Central European Free Trade Agreement Research Articles

ECONOMIC TRENDS IN THE REGION OF SOUTHEAST EUROPE AND THE SPECIFICITY OF THE CEFTA AGREEMENT

<p><span style="font-size: 12.0pt; line-height: 107%; font-family: 'Times New Roman',serif; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;">Economic collaboration among Southeast European countries and the establishment of free trade with the European Union are seen as potential drivers for regional development. However, given the region's intricate political landscape and historical challenges, achieving these objectives faces hurdles stemming from political and historical complexities. In an effort to fortify regional ties, the European Union has provided support through mechanisms such as Bilateral Free Trade Agreements, Generalized Trade Preferences, and the Central European Free Trade Agreement (CEFTA) of 2006. Since the inception of the CEFTA agreement in 2006, the Free Trade Agreement has emerged as a pivotal catalyst in enhancing international trade in Southeastern Europe. It has played a crucial role in fostering economic integration, streamlining trade processes, boosting regional trade volumes, and establishing a cohesive economic zone that appeals to foreign direct investors and facilitates the mobility of professional service providers. Over the past fifteen years, intra-regional trade has experienced significant growth, accompanied by a rising proportion of trade occurring within the region. The liberalization of trade within CEFTA has not only stimulated market competition but has also spurred integration across various sectors and industries in the region. Furthermore, it has acted as a catalyst for foreign direct investment, both from external sources and within the region itself.</span></p>

Does regional trade integration reinforce or weaken capital mobility? New evidence from four free trade areas

The study aims to empirically determine whether a higher level of trade openness and the presence of better legal protection for investors enhances the impact of trade bloc membership on capital mobility based on four trading blocs: Eurasian Economic Union (EAEU), Central American and Dominican Republic Free Trade Agreement (CAFTA-DR), Central European Free Trade Agreement (CEFTA), and the Pacific Alliance. This study employs the fully modified and dynamic ordinary least squares estimators and a panel quantile regression cointegration estimator. The study finds that a country's affiliation with a trade bloc improves capital mobility in the whole group and EAEU region, low capital mobility in the Pacific Alliance region and moderate low capital mobility in the CAFTA-DR region. The legal protection system alone provided for the investors does not improve the level of capital mobility unless its interaction with investment is included. Also the study reveals that high trade openness does not necessarily lead to better capital mobility for the studied trade blocs.

A simple method to ex-ante quantify the unobservable effects of trade liberalization and trade protection

We propose a simple and flexible econometric approach to quantify ex-ante the impact of comprehensive trade liberalization or protection with the structural gravity model. Specifically, we argue that the difference between the estimates of border indicator variables for affected and non-affected countries can be used to measure unobservable changes in bilateral trade costs in response to hypothetical policy changes. To demonstrate the effectiveness of our methods, we focus on the integration between the countries from the Central European Free Trade Agreement (CEFTA) and the European Union (EU); an important policy application that has not been studied before due to a lack of data. We overcome this challenge by utilizing a new dataset on trade and production that covers all EU countries and all CEFTA members (except for Kosovo). The partial equilibrium estimates that we obtain confirm the validity of our methods, while the corresponding general equilibrium effects point to significant and heterogeneous potential gains for the CEFTA countries from joining the EU. The proposed methods are readily applicable to other applications, e.g., Brexit or joining the World Trade Organization (WTO), and can also be extended to ex-post analysis.

CEFTA's Role in Harmonizing the Market and Competition with Local Products Case: Taxation Against Serbia and Bosnia and Herzegovina

