The region received a “Mini Schengen”, which should accelerate the flow of people, goods, services and capital, but this time the guarantee of that agreement is America.
When Branko Azeski, President of the Chamber of Commerce of Northern Macedonia, openly and bluntly said at the Kopaonik Business Forum a year and a half ago that CEFTA was dead and that the region needed a new arrangement under the auspices of the European Union to provide mechanisms to reach an agreement he respects – he never dreamed it would really happen.
The region received a “Mini Schengen”, which should accelerate the flow of people, goods, services and capital, but this time the guarantee of that agreement is America. “Mini Schengen” is part of the agreement that was signed in Washington in early September, which is important for our country, which is the largest exporter in the region and which lost more than half a billion euros in just two years due to the closure of the southern province market.
Chambers of Commerce of Serbia and the so-called Kosovo signed a joint statement in Belgrade earlier this week in the presence of senior US officials Richard Grenel, a special adviser to the US president, and Adam Bohler, the executive director of the DFC. With the statement, they supported the initiative of regional cooperation “Mini Schengen” because it is, as it is stated, an important step towards prosperity and improvement of stability and competitiveness in the entire region of the Western Balkans.
Bojan Stanic, Assistant Director of the Sector for Strategic Analysis of the Serbian Chamber of Commerce (SCC), explains that in the formal sense, the Washington Agreement committed Kosovo to become part of the “Mini Schengen”. Before him, “Mini Schengen” was supported and joined by Albania and Northern Macedonia, and it is expected that Montenegro and Bosnia and Herzegovina will decide for this.
Our interlocutor emphasizes that it is important that there is an interest of the European Union to support the “Mini Schengen”, but under the condition that all economies of the region are included.
– With the political authority of the USA, which is behind the agreement reached in Washington, we believe that the “Mini Schengen” initiative will get additional wind in its back. We expect further concrete progress towards the creation of that common economic space by the end of this year – Stanic says for Politika.
He reminds that the “Mini Schengen” initiative started to develop in the second half of 2019, and three conferences have been held so far, but everything has been stopped due to the appearance of the corona. All fields have been defined in which cooperation should be improved in order to get closer to what we call the common market through the application of four economic freedoms: people, goods, services and capital.
– Some steps have already been taken when it comes to cooperation in the exchange of goods, because now there is a single border crossing between Serbia and Macedonia. We are currently working on obtaining documents that accompany the goods, phytosanitary and other paperwork, for more efficient treatment. Electronic surveillance is planned during the transport of goods through the region. The key contribution of that cooperation is the recognition of diplomas, which is important for deficient professions such as doctors, engineers, architects. Those without nostrification can apply for a job in the region. It is also important to promote this region as a unique investment destination, considering that we have a disparity, ie that investments come to certain parts of the country, while the peripheral areas are especially endangered – says Stanic.
“Mini Schengen” is an upgrade of the CEFTA agreement, a free trade agreement in terms of goods, which has a part that refers to services, but was not used enough.
According to our interlocutor, CEFTA has made a significant contribution to the growth of trade within the region. But that agreement had its limitations and it needed to be upgraded in the sense that it needed to allow the free flow of both people and capital, which is the most complicated.
The Washington agreement and the “small Schengen” are a guarantee that there will be no unilateral measures, such as the Kosovo taxes on goods from Serbia. They were completely abolished in March, and in a few months, the placement of our goods in Kosovo and Metohija returned to 50 percent of what we had in 2018, before the introduction of the tax.
– During 2019 and in the first quarter of this year, the placement of Serbian goods in Kosovo and Metohija was zero. When the taxes were abolished in March, ending in July, the placement of our goods was worth 120 million euros, and in the same period in 2018, it amounted to about 250 million euros. I believe that it will increase further over time – says Stanic.
For us, the “Mini Schengen” is important because of the faster flow of our goods, which we export a lot to the surrounding countries. We have a trade surplus with all countries in the region, primarily with Bosnia and Herzegovina, Northern Macedonia, Montenegro and Albania. We are also positive in the services of the IT sector, which had a surplus of half a billion euros in the first seven months. The share of the IT sector is approaching the share of agriculture in GDP.
– Through this cooperation, we expect domestic investments to increase, but also a larger inflow of foreign investments. The first question asked by a foreign investor who wants to build a factory is what the political situation is. This will reduce the political risk that is often chosen by investors. Several formal steps took place in a short period of time, which was not the case before. Now we have one flywheel and a certain level of euphoria is being created among businessmen and politicians that this is really feasible – says Stanic, Politika reports.
