At the Third International Strategic Forum “Belt and Road” in Beijing, with the participation of officials from more than 130 countries and 30 international organizations, representatives of Serbia signed the Free Trade Agreement with China.
The agreement, which was signed in the presence of Serbian President Aleksandar Vučić and his Chinese counterpart Xi Jinping, will cover 10,412 Serbian tariff positions, ie products, and 8,930 from the Chinese side.
Economists believe that the agreement is a good step because the Chinese market is the largest in the world, but that restrictions, i.e. quotas, should be taken into account in order not to end up in a paradoxical situation where exports increase, which is good for the economy of a country, without meet domestic demand.
When would the agreement enter into force?
Serbian President Aleksandar Vučić says that the agreement will enter into force by May or June. He said that Serbia must “chase” the so-called preferential arrangements for products in agriculture and industry.
“We have to conquer new large markets, so that the surplus of raspberries and apples, wine and brandy does not come into question”, said President Vučić.
This would mean that we would no longer have any customs duties, which are very high today, on Serbian apples, plums, peaches, soybean oil, because it is one of the most sold products.
Vučić pointed out that there will be no customs duty on frozen raspberries, which recorded a growth of 350 percent compared to the previous year, as well as on beer, water, sour water and almost all pharmaceutical and industrial products.
“Wine will be completely duty-free in five years, as the duty will be gradually reduced by 20 percent over the next five years, while today they must be included and make up 30 percent of the total price. It will be zero percent after five years and our winemakers will have a much better price on that market”, Vučić pointed out.
He emphasized that it will mean a lot for wineries throughout Serbia. When it comes to brandy, the customs duty will be abolished in a period of 10 years, since it will be lower by 10 percent each year.
How to protect the domestic market?
Professor Nikola Stakić from Singidunum University tells Euronews Serbia that, for example, the Serbian wine industry has something to offer, stating that the entire Serbian wine market cannot serve only one city – Shanghai. He believes that the methods of transport and logistics should also be considered, but also the protection of the domestic market should be foreseen.
“Whether it will go through the port, dry ports, railway. These are questions that businessmen will certainly take into account. In my opinion, the basic fear, maybe justified, maybe not, is that it should be seen that there are export quotas for certain types of products, that we would fear that the domestic market would be left without those products, if the vast majority of exporters see that there are much greater profit opportunities abroad”, said Stakić.
Bojan Stanić from PKS tells Euronews Serbia that there are protection mechanisms in case of any disruption, in terms of the application of quotas.
The free trade agreement is a bilateral document, and Stanić says that this document will liberalize trade not only from the Serbian, but also from the Chinese point of view.
“We looked to protect our production as much as possible during a period of adjustment, in the metal, chemical and textile industries. For example, within that agreement, you have two-thirds of all products that will be immediately liberalized, there will be no customs duties on them, 25 percent products will have that period of adjustment for five, ten, 15 years, and in the end there will be about 10 percent of products that will be completely exempt, customs will remain on them permanently”, said Stanić.
He says that Serbian exports to China are symbolic if copper, wood and basic raw materials that are mostly exported by Chinese companies from Serbia are excluded.
“When we talk about agricultural products where we have a comparative advantage in the international market and when you put our agricultural products exports to China, including livestock, you get less than half a percent of our total exports to the world.
So, very little realized potential so far. However, the free trade agreement should further push our businessmen to export there, but what we as PKS see, there is not much interest there. The essence is to try to bring as many foreign investors as possible here who would later benefit from that agreement, whether they came from Europe or China is another question”, said Stanić.
For Sava Mitrović from the Center for European Policies, the effects of the free trade agreement between Serbia and China will be felt only in the years after it is signed and implemented because there are numerous transition periods, while certain customs duties will be reduced, but in stages.
“The question is whether we will see the effects immediately. China is a big market, it can be significant, but the question is how our exporters will organize themselves and whether the state is ready to offer them support and help in accessing and conquering this big the market of China.
It is good for our agricultural products to be able to gain access to this kind of market, because this year and in previous years we were faced with surplus food products, so the Chinese market could certainly absorb it”, Mitrović told Euronews Serbia.
How will exporters from Serbia get to China, that is, issues of transport and logistics, Mitrović says, are serious issues that the Serbian economy must face on a structural level.
“How good this can be for Serbia will depend on all of that. As for imports, the President of Serbia emphasized that some raw materials from China will first of all be able to enter Serbia, some raw materials that are necessary for our industry, but there is also the question is how it will affect the domestic economy, whether Chinese exporters will start to compete with the Serbian economy”, Mitrović said.
A buyer from China has been waiting for the export of honey from Serbia for a year
The President of the Association of Beekeepers’ Organizations of Serbia, Rodoljub Živadinović, expects that the free trade agreement will speed up export procedures and that honey could be among the first products to be found on the Chinese market, considering that all the paperwork has been completed and that only China needs to to verify the registration of facilities where honey is packed.
“First, the harmonization of veterinary certificates for honey had to be signed, without that, ours cannot issue papers for export, nor can they receive it there, that is finished. Then comes the registration of the facility.
The Chinese sent the paperwork, what we need to fill out as a country, then forwarded to the states to us, to various companies that have expressed interest in exporting, there are four or five of them. Those who want to, entered the procedure of registering the facilities in which they pack honey.
All the forms were filled out, the inspection looked at what it saw, it was forwarded to China and now it is up to China to stamp and sign and say – yes, we have registered your facilities”, said Živadinović.
He told Euronews Serbia that currently around 500 tons of honey are in stock for export.
“We have a customer from China, who has been trying to export honey to him for a year, but we still can’t. When we told the customer how much we have for export, he said – you don’t have anywhere near as much as we need.
If everything goes well, everything that is produced will go to China at least as far as acacias are concerned, we will see about other species because we are not deep enough in the negotiations there yet to be able to say. It never all goes, there are those beekeepers who are not interested in exporting, retail exclusively”, said Živadinović.
He states that the honey would be transported by ship and that it takes a month to reach China.
“We are very close to the goal”, says Živadinović and explains that if all procedures were completed today, honey from Serbia could go to China in a month.
“Cooperation with China may come under pressure”
And while Mitrović states that it is understood that the agreements with China and Russia on free trade will be terminated by Serbia’s entry into the EU, Stanić says that taking into account the tightening of relations between the West and China, above all the conflicts they have in the economic sense, that long-term cooperation with China may come under pressure.
Stanić adds that the Chinese “Belt and Road” initiative is losing importance in Europe.
“For example, Italy withdrew from that agreement, on the other hand, that platform – the cooperation between China and 16 countries of Central and Eastern Europe also lost its importance, bearing in mind the change in geopolitical circumstances”, said Stanić.
Mitrović states that there is no ideal agreement, that it is necessary to diversify foreign economic relations, but certainly work on the EU accession process.
“In a situation where membership in the EU is still far away, it probably won’t be in this decade, it is quite pragmatic to diversify foreign economic relations, but we should definitely work on the process of accession to the EU, sectoral accession to the EU single market, in the perspective of full membership, which will entail the termination of all of these free trade agreements with both China and Russia and then we will become part of the Customs Union and the EU’s foreign trade policy”, says Mitrović.
Sign up for business updates & specials.
