2009: Serbia’s Road Map to EU Accession

Unilateral implementation of the Stabilization and Association Agreement?

 The Stabilization and Association Agreement (SAA) between the European Union and the Republic of Serbia was signed exactly one year ago. It is a comprehensive and binding document with clearly defined bilateral obligations. Although the commencement of the SAA ratification process and the concurrent application of the Interim Trade Agreement (ITA) have been awaiting the green light of the EU Council of Ministers, the Serbian government formally started implementing the trade part of the SAA from 30 January 2009. Full cooperation with the International Criminal Tribunal for the Former Yugoslavia (ICTY) in the Hague is a formidable precondition set by the EU. Unsatisfied with the level of such cooperation on the part of Belgrade, the Netherlands have been blocking, so far at least, ratification of the SAA.


SAA’s implementation is highly important for Serbia. Its fundamental economic component is the establishment of a free trade zone between Serbia and the EU. The European Union is not only a market of half a billion of consumers. It is for Serbia, traditionally, its most important trade partner: more than a half of the country’s world trade (56 per cent) is carried out with the EU. If one bears in mind that the Central European Free Trade Agreement (CEFTA) countries, which have the European vocation as well, are second largest export market for Serbia, it is easily deduced that in the future more than 80% of Serbian export will be directed towards the EU member states.

Despite the fact that the EU has not yet started the formal implementation of the SAA, Serbian products enjoy favoured nation status in the European market. Namely, since November 2000 the EU started implementing free trade regime towards Serbia. In other words, Serbian businesses have been paying neither customs nor other duties in exports to the EU countries. The level of thus generated savings is reflected in the fact that Serbian traders would have had expenditures to the tune of 385 million Euros in the previous year, if there was no preferential treatment. It means that in previous eight years, Serbian exporters have saved a total of 2 billion Euros. Owing to this type of treatment for Serbian products and the overall economic reforms implemented in the country, Serbia’s exports to the EU in 2008 has, in comparison to 2001, increased by 265 per cent.

Precise effects of implementation of the trade agreement from Serbian side cannot be evaluated yet, as it has been only four months since the implementation started. Prices of some products have naturally decreased: automobiles and various other equipments. Besides the implementation of the customs union, the current global economic crisis contributed towards the reduction in the prices of industrial products. For the first two months, the loss due to unpaid customs tax for imports from the EU is estimated to be about 10 million Euros. In the same period, the level of direct foreign investment from the European Union has reached the value of 165 million Euros. The investments announced in May 2009, by the Dutch Heineken and VDL, the German Leoni and the Slovenian Merkur are ten times higher than the loss resulting from the elimination of customs duties.

By initialing the SAA, the harmonisation of national legislation with that of the European Union’s has become one of the contractual commitments. Having this in mind, in the last trimester of previous and the first three months of this year, the government of Serbia has adopted seventy two laws which are either directly or indirectly linked with the European integration process. Laws in the field of customs policy, protection of competition, state aid control, public procurement, standards and technical regulations were adopted or amended. In this list, numerous regulations are included aiming at moving Serbia towards the White Schengen list. Inclusion of the Republic of Serbia in this list will automatically grant Serbian citizens the right of visa-free travel within all Schengen Agreement countries.

Simultaneously with the commencement of the SAA implementation, the process of reporting on realisation of the National Programme for Integration (NPI) with the EU has also started. The NPI monitors the legislative reforms essential for the European integration process. The second quarterly report has been recently presented. It demonstrates that from January to March 2009, more than 53% of the planned EU regulations have been adopted.

All in all, the signing of the SAA and the commencement of its implementation are significant steps along Serbia’s European path. This path leads towards more organised, stable and prosperous society. Full EU membership for Serbia remains Belgrade’s prime goal.