EFFECTS OF ECONOMIC INTEGRATION
WITHIN CEFTA – 2006 - EVIDENCE FROM THE MACEDONIAN
EXPERIENCE
Irena Kikerkova, Ph.D.
Ss. Cyril and Methodius University,
Faculty of Economics - Skopje
Methodological problems on following trade exchange among
CEFTA-2006 member-states
Problem of unification of member-states statistical reporting:
- Member-states did not accept to create a special data base
and to report regularly on the trade exchange within the free
trade area, with exception of Croatia and Kosovo;
- Macedonia is reporting on the trade exchange of “Western
Balkan countries” ;
- Bosnia and Herzegovina is reporting on “European countries
in development” ;
- Serbia does not report on CEFTA-2006 trade exchange of
goods at all ;
- All of the other member-states are reporting in euro. Only
Macedonia is reporting its trade exchange with CEFTA-2006
in American dollars.
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There is also a significant discrepancy in the so called mirror
statistical evidence of export and import flows of the
member-states which causes doubts that differences in the
reported data are not a result only of differences in the
statistical methodology (Handziski, 2010);
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The greatest obstacle for adequate analyzes of the trade
exchange of goods within CEFTA-2006 is the fact that the
trade statistics within the region is not fully publicly
available.
Statistical evidence on the Macedonian trade exchange of
goods with CEFTA-2006 countries
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The creation of the free trade area had an immediate positive
impact on the total trade exchange of goods of the memberstates which was evident until the beginning of the economic
crises in 2008;
Total Macedonian export to CEFTA-2006 member-states
almost doubled in the period from 2006-2008. Similar
tendencies were also registered on the import side;
The effect upon the Macedonian trade balance was positive, as
Macedonia recorded a surplus in the trade within the region in
all of the years after the creation of the free trade area;
The trade surplus reached a pick at the end of 2008 with a
total amount of 647.27 million American dollars.
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The most important traders in the region – Croatia and Serbia were severely hit by the crises and they both tried to protect
their balance of payment positions by imposing various
restrictions and impediments to trade and imports of goods.
In the case of Macedonia, the crises restricted the participation
of CEFTA-2006 trade exchange of goods to only 20% of the
total Macedonian trade exchange by the end of 2009. Trade
partners from CEFTA-2006 created 37.2% of total
Macedonian exports and only 11.9% of total Macedonian
imports. Even under these inconvenient circumstances
Macedonia realized a trade surplus of about 400 million
American dollars. However, the realized surplus in the trade
with CEFTA-2006 in 2009 decreased by 38.6% in
comparison with the one realized in 2008.
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In 2010 the situation slightly changed and there was some
recovering of the trade flows of goods among member-states.
However, in comparison with 2009 total Macedonian trade
within CEFTA-2006 increased by only 2.8% and reached the
amount of 1.64 billion American dollars, of which 1.018
billion American dollars were registered at the export, while
0.628 billion American dollars were registered at the import
side. Most of the increment of the Macedonian trade within
the region was due to the increment of the trade with Kosovo
(of 41.8%) and with Montenegro (of 8.4%). At the end of
2010 Macedonian export to CEFTA-2006 member-states
created 31% of the total Macedonian export.
The trade pattern of Macedonian trade exchange within
CEFTA-2006
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The Macedonian economy faces a continuous decrement of
competitiveness of its ready-to sell products due to the weak
productivity and outdated technology engaged in its processing
industry;
The weak capacity of the country is obvious, as it can not
provide larger export to one region without diminishing its
export to another region. The most important trade partners for
the Macedonian economy come from two regions: the EU and
CEFTA-2006;
Macedonian trade flows towards EU and CEFTA-2006 trade
partners fluctuate from year to year regarding the economic
situation in both of the regions, as Macedonian exporters did
not have the capacity to boost their total production, as well as
their total exports.
