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Staša Košarac, Minister of Foreign Trade and Economic Relations of Bosnia and Herzegovina: Opening new markets is a priority


Improving the economic and business environment, implementing development projects and intensifying reform processes, as well as establishing connections in the region, are the best way to attract foreign investments

Regional cooperation is key to overcoming unresolved issues and continuing the Western Balkans’ accession into the European Union. This cooperation is also the driving force behind economic development and can certainly save the economies of our countries, especially after the COVID-19 pandemic. Serbia is one of the most important external trade partners of Bosnia and Herzegovina in terms of trade volume. In the last few years, the Republic of Srpska and Serbia have had very fruitful cooperation.

What position does Bosnia and Herzegovina occupy in terms of economy and relations with other Western Balkan countries?

The coronavirus-induced crisis has demonstrated the importance of regional cooperation, socio-economic interdependence of regional economies, but also the need for further strengthening of ties, both in the Western Balkans and with the European Union.

At the onset of the pandemic, during quarantine, the CEFTA member countries agreed to establish the so-called green corridors, thanks to which vital products from the joint list passed the border crossings between our countries quicker. This is one of the important successes in the fight against the pandemic and the best example of regional cooperation.

It is in our best interest to actively seek and create conditions for as many facets of cooperation as possible in order for our economies to recover. Further economic integration creates an opportunity for faster development of the domestic economy, not only in terms of trade but also in terms of creating prerequisites for the development of a more competitive economy and bridging the gap between our economies and the more developed economies of the EU and the world.

Ultimately, the regional market is extremely important to us, because, after the EU, we export the most to the CEFTA countries. I would also like to say that, in the first six months, 16.3 percent of Bosnia and Herzegovina’s exports ended in the CEFTA countries. We exported goods worth more than a billion BAM to this market, which was a 29.6 percent growth relative to last year.

Last year was challenging for all countries. This year has brought a recovery. What is the situation in Bosnia and Herzegovina in terms of economic recovery?

Official data show that our country is recovering and continuing to grow economically. In the first six months of 2021, the total volume of external trade increased by 23.6%, or 3.14 billion BAM compared to the same period last year. In the observed period, exports amounted to 6.65 billion BAM and are higher by 30.53% compared to the same period last year.

The business community in the Republic of Srpska and the Federation of Bosnia and Herzegovina are still facing numerous difficulties and remediation of the consequences of the coronavirus, but we have still managed to record an increase in exports from January to June this year. It is especially encouraging to see that, in the first six months of 2021, we exported more goods than in the previous five years together.

„The Republic of Srpska and Serbia have fraternal relations and specialities, not to the detriment of the other two nations in Bosnia and Herzegovina“

Opening of new markets and boosting regional cooperation are high on my list of priorities because we need to perpetuate the trend of export growth, contribute to the economic recovery and protect domestic production. I think that Bosnia and Herzegovina joining the Open Balkans initiative is an exceptional opportunity for the realization of that goal because regional connection means a better economic perspective for all the countries in the Western Balkans. The regional economic zone will facilitate trade in both goods and services, as well as ensure the free movement of people and capital, and contribute to greater economic growth, thus reducing unemployment and attracting investments.

What should Bosnia and Herzegovina do to increase FDI influx?

We need to act much stronger and more concretely to attract foreign investors. This is a basic task that needs to be adequately solved in the coming period. We currently have a traditional approach and we need a step forward. It is very important to define the top sectors that need investments in the Republic of Srpska and the Federation of Bosnia and Herzegovina, after which we need to invest additional efforts to create an environment for the development of these sectors.

I am pleased to say that there are concrete proposals from the relevant local and federation bodies in this context, and the Ministry I head will certainly coordinate all these activities. One of the priorities is to establish and properly operate free business zones because they are a development opportunity for the domestic economy, new investments, new jobs, and higher external trade.

In this regard, I recently initiated amendments to the Law on VAT, to create prerequisites for companies to be exempt from paying VAT on their utility bills, such as electricity, water, gas and waste disposal, which are all used in the production of commercial goods in free zones. At the same time, this initiative is important because it will bring existing and future free zones in the Republic of Srpska and the Federation of Bosnia and Herzegovina on an equal footing with free zones in the region, offering equal benefits to foreign investors, which is the goal of establishing free zones.

We recently had a successful meeting in Jahorina with representatives of the Pirot Free Zone from Serbia and arranged a visit to exchange experiences and map future steps, as certain local communities have already expressed serious interest in doing so.

You recently announced Bosnia and Herzegovina’s membership in the WTO. How will the membership benefit the economy, and what will it mean for the country?

