Prospects of CEFTA

Improving Cooperation in SEEKick-off MeetingSarajevo, 16 March 2012

Renata VitezDirector

CEFTA SECRETARIAT

Modern Regional Free Trade Agreement ...

• … harmonising trade rules across the region and incorporating modern trade related provisions;

• implying also … the Parties “aim … to accede to the EU and that CEFTA is a proven route to accession … (Preamble) … because intra-regional free trade is part of pre-accession process to EU (SAAs).

The modernised CEFTA is the first internationally binding Treaty signed by the SEE countries themselves; successful implementation is vital both

economically and politically.

CEFTA SECRETARIAT

Built on ....

EUChapter V

Operating Rules

Competition Rules

CEFTAChapter I, II, II, IV

Liberalisation of Trade in Goods

WTO

Chapter VI

New Trade Issues: Services, Investment, Government Procurement, Intellectual Property

CEFTA SECRETARIAT

Joint Committee

Subcommittee on Agriculture and

SPS

Subcommittee on Customs and RO

Subcommittee on NTBs and TBT

Working Group on TBT

Working Group on Trade in

Services

Secretariat

Implemented through a well developed structure ...

CEFTA SECRETARIAT

The period 2009 – 2011 was marked by ...

• Very active Chairs in Office and good coordination among the Article 44 Contact Points and with the Secretariat resulting in:• Meeting all deadlines and commitments from the Agreement• Achieving positive results in all key areas of the Agreement

(liberalisation of trade, diagonal cumulation, elimination of NTBs, competition, opening of public procurement markets, increasing transparency etc.)

• Decision making backed up by high quality analysis and recommendations of renowned international organisations e.g. OECD and World Bank

• Introducing of timely annual and multi-annual programming at all levels• Expanding the implementation structure (two new working groups)• Increasing visibility by introduction of new promotional/transparency

tools i.e. the CEFTA Week and the CEFTA Trade Portal

CEFTA SECRETARIAT

Recovery after fall in 2009

90

100

110

120

130

140

150

160

2006 2007 2008 2009 2010

Evolution of Exports (2006=100)

CEFTA 2006 Parties EU27 World

Source: OECD

CEFTA SECRETARIAT

Intra-CEFTA exports account for about 30% of total CEFTA exports.

28.3%30.7%

32.2%

31.7% 29.2%

0

5

10

15

20

25

30

35

2006 2007 2008 2009 2010

Bill

ion

s U

SD

Intra-CEFTA and CEFTA-EU exports

Intra-CEFTA Exports CEFTA Exports to the EU

Source: OECD

CEFTA SECRETARIAT

The share of agricultural exports is around 45% and around 20% for non-agricultural exports.

-

5

10

15

20

25

30

35

40

45

50

2009 2010 20113Q

Intra-CEFTA Share in Total Exports (%)

Total Agri Non-Agri Average

Source: CEFTA Parties

CEFTA SECRETARIAT

Dependence on Intra-CEFTA trade is especially high for agricultural products.

Intra-CEFTA trade in agricultural products as % of total trade (3Q2011)

Intra-CEFTA trade in non-agricultural products as % of total trade (3Q2011)

0

10

20

30

40

50

60

70

80

90

100

Exports Imports

AL BA HR MK MD ME RS KOS* Average

0

10

20

30

40

50

60

70

80

90

100

Exports Imports

AL BA HR MK MD ME RS KOS* Average

Source: CEFTA Parties

CEFTA SECRETARIAT

Transposition of EU technical regulations

Party Totally / Partially

implemented

Draft stage No transposition of EU

sectoral legislation

Level awarded

Albania 122 16 32 3

BiH 0 0 0 1

Croatia 97 0 12 3/4

Macedonia 53 0 13 3

Moldova 79 6 102 2/3

Montenegro 2 79 83 2/3

Serbia 30 11 81 3

Kosovo (UNSCR

1244/99)

0 3 11 1/2

Figures refer to 193 product groupingsSource: CEN

CEFTA SECRETARIAT

Manufacturing in CEFTA – Turnover: 42.5 bn EUR – Employment: 1.07 m

Shares of CEFTA Parties:(by turnover)

