_ Eurasian Studies. Munich, 9 September 2019.
The European Union called on Serbia to refuse to sign a free trade agreement with the EAEU, declaring that it contradicts its plans for EU accession. Thus, Brussels made it clear to Serbia that it was unlikely that it would be possible to sit on two chairs. In Belgrade, they object to the response that, before joining the EU, they have the right to conclude such agreements with any countries. Nevertheless, soon Serbia will have to decide and coordinate its foreign policy with the EU, including with regard to Russia.
An urgent appeal to Serbia to refuse to sign a free trade agreement with the EAEU was made by the EU foreign ministers, who gathered in Helsinki at the end of last week. So they reacted to the meeting of Serbian President Alexander Vucic, which happened the day before in Belgrade with the new Russian ambassador Alexander Botsan-Kharchenko where they announced that an agreement between Serbia and the EAEU will be signed on 25 October 2019.
The common opinion of European ministers was expressed by the Minister of Foreign Affairs of Slovakia Miroslav Lajcak.
“You cannot simultaneously move in several directions,” Mr. Lajcak advised the Serbian leadership. “If your orientation towards Europe is serious, then make decisions that bring you closer to it. You can’t say anything about this decision (to sign an agreement with the EAEU). ”
And in the office of the head of the EU diplomacy, Federica Mogherini reminded that, although today Serbia can conclude agreements with any countries, during the negotiations on accession to the European Union, it “pledged to withdraw from all free trade agreements at the time of entry.”
The EU call for Serbia was a new warning from Brussels about the unacceptability of the two-seat policy in relations with the West and Russia, which the Serbian President Alexander Vučić is trying to pursue. They have repeatedly reminded the leadership of Serbia who its main partner is: the EU accounts for more than 60% of the Serbian foreign trade turnover, Russia accounts for less than 7%, and the volume of European investments in Serbia is many times higher than Russian.
Interviewed Serbian experts are convinced that the agreement with the EAEU will not bring Serbia any special economic dividends. Belgrade already has similar agreements with three of the five members of this Union – Russia, Belarus and Kazakhstan – and the inclusion of Armenia and Kyrgyzstan in them will not fundamentally change the situation. Moreover, the vast majority of Serbia’s trade with EAEU members falls on Russia, with which Belgrade signed a free trade agreement back in 2000.
“The agreement with the EAEU is not significant for Serbia,” said Dragan Djukanovic, head of the Belgrade Center for Foreign Policy.
Therefore, experts regard the upcoming signing of this document as Serbia’s attempt to push the European Union to accelerate its European integration process: they say that if the movement towards the EU slows down, we have an alternative in the east.
The warning from European ministers that the agreement with the EAEU is contrary to Serbia’s plans for EU integration was considered illegal in Belgrade. “When the moment comes for Serbia’s accession to the European Union, we will have to respect all its decisions and will not be able to have free trade agreements with other countries. But it will be at the moment of entry, and it’s not at hand, ”said the Minister of Foreign Affairs of Serbia Ivica Dacic.
Indeed, according to the new EU enlargement strategy adopted in February last year, Serbia will be able to join its ranks no earlier than 2025. However, in the course of negotiations on accession, Belgrade will very soon have to start a dialogue with Brussels on chapter 31 on foreign and defense policy. And then Serbia will either have to join the EU’s policy towards Russia, including on the issue of sanctions, or say goodbye to plans for a European future. In the second case, the question of withdrawing from the agreement with the EAEU will disappear by itself.
The EAEU-Serbia FTA agreement provides for a duty-free export regime for an unlimited number of brandy, semi-solid and hard goat and sheep cheeses, as well as annual customs quotas for the export of vignac (about 90,000 liters of this drink), 2,000 tons of cigarettes and 400 tons of semi-hard and hard cow cheeses. Since Serbia supplies duty-free about 99% of its goods to Russia, Belarus and Kazakhstan, and new measures will help to enter the markets of Kyrgyzstan and Armenia.
The list of priority export items also includes meat, some types of cheese, white sugar, sparkling wine, cigarettes, ethyl alcohol, pneumatic tires, yarn and cotton fabrics, refrigeration
There are certain positive trends in 2019, as imports from Russia increased by 26% in the first half of the year (trade with other EAEU countries was very modest). Serbian exports to Russia remained virtually unchanged over the same period (down 3%). If these trends continue, imports will amount to 2.2 billion euros throughout the year (almost 9% of the total volume of Serbian imports), while exports in 2019 will amount to 840 million euros (which is 5.2% of the total volume of Serbian exports).
There were two critical moments in the development of Serbian trade with Russia. After relatively stable periods amounting to about 5% of Serbian exports and about 15% of total Serbian imports in the period 2000-2008. (which amounted to a strong average growth of about 20% annually), Russia’s share in Serbian trade fell sharply in 2009.
Another shock occurred after the 2014 war in Ukraine: exports to Russia in 2015 fell to 653 million euros (5.3% of the total). After this year, Serbia has seen an upward trend in Russian trade, especially with respect to imports from Russia, despite a sharp drop in Russian imports caused by a strong depreciation.
After this year, in Serbia, there has been a tendency to increase trade, especially regarding imports from Russia, despite a sharp drop in demand for Russian imports, caused by a strong depreciation of the ruble.
Sanctions against Russia and especially against agriculture in the Russian Federation created a big “hole” in the EU market. The export value of Serbian agricultural products doubled from 2012 to 2018, reaching $ 317 million this year. Nevertheless, this is still a small part of Serbia’s total agricultural exports, although its share in the Russian Federation increased (from 7.2% in 2012. up to 13.1% in 2018). In addition, Serbian exports of other goods to the Russian Federation declined over the same period.
In 2014, Belarus entered the top 20 Serbian trading partners, accounting for 0.5% of total exports (54 million euros) and 0.4% of total imports (64 million euros), respectively.
Under the agreement, Serbia is expanding the number of states with which there has not yet been a free trade agreement – Armenia and Kyrgyzstan. Also expanding the list of products in duty free mode. Now Serbian producers will be able to supply all types of sheep and goat cheese to the markets of these five states, and an additional 400 tons of cheese made from cow’s milk. Already, two-thirds of cheese exports go to the Russian market. Duty-free deliveries in unlimited quantities of all types of fruit brandy (hard alcohol distillate) also become possible, which means a lot to home producers. Here, 90 thousand liters of vignac (the Serbian analogue of cognac) and 2 thousand tons of cigarettes. As a result, Belgrade plans to increase exports to the EAEU markets to $ 1.5 billion in two or three years.