Macedonia Trade Relations with the EU

Subchapters:

  • Business Relationships
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Trade relations with the EU and therefore with the Czech Republic have been strengthening for a long time, but last year they were hit hard by the pandemic. There have been closures and disruptions to supply chains around the world, and the Macedonian economy has struggled to withstand this. Government support programs have had some impact on boosting trade, but fiscal space has narrowed due to rising debt levels approaching 60% of GDP.

The total value of exported goods from North Macedonia to the EU in 2020 was EUR 448 million, a decrease of 17.8% compared to the same period in 2019, while the value of imported goods in the same period was EUR 35million, which was 15.1% less than in the same period of 2019. The trade balance is long-term positive, in 2020 it amounted to EUR 9 million. The most important trade partners of North Macedonia are Germany (almost half of all trade) and other EU countries and the countries of the former Yugoslavia. Agricultural products, tobacco, textiles, catalytic converters with precious metals or their compounds, ignition wire kits for vehicles, aircraft or ships, parts for seats, for motor vehicles and internal combustion engine parts account for the largest share of exports. The most common imports are platinum and platinum alloys (unprocessed or powdered),

Trade exchange with the EU (million EUR)

2018 2019 2020 2021 2022
Exports from the EU (million EUR) 480 504.3 448 ON ON
Imports into the EU (million EUR) 478.4 429.5 351.6 ON ON
Balance with the EU (million EUR) 1.6 74.8 96.7 ON ON

Source: European Commission

Trade relations with the Czech Republic

Trade exchange with the Czech Republic (million EUR)

2018 2019 2020 2021 2022
Exports from the Czech Republic (million EUR) 120 142 98.7 ON ON
Import to the Czech Republic (million EUR) 295 305 237.6 ON ON
Balance with the Czech Republic (million EUR) -175 -163 -138.9 ON ON

Source: businesscarriers.com

FTAs and treaties

Treaties with the EU

The Republic of North Macedonia joined the World Trade Organization (WTO) on 4 April 2003. North Macedonia has also signed bilateral trade agreements with Turkey, Ukraine and the European Free Trade Association (EFTA) (Iceland, Liechtenstein, Norway and Switzerland). The country is also a member state of the Central European Free Trade Agreement (CEFTA) and has signed the Stabilization and Association Agreement with the European Communities – CEFTA. CEFTA includes Albania, Bosnia and Herzegovina, North Macedonia, Moldova, Montenegro, Kosovo and Serbia. The agreement entered into force on 26 July 2007. In April 2001, North Macedonia and the EU became signatories to the European Stabilization and Association Agreement (SAA). The Stabilization and Association Agreement and the Economic Integration Agreement between North Macedonia and the EU entered into force in June 2001 and April 2004 (for trade in services). The agreements stimulate already large volumes of exports and imports in North Macedonia with EU member countries, mainly Germany, Great Britain, Italy, Bulgaria and Greece. The EU is North Macedonia’s largest trading partner, accounting for more than 80% of North Macedonia’s exports in 2019 and supplying just over 60% of Macedonia’s imports.

Contracts with the Czech Republic

The trade agreement between North Macedonia and the Czech Republic was signed on 19 September 1997 in Prague (valid from 10 December 1997). The agreement on the avoidance of double taxation was signed on 21/06/2001 (effective from 19/05/2002). The agreement on the support and protection of investments (signed in 2001) entered into force in August 2002. On 1 January 2007, the Treaty between the Czech Republic and Macedonia on social security also entered into force. The regulation in the field of health care, which is based on the principle of preserving the right to the provision of necessary health care during a stay in the territory of another state, should be considered a fundamental change brought about by the Treaty. However, compared to the past, the costs are no longer borne by the state, but by the insured’s health insurance company.

Trade agreements give North Macedonia access to markets with a total of 650 million consumers.

Developmental cooperation

The Republic of North Macedonia does not have its own development programs in which Czech companies could participate. On the contrary, the EU allocated a total of EUR 66million for North Macedonia between 2014 and 2020.

The priority sectors for funding from the EU were: Democracy and public administration – public service reform (transparency, accountability, independence) centrally and locally; support for decentralization and local governance; implementation of key parts of the Ohrid Peace Agreement; improvement of economic policy and management of public finances;. Rule of Law and Judicial Reform; more effective fight against corruption; respect for human rights, completion of police reforms and the fight against organized crime. Environmental and climate action; promoting sustainable growth; transition to a low-carbon economy. Transport – developing a modern, well-connected transport network to support competitiveness and growth; ensuring safer transport networks; improving mobility in urban areas using green transport. Competitiveness and innovation – improving economic competitiveness; increasing foreign direct investment; export diversification; creating conditions for sustainable economic growth and convergence of the EU; strengthening the trade framework (legal and institutional), including the implementation of EU legislation on the single market. Social development – ​​support for a more inclusive and efficient labor market; improving access to quality education and training to better match skills to employers’ needs; creating a modern, flexible social security system with greater social inclusion; strengthening of professional organizations. Agriculture and rural development – promoting more balanced development in rural areas; improving food safety standards; competitiveness of agricultural and food production. Regional and territorial cooperation – support of good neighborly relations; support for socio-economic development in border areas.

Prospective fields of study (MOP)

Agricultural and food industry

The priority of the Macedonian government is above all the development of agriculture, in all its forms. This February, the World Bank approved a project to modernize agriculture in North Macedonia in the total amount of USD 50.5 million or EUR 46 million. This two-year project includes the implementation of several key projects: 1) Construction of 2 “Agrofood Platform” shopping centers, which should comprehensively solve the purchase, storage, sorting and sale of agricultural products; 2) A software solution for the cadastre and registration of agricultural land in the Republic of North Macedonia, which will provide fast and accurate information for each plot; 3) Rendering plant for ecological processing of by-products of animal origin, while maintaining environmental protection standards.

Rail and rail transport

The railway infrastructure in North Macedonia is in a bad state. The European Union has promised help and is committed to financing projects for the construction and modernization of railway lines 1) Kichevo-border with Albania and 2) Kumanovo-border with Bulgaria. Project financing will be covered by 37% from the EU and 63% from state sources. Projects include railway track, earthing, tunnels, bridges, overpasses, retaining walls, service areas, railway stations, electrification, installation of telecommunications equipment and signaling. The conceptual design of the solution for the railway is drawn up and tenders for construction contractors are being launched. Construction is expected to begin in 2021 and be completed by the end of 2025. The Italian company Pricewaterhouse Coopers Advisory Srl prepared a study of the development and restructuring of the RSM Railway business segment and it is expected that

Water management and waste industry

Waste management and the protection of water resources are becoming, as North Macedonia approaches EU standards, a serious topic. A number of projects are expected, with the use of EU funding, for the construction of wastewater treatment plants in practically all regions of the country. The wastewater treatment plant in the capital Skopje should be implemented among the first, where the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) provided EUR 136 million for its implementation. The treatment plant will, in accordance with EU standards, serve more than 500,000 people. With the support of the European Union, the construction of wastewater treatment plants in Prilep, Radovish, Strumica and Kičevo has already been completed. Projects in Bitola and Tetovo are to be launched soon. Their financial coverage is prepared through IPA II projects. At the same time, technical documentation has already been created for treatment plants in the municipalities of Veles and Stip,

Defense industry

North Macedonia joined NATO in 2020, and in order to meet its standards, the army must be gradually modernized in the coming years, which is a great opportunity for Czech companies. It is not only about light firearms, but also about the modernization of equipment, as well as equipment for infantry (clothing, protective clothing, masks and half-masks, backpacks, boots).

Macedonia Trade Relations with the EU