The dialogue – a tool to enhancing the regional economic cooperation

22 July 2021

Since 2003 the trade between Western Balkans countries was formalized through bilateral free trade agreements, stating with the first bilateral free trade agreement (FTA) signed between Kosovo and Albania in July 2003 to continue with other WB6 such as North Macedonia and Montenegro. In contrast, a bilateral FTA was not signed with Serbia and Bosnia and Herzegovina due to political issues.

After the successful trade cooperation with signatory parties, on 19 December 2006, WB6 and Moldova signed an Agreement to amend and enlarge the Central European Free Trade Area– CEFTA 2006. This comprehensive Agreement’s main objectives are, inter alia, 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 the international standards and harmonize provisions on modern trade policy issues such as competition rules and state aid. 

Regional cooperation and good neighborly relations are key elements in the EU accession process for all Western Balkan countries and for the attraction of foreign direct investments. Through deeper integration within Western Balkans region, countries will increase their market size, improve service quality and help attract foreign direct investments.

Despite some initial successes, such as the Brussels Agreement of 2013, the EU-facilitated dialogue between Kosovo and Serbia, has stalled. In 2020, the dialogue continued as three technical level meetings on economic cooperation took place between the delegations. It is to be seen, nevertheless, whether there will be other meetings regarding economic cooperation given that Kosovo has a new government.

With respect to the free movement, it is worth mentioning a success story which happened during the early pandemic situation in 2020. CEFTA countries with the support of the CEFTA Secretariat, the Secretariat of the Transport Community and the Regional Cooperation Council have established the so-called “Green Corridor” to facilitate the transport and trade of goods during the COVID-19 period by identifying a limited number of border crossing points and which would function in all circumstances. The Green Corridor started operating on 13 April 2020 on 24/24 and 24/7 basis. The primary purpose of Green Corridor is to trade goods without hindrance, especially for essential goods such as: food supplies, livestock, animal feed, chemicals and essential medical supplies and equipment. Despite some minor challenges that occurred in the beginning of the implementation of the Green Corridor between Kosovo and Serbia, the initiative resulted to be successful. This is also a good example to be taken into account for upcoming regional initiatives. 

Economic reforms are a key ingredient for the EU accession process. Fulfillment of the economic criteria is a core requirement for the EU membership, as set out in the Copenhagen criteria. However, economic reforms, although necessary, are not sufficient to guarantee an appropriate functioning of a market economy. The close interconnection between market and governance reforms is well entrenched in the literature. Reforms can be more successfully implemented if the proper balance between transposition of the EU Acquis and institutional upgrading is achieved.

However, there is a basic condition that should be achieved in order to deepen the regional integration and to enhance regional economic cooperation. The political issues between Kosovo and Serbia that have seriously conspired against regional integration efforts should be addressed with a sense of urgency as a necessary condition for the EU and other initiatives to be successful. If there is no progress in the political area in the region, certainly there will be innumerable hurdles that could frustrate any progress towards the expected results from the existed initiatives and initiatives that might happen in the future.

Therefore, in the current situation a politically realistic solution is needed. Any solution imposed from outside, which doesn’t change the legal situation, will benefit Serbia rather than Kosovo. Serbia may use any attempts from outside to increase its leverage in the region.

As a result, political solutions can only be incremental and may follow economic connectivity in wider region of Southeast Europe.  

This op-ed is originally written in English.

The op-ed is supported by the Royal Norwegian Embassy in Pristina. The opinions are of the authors and do not reflect the views of Balkans Policy Research Group and the donor.