The EU is the main trading partner of the Western Balkans (WB). According to the estimates from 2021, 81% of total WB exports went to the EU while 58% of the WB imports came from the EU, peaking at €28.2 and €36.9 billion, respectively. The manufactured goods dominate the EU trade with the WB, making up 75% of the EU exports and 76% of the EU imports from the WB.  Trade with the region has grown by almost 130% over the past 10 years.

Indeed, the EU-WB trade increase in volume owes to the implementation of Stabilisation and Association Agreements (SAAs) providing for a zero-tariff trade between the EU and the region.

However, the trade between the SAAs parties is inhibited by numerous non-tariff barriers to trade (NBTs). NTBs come from various sources – technical regulations, licensing requirements, customs procedures, and other regulatory obstacles – that can distort the flow of goods between the parties. These barriers result in increased costs, delays, and administrative burdens for businesses engaged in cross-border trade. As a matter of illustration, the waiting time only at crossing points in CEFTA states generates up to 300 M€ annually.

Arguably, given the scale of trade, the detrimental effect of the NBTs applied between the WB and the EU could be much higher. Indeed, failure to eliminate NBTs between SAA parties is reflected in the costs of doing business, lost opportunities and a slower pace of market integration. This is all the more surprising given that the SAAs parties have agreed to abolish all the quantitative restrictions and measures with an equivalent effect to the free cross-border movement of goods. The revised enlargement methodology (REM) envisages potential for “closer integration of the country with the EU”, including the “work for accelerated integration and ‘phasing-in’ to […] the EU market” based on the countries’ sufficient progress in reform priorities agreed in the accession negotiations.

To that end, the REM foresees the SAA institutional structures as a venue for monitoring “the progress in […] [implementation of] specific measures of accelerated alignment” with the relevant Union acquis. In particular, the SAA sub-committees would be used for “identification of opportunities for accelerated alignment and integration in all EU policy areas, with clear benefits for European Union and candidate countries”, which, arguably, includes the abolition of remaining obstacles to the free movement of goods, in accordance with the SAA provisions.

Članak Sectoral integration opportunities in the SAA regime se pojavljuje prvo na European Policy Centre.

Balkan Six partners have been struggling to conclude legally binding agreements needed for turning regional markets into an single area without internal obstacles for free movement of goods, services, work force and capital. Indeed, failure to do these is reflected in the costs of doing business, lost opportunities and slower pace of CEFTA trade facilitation. Regional market remains fragmented. Innovative Policy Proposal (IPP) identifies mutual mistrust in CEFTA Parties’ trade related documents as a major source of the NBTs.

Distributed ledger technologies (DLTs) or blockchains are capable of building trust between parties regarding authenticity of their data with disintermediation. Namely, the blockchain tech minimizes the amount of trust required between the equal partners to transact due to the smart contract functionality that enables automatic enforcement of terms and conditions embedded in the agreed protocol of the distributed ledger.

Indeed, the Economist coined the blockchain as a machine for creating trust, an ultimate trust machine. To many, blockchain technology lacks a sufficiently proven and robust use case in the public sphere. However, in current times that do not lack excuses, being good or bad, to create new trade headwinds, to sleep on the blockchain potential can generate lofty opportunity costs for CEFTA parties.

This paper won the first place in the competition “CEFTA – regional trade area and beyond: Call for Innovative Policy Proposals” which was announced on the occasion of ten years of CEFTA

Članak CEFTA: The trust machine for Common Regional Market se pojavljuje prvo na European Policy Centre.

In a significant part of the public, for years now, there has been a belief that membership in the World Trade Organization (WTO) and joining to the European Union (EU) opens the door to genetically modified organisms (GMO)[1]and GM products in Serbia. A part of the public is opposed to the adoption of new legislation, harmonized with the EU regime, and raises a legitimate question of whether we will allow “those who are engaged in genetic mania to crossbreed Serbs with green beans” (Ljubivoje Ršumović, “Are we going to allow?”)

Development is fraught with risks, and every rational society tries to balance the goals of economic growth and the risks it carries with it. Countries remove, prevent and control (un)know risks associated with development to an extent that possible effects on health, the environment and biological diversity become unacceptable to the community. This is the case with the (un)known risks of GMO products of the bioengineering industry. To begin with, we can distinguish between two dimensions of GMO controls: cultivation control and import control and placing GMO’s on the market. A state, for instance, may reserve the right not to allow the cultivation of GMOs (which for example eliminates the risk of compromising biodiversity and the creation of a monopoly based on intellectual property rights on its territory), but at the same time allow the import of GMO products with strict control over its usage (for example, GMO cotton for industrial purposes or GMO soybean meal for animal feed only).

