WORLD TRADE  
ORGANIZATION  WT/L/731 
18 July 2008 
 (08-3485) 
General Council 
29-30 July 2008 Original:   English 
 
 
 
EUROPEAN COMMUNITIES' PREFERENCES FOR ALBANIA, BOSNIA AND 
HERZEGOVINA, CROATIA, SERBIA AND MONTENEGRO AND THE FORMER 
YUGOSLAV REPUBLIC OF MACEDONIA 
 
Report of the European Community un der the Decision of 28 July 20061 
 
 
 The following communication, dated 17 July 2008, is being circulated at the request of the 
Delegation of the European Commission. 
 
_______________ 
 
 
1. Introduction 
1. On 8 December 2000, the EU was granted a wa iver (WT/L/380) from its obligations under 
paragraph 1 of Article I of the GATT 1994 to the extent necessary to permit the European Community 
to afford duty-free or preferential treatment to e ligible products originating in Albania, Bosnia-
Herzegovina, Croatia, the former  Yugoslav Republic of Macedonia and Serbia and Montenegro, 
without being required to extend the same duty-free or  preferential treatment to like products of any 
other member.  This waiver expired on 31 December 2006. 
2. With a view to maintaining the current system  in place, the European Community requested 
an extension of the Western Balkans Waiver, whic h was adopted by the WTO General Council at its 
meeting on 27-28 July 2006 (WT/L/654).  This waiver  covers products originating in Albania, Bosnia 
and Herzegovina, Croatia, the former Y ugoslav Republic of Macedonia, Montenegro2 and the 
customs territories of Serbia and of Kosovo.3  The waiver will expire on 31 December 2011. 
3. Under the terms of this waiver, the European Community is required to submit to the General 
Council an annual report on the preferences and dut y-free treatment afforded to products from the 
countries listed in paragraph 1, including the extent  to which such preferen ces and duty-free treatment 
differ from the European Communities' MFN and G SP concessions, with a view to facilitating the 
annual review provided for in paragr aph 4 of Article IX of the WTO Agreement.  This report covers 
the calendar year 2007. 
4. The EU trade regime vis-à-vis  these countries is currently regulated by the granting of 
autonomous trade preferences and by the conclusi on of Stabilization and Association Agreements. 
5. As of 1 January 2007, the two new EU Member States, Romania and Bulgaria, took over the 
above-mentioned EU trade regime to wards the Western Balkans.  To reflect this development, trade 
                                                      
1 WT/L/654. 
2 Montenegro held a referendum on independence on 21 May 2006 and declared its independence on 
3 June 2006. 
3 Pursuant to United Nations Security Council Resolution 1244. WT/L/731 
Page 2  
 
