What Is Central European Free Trade Agreement

Central European Free Trade Agreement (CEFTA): A Quick Overview

The Central European Free Trade Agreement (CEFTA) is a trade agreement originally signed on December 19, 1992, between the countries of the Visegrád Group (Czech Republic, Hungary, Poland, and Slovakia) and three Balkan countries (Bosnia and Herzegovina, Serbia-Montenegro, and Croatia). The agreement came into force on July 1, 1994, and aimed to promote free trade and economic cooperation between the signatory countries.

In 2006, CEFTA was revised and expanded to include Albania, Kosovo, North Macedonia, and Moldova, while Serbia and Montenegro became two separate signatory countries. The revised agreement entered into force on July 26, 2007. The agreement provides for the gradual liberalization of trade in goods and services among the signatory states through the elimination of import duties and other trade barriers.

CEFTA has been successful in promoting regional trade and economic integration. According to the World Bank, CEFTA members’ intra-regional trade has increased from $3 billion in 2000 to $10 billion in 2019. The trade agreement has also contributed to the improvement of the investment climate in the region, as it provides investors with a predictable and stable business environment.

Moreover, CEFTA has served as a stepping stone for the integration of its member countries into the European Union (EU). All CEFTA members, except Kosovo, are either EU members or EU candidates. For instance, Montenegro and Serbia are in the process of joining the EU, while North Macedonia became an EU candidate country in 2005.

While CEFTA has been instrumental in promoting trade and economic cooperation among its member countries, it also faces some challenges. For instance, some member countries face difficulties in fully implementing the agreement’s provisions, particularly the liberalization of trade in services. In addition, CEFTA members face competition from other free trade agreements, such as the EU’s Stabilization and Association Agreements with the Western Balkans.

Despite these challenges, CEFTA remains a significant trade agreement in the region. It is a testament to the commitment of its member countries to deepen economic integration and foster regional cooperation. As the region continues to face economic challenges and political instability, the relevance of CEFTA in promoting stability and prosperity in Central and Eastern Europe remains undeniable.