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For Macedonian exporters CEFTA-2006 is especially
important for export of agricultural goods. More than half of
total Macedonian export of agricultural goods is exported in
CEFTA-2006, of which almost 1/3 consists of fresh
vegetables, and the rest are confectionary products and
cigarettes. Over 60% of the exported agricultural products go
to Serbia (and within it in Kosovo), less to 15% go to
Croatia and about 11% to Bosnia and Herzegovina.
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At the same time Macedonia depends on imports of
agricultural products, especially wheat and vegetable and
animal oils. The import of agricultural goods from CEFTA2006 creates around 30% of total Macedonian imports of
this kind of products and the greatest Macedonian trade
partners in the region are Serbia which provides more than
2/3, and Croatia with 17.8% of the total amount of this kind
of imports. Nevertheless, Macedonia still realizes trade
surplus in the trade in agricultural goods within the region,
which for the first 9 months of 2011 amounts about 36 million
American dollars.
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The most important non-agricultural export items for
Macedonian exporters within CEFTA-2006 are: mineral fuels
and iron and steel which create more than 1/4 each of total
Macedonian exports to the region, followed by much smaller
participation of iron and steel products, pharmaceuticals
and some electrical machinery and equipment.
Macedonian imports from the region are mostly steel and
iron; mineral fuels; electrical machines and equipment;
plastics and paper and paper board. The most important
trade partners from the region both for exporting and
importing of non-agricultural products are Serbia and
Croatia.
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The structure of exchanged goods in the Macedonian case
clearly points out that the trade pattern is still inter-industrial
and is mostly unlikely to change looking from a short-term
perspective.
However, data on trade exchange from other members of
CEFTA-2006 confirm the inter-industrial pattern, as well.
The trade pattern is inter-industrial between CEFTA-2006 and
the EU.
All CEFTA-2006 members are oriented to export one type of
raw-materials and semi-processed goods and at the same time
to import another type of raw-materials or sophisticated
industrial goods.
Progress in the process of economic integration within
CEFTA-2006
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Established a mutual trade portal a year ago to provide all
relevant information not only on different export and import
procedures of CEFTA-2006, but also an on-line availability of
all forms and documents needed for completion of the customs
procedure.
Since the beginning of this year, an agreement on unification
on transit procedures within CEFTA-2006 has been signed.
Serbia even proposed (and Montenegro and Bosnia and
Herzegovina supported the proposal) that movement of
persons should be allowed only with a valid identification card,
instead of a passport –not possible for Moldova;
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Creation of the Interchamber CEFTA-Working Group on
Insurance at the beginning of March 2011 in Belgrade in
order to provide gradual liberalization of the trade regulative
and abolishment of administrative barriers to providers of
insurance services within CEFTA-2006 and establishment of
co-insurance services among member states;
Establishment of a Regional Training on Taxation with a
project supported by the Ministry of Finance and implemented
by the Public Revenue Office of the Republic of Macedonia.
Challenges faced by CEFTA-2006 member-states
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The presence of non-trade barriers - Last June the CEFTA
Sub-Committee on NTBs and TBT launched the first NTBs
reduction monitoring cycle on the basis of Multilateral
Monitoring Framework proposed by OECD, and its results
are due by the end of this year. This monitoring also would
follow up the mutual recognition of national laboratories
for control of quality of the products, until their full
harmonization;
Full implementation of the diagonal cumulation of origin Since 1st of November 2011 the implementation of diagonal
cumulation is possible for Albania, Macedonia and Serbia
with EFTA countries. Also, all of the CEFTA-2006 countries
have to actively participate in the revision of the Pan- EuroMed rules;
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Further trade facilitation by enhancement of customs to
customs, customs to government and customs to business
cooperation;
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Implementation of simplified customs procedures on
regional level, as well as providing mutual recognition of the
provided national status of authorized economic operators;
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Establishment of regional logistic centers.
Threats to the process of economic integration within
CEFTA-2006
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The Croation accession into the EU due to be realized in 2013;
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The jeopardy of a new economic crises in 2012;
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The increased indebtedness of Greece, Ireland, Spain,
Portugal, but also of Italy and other EU member-states;
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The instability of the Euro zone and the threat of its collapse.
THANK YOU FOR YOUR ATTENTION!