SERBIA/ BOSNIA-HERZEGOVINA : Two weeks of hectic talks ahead for Serbia and Bosnia in lead up to CEFTA signing.

A trade deal meant to boost economic activity and draw investment to the Balkans risks being severely weakened unless Bosnia and Serbia win concessions from its neighbours on tobacco and food duties in the next two weeks. Officials from the two countries say they are reluctant to sign on to the Central Europe Free Trade Agreement, considered a training ground for states vying to join the European Union, without better protection for domestic industries. Together, the two countries, Serbia and Bosnia, make up half of what will be a market of 29 million people across the region, including Croatia, Macedonia, Albania, Montenegro, Moldova and U.N.-administered Kosovo. Serbia, the largest country, is concerned about its tobacco sector, which has attracted over USD1 billion in investment from companies such as Philip Morris and British American Tobacco. It currently applies a relatively low 15 percent tax on imported cigarettes but protects its own producers by means of high excise duties. "If we stick to what it is, this CEFTA agreement and what is the main request of the other parties and, that is to decrease our excise burden. This will open up our market and it will be in breach of our obligations towards the local producers that we have taken over in 2003," Vlatko Sekulovic of Serbia's negotiating team said. "So, the only compensation that we can offer them, it's essentially the opening up of the markets in the region," Sekulovic said. But to achieve that they must convince Croatia to cut the high customs that protect its tobacco industry. "If we are opening up, then also the other countries have to open up. That is our basic request and we have done and we have made several proposals in that direction, particularly to our friends in Croatia, Macedonia and Bosnia in order to find a solution," Sekulovic said. For Bosnia, the key issue is agriculture. Bosnian farmers have been protesting for months in downtown Sarajevo, saying that unfair trade deals with the neighbours are bringing them to their knees. The farmers say Croatia and Serbia heavily subsidise their food sectors, impose non-custom barriers on Bosnian products and even block Bosnian exports in transit to Slovenia and Macedonia. "I can't go back to my home if our demands are not met. I wouldn't know what to say to my child when I came back," protesting farmer Branko Bilbija said. "All the free-trade agreements signed so far only caused us problems and did us no good. We can't sell our products outside this country," another demonstrating farmer, Toni Cugelj said. Bosnian officials say they are hoping for significant concessions from the neighbours before signing. "We are asking for a higher level of protection of agricultural products, to be more concrete we want to protect our producers of meat and dairy products. It is needed because Croatian and Serbian producers are far more superior in this sector and if we sign the proposed deal there would be no prospects for our producers." said Duljko Hasic of Bosnia's negotiating team. "Our negotiating team cannot go below this minimum. It is a minimal request made by Bosnian negotiating team," Duljko said. The signing ceremony for CEFTA is in Bucharest on December 19, but the deal would go into effect next summer after all countries have ratified it.

ITN Source | December 6, 2006

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