Madrid raises obstacle to Balkans trade deal

Date: 29/06/2000

By Simon Taylor

Spain is fighting EU plans to reduce barriers to trade with the Balkans states which are designed to boost the region's economic development.

Madrid has voiced concern that the proposals drawn up by the European Commission could lead to a big rise in exports to the Union which would harm EU producers.

The package of trade liberalisation measures proposed by the Commission would give 95% of all imports from the Balkans duty-free access to the Union market.

But Spain argues that the concessions should be introduced in stages to reduce their impact on EU firms. "We should establish two temporary quotas with an annual increase in volume," said one official, adding that Madrid wanted Union governments to order a study into the likely effect of the proposed measures on trade flows.

The official stressed that Madrid supported the Commission's aim of assisting the region in overcoming under-development, but had serious misgivings about the impact of the proposed measures.

Spain's stance has been greeted with dismay by the Commission and other member states. "We hope that some member states will see the political importance of this deal as part of moves to help the Balkans," said one diplomat.

Supporters of the package argue that it will have a minimal effect on EU markets as exports from countries in the Balkan region only account for 0.16% of total Union imports. They also point out that the measures contain a number of safeguards to ensure that exporters do not boost their output to take advantage of more favourable trading conditions. Diplomats say a mechanism would be introduced to shut off further trade flows if exports increased massively. They also stress that some quotas would be retained for sensitive goods such as textiles and agricultural products to limit exports from the Balkan states. Certain goods like beef and some fisheries products have been excluded from the liberalisation package altogether in an attempt to win greater political support for the measures.

Although Spain is the only member state which has voiced serious concerns about the Commission's approach, other EU governments have called for more products to be left out of the package. They have expressed fears that it will set a worrying precedent for future trade policy, and could encourage other regions, such as the Mediterranean, to press for the same concessions.

The main aim of the Commission's plan is to help attract foreign investment into the Balkan states, and promote economic and political stability in the region.

The concessions contained in the package would be offered to Bosnia-Herzegovina, Croatia, Albania and the former Yugoslavian Republic of Macedonia. Kosovo would also benefit from the deal, even though it is still technically part of the Federal Republic of Yugoslavia (FRY).

But Montenegro, which is also part of the FRY, would not be eligible for the general trade concessions under the package, although it is being offered the chance to export 50,000 tonnes of aluminium and aluminium products to the Union duty-free in a bid to support the republic's ailing economy.

Spain is fighting EU plans to reduce barriers to trade with the Balkan states which are designed to boost the region's economic development.