A full-fledged membership in the World Trade Organization is an absolute priority of Bosnia and Herzegovina’s Ministry of Foreign Trade and Economic Relations during my current terms in the office, because it brings many benefits for the domestic economy, primarily from the aspect of easier access to foreign markets under equal conditions. Membership in this association would enable producers in Bosnia and Herzegovina to more easily enter markets where they are not present at the moment. It is also important for consumers given the fact that a significant number of products could be sold in Bosnia and Herzegovina at lower prices.

Therefore, after many years of stagnation, we have managed to finalize the key steps so that we could become a member of this global association at the WTO General Assembly on November 30.

„The EU is an extremely important external trade partner for us and we strive to enter its huge market of 500 million potential consumers“

In terms of multilateral negotiations on Bosnia and Herzegovina’s external trade regime, the issue of the so-called right to trade remains open, which needs to be harmonized with the USA. Since Bosnia and Herzegovina’s position, in this case, is fully harmonized with the EU, we expect that the United States will adequately treat the harmonized position of our country and the EU and that we will manage to find a compromise solution with the Americans.

So far, we have concluded bilateral negotiations and signed protocols with 17 WTO member countries, and progress has been made in negotiations with the Russian Federation. In order to complete the final phase of bilateral negotiations with the Russian side, we need to pass a decree on the quality of petroleum liquid fuels in Bosnia and Herzegovina. The Ministry has already drafted the text of this decree, for which we received the support of the Energy Community. The adoption of the decree will create the possibility for us to join the WTO by the year-end.

How would you rate the overall cooperation between Serbia and Bosnia and Herzegovina, as well as the cooperation between the Republic of Srpska and Serbia?

In the first six months of this year, we exported goods worth 732 million BAM to the Serbian market, which is a 32% increase compared to last year. Imports from Serbia increased by 20% in this period and amounted to 1.42 billion KM.

The Republic of Srpska and Serbia have fraternal relations and specialities, not to the detriment of the other two nations in Bosnia and Herzegovina. The Republic of Srpska and the Serbian people are looking forward to Serbia’s progress and success in all fields.

I am encouraged by the excellent relations between the Serbian member of Bosnia and Herzegovina’s Presidency, Milorad Dodik, and the President of Serbia, Aleksandar Vučić, and the productive cooperation between the two governments. I completely agree with President Dodik’s assessment that the Republic of Srpska and Serbia have had the best cooperation in the last few years. Every day, Serbian leadership validates the fact that cooperation with the Republic of Srpska is one of Serbia’s priorities.

This is demonstrated by economic and infrastructural projects, such as the Buk Bijela hydroelectric power plant, the construction of the Belgrade-Banja Luka-Sarajevo motorway and the construction of Trebinje Airport. Today, the Republic of Srpska and Serbia celebrate many common holidays and are working together to preserve the Serbian identity through a joint school curriculum, the same language and culture.

There is always room for improving and boosting economic cooperation because establishing stronger links with Serbia is of special interest to us. The Republic of Srpska and its officials in the Federation’s bodies are fully supportive of the Open Balkans initiative. It is an opportunity for the Western Balkans to achieve prosperity and it provides a stable basis for attracting investments, facilitates higher economic growth and reduces unemployment in the region. The fact is that Bosnia and Herzegovina has not yet joined this regional cooperation initiative due to the obstruction of some political structures from the Federation of Bosnia and Herzegovina. This is an inexplicable policy, because of which, unfortunately, the business community from the Republic of Srpska and the Federation will suffer.

Regardless of the unfounded opposition from the Federation of Bosnia and Herzegovina, I welcome the readiness shown by presidents Dodik and Vučić for talks on the possibility of bringing the Republic of Srpska closer to the Open Balkans initiative, because our citizens, as well as the entire business community, will benefit from it.

What areas have you been focusing on in 2021? Maybe regional cooperation and economy?

Protecting domestic production, opening new markets and boosting regional economic ties are the focus of my work during my term in the office. In the previous answer, I intentionally underlined the Open Balkans initiative, because it facilitates competitiveness by moving towards EU standards, which will reduce the structural imbalance of the Western Balkans and the EU, as well as fulfilling obligations from the EU accession process, which is the main foreign policy goal of the Western Balkan countries, including Bosnia and Herzegovina.

„Protecting domestic production, opening new markets and boosting regional economic ties are the focus of my work during my term in the office“

The EU is an extremely important external trade partner for us and we strive to enter its huge market of 500 million potential consumers. However, the fact that the concentration of our exports to the EU stands at over 74 percent tells us that we must be careful because a possible market disruption could cause difficulties for our business community.

To prevent such a scenario, we are continuously conducting activities on opening new markets for domestic products. I think that Russia, China, Malaysia, Israel, Kuwait, the United Arab Emirates and Saudi Arabia represent an exceptional opportunity and additional incentive for the development of domestic agricultural capacities, especially in terms of exports of red meat, as well as poultry, fish, milk and dairy products. I think that we need to ensure stability and accelerated progress of domestic export-oriented companies.


Source: diplomacyandcommerce.rs


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