By researching various literature and publications we have managed to summarize a proper structure related to this topic. CEFTA (Central European Free Trade Agreement) is a free trade agreement in which eight countries of the Western Balkans region participate. CEFTA was established with the aim of eliminating payments for mutual trade between member states; creating favorable conditions for the development and diversification of trade; promoting trade and economic cooperation; intensification of economic relations for mutual benefit and for the contribution to the EU integration process; contribution to the development of EU trade relations and integration into the multilateral trading system. in the EU. Although not mandatory, CEFTA is the inevitable path for all EU aspiring countries. It is also one of the conditions for Kosovo to integrate into the EU, but from the research we reach a conclusion that the Cefta Agreement was not favorable for Kosovo and the Trade that it conducts with the Balkan countries. Also, the presence of Kosovo in Cefta as a representative of UNMIK and not as an independent state like the Republic of Kosovo provides an overview that Kosovo in Cefta is conditional starting from its absence as a state and then in the space provided in market, states that do not recognize Kosovo's citizenship are a barrier to Kosovo's integration into this agreement. In terms of trade, Kosovo is obliged to start these barriers set by non-recognizing states of its citizenship and to act with the same currency, these states especially Serbia and Bosnia have constantly hindered the development of Kosovo economy which aim only to benefit from Kosovo which trade policies link to the political status that these countries develop towards each other. As Kosovo does not have the expected benefits from this agreement, some advice and recommendations are given to change the situation, but it is not a solution to set obstacles, as the very purpose of integration in this agreement has been the release of barriers and cooperation between member countries. Since the commitment to implement CEFTA is also included in the Stabilization and Association Agreement signed between Kosovo and the European Union, the opportunity for Kosovo is to renegotiate this agreement together with other member states. Keywords: Tax (tarrif), Export, Import, Market, Economic Report, Domestic Products, Competition

Central European Free Trade Agreement (CEFTA) and Regional Cooperation with a View to the Improvement of Dispute Resolution Mechanism

Central European Free Trade Agreement (CEFTA) and Regional Cooperation with a View to the Improvement of Dispute Resolution Mechanism

Export Competitiveness of Agri-Food Sector during the EU Integration Process: Evidence from the Western Balkans

Trade agreements with the European Union (EU) and Central European Free Trade Agreement (CEFTA) significantly influenced the liberalisation of agri-food products in Western Balkan (WB) countries. In all Western Balkan countries, there has been an intensification of the trade of agri-food products and a partial change in the regional and commodity structures of trade. This paper aims to identify comparative advantages of agri-food sectors and consider its tendencies during the EU integration process. Additionally, this paper will discuss some opportunities for improvement of the export positions of agri-food products. In that context and based on the literature review, the indexes of revealed comparative advantages and its modified version will be used as a main method for analysis in this research. Results showed that all Western Balkan countries, except Albania, have comparative advantages in exporting agri-food products. It is evident that Serbia has the highest level of comparative advantages in this sector. Moreover, this paper suggests that all countries should aim to provide the best possible positions for their agri-food products during pre-accession negotiations for EU membership and take the necessary steps towards increasing the level of competitiveness in the common EU market.

Trade creation and trade diversion effects from Croatia’s CEFTA and EU membership

This paper provides a detailed empirical study of trade creation and trade diversion effects arising from Croatia's two regional trade agreements, the Central European Free Trade Agreement (CEFTA) and the European Union (the EU). It offers a foundation for discussion about future trade policies in terms of benefits and drawbacks from those regional trade agreements. Croatia’s imports, exports and total trade flows with 180 trading partner countries were examined for the period of 2000 – 2016. Cross-country panel regression using gravity model of international trade assessed pooled OLS, fixed and random effects, as well as more robust Tobit and PPML estimator models. The random effects model found positive effects of Croatia-CEFTA integration evident in trade creation in imports, exports and total trade flows. Croatia-EU integration exhibits no significant effect of trade creation in neither imports, exports nor total trade flows. Nonetheless, there is a trade diversion effect in cases of imports and total trade flows. In the Tobit model CEFTA created trade in imports, exports and total trade flows, while the EU diverted trade in imports and total trade flows. Finally, the robust PPML estimator found that: (1) CEFTA membership created trade in imports, exports and total trade flows, and (2) the EU membership diverted trade in imports and exports, and created trade in total trade flows.

Ekonomska determinisanost integracionih procesa Republike Srbije

Exchange of goods and services is the most important domain of economic cooperation between the Republic of Serbia with the world and is crucial for faster growth of gross domestic product (and thus expected economic growth rates and faster social development and rising living standards) in the coming period. Due to this, paper analyses the degree of involvement of the Republic of Serbia in total world exports, its most important foreign trade partners, the degree of openness of the economy and the share of exports in gross domestic product, analyzing the period from 2008 to 2017. The aim of this paper is to study specific relations between the Republic of Serbia and its most important foreign trade partners and their interdependence with the integration processes through multilateral and bilateral cooperation with the European Union, Eurasian Economic Union, World Trade Organization and Central European Free Trade Agreement. Based on the updated statistical research and analysis of the content of the basic determinants of bilateral agreements, recommendations were given for the future development of integration processes within the European Union and the Eurasian Economic Union.

