What will the free trade agreement with China bring to Serbia

Published on 8. August 2022., News

The conclusion of the free trade agreement between Serbia and China (SFTA), which is expected by the end of the year, will open up new business opportunities for Serbian manufacturers.

They will be able to sell their products and services on more favorable terms in the huge Chinese market, with more than 1.4 billion people. On the other hand, the agreement will make our country one of the most attractive investment destinations in Europe.

Its signing will allow most products to be imported and exported duty-free, or for those duties to be reduced, which will lead to an increase in the volume of trade, writes Novosti. China is the most important trading partner of Serbia in Asia, and with this agreement the strategic partnership of our two countries will be further strengthened. Domestic experts point out that it is necessary to carefully define that document in order to avoid the potential risks that the opening of our small market can bring to the world’s largest trading superpower.

The draft of the free trade agreement with China began to be prepared a month ago.

The Ministry of Finance manages the Working Group engaged in its preparation. Minister Siniša Mali emphasized that the conclusion of this agreement will increase the competitiveness of our economy, contribute to the growth of exports and open the door for the arrival of new investments from around the world.

“During the last 10 years, in the period from 2012 to 2021, Serbia’s exports to China increased 152 times”, said Mali.

It is growing year by year, and last year exports reached almost one billion dollars.

Bojan Stanić, assistant director of the Strategic Analysis Sector of the Serbian Chamber of Commerce (PKS), says that the organization supports the initiative of our government to enable free trade between the two countries, but indicates that it is necessary to negotiate the agreement as best as possible.

“That process should be approached cautiously, it is necessary to form a broad negotiating team and it is mandatory to consult our businessmen,” emphasizes Stanić.

“Signing a free trade agreement between two disproportionate countries in terms of economic potential is a complex matter, given that we have both advantages and risks. In such relations, the side with less economic capacity is usually in a subordinate position”.

He indicates that the agreement should be more broadly defined and that, in addition to foreign trade, it should include the investment activities of both our companies in China and theirs in Serbia. This means that it should be agreed on the employment of our workers in Chinese companies that come here, as well as the inclusion of Serbian companies, that is, suppliers in their supply chains. Serbia mainly exports raw materials such as metal and wood to this Far Eastern country.

“We need to find a way to increase the export of meat and meat products, wine and other alcoholic beverages,” says Stanić. “The purchasing power of the population is increasing in China. The Chinese consumer looks more and more like a European, drives European cars, wants to consume European wine, cheese and other quality products”.

Economist Ivan Nikolić estimates that the agreement with China will be extremely stimulating for those who will have large, mass production in Serbia. He believes that these are, above all, foreign investors, because the question is whether Serbian companies can achieve this.

The presidents of the two countries, Aleksandar Vučić and Xi Jinping, reached an agreement in February of this year on the conclusion of an agreement on free trade. Western countries, which have an enormously larger volume of trade with China, do not look favorably on this. According to Stanić, Switzerland and Iceland have such an agreement in Europe, and Norway and Moldova are currently considering this issue.

Exchange 5.3 billion dollars

The volume of trade between Serbia and China last year amounted to 5.3 billion dollars, and Serbian exports recorded a growth of 157.7 percent. For the first five months of this year, foreign trade was 2.62 billion dollars, which is almost 40 percent more compared to the same period last year. At the same time, exports increased by 76 percent and imports by 32 percent. Of the five largest Serbian exporters last year, three companies are owned by Chinese investors. They achieved a total export of 1.9 billion euros, B92 writes.

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