  statistics presented below were recalculated for the EU at 27 Member States.  As data for the full 
current year are not yet available, statistics presented relate to the year 2007. 
2. Autonomous trade preferences 
6. Before 2000, the European Union already had a liberal trade regime towards the Western 
Balkans, allowing more than 80 per cent of regional exports to enter the European Union duty-free.  
On 1 December 2000 the EU Council of Ministers ex tended the duty-free access to the EU market for 
products originating from this area even further. 
7. The reason for such an extension was that th e general level of imports from the Western 
Balkans countries remained very low, being less than one per cent of all Community imports.  It was, 
therefore, considered appropriate to further im prove the Community's autonomous trade preferences 
by removing all remaining tariff ceilings for indu strial and agricultural products and by further 
improving access to the Community market for agricultural and fishery products. 
8. Further market opening is expected to contribute to the process of political and economic 
stabilisation in the region.  Fully liberalized access  to the markets of the European Union is also 
foreseen as part of the Stabilization and Association Agreements. 
3. The Stabilization and Association Agreements 
9. The Stabilization and Association Agreements, which the EU is progressively concluding 
with the countries of the Western Balkans, are tools  which provide, much as the Europe Agreements 
did for the candidate countries in Central Euro pe, for the economic development and political 
stabilization of the countries in the region, and to establish a close, long-term association between the 
EU and the Western Balkans. 
10. The Stabilization and Association Agreements aim at creating a free trade area for goods 
among the parties over a transitional period in line with Article XXIV of the GATT 1994 and 
envisages a progressive and reciprocal liberalization of trade in services. Associated disciplines in 
areas such as competition and state aid rules, intell ectual property, public procurement, etc. are also 
envisaged. 
11. Six agreements of this kind have been concl uded so far.  One with the former Yugoslav 
Republic of Macedonia, one with Croatia, one with  Albania and more recently with Bosnia and 
Herzegovina, Montenegro and Serbia.  The Stabiliza tion and Association Agreement with the former 
Yugoslav Republic of Macedonia entered into for ce on 1 April 2004 and the one with Croatia on 
1 February 2005.  The Stabilization and Associ ation Agreements with Albania, Bosnia and 
Herzegovina, Montenegro and Serb ia are undergoing ratification. 
12. As the ratification procedures of these Stabilization and Association Agreements take a 
significant period of time the trade provisions of thes e agreements entered into force on, respectively, 
1 June 2001 for the former Yugoslav Republic of Macedonia and 1 March 2002 for Croatia, 
1 December 2006 for Albania, 1 January 2008 for Montenegro, 1 July 2008 for Bosnia and Herzegovina, by means of interim agreements.  The entry into force of the interim agreement with 
Serbia is suspended subject to fulfilling by Serbia  of the conditions attached. All three agreements 
establish a free trade area with the concerned count ry in line with the obligations foreseen in 
Article XXIV of the GATT 1994.  At the same ti me they allow the continuation of the autonomous 
preferences where these provide more favourable c onditions for the export of the goods originating in 
Croatia, the former Yugoslav Republic of Macedonia,  Albania, Bosnia and Herzegovina, Montenegro 
and Serbia, once the interim agreement enters into  force. At the present moment almost all the 
countries in the region have in place interim agr eements or stabilization and association agreements  WT/L/731 
 Page 3 
 
 
  with the EU. Hence, keeping the autonomous pref erences is of most importance for the customs 
territory of Kosovo. 
4. Trade with the countries of the Western Balkans 
13. In the year 2007 EU imports from the Western Ba lkans concentrated primarily on agricultural 
and textile products. However, the trade balance fo r the countries of the Western Balkans remained 
negative for all sectors.  Total trade with the Wester n Balkans remained also low, at 1.4 per cent of 
total EU trade with the rest of the world.  The stabilization of the area and the new export 
opportunities described in the precedent paragraphs  should help the Western Balkans countries to 
diversify their economies and to am eliorate such a trade balance. 
14. Statistical annexes are provided to present a de tailed description of the EU trade relations 
with the countries of the Western Balkans for the year 2007.4  The first annex describes the trade 
relations with the countries of the Western Balkan s as a whole, while the remaining annexes describe 
in detail the trade relations with each country of the region. 
                                                      
4 To a large extent, separate statistics for Serbia a nd Montenegro are not availa ble yet. That is why we 
also present some updated statistics on Serbia and Montenegro together.  
  WT/L/731 
Page 4  
ANNEX 1: WESTERN BALKANS 
 
Population in Mio  20        
Area in 1000skm 
(2007) 264        
Gross Domestic 
Product in BN euro 83        
GDP Per Capita in 
euro 4,134        
         
         
         
         
EU, Trade with Balkans        
  IMPORTS EXPORTS  TRADE     
  Rank 2007:24 Rank 2007: 11 BALANCE    
Year Value (Mio €) Share of total EU 
imports Value 
(Mio €) Share of total 
EU exports Value  
(Mio €)    
               
2003 6,784   0.7   17,992  2.1   11,208      
2004 8,073   0.8   20,554  2.2   12,480      
2005 8,990   0.8   21,429  2.0   12,439      
2006 11,544   0.9   24,929  2.2   13,385      
2007 13,291   0.9   28,782  2.3   15,491      
         
