REGIONAL COOPERATION AND ECONOMIC INTEGRATION

PART II:
the governments of Western Balkan countries to enhance their mutual economic and trade
cooperation, the EU took a further step by offering these countries the Stabilization and
Association Agreement as a special regional free trade agreement. Offering the opportunity
for gaining a candidate status until full membership in the EU, the SAA stresses the priority
of a creation of a free trade area among countries that signed this agreement with the
EU. The creation of a free trade area of the Western Balkan countries with a signed SAA
is considered to be one of the milestones in the measuring of the successfulness of the
fulfillment of the necessary criteria for obtaining a full membership into the EU. However,
in the period from 2001 until 2006 only three countries in the region (Macedonia, Croatia
and Albania) managed to sign a SAA with the EU. Also, they never tried to create a free
trade area among themselves. At the end of 2007 Bosnia and Herzegovina also signed a
SAA, though it is not in function, yet (Kikerkova, 2008:354).
After the fall of the socialist system, Western Balkan countries regulated their trade
exchange of goods by bilateral free trade agreements. One of the initiators and the leader in
the process of signing bilateral free trade agreements within the region was the Republic of
Macedonia. It had 11 from a total of 32 signed bilateral free trade agreements in the region.
Despite all of the signed free trade agreements, trade-partners’ Customs Offices were not
prevented to apply different administrative and red tape procedures on exports form the
Balkans and transit of goods. These practices especially affected exports of agricultural
unprocessed products which spoiled easily and which were deliberately kept on border
lines until they would become useless. The physical design of the border passes of all the
Balkan countries looked as it was created not to allow, but to prevent the flow of people
and goods, which is completely opposite of the modern western business practices. The
political instability of the region additionally complicated the whole picture. Because all of
the mentioned obstacles, the efforts for trade liberalization did not result with a significant
economic growth of the country, as all of the signed agreements provided growth of total
Macedonian exports of only 2.18% and growth of total Macedonian imports of 4.42% per
year (Kikerkova, 2006:114).
The given preferential treatment of goods within the Stabilization and Association
Agreement and the huge capacity of the EU market created additional problems for the
trade exchange of goods within the Western Balkan. Countries that signed the SAA started
to divert their trade towards their EU partners, which created additional neglect of the trade
partners from the nearest neighborhood. This was also the case with Macedonia. Before
the signification of the SAA with the EU, the trade with Western Balkan countries created
23% of the total Macedonian trade exchange, while in 2006 it amounted for only 8% of its
total trade exchange.
The creation of the multilateral free trade agreement for the Western Balkans named
CEFTA-2006 finally put an end to this negative trend.
1. Main provisions of trade liberalization under CEFTA-2006
CEFTA-2006 is a multilateral free trade agreement which replaced the 32 bilateral free
trade agreements that were used as basis for the regulation of the trade exchange of goods
158