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On behalf of the European Union I would first like to welcome the Delegation of the Republic of North Macedonia led by Mr. Kreshnik Bekteshi, Minister of Economy. I would also like to thank the WTO Secretariat and the Government of North Macedonia for their respective reports. Let me extend also our appreciation to the Discussant, H.E. Mr. Dagfinn Sørli (Norway) for giving us his views on the country's trade policy’s main features.
This is North Macedonia's second Trade Policy Review. The EU welcomes this opportunity to discuss the developments in North Macedonia's trade policies and practices since the previous Trade Policy Review in 2013.
Chair, the EU is very pleased to participate in North Macedonia's review as we enjoy a close relationship. North Macedonia has been an EU candidate country since December 2005. This year also marks the 15th anniversary of the entry into force of the Stabilisation and Association Agreement (SAA). As it is described in the Secretariat report, the SAA is a contractual bilateral free trade area between the EU and North Macedonia that included a transition period of 10 years, which has now expired.
As noted by the minister, in the light of the significant progress achieved in advancing EU reforms, the European Commission has once again recommended opening the negotiations with North Macedonia in its Communication on the EU Enlargement Policy published in May 2019. The EU Council is expected to reach a clear and substantive decision on the opening of accession negotiations as soon as possible and no later than October 2019.
The EU is the largest trading partner of North Macedonia with increasing importance. Indeed, in 2018 we exchanged goods worth 10.5 billion euros and services worth almost 2 billion euros. The EU is also the biggest investor in North Macedonia with direct investment stocks in the country of almost 2.5 billion euros in 2017.
Regarding EU aid to the country, it is comprehensive and reflects the common strategic objective of EU integration. It covers areas such as private sector development, agriculture, rural development, transport, environment and climate change, employment and education and a number of reforms related to governance, justice and home affairs. The budget allocated for the period 2014-2020 amounts to about EUR 600 million.
Overall, North Macedonia can be commended for showing its strong determination to advance the reform agenda, including a number of policy reforms supporting fiscal consolidation. After a prolonged stagnation, growth resumed at 2.7% in 2018 and unemployment continued to decrease, while remaining still high (around 20%) even if it is probably inflated by the remaining high level of informal activities.
The EU would like to encourage North Macedonia to further continue on its reform path in order to boost the growth of its economy. We particularly welcome the new Public Procurement Law which is expected to increase transparency and predictability on the market. The EU looks forward to swift accession of North Macedonia to the WTO Government Procurement Agreement.
We take note of North Macedonia’s strategy and action plan for the formalisation of the informal economy and would like to know more about initial results and possible further plans for improving the business environment in the country. The EU would also be interested to hear the views of the authorities on the progress achieved to improve the competitiveness of its manufacturing sector with a view to increase the level of integration of its domestic companies into global value chains. The EU would also be eager to learn more on the concrete measures to increase the spill-over effect of FDI to the rest of the economy as well as on how to monitor efficiency and cost-effectiveness of different business support schemes.
Again, we would like to commend North Macedonia for its efforts in pursuing reforms and at the same time we encourage the authorities to keep the momentum going. This is needed because businesses still face some important trade barriers, notably due to complex regulatory framework and high customs costs.
Finally, the EU very much appreciates efforts made by North Macedonia to provide notifications, particularly under the SCM Agreement. The EU also strongly appreciates the fact that North Macedonia implemented a vast majority of its implementation commitments under the Trade Facilitation Agreement, following its ratification in 2015.
We wish all the best to the delegation of North Macedonia in this challenging exercise that a TPR represents. Thank you.