Regional Economic Cooperation in the Western Balkans: The Role of Stabilization and Association Agreements, Bilateral Investment Treaties and Free Trade Agreements in Regional Investment and Trade Flows

ABSTRACT This study explores the role of stabilization and association agreements (SAAs), bilateral investment treaties (BITs) and free trade agreements (FTAs) in the Western Balkans and their impact on the region’s inward foreign direct investment (FDI) and exports, with primary interest in the effects on intra-regional FDI and trade. Results show that BITs were not related to intra-regional FDI, nor to the FDI from other countries. The Central European Free Trade Agreement (CEFTA) contributed to increased intra-regional trade. Finally, the SAAs turn out to be highly significant for FDI from the EU to signee countries, and their exports to the EU.

COMPETITIVENESS AND INEQUALITY IN INCOME DISTRIBUTION IN THE EUROPEAN COUNTRIES AT DIFFERENT LEVELS OF DEVELOPMENT

The paper studies the interdependence of the phenomena of country’s competitiveness and inequality in income distribution in respect of the countries of the European continent, divided in two groups: a) the present (Albania, Montenegro, Bosnia and Herzegovina, Macedonia, Moldova, and Serbia) and former members (Bulgaria, Croatia Hungary, Poland, Slovakia, Slovenia, Romania, and the Czech Republic) of the Central European Free Trade Agreement – CEFTA, and b) EU15 countries. The study relates to the period from 2006 to 2013. The first group of countries represents less competitive countries, while the second includes highly competitive European economies. The achieved level of competitiveness is expressed by the values of the Global Competitiveness Index of the World Economic Forum, decomposed into Basic & Efficiency factors based competitiveness and Innovation & Sophistication factors based competitiveness. Inequality in income distribution is expressed by the Gini coefficient. Based on the created model of dependence of the Gini coefficient on the above-mentioned components of competitiveness, using simple and multiple linear regression analysis, it has been concluded that the achieved level of competitiveness of some countries has a statistically significant influence on the value of the Gini coefficient. The results of multiple linear regression analysis show that, in the group of CEFTA countries, the influence coefficient of Basic & Efficiency factors based competitiveness is around -3.8, while for the EU15 group, it is about 2.4. Furthermore, research has confirmed a statistically significant influence of Innovation & Sophistication Factors based competitiveness on the decrease in the value of the Gini coefficient in both observed groups of countries; in CEFTA group, influence coefficient is about -8.4, and, in the EU15, the influence is somewhat weaker, and amounts to -5.8.

Measurement of Export Market Concentration for the Largest European Economic Integrations

Abstract Background: By joining different regional economic trade agreements, countries achieve preferential trade liberalisation. There are four main types of regional economic agreements in the world today: free trade area, customs union, common market, and economic and monetary union. Objectives: The goal of this paper is the measurement of the export market concentration for the largest European regional economic integrations in the period between 1995 and 2016. Methods/Approach: Various concentration measures have been used in the measurement of export market concentration, but the emphasis is placed on the standardized Herfindahl-Hirschman index as the basic measure of trade concentration. Results: Results of the analysis have shown that the highest concentration level of trade with countries worldwide is among the European Free Trade Association (EFTA) countries, whereas the EU-15 countries seem to have the lowest concentration level. On the other side, the Central European Free Trade Agreement (CEFTA) countries have the highest concentration level of trade with countries from the same group, and again the EU-15 countries have the lowest concentration level, which indicates that the CEFTA countries implemented deeper integration processes related to mutual intra-regional trade. Conclusions: Deep integration processes led to lower values of export market concentration indices for intra-regional trade among countries of the same regional economic integration in comparison to trading with countries worldwide.

