Банкеръ Weekly

Briefs

CEFTA IS NO LONGER WHAT IT USED TO BE

Is it reasonable for the Central European Free Trade Agreement (CEFTA) to continue existing? That seemed to be the key question that had to be answered by the annual meeting of government leaders of CEFTA members, held in Sofia during the week. In the beginning of May 2004, after they joined the European Union (EU) Poland, the Czech Republic, Slovenia, Hungary and Slovenia withdrew from from the agreement, signed in the Polish town of Krakow in 1992. Thus, only Bulgaria, Romania and Croatia remained in CEFTA. Concerns that over the next few years the organisation will lose its individuality are beefed up by the fact that Sofia and Bucarest should also leave CEFTA after their accession to the EU in 2007. Despite these reasonable fears, the participants in the meeting in Sofia demonstrated optimism regarding the organisation's future. The final declaration of the forum underlined that CEFTA's doors remain open to new member countries from the region. The document would certainly be more significant if Romania, Macedonia and Croatia had signed it. But for one reason or another, they did not arrive in Sofia. Anyway, the reached agreement for Macedonia's accession to CEFTA could be regarded as a step towards the realization of the aims, entereed in the declaration. It's another question if the setting up of the Balkan trade quartet between Sofia, Bucarest, Zagreb and Skopje, would bring real economic benefits to the country. The analysis of data about Bulgaria's foreign trade balance in the 1999-2003 period (i.e. for the time since our country joined the organisation till its transformation) shows that Bulgaria has not taken advantage to the maximum degree of the liberalization of trade in the region. For instance, in 1999 our foreign trade deficit in the turnover with CEFTA's members amounted to USD163.9MN and reached USD370.7MN in the end of 2003. The fact that imports from Poland, the Czech Republic, Slovakia, Hungary and Slovenia invariably exceeded the export of Bulgarian goods to these markets is quite indicative of our country's competitiveness. Presently, however, Bulgaria is something of a regional leader in the trade with Romania, Croatia and Macedonia. According to data of the Ministry of Economy, in the first eight months of 2004 our commercial exchange with Romania totalled USD496.4MN (some USD200MN up from the same period of 2003), with exports exceeding by USD8.7MN imports from that country. Bulgaria's trade surplus in the turnover with Croatia for the first eight months of this year amounted to USD10.606MN, and to USD96.4MN in the commercial exchange with Macedonia. As a whole the relative share of Bulgaria's CEFTA partners is low - 8 per cent. Asked to comment on these figures for the BANKER weekly, Premier Simeon Saxe-Coburg-Gotha replied in his usual let's look on things positively style. According to him, any statistics is relative and what journalists find alarming could be accepted by politicians as encouraging for solving the problems. And problems are abundant, at least concerning the specification of criteria for CEFTA's expansion by accession of countries from the Western Balkans. In the words of Milen Keremedchiev, Chief Coordinator for Bulgaria of the Southeastern Europe Stability Pact, a serious hindrance in that respect is the requirement in CEFTA's Articles of Association that the candidates should be members of the World Trade Organisation (WTO) or to have signed agreements for association with the EU. That impedes Serbia and Montenegro, Bosnia and Herzegovina from joining CEFTA. What is interesting in the case is that they are pressed by the EU to realize the idea launched within the Stability Pact for setting up a joint free trade zone in Southeastern Europe, and at the same time there are regulatory problems, hampering the establishments of such a mini market. That to a large extend explains why the only application for accession to CEFTA's new format has been filed by Albania.

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