         
                            
   WT/L/731
 Page 5 
EU, Imports from Balkans  EU, Exports to Balkans  
SITC Rev.3  
Product Groups Value (Mio €) Share by products 
(%) Share of totals 
(%) SITC Rev.3  
Product Groups Value 
(Mio €) Share by 
products 
(%) Share of 
totals (%) Balance 
                  
TOTAL 13,291    0.93  100.0 TOTAL 28,782    2.3  100.0 15,491   
Agricultural products 1,586    1.69  11.9 Agricultural products 2,370   3.3  8.2 784   
Energy 338    0.10  2.5 Energy 1,720   2.8  6.0 1,382   
Non-agricultural raw 
materials 42    0.06  0.3 Non-agricultural raw 
materials 97   2.0  0.3 55   
Office/telecom. 
Equipment 96    0.18  0.7 Office/telecom. 
Equipment 401   1.7   1.4 304   
Power/non-electrical 
mach. 886    1.11  6.7 Power/non-electrical 
mach. 3,066   1.6  10.7 2,180   
Transport equipment 531    0.59  4.0 Transport equipment 3,541   2.1  12.3 3,010   
Chemicals 853    0.75  6.4 Chemicals 3,609   1.9  12.5 2,756   
Textiles and clothing 1,365    1.73  10.3 Textiles and clothing 1,716   5.1  6.0 350   
Iron and steel 1,527    3.75  11.5 Iron and steel 1,220   3.5  4.2 -307   
         
World excluding Intra-EU trade and European Union: 27 members.     
Source : Eurostat (Comext), FMI.        
         
   
  WT/L/731 
Page 6 ANNEX 2: ALBANIA 
  
 
Population in Mio  3        
Area in 1000skm 
(2007) 29        
Gross Domestic 
Product in BN euro  7        
GDP Per Capita in 
euro 2,317        
         
         
         
         
EU, Trade with Albania        
  IMPORTS EXPORTS  TRADE    
  Rank 2007: 88 Rank 2007: 62 BALANCE    
Year Value 
(Mio €) Share of 
total EU 
imports Value 
(Mio €) Share of total EU 
exports Value 
(Mio €)    
               
2003 360 0.04 1,156 0.1 795    
2004 398 0.04 1,276 0.1 878    
2005 417 0.04 1,383 0.1 966    
2006 496 0.04 1,541 0.1 1,045    
2007 602 0.04 1,805 0.1 1,203    
         
         
          
   WT/L/731
 Page 7 
EU, Imports from Albania EU, Exports to Albania 
SITC Rev.3  
Product Groups Value 
(Mio €) Share by 
products 
(%) Share of 
totals 
(%) SITC Rev.3  
Product Groups Value 
(Mio €) Share by 
products 
(%) Share 
of 
totals 
(%) Balance 
TOTAL 602 0.0 100.0 TOTAL 1,805 0.1 100.0 1,203
Agricultural products 35 0.0 5.8 Agricultural products 249 0.3 13.8 214
Energy 40 0.0 6.6 Energy 180 0.3 10.0 140
Non-agricultural raw 
materials 1 0.0 0.1Non-agricultural raw 
materials 70 . 2  0 . 4 7
Office/telecom. 
Equipment 0 0.0 0.1Office/telecom. 
Equipment 18 0.1 1.0 17
Power/non-electrical 
mach. 14 0.0 2.4Power/non-electrical 
mach. 159 0.1 8.8 144
Transport equipment 2 0.0 0.3 Transport equipment 113 0.1 6.3 111
Chemicals 1 0.0 0.1 Chemicals 184 0.1 10.2 184
Textiles and clothing 157 0.2 26.0 Textiles and clothing 187 0.6 10.4 30
Iron and steel 3 0.0 0.5 Iron and steel 43 0.1 2.4 41
         
World excluding Intra-EU trade and European Union: 27 members.     
Source : Eurostat (Comext), FMI.        
 
