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Conclusions by Chairman Fabrizio Saccomanni and Co-Chair Minister Dragan Mikerevic

The Working Table on Economic Reconstruction, Development and Co-operation held its fifth meeting on 30 November 2001 in Sarajevo.

The Special Coordinator Bodo Hombach, commenting on the agreement signed the day before on the SAVA river between Slovenia, Croatia, Bosnia Herzegovina and FRY, underlined the steadily increasing spirit of cooperation within the region. Minister of Foreign Affairs and Chaiman of the Council of Ministers, Zlatko Lagumdjia, reaffirmed his country’s support for the Stability Pact as a regional framework for development, enhancing democratic institutions and overall stability. High Representative Wolfgang Petritsch commended Bosnia’s new activities on a regional level and underlined the need for further harmonisation of legislation throughout the region, notably in the economic field.

Trade Liberalisation and Facilitation

The Signatory Countries to the Memorandum of Understanding informed the WT of the progress being made on the negotiation of Free Trade Agreements (FTA). Of the twenty-one agreements to be concluded by 31 December 2002, five agreements are signed and ten are under negotiation. Of the ten under negotiation, two are in the final stages and the WT welcomed the news that Croatia and Bulgaria will sign an FTA on 4 December and Albania and FYR of Macedonia will sign an FTA on 21 December 2001.

Signatory Countries were congratulated on the progress made to date and urged to continue and intensify their negotiations over the coming months. In particular, they were encouraged to overcome some of the issues raised during the presentations and discussion. These include the seemingly slow response from FRY to requests to pursue negotiations, a request from Bosnia and Herzegovina for all goods to be included under the FTA (i.e. no exemptions) and the apparent slow pace of Romania in commencing negotiations. The EC in particular expressed its concern about these last two points.

The countries reiterated their commitment to meeting the deadline set out in the MoU but a number of representatives including those from FRY and Albania highlighted the substantial demands that FTA negotiations place on their relatively small administrations.

In that context, the Chairman recalled commitments made by all countries and invited countries facing capacity problems to draw attention to technical assistance requirements through the Working Group on Trade.

The large number of trade related projects in the region was noted, in particular the World Bank Trade and Transport Facilitation Programme and the EC funded Customs Assistance Missions. The Chairman of the Trade Working Group emphasised the need for close co-operation between such projects.

In addition to tailored technical assistance for FTA negotiations, a summary of specific technical and financial assistance from the international community to facilitate implementation of the MoU was presented to the WT. This includes provision of technical and management assistance to the Secretariat, ad hoc technical assistance and seminars/workshops on various technical issues to be addressed in FTAs (e.g. rules of origin) or under the MoU generally (e.g. competition policy).

The European Commission, Sweden, Switzerland, the UK and the USA are the most active supporters of the Working Group. France, Germany and Ireland have also indicated their support for the efforts of the Group and the Secretariat is in discussion with these countries on how to make the best use of this support.

Investment Compact

The Chairman noted the strong commitment by donor countries for the work of the Investment Compact and welcomed their expressions of continued support in 2002. He hoped that this would be voiced also at international gatherings. He noted that national/regional ownership is a key element of the IC approach and crucial to implementing reform. He stressed the importance of IFIs being active in working in partnership with the Investment Compact process.

The UK, OECD and Stability Pact Office presented a non paper called Strategy for a Common Regional Investment Space in SEE (an outline note on this was endorsed in principle at the Project Team meeting in Bucharest on 24 October 2001). The objective is to give new impetus on some key points covered by the Investment Compact. In that regard it might be necessary to have an MoU to be endorsed at ministerial level as a sign of renewed and high level political commitment to reform and to complement the original text of the Investment Compact.While taking note of the general support in principle for the idea, the Chairman emphasized that further work on this proposal was needed to address points made, namely, it should not detract from ongoing work and should have the support of the private sector as well as SEE countries. He therefore invited the co-chairs of the Investment Compact to continue consultation on the concept and present a new version to the Project Team .

The UK representative announced that his country, while remaining a strong supporter of the IC Process, would step down from the co-chairmanship. Chairman Saccomanni thanked the UK for their important contributions and welcomed Austria as the new co-chair.

Social cohesion

A large consensus was confirmed around the basic fact that adequate modernization of the Welfare State is an important pre-requisite for peace and stability in the SEE. It was agreed that, in numerous instances, economic development is indeed interlinked to the reform of the Social Sector: privatization increases unemployment, public financial structural adjustments including the restructuring of social schemes will open new private sectors markets, e. g. insurance and retirement schemes, the dismantling of Former Yugoslavia imposes the re-appropriation of common policies in key sectors, health and labor, for instance.

Furthermore, the promotion of a regional cooperation in the reform of the social sector was deemed important because of the similar structural landscape of the SEE countries, the common problems faced in the ongoing transition process, and the urgency of harmonizing national policies with EU and international standards.

Several donor governments and institutions also re-affirmed their financial support to projects, which had been developed by the partners of the Initiative. The SEE countries reiterated their commitment to work for the reform of social policy, in close cooperation with the International Community. In that process, regional cooperation will help to maximize results and minimize costs. It was also noted that newly established governments in SEE countries are still fragile and must be seen to be honoring their commitments vis a vis their constituencies.

The Chairman concluded that it is necessary to capture the momentum demonstrated by several donors countries and International Organizations who have pledged their support to the process as well as their financial commitment. Further efforts have to be invested in involving additional donors. Bilateral cooperation should increasingly support initiatives having a regional dimension.

Energy

The Chairman recalled that energy has been high on the agenda of SEE for a long time and in particular for the SEE Cooperation Process, which expressed at their last ministerial meeting the wish to see things moving faster in that area. Albania, as Chairman in Office of the SEECP, acting along the lines of the last SEECP ministerial meeting, circulated and presented a Non Paper on Energy Coordination and Policies in SEE. This non paper calls for the enhancement of the SEE Energy Coordination Process and for drawing up a regional Energy concept, building on already existing initiatives. It also foresees the creation of the SEE Energy Cooperation Process Working Group and meetings of ministers responsible for energy every year to set regional guidelines.

This proposal was welcomed by the WT, in particular by Japan, Canada and Italy, which however would wish to see a more ambitious paper. The need to come to a coordinated view of energy subsectors was emphasized.

Germany also fully supported the idea and confirmed its offer stated at the Regional Conference of Bucharest, October 2001, to support the SEEECP Working Group via the Stability Pact.

The Chairman encouraged the Albanian authorities to keep working on the concept which should then be adopted at the SEECP summit, to be held in Tirana in February 2002.

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