• Serbia’s negotiatons on Chapter 30

    External Relations

    Bearing in mind the recent official opening of the negotiations between Serbia and EU at the Intergovernmental Conference ceremony in Brussels on the 21st of January and the four explanatory screenings that have taken part in past period, a more detailed description of the negotiating framework, various chapters and Serbia’s position is needed.

    The following article aims at contributing to the understanding of an important chapter for Serbia and its economy, which is threatened to be undermined in its importance in the negotiating process, namely, Chapter 30 “External Relations.” Firstly, the Chapter encompasses under the common European commercial policy issues such as trade and trade agreements with third countries, which is to a great extent, derived from international agreements i.e. the World Trade Organization. Secondly, under development policy, the chapter deals with relations with international organizations in the form of international development cooperation and humanitarian aid.

    Chapter 30 “External Relations” of the negotiating framework refers mainly to the regulations of the common commercial policy of the EU, the regulations that apply to international trade – including duties, obligations attributed to the members of the World Trade Organization (WTO), all EU trade agreements with third countries-as well as development and humanitarian assistance to developing countries and least developed countries. It has been deemed as a chapter which is relatively easy to close during accession negotiations. Nonetheless, in the case of Serbia it should not be undermined as it has significant influence both on country’s economy and its foreign relations. The acquis communautaire pertaining to Chapter 30 must be accepted in order for the negotiations to proceed, but in the negotiating position of Serbia, the national interest must be well conceived, argued for and defended, specifically in regards to the implications which the application of the acquis could have on its economy. The EU legislation in this area consists mainly of regulations, which have direct effect in the Member States, however the challenges of their implementation as well as their impact should be examined and assessed from the perspective of Serbia.

    The functioning of the single market and the customs union is indivisibly tied to the assurance of a single set of import and export regulations such as the common customs tariff as the basis, rules on anti-dumping and safeguard measures, measures against subsidized imports or illicit trade practices as well as quantitative restrictions and trade bans as responses to foreign policy decisions so that the Member States would come forth as a unified front vis-à-vis third countries. Therefore, undoubtedly the aforementioned matters may be highly contentious and solicit thorough and in-depth examination of the implications for a certain acceding country in respect to adhering to a plethora of commercial agreements concluded with non-member countries. It is also relevant to note that the common commercial policy is of high political importance since it serves the EU to confirm its standing on the global trading area and its “trade not aid” development policy reflected among other in preferential treatment granted to exports from developing countries.

    Serbia as every candidate country will need to indisputably accept the relevant acquis and ensure that their legislative and institutional frameworks are rising up to the challenge of implementation. However, the ‘particularity’ of Serbia’s position and the possible consequences stemming from the foreclosure of Serbia’s previous trade and economic agreements with third countries and adherence to Union’s agreements and commitments must argued and defended during the negotiations. Even though the EU through the Stabilization and Association Agreement (SAA) and the EFTA countries (Liechtenstein, Norway, Switzerland) are Serbia’s main trade partners, other important Free Trade Agreements (FTA) should not be disregarded such as those with CEFTA countries (Albania,  Bosnia  and  Herzegovina, Macedonia,  Moldova,  Montenegro and  UNMIK Kosovo) as well as Turkey, Russia, Belarus and Kazakhstan.

    In fact, CEFTA countries with a population of around 25 mil. are Serbia’s second export partner. At the point when the EU is opening the negotiations with Serbia, it is of great importance to examine the manner in which Serbia can deal with these markets once it becomes a fully-fledged member of the EU. To this point, for instance, the recent Croatian example can provide significant answers which may guide the analysis and lead towards certain conclusions. On Monday, July 1 2013, Croatia became the 28th Member State of the European Union and consequently, left CEFTA so as to comply with the trade agreements of the EU, which are regulated by the SAAs in the case of CEFTA countries. Therefore, Croatian exports will face new or higher import tariffs and quotas in the CEFTA countries. This proves to be very burdensome for Croatia because of its large quotas of imports and exports with the countries of CEFTA. Even if at this point the fact that Croatia left CEFTA may give Serbia the opportunity to increase its exports and sales on the CEFTA market, it will be the scenario that Serbia will also have to face in future. Therefore, it is important to learn from Croatia’s experience in order to be able to handle such a situation better in future, when it is Serbia’s turn to leave CEFTA and join the EU.

    In case of the agreement with Turkey and EFTA countries, Serbia will not face many problems as they are constructed under “EU terms and practice.” However, this is not the case with the important FTA with Russia, Belarus and Kazakhstan where Serbia’s position will be quite delicate. These agreements have great importance and potential for the Serbian industry, as they also allow foreign investors to make planned investments in production plants in Serbia with the end goal of exporting these goods to the vast market of Russia, Belarus and Kazakhstan (NB: population of above 168 mil.). These agreements will, however, become void once Serbia joins the EU. The impact of losing the benefits from such important agreements must be discussed during the negotiations, as it could have negative consequences on Serbia’s economy, which is not in the best interest of EU as well.

    On the other hand, by becoming a fully-fledged member Serbia will become a participating country in many FTAs that the EU has already signed or is negotiating at the moment. It will therefore also apply all the benefits that EU agreements grant to third countries or organizations. Most importantly, Serbia will gain access to certain markets to which it had limited access until this date, such as for instance, the markets of Latin America, Africa, South Korea, South Mediterranean and others. Hopefully, by the time Serbia joins the EU, other important FTAs will be signed with US, Canada and Japan.

    As the Union is highly dedicated to development as one of the core policies of external action alongside foreign, security and trade policies, under the obligations of Chapter 30 Serbia will have to contribute to EU objectives of eradicating of poverty, stimulating sustainable development and working towards the advancement of the UN Millennium Development Goals (MDG’s). Development and humanitarian aid policies are reflected in the acquis communautaire which means that the accession countries need to transpose and apply the relevant legislation, and upon accession participate in financing development assistance, as well as in decision making and implementation. Since Serbia does not have a modern legislation on development and humanitarian aid, the possibility of conceiving a strategy for providing aid should be examined and put into practice as soon as possible. Additionally, it is important to note that as in the case of the Eastern Enlargement, participating in the EU development and humanitarian aid policies will mean for Serbia an important transition from a typical aid recipient beneficiary to aid provider.

    In summary, Chapter 30 is quite extensive and the obligations that Serbia needs to adopt could initially present a burden. However, if the negotiations are constructed and concluded successfully, the topics covered in this chapter promise to be one of the most important development engines in the future, in return guaranteeing Serbia recognition and easier access to the markets around the world. Finally, it should be emphasized that Chapter 30 requires a horizontal approach to policy making, as the topics its covers are closely interconnected to the ones in other chapters (e.g. Single Market, Competition policies, Customs etc.). Moreover, to these ends, an efficient administrative capacity that is able to tackle all the cross-sectorial issues is of paramount importance.

    Written by Ksenija Simović

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