Pascal Lamy: "Clear steps towards free trade in South East Europe"

Your Excellencies, Ladies and Gentlemen,

I am very pleased to be with you today for the third Ministerial Meeting of the Stability Pact's Trade Working Group.

Since we last met in this format, in 2001 in Brussels, a lot has been accomplished. Today, we can celebrate the conclusion of negotiations on the network of bilateral Free Trade Agreements between the original signatories of the Memorandum of Understanding on trade liberalisation and facilitation.

The Western Balkans appear to be back to work and trade is a key instrument of reconstruction and stabilisation. The arrangements you have created open the way to trade and investment in your region and demonstrate your commitment to working together to build the future of your countries. This is your achievement. Congratulations !

I told you so in 2001 and I am glad to repeat it today: the Commission evidently fully supports this regional free trade initiative and confirms that it takes place in a European perspective.

Indeed, the European future of your countries is very clear.

The Thessaloniki European Council of last June confirmed the objective of welcoming Bulgaria and Romania in the EU in 2007 and clearly stated that the future of the Western Balkans is in the EU. Also, Moldova will be included in the 'Wider Europe' initiative, the Commission communication which sets out the prospects of close neighbourhood with an enlarged Europe.

Furthermore, trade liberalisation is a cornerstone of the EU Stabilisation and Association process for the Western Balkans. Free trade creates the necessary conditions to achieve what we all want: prosperity, stability and peace.

Our vision, which we share with the Stability Pact, is that trade liberalisation must operate at three levels: the bilateral with the EU, the multilateral level and the regional one.

At bilateral level, the EC has already done a lot for you. The autonomous trade preferences, which liberalise over 95% of our trade are progressively incorporated in our Stabilisation and Association Agreements. We are thus in the process of creating a free trade area between ourselves.

Multilateral liberalisation is also progressing well since all but two countries are now WTO members.

Finally, building a regional free trade area is your contribution to the venture. It is the perfect complement to bilateral and multilateral trade liberalisation. By operating in a regional format, you are much more likely to attract foreign investment and hence you significantly increase opportunities for economic development. This type of regional integration also demonstrates your ability to interplay with your neighbours, something the Commission is very keen to verify with EU candidates, be they current or future.

So, what lies now ahead of us ?

Firstly, the network of FTAs is not complete yet. Negotiations on two agreements need still to be concluded. I look forward to hearing Serbia and Montenegro and its partners in these to announce today a close deadline to conclude talks.

Secondly, through these Free Trade Agreements you have taken on substantial commitments, going even beyond established best practice. However achieving a free trade area is in fact a complex task and today is just the beginning of the challenge.

In the short term, you will have to demonstrate relentless political will to implement these agreements and overcome the inevitable obstacles that will arrive on your path.

You should also consider how to go beyond the current arrangements, to achieve an economically efficient free trade area, namely one with the highest possible degree of harmonisation. You will also have to embark on other equally important aspects, such as regulatory and administrative reform and progressive alignment to the EU regulations.

Pursuing liberalisation of services in the near future will be an additional boost to market access and an irrefutable contribution to increasing trade and investment.

This is the menu of today's Ministerial Declaration and work programme for the Trade Working Group. It is an ambitious programme but it is what is required to realise the common vision you all shared when you signed the Memorandum of Understanding. A hard work certainly, but with a high reward.

You are not alone in this venture. We stand by you, including with important trade related financial assistance.

Let me conclude by expressing the hope that investors and traders will now take advantage of the new opportunities you offer them, to create ever stronger trade links and realise the virtuous economic development we all want to see.