A common market in the western Balkans could help unblock flows of much-needed foreign direct investment, the EBRD’s regional director Holger Muent told GlobalMarkets.
However, the idea, which he said would “not only boost trade between countries but also encourage external investors to come into the region and use it as a base from which to service larger markets” has encountered profound scepticism from neighbours. Albania and Kosovo are expected to push back against what they are fear are attempts by Serbia, the region’s largest economy, to dominate the project.
Although the initiative was announced at a regional summit with the theoretical backing of all six countries, Kosovan prime minister Isa Mustafa took to Facebook to express his scepticism about the project. “The common market is not in the same interest of all countries,” he posted. “I don’t expect Kosovo to be enthusiast about the proposal. We don’t want the past to return to us in different packaging.”
Proposals for a unified market covering the six non-EU countries in the region — Serbia, Bosnia, Montenegro, Macedonia, Kosovo and Albania — were announced in March by the bloc’s commissioner for neighbourhood policy and enlargement negotiations, Johannes Hahn.
Combining the six countries would create a market with a population of 18.3m and GDP of $88.1bn. “The individual countries are very small so it makes sense to look at the whole region as one market,” said Muent.
NEXT STOP — EU
The six states are already members of the Central European Free Trade Agreement, another EU-sponsored project launched in 2006. The initiative has failed to produce the expected boost to intraregional trade and inward investment, however, prompting the EU to launch the new proposals.
Representatives of the EU have also indicated that the establishment of a common market could facilitate the eventual integration of the member countries into the larger bloc.
“What is important is that it is all framed in the context of EU approximation, so it is not a distraction from that process but part of the process,” said Muent. “If these countries become members of the EU that would obviously mean that trade barriers need to be removed, and standards and regulation harmonised.
“There is still a long way to go to accession, particularly for those countries that have not yet achieved candidate status, but providing something along the way that is tangible and makes sense is a positive step.”
Only Serbia, Macedonia, Albania and Montenegro have so far been granted official candidate country status by the EU.
Despite the benefits of integration, however, Muent warned that it would not be easy. “There would be a lot more to do in terms of harmonisation of standards, certification etc.”