Agricultural Trade Integration in Western Balkans: Orientation and Complementarity

Abstract

As guidance for the integration of Western Balkans (WBs) to EU is based on the lessons learnt by the accession of Central and Eastern Europe countries in 2004 and 2007, an important element for the prospects of WBs EU membership, is the regional trade integration through the CEFTA2006 agreement. Since CEFTA2006 entry into force in 2007, agricultural trade among CEFTA2006 members as well as among Western Balkan countries and EU members expanded significantly. EU countries constitute the destination of almost half of Western Balkan agricultural exports. In this context, this study attempts firstly to evaluate the degree of sectoral and geographical dispersion of six selected Western Balkan countries and CEFTA2006 members’ agricultural exports, namely Albania, Bosnia & Herzegovina, Croatia, Montenegro, FYR Macedonia and Serbia and secondly to assess the extent of agricultural trade complementarity between Western Balkans and EU countries. The study, utilizing the latest available agricultural trade data (classified by the Combined nomenclature at two digit level) for the period 2007-2012, identifies twenty four agricultural sectors (C codes 01-24) in order to construct three trade indices, namely Regional Hirschmann, Sectoral Hirschmann and the Trade Complementarity Index. Calculations indicate that among Western Balkan countries, Serbia and FYR Macedonia displays the utmost geographical distribution of their agricultural exports, while Bosnia-Herzegovina and Montenegro exhibit the greatest sectoral exports dispersion. As it concerns the complementarity of Western Balkans agricultural exports to EU markets, overall, neighboring EU members are not calculated as favorable towards agricultural exports, while orth-Western EU countries like Finland, Germany, UK or France are displaying greater potentials as future exporting markets.