By Ervin Lisaku
TIRANA, Dec. 25 – Albania is leading exports to Kosovo among regional EU aspirant countries following Kosovo’s recent 100 percent tariff on imports from Serbia and Bosnia and Herzegovina in retaliation for their efforts in blocking the recognition of Kosovo’s independence and its membership in key international organizations.
Kosovo’s statistical agency says Albania overtook Serbia for exports to Kosovo for the first time among CEFTA regional free trade countries and ranked second only to Germany last month after Kosovo introduced a 100 tax on imports from Serbia and Bosnia and Herzegovina on Nov. 21. The CEFTA free trade member countries include six EU aspirant member countries plus Moldova.
Data shows Albania exported products worth around €20 million to Kosovo last November, leading Kosovo’s imports among CEFTA countries with a 7.4 percent share, followed by Serbia with 5.6 percent and Macedonia with 5.5 percent.
Serbia has traditionally dominated exports to Kosovo among regional and EU countries with a 12 to 13 percent share, followed by Germany and Italy. Albania has increased its market share to around 7 percent this year after accounting for 5 percent of Kosovo’s imports last year.
Albania’s prospects to gain Kosovo market share are even more optimistic as the latest November data includes only ten days of blockade on Serbian imports and December is expected to see Albania with an even higher share, the same as other regional competitors mainly Macedonia which has a similar market share compared to Albania in Kosovo.
Ethnic Albanian-dominated Kosovo declared independence from Serbia a decade ago and has been recognized by more than 100 countries, but not yet Serbia, five EU member countries and Russia and China, in a situation that hampers Europe’s youngest country’s efforts to join international organizations and move faster toward Euro-Atlantic integration.
EU-mediated talks to help the two neighbouring countries normalize relations have so far failed and Kosovo insists it won’t lift its tariff on Serbian products unless Serbia recognizes Kosovo.
While Kosovo’s unilateral tax has received international criticism because of running against the regional free trade agreement, Kosovo authorities say it’s the only way to stop Serbian agenda against Kosovo’s independence and Euro-Atlantic integration a decade after its independence from Serbia.
CEFTA member countries account for about a fifth of Kosovo’s imports which last November were led by Germany with an 11 percent share.
Albania exported products worth 25 billion lek (€201 million) for the first 11 months of this year, up 35 percent compared to Jan-Nov. 2017 in exports led by ‘construction materials and metals’ and ‘minerals, fuel and electricity’ and to a smaller degree by ‘food and non-alcoholic beverages,’ according to INSTAT, Albania’s state-run statistical institute.
Drastic cut in Serbian exports
Serbian and Bosnian exports to Kosovo have suffered a drastic cut since the Nov. 21 introduction of the 100 percent import tax, Radio Free Europe/Radio Liberty in the local Albanian service reports referring to data by Kosovo customs authorities.
Data shows Serbian and Bosnian exports to Kosovo in four weeks since the tax introduction (Nov. 21 to Dec. 19) were reduced to a mere 174 trucks mainly transporting raw material worth around €290,000, compared to some 2,800 trucks worth €35 million during the same period last year.
Local Kosovo media say the blockade on Serbian imports is having an initial positive effect on local Kosovo producers, some of whom have increased production capacity and employment. However, import of raw material that was traditionally imported from Serbia and Bosnia remains a problem until new competitive suppliers are found.
Kosovo imported some €450 million of goods from Serbia in 2017 and another €81 million from Bosnia and Herzegovina, according to Kosovo authorities.
Albania opportunities
While Albania will find it almost impossible to replace Serbian grains and flour as well as raw material for Kosovo producers, local experts say Albania can be quite competitive in replacing former Serbian steel and oil products which Albania heavily produces through Turkish and Chinese investors.
However, tariff and non-tariff barriers still in place and poor production capacities by the Albanian economy compared to other regional competitors will likely find the Albanian economy with few benefits from Kosovo’s tariff hitting more than €500 million of Serbian and Bosnian products.
Both countries are heavily reliant on imports with Kosovo’s exports meeting only 12 percent of what it imports and Albania having an export/import coverage ratio of around 50 percent.
Trade exchanges between the two countries are considered sharply below potential with a series of tariff and non-tariff hampering their boost.
Kosovo imported products worth €152 million from Albania in 2017, accounting for a 5 percent share. Meanwhile, Kosovo’s imports from Serbia, its traditional top trading partner and the region’s largest economy, were around three times higher at around €450 million, according to Kosovo’s statistical agency.
Meanwhile, Albania-Kosovo trade exchanges of around €210 million in 2017 were almost the same to trade that Albania conducts with Serbia with which it has a huge trade gap of 20 billion lek (€162 million) with imports exceeding exports by five times in 2017.
Kosovo is the second most important destination of Albanian exports and the sole regional Western Balkan that Albania has a trade surplus. Albania is also the prime destination of Kosovo exports.
Last November, Albania and Kosovo authorities vowed to step up economic cooperation by scrapping tariff and non-tariff barriers and conclude a customs union project that would facilitate trade exchanges between the two neighboring ethnic Albanian countries following moderate progress in the past five years when the two governments have held regular annual joint meetings.
