The negotiated agreement is expected to increase trade exchange and foreign investments.
By Linda Karadaku for Southeast European Times in Pristina -- 14/10/2013
Kosovo officials signed the agreement with Turkey on September 27th. [Kosovo Ministry of Trade and Industry]
Kosovo's free-trade agreement with Turkey – the first such pact negotiated by Pristina since Kosovo declared its independence five years ago – is being seen as an important stepping stone toward foreign investment and a stronger economy.
Already Kosovo's fourth largest importer behind Serbia, Italy and Germany, the pact with Ankara helps open Kosovo markets to the powerful Turkish economy, which continued to grow despite the economic downturn that struck most of Europe. Turkey's GDP grew by 9.2 percent in 2010, followed by 8.8 percent expansion in 2011 and then 2.2 percent in 2012. Second-quarter growth this year reached 4.4 percent.
The agreement signed on September 27th guarantees the immediate removal of the customs tax from Turkey for all Kosovo producers who will export industrial goods to Turkey.
Kosovo citizens will not have to pay the customs tariff for Turkish products that are not produced in Kosovo. The customs tariff will be immediately removed on 2,300 Turkish products, including industrial and agricultural goods.
According to the Ministry of Trade and Industry, the agreement guarantees the protection of the sensitive producing sectors in Kosovo for up to 10 years from the removal of the customs fee for products originating from Turkey.
"We have been careful that during the negotiations to protect our producing sectors, which have started to develop and which have a potential to increase in the coming years," said Mimoza Kusari Lil, who was Kosovo's minister of trade and industry when the agreement was signed. She recently resigned to campaign for mayor for the municipality of Gjakova.
Turkey's minister of economy, Zafer Caglayan, said the agreement will have a positive impact on the economic development of both countries and it shows economic relations between Turkey and Kosovo are being strengthened every day.
"Now we are building a highway through this (trade agreement), so Turkish and Kosovan investors can travel safely and quickly on this highway (between Turkey and Kosovo)," Caglayan told Anadolu, the Turkish news agency.
Kosovo Prime Minister Hashim Thaci said the agreement is expected to aid the increase of the Turkish investments in Kosovo and more trade between the two countries.
Thaci noted that Kosovo is preparing a similar agreement with Albania, an issue discussed with Albania Prime Minister Edi Rama.
"The aim of this agreement (with Albania) is to push ahead and facilitate the trade between the two countries by simplifying and harmonising the regulations and the demands for transport, trade and customs," Thaci said.
Analysts in Kosovo say that such agreements are neccessary because they eliminate customs barriers and open markets to more consumers. Ibrahim Rexhepi, executive director of the Kosovo Centre for Strategic and Social Research, said that 80 percent of global trade is done through free-trade agreements.
"The economic relations with Turkey are not closed only with trade exchanges, but this state is a very strong partner in other fields as well. It has three banks in Kosovo, Turkish companies are the buyers of KEK distribution (Kosovo Electric Power Company) and concessioners of the Pristina airport. There are also many investments done in the fields of health and education (sectors)," Rexhepi told SETimes.
Ramadan Ilazi, executive director of the Kosovo Peace Institute in Pristina, said the co-operation with Turkey, although being very important, should not transform Kosovo into "a client state" of Ankara.
"Therefore, it (Kosovo) should be careful in its relations with Turkey, I believe it should have a good balance of these relations," Ilazi told SETimes, noting that Kosovo needs first to strengthen its strategic relations with the European Union.
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