Serbia trade policy future direction, the opinion: EU plus Russia and China?

22. April 2013. / News Serbia Energy

The percentage of those who believe that Serbia will get long expected EU candidate status date until 28 June is lower and lower. However, the fact that Brussels hasn’t yet closed the door for continuation of dialogue with Pristina completely represent a ray of hope, as well as estimation of most analysts that continuation of negotiations in interest of EU and SAD. The biggest optimists also realize that it is unrealistic to expect Serbia to join EU countries before 2020. So we don’t know how to understand a remark of politicians and government representatives that Europe has no alternative and that all our problems especially economical ones will be resolved by membership in EU. Does it mean that all attention should be paid on accession to this EU family not carrying for own interests at other markets like Russian, African and market on Near East.

-There is always an alternative in life. So, it isn’t either-or dilemma, it is a solution which is more acceptable for us. It is sure that Serbia won’t disappear if it doesn’t access EU but it is also certain that recovery path will be slower. In other words, we’ll have more problems in solving pilled economical problems without EU support. On the other side, even if we get a green light for beginning of negotiations, this process will last until 2020 under best circumstances. We’ll get some money from pre-accession funds during this interval but this won’t solve all our problems because EU accession means that our rich uncle will give us billions of EUR, figuratively speaking. Issuing the date should be considered as additional impulse to our intentions to finish launched reforms especially because we haven’t shown to be the first league in reform performing peculiarly in agreement performing so EU and MMF’s pressure is necessary. Of course, it would be better without a pressure by anyone. I’ll remind that Slovenia and Czech Republic have found their own path toward EU without any pressure- Dean of University for Economy, Finance and Administration (FEFA), Mihailo Crnobrnja said for Danas.

When out interlocutor was commenting data that Serbia hasn’t used any advantages of an agreement for free trade with Russia as well as with other countries from ex Soviet Union  and that that space for export increase should be searched here, he reminds that EU does not limit performance of other countries at other markets. He indicates that Serbia has the agreement for free trade with EU which means that big Russian market and even bigger EU market are at the same level. One little country like Serbia needs to export goods because it doesn’t have enough developed domestic purchase that can guarantee development. The good examples are Holland and Belgium that do this very successfully. A lot supposes to be done on the product structure change previously and precondition for it is reindustrialization”, Crnobrnja believes.

Opposites say that EU is the only alternative for Serbia, as an argument they mentioned Switzerland and Norway which mark fast economy growth despite that they are no EU members. On contrary, Romanian and Bulgarian citizens whose average earning is below 400 EUR cannot say that EU membership made them happy. It is hard to accept an argument that more than 50% of Serbian products end up on EU market  for a positive one, because significantly more goods enters Serbia from EU and this trend would only be increased with customs tax termination. Not to talk about that Serbia will lose privileged status for exchange with Russian Federation, Kazakhstan and Belarus with EU accession that are enabled by bilateral agreements for free market.

Mladjen Kovacevic, ordinary member of Economy Science Academy stresses that attention should be transferred to Russian market where Bulgaria has incomparably more export.

-The belief that everything will go with a swing after EU accession is not realistic. It is one more reason for thinking about organized performance at big markets like Russian, Chinese, South African, Turkish that mark big growth rate more seriously. Problem of high transport expenses that follow goods’ placement at markets that are far can be solved with highly sophisticated and ecologically clean products which transport can be used as air transport- Kovacevic emphasizes and adds that we need export-import bank that will credit export work.

