Countries of South Eastern Europe (SEE) have made a major breakthrough today (10 June) by committing themselves to upgrading the existing network of 29 bilateral Free Trade Agreements (FTAs) to a single Free Trade Agreement and to further simplify the regulatory environment for investment.

At a Ministerial Meeting on Investment and Trade in SEE in Sofia (organised by the Stability Pact's Trade Working Group and the Investment Compact), ministers and representatives responsible for the economy from Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Moldova, Romania, Serbia and Montenegro, The former Yugoslav Republic of Macedonia and UNMIK/Kosovo adopted an ambitious declaration in which they committed themselves to undertake preparatory work on a single free trade agreement with a view to launching negotiations early next year and concluding them in the course of 2006.

The benefits of a single FTA would be substantial: by providing traders and investors with a simplified, transparent and consistent framework for business relations, the agreement would greatly enhance the ability of the region to attract increased inflows of foreign direct investment and stimulate regional trade while synergies between trade and investment would contribute to increased employment and economic prosperity.

Speaking at the Ministerial Meeting in Sofia, Fabrizio Saccomanni, Chairman of the Stability Pact's Economic Co-operation and Development Working Table, stressed some practical results of the regional co-operation under two of the Stability Pact's most important initiatives - the Trade Working Group and the Investment Compact.  "We have seen so-called "statements of political willingness" translated into concrete actions on the ground that have contributed to the €8 billion of foreign direct investment inflows to the region in 2004, as well as increased trade flows among the countries."

While there has been a very welcome increase in FDI in South Eastern Europe, the inflows are not evenly distributed across the region with Romania and Bulgaria accounting for nearly 70% of FDI inflows.  The commitments made today will give a chance to all countries in the region to catch up as designations for investment and sources of goods and services.

Several ministers, along with the European Commission, also noted the importance of such regional co-operation and integration in contributing to the countries progress towards accession to the EU. 

Ministers have mandated the Stability Pact's Trade Working Group, which has already been instrumental in negotiating and monitoring the implementation of the 29 FTAs, to undertake all the preparatory work required to conclude an agreement in 2006.  The Investment Compact has been tasked to propose new targets for investment reforms to be implemented in 2006 as well as to determine the feasibility of a regional investment framework to complement the single FTA.

Launched in 1999, the Stability Pact for South Eastern Europe is the first comprehensive conflict-prevention strategy of the international community, aimed at strengthening the efforts of the countries of South East Europe in fostering peace, democracy, respect for human rights and economic prosperity.  The Stability Pact provides a framework to stimulate regional co-operation and expedite integration into European and trans-Atlantic structures.  The Pact's secretariat, located in Brussels, is organised into three units - Working Table I deals with issues of democratisation and human rights, Working Table II with economic reconstruction, cooperation and development matters and Working Table III with security issues.

The Investment Compact is an initiative of Working Table II of the Stability Pact for South Eastern Europe aimed at improving the region's economic and business environment.  Bulgaria is currently the co-chair of the Investment Compact, together with Austria and the Organisation for Economic Co-operation and Development (OECD).

For further information, please contact Stability Pact's Spokesperson Mr Dragan Barbutovski (+32 (2) 401 8725 or press@stabilitypact.org), the SP Expert on Trade Ms Mary 0'Mahony (+32 (2) 401 8709 or mary.omahony@stabilitypact.org) at the SP Secretariat in Brussels or Mr Declan Murphy at the OECD in Paris (+33 (1) 45 24 97 01 or declan.murphy@oecd.org ).

Links to:           -  Statement on Trade, adopted at the Ministerial Meeting in Sofia
                        -  Statement on Investment, adopted at the Ministerial Meeting in Sofia