1. REPUBLIC OF MACEDONIA AND CEFTA -2006
Irena Kikerkova, PhD Ss. Cyril and Methodius University Faculty of Economics – Skopje Republic of Macedonia
REPUBLIC OF MACEDONIA AND CEFTA -2006
Skopje,2016

2. CEFTA – 2006 member states:
Croatia, Serbia, Bosnia and Herzegovina, Montenegro, Kosovo, Albania and Moldova;
Croatia since July, 2013 is not part of CEFTA – 2006, as it joined the EU.

3. Total trade exchange within CEFTA
Trade exchange of goods of the Republic of Macedonia within CEFTA-2006 for the period (in million American dollars)
Year
Export
Import
Total trade exchange within CEFTA
2006*
787.51
400.19
1,817.70
2007
991.72
613.70
1,605.42
2008
1,408.95
761.68
2,107.63
2009
1,000.42
600.36
1,600.78
2010
1,018.32
628.11
1,646.43
2011
1,299.31
799.29
2,028.00
2012
833.69
649.50
1,483.19
2013
804.26
719.00
1,523.26
2014**
512.23
570.32
1,082.55

4. …
Macedonian trade exchange within the region almost doubled in the period from The realized trade surplus of the country from trading within the region amounted about 647 million American dollars (28% of total Macedonian trade exchange of goods were done with CEFTA-2006);
The crisis restricted the participation of CEFTA-2006 trade exchange of goods to only 20% of the total Macedonian trade exchange at the end of Exports were especially affected and decreased by 37.2% in comparison with the export realized in 2008;
There was a period of stabilization of trade flows of goods in 2010 and Trade surplus went down to about 400 million American dollars.
Since 2012 Macedonia recorded further decrement of the total trade exchange with CEFTA-2006 trading partners. In 2013 the total trade exchange of Macedonia with the free trade area went down to 14% and the trade surplus amounted only about 80 million American dollars.

5. …
In 2014 the total trade exchange of goods within the region fell down to 11.8% of the total trade exchange of goods of the country. Data for 2014 point out that even in absolute figures the total trade exchange fell to a level lower than the one reached in 2006 when the FTA had not been functional yet. Trade surplus for Macedonia completely melted down and last year it was converted into a deficit of about 80 million American dollars.
It is also important to note down that this negative trend was not influenced by Croatia leaving the region. For Macedonia the two most important trading partners from the region were and still are Serbia and Kosovo. Those two countries comprise about 50-60% of the total Macedonian trade exchange of goods in CEFTA – 2006.
The negative trend continued throughout 2015, when all the countries in the region registered further decrement of their mutual trade. In the case of Macedonia, the trade exchange within the region fell for almost additional 2 percentage points.

6. Total trade exchange of goods of CEFTA member-states with the EU and with CEFTA-2006 by CEFTA-2006 member-states in 2013
CEFTA member -state
Total EU trade exchange
Exports Imports
Total CEFTA trade exchange
Exports Imports
Albania
77% %
11% %
B&H
73% %
16% %
Kosovo
40% %
36% %
Macedonia
73% %
17% %
Moldavia
47% %
0% %
Montenegro
49% %
43% %
Serbia
61% %
21% %

7. …
Looking at data published on the CEFTA trade-portal web page it is evident that all of the member-states have the same experience of substantial decrement of total trade exchange within the region and diversion of trade flows of goods towards the EU. Most of them realize between 40 and 60% of their total trade exchange of goods with the EU.
Half of the intra-regional trade of goods consists of intermediate goods. In 2010 intermediate goods created 59% of the total exchange of manufactured goods within the region. However, the supply chain in the industry “Food, Beverages and Tobacco” alone created 43%.
The intra-regional trade structure, however, is dominated in value terms by goods from the medium-high technology industries (“Chemistry” and “Electrical Machinery” ), but in volume absolutely dominant are the goods from medium-low technologies (“Basic Metals” and “Fabricated Metal Products”). Bosnia and Macedonia are the two most integrated economies within the CEFTA-region from the view-point of intra-CEFTA supply chains.

