1. "FTA-s/CEFTA and some revealed effects, on the Albanian Economy and Agribusiness" Selim Belortaja ACIT (Albanian Centre for International Trade) Skopje, January 25, 2008

2. My Presentation Our region: accelerated process of tariff liberalisation. Albania: deeper liberalization in Agbiz tariffs. Growth of trade volume but..with important imbalances. Ag.and ag.processing products suffering more Gains from trade liberalization (hub and spoke, retail prices) CEFTA – 2006: cares on insufficiencies of bilateral FTA-s Competitiveness: a comprehensive approach for optimizing impacts and maximizing benefits from t.liberalization

3. SEE countries: a multi-path commitment to trade liberalization efforts Autonomous measures Regional efforts/agreements –Bilateral –CEFTA 2006 EU integration Multilateral context (WTO) Brussels 2001: the MoU on Trade Facilitation and Liberalization, The regional approach gains a new momentum

4. Albania’s simple bound av.tariff dynamics, 2002-2009

5. Tariffs, % ALBB&H 1 BULCROFYROMMONT 1 MOLDROMEU Simp. average final bound Total Agric Non-Agric 7.0 9.4 6.6 25.6 42.4 23.0 6.4 12.0 5.5 7.2 13.4 6.3 6.9 13.4 6.0 39.9 98.4 30.9 5.4 15.4 3.9 Simp. aver MFN applied Total Agric Non-Agric 5.7 7.9 5.4 7.2 13.8 6.2 10.4 19.9 9.0 4.9 11.0 4.0 8.3 13.7 7.4 4.9 10.8 4.0 5.2 11.5 4.2 (2005) 15.9 22.9 14.8 5.4 15.1 3.9 Animal prod 2 8.645.724.020.914.119.717.823.125.4 Dairy prod 2 9.921.339.026.320.829.017.139.023.8 Fruit, veget, plants 2 10.38.524.011.920.813.513.220.211.8 Coffee, tea 2 11.77.823.98.814.710.08.118.06.5 Cereals and preperations 2 7.913.626.412.317.87.910.722.225.6 Oilseeds, fats & oils2.12.610.14.32.82.65.912.35.9 Sugar and confectionery5.68.526.919.38.24.818.633.832.9 Beverages and tobacco11.131.530.714.931.624.217.753.920.2 Cotton2.00.0 1.80.0 Other agri prod6.11.26.42.61.91.76.420.35.3 1 Non- WTO member 2 Average MFN applied Tariff liberalization: Albania and its neighbors, relatively low import tariffs

6. Albanian regional trade, supported by the bilateral FTA-s

7. An impressive growth of regional trade volume – but still weak import coverage 2002 total 2006 total 2002 regional 2006 regional Total trade 2006/2002 Regional tr. 2006/2002 Albanian Exports 330,2 790,6 12,7 64,0 2,4 times 5,0 times Imports1490,03049,7 113,3 316,6 2,04 2,8 Trade Volume 1820,03840,3 126 380,6 2,11 3,0 ALBANIA’s TRADE200220032006FactTendency Regional import coverage (By regional exports) 11,211,720,2weakerStrong improvement Total import coverage (By total exports) 22.224,126betterSlight improvement

10. Albanias total exports to the region

11. Albanian export of agbiz. Products to the region

12. Annual increase rates of Albania’s total export to the region (%)

13. Annual increase rate of Albanian Agbiz. Export to the region (%)

14. The rate of the export of Agbiz. commodities to total export to the region (in %)

15. Albania’s total imports from the region

16. Alb. Imports of Agbiz. products from the region

17. Increasing rate of total imports to the region 2001-2007 (%)

18. Increase rates of agbiz. Imports from the region

19. The rate of the imports of Agbiz. commodities to total imports from the region (%)

20. Is there any “visible” shift to a stronger regional trade? (2003 to…)

21. …2006 )

22. 2000200120022003200420052006 (Goods Export +Import)/GDP 36.039.940.439.136.939.641.8 (Ex+Im+Pr.Tr) /GDP47.653.153.252.849.851.254.8 Goods exp./GDP6.97.47.37.87.968.08.6 Export growth rates (%) -7.219.38.435.434.9920 (Goods +services export +import)/GDP 59.863.766.565.862.064.766.2 (Ex+Im+S+Priv. Transf.) /GDP 71.476.979.379.574.976.379.2 (Ex+Im+S+Private Transfers + FDI)/GDP 75.382.082.382.679.480.5 83.7 Albania’s Openness indexes, as % to GDP

23. Failures of bilateral FTA-s –Mendelson: “A complicated system(‘sphagetti bowel’)…” –World Bank (2000): “…a series of uncoordinated bilateral FTA-s, with different coverage, preferential depth and rules of origin, are very hard to be implemented…” –Not in full conformity with the principals and standards of the MoU 2001, including the trade coverage standards (90% of the tariff lines and 90% of import value) –A critical issue: the rules of origin, considering just the “individual origin” from a single country –As a result the implementation of the FTA’s “… could not lead to the expected dynamic benefits regarding the economy of scale, transfer of technology, etc.” (Grupe and Kuŝić, 2005)

24. On the other hand: The context of Thessaloniki agenda: called for deeper trade relations, including the development of closer regional trade integration. recalled the central role of trade policy in SAP This calls for broad and complex facilitating and liberalization measures, far beyond the mere tariff liberalization

25. From FTA-s to CEFTA 2006 – a “natural” and smooth process -consolidation of the 31 bilateral FTA-s, deeper liberalization, abolition of quotas -creation of a single Regional Free Trade area -”modernised CEFTA”: completion with “new” dimensions, like trade in services, measures regarding investments, public procurement, competition and state aid, i.property, antidumping, safeguards, non-tariff-barriers, etc. -from the view of EU: complementary to the Stabilization and Association process

26. Trade liberalization and trade growth – a complex casual link A complexity of factors behind the end results: –Restoration of peace in the region –On-going reform process in each country regarding the business climate –Infrastructure development –More free movement of people –FDI / economic growth –European Integration process and: –FTA-s and CEFTA The regional trade - still a potential to be explored: –EU markets remain the most important for many SEE countries. –Imports from the other countries are also expanding fast

27. Competitiveness- a key issue GCI and Albania, 2007-08

28. Ranking Comparison Report of WEF, 2007-2008 Global Competitiveness Index Albania 2007: 109/131 (score: 3.48) Albania 2006: e 98/122 (score: 3.56) Rank 131 in “inovation” 122 “ 124 in “Infrastructure”119 “ 117 in “goods market efficiency”107 “ 114 in “Institutions”111 “ 74 in “technological readiness” 88 Main concern: lowest position as compare to the region Business Competitiveness Index: Albania 2007: rank 122 out of 127 countries Albania 2006: 119 th out of 121

29. GCI and its 12 pillars 2007-08 Who takes care on each issue?

30. Concluding Remarks The regional trade liberalization build on an complex and multi-path process. Albania’s trade with the region growing faster and showing more interest. Winners and losers Albania’s Agbiz regional trade, facing more difficulties to compete. The increased trade volume so far, mainly results from tariff liberalization. Problems with the distribution of gains from tr. liberalization (externally and internally) CEFTA-2006 brings a new momentum, especially in overcoming some non-tariff shortcomings. Competitiveness: an approach and philosophy which deserves more attention by governments, donors and interest groups Neither tariff liberalizat. nor regional trade volume, are ‘final goals’ per se. They are processes leading to sustainable development EU integration shall prevail, as it addresses with priority the remained issues

31. THANKS FOR THE ATTENTION Contacts: sbelortaja@acit-al.org www.acit.al.org