1. 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 Minister Verica Ignjatović, Adviser Ministry for International Economic Relations of the Republic of Serbia With the support of the European Commission

2. 2 TRADE LIBERALIZATION IN 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

3. 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

4. With the support of the European Commission 4 Serbian imports in 2004 according to trading partners

5. 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

6. With the support of the European Commission 6 Trade Serbia with the world in the period 2000-2004 YEAR TOTAL TRADE EXPORTS INDEX GROWTH OF EXPORTS IMPORTSINDEX GROWTH OF IMPORTS TRADE BALANCE % COVERAGE OF IMPORTS BY EXPORTS 20004,887.71,557.8113.83,329.8115.3- 1,771.946.8 20015,981.41,720.7110.54,260.8128.0- 2,540.140.4 20027,689.02,075.2120.65,613.8131.8- 3,538.636.9 200310,227.42,754.9132.87,472.5133.1- 4,717.736.8 200414,276.63,523.4127.810,753.2143.8- 7,229.932.8

7. With the support of the European Commission 7 Trade Serbia – world in USD million

8. 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

9. With the support of the European Commission 9 Trade between Serbia and the SEE TRADEEXPORTSIMPORTSTRADE BALANCE Years200220032004200220032004200220032004 TOTAL (R SERBIA) 2,075.22,477.43,701.05,613.87,324.011,139.2-3,538.6-4,846.6-7,438.2 BiH323.1395.3650.3129.5167.7243.0193.6227.6407.3 MACEDONIA205.8220.2266.9126.8132.9164.979.087.3102.0 ROMANIA53.371.3124.3135.9134.2210.1-82.6-62.9-85.8 CROATIA42.076.0154.090.5121.7208.4-48.5-45.7-54.4 BULGARIA32.553.461.5117.8130.1235.7-85.3-76.7-174.2 ALBANIA6.426.616.20.10.50.66.326.115.6 MOLDOVA1.41.82.30.70.91.80.70.90.5 Total 7 SEE countries664.5844.61275.5601.3688.01064.563.2156.6211.0 Share of SEE countries in total Serbian trade (%) 32.0234.0934.4610.719.399.56

10. With the support of the European Commission 10 Trade Serbia – SEE in 2004

11. 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,

12. 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

13. With the support of the European Commission 13 Trade between Serbia and the EU 25 in USD million YEAR TOTAL TRADEEXPORT INDEX GROWTH OF EXPORTS IMPORT INDEX GROWTH OF IMPORTS SALDO % COVERAG E OF IMPORTS BY EXPORTS % SHAREOF TRADE WITH EU IN TOTAL TRADE 20002,391.56802.331241,589.23107- 786.9050.4948.9 20013,082.16946.811182,135.35134-1,188.5444.3451.5 20024,258.711,149.101213,109.61146- 1,960.5136.9555.4 20035,451.831,351.351184,100.48132- 2,749.1332.9653.3 20047,901.901,892.271401406,009.63147147- 4,117.3631.4953.7 2005 I-VII 4,147.381,394.82162 2,752.5698- 1,357.7450.6751.8

14. With the support of the European Commission 14 Trade Serbia – EU 25 in USD million -6000 -4000 -2000 0 2000 4000 6000 8000 200020012002200320042005/7m ExportsImportsDeficit

15. 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

16. 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

17. 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

18. 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

19. 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!!