Stabilisation and Association Agreements : frequently asked questions

As the number of countries running excessive budgetary deficits diminishes, the European Commission believes it is of the utmost importance that national governments in the European Union take advantage of the good economic times to progress rapidly towards the objective of sound and sustainable budgetary positions. Under current policies, only 10 of the 27 EU countries will have reached their medium-term budgetary objective in 2008 despite three consecutive years of above-trend economic growth. To improve the functioning of the ‘preventive arm’ of the Stability and Growth Pact, therefore, the Commission on 13 June 2007 made a number of proposals which build on the 2005 SGP reform. They deal with the way governments formulate and implement their budgetary strategies over the medium term and the strengthening of surveillance and coordination of economic and budgetary policies at EU level. The aim is to achieve sustainable budgetary policies that contribute to higher growth and employment.

Why do we need a Stabilisation and Association Agreement?

• The European integration of the Western Balkan countries is the ultimate goal of the EU’s policy for the region – the Stabilisation and Association process (SAP).
• The centrepiece of the SAP is the conclusion of a Stabilisation and Association Agreement (SAA) that represents a far-reaching contractual relationship between the EU and each Western Balkan country, entailing mutual rights and obligations.
• A SAA embodies the choice for Europe made by the Western Balkan countries and the membership perspective offered to them by the EU.
• A SAA is a binding Treaty acting as a catalyst for change. The full implementation of the provisions of a SAA represents for a specific Western Balkan country, an essential step towards integration into the EU. A SAA is an instrument that will accompany the countries of the region all their way to EU accession – as decided at the Thessaloniki Summit, no intermediate contractual phases exist between the SAA and EU accession.

What does a Stabilisation and Association Agreement stand for?

• The SAA provides for the creation of a free trade area between a specific country and the EU for industrial products and most agricultural products. In the beginning, the trade provisions of a SAA are asymmetrically in favour of the signatory Western Balkan country. This means essentially that the EU grants the specific country unlimited duty free access to the market of the enlarged Union for virtually all products. On the side of the specific Western Balkan country, tariffs for some industrial and agricultural products are abolished immediately, while others are phased out over a number of years. While tariffs for agricultural products are reduced, quotas may remain for a number of sensitive products.
• The SAA sets the formal framework for the countries of the Western Balkans to gradually align their legal and economic frameworks with those of the EU and to co-operate closely with the EU on a number of sectors at the heart of the internal market.
• The SAA provides agreed priorities which allow the EU to work with each country of the region to bring them closer to the standards which apply in the EU. The SAA focuses on respect for key democratic principles and core elements of the EU single market. The commitment by a specific Western Balkan country to increasing political and economic freedoms is the very basis of a SAA. By extending core elements of the EU’s single market, the SAA provides a training ground for future EU membership.
• The SAA encourages the active development of regional co-operation by a specific Western Balkan country, with the support of the EU.
• The SAA intensifies the relations between the EU and a specific Western Balkan country, resulting in mutual learning and better understanding.
• The SAA structures the relationship between the EU and a specific Western Balkan country, establishing close co-operation in a wide range of policy areas (including in the area of justice and home affairs), based on reciprocity and to the benefit of both parties.
• The EU commits itself to providing decisive support for the implementation of reforms, and to using all available instruments of co-operation and technical, financial and economic assistance to this endeavour.

What are the main areas covered by a Stabilisation and Association Agreement?

• The SAAs are modelled on the Europe Agreements with the Central and Eastern European countries, while containing also specificities such as the obligation for regional co-operation and provisions on Justice and Home Affairs matters.
• Each SAA covers the implementation of the same core tasks, while some aspects can be tailored individually to each Western Balkan country.
• Especially important areas covered by a SAA are:
• the establishment of political dialogue;
• the promotion of regional co-operation;
• the establishment of a free trade area between the specific country and the EU;
• mutual concessions concerning the “four freedoms”: movement of workers, establishment, supply of services, and movement of capital;
• the approximation of the legislation of a specific country to Community law, including precise rules in the fields of competition, intellectual property rights and public procurement;
• wide-ranging co-operation in all areas of EU policies, including in the area of justice and home affairs.

What are the main aims of a Stabilisation and Association Agreement?

