Developments in trade, customs, taxation, industry and free movement of goods over the past year were discussed in Pristina yesterday by representatives of Kosovo and the European Commission. This was the 3rd meeting of the Sub-Committee, under the Stabilisation and Association Agreement (SAA), which entered into force in April 2016. In all areas, the Commission and Kosovo agreed on the importance of implementing the relevant European Reform Agenda and Economic Reform Programme priorities as well as the recommendations from the Commission’s 2019 Kosovo Reports and previous Stabilisation and Association sub-Committees.
As regards trade, the discussions focused on possible ways to address Kosovo’s growing trade deficit. In this context, Kosovo noted the contribution of trade in services to partially offset the trade deficit. The parties positively noted the 15% increase in bilateral trade with the EU, which reached EUR 1.2 billion in 2018. The Commission also reiterated its call to revoke the 100% tariffs imposed on goods originating from Serbia and Bosnia and Herzegovina. It recalled Kosovo's commitment to the multi-annual action plan for the development of a Regional Economic Area (REA) and it stressed, in particular, the need to ratify and implement the CEFTA Additional Protocol 5 on trade facilitation, adopt and implement Additional Protocol 6 on trade in services, and adopt mandate and appoint negotiating team to negotiate Additional Protocol 7 on dispute settlement. Finally, the Commission stressed the importance of improving the investment climate, further aligning with EU regulations and best practices as well as eliminating non-tariff barriers.
On customs and taxation, the European Commission urged Kosovo to withdraw the decision on discriminatory excises on cigarettes, to bring the legislation into line with the SAA. It stressed the importance of further combatting the informal economy and continuing tax administration reforms, in particular by reducing the time for VAT refunds for businesses and increasing the debt collected (tax arrears). The Commission encouraged Kosovo to gradually introduce a contemporary compliance risk management methodology, which involves publicity campaigns and targeted interventions, including smarter audits. On customs, Kosovo committed to amend the Kosovo Customs and Excise Code to further align it with EU legislation and practices. Finally, the Commission encouraged Kosovo to apply for the Customs 2020 programme, aimed at further improving Customs capacities and assisting in EU acquis alignment.
On industry and SME policy, the European Commission recalled the need to restructure Kosovo Investment and Enterprise Support Agency (KIESA) to enable the agency to design and implement before and after care services and programs in support of investments and private sector. The Commission urged to improve business statistics. Furthermore, it encouraged to boost competitiveness and fully develop the export potential of Kosovo businesses, to take full benefits of the SAA. The Commission welcomed the ratification of Kosovo’s participation in the Union program COSME, to support small and medium enterprises, and called for immediate actions enabling participation in the Enterprise Europe Network, as well as in Erasmus for Young Entrepreneurs. Kosovo committed to take steps towards designing a smart specialisation strategy in order to enhance coherence of research and innovation, education and training, industry and enterprise policy areas.
Finally, on free movement of goods, Kosovo committed to increase the capacity of institutions and to further align with the EU acquis the legislation improving quality infrastructure in the areas of standardisation, accreditation, conformity assessment, metrology and market surveillance. The European Commission urged Kosovo to ensure the consistent enforcement of the relevant regulations across Kosovo.