Impact of Croatia's Accession to the European Union on the Trade Orientation of Bosnia and Herzegovina

Abstract

The paper analyses the impact of accession of Croatia, Bosnia and Herzegovina’s traditionally most important regional trading partner, to the European Union on the trade exchange volume and foreign trade orientation of BIH. Although the SAA offered BIH “on paper” a more liberal and favouringly asymmetrical trade approach in relation to the CEFTA 2006 Agreement valid until Croatia’s accession to the EU, especially in the segment of the agricultural production circulation, the statistical data on mutual trade show unambiguous and significant reduction in the volume of foreign trade, more pronounced in BIH export, particularly in the trade of agricultural products. This confirms once again that only several classes of non-tariff barriers have a decisive influence on at least a short-term negative bilateral trade impact of Croatia’s accession to the EU, which BIH tries to compensate by increasing exports to other traditional partners, first Italy and Germany (segment of industrial products in a timely manner focused on the EU core), but also Serbia and Turkey (less picky and in favour of markets). Since much milder decline in imports of BIH from Croatia is not accompanied by a significant comparative increase in direct foreign investments from Croatia to BIH, the volume of bilateral trade exchange could be increased in medium-term manner either by fulfilling different standards, certificates of compliance and certification laid down in the EU (which would result in an increase in BIH exports) or by a possible incorporation of concessions that Croatia enjoyed within the CEFTA 2006 in the SAA with BIH (which would result in an increase in BIH imports).