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In order to enhance the democratisation and economic transformation of the entire Western Balkan region comprising Albania, Bosnia and Herzegovina, Croatia, former Yugoslav Republic of Macedonia, Montenegro and Serbia, the European Union (EU) unilaterally granted generous trade preferences to those countries in late 2000. Thereafter, bilateral trade relations between Serbia and the EU, which were interrupted during the 1990s, were re-established and intensified. The trade preferences granted, known as the autonomous trade measures (ATMs), basically allow virtually all products originating in Serbia to enter the EU without quantitative restrictions and customs duties; the only exemptions being imports of wine, baby beef and some fishery products to which tariff quotas apply.

The ATMs are, however, subject to a standstill clause (Ref. Article 2(1) of the Council Regulation No. 2007/2000) under which the preferences will be suspended if the beneficiary countries introduce new or increasing existing duties, charges and quantitative restrictions or measures having equivalent effect for imports originating in the EU. One other requirement for the granting of ATMs is the obligation for the export country to comply with the definition of the concept of ‘originating products’ and to prove that the goods which are exported to the EU are in fact produced in the country.

Due to the inability of the Serbian authorities to adequately apply the system of certification and control of the preferential origin of sugar and to verify the origin of the products in the 15-month period (from 30 April 2003 to 7 August 2004), the European Commission suspended the trade preferences for imports of Serbian sugar (CN codes 1701 and 1702). After the deficiencies in the Serbian system of certification and control of preferential origin of sugar were rectified, the preferential systemfor sugar of Serbian origin was restored on 7 August 2004. In this context it is important to know that as of 1 July 2005, the trade in sugar between the Western Balkan countries and the EU has been guided by the system of annual duty-free tariff quotas, which was established as a part of the broader EU sugar sector reform. It should be noted, though, that the exact levels of the allocated sugar quota of 180.000 tones per year for Serbia, as well as the sugar quota management are agreed jointly by the EU and the Serbian representatives.

Bilateral trade relations with the EU also include the trade in textile and textile products, which is governed by the Textile Agreement signed between the Republic of Serbia and the EU on 31 March 2005. This agreement brings the immediate opening of the EU market for textile and textile products originating from Serbia and Serbia’s commitment to phase out its tariffs for the EU textile imports over a period of three years and to apply a zero tariff rate on EU textiles from January 2008 onwards.

Apart from the direct trade relations, the EU has also been very supportive to all other regional and multilateral trade relations in which Serbia and all other Western Balkan countries engage. One such initiative refers to the creation of free trade area by conclusion of the Central European Free Trade Agreement (CEFTA) in December 2006. The whole initiative took place under the auspices of the Stability Pact for South Eastern Europein which the EU has an important advisory role.

On a multilateral level, the EU has been supportive to Serbia's application for the membership in the World Trade Organisation, which was submitted to the WTO on 15 February 2005. Serbia's current WTO accession status is given on the official WTO website.

To conclude, Serbia has opportunity at all levels to enhance its trading prospects; these require further effort to be fully realised. Notably, Serbia is still to take full advantages of the EU trade preferences by intensifying progress in structural reforms and by increasing the competitiveness of its products. Also, the encouraging prospects of a Stabilisation and Association Agreement (SAA),which the country is hoping to sign with the EU in the forthcoming period, should additionally spur bilateral trade. Eventually, with the full implementation of the SAA, Serbia and the EU should form a wide free trade area with lots of potential for increased trade and overall harmonisation in areas of state aid control, technical regulations and standards, protection of consumers, competition and intellectual property rights, and many other fields.

• What’s new in EU trade policy?
  http://europa.eu.int/comm/trade/gentools/news_en.htm
• EU Exports Helpdesk for exporters from developing countries
  http://export-help.cec.eu.int
• The Stability Pact for the South Eastern Europe
  www.stabilitypact.org
• The World Trade Organisation
  www.wto.org