MEPs voted overwhelmingly in favour of the legal agreement, which regulates Serbia's relations with the EU and leaves the door open for future accession.
The pact must now be ratified by all member states to enter into force.
"By ratifying the Stabilisation and Association Agreement […] we acknowledge and welcome Serbia's achievements in the past year," said Jelko Kacin, a liberal MEP from Slovenia who is the European Parliament's rapporteur on Serbia.
"At the same time, we point out all the challenges that lie ahead," she added, speaking at the Parliament's plenary meeting in Strasbourg on Tuesday (18 January).
The Stabilisation and Association Agreement (SAA), signed in 2008, opens up trade relations between the EU and Serbia in view of the country's eventual membership of the bloc. However, member states only began to ratify the agreement in June 2010.
In Strasbourg, MEPs called on the remaining countries to swiftly proceed with ratification. 11 member states have completed the process so far.
Dialogue with Kosovo
MEPs rejected earlier versions of the resolution which might be seen as endorsing the partition of Kosovo or an exchange of territory between Serbia and its former province.
Instead, they voted through a text urging Belgrade to start talks with Pristina "without delay" and avoided referring to new negotiations over Kosovo's status.
MEPs called on Serbia to facilitate cooperation between the EU's law-enforcement mission in Kosovo, EULEX, and Kosovo Serbs residing in the northern part of the new republic. They also urged Belgrade to dismantle "Serbian parallel structures in Kosovo," referring to the region of Mitrovica over which Prisina has no control.
The Serbian authorities were also urged to adopt a "constructive attitude" towards upcoming general elections in Kosovo. Until now Belgrade has encouraged ethnic Serbs to boycott polls organised by Pristina.
But the biggest bugbear remains the country's collaboration with the International Criminal Tribunal for the former Yugoslavia (ICTY) in The Hague. In the European Parliament's eyes, Serbia can only improve its EU prospects by stepping up its efforts to arrest war criminals Ratko Mladić and Goran Hadžić.
"Serbia can only gain candidate status and/or open accession negotiations with the EU if the ICTY Office of the Prosecutor assesses that it has offered full cooperation," the Parliament's resolution reads.
Major domestic reform needed
On the domestic agenda, the Parliament notes that "corruption is still prevalent in the country," highlighting in particular the problem of trafficking, the proceeds of which are used for sustaining criminal networks.
The Parliament also draws attention to current practice in Serbia whereby officials hold more than one office, which creates the risk of conflict of interest and corruption.
The Serbian parliament is called upon to abandon the practice of 'blank mandates', which allows political parties to control MPs like pawns. In more general terms, it calls on MPs in Serbia to align with European democratic standards "at the earliest possible date".
Situation of minorities criticised
The European Parliament underlined the need to improve access to education in their mother tongue, as well as access to information, with respect to Bosniak, Bulgarian, Bunjevci and Romanian minorities.
Hungarian MEP György Schöpflin (European People's Party) recently said that his country didn't have similar problems with Serbia. The explanation may be that the sizeable Hungarian minority in Vojvodina, the northern part of Serbia, is less prone to Serbian assimilation as other minorities.
The Parliament also deplored violent clashes that accompanied a gay parade in Belgrade on 10 October. Human rights groups reported that the Orthodox Church in Serbia has traditionally played a role in instigating homophobia.
The Roma minority is another problem for Serbia, where most gypsies live in extreme poverty. The Parliament deplored the fact that only 5% of the Roma in Serbia hold a permanent job.
Serbia's deplorable road infrastructure is an additional cause of concern for MEPs, who urged Belgrade to complete 'European Corridor X'. The term describes a road to the Serbian city of Nis, next to the Bulgarian border, which has been a bottleneck for decades and is a nightmare for drivers.