The trade effects of Albania’s trade agreements with CEFTA members

ABSTRACTSince the Central European Free Trade Agreement (CEFTA) was signed in 2006, Albanian exports to CEFTA member countries have increased four-fold. Applying a trade growth decomposition methodology, we show that Albanian firms that did not export to CEFTA countries before the agreement account for a large share of this export growth. Exports also increased among goods that were the least traded before the agreement. Estimating a gravity equation, we find that the CEFTA increased Albanian exports between 34% and 144%, depending on how the previous bilateral agreements with CEFTA countries are accounted for. Additional regression analyses conclude that the CEFTA fostered exports through the reduction of tariffs.

The Effects of Economic Integration on Croatian Merchandise Trade: A Gravity Model Study

The paper shows that Croatia trades more with higher income and closer countries, which is in line with the standard gravity model assumption, and that a strong bias exists towards trade with countries of the former Yugoslavia. In addition, Croatian accession to the European Union proved to affect trade positively. On the other hand, free trade agreements signed with non-EU countries do not have a statistically significant and positive effect on Croatian trade. Although the positive impact of Croatia’s membership in Central European Free Trade Agreement (CEFTA) did not prove to be robust, this could be explained by its strong overlap with the group of countries from former Yugoslavia. Additionally, it was found that the crisis affected the determinants of Croatian exports and imports in different ways and that some disparities exist between trade in goods and trade in goods and services.

WCO Immediate Release Guidelines State of Application in CEFTA

The application of the World Customs Organisation Immediate Release Guidelines (WCO IRG) is pivotal for the expedited movement of goods across borders and the facilitation of trade. Nonetheless, there is no universal application of the Guidelines globally and therefore an uneven standard of trade facilitation exists. With the forthcoming ratification of the Bali Trade Facilitation Agreement (TFA) an opportunity exists for countries and regions alike to not only improve the application of WCO IRG in order to prepare for the TFA, but to stimulate economic growth. Both of these goals mirror aspirations of the Central European Free Trade Agreement (CEFTA) region in a bid to secure EU membership for its members. With the recent implementation of the Union Customs Code and the ratification of the TFA, CEFTA members need to focus on the continuous improvement of customs procedures and processes in order to not only grow economically but maintain a similar standard to their EU counterparts. Using data collected by DHL Express, this article analyses the application of the WCO Immediate Release Guidelines in the CEFTA region. The article is successful in highlighting both areas of strengths and weaknesses for the average CEFTA application in twelve key domains in comparison to the WCO Ideal, the EU and the rest of the world. Through vast experience of the Express Industry the authors are able to suggest achievable methods in order to improve some of these areas of weakness.

Multilateralna dyplomacja państw środkowoeuropejskich przed i po 1989 roku

The article discusses the roles played by multilateral diplomacy of the Central European states. These roles have changed following historical developments. In the interwar period Central European states had to establish their diplomatic services. Important role played at that time multilateral diplomacy within the League of Nations. After the II World War the Central European states were part of the Soviet sphere of influence and multilateral diplomats were active in communist organisations such as the Warsaw Pact and the Council for Mutual Economic Assistance (CMEA). However, multilateral principles such as indivisibility, diffused reciprocity and generalized principles of conduct were not applied. In the UN system and the CSCE Central European diplomats represented interests of Soviet Block. After regaining independence in 1989 Central European states founded regional organisations such as the Visegrad Group and the Central European Free Trade Agreement (CEFTA), as well as acceded Western organizations, such as the Council of Europe, economic and financial organizations (World Bank, IMF, OECD), NATO and the European Union. Today multilateral diplomacy plays important role in foreign services of Central European states.

Central European Free Trade Agreement (CEFTA) 2006 - Opportunities, Trade Relation and Evolution of Macedonian Economic Diplomacy

Main activity in the foreign trade policy of the Republic of Macedonia during the past 10 years was the integration of the country on the Central European Free Trade Agreement – (CEFTA). The reason for this is the expectation that the membership of the Republic of Macedonia in CEFTA will significantly contribute to the continual efforts for strengthening the regional trade cooperation, further liberalisation of foreign trade exchange, and continuation of activities for harmonisation of trade rules with international standards. Additionally, CEFTA 2006 provides a much more comprehensive framework for development of mutual relations and economic cooperation among the countries of South Easte Europe. We will explain the concept of development of economic diplomacy in the Republic of Macedonia as a tool for supporting Macedonian economy. The purpose of these activities is to present the Republic of Macedonia as an attractive destination for foreign investments through the promotion of business advantages, and giving incentive to Macedonian export, as well as through strengthening of the country’s position as a attractive touristic destination.

