Trade and Free Trade Agreements

Trade and Free Trade Agreements

Foreign Trade Regulations Albania applies a liberal trade regime. Foreign Trade has been liberalized since 1990 and follows guidelines set by the European Union. As a result of this liberalization and an on-going process of harmonization of Albanian customs rules with the EU system, imports and exports of commodities are not generally subject to special authorization requirements. Exceptions apply to quotas or control requirements imposed through different bilateral or multilateral agreements signed by Albania.

Licenses are also required for specific commodities with restricted circulation within the country (such as military or strategic goods, radioactive materials and psychotropic substances, drugs etc.) Licenses can be obtained from the Ministry of Defense (military or strategic goods) Ministry of Health (drugs and psychotropic substances).

Exports are not subject to any export taxes, fees or other barriers. Imports are not subject to any import duty taxes other than customs duties. Imports are subject to VAT and some items, such as tobacco, alcoholic beverages and fuel are also subject to an excise tax.

Albania joined the World Trade Organization (WTO) in 2000. Albania applies WTO rules on import licensing, e.g. to products affecting life, health and the environment.

For seven years (1 October 1999 – 30 November 2006), Albanian exports to the EU countries benefited from an asymmetric regime, in the form of autonomous measures. On June 12, 2006 in Luxembourg, Albania signed the Stabilization – Association Agreement with the EU. As a result an Interim Agreement EU - Republic of Albania has been in effect since 1 December 2006. This agreement further liberalizes trade between EU and Albania. The liberalization rate on Albanian products which enter the EU market is evaluated to be 98%. The Interim Agreement replaced the Trade, Commercial and Economic Co-operation Agreement between the European Community and Albania and will be in effect until all EU member countries ratify the Stabilization – Association Agreement with Albania.

Trade Developments According to the Bank of Albania, for the year 2006, the overall volume of trade (exports + imports) was estimated to be around 3.8 billion USD of which the export volume was approx.

790 million USD. The European Union remains Albania’s the main trade partner with 85% of exports and 62% of imports. Italy and Greece alone cover 75% of imports and 92% of exports to the European Union or 49% of total imports and 83% of total exports.

Source: Bank of Albania, ACIT

Fact Sheet No.3

Last updated: February 2007

Trade and Free Trade Agreements

Foreign trade by countries 2006 (in thousand USD)

Source: www.acit-al.org

Fact Sheet No.3

Last updated: February 2007

Trade and Free Trade Agreements

Foreign trade by categories of products 2006 (in thousand USD)

Source: www.acit-al.org

Fact Sheet No.3

Last updated: February 2007

Trade and Free Trade Agreements

Free Trade Agreements Interim Agreement Albania –EU Once the Stabilization – Association Agreement (SAM) was signed (Luxembourg, June 12, 2006), further developing and strengthening of trade relationships between Albania and EU countries was necessary. For this reason an Interim Agreement is in effect since December 1, 2006, which allows trade and trade related provisions of SAM to take effect. The Interim Agreement replaced the Trade, Commercial and Economic Co-operation Agreement between Albania and European Community, and aims at establishing a free trade area between Albania and the EU within a 10 years period. Under this agreement, customs duties on Albanian industrial products entering the European market are reduced to zero. The same rule applies to most Albanian agricultural products while for others customs duties will be continually reduced until they are also eliminated.

Central European Free Trade Agreement On 6 April 2006, at the South East Europe Prime Ministers Summit in Bucharest, a joint declaration was adopted on the expansion of CEFTA to Albania, Bosnia and Herzegovina, UNMIK on behalf of Kosovo, Moldova, Serbia and Montenegro. The current members of CEFTA are Croatia and FYR Macedonia. The new enlarged agreement was initialed on 9 November 2006 in Brussels and signed on 19 December 2006. Ratification will take place before 31 March 2007, and the new CEFTA treaty will take effect on 1 May 2007. The enlarged CEFTA will consolidate the network of bilateral free trade agreements and ensure that Albania is an equal partner within CEFTA. It will give to Albanian exports duty free access to a larger market. It will also create common institutions to promote further economic development and to deal with trade barriers in a cooperative manner.

Bilateral Agreements In the framework of the Stability Pact’s Memorandum of Agreement on Trade Facilitation and Liberalization (signed from Trade Ministers of South East European Countries in Brussels, June 2001), the Albanian Government committed itself to the implementation of liberal trade policies. One of the Stability Pact’s requirements is that the Balkans be transformed into a free trade zone. Free Trade Agreements have been signed with neighboring countries to create a regional market of 65 million consumers. Albania has concluded bilateral agreements with all participating nations of the Memorandum including Kosovo.

The newest Free Trade Agreement was signed between Albania and the Republic of Turkey on December 21, 2006. This is an asymmetric agreement where Albanian products exported to Turkey are free of custom duties. Simultaneously, tariffs on sensitive industrial products imported from Turkey will continue to be reduced and then eliminated after 5 years. The two countries will trade agricultural products within the quotas specified in the Agreement with no customs. Standard customs duties will be paid on all products not include above.

Currently, FTAs with Bulgaria and Romania have been eliminated since they became members of the EU and the Interim Agreement now applies. FTAs with all other countries within the region, except Turkey based on the above agreement, are going to be abolished when CEFTA takes effect in May 2007.

Fact Sheet No.3

Last updated: February 2007