Belarus – Serbia: current challenges and ambitious plans

№ 1, 2021
Author:

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Valery Brylev, 
Ambassador Extraordinary and Plenipotentiary of the Republic of Belarus to the Republic of Serbia (Ambassador to the Republic of North Macedonia and Montenegro concurrently)



 

2020 was a challenging year for businesses around the world. The pandemic made adjustments to the usual development of international co­operation. Could you assess its impact on the Belarus-Serbia trade and economic relations? Which spheres were the most vulnerable to its effects and where, instead, it was possible to maintain (or even increase) the operation capacity?

The previous year, marked by the COVID-19 pandemic, was difficult for everyone, including the Ministry of Foreign Affairs and Belarusian diplomatic missions abroad. We faced challenges that we had only seen before in disaster movies. Lockdown, border closures and shipping problems, layoffs, empty streets and overcrowded hospitals – all these things suddenly became a new reality.

The scale of adverse consequences for macroeconomics and for both – the regional and national levels – has yet to be ascertained. It is not only about the GDP and foreign trade volume. The pandemic effects altered trade flows and suspended production chains, reduced the financial capacity of enterprises, and became a resilience test for governments, businesses and every individual.

Serbia faced the pandemic starting from a reasonably confident foothold. The country's dynamic economic development in the context of the gene­ral stagnation of the European market in recent years allowed to implement a wide range of economic and other rele­vant support measures with a record-breaking 12.5 percent state aid to GDP ratio. Tax and administrative incentives, as well as direct financial contributions to businesses and communities, helped to keep the economic and social agenda under control, stimulate consumption and avoid an explosive growth of unemployment rate.

During the state of emergency in ­Serbia, most industrial enterprises continued functioning. Manufacturing and construction sectors had a stabilizing effect while other sectors were suffering a setback. The IT industry has demonstrated exceptional vitality and resilience during the pandemic.

The state of emergency and other restrictions affected the bilateral trade volume. Bilateral trade between ­Belarus and Serbia decreased in 2020, but we expect to exceed the $100 million mark in goods.

Despite the decline in Belarusian exports under difficult circumstances, 30 new items appeared in the product range (yeast, ethyl alcohol, hygiene items, craft paper, etc.); we have essentially increased the supply of cellulose, butter, special purpose vehicles, furniture, synthetic fabrics.

Trade in services is particularly noteworthy. Belarusian service exports to Serbia in 2019 reached a level comparable to the goods supply volume ($77.6 million and $80.6 million respectively). In 2020, service exports accounted for a positive trade balance of more than $20 million.

It has become possible due to the Embassy's commitment and the hard work of Belarusian specia­l­ists on the construction of the most complex units of the Serbian part of the Turkish Stream gas pipeline. OJSC ­"Beltruboprovodstroy" maintained the construction of 10 underwater crossings in ­Serbia, including the laying of a 1409-meter route under the Danube using the unique Direct Pipe® technology.

Serbia is the only country in Europe with which Belarus has a free trade agreement. How has this fact affected the development of trade and economic relations?

The free trade regime between Belarus and Serbia has been in effect since 2009, when the trade turnover barely reached the $50 million mark. Surely, duty-free trade opportunities have boosted the flow of goods in both directions. The maximum was registered in 2015, when bilateral trade reached $250 million.

It should be borne in mind that the signing of an agreement with Serbia doesn't mean receiving exclusive advantages for Belarus to promote its goods, rather than that it provides Belarusian products with equal conditions of access to the Serbian market.

The fact is that Serbia has duty-free regimes with Belarus, Kazakhstan and Russia (in the short term – with all Eurasian Economic Union members), with Turkey, with the countries of the European Free Trade Association (EFTA: Norway, Switzerland, Iceland and Liechtenstein), as well as with the members of the Central European Free Trade Agreement (CEFTA: North ­Macedonia, Montenegro, Bosnia and Herzegovina, Albania and Moldova).

Even though Serbia is not a member of the EU, we are conducting trade within the legal framework as close as possible to European standards. The conditions for the supply of our products to the Serbian market include certification and quality compliance with European or Serbian requirements (harmonized with those of the EU). The fact that Serbia observes fixed antimonopoly and tender rules should also be considered.

On the other hand, the unique set of preferential trade regimes in Serbia is of interest to Belarus in the context of the creation of joint ventures or assembly plants with the prospects of getting a foothold in the Balkans over the long run, with trade opportunities in the EU and third countries. Such an approach has proven to be effective when building MTZ and MAZ distribution networks: the assