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Brussels, 1 August 2013
Statement on the negotiations with Bosnia and Herzegovina on the bilateral trade regime after the accession of Croatia to the EU
The European Commission regrets the continuous stalemate in the negotiations with Bosnia and Herzegovina on the bilateral trade regime after the accession of Croatia to the EU.
In the current negotiations on the adaptation of the EU-Bosnia and Herzegovina Stabilisation and Association Agreement (SAA) and its Interim Agreement in light of Croatia's accession to the EU, Bosnia and Herzegovina continues to refuse the methodology of the EU. This methodology consists of a purely technical adaptation of the bilateral trade of the EU with Bosnia and Herzegovina in order to take into account the traditional trade of the country with Croatia under the Central European Free Trade Agreement (CEFTA).
The methodology means that trade concessions applicable to the EU with 27 Member States are adjusted by the trade flows of Bosnia and Herzegovina and Croatia in order to reflect the situation of the enlarged EU-28. If, for instance, for a given product quotas of 1,000 tonnes have existed under the SAA/Interim Agreement for which no customs duties are to be paid and if the traditional trade of Bosnia and Herzegovina with Croatia under CEFTA has been 100 tonnes, the new quotas of this product after technical adaptation would be 1.100 tonnes with regard to the EU-28, still duty-free.
This shows that the adaptation is of a purely mathematical nature to help maintaining the trade conditions. Fundamental changes to the concessions and duties would disturb the regional markets, which have grown during the last years. They would impact negatively on the existing bilateral trade of Bosnia and Herzegovina with the EU. Trading partners count on reliable trade conditions.
The EU methodology was accepted by all countries that have applied for EU membership. All Western Balkans countries have accepted this methodology – with the exception of Bosnia and Herzegovina.
Bosnia and Herzegovina requires instead a principle review of the existing trade concessions arguing amongst others that the country had suffered from the free market area under the CEFTA.
Trade between the EU and Bosnia and Herzegovina is governed since the signature of the SAA and its Interim Agreement in 2008 by an asymmetric trade liberalisation, very much in favour of Bosnia and Herzegovina. The country benefitted from the very beginning of an almost completely free access to the EU market, whereas trade concessions on products of EU origin were implemented only progressively and customs duties still apply to certain products.
In fact, Bosnia and Herzegovina can export freely to the EU all categories of products. Only sugar, wine, fish and baby beef are subject to specific quotas beyond which duties are to be paid by Bosnia and Herzegovina for the export to the EU.
Since no agreement has been reached so far on the SAA adaptation, Bosnia and Herzegovina imposes now substantial import duties on agricultural products from Croatia, in particular on milk and certain meat and meat products, which were fully liberalised before 1 July 2013.
The European Commission regrets the current attitude of Bosnia and Herzegovina, which is not in line with the spirit of bilateral free trade as it is provided for in the SAA and the Interim Agreement. The effective establishment of bilateral free trade is one of the cornerstones on a country's path to EU membership. The current attitude is a step backwards.
The Commission takes note of the recent statement by the head of the negotiating team of Bosnia and Herzegovina, Dragiša Mekić, who asked for reciprocity in these negotiations. The Commission would agree to the principle of reciprocity which would require the country to provide to the EU the same level of concessions that the EU is granting today to Bosnia and Herzegovina for all products set out in the bilateral agreement. However, in consideration of the fragile economy of Bosnia and Herzegovina, the Commission has never requested the country – and in particular not under the current negotiations - to immediately achieve a symmetrical full trade liberalisation.
The current attitude of Bosnia and Herzegovina to protect its domestic market will delay the establishment of a common free trade area with the EU made by 28 Member States. Consumers in Bosnia and Herzegovina will have to pay higher prices for products that were traditionally imported from Croatia.