Serbia and the members of the Moscow-led Eurasian Economic Union (EAEU) have resolved controversial issues related to brandy and cheese quotas, paving the way for signing a comprehensive free trade agreement.
The EAEU, sometimes called Eurasian Union, was created in 2014 between Russia, Belarus and Kazakhstan, while Armenia and Kyrgyzstan joined the following year.Trade between Serbia and the EAEU countries is worth $2.87 billion per year, 90% of which is the trade with Russia.
A free trade agreement with the EAEU was supposed to be signed during Russian President Vladimir Putin’s visit to Serbia in mid-January, but not all tariff lines had been harmonised by that time.
Then Russian Ambassador to Serbia, Alexander Chepurin, tweeted that the establishment of a free trade zone between Serbia and the EAEU was a done deal and that all that was left was for the decision to be ratified at a meeting of the Intergovernmental Council. The next session of the body is to be held in late April, Chepurin wrote in February.
However, as an EU candidate, although Serbia can sign free trade agreements, they will become invalid once it joins the Union.
The final text of the Free Trade Agreement was harmonised by Serbian Minister of Trade Rasim Ljajić and EAEU Minister of Trade Veronika Nikishina in Moscow on 12 March.
Serbia already has free trade agreements with Russia, Belarus and Kazakhstan, which allow it to export 99% of its goods to those countries duty-free.
The problematic points in the talks with the EAEU, which started in 2016, were Vinjak brandy quotas for Armenia and cheese quotas for Belarus.
Ljajić told Beta News Agency that ‘a modern text of the Free Trade Agreement was arranged’ in Moscow, ‘which is in line with the rules of the World Trade Organisation and the principles of modern trade practices’.
‘We did not get all that we wanted, but we will have more goods on a duty-free regime than we have had so far’, the trade minister said, specifying that Serbian producers would be able to export unlimited quantities of all types of fruit brandy and sheep and goat milk cheese.
Serbia also got quotas for exporting cigarettes, Vinjak brandy and certain types of cow’s milk cheese which had not been duty-free until now.
Duty-free car exports were not negotiated, given the condition that more than 50% of vehicle components must be domestically made, which is not the case with the manufacture of Fiat cars at the Kragujevac factory.
According to Ljajić, the agreement also contains other elements that will conspicuously cut the operative costs of import and export, which will help make Serbian producers more competitive.
Serbia’s biggest foreign trade partners are the EU member states, which account for 62% of overall trade, while the second most important partners are the countries of the Central European Free Trade Agreement (CEFTA).
Official statistics show that Serbia’s leading export markets in January 2019 were Germany, Italy, Bosnia-Herzegovina, Russia, and Romania. In imports, the main partners were Russia, Germany, China, Italy, and Hungary. The biggest deficit was seen in the trade with Russia, due to fuel imports, and China, due to mobile phone and laptop imports.
The EU doesn’t have official relations with EAEU and has voiced doubts about legal certainty with this organisation.
As a EU candidate country, Serbia is invited to join the sanctions imposed on Russia after the annexation of Crimea. Instead, Serbia has increased its trade with Russia.
[Edited by Zoran Radosavljevic and Georgi Gotev]