Kosovo's decision to ban import of Serbian merchandise constitutes a drastic breach of the Central European Free Trade Agreement (CEFTA), which was signed by the UN Mission to Kosovo, the Serbian Chamber of Commerce (PKS) stated Thursday.

The PKS thinks the actions taken by the Pristina authorities will not improve trade, investments or employment in Kosovo, while they will drastically raise trade on the grey market, leading to price increases and hurting consumers. The embargo obstructs the development of the entire region, the statement reads.

Since CEFTA is a project by the EU, the PKS expects the EU, CEFTA and all its members to condemn the embargo.

The PKS notes that on May 26 it sent a letter to the EU High Commissioner for Foreign Affairs Catherine Ashton, Head of the EU Delegation to Serbia Vincent Degert, CEFTA Secretariat Director Renata Vitez, Serbia's Prime Minister Mirko Cvetkovic, a number of ministries and other relevant institutions to draw attention to this non-tariff barrier.

On behalf of Serbia, the PKS expressed concern over the announced embargo, stating that it significantly undermined the achievements of CEFTA's implementation.

Such actions by Pristina are harming the economic recovery of the region and obstructing Western Balkans' integration into the World Trade Organization, the PKS stated.

Degert's response was that the European Commission had discouraged the introduction of customs and customs seals for merchandise coming from Serbia.

In his letter to the PKS, Degert remarked the European Commission's view was that all sides had to respect the CEFTA agreement, which states special conditions for dispute settlement, requiring that all 8 CEFTA members have to meet them.

CEFTA 2006 is the most important agreement regulating trade in the region and represents a modern version of the old free trade zone, which all the countries of Central and Eastern Europe were members of in preparation for EU accession.

The CEFTA agreement requires its members to allow free trade on their territory based on the standards of the EU and World Trade Organization.