As of January, Kosovar goods which are exported to member states of EU will be less competitive than they were the last 10 years. The preferential trade Agreement that Kosovo had with EU has expired in December, 2010. Goods “Made in Kosova” will not be able to enter the European market without paying tariffs anymore.

The need to apply for preferential measures for Kosovar goods was necessary due to the absence of a free-trade agreement between Kosovo and EU. Officials from the European Commission have said that Kosovo must fulfill a lot of conditions before they can start the negotiations to sign any free-trade agreement.

European Commission has the power to ratify these preferential trade measures but it needs the consent of the European Council and the European Parliament.

The last two have rejected the renewal of the preferential measures. According to officials from the Department of Trade in the Ministry of Trade and Industry, “These two institutions of EU did not carry out the ratification due to political reasons. According to our information, the European Council has said that the economic aspect is OK and that they expect to find a way to renew these preferential measures as soon as possible.”

The lack of such an agreement poses a very heavy burden on the economy of Kosovo because it reduces the opportunities through which domestic businesses can profit from exporting abroad.

In the absence of the Agreement, trade barriers will make exporting less favorable and will as a result significantly reduce the earnings of those businesses which depend on it. This will have direct consequences on the entire economy of Kosovo because businesses will have less capital goods to invest with.

Knowing that the problem of poverty in Kosovo is mainly caused by the absence of capital goods, trade barriers with EU will increase poverty in Kosovo. EU is Kosovo’s main trading partner because 54% of Kosovar exports go to its member states. This makes the negative effects of trade barriers even greater.