Trade in Services in the Western Balkan Countries

Abstract

The liberalisation of services trade in the Western Balkan countries has been driven by their need to integrate into international markets, develop strong market economies and achieve EU membership. Compared to the non-Baltic new member states (NMS), the Western Balkan services sectors are smaller in size and have a more adverse composition, with traditional services sectors being dominant over sectors with a higher value added. Although modest, the rate of growth of Western Balkan exports in services is higher than that of the NMS, and higher than their own GDP growth, which indicates an improving export performance and allows for a process of gradual catch-up. Further liberalisation of trade in services within Western Balkan countries is envisaged by a regional trade agreement, CEFTA, and is on their path of EU accession. The main goal of this liberalisation is to foster development of the domestic markets, both through regulatory reforms approximating EU market rules and by fostering competition between the service providers (within the country and intra-CEFTA). A precondition for EU accession is WTO membership, which Bosnia and Herzegovina and Serbia are still negotiating (Kosovo has not yet applied for membership but is expected to do so). The WTO accession negotiations of Bosnia and Herzegovina and Serbia have reached a stalemate, due to adverse accession negotiation requests from a couple of WTO members that are de facto blocking the process. Until this situation changes, these countries will not become WTO members and will not able to complete their EU accession.