  
 
   
  WT/L/731 
Page 8 ANNEX 3 : BOSNIA HERZEGOVINA  
 
 
 
Population in Mio  4        
Area in 1000skm 
(2007) 51        
Gross Domestic 
Product in BN euro  10        
GDP Per Capita in 
euro 2,412        
         
         
         
         
EU, Trade with Bosnia        
  IMPORTS EXPORTS  TRADE    
  Rank 2007: 65 Rank 2007: 55 BALANCE    
Year Value 
(Mio €) Share of 
total EU 
imports Value 
(Mio €) Share of total EU 
exports Value 
(Mio €)    
               
2003 848 0.1 2,215 0.3 1,367    
2004 1,019 0.1 2,388 0.3 1,369    
2005 1,332 0.1 2,871 0.3 1,538    
2006 1,725 0.1 2,882 0.2 1,158    
2007 1,829 0.1 3,123 0.3 1,293    
          
   WT/L/731
 Page 9 
EU, Imports from Bosnia EU, Exports to Bosnia 
SITC Rev.3  
Product Groups Value 
(Mio €) Share by 
products 
(%) Share 
of 
totals 
(%) SITC Rev.3  
Product Groups Value 
(Mio €) Share by 
products 
(%) Share 
of 
totals 
(%) Balance 
TOTAL 1,829 0.1 100.0 TOTAL 3,123 0.3 100.0 1,293
Agricultural products 170 0.2 9.3 Agricultural products 338 0.5 10.8 168
Energy 24 0.0 1.3 Energy 74 0.1 2.4 50
Non-agricultural raw 
materials 1 0.0 0.1Non-agricultural raw 
materials 22 0.1 0.7 21
Office/telecom. 
Equipment 1 0.0 0.0Office/telecom. 
Equipment 27 0.1 0.9 27
Power/non-electrical 
mach. 173 0.2 9.4Power/non-electrical 
mach. 354 0.2 11.3 181
Transport equipment 150 0.2 8.2 Transport equipment 390 0.2 12.5 241
Chemicals 55 0.0 3.0 Chemicals 382 0.2 12.2 328
Textiles and clothing 133 0.2 7.3 Textiles and clothing 194 0.6 6.2 61
Iron and steel 80 0.2 4.4 Iron and steel 126 0.4 4.0 46
         
World excluding Intra-EU trade and European Union: 27 members .     
Source:  Eurostat (Comext), FMI.        
 
  
   
  WT/L/731 
Page 10 ANNEX 4: CROATIA 
 
 
 
Population in Mio  4        
Area in 1000skm 
(2007) 57        
Gross Domestic Product in BN euro  35        
GDP Per Capita in 
euro 7,790        
         
         
         
         
EU, Trade with Croatia        
  IMPORTS EXPORTS  TRADE    
  Rank 2007: 45  Rank 2007:23 BALANCE    
Year Value  
(Mio €) Share of 
total EU 
imports Value 
(Mio €) Share of total EU 
exports Value 
(Mio €)    
               
2003 3,347 0.36 9,037 1.04 5,689    
2004 4,004 0.39 9,971 1.05 5,967    
2005 4,077 0.35 10,732 1.02 6,654    
2006 4,891 0.36 12,362 1.07 7,472    
2007 4,974 0.35 13,256 1.07 8,281    
          
   WT/L/731
 Page 11 
EU, Imports from Croatia EU, Exports to Croatia  
SITC Rev.3  
Product Groups Value  
(Mio €) Share by 
products 
(%) Share of 
totals (%) SITC Rev.3  
Product Groups Value  
(Mio €) Share by 
products 
(%) Share 
of 
totals 
(%) Balance 
                  
