TIRANA, Nov. 28 – Albania and Kosovo are on track to finalizing their customs union through the establishment of a Kosovo customs operations office at Durres Port, the Albanian and Kosovo Prime Ministers announced during the fourth joint government meeting held this week in Korà§a, southeastern Albania.
The two neighboring countries have signed several deals aimed at boosting trade exchanges and investment in the past four years, but progress has been quite modest due to ongoing barriers and trade disputes. However, 2017 is set to register a historic high of about €200 million in Albania-Kosovo trade exchanges following a strong double-digit hike in the first ten months of this year.
“We will continue working on the opening of the Kosovo Customs Operations Office at the Durres Port and that means that this office must become operational as soon as possible,” Prime Minister Rama said, adding that the office will also ease Kosovo exchanges with other countries through Durres Port, Albania’s largest, where Kosovo transit exports and imports account for about 10 percent of the volume of goods it handles.
“Goods destined for Kosovo will complete all the customs procedures at Durres Port, making it unnecessary to stop at Albania-Kosovo customs offices. That will be a drastic cut in time needed to carry out procedures and will considerably reduce the products’ cost and increase trade benefits,” added Rama.
The customs union, a project dating back to January 2014, when the two countries signed a strategic cooperation and partnership deal in their first joint government meeting, is currently being held back by some technical aspects on the Kosovo side.
The meeting at Korà§a, one of Albania’s key historical sites, where the first Albanian school opened 140 years ago when the country was still under Ottoman rule, came one day before Albania marked its 105th independence anniversary and a time when majority ethnic Albanian Kosovo will be celebrating in few months ten years of independence from Serbia.
Kosovo Prime Minister Ramush Haradinaj said cooperation with Albania was key to strengthening Kosovo both domestically and regionally considering the challenges facing the country in membership to international organizations, increasing the number of recognitions and its Euro-Atlantic integration prospects.
“The strengthening of Kosovo and our strengthening in the Balkans is achieved or accelerated through cooperation between Kosovo and Albania,” said Haradinaj.
“We are working on economy. We are especially focused on small and medium-sized producers and providing easier fiscal policies to them and a legal package to reduce the doing business bureaucracy. What remains to be done is logistics, which means the investment locations and the necessary infrastructure,” added the Kosovo Prime Minister.
However, behind the political rhetoric, Kosovo businesses complain non-tariffs barriers remain a key concern for Kosovo exporters to Albania.
“The practice of joint meetings between the Kosovo and Albanian governments has been welcomed by the business community and the Kosovo Chamber of Commerce, believing that it will have a positive impact on the establishment of a favorable trade and investment climate between he two countries through the elimination of ongoing barriers, especially during the export of Kosovo products to Albania,” Safet Gerxhaliu, the head of the Kosovo Chamber of Commerce said ahead of the meeting.
“Considering that this practice has up to now produced only a background for media consumption, the Kosovo Chamber thinks that the format and content of these meetings should change toward establishing mechanisms that guarantee the implementation of measures and action that ultimately lead to increasing economic cooperation between the two countries,” he adds, pointing out non-tariff barriers by Albanian authorities and dumping by Albanian exporters as some of the issues facing Kosovo businesses.
Albanian companies have also complained high customs duties and non-tariff barriers only favor big companies, mainly construction and steel companies in exports with Kosovo.
The recognition of mutual phytosanitary certificates has emerged as a key barrier for businesses in both countries as the two countries seek to diversify trade exchanges mainly relying on “fuel, electricity, construction material and metals.”
Trade, investment ties
Albania-Kosovo trade exchanges dominated by Albanian exports, rose by a third to about 24.5 billion lek (€181 million) in the first ten months of this year and are on track to register a record high after fluctuating at about the same level in the past five years, according to INSTAT, Albania’s state-run statistical institute.
Albania’s trade exchanges with Kosovo account for only about 3 percent of the total and Kosovo is the country’s second most important destination for exports.
The two ethnic Albanian countries have overcome a number of trade barriers over certain products in the past few years and made some procedures easier, but lack of an early tradition in economic cooperation seems to be the main issue preventing the creation of a single market of about 5 million resident consumers, experts say.
Data shows that behind political rhetoric of excellent economic cooperation with Kosovo, trade exchanges between the two countries are almost the same compared to Albania’s trade volume with Serbia and only half of what Kosovo imports from Serbia.
When it comes to mutual investment, the level of investment is largely dominated by Albanian companies.
Albanian investors have been among the top five foreign investors in Kosovo in the past few years with the 2016 FDI estimated at about €29 million, down from a peak level of €40 million in 2015. The Albanian FDI stock in Kosovo, mainly concentrated in the real estate, financial and trade sector, is estimated at €193 million and is represented by some 900 Albanian companies.
Kosovo companies in Albania have been less active in the past few years with their stock of FDI only slightly increasing to a total €29 million.
Some 600 Kosovo companies operate in Albania, mainly in the construction and trade sectors.
The Highway of Nation linking Albania to Kosovo has played a key part in the Kosovo Albania trade and human exchanges in the past decade despite its huge cost of about €2 billion euros on both sides of the border not yet justifying trade exchanges of about €200 million annually, more than double before the highway’s 2009 opening.
The Albanian part of the highway, which is set to become the country’s first toll road in 2018, plays a key role in Albania’s patriotic-dominated tourism bringing about 2 million Kosovo tourists each year.
