Landen Zuidoost-Europa vormen vrijhandelszone (en)

On April 6 in Bucharest the countries of South Eastern Europe will launch negotiations to consolidate the 31 bilateral free trade agreements of the Southern European Region into a single Regional Trade Agreement.

The European Union has welcomed these negotiations and offered strong political and technical support, as it has at every stage of the trade liberalisation process in South Eastern Europe.

Although the EU is not a party to the talks or to the Regional Trade Area that they will create it is the region's biggest trading partner by far and a key source of foreign direct investment. The process of strengthening trading links between the economies of South Eastern Europe is an important part of any wider strategy of growth and stability in the region.

For candidate countries, the experience of trade liberalisation in South Eastern Europe is an important precursor to the economic cooperation that is an inherent part of Membership of the European Union.

South Eastern European countries have benefited from freer trade - with the EU and with each other

The EU is by far the most important trading partner for the South Eastern Europe countries[1]. In 2005, total trade between the EU and the SEE amounted to € 79 billion, up 53% compared to 2001. All countries experienced an increase in trade with the EU during that period. The largest increases were recorded by Romania (+67%) and Bulgaria (+52%), highlighting the important process of trade and economic integration following from the EU accession process.

Table 1: EU Trade with SEE countries (€ million), 2001-2005

The EU has offered free access to the EU market for the countries of the Western Balkans since 2001 - in that time, exports from these countries to the EU have grown by more than a third.

Trade between South East European countries has been boosted by the establishment of bilateral Free Trade Agreements. In 2004, regional trade amounted to € 3.5 billion, up 33% from the figure of € 2.6 billion of 2002. Croatia's exports to the SEE countries went up €227 million in two years (27% of total), Romania's exports to the SEE countries went up € 244 million (47%) of total. All countries registered increases in their exports to the other countries of the region.

The countries registering the highest rates of growth of bilateral trade with the EU are also those who have most developed their trade within the region - a fact that reinforces the extent to which closer regional trade and closer trade with the EU complement each other.

Table 2: Intra-SEE trade, 2002-2004 (€ million)

Source: Commission calculations based on IMF (DOT) data

Simplifying the trade map in South East Europe

Nevertheless, the South Eastern European region is trading far below its potential and it attracts only a limited amount of foreign direct investment. Therefore, there is scope for further trade-enhancing measures.

In June 2005, the countries and territories concerned agreed to work towards transforming the current network of bilateral Free Trade Agreements into a single regional free trade agreement.

The map of South Eastern Europe's trade arrangements takes in 31 bilateral free trade agreements. The negotiation of a single Regional Trade Agreement will turn those 31 agreements into a single pact, if possible before the end of the 2006.

31 bilateral agreements mean 31 sets of rules making life more difficult for traders in a region that needs to do all it can to encourage trade. The fragmented market also turns away investment from Europe and elsewhere that might otherwise seek out this growing market. An integrated regional market with a simplified single set of trade rules will make the region more attractive for inward investment.

What would the regional Free Trade Agreement contain?

The negotiations launched this week will aim to enlarge the Central European Free Trade Agreement (CEFTA) to include additional countries and territories of the South East European region. Simultaneously, CEFTA will also be modernised by including modern trade provisions in areas such as the harmonisation of rules, services or the protection of intellectual property rights.

The agreement would create a regional free trade area, based on the existing bilateral agreements which liberalise more than 90% of trade and almost all trade in industrial goods. It would encourage co-operation and to a possible extent, try to gradually liberalise trade in services in the region.

It would consolidate and improve the region's "rule book" on trade and include modern trade provisions on issues such as competition, government procurement and protection of intellectual property. It would provide for convergence of relevant trade-related rules, notably with regard to industrial and sanitary-phytosanitary rules.

The result will be a simplified single system of rules that will make it easier to trade within the region. Increased trade plays a key role in promoting economic growth, job creation and reduced unemployment.

A Regional Trade Agreement will make the region more attractive as a consolidated market for foreign investment. Overall, FDI flows in the region remain low and insufficient to finance the countries' current account deficits. The countries need to attract greater levels of foreign direct investments, in particular greenfield investments which are becoming increasingly important as the privatisation process in the region winds down.

The negotiations will also assist those that are not yet part of the WTO to prepare for membership - because the two processes are rooted in the same goals and rules of progressive liberalisation and open trade.

The European Union strongly supports progressive trade liberalisation in South Eastern Europe

The European Union has welcomed these negotiations and offered strong political and technical support, as it has at every stage of the trade liberalisation process in South Eastern Europe. Although the EU is not a party to the talks or to the Regional Trade Area that they will create, it is inevitably watching from the sidelines.

Not only is the EU the region's biggest trading partner by far and a key source of foreign direct investment, but the process of strengthening trading links between the economies of South Eastern Europe must be an important part of any wider strategy of growth and stability in our wider region.

Closer trading links in the South Eastern European region have helped Romania and Bulgaria prepare for EU Membership

The European Union is built on regional economic integration and closer trade. The European Union believes that the principles of open trade can be a foundation for stability and prosperity in South Eastern Europe. For a candidate country, building a capacity for open trade is an important part of preparing for EU membership; similar to any other criteria for EU membership.

It is not a question of closer regional integration in South Eastern Europe or membership of the European Union - they reinforce each other.

The original Central European Free Trade Agreement (CEFTA) prepared some of Europe's most recently acceded Member States for the realities of economic integration and cooperation that are an inherent part of Membership of the European Union. Romania and Bulgaria took up this baton in the CEFTA. By being a driving force behind this expansion of CEFTA to the candidate countries of the Western Balkans, they pass that baton on.

For more information on EU trade relationship with the Western Balkans please visit:

http://europa.eu.int/comm/trade/issues/bilateral/regions/balkans/index_en.htm

[1] Albania, Bosnia-Herzegovina, Bulgaria, Croatia, the former Yugoslav Republic of Macedonia, Moldova, Romania, Serbia and Montenegro (including Kosovo, as defined in United Nations Security Council resolution 1244)