TOTAL 4,974 0.3 100.0 TOTAL 13,256 1.1 100.0 8,281
Agricultural 
products 612 0.7 12.3Agricultural 
products 1,119 1.5 8.4 507
Energy 240 0.1 4.8 Energy 854 1.4 6.4 614
Non-agricultural 
raw materials 19 0.0 0.4Non-agricultural 
raw materials 29 1.0 0.2 11
Office/telecom. Equipment 90 0.2 1.8Office/telecom. 
Equipment 201 0.9 1.5 110
Power/non-electrical mach. 461 0.6 9.3Power/non-
electrical mach. 1,345 0.7 10.1 884
Transport equipment 252 0.3 5.1Transport 
equipment 1,799 1.1 13.6 1,548
Chemicals 429 0.4 8.6 Chemicals 1,607 0.8 12.1 1,178
Textiles and 
clothing 408 0.5 8.2Textiles and 
clothing 658 2.0 5.0 249
Iron and steel 34 0.1 0.7 Iron and steel 581 1.7 4.4 547
         
World excluding Intra-EU trade and European Union: 27 members.     
Source : Eurostat (Comext), FMI.        
  
  WT/L/731 
Page 12 ANNEX 5: FORMER YUGOSLAV REPUBLIC OF MACEDONIA 
 
 
 
Population in Mio  2      
Area in 1000skm 
(2007) 26      
Gross Domestic Product in BN euro  5      
GDP Per Capita in euro 2,561      
       
       
       
EU, Trade with FYR of Macedonia      
  IMPORTS EXPORTS  TRADE  
  Rank 2007:63 Rank 2007: 61 BALANCE  
Year Value  
(Mio €) Share of 
total EU 
imports Value 
(Mio €) Share of total EU 
exports Value  
(Mio €)  
             
2003 701 0.07 1,299 0.15 598  
2004 820 0.08 1,517 0.16 697  
2005 1,018 0.09 1,567 0.15 550  
2006 1,304 0.10 1,832 0.16 528  
2007 1,866 0.13 2,082 0.17 217  
        
   WT/L/731
 Page 13 
EU, Imports from FYR of Macedonia EU, Exports from FYR of Macedonia 
SITC Rev.3  
Product Groups Value  
(Mio €) Share by 
products 
(%) Share of 
totals 
(%) SITC Rev.3  
Product Groups Value 
(Mio €) Share by 
products 
(%) 
TOTAL 1,866 0.1 100.0 TOTAL 2,082 0.2
Agricultural products 173 0.2 9.3 Agricultural products 192 0.3
Energy 3 0.0 0.2 Energy 95 0.2
Non-agricultural raw materials 0 0.0 0.0Non-agricultural raw 
materials 5 0.1
Office/telecom. 
Equipment 1 0.0 0.0Office/telecom. 
Equipment 24 0.1
Power/non-electrical 
mach. 13 0.0 0.7Power/non-electrical 
mach. 154 0.1
Transport equipment 8 0.0 0.4 Transport equipment 201 0.1
Chemicals 22 0.0 1.2 Chemicals 228 0.1
Textiles and clothing 477 0.6 25.6 Textiles and clothing 312 0.9
Iron and steel 756 1.9 40.5 Iron and steel 178 0.5
       
World excluding Intra-EU trade and European Union: 27 members.    
Source : Eurostat (Comext), FMI.      
 
 
  
 
  
  WT/L/731 
Page 14 ANNEX 6: SERBIA 
 
 
Population in Mio  8        
Area in 1000skm 
(2007) 102        
Gross Domestic 
Product in BN euro  26.2        
GDP Per Capita in 
euro 3,495        
         
         
         
         
EU, Trade with Serbia        
  IMPORTS EXPORTS  TRADE    
  Rank 2007: 53 Rank 2007: 33 BALANCE    
Year Value 
(Mio €) Share of 
total EU 
imports Value 
(Mio €) Share of total EU 
exports Value  
(Mio €)    
               
2003               
2004               
2005* 1,177   0.1  2.610  0.2  1,433     
2006 2,835   0.2  5,792  0.5  2,957     
2007 3,677   0.3  7,845  0.6  4,168     
 
