REGIONAL COOPERATION AND ECONOMIC INTEGRATION

CEFTA-2006 TRADE COOPERATION
The structure of the Macedonian export sector, where the producers of raw materials and
of goods with low level of industrial finalization dominates, is inherited situation from the
previous economic system, where the process of creating the production structure of the
Macedonian economy was determined from the needs of the Yugoslav economy. The more
developed republics in the Yugoslav federation (Slovenia, Croatia, and Serbia) forced their
economic interests and had created production structures where producers of goods with
high level of industrial finalization were dominating. The rest of the republics were inputs
and raw materials suppliers of their production. After the brake down of the Yugoslav
federation, and building a new market oriented economies in the region, the situation from
the aspect of the production structure was not changed. The regional cooperation among
the countries from the region is not enough strong impulse for changing the structures of
countries’ export sectors. During the whole period, 70 % of Macedonian export consists
of goods with low level of industrial finalization (food, steel, iron, products from steel and
iron, chemicals, and textile).
After 2001, the trade exchange of Macedonian economy shifted from regional markets
to the larger European markets. The signing the SAA with the European Union was the
reason for this change, whereby all administrative barriers in the trade exchange were
removed. The participation of trade exchange with the European companies in the total
trade exchange within the trade under the free trade agreements is significantly high (more
than 60%). As an exporter of row materials and intermediary goods and an importer of
goods with high level of industrial finalization, the week Macedonian production is not in
a position to reach a better market access at the Union market. In the period 2002-2006 the
import of goods is almost double from the export of goods in the European market. As a
result, the trade deficit in the trade exchange with the Union has an increasing tendency.
Table 4: Trade exchange of the Republic of Macedonia with the EU
in the period 2002-2006
EU
Amounts of
trade exchange
within trade
Participation of
trade in the total
exchange within
Net export
or (net import)
(million USA $)
under the free
trade agreement
trade under
the free trade
2002
(million USA $) agreement
1.754 61,58% -554
2003 2.061 62,11% -507
2004 2.417 62,28% -503
2005 2.551 60,33% -383
2006 2.976 59,41% -324
Source: Reports on foreign trade of Macedonia 2007and 2008
2. Trade exchange within CEFTA – 2006: the case of Macedonian economy
Expectations for the positive effects on the trade exchange among the countries from the
Western Balkans from the number of bilateral free trade agreements were not realized.
Furthermore, the positive impact on economic growth of these economies was absent too.
The gap between the region and the EU increases. Political instability in the region has a
supportive role for the disintegration of the region.
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