Currently Kosovo’s only trade agreement is the Central European Free Trade Agreement (CEFTA). However, negotiations recently began with Turkey regarding a free trade agreement and it is expected that negotiations will begin in 2013 with the European Union regarding a Stabilization and Association Agreement with will provide for bilateral free trade. (Most of Kosovo’s exports to the European Union currently benefit from duty free treatment under the EU’s ATM program.)
CEFTA establishes free trade between 7 Balkan states and Moldova. CEFTA is viewed as a step toward eventual EU membership of its members. Croatia will withdraw from CEFTA in July 2013 when it becomes a member of the European Union. The main objectives of CEFTA are: to expand trade in goods and services and foster investment by means of fair, stable and predictable rules; eliminate barriers to trade between the Parties; provide appropriate protection of intellectual property rights in accordance with international standards and harmonize provisions on modern trade policy issues such as competition rules and state aid. It also includes clear and effective procedures for dispute settlement and facilitates the gradual establishment of the EU-Western Balkan countries zone of diagonal accumulation of origin.
On December 19, 2006, Albania, Bosnia and Herzegovina, Croatia, Macedonia, Moldova, Montenegro, Serbia and the United Nations Interim Administration Mission in Kosovo (UNMIK) on behalf of Kosovo signed an Agreement to amend and enlarge the Central European Free Trade - CEFTA 2006.
Following the ratification processes, CEFTA 2006 entered into force on 26 July 2007 for five signatories (Albania, Macedonia, Moldova, Montenegro and UNMIK/Kosovo), for Croatia on 22 August 2007, Serbia on 24 October 2007 and for Bosnia and Herzegovina on 22 November 2007.
The CEFTA Parties agreed (Chapter VI of the Agreement) on a combination of specific commitments and evolutionary clauses in trade-related areas such as services, investment, government procurement and protection of intellectual property. In summary, the main objectives for each topic are:
Services: a progressive liberalization and mutual opening of the services market;
- Investment: ensuring stable and equitable treatment of investors and complementing the trade liberalization gains with investment opportunities;
- Government procurement: a progressive and effective opening of the governments' procurement markets by May 2010;
- Protection of Intellectual Property: ensure adequate and effective protection of intellectual property in accordance with international standards, in particular with the WTO Agreement on Trade-related Intellectual Property Rights.
Based on the CEFTA 2006 Agreement, the Parties have abolished all customs duties on imports, all charges having equivalent effect, and all import duties of a fiscal nature in trade between the Parties on all products other than those subject to bilateral concessions. Also, the Parties have abolished all customs duties on exports, charges having equivalent effect, and export duties of a fiscal nature in trade between the Parties.
For imports into Kosovo that originate in the territory or territories of Parties to CEFTA, no customs import duty is applicable. However, it should be noted that goods, which originate in countries outside CEFTA (e.g. Germany, China), but which are imported directly into Kosovo from the territory of a Party to the CEFTA are not eligible for entry into Kosovo free of customs import duty, under the terms of the CEFTA. The customs import duty on such goods, generally 10% ad valorem, must be paid at the time of importation into Kosovo.
The Agreement fully conforms to the WTO rules and procedures and EU regulations. The Agreement provides a legal framework for trade for the Parties to prepare for EU accession, thus continuing the tradition of the original CEFTA, whose founding members are now in the EU. Indeed, a Joint Declaration concerning the “Application of WTO Rules and Procedures by all Parties states:
“To the extent that references are made in the context of this Agreement, to the rules and procedures set out in Annex 1A, Annex 1B and Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization, the Parties agree to apply them irrespective of whether or not they are members of WTO.”
For more information on CEFTA go to www.cefta2006.com/