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News 06 Jan 16

EU Suspends Trade Preferences for Bosnia

Bosnian farmers are worried after Brussels suspended free trade arrangements - which means they will have to pay tarrifs once again to export produce to EU markets.

Rodolfo Toe
 Photo: FLICKR

Bosnian farmers will now have to pay tarrifs if they want to export their produce to the EU market after January 1, after Brussels suspended a trade liberalisation deal.

"The European Parliament decided ... to suspend the trade preferences granted unilaterally by the EU to Bosnia and Herzegovina," Zora Stanic, the spokesperson of the EU delegation in Sarajevo, told BIRN on Tuesday.

"These preferences have been officially suspended from January 1 until the EU and Bosnia and Herzegovina have signed and provisionally applied an agreement on the adaptation of trade concessions in the SAA," she explained.

The EU has adopted trade liberalisation agreements with countries in the Western Balkans wishing to join the EU in order to speed up their economic integration.

Trade between the EU and Bosnia has been governed since the signing of an SAA and an Interim Agreement in 2008 by this asymmetric liberalisation.

Since then, Bosnia has enjoyed almost completely free access to the EU market, exporting all categories of products there without fees. Only sugar, wine, fish and baby beef are subject to quotas.

Since Croatia joined the EU in July 2013, however, Brussels has been asking Bosnia to update the SAA in order to take account of traditional economic relation between the two countries under the Central European Free Trade Agreement, CEFTA. This means updating the economic quotas included in the SAA.

So far, however, Bosnia has refused to review the terms of the SAA, claiming that this would damage its economy.

"The EU claims that we will not suffer from an update of the SAA because we have been trading with Croatia in the past. This is true, but Croatia benefits from more European subsidies for agriculture than Bosnia, and in this sense it will be difficult for us to face competition from Croatian produce once we update the SAA," Mirko Sarovic, Minister of Foreign Trade, said on Monday.

The EU is Bosnia's most important trade partner. EU countries accounted for 77 per cent of the Bosnian exports and 60 per cent of its imports in 2015, according to the Statistics Agency.

Bosnian farmers fear the EU's decision to curb trade liberalisation with their country will have a serious impact later in the year after the harvest.

"The EU's decision won't impact immediately on our business because it's winter. But our government needs to find a solution by June or July, when production peaks, or it will become very difficult," Nermin Basic, director of Baso, a company from Velika Kladusa that exports fruits and vegetables to the EU, told BIRN.

"Our politicians are to blame for this situation," Basic said, adding: "It's unbelievable how they did not foresee this problem when they first signed the SAA with Brussels."

"This situation will have a tremendous impact on... producers of fruits and vegetables. The inefficiency of our government is bringing the sector to its knees," Dragi Zujo, director of Agroneretva, a cluster company that groups six associations of Bosnian producers, told BIRN.

"If this situation is not solved quickly, agriculture in Bosnia and Herzegovina is at risk of disappearing," Zujo added.

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