Transcript An Overview of Trade and Trade Policy Developments in SEE

Alexandroupolis, Greece
5-7 December 2004
The Emergence of a Free Trade Area in SEE:
Why, How, What and Where to?
Per Magnus Wijkman
Technical Expert to Working Group on Trade
Liberalisation and Facilitation of the Stability Pact
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I. Why liberalise and facilitate trade?
To ’join Europe’ requires postwar
reconciliation and reconstruction in
the region
Trade contributes importantly to
both objectives
Good neighbours make good traders
and vice versa
2
Trade liberalisation may:
triple intra-regional trade
quadruple trade between Western and
Eastern Balkans
between Western Balkans and Romania
(8x)
between Western Balkans and Bulgaria
(3x)
double trade within Western Balkans
Source: World Bank
3
Potential growth of intra-regional trade
Croatia
GDP 20,211 US
SaM
GDP 12,020
US
74
243
367
Source: World Bank
Romania
GDP 34,027 US
2
11
500
2000
320
112
22
BiH
GDP 4,387
US
Macedonia
GDP 3,401
US
24
Albania
GDP 3,665
US
Croatia
GDP 20,211 US
518
Bulgaria
GDP 12,403
US
Potential
SaM
GDP 12,020
US
411
1,869
Romania
GDP 34,027 US
284
Potential
200
321
285
225
287
BiH
GDP 4,387
US
147
Macedonia
GDP 3,401
US
1,524
Bulgaria
GDP 12,403
US
218
Albania
GDP 3,665
US
4
II. How to liberalise trade
Big Bang (A single agreement)
OR
Evolutionary process (A network of bilateral
agreements)
…the first is easier to negotiate, to administer,
and to apply
5
Six bilateral Free Trade Agreements
existed prior to June 2001
One country had three bilaterals,
three countries had two bilaterals
and one had one agreement.
Croatia
Moldova
BiH
Romania
S&M
Bulgaria
Albania
Macedonia
6
Uncertain of success and risk avert,
countries chose the network approach
Seven SEE Ministers sign Statement of Intent to
liberalise trade in Geneva, January 2001 and
Memorandum of Understanding at Ministerial
meeting in Brussels, June 2001. Moldova joins.
Target: free trade in SEE region.
Milestone: conclude at least 1/2of the
agreements and open negotiations on all by
Ministerial in June 2002.
Deadline: conclude 21 bilateral trade agreements
by end of 2002.
…… a tight schedule but all 28 agreements are now
in force.
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Network of Free Trade Agreements February 22,
2002
Initial scepticism lead to slow start. Only 2 negotiations concluded and 8 opened in 8
months. Most activity in Western Balkans.
Croatia
Moldova
BiH
Existing before June 27 2001
Signed after June 27 2001
Under negotiation
Romania
S&M
Bulgaria
Albania
Macedonia
8
Network of Free Trade Agreements as of May 8, 2002
Breakthrough at Washington? Only 2 more negotiations
concluded and 3 more opened. But Eastern Balkans catching upgreater balance. Concern focuses on Bulgaria and FRY.
Croatia
Existing before June 27 2001
Signed after June 27 2001
Under negotiation
Moldova
BiH
Romania
S&M
Bulgaria
Albania
Macedonia
9
Network of Free Trade Agreements as of mid October 2002
June milestone met in October. FRY and Bulgaria negotiating with all. But
10 negotiations to be completed in 2 months!
5 existing before June 27 2001
6 signed after June 27 2001
10 under negotiation
(Numbers exclude Moldova)
Commitment: 21 signed by end of 2002.
