EU welcomes signing of new Central European Free Trade Agreement
European Commission - IP/06/1837 19/12/2006
Brussels, 19 December 2006
Prime Ministers of South Eastern European countries and territories have today signed a new Central European Free Trade Agreement (CEFTA). This marks the conclusion of ambitious negotiations launched on 6 April this year. The new CEFTA consolidates 32 bilateral free trade agreements in the Southern European Region into a single Regional Trade Agreement. Although the EU is not a party to this new Agreement, the European Commission has provided continuous political, technical and financial support, at every stage of the trade liberalisation process in South Eastern Europe. The EU warmly welcomes the conclusion of the agreement.
EU Enlargement Commissioner Olli Rehn said: "The CEFTA complements the EU's Stabilisation and Association Agreements for the countries of the Western Balkans. It makes an important contribution to economic development and regional co-operation. For the candidate and potential candidate countries CEFTA is a stepping stone towards the closer economic cooperation that is an inevitable part of membership of the European Union."
EU Trade Commissioner Peter Mandelson said: "CEFTA will replace the spaghetti bowl of regional FTAs in South Eastern Europe with a single agreement that will boost trade and attract investment. The expanded CEFTA will offer real economic benefits to all sides. But it also sends an important political signal. Closer trade relations in South Eastern Europe are a foundation for stability and growing prosperity".
The EU is by far the region’s biggest trading partner and a key source of foreign direct investment. The process of strengthening trading links between the economies of South Eastern Europe is an important part of the EU's wider strategy of growth and stability in the region. The experience of trade liberalisation in South Eastern Europe is an important precursor to the economic cooperation that is an inherent part of Membership of the European Union.
The signatories of CEFTA are Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the former Yugoslav Republic of Macedonia, Moldova, Montenegro, Romania and Serbia (including Kosovo, as defined in United Nations Security Council resolution 1244). Romania and Bulgaria will leave CEFTA when they become members of the European Union on 1 January 2007.
What does the regional free trade agreement contain?
The agreement creates a regional free trade area, based on the existing bilateral agreements which liberalise more than 90% of trade and almost all trade in industrial goods.
The agreement consolidates and modernises the region’s “rule book” on trade and includes modern trade provisions on issues such as competition, government procurement and protection of intellectual property. It will provide for convergence of relevant trade-related rules, notably with regard to industrial and sanitary-phytosanitary rules.
The result is a simplified single system of rules that will make it easier to trade within the region. Increased trade plays a key role in promoting economic growth, job creation and reduced unemployment.
CEFTA will make the region more attractive as a consolidated market for foreign investment. Overall, FDI flows in the region remain low. They are insufficient to finance the countries’ current account deficits. The countries need to attract greater levels of foreign direct investments, in particular new investments are becoming increasingly important as the privatisation process in the region winds down.
CEFTA will also assist those that are not yet part of the WTO to prepare for
membership – because the two processes are rooted in the same goals and
rules of progressive liberalisation and open trade.
For more information on CEFTA see MEMO/06/502: A New Regional Agreement to Develop Trade in South Eastern Europe.