• To provide an institutionalised framework for the development of political dialogue. Political dialogue between the EU and the Western Balkan countries is already held and has been particularly promoted by the Thessaloniki agenda. The SAA framework will contribute to the development of political relations between the EU and the countries of the region. It will promote an increasing convergence of views on security and stability in Europe, and will contribute to harmonising positions regarding international issues. The political dialogue with the EU will also promote the countries’ full integration into the community of democratic nations. The EU is committed to support the Western Balkan countries in their efforts to develop both their economic and international cooperation.
• To support the efforts of the Western Balkan countries to complete their transition into well functioning market economies. This is done partially by encouraging the countries to gradually harmonise their legislation to that of the European Community, in particular in core areas of the EU’s single market. The Western Balkan countries already benefit from the Autonomous Trade Measures (ATMs), unilateral and exceptional trade concessions offered by the EU. While the ATMs are unilateral measures by the EU that can be revoked, the SAAs turn trade relation with the EU into a contractual one, requesting a measured opening of Western Balkan markets while bringing legal stability. The aim is to step by step develop a free trade area between the EU and the Western Balkan countries. This will promote the development of trade and investment, factors that are crucial to economic restructuring and modernisation. In December 2006, a new Central European Free Trade Agreement (CEFTA) was signed by all the countries of the region. The Agreement creates a regional free area and a simplified single system of rules that make it easier to trade within the region. The SAAs and CEFTA establish a comprehensive legal framework for trade liberalisation that will increase the attractiveness of the various countries for much needed foreign investment, as it happened successfully in the past with Central European countries that eventually joined the EU.
• To promote regional co-operation and good neighbourly relations. Once a SAA is in place, the country has to work to achieve closer co-operation with neighbouring countries. Regional co-operation is encouraged in all fields.

What is the state of play and the way ahead?

• Pending the ratification of a SAA (necessary for the entry into force of it), certain parts of the Agreement, in particular the provisions relating to the free movement of goods and the transport-related provisions, are put into effect/ enter into force through an Interim Agreement.
• Stabilisation and Association Agreements are in place with the former Yugoslav Republic of Macedonia (1 April 2004) and Croatia (1 February 2005). When a SAA enters into force, a new set of joint bodies is established: at ministerial level (Stabilisation and Association Council), at high officials level (Stabilisation and Association Committee) and at technical level (Sub-committees).
• The SAA with Albania was signed in June 2006. An Interim Agreement allowed its trade provisions to enter into force in December 2006 pending ratification of the SAA itself. SAA negotiations with Albania started in 2003 and took more than three years. Before concluding an agreement, the EU needs to be confident that the country concerned has the institutions and capacity in place to implement it.
• Technical talks for a SAA with Bosnia and Herzegovina have been finalised. However, the formal conclusion of the negotiations – through the initialing of the Agreement – remains dependent on sufficient progress by BiH in addressing key priorities. For signing the SAA, BiH will need to adopt a credible police reform package, to achieve full cooperation with the ICTY and to make further progress in the areas of public broadcasting and public administration.
• The SAA with Montenegro was initialled in March 2007 and its signature is foreseen for this autumn. Pending the ratification of the SAA, an Interim agreement is expected to enter into force in January 2008.
• Negotiations for a SAA with Serbia were launched in October 2005 but, due to lack of cooperation with the International Criminal Tribunal in the Hague (ICTY), they have been put on hold in May 2006. Following a clear commitment by the country to achieve full cooperation with the ICTY, and concrete actions undertaken by the country that have matched this commitment, SAA negotiations with Serbia resumed on 13 June 2007. As Kosovo is currently governed in accordance with the provisions of UN Security Council resolution 1244, the current SAA negotiation will not affect Kosovo. An SAA can only be concluded with States, an SAA could not be negotiated with Kosovo, given its current status.
• It is in the interest of the Western Balkan countries to fully implement the SAAs, irrespective of their individual status on the road to European membership. The SAAs will accompany the Western Balkan countries until they join the Union. It is important therefore, that the countries do not become complacent once they advance to a stage when they are accepted as candidate countries and begin membership negotiations; the SAAs must be respected and fully implemented and will be an important tool in preparing for membership. The EU will monitor and follow the implementation of the SAAs up through a number of mechanisms of the Stabilisation and Association Process, including the European Partnerships and Annual Progress Reports.

What are the main benefits for the citizens of the Western Balkan countries?

• Enhanced political stability and security due to good neighbourly relations, regional co-operation, and deeper integration into the EU.
• Economic development through enhanced trade and economic co-operation and the creation of a business environment providing for investments, encouraging individual entrepreneurial initiatives and generating employment.
• Progress in the process of political and economic reforms, including in the areas of institution building, public administration reform, respect of human rights and the rule of law, which are necessary to improve significantly the quality of life for all the citizens of the Western Balkan countries.

Source: European Commission