Trade in Southeast Europe: recent trends and some policy implications

Trade liberalisation in Southeast Europe (SEE) has been strongly promoted by the European Union (EU) in recent years, as part of its initiatives aimed at stimulating regional cooperation among the SEE countries. The Stabilisation and Association Process launched in 1999 for the five countries of the so- called western Balkans - Albania, Bosnia and Herzegovina, Croatia, FYR Macedonia and Serbia and Montenegro - explicitly requires the implementation of regional cooperation as a condition for speeding up the process of EU integration. In the area of economic cooperation, trade liberalisation has become one of the principal instrument for promoting these objectives. A Memorandum of Understanding on Trade Liberalisation and Facilitation was signed on 27 June 2001 in Brussels by the Foreign Trade Ministers of SEE countries, which envisaged the conclusion of bilateral free trade agreements. The paper analyses recent trends in trade of the SEE countries. Some general features of the SEE region in 1989 are first presented (section 2). The impact of the political and economic events of the 1990s on trade relations among the SEE countries is then considered (section 3). Trade patterns of the SEE countries over the last five years are analysed in some detail (section 4). Some controversial issues raised in recent debates on trade liberalisation in SEE are also discussed, explaining why interpretations sometimes differ (section 5). The main conclusions and some policy implications are given at the end (section 6).