The view of statistical data we had gotten from Serbian Chamber of Commerce indicates that EU countries are the most important partners to Serbia because more than a half of external trade is done in cooperation with them. According to the data for 2012, Serbian export to EU market exceeded last year for 5,1 billion EUR and it marks growth of 5,4%. The growth of 8,8% is registered on import side also- goods in the value of 8,6 billion EUR is imported from EU countries. This indicates a deficit of 3,5 billion EUR (jump for 9,4% with reference to 2011). Individually observed toward member countries, Serbia has exported in Germany the most (about a billion EUR), Italy (933,3 million EUR) and Romania (727,6 million EUR) which makes 52,3 percent of total export to EU. The order of countries is similar on the import side also but the most goods in value of 1,6 billion EUR arrived from Germany. Italy follows (1,4 billion EUR) and Hungary where 728,2 million worth goods were imported from. It is also interesting that deficit is always being marked in contrast to constant surplus from agricultural products. Trade cooperation between Serbia and EU is being done in accordance with orders from Transmission Trade Agreement that includes all market aspects from the Agreement for stabilization and joining. Serbia signed this agreement on 29 April 2008 and EU Parliament ratified it on 19 January 2011. The agreement will be enforced when all 27 countries ratify it and it is estimated to happen in the first half of this year.

Russia is the fifth Serbian partner and the second in the import area with 10,2% participation. Total exchange was accomplished last year with Russian Federation and it exceeded 2,7 billion dollars which represents a fall of 21% with reference to 2011. The fact that export whose value exceeded 871,4 million dollars grew for 9,5 percent is encouraging while import of 1,8 billion dollars marks a fall of 30,7 percent at the same time. Negative balance in trade with Russia is being expressed with number of 976,5 million dollars. No custom trade of 99% of products is regulated with the Protocol for widening the Agreement for Free Trade of SRJ and RF (from August 2000) that Serbian and Russian governments signed in Belgrade on 22 July 2011.

The document that China is 56th on the list of 164 markets shows that China is one of the most important external trade and financial partner of Serbia on Asian continent. China is even better placed on the list of countries we import goods from- it takes the third place. China participated in total export of Serbia with modest 0,06 % and in total import woth 8,2%. More than 1,49 billion dinars was spent on fish export last year where 514 million dollars were provided for products from Chinese companies while the rest of import is contained from the goods that is being sold under somebody else’s trade mark (multinational corporations that produces in China). Negative balance in exchange with China that exceeded 1,48 billion dollars is one more obvious indicator that Serbian exporters haven’t use the potential of the market. Modest export result of 20,2 million dollars is marked in the exchange with the huge market of South America.

Experts are mostly agreed in estimations that issuance of the date for beginning of negotiations with EU lifted credit rating of the country and accelerated inflow of foreign direct investments while the stoppage of dialogue with Pristina can endanger announced investments and the price would increase. Status quo position is not the happiest solution either and the question is how this will reflect our relation to financial institutions, MMF and World Bank before all. When negotiations about Serbian EU accession will start? If we can judge according to answer of one of German parliament representative who declared that that is more important when reforms will be over than when they will begin, it is not so possible to happen in June. The rules and the time are dictated by EU, we only need to adjust to these rules if we can.


Market diversification

-I pledge for trade diversification, but data are not as we wanted. Our export to the whole Asia, Africa and South America is lower than our export to Italy. So, we need to increase our presence to other markets which is much easier to say than to do. I will mention the example of India. We export the goods worth 100 million dollars to the territory that counts more than a billion users. Situation is even more alarming on the Chinese market- import from this country is 1,3 billion dollars worth, while our export is only about 2 million dollars. Our products are not competitive on this market. If we produced information technology, we would have what to offer- Mihailo Crnobrnja, Dean of FEFA, stresses.

Export or die

-We mustn’t close our eyes in front of the fact that Serbia marks high external trade deficit and it is in front of the challenge “export or die” that Japan and Korea had confronted after the World War II. Strategy is required for some more serious performance on the new market, the accent in this strategy would be in the change of structure of exported products considering that the goods of low finalization phase is dominant at the moment. In addition I will mention the data fact from World Economy Forum that Serbia is placed on 134th place of 144 countries according to competitiveness- Mladjen Kovacevic reminds.

5,1 billion EUR- export to the EU market

871,4 million dollars- export to Russian Federation

20,2 million dollars- export to South America

Source;Serbia Times/Agencies

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