2005* : June 2005-December 2005  
    
   WT/L/731
 Page 15 
EU, Imports from Serbia EU, Exports to Serbia 
SITC Rev.3  
Product Groups Value 
(Mio €) Share by 
products 
(%) Share 
of 
totals 
(%) SITC Rev.3  
Product Groups Value 
(Mio €) Share 
by 
products 
(%) Share of 
totals 
(%) Balance 
TOTAL 3,677 0.3 100.0 TOTAL 7,845 0.6 100.0 4,168 
Agricultural products 589 0.6 16.0 Agricultural products 384 0.5 4.9 -205 
Energy 31 0.0 0.8 Energy 460 0.7 5.9 429 
Non-agricultural raw 
materials 21 0.0 0.6Non-agricultural raw 
materials 33 0.5 0.4 12 
Office/telecom. Equipment 4 0.0 0.1Office/telecom. 
Equipment 124 0.5 1.6 120 
Power/non-electrical mach. 219 0.3 6.0Power/non-electrical 
mach. 979 0.5 12.5 760 
Transport equipment 117 0.1 3.2 Transport equipment 943 0.6 12.0 826 
Chemicals 347 0.3 9.4 Chemicals 1,157 0.6 14.7 810 
Textiles and clothing 189 0.2 5.1 Textiles and clothing 341 1.0 4.3 152 
Iron and steel 635 1.6 17.3 Iron and steel 278 0.8 3.5 -358 
         
World excluding Intra-EU trade and European Union: 27 members.     
Source : Eurostat (Comext), FMI.        
 
 
   
  WT/L/731 
Page 16 ANNEX 7: MONTENEGRO 
 
 
 
Population in Mio  0.7        
Area in 1000skm 
(2007) 25.3        
Gross Domestic 
Product in BN euro  4.8        
GDP Per Capita in 
euro 7,098        
         
         
         
         
EU, Trade with Montenegro       
  IMPORTS EXPORTS  TRADE    
  Rank 2007: 107 Rank 2007: 99 BALANCE    
Year Value 
(Mio €) Share of 
total EU 
imports Value 
(Mio €) Share of total EU 
exports Value  
(Mio €)    
               
2003              
2004              
2005* 85 0.01 284 0.0 199    
2006 293 0.02 519 0.0 227    
2007 343 0.02 672 0.1 330    
2005* : June 2005-December 2005        
          
   WT/L/731
 Page 17 
EU, Imports from Montenegro (2007) EU, Exports to Montenegro (2007) 
SITC Rev.3  
Product Groups Value 
(Mio €) Share by 
products 
(%) Share 
of 
totals 
(%) SITC Rev.3  
Product Groups Value 
(Mio €) Share by 
products 
(%) Share 
of 
totals 
(%) Balance 
TOTAL 343 0.0 100.0 TOTAL 672 0.1 100.0 330
Agricultural products 7 0.0 2.0 Agricultural products 88 0.1 13.0 81
Energy 0 0.0   Energy 56 0.1 8.4 56
Non-agricultural raw 
materials 0 0.0 0.1Non-agricultural raw 
materials 00 . 1  0 . 1 0
Office/telecom. 
Equipment 0 0.0 0.0Office/telecom. 
Equipment 70 . 0  1 . 0 7
Power/non-electrical 
mach. 6 0.0 1.7Power/non-electrical 
mach. 76 0.0 11.2 70
Transport equipment 3 0.0 0.7 Transport equipment 93 0.1 13.9 91
Chemicals 0 0.0 0.1 Chemicals 51 0.0 7.6 50
Textiles and clothing 3 0.0 0.8 Textiles and clothing 24 0.1 3.6 22
Iron and steel 19 0.0 5.5 Iron and steel 13 0.0 2.0 -6
         
World excluding Intra-EU trade and European Union: 27 members.     
Source : Eurostat (Comext), FMI.        
 
  
__________