Liberalisation of Foreign Trade

Economy ahead of Politics

Seven Balkan countries, despite still burdened political relations, primarily of members of former Yugoslavia, are turned towards mutual economic cooperation. If politics fails to follow the economic necessity, Balkan will be threatened by an even greater economic standstill, increase of indebtedness and endangering of social peace because of the inevitable increase of the number of the unemployed.

AIM Belgrade, May 18, 2001

By amending the law on customs and foreign trade passed by federal parliament, Yugoslav government focused its attention on creation of conditions for economic cooperation with the world, but primarily with the countries of the Balkan. The existing regulations have also been liberalised when conditions for export and import are concerned. In the Law on Customs Tariffs instead of the previous 38 different rates applied in customs clearance, their number was reduced to only six.

Instead of importing quotas which enabled introduction of administrative measures in foreign trade and in this way opened the possibility for various privileges, importing was exempt from interference of state agencies and their role was reduced to issuing decisions. These economic moves preceded political steps, but the level to which they are open to economic cooperation will condition to what extent the Balkan countries, primarily the members of former SFRY, will resolve their political relations and disentangle unsettled accounts.

The reform of legislature which refers to foreign trade and customs was also the pre-condition for application of free trade between seven Balkan states with the intention to abolish customs at the borders of Balkan countries in a foreseeable future, official estimates speak of the period of five years. This refers to Croatia, Bosnia & Herzegovina, Yugoslavia, Albania, Macedonia, Romania and Bulgaria. About 50 million people live in them, and that is a respectable market which enables accelerated development of these countries and it can bring them in due time closer to the achievement of the main goal – joining of the European Union.

Economic cooperation of Balkan countries which is also advocated by the European Union, is the test of the extent to which democratically established authorities are ready to make the Balkan instead of the powder keg a zone of cooperation. Adjustment of legislature is the first step with which the Balkan countries are expected to show whether they are ready to apply for the European “maturity test”.

The parliamentary debate which accompanied the amendment of the mentioned laws in the federal assembly showed that there are sceptics who believe that Yugoslav economy in view of the state it is in, is not capable of opening towards foreign competition. The warning came from among the opposition, in fact the parties which while they were in power, favoured self-isolation. Such approach that protected Yugoslav economy from foreign competition disabled it and made it impossible for it to count on a good result in economic competition. Yugoslav government bravely reduced the existing customs protection from the previous 15 to 10 per cent, with the intention to reach an agreement on free trade with other Balkan states in the foreseeable future. So far such an agreement exists only with Macedonia. During the mass visit to Belgrade of entrepreneurs from Croatia it was suggested that a similar agreement be reached by these two states, but political conditions are still below the level required by the economy.

There are still unresolved issues between Yugoslavia and Croatia, which burden mutual political relations. Among the major ones are the division of former joint state, the appeal of Croatia for war indemnity, and return of refugees. And while in Croatia they still do not know who to entrust with the post of the ambassador in Belgrade because the policy towards Yugoslavia has not been defined to the end, entrepreneurs of the two states have already exchanged visits, and some companies are already knocking at the door of their neighbours' market.

Due to the suspended economic relations between Serbia and Croatia, the social product of which amounted to two thirds of the total produced value in the former joint state, the existing highway between Belgrade and Zagreb the construction of which cost more than two billion German marks, was turned into a dead capital because nowadays there are on it less than one per cent of the vehicles that moved along it before the country dissolved. The railroad is in a similar situation along which freight and passenger trains used to pass every three minutes.

Political authorities fear that economic opening could serve for integration of the “higher order” so they are restraining their economies from greater cooperation. Fear that opening will hinder their economies is an unconvincing pretext for economic experts because the two economies are approximately equally developed, so if such economies are afraid of each other, how badly should they fear those who are a few decades ahead of them.

Balkan states belong among the most indebted countries, and their development is conditioned by new loans. With production that would rely only on the local market they drastically reduce their possibilities to pay back the loans and thus create the space for further increase of their debts. In this way economic conditions will affect political independence, so it turns out that, as the well-informed estimate, by hindering economic cooperation political authorities are cutting the bough they are standing on, especially because internal discontent of a large number of the unemployed is stirred up. Only in Yugoslavia about 40 per cent of the working population do not have a permanent job.

At this moment Serbia is preserving peace thanks to foreign support in donations, but if the new authorities “forget” that economic revival is the number one task discontent among the population will be a constant threat of an open conflict. Economic circumstances in other Balkan states are not much better than the Yugoslav.

Ratomir Petkovic

(AIM)