Changes in BH Foreign Trade after the Process of Liberalization with Neighboring FTA Countries

Abstract

Macroeconomic performances of Bosnia and Herzegovina after the war and process of reconstruction and transition of economy are pretty bad. One of very critical issues regarding the state of BH economy is external sector, or more precisely, foreign trade deficit that has increasing trend from year to year. This paper will present some basic characteristics of BH foreign trade overall. But, main task is to analyze changes in BH foreign trade after the process of liberalization through foreign trade agreements. It is evident today that after liberalization of foreign trade with FTA countries value of import and export increased. But, BH trade deficit was larger from year to year even the fact that growth rate of export had been faster than growth of import. In 2004, foreign trade deficit with FTA countries was more than 50 % of total deficit or 1,718 billions of
1. Also, additional increase of trade deficit in 2004 compare to 2003 has been made basically with FTA country – 83 % of total additional deficit. Therefore, we may conclude that main generators of additional foreign deficit are FTA countries. And finally, beside the fact that BH has almost full liberalization of foreign trade with neighboring countries it is possible to find some non-tariff barriers to trade. We are going to identify them.