Tradeflow Study - UNDP Black Sea Trade and Investment Promotion ...

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. I.2. Background to Trade and Investment Cooperation in the BSEC region The Black Sea Economic Cooperation (BSEC) came into existence on the 25 th of June 1992 with the signature of the “Summit Declaration on Black Sea Economic Cooperation” and the “Bosphorus Statement” by the Heads of State of eleven countries: Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey and Ukraine. Its Charter became effective on the 1 st of May 1999, and the BSEC was transformed into an international legal entity as a regional economic organisation: the “Organization of the Black Sea Economic Cooperation”. Serbia and Montenegro joined the Organization in April 2004. The regional organisation bases its cooperation on the Summit Declaration and Bosphorus Statement, and on other declarations signed in subsequent meetings (Bucharest, Moscow, etc). Owing to its geographical location, the Black Sea region could easily be integrated into the markets of Europe, Central Asia and/or the Middle East (see box 1). The region has long been seen as a very challenging economic area for both political and economic reasons. The initial purpose of the BSEC was to gradually expand intra-regional trade and investment and identify the key milestones for trade potential in the sub-region. The Organization of the BSEC has progressively been recognized since its foundation to be a key actor in promoting the region as an area of peace, cooperation and prosperity. Box 1. BSEC Configuration and the EU Whilst being part of the BSEC, a number of countries are already Members of the EU, are candidate countries, or aspire to become Members of the EU in due course. The political and economic incentives related to joining the EU have led to a trade policy shift towards the EU and away from traditional markets. Greece is a Member State of the EU since 1981, while Romania and Bulgaria acceded to the EU on 1 January 2007. Turkey was formally recognised as a candidate country in 1999, and is still undergoing negotiations for accession. The BSEC institutional structure is based on four main pillars comprising the governments, parliaments, private sectors and local administrations of Member States. The highest decision making organ of the BSEC is the Meeting of the Ministers of Foreign Affairs (MMFA). The 18/135
Parliamentary Assembly of the BSEC (PABSEC) adds another dimension so that national parliaments can pass legislation in line with the decisions of the MMFA. The Black Sea Economic Council, which represents the business communities of the Member States, has been established to give directions to the development of cooperation and trade of goods and services between the member countries, and the Black Sea Trade and Development Bank has been set up to finance such regional projects. Six of the member countries had been part of the Soviet Union, and some inter-relations among BSEC countries remain sensitive. There are also significant differences between the economies of the BSEC countries, which are divergent in terms of their production capacities, availability of factors of production, natural resources, and market size. However, despite the fact that the region has been the scene of tensions in the past, the end of the Cold War has given a way to new opportunities for cooperation and more open democratic systems. The member countries have committed themselves to serve the purpose of cooperation towards a “free trade zone” where commodities, services and factors of production would be exchanged freely. The Organization of the Black Sea Economic Cooperation has generated a dialogue between member countries and generated political and institutional adjustments, and regional trade integration projects towards a sustainable growth for the region. The existing political tensions between some member countries and the socio-economic differences in the region have led to the creation of a flexible organizational structure with no legal commitment but a concentration on concrete cooperation projects. This kind of approach aims at action-oriented objectives: it envisages to promote both intra-regional trade and extraregional trade, with a progressive integration of the newly independent states into the World economy, and it envisages to produce jointly the public goods and services that may be too costly for individual Members, such as education projects, training research and development, infrastructure, environment, energy management and communication. The scope of cooperation involves several areas such as transport and communication, infrastructure, exchange of statistical data, standardisation and certification, security and creation of a stable and attractive pool of investment and trade 5 . 5 Information sources from the Organisation of Black Sea Economic Cooperation 19/135
Page 1: Black Sea Economic Cooperation: Stu
Page 4 and 5: . Table of Contents Abbreviations .
Page 6 and 7: . Table 15d. Greece’s Commitments
Page 8 and 9: . Abbreviations BSEC EBRD EU EUROST
Page 10 and 11: . econometric model, referred to as
Page 12 and 13: . In this regard, travel services h
Page 14 and 15: . stock and foreign affiliates acti
Page 16 and 17: Current account balance (% of GDP)
Page 18 and 19: % of GDP . The dynamism of the priv
Page 22 and 23: . II. Trade Potential and Opportuni
Page 24 and 25: . As mentioned earlier, the major e
Page 26 and 27: Imports Perspective . There are cer
Page 28 and 29: . II.1.3 Intra-industry trade betwe
Page 30 and 31: j j . x is the value of total expo
Page 32 and 33: . Table 10 provides a summary of th
Page 34 and 35: . Table 11. Twenty five products wi
Page 36 and 37: . Wood and wood products, in parti
Page 38 and 39: . Metal products, in particular HS
Page 40 and 41: Maximum MFN in Region (%) . make cr
Page 42 and 43: . II.4. Services With the exception
Page 44 and 45: . Table 13. Performance of trade in
Page 46 and 47: . Table 14a. Indicative Service Exp
Page 48 and 49: . Table 14e. Indicative Service Exp
Page 50 and 51: . Table 14i. Indicative Service Exp
Page 52 and 53: . divided by each mode of supply, f
Page 54 and 55: . Table 15b. Armenia’s Commitment
Page 56 and 57: . Table 15d. Greece’s Commitments
Page 58 and 59: . Table 15f. Turkey’s Commitments
Page 60 and 61: . Other commercial services (which
Page 62 and 63: . Table 16 Foreign direct investmen
Page 64 and 65: . In terms of existence of a legal
Page 66 and 67: . III.3. Sectoral opportunities BSE
Page 68 and 69: . service sector (retail, business
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. Table 23b. FDI in Bulgaria (2005)
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. Table 23d. FDI in Romania (2005)
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. Table 23f. FDI in Turkey (2005) I
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. 74/135
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. of trade in services performance,
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. Egger, P. (2002), An Econometric
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. World Bank (2005), Trade, Transp
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. Annex 1. Trade Indicators 82/135
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. Table A2. Major Import Partners f
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. Table A4. Major Import by Product
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Albania Armenia Azerbaijan Bulgaria
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. HS Description ALB ARM AZE BGR GE
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. Table A7 Trade intensity in BSEC
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. HS Description ALB ARM AZE BGR GE
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. country I and country j’s capit
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. Annex 2.3. Results of Gravity Equ
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. Georgia Sector / Exports to ALB A
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. Russia Sector / Exports to ALB AR
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. Annex 2.4. Results of Trade Flow
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Annex 2.5. Results of Trade Flow An
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. Note: Excludes energy and tobacco
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