THE IMPACT OF CROATIA’S ACCESSION TO THE EU ON ECONOMIC RELATIONS WITH THE CEFTA COUNTRIES

Paper explores the effect of Croatia’s expected accession to the European Union on terms of trade with the CEFTA 2006 Agreement signatories. The emphasis is put on Bosnia and Herzegovina and Serbia, the two most important export markets within the current CEFTA integration where Croatia exports mostly duty-free. After joining the EU, Croatian products will be subject to the provisions of various stabilisation and association agreements which regulate trade relations of the majority of the CEFTA members with the EU. By comparing the provisions of stabilisation and association agreements and the CEFTA 2006 Agreement, Croatia’s export sectors most sensitive to possible negative terms of trade changes are identified. Unless Croatia negotiates the retention of zero or lower rates of customs duties prior to its accession to the EU, which is highly unlikely, the most pronounced negative changes in custom duties and ensuing reduction in exports can be expected in tobacco, meat and confectionery industries.