Photo: BIRN.

Concerns raised over reciprocity and economic recovery package

On Thursday’s episode of BIRN’s televised programme, Jeta ne Kosove, entrepreneurs and government officials debated the effects of introducing reciprocal trade measures with Serbia on the country’s economy, as well as the government’s recovery package introduced in the wake of the coronavirus pandemic.

Isak Vorgucic is a beer producer from Gracanica. Although he is a professional journalist and has worked at KIM Radio since 2000, brewing has long been his true passion.

In 2017, Vorgucic finally decided to invest and produce beer himself. By June 2018, he was ready to begin exporting his beer to Serbia.

It was then that he experienced first-hand the consequences of what he described as double standards in trade relations between Kosovo and Serbia.

“I was importing barley from Backa Palanka [a Serbian town] into Kosovo to make my beer, and for this I did not need to do a phytosanitary analysis,” Vorgucic told BIRN. “But when I was sending my beer to Serbia, besides demanding documentation proving phytosanitary analysis was done, the beer also had to be sent for additional tests.”

According to Vorgucic, these tests cost him 100 euros for each of the four types of beer he brews, a total of 400 euros. 

“I imported materials into Kosovo many times from Serbia and Slovenia, and I was never obliged to pay additional money,” he said. “But when I tried to export the goods to Serbia, these obligatory tests meant that my beer had to wait for very long periods in customs, which can really endanger its quality.”

On March 31, the Kosovo Government introduced reciprocal measures in trade with Serbia, while temporarily lifting the 100 per cent tariff on imported goods. The decision means that the same measures currently in place for Kosovo producers exporting their goods to Serbia will apply to Serbian producers bringing their business to Kosovo. 

On Thursday evening, BIRN invited Vorgucic, other local entrepreneurs and civil society members to join the Minister of Finance and Transfers, Besnik Bislimi, in a debate discussing the effects of the recent measures and addressing other concerns from Kosovo business owners. 

Many producers are wondering what comes next once “reciprocal measures” are in place, participants in the debate noted, as well as how the government plans to guarantee that the measures in place are what is best for Kosovo’s economy.

Establishing reciprocity

According to finance minister Bislimi, the establishment of reciprocity means “equal treatment.”

“In terms of the export of goods, reciprocity means applying the same measures in Kosovo that are used by Serbia,” Bislimi said, adding that it is important that exports from both Kosovo and Serbia are held to the same standard to ensure that Kosovo businesses are not put at an automatic disadvantage.

However, Astrit Panxha, a representative of the Kosovo Manufacturing Club, warned that demanding reciprocity from Serbia could have unwanted consequences for Kosovo producers. 

“Serbia’s policy works to discourage the import of products from Kosovo, but we should not impose any barriers on the import of raw materials from Serbia because this could harm our manufacturers,” Panxha said, adding that he believes trade restrictions should only be placed on the final product, and not raw materials. 

Panxha believes that the previous government’s 2018 decision to impose tariffs on Serbian goods had both positive and negative consequences for Kosovo producers. The Manufacturing Club representative said that while there was an increase in the consumption of domestic products, “growth would have been greater if the Serbian products in Kosovo had not been replaced with those of other countries.”

Arben Tershnjaku from the company Liri, which produces Sempre biscuits, said that imposing the tariff has been incredibly beneficial, increasing the capacities of his company and the sales of the product in Kosovo.

“The tariff has increased the consumption, and therefore the production, of Sempre biscuits. Since the tariff was introduced, we have seen a 120 per cent increase in sales,” Tershnjaku said.

Miodrag Milicevic from NGO Aktiv does not believe that the tariffs were dropped for economic reasons. In his opinion, the government’s decision to drop the tariff was politically motivated, questioning whether it was lifted as a short term solution to facilitate the return of Kosovo and Serbia representatives to the dialogue table and not for economic reasons.

“The decision to remove the tariff has a deadline, June 15, 2020. So, we are not talking about removal of the tariff but for a temporary measure to suspend the tariff,” said Milicevic.

Recovery package concerns

Participants in the debate also discussed the emergency economic package that has been introduced by the government to soften the economic blow expected to come as a result of measures to combat the spread of coronavirus. 

The government’s package, which was approved on March 30, is set to provide 170 million euros of support to Kosovo’s business community.

According to the government, the package will help small and medium-sized businesses affected by the pandemic to pay their employees. The package is also designed to provide extra financial assistance to employees who are directly exposed to the virus in their line of work, such as health professionals and law enforcement staff.

However, both the Kosovo and American Chambers of Commerce have assessed that the amount allocated by the government will not be sufficient for Kosovo’s businesses to overcome the economic devastation the virus may cause.

Berat Rukiqi from the Kosovo Chamber of Commerce said that the government package should have amounted to at least 300 million euros. “We demanded 300 million euros, as I don’t believe that the proposed amount would be able to have any real effect on the damage to Kosovo’s economy,” he said.

Arian Zeka from the American Chamber of Commerce agreed with Rukiqi’s assessment. “Only this package would be able to proportionally compensate the damage to enterprises and employees,” he said.

Many questions were raised related to the informal nature of much of Kosovo’s market, with debate participants wondering whether unregistered employees will be able to access the financial support that the package provides.

Finance Minister Bislimi replied that this would be a “good opportunity” for businesses to register their employees.

Roma activist Sakibe Jashari raised the plans to allocate two million euros for aiding marginalized communities in Kosovo, questioning the minister over how these funds, which are intended to support vulnerable groups during the pandemic, are to be distributed.

According to Bislimi, this matter is still being debated, but he confirmed that distribution of the aid will be carried out under the supervision of Kosovo’s Red Cross.

However, one local business owner is emphatic that he will not be reliant upon the government’s emergency economic package during the pandemic. 

Burim Piraj, owner of the meat production company Meka, announced during the debate that his company will not accept any subsidies from the government to pay his 80 employees, and that his company raised the minimum wage of employees from 300 to 350 euros per month.

Piraj said his refusal to accept government subsidies was his way of supporting and expressing solidarity with the government. “How can I explain to a worker that I’m having financial issues, paying him a salary of 170 euros per month, while I’m driving a Porsche and a Mercedes and taking trips to Dubai? That is problematic,” he added.

This series of debates has been supported and funded by UNMIK. The program only reflects the views of individuals.

03/04/2020 - 21:48

03 April 2020 - 21:48

Prishtina Insight is a digital and print magazine published by BIRN Kosovo, an independent, non-governmental organisation. To find out more about the organization please visit the official website. Copyright © 2016 BIRN Kosovo.