Croatia
Moldova
BiH
Romania
Yugoslavia
Bulgaria
Albania
Macedonia
10
Chairman of WT II in November calls a
crisis meeting
Show-and-tell time set for December
2002 registers major progress
Establish which countries would fail to
meet their commitments by Ministers
(only two agreements – 3 countries)
Stop the clock over at year end to allow
one remaining agreement to be finalised
Success in February 2003
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Reasons for success
SEE ownership, small countries lead
Dedicated WG leadership, high-level
representation, concrete targets, deadline
and milestones, peer pressure,
professional expertise, entrepreneurial
secretariat
Donor country support, essential for
candidate countries
EC overcame SEE scepticism by SAAs and
by Thessaloniki Declaration 2003
12
III. What do the FTAs provide?
Free trade in goods within six years –
tariffs and non-tariff barriers abolished
Almost Completed
Harmonisation of trade-related legislation
based on EU acquis and WTO rules and
procedures In full progress
Evolutionary clause for liberalising trade in
services Just starting
13
High-tariff countries and products
Average Tariff Rates for Agricultural and
Industrial Goods
Industrial Tariffs
25,0
Bosnia
Albania
Moldova
Croatia
Bulgaria
Serbia & Montenegro
Macedonia
Romania
20,0
15,0
10,0
5,0
0,0
0,0
5,0
10,0
15,0
20,0
Agricultural Tariffs
25,0
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Eliminate tariffs on 90% of traded
goods
1. Zero tariffs for manufactures in almost
all agreements.
2. Zero tariffs for agricultural goods in only
five agreements. Virtually no
liberalisation of agriculture in six
agreements. Limited in rest.
3. Thus, about half the agreements pass
the overall 90 % test. Seven fail the
overall test, rest borderline.
4. Agriculture is the critical sector for
5-10 agreements to conform to Mou.
15
Seven agreements fail both criteria
of trade coverage – ten pass both
Gem report, July 2004
Alb-Mol, Alb-Mac
Alb-S&M, BiH-Bul
BiH-Rom, Cro-Mac,
Cro-S&M
Alb-Bul, Alb-Cro
Bul-Mac, Bul-Mol
Cro-Rom, Mac-Rom
Mac-Mol
Fail import-weighted coverage
test
Fail HS-lines coverage test
test
Alb-Rom, Bul-S&M
Cro-Mol, Rom-S&M,
16
Measures under way to facilitate trade
Simplify customs procedures
Implement common rules of origin
Adopt EU competition policy
Implement international SPS procedures
Improve regional transport infrastructure
17
Customs procedures
The MoU requires countries to ”simplify
customs procedures, …harmonise
legislation, documentation and procedures
with those of the EU; engage in mutual
assistance between customs
administrations…”
Queues and problems at border crossings
are costly for business. Time is money.
Considerable TA being provided, EC,
World Bank also by USA, Ireland in SP
18
Rules of origin
The MoU calls on the countries to apply a
”common set of preferential rules of
origin”.
Major activity for 2005/6 is to implement
Pan-european preferential rules of origin
Target is to cumulate origin diagonally
within the SEE region – crucial for
domestic and foreign investors
This will prove to EU that SEE countries
are ready to participate in cumulation of
origin on a Pan-European basis
19
Competition policy
MoU requires the countries to ”harmonise
their competition law with that of the EU”
and to strengthen the enforcement
capacity of the relevant authorities.
If SEE countries adopt EU rules they will
not use countervailing duties or antidumping measures against each other
CARDS/OECD assistance in 2005 on
implementing competition rules.
20
Sanitary and phytosanitary standards
The MoU requires that legislation inter alia
”relating to plant, animal and human
health … are compatible with the
provisions of WTO, EU…”
Meeting SPS is essential for boosting
agriculture exports and improving farmers
income.
Major programmes for Food Quality and
Infrastructure in 2003-07 by Sweden
21
Transport and communications
infrastructure
Transport infrastructure essential to
facilitate trade
Credible commitment to the SEE free
trade area is crucial to obtain funding for
regional infrastructure projects
22
Services
The MoU requires a clause in FTAs
”foreseeing the future liberalisation of
trade in services”
Sweden funded a major study by the
OECD to assess the ”prospects for
regional co-operation”
EC CARDS is funding a major programme
to harmonise regulatory regimes for key
services on the EU acquis.
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IV. Where is trade liberalisation going?
Increase transparency for business
through one agreement rather than 28
Inform business and consult with it
Create new institutions to manage a more
extensive and complex agreement
Increase regional ownership of the
process and its institutions
..The Working Group on Trade Liberalisation and Facilitation is
currently considering these issues
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Congratulations to the countries of
the region and good luck!
www.stabilitypact.org
[email protected]
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