The European Commission has today welcomed the entry into force of the Interim Agreement (IA) with Bosnia and Herzegovina.  The IA effectively creates a free trade area, with progressive opening of the market of Bosnia and Herzegovina facilitating economic and social development.   The two sides signed the Stabilisation and Association Agreement (SAA) and the IA on 16 June in Luxembourg. Until the ratification process is finalised the trade provisions of the SAA are applied through the IA. 

EU Trade Commissioner Peter Mandelson said:  “Trade is a key element of EU policy in the region and an important driver of development. The free trade area will create economic opportunity and will attract more European investment to Bosnia and Herzegovina.” 

Enlargement Commissioner Olli Rehn added: “The entering into force of this Agreement is a further proof of the EU’s commitment to the European perspective of Bosnia and Herzegovina. It will enhance economic development in the country. Its successful implementation is the gateway to candidate status.”

The agreement allows free access to EU markets for almost all goods from Bosnia and Herzegovina, which in turn will gradually open its market to the European products and services.  Bosnia and Herzegovina will also introduce standards from the EU, progressively aligning its legislation in a number of areas such as competition, intellectual property, investment, public procurement or protection of personal data.  This process will facilitate economic and social development in Bosnia and Herzegovina and will encourage proceeding with further economic reforms. Finally, the institutional set-up foreseen in the SAA/IA will constitute a forum of extensive dialogue and cooperation in trade related matters and beyond.

The latest Commission Communication on Western Balkans from 5 March 2008 notes that the region has a clear European perspective. In this regard, a successful implementation of the IA and SAA is a key and essential factor in assessing Bosnia and Herzegovina’s readiness to further advance relations with the EU.

Background

The EU is Bosnia and Herzegovina’s biggest trading partner, with total trade of around 5 billion euros in 2007.  In 2007, imports coming from the EU made up 66.7% of total imports by Bosnia and Herzegovina, while exports to the EU accounted for 71.4% of its total exports. In 2007, EU imports from grew by 6.1% year on year to reach over 1.8 billion euros, while exports to Bosnia and Herzegovina grew by 8.3%, reaching over 3 billion euros.

For more information on EU Trade policy see: http://ec.europa.eu/trade/ or contact Peter Power +32 498 98 03 48 or Michael Jennings +32 498 98 68 80

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Brussels, 1 July 2008

Fact Sheet:  EU-Bosnia and Herzegovina Stabilisation and Association Agreement and Interim Agreement

Trade policy plays an essential role in the EU’s overall strategy towards the Western Balkans. It is based on four pillars:

• Autonomous trade preferences (ATMs), allowing duty free quota free access to the EU market for almost all products originating in the beneficiary countries and territories;
• Creation of bilateral free trade areas as part of the Stabilisation and Association Agreements (SAAs);
• Support for regional trade integration;
• Support for WTO membership.

With regard to trade in goods, the aim of the SAAs is to progressively establish a free-trade area between the EU and the countries of the region, on the basis of reciprocity, but in an asymmetric manner. The EU has already very largely liberalised its import trade with these countries through the ATMs, so the SAA takes over the EU autonomous trade preferences with the country in question while providing for a gradual opening of the market of the latter to EU products.  Pending the ratification of the SAAs by all the Member States the trade provisions enter into force through an Interim Agreement (IA).

Two SAAs are currently in force: with the former Yugoslav Republic of Macedonia (entry into force on 1st May 2004) and with Croatia (entry into force on 1 February 2005). The SAA with Albania was signed in June 2006 and the IA on trade and trade-related matters entered into force on 1 December 2006. The SAA and IA with Montenegro were signed on 15 October and the IA entered into force on 1 January 2008, the ones with Serbia were signed on the 29 April in Luxembourg. The SAA and IA with Bosnia and Herzegovina were signed on 16 June 2008 and the IA entered into force 1 July 2008.

SAA negotiations with Bosnia and Herzegovina

On November 2005, the General Affairs and External Relations Council adopted a negotiation mandate on a Stabilisation and Association Agreement with Bosnia and Herzegovina. The negotiations went fast and were concluded on December 2006 and on 16 June 2008 the signature of the SAA and IA took place in Luxembourg. The agreement provides for the creation of a free trade area within maximum 5 years since the entry into force of the IA.

EU-Bosnia and Herzegovina Trade

• The EU is Bosnia and Herzegovina’s biggest trading partner, with total trade of around 5 billion euros in 2007.  In 2007, EU imports from grew by 6.1% year on year to reach over 1.8 billion euros, while exports to Bosnia and Herzegovina grew by 8.3%, reaching over 3 billion euros. EU products made up 66.7% of total imports by Bosnia and Herzegovina’s, while its exports to the EU accounted for 71.4% of the total.
• The EU exports to Bosnia and Herzegovina mainly: machinery and transport equipment (28.3%); manufactured goods classified chiefly by material (22.4%); chemicals and related products (12.2%); miscellaneous. manufactured articles (10.6%).
• The main imports from Bosnia and Herzegovina to the EU are: miscellaneous manufactured articles: (29.3%); manufactured goods classified chiefly by material (24.3%); machinery and transport equipment (18.9%); crude material inedible, except fuel (13.9%).

For more information on EU Trade policy see: http://ec.europa.eu/trade/ or contact Peter Power +32 498 98 03 48 or Michael Jennings +32 498 98 68 80