Negotiations with Ankara are expected to last for one year.
By Muhamet Brajshori for Southeast European Times in Pristina -- 25/09/12
Turkish exports to Kosovo were more than 20 million euros in 2011. [Reuters]
The government of Kosovo has launched talks with Turkey on a free trade agreement, which would be Pristina's first since Kosovo became independent in 2008.
Kosovo Trade and Industry Minister Mimoza Kusari-Lila and Turkey Economy Minister Zafer Caglayan began negotiations on September 3rd in Ankara.
Kusari-Lila said that the Kosovo's economy is smaller than the Turkish economy, so Pristina will need to protect some of its strategic sectors for a few years.
"Since our economy about 70 percent is composed from services, we kindly ask that the services in particular be part of those negotiations," Kusari-Lila said.
Caglayan said that free trade agreement will benefit the economic development of both countries, and said that the Turkish government will take in considers Kosovo's demands.
"[We] asked to consider all Kosovo's requirements, including protection of Kosovo's strategic sectors and the inclusion of service on these negotiations. Sincerely, we are interested to see Kosovo an economically developed country and these negotiations will serve to this goal," Caglayan said.
Turkish goods exports to Kosovo in 2011 were $265.9 million (20.5 million euros), down 9.6 percent from 2010. Kosovo was Turkey's 134th largest supplier of goods imports in 2011. Turkish goods imports from Kosovo totaled $10.1 million (7.8 million euros) in 2011, down 25.7 percent from 2010.
Experts say that while the agreement is an important step to liberalise trade, they say that Pristina should insist in protecting some products which already can be produced in Kosovo.
"[I]n Kosovo, when confronted with a large trade imbalance and in circumstances where we have a little developed producing sector, it makes it impossible to us to utilise the benefits of the free trade agreement especially with powerful industrial countries such as Turkey," Arian Zeka, executive director of American Chamber of Commerce in Kosovo, told SETimes.
Arta Istrefi, political advisor of Kosovo's Minister of Trade and Industry, told SETimes that the negotiations with Turkey will last nearly one year, as it was the experience with the countries of the region.
"For us it is very important to protect strategic sectors in order not to harm local products and the development of those sectors. During our previous contacts Turkish side is showing constructively and support for Kosovo," Istrefi said.
Zeka said Kosovo hopes to enjoy the benefits from free trade agreement with all countries, especially the EU, when it is able to produce on its own and not to depend on imports.
Istrefi said that Kosovo will benefit by enabling exports without custom duty, while it will make Kosovo products more competitive in Turkish and European markets as well.
"The agreement increases the possibility of Turkish investments in Kosovo. Turkish investors' interest to invest in Kosovo is constantly growing and we expect that the removal of customs duty for the goods of Turkey in a number of sectors will help them to realise investments in Kosovo," Istrefi said.
Zeka said that Turkish economic development will be a challenge for Kosovo exporters, but argues that a detailed analysis is needed to see if there are certain products which are not produced in Turkey, for which potential exists in Kosovo.
"I hope that the free trade agreement will serve as an opportunity to attract more foreign investment, international manufacturing companies from Europe or elsewhere, which would like to place in Turkey internationally renowned products produced in Kosovo," Zeka said.
The UN negotiated and signed the CEFTA agreement on Kosovo's behalf in 2006. Kosovo plans to launch talks with the EU on a free trade agreement and other third countries by 2013.