Control of GMO in Serbia can be briefly described as a system of “ban and forget”. The Law on GMO stipulates that “no modified organisms or products containing genetically modified organisms can be traded or grown for commercial purposes on the territory of the Republic of Serbia” (Article 2). Since the GMO and GM products are prohibited (except in cases explained below), there is no method of recording and monitoring GMO products through a registration system and permits, so our governing bodies rarely come into contact with GMO’s. Also, there is no system of GMO labeling, so consumers have no information about what they are purchasing.

However, this ban is not absolute. Products which have less than 0.9% GMO traces, more specifically, seed and reproductive material with less than 0.1% GMO traces are unaffected by the ban (Article 3). Our Law on GMO’s creates a legal fiction where products with a small presence of GMO’s are not deemed as GM products, and does not require labeling of such products. In other words, there is no zero tolerance for GMO’s according to our law, despite widespread opinion.

“Catch-22”. We prohibited, but we do not record, becaue we can not record what is prohibited and what is prohibited does not exist, which means we cannot label it. For anything remaining, simply declare that it does not exist. Therefore, we are protected.

EU GMO control system can be described in the following way: ban – apply – register – assess – approve – label – control – monitor. The EU applies a zero-tolerance system of cultivation, production, processing, importing and selling of unapproved GMO, as well as a system of strict control of the circulation and control of purposes of approved GMO products.

As for the dimensions surrounding the release of GMO’s into the environment, each member state has the right to prohibit the cultivation of GMO’s on their territory, previously approved at the EU level. Import and selling of unapproved GMO products, seeds and reproductive material, including products with traces of less than 0.9%, is absolutely prohibited. When the EU aprroves the import and selling of GMO’s, the Member States, in principle, may not prohibit its free circulation  if it is in accordance with the terms of the license, unless they overrule a decision of the European Commission by a qualified majority.

So what is the catch with such a system of prohibitins and permissions?

Each of us knows what GMO is and can recognize it when wee see it as much as Mr. Rsumović or Mr. Sevarlić.[2] Moreover, scientists, bioengineers, and those who need to prevent and control the circulation of GMO (government) can identify GMO when it appears as much as poets and economists. A scary thought, is it not? Consider the fact that the expert, bioenginer, in order to recognize GMO must be in tocuh with it, to then pass the information along to the authorities competent to implement the system of bans and controls. The system of registration and recording which preceeds licencing allows the EU, Member States and the scientific community to get in touch with GMO, become familiar with the characteristics of each individual and the risks it carries. Moreover, if you do not issue a licence (which is a frequent scenario) the EU has recieved information about that specific GMO, how to recognize it, which risks it carries, and can control its illegal circulation.

Well, what’s the catch then, given that the EU can still allow GMO products?

Through a system of labeling previouly approved GMO products, the manufacturer is obliged to inform its customer and consumers, by placing ”this product contains GMOs“ on the packaing and labelling. Distributors, retailers and consumers can make informed choices. When it comes to cultivation, as stated previously, the Member States retain the right to ban GMOs on their fields. Finally, a system of notification and registration requires the manufacturer to provide information to authorities on how to recognize GMO, with no guarantees that they will be granted a license.

Who in the EU buys and sells food with this label?

Hardly anyone.

What do GMO producing countries have to say about such an EU system?

I do not know, but according to the procedures led in the WTO against the EU, probably something like “that’s quite a catch.”

Who applies a system of prohibitions, licenses and controls similar to the EU?

Russia.

Is “ban and forget” or “ban-approve-label-control” a better system?

For those “who are bursting with pride when they crossbreed salmon with beans,”[3] I believe, there is no doubt.

What do we gain and what we lose with the current approach to GMO?

We get a firm belief that we are protected from GMO’s and we lose the most favored tariff treatment for our goods and services in markets with which we do not trade under umbrellay of the free trade agreements, because we do not fulfill the conditions for WTO membership.

 “Catches” (Fore i fazoni) is the name of TV show for children whose author is Ljubivoje Ršumović, writer and poet for children.

[1] A genetically modified organism is an organism whose genetic material has been altered by methods of modern biotechnology.

[2] Mr. Sevarlic is an agro-economist and a MP in the National Parliament. He has been recorded by media as performing Mr. Ršumović poem “Are we going to allow?” in the Parliament, as a sign of protest against the adoption of the Law on the GMO, allowing the compliance with the WTO requirements.

[3] LJ. Rsumović, “Are we going to allow?”.

Članak GMO? What’s the Catch? se pojavljuje prvo na European Policy Centre.