Incentive, Shock, or Neither?

What are the prospects for European Union accession in Bosnia, a country with a legacy of ethnic conflict and malfunctioning democracy? How might the accession of Croatia to the European Union affect this process? This paper analyses the current state of Bosnian politics through the lens of EU accession and considers the political and economic impact of Croatian accession. A lack of incentive for Bosnian politicians to implement the governmental changes needed for Europeanization—the process of adopting European rules—has created a stagnant and intransigent political climate, one made more difficult by the Bosnian bureaucracy. Ethnic divisions hard-wired into the Bosnian political system by Article IV of the Dayton Agreement make the political costs of Europeanization and institutional reform much higher than those associated with the continuation of ethnicity based parliamentary politics. However, Croatian accession (and the associated process of leaving the Central European Free Trade Agreement) will cause changes to the Bosnian economy, which heretofore has relied heavily on free trade with Croatia through CEFTA. A significant shock to the Bosnian economy caused by Croatian accession could trigger a political response, making Europeanization a viable alternative to the status quo. In order for the economic impact to be translated into politics, there must be an engaged populace willing to push for reform and translate their desire for Europeanization into a political force. Ultimately, I argue that the lack of effective inter-ethnic civil society and political mobilization in Bosnia will prevent significant political movement towards Europeanization, despite any economic discomforts caused by Croatia’s EU accession.

Review of bilateral investment treaties signed by Parties to the Central European Free Trade Agreement (CEFTA) 2006

This paper reviews the content of bilateral investment treaties listed in Annex 6 of the CEFTA 2006 with a view to identifying commonalities and potential gaps. The paper examines provisions on admission and treatment (i.e., national treatment and mostfavoured nation); transfers, expropriation, and dispute settlement (i.e., state-to-state and investor-to-state).

National treatment restrictions in Parties to the Central European Free Trade Agreement (CEFTA) 2006

This paper reviews existing restrictions to national treatment found in Parties to the CEFTA 2006. The review covers restrictions to national treatment such as approval and licensing/screening procedures, equity and other discriminatory measures on establishment, corporate organisation, and transparency measures.

Livestock production: Present situation and future development directions in Republic of Serbia

Livestock production is important branch of agriculture in Republic of Serbia. Over 700.000 households are engaged in this production, which is over 55% of total number of households. Livestock production provides necessary products (milk, meat, eggs) for nutrition of domestic population. Also, livestock production provides raw materials for food industry (dairy plants, slaughterhouses, meat industry, conditory industry and leather industry). Livestock production is expected to provide high quality products for export, primarily beef and lamb meat. Chance/opportunity for export exists also for cheeses of high quality (especially sheep and goat cheeses) of defined origin and quality. Based on available data, current situation in livestock production is assessed as inviolable. Number of heads of all species of domestic animals and poultry has been constantly decreasing over the period of last 12 years. The greatest decrease of number of heads of livestock was recorded in years 2000, 2001 and 2002, in all species of domestic animals. During this period, number of cattle decreased by 18,6%, of pigs by 11,8%, sheep by 12,3%, number of goats by 54,1%, horses by 66,0% and poultry by 28,0%. So, by the end of 2007, number of cattle was 1.087.000, pigs 3.832.000, sheep 1.606.000, goats 149.000, horses 18.000 and poultry 16.422.000. Republic of Serbia will in its near future become member of European Union (EU) and World Trade Organization (WTO), which means that livestock production should prepare for competition on unique developed market, without any state trade barriers. Serbia has been preparing for this since 2006 when it signed bilateral agreement on free trade with neighbouring countries - Central European Free Trade Agreement (CEFTA) and in this way became part of the market and accepted the competition rules on the free market. Accession to EU and WTO includes liberalization of trade in livestock products, low possibility for import protection, implementation of quality standards (HACCP; ISO, Global GAP), reduction of the level of domestic support, discontinuing of export subsidies, increase of profitability and ability to be competitive on the international market.