Support to regional economic integration

General Overview 

An important requirement in the process of EU accession of the partner economies of the Open Regional Fund for South-East Europe – Foreign Trade (ORF FT) is the implementation of CEFTA.

Besides its efforts to eliminate tariff and non-tariff barriers to trade among its Parties, the agreement is constantly expanded, the latest additions being the Additional Protocols 5 and Additional Protocols 6 (AP5 and 6). In addition, the Western Balkan economies agreed on the  Common Regional Market Action Plan (CRM) in 2020, which includes concrete measures for advancing economic cooperation based on the four freedoms: goods, services, capital, and people.

The projectSupport to Regional Economic Integration is a direct contribution to the implementation of the reform agenda for trade and competitiveness in CEFTA in line with the requirements of the EU approximation process. It is committed to creating a transparent and safe regional environment for businesses by facilitating trade and improving trade in services. It also specifically targets the quality infrastructure systems by aligning them with the EU acquis in selected sectors and strengthens regional cooperation on inter – party e-commerce.

Why is this important?

There is high potential for increased trade and competitiveness in the region, but the legal and economic framework still lags behind the commitments of regional agreements, leading to slow harmonization of trade-related laws and regulations with EU standards and persistence of legal and administrative barriers for companies.

The project aims to provide support to the CEFTA structures in their efforts to further deepen regional economic integration and alignment with the EU acquis. In a transparent and fair business environment it is easier for companies to trade and flourish.

Focal areas of the project

Trade facilitation

Within the first component, the project supports the CEFTA structures in implementing recognition arrangements for Authorized Economic Operators programmes and other trade related documents, thereby significantly easing trade procedures for companies. In addition, the project contributes to establishing an integrated risk management system between customs and other agencies at the crossing points, which will allow these agencies to lower their inspection rates while simultaneously ensuring the necessary security controls within CEFTA.

Private sector involvement constitutes an important element of the project. Businesses monitor the implementation of agreed reforms and are directly involved in shaping new procedures with direct suggestions and inputs. By reporting on their experience in conducting trade in the region, they give direction to the reform efforts for simplified trade procedures.

Implementation of the supported trade facilitation reforms will ultimately lead to significant time and cost savings for companies, thereby enhancing intra-regional trade and contributing to a more reliable and competitive regional economic area. 

Trade in services liberalization

The second part of the project supports public and private actors in implementing regional agreements relating to trade in services, in particular the CEFTA Additional Protocol 6. Liberalization of service trade should facilitate further economic integration and encourage companies to trade on the CEFTA Parties’ markets. The project offers expertise and solutions to support economic integration and enables recognition of specific licenses and professional qualifications. Both private and public sectors have important roles to play in the implementation of regional agreements on trade in services, and the project enables them to foster cooperation and increase regulatory transparency. Through training and coaching sessions offered by the project, all CEFTA contact points for trade in services will gain valuable knowledge and skills for their everyday work.

Benefits

Practical implementation of the AP5 and AP6 to CEFTA and the Common Regional Market Action Plan will not only make procedures at the crossing points simpler and faster, but will also contribute to the promotion of trust and transparency between the CEFTA Parties and enhance the partnership between customs and the business community. The active involvement of the private sector in an effective public-private dialogue improves good governance and policy decision-making as a balance between the public and private sector’s interests.

By supporting governmental agencies in streamlining procedures necessary for trading goods and services in the region, the ORF FT contributes to creating a more favorable business environment. AEOs enjoy preferential treatment at customs, which gives them concrete benefits in terms of reduced bureaucracy and saving time. Through the work of the ORF FT,  enterprises and founders benefit from a harmonized legal framework in CEFTA, which, consequently might redirect resources to further business development and contribute to the economic growth and job creation in the Western Balkan economies.

In a nutshell, the ORF FT aims to:

  • Implement regional agreements on trade in goods and services;
  • Speed up the trade in goods and services across the region through less red tape and reduced costs;
  • Provide for the recognition of certificates obtained in all Parties;
  • Develop and implement a regional approach to the joint risk assessment of goods at customs;
  • Enhance integrated risk management where customs and other governmental agencies join efforts to detect risky goods at the crossing points;
  • Foster the modernisation of trade procedures through an informed private sector and effective public sector;
  • Engage the private sector to design common regional positions;
  • Get ready to benefit from trade relations with the EU.

The project Support to Regional Economic Integration” is co-financed by the European Union (EU) and the German Federal Ministry for Economic Cooperation and Development (BMZ) and implemented by GIZ, Open Regional Fund for South-East Europe – Foreign Trade.

Supporting Regional Electronic Commerce in CEFTA

The value of electronic commerce, as one of the key drivers in economic development, is growing constantly in the region and is, therefore, one of the project’s key intervention areas for deeper regional integration and cooperation. Regional e-commerce brings enormous opportunities for economic and social development by fostering innovation, introducing new trade models and consumer trends, and creating new job opportunities. To unlock the potential of e-commerce within the region and meet the growing demand for intra-regional e-commerce, the CEFTA parties agreed to cooperate on improving the framework conditions for regional e-commerce. As the new driving force, rapidly growing e-commerce brought about various challenges for stakeholders from the public and private sectors: customs and other relevant government agencies have to ensure not only rapid release and clearance of goods but also manage risks and collect revenues. Traders on the other hand have to manage their businesses processes online and meet requirements for exporting or importing goods.

In order to support these processes, the project addresses the main challenges at two levels: at the level of the regulatory framework and the level of the private sector. In the first area, it tackles alignment of the rules and procedures within CEFTA with the EU acquis communautaire, while in the second it encourages companies to engage in regional e-commerce activities.

Companies will be provided with information about the trading environment in the Western Balkans on a regional e-commerce platform. Additionally, the project will support introducing a regional trust mark based on EU best practices, which will assure consumers that an e-commerce provider from another CEFTA Party complies its operations with the same defined standards.

A growing regional e-commerce market holds the potential to create more jobs. All the activities within the project are directed towards that goal of supporting job creation by facilitating trade in goods and services and establishing a functional regional e-commerce market. Through a safe legal basis, as the same conditions will apply regionwide, the private sector will be encouraged to engage more in the regional e-commerce business. These processes will enable them to become familiar with features of the European electronic market whose rules and regulations have been transposed to the region.

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