Open Regional Fund for South-East Europe – Foreign Trade

Project description

Title: Open Regional Fund for South-East Europe – Foreign Trade Promotion
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Countries: Albania, Bosnia and Herzegovina, Kosovo, Macedonia, Montenegro, Serbia
Lead executing agency: Regional Cooperation Council (RCC)
Overall term: 2006 to 2020

Open regional funds for South-East Europe – foreign trade promotion: One-stop-shop information system on trade facilitation © GIZ

Context

The South-East European countries taking part in the Open Regional Fund for Foreign Trade Promotion all aspire to become EU members. An important requirement for EU accession however is the implementation of the Central European Free Trade Agreement (CEFTA) which these countries – and the Republic of Moldova – signed in 2006. The objective of the agreement is to eliminate tariff and non-tariff trade barriers and so facilitate the movement of goods. While there has been visible progress in CEFTA implementation over recent years, there is still quite a way to go before all the targets which are set out in the agreement will have been reached. Also, several countries are making very slow progress in harmonising their regulations with EU trade standards and directives. As a result, legal and administrative barriers continue to obstruct trade. Also important for the trading environment are demand-oriented services for companies. However, the current range of trade promotion services falls short of the needs articulated by the relevant export-oriented businesses. Thus, both the legal and the institutional frameworks are not sufficient for boosting regional and international trade and, in many areas, they still fail to comply with EU convergence criteria.

Objective

The project aims to improve framework conditions for trade in South-East Europe as part of the EU convergence process.

Approach

The Open Regional Fund for Foreign Trade Promotion (ORF-FT) supports regional initiatives designed to improve conditions for free trade. Individual ORF FT-backed projects involve at least three countries and are planned and implemented with various actors. Their aim is to improve the rollout of regionally agreed trade facilitation reforms and promotion measures while giving companies better access to relevant information and know-how. At the same time, these projects enhance public-private dialogue by specifically addressing trade barriers prioritised by the private sector and by promoting the use of regional platforms for the joint development or dissemination of good practice-based solutions. Key project partners include CEFTA (CEFTA Secretariat and Committees and the national CEFTA Contact Points), line ministries, state authorities relevant for trade (e.g. customs), and private sector organisations.

Co-financed by the EU, the ORF FT is implementing the project ‘Support to Facilitation of Trade between CEFTA Parties’ whose goal is to facilitate trade in the CEFTA region by simplifying trading procedures and reducing and eventually removing the most distortive non-tariff measures in two selected supply chains. Adopting a product-oriented approach, the project examines the three main dimensions impacting the free trade of goods in the CEFTA region: 1) Non-tariff measures stemming from non-harmonised legislation and practices; 2) Redundant and overlapping document and data submission requirements for traders; 3) Excessive and redundant physical inspections at the border.

  Open regional funds for South-East Europe – foreign trade promotion: Trade facilitation within CEFTA © GIZ

Results 

The Open Regional Fund for Foreign Trade has contributed to the removal of trade barriers in the CEFTA region in several ways and has strengthened the capacities of relevant actors in the process. One particularly notable achievement is the increased level of transparency surrounding trade barriers. This is thanks to the establishment of comprehensive CEFTA information and reporting system on trade requirements and barriers (http://transparency.cefta.int/). In addition, trade policy capacity has been strengthened, as evidenced by the respective countries’ trade diplomacy strategies. Now more advantageous rules for determining the country of origin are in place which have ultimately benefited the companies in the project region. Moreover, the project has helped strengthen regional trade-related networks, including networks and cooperation arrangements between business associations (IT sector, organic farming), and has also improved cooperation between market surveillance institutions in South-East Europe. Through its intensive work with Chambers of Commerce, the Open Regional Fund for Foreign Trade has succeeded in improving the services available for export-oriented companies in the region, e.g. by introducing an export management course in three of the countries concerned.