If it doesn't adjust its SAA, Bosnia will lose privileges in trade with EU

The European Parliament on Tuesday decided by a majority vote to suspend trade privileges for Bosnia and Herzegovina for its refusal to adjust its Stabilisation and Association Agreement (SAA) with the EU to make it reflect the fact that Croatia has become a member of the European Union.

If Bosnia and Herzegovina does not agree to adjust its SAA, as of 1 January 2016 autonomous trade privileges will be suspended until the SAA is adjusted. Bosnia and Herzegovina, juts like other countries in the Stabilisation and Association Process, has an asymmetrical trade regime with the EU which makes it possible for it to export, free of customs duties, primarily some agricultural products.

The head of the European Parliament's delegation for relations with Bosnia and Herzegovina, Tonino Picula of Croatia's Social Democratic Party, welcomed the European Parliament's decision, stressing that all the other member-countries of the Central European Free Trade Agreement (CEFTA) had adjusted their SAAs to Croatia's membership of the EU.

"Croatia had to do the same thing when Slovenia and Hungary joined the EU in 2004. Besides, the decrease in our agricultural exports to Bosnia and Herzegovina since 1 July 2013 has not been compensated for by other export markets because an alternative to the products in question cannot be found in a short period of time," Picula said after the vote.

At the time when Croatia joined the EU, Bosnia and Herzegovina was its second most important export market and its most important market for its agricultural exports. Back in August 2013, Picula asked the European Commission which measures it planned to take to preserve the trade volume between the EU and CEFTA member countries after Croatia's accession to the EU.

By leaving the CEFTA market, Croatia has temporarily lost the right to privileged customs rates. This has mostly affected the domestic food industry and agricultural producers since they export 45% of their products to Bosnia and Herzegovina. Croatia's EU membership has led to a change in export conditions and since 2014 full customs duties are applied to the 20 most important Croatian agricultural and food products.

Bosnia and Herzegovina Foreign Minister Igor Crnadak confirmed on Tuesday that his country was ready for an agreement with the EU on the adjustment of the temporary trade agreement and wanted a compromise that would enable its full application to Croatia as well.

"Bosnia and Herzegovina has new positions and the European Commission, too, is ready to talk," Crnadak told reporters ahead of a meeting with representatives of the country's parliamentary parties at which joint activities were to be agreed with regard to the country's European integration.

Bosnia and Herzegovina plans to submit an EU membership application soon and for the application to be assessed as credible, the country will have to agree to the adjustment of its SAA based on the principle of traditional trade.

So far Bosnia and Herzegovina has been the only country refusing to accept the principle of free trade, which is applied in all talks when the EU concludes, after each enlargement round, additional protocols to existing trade agreements with third countries.

Since the SAA between the EU and Bosnia and Herzegovina is asymmetrical, granting Bosnia and Herzegovina privileges in trade with the EU, the Bosnian authorities earlier tried to use it also for trade with Croatia after its EU accession, which has caused significant damage to Croatian exporters, who, at the time when Croatia was part of the CEFTA, could export their products customs-free to all countries of that free trade zone. That is why the principle of traditional trade was introduced so that countries that join the EU do not suffer damage because of their changed status.

Last update: Wed, 16/12/2015 - 12:33

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