What is the Central European Free Trade Agreement (CEFTA)?

The Central European Free Trade Agreement (CEFTA) is a trade agreement among non-EU nations that mostly belong to Southeastern Europe. It was established by members representing Hungary, Poland, and Czechoslovakia, and gradually, spread its roots in countries including Romania, Moldova, Serbia, Albania, Bulgaria, Bosnia and Herzegovina, Croatia, Macedonia, Montenegro, Slovenia, and the United Nations Interim Administration Mission in Kosovo representing Kosovo.

How does the Central European Trade Agreement Work? 

A nation who is already a member of CEFTA, when joins the European Union, loses its membership with CEFTA. As per reports of July 1, 2013, the member nations of CEFTA include Albania, Bosnia and Herzegovina, Macedonia, Moldova, Montenegro, Serbia, and the UNMIK representing Kosovo. Eligibility of being a CEFTA member: As per the previous Poznan Declaration standards:

• World Trade Organization membership
• Free trade agreements with the existing CEFTA member nations
• European Union Association Agreement offering prospective complete membership

Present criteria since Zagreb meeting held in the year 2005:

• WTO membership or abiding by all regulations of WTO
• Free trade agreements with existing CEFTA member nations
• Any type of European Union Association agreement

Original agreement

The Visegrad Group nations approved the authentic CEFTA agreement. These nations included Poland, Czech and Slovak republics and Hungary, and the agreement was signed on Dec. 21, 1992 in Krakow, Poland, and it was implemented in the year 1994. In the presence of CEFTA agreement, member nations sought to organize effort so as to merge into the Western European organizations, and participate in European economic, political, security mechanisms, thereby strengthening the democratic conditions as well as free-market economics. There were some amendments made in the CEFTA agreement on Sep. 11, 1985 in Brno, followed by Jul. 4, 2003 in Bled. Slovenia became a part of CEFTA in the year 1996, Romania in the year 1997, Croatia in the year 2003, and Macedonia later in the year 2006.

2006 agreement

Now, the members of the primary agreement had now become a part of the European Union and, hence left CEFTA. This was one of the situations that led to the extension of CEFTA so as to include the remaining Balkan regions that had finished a series of bilateral FTAs within the structure of the Stability Pact for South Eastern Europe region. The extent of CEFTA was expanded to regions including Albania, Bosnia, and Herzegovina, Moldova, Serbia, Montenegro and UNMIK on behalf of Kosovo, and this announcement was made at the South East Europe Prime Ministers Summit held in Bucharest. Discussions regarding the accession of Ukraine also took place. The exclusive agreement was released on Nov. 9, 2006 in Brussels, and was approved and implemented on Dec. 19, 2006 in the South East European Prime Ministers Summit held in Bucharest. For Albania, Kosovo, Macedonia, Moldova, and Montenegro, this agreement was implemented on Jul. 26, 2007, for Croatia on Aug. 22, for Serbia on Oct. 24, and for Bosnia and Herzegovina on Nov. 2007. This agreement had an objective to regulate a free trade zone in the location by the end of 2010. After being independent on Feb, 17, 2008, UNMIK kept representing Kosovo in all of its CEFTA summits. In 2008, there were modifications made in Kosovos customs stamps that substituted UNMIK with Kosovo. Ultimately, this created trade restrictions between Kosovo and countries like Serbia and Bosnia. The Pristinian government also enforced import restrictions on goods received from Serbia. This ultimately increased tension at borders in the mid of 2011.

Relations with the European Union

Earlier, member nations had given approval for the association agreements with the European Union. So, in some way, even CEFTA has helped countries in getting ready for the complete European Union association. On May 1, 2004, countries including Poland, the Czech Republic, Hungary, Slovakia, and Slovenia became a part of the European Union, while other nations such as Bulgaria and Romania joined it on Jan. 1, 2007. Croatia became a part of the European Union on Jul 1, 2013. For the last 6 years, Montenegro and Serbia have been a part of European Union accession conversations, whereas Albania and Macedonia tend to be official nominees for the European Union. After the recommendations made by the European Union, the prospective members got ready for association by creating FTAs or free trade areas. EU nations have a big portion of CEFTA foreign trade.

Related Topics

• Trade Balance: Surplus and Deficit
• Mercantilism
• J Curve
• National Trade Data Bank
• Capital Account (Economics)
• Merchandise Trade Balance
• Current Account 
• Income Payments
• Unilateral Transfer
• Is it better to have a trade surplus or a trade deficit? 
• Export of Goods and Services and Percentage of GDP
• Heckscher-Ohlin Model 
• Linder Hypothesis
• The Balance of Trade as a Balance of Payments
• National Savings and Investment Identity
• Circular Flow of Money
• Financial Capital
• Supply and Demand Sides for Financial Capital? 
• Flow of Capital
• Domestic Saving and Investment Determine the Trade Balance
• National Savings Identity and Trade Deficits
• How the Business Cycle Affects Trade Balances
• Trade Balance or Trade Surplus
• Level of Trade
• Comparative Advantage
• Absolute Advantage
• Specialization and Gain from Trade
• Absolute Advantage in All Goods
• Production Possibilities Frontier and Comparative Advantage
• Comparative Advantage and Mutually Beneficial Trade
• Gain from Trade
• Opportunity Costs and International Trade
• Intra-Industry Trade
• Splitting Up the Value Chain
• How Economies of Scale Lead to Trading Advantages
• Protectionism
• Closed Economy
• Tariffs 
• Double Column Tariff
• Import Quotas
• Double Column Tariff
• Infant Industry Theory
• National Interest Argument
• Race to the Bottom
• Anti-Dumping Laws
• Dumping
• Trade War
• Race to the Bottom
• Non-Tariff Barriers
• Effects of Trade Barriers
• Who Is Benefited and Who is Harmed by Protectionism?
• Infant Industry Theory for Restricting Imports
• What is the Anti-Dumping Argument for Restricting Imports?

• Anti-Dumping Laws
• Dumping

• What is the Environmental Protection Argument for Restricting Imports?
• Race to the Bottom
• Unsafe Consumer Products Argument for Restricting Imports?
• National Interest Argument for Restricting Imports
• What is the WTO?
• What is the GATT?
• What are Free Trade Agreements?
• North American Free Trade Agreement
• Central European Free Trade Agreement
• General Agreement on Free Tariff and Trade (GATT)
• Common Market
• Common Market for Eastern and Southern Africa
• Central American Common Market
• Caribbean Community and Common Market
• What are Economic Unions?
• WTO
• International Monetary Fund
• World Economic Forum
• Inter-American Development Bank
• Davos World Economic Forum 
• Chamber of Commerce
• Jackson Hole Economic Symposium