THE STABILIZATION AND ASSOCIATION AGREEMENT

The Stabilization and Association Agreement, which Serbia signed with the EU a year ago, has not taken effect yet, due to opposition by The Netherlands, which states as the reason insufficient cooperation with the Hague Tribunal. Meanwhile, on 30 January 2009, the Serbian government started the formal application of the trade section of the Agreement. Although the opinions of experts and political parties about the benefit the government’s decision bringts to the economy differ, the prevailing opinion is that this is a very good move.

More than half of the total trade exchange is performed by Serbia with EU member-states. In March 2009, most goods were placed on the German market, namely around 195 million dollars, while Italy is at the third position of Serbia’s partners, with exports reaching almost 180 million dollars.

Serbian Deputy PM in charge of European integrations Bozidar Djelic remarks that public talks tend to ignore the fact that, although the EU has not started applying the Agreement formally, products from Serbia have for years had a privileged position on the European market. On the basis of approved preferentials for some products, Serbian exporters to the EU have been exempted from customs fees and other duties for eight years now, which has led to some 2 billion EUR of savings and a triple increase of exports.

The most frequent remark to the government’s decision to apply the Agreement refers to the reduction of incomes from unpaid taxes at the moment when Serbia has been affected with the economic crisis. However, Đelić explains, the crisis has struck the whole world and the reduction of total exchange in goods is the result. According to the European Integrations Office, in the first two months the loww of uncollected duties amounts to some 10 million EUR. In that period, the level of direct foreign investments from the EU reached some 165 million EUR.

By the way, the Stabilization and Association Agreement envisages a certain period of time to be left for lifting duties on EU products for Serbia, in order that Serbian economy be adapted to new business conditions. The entire process should be completed by 2013 and meanwhile customs duties will be cancelled gradually. Depending on the degree of sensitivity and significance for home economy, industrial products have been divided into three groups and the level of customs protection is in accordance for that. For insensitive products, duties can be lifted right away and the budget will not sustain much damage, as they amount to some 1.84% on average. Speaking of agriculture, which is the strategic branch of Serbian economy, numerous customs fees on agrarian products will remain after the expiry of the set deadline.

Business people have mostly supported the application of the Interim Trade Agreement, while those opposing it are few and are those that do not have a competitive product or have been used, with the help of the state, to have a monopolist position in a certain sector. However, the present government is firmly in favour of EU integrations, as that is a course not only to a more developed economy, but to a better-organized society and a higher living standard of citizens.