Albania 1.2 bnBIH 4.2 bnCroatia 14.0 bnUNMIK/Kosovo 0.6 bnfYR Macedonia 3.6 bnMoldova 1.5 bnMontenegro 0.6 bnSerbia 16.8 bn

3%

10%

33%

1%

8%4%

1%

39%

Albania

BIH

Croatia

UNMIK/Kosovo

fYR Macedonia

Moldova

Montenegro

Serbia

Approx. 70% of the manufacturing activity in CEFTA is concentrated in Serbia and Croatia

Source: OECD

CEFTA SECRETARIAT

Manufacturing activity is heavily concentrated in low and medium low tech industries.

Low Tech Industries (45%)

Medium Low Tech Industries (34%)

Medium High Tech Industries (18%)

ICTIndustries (3%)

Food and Beverages Tobacco Products

Textiles Wearing Apparel Leather Products Wood Products Paper Products

Publishing and Printing Furniture and Other

Manufacturing

Petroleum Products Rubber and Plastic

Products Non-metallic Mineral

Products Basic Metals

Fabricated Metal Products

Chemical Products Machinery and

Equipment Electrical Machinery

Motor Vehicles Other Transport

Equipment

Office machinery and computers

Radio, Television and Communication

ProductsMedical, Precision and

Optical products

Source: OECD

CEFTA SECRETARIAT

Services account for lion’s share of economies...

• Trade, construction, real estate and transport are most important

0

10

20

30

40

50

60

70

80

90

100Services as % of GDP

Source: World Bank

CEFTA SECRETARIAT

… with big potential to increase Intra-CEFTA trade in services.

Source: World Bank

CEFTA SECRETARIAT

Challenges for the years to come

• The implementation of CEFTA is now involving the domains for which• Objectives of liberalisation are not explicitly set up by the Agreement. • Ministries responsible for Trade might not always have a direct

mandate over these domains, thus requiring involvement of other governmental bodies (e.g. elimination of NTBs, trade facilitation, liberalisation of trade in services, etc.).

• These areas require technically complex discussions, as well as coordinated efforts of both policy making Ministries and law enforcement authorities at the same time.

• As a consequence, the projects and initiatives to support the implementation are also getting technically demanding and increasingly complex.

• Trade policy alone is not sufficient to optimise the impact of regional trade liberalisation and European integration.

CEFTA SECRETARIAT

Objectives

CEFTA 2008 - 2011

• All commitments and deadlines met• Liberalisation of trade in goods • Diagonal cumulation• Opening of PP Market• TBT notification• State Aid notification• IPR review• Non-discrimination in Investment• CEFTA Trade Portal

CEFTA 2012 - 2015

• Strategic partnerships deepened• Investment• Supply chains• Transportation channels

• Focus in CEFTA implementation• Liberalisation of trade in services• Elimination of NTBs• Trade Facilitation• Transparency

CEFTA SECRETARIAT

Assumptions

• Harmonisation efforts within CEFTA are aligned with the common objective to join the EU

• All decisions are promoting and not in anyway jeopardising the accession process of respective Parties

• No CEFTA specific standards or practice are introduced

CEFTA SECRETARIAT

“CEFTA Approach”

• Analyse trade flows• Assess existing and potential barriers to trade• Articulate respective Parties interest• Identify potential area of multilateral/plurilateral interest• Cross-check with the respective EU accession priorities/plans • Agree on the scope of CEFTA negotiations

CEFTA SECRETARIAT

Key Success Factors

• Strategic view– understanding strategic importance of trade and strengthening regional cooperation/partnerships• by the Parties in the context of their economic development, regional

cooperation and accession to the EU• by the donors in the context of the impact of trade on promoting economic

development in the Region • Coordination – efficient coordination required

• among the Parties in the negotiations• within respective Parties administrations to develop Parties’ positions• between the Parties and the Secretariat to execute action• between the Parties, the Secretariat and international partners to seek for

synergies and prevent overlapping of efforts• Sustainability – ensuring sustainability of the process as a prerequisite to success

• discipline of all actors in programming and implementation of priorities• regular participation and appropriate representation in official meetings• active involvement in agreed activities• financial discipline

THANK YOU.