8. The issue of nontrade barriers within CEFTA-2006
Many reasons for downward trends in the trade exchange of goods among member-states;
Economic chambers of the member-states were the first that rose the issue on the exsitence of non-trade barriers to trade;
Trade versus nontrade barriers instead of tariff and non-tariff barriers;
The problem of discovering, evidencing and measuring NTBs initiated the establishment of the OECD monitoring tool within the region;
NTBs were divided in three groups: technical barriers to trade (TBT); sanitary and phytosanitary measures (SPS) and administrative barriers to trade.

9. … Regarding TBT barriers to trade, the following has been confirmed:
- Continuous progress in legislation harmonization, however no implementation of the legislation already in place;
- Transposition of EU legislation relevant for those areas in each member-state with a different pace;
- Non-existence of adequate notification mechanisms on new implemented technical standards/ SPS measures;
- Evidence confirms the existence of TBT conformity assessment bodies in all product areas in only few CEFTA member-states;

10. …
- In regard of SPS barriers, most of the CEFTA member-states suffer from lack of adequate equipment for field inspection, lack of trained personal and state budget restrictions;
-Lack of risk analysis capacity meaning risk assessment, risk management and communication on risks;
- Exchange of information on new legislation and measures on bilateral basis and at informal meetings;
- Especially important is the non-existence of internationally accredited laboratories and lack of mutual recognition of national laboratories attests;

11. …
Even more, CEFTA member-states do not distinguish between conformities in food safety versus quality of food. Hence elimination of quality issues from import/export control of food is strongly recommended;
Transposing the EU legislation in each member-state with a different pace creates additional problems - misunderstandings due to differences in understanding and commenting transposed laws, EU standards and practices.
Also, information points should be established as soon as possible and regular exchange of information on the applied and new SPS measures according to the international provisions and standards should be done among all the member-states .

12. … Administrative barriers to trade are numerous:
Working hours of border agencies within CEFTA-2006 have still not been synchronized;
No significant improvement in regard of the functioning of national web-sites, advanced rulings, appeal procedures and fees and charges;
Member-states try to follow up international standards and multilateral regulative framework, but fail to provide their full implementation, even when national legislation is in place;
Information on advanced rulings, although obligatory according to WTO and the Revised Kyoto Convention is still issued only on request of traders;
Despite of the Revised Kyoto Convention in some of the member-states there is no independent authority in charge of delivering second instance decisions in appellate procedures;

13. …
No information on applicable fees and charges is available on regional level, and with exception of Macedonia, Customs does not provide a comprehensive overview of types and amounts of all applicable fees and charges;
CEFTA member-states have complicated documentation formalities due to the non-existence of electronic customs system; The enquiry points are not functioning on unified terms within the FTA and they basically cover customs legislation and procedures issues;
No risk management capacity on regional level;
Despite all the efforts, some of the essential good practices within the region, such as: pre-arrival processing, the usage of simplified procedures and modernization of equipment and well trained personal in the customs laboratories, are still lacking ;
There are also serious difficulties in implementing the concept of authorized economic operator (AEO), although in some of the member-states the legislation is already in place.

14. …
Analysis of the causes that prevent other member-states to boost up their trade within the region is difficult to perform due to lack of reliable data;
In some of them there is a huge deficit in the balance of payment, and a significant part of it derives from the deficit in the trade balance (Montenegro and Serbia);
Kosovo has a very fragile economy and no capacity to act as significant trader in the region;
Bosnia and Herzegovina suffered the most from Croatia’s departure;
All of the countries face political challenges which prevents them to articulate their mutual interest;

15. …
It seems though that non-trade barriers are not the real cause for the decrement of the intra CEFTA trade exchange of goods;
The structure of the output, basically consisting of intermediate goods in the metal-processing and food processing value chains which are competitive and not complementary goods, as well as no possibility for producing sophisticated manufactured goods, are one of the causes that inhibits increment of trade exchange;
Poor transportation as well as border infrastructure are also another important impediment to CEFTA-2006 trade exchange;
All of the member-states having SAA strive to keep their positions on the EU market and have no capacity to boost trade both within CEFTA and in the EU;
In the case of Macedonia the creation of the so called Technological Industrial Development Zones diverted a major part of the trade exchange of goods towards the EU (about 70%). About 50% of the total export of goods of the country as a result of the activity of foreign companies within the TIDZ is exported to Germany, and about 15% of the total import also comes from Germany.

16. THANK YOU FOR YOUR ATTENTION!