Analysts agree that damages can be huge for both countries due to the trade embargo.
By Biljana Lajmanovska and Linda Karadaku for Southeast European Times in Skopje and Pristina -- 14/09/13
Though the border between Macedonia and Kosovo is closed to vehicles, people can still cross over on foot. [Tomislav Georgiev/SETimes]
Officials in Skopje and Pristina are working to resolve a trade embargo that bans goods from Macedonia, and a retaliatory entrance fee imposed by Macedonia on Kosovo visitors.
The embargo was introduced this month and threatens trade relations between Skopje and Pristina.
Kosovo's ministry of trade and industry released a statement stating that "the measures to block the import of products originated from Macedonia remain in power until a decision is taken from the Macedonian side to remove all trade barriers and the freedom of movement of people barrier towards Kosovo."
The ministry confirmed that the border remains closed for vehicles, but people can cross on foot.
Pristina said the embargo was a response to a previously introduced Macedonian measure that limits the import of flour and wheat from all CEFTA (Central European Free Trade Agreement) countries. Kosovo's embargo was on food products, including grain, flour, milk, vegetables, alcohol and cigarettes.
Macedonian authorities responded to the embargo by introducing a tax of 5 euros for every car with a Kosovo registration plate, 2 euros for every Kosovo citizen, and 10 euros for every bus entering Macedonian border. The tax further increased tensions and prompted Kosovo to ban the import of all Macedonian products.
"There are no reciprocity measures for the free movement of people, because we understand that would hit the Albanians in Macedonia and others that come to Kosovo, of course the Macedonians as well," Mimoza Kursari-Lila, Kosovo deputy prime minister and minister of trade and industry, told the Kosovo daily Express.
Macedonian authorities would not comment on the latest developments in trade relations with Kosovo, but said they will take all measures to normalise trade relations with Pristina.
Macedonia Prime Minister Nikola Gruevski talked with his Kosovo counterpart, Hashim Thaci, but did not arrive to a solution yet.
Last year the total trade exchange between Macedonia and Kosovo amounted to 317 million euros, and so far this year it is at 109 million euros.
"This isn't just a one-day measure. We know that once a market is lost, it's lost forever. Surely, someone else will fill out this vacuum, but we can't afford this luxury and lose our traditional markets," Menderes Kuci, president of the Trade Chamber of North-West Macedonia, told SETimes.
Analysts agree that the damage can be huge for both countries.
"Macedonia must work on improving the competitiveness and not be forced to protect the domestic production with this type of measures. Now other offers might appear on Kosovo market and we might lose this market forever," Boris Anakiev, retired agricultural economist from Skopje, told SETimes.
Ibrahim Rexhepi, Kosovo economist and executive director of the Kosovo Centre for Strategic and Social Research, told SETimes that Macedonia exports in Kosovo are valued at around 300 million euros annually, while Kosovo exports to Macedonia are less than 30 million euros. However, Rexhepi said the Kosovo market could also suffer.
"It is possible that Kosovo market would also be badly affected, especially with oil products which are almost up to two-thirds imported from Macedonia to Kosovo," Rexhepi told SETimes.
Other CEFTA countries are also dissatisfied with Macedonia's decision to condition the import of wheat and flour. Serbia was the first to protest, threatening to introduce an embargo on Macedonian products, but so far no other country decided to take such strict measures as Kosovo.
What specific measures should the two governments rely on to speed up the resolution of their trade conflict? Let us know what you think.