and respecting the diversity of member states

The part relating to the liberalisation of trade has been completed and customs duties have been abolished, while now we face a new task of liberalising the services market

Serbia, like other member countries, must harmonise its legislation with the rules of the WTO and finalise negotiations with Brazil, Ukraine and the Russian Federation

In contrast to that, how much of a factor in attracting foreign investment was represented by the creating of a larger space for free trade?

– The initial idea was for CEFTA to be presented as a single investment destination and to promote the region as a whole, which is still just an idea requiring work to be realised. In the meantime, each country highlights and promotes its comparative advantages and I think it will remain like this until the establishment of value chains and supply chains.

However, we already doing a lot of work on that and so far two areas have been identified – the automotive industry and non-alcoholic beverages. A special study on this is being carried out by a working group of UK experts, with recommendations on how to exploit these defined chains to ensure final products are of a higher quality.

Politics does not impact on the work of CEFTA, although in certain situations it is evident that the overall atmosphere reflects the current political circumstances in the region

For many years there has been talking about further liberalisation and the abolition of non-tariff barriers. You recently announced that things could finally start moving from a standstill.

– The part relating to the liberalisation of trade has been completed and customs duties have been abolished, while now we face a new task of liberalising the services market. Negotiations on the liberalisation of services should be finalised by the middle of this year, which will allow for the recognition of qualifications, diplomas and professional services. That could be significant for Serbia because 60 per cent of the structure of the Serbian economy/GDP comprises services.

What is also new is that work is being carried out on a new agreement on trade facilitation, i.e., easing procedures at borders. Such an agreement exists within the WTO as the Trade Facilitation Agreement and it implies the unifying of customs documents, procedures, border inspections, limited waiting times etc. The first draft of that agreement, under the auspices of CEFTA, should be ready by summer.

When it comes to the abolition of non-tariff barriers, we are constantly working on that, but there are always individual examples. They generally occur seasonally, when some countries impose additional measures under pressure from domestic industries.

How much are the disputes that occasionally arise within CEFTA part of a deeper problem – i.e. the fact that many countries have not taken sufficient advantage of the opportunity to diversify their production and, thus, they seek to close their markets, mostly in the food domain?

– Serbia, as the largest country and the largest partner, is also the most competitive in that group and has no such problems, but some countries have not moved beyond old production methods and they still do a lot of work and produce goods in a traditional way. It is left up to every country to decide how to diversify production and in what way.

The system for settling disputes in CEFTA is not effective, because there are no adequate sanctions or compensation. Serbia has launched an initiative to review these procedures, which will ensure disputes can be resolved quickly and offenders punished appropriately

How do negotiations with Kosovo influence relations within CEFTA, considering that until some time ago accusations had been levelled by Kosovo that Bosnia-Herzegovina and Serbia were blocking the export of goods from Kosovo?

– Given that the problem of Kosovo’s representation in CEFTA has been resolved, we no longer have any kind of unclear situation, because it is presented with a star referring to UNSCR 1244, and when a decision is made it is necessary for UNMIK to participate as a signatory of the Agreement. Kosovo has no more problems within CEFTA than other countries and it could not be said that these are a consequence of political relations or situations, but rather only trade relations, in which every country protects its own interests.

Back in its early days, CEFTA was seen not only as a path towards the EU but also as a stop on the way to Serbia entering the WTO. After years of waiting, how close are we to that objective today?

– CEFTA is indeed seen as a path towards the EU, but not as a path to WTO membership. In the CEFTA preamble, all basic principles are taken from the WTO, while some provisions directly refer to relevant WTO members.

Today the WTO has 164 member countries, which makes it an immense organisation in which decisions are taken by consensus and are now waited for longer than ever before. And, in addition to regular activities, within the framework of the WTO agreement has also been reached on the Trade Facilitation Agreement, after ten years of negotiations, which is the document that also provides the basis for negotiations within CEFTA.

The fact is that the slowness of the multilateral trading system has prompted many WTO members to turn regional, instead of multilateral, cooperation, which certainly undermines the importance of this once powerful trading organisation. Serbia, like other member countries, must harmonise its legislation with the rules of the WTO and finalise negotiations with Brazil, Ukraine and the Russian Federation.

Do you think that, despite the possibilities of further liberalisation, the CEFTA agreement has actually more or less completed its mission?

– That certainly cannot be said, because we have launched liberalisation of the services market, so there are work and activities to be done for quite some time into the future. There will be many questions about this issue and a consensus must be reached regarding everything. And more work must be done for the services market, and then also on the new trade facilitation agreement, which has been agreed by the prime ministers of all CEFTA countries. When we finish that, some new ideas and demands for new agreements will probably emerge, which will make CEFTA an even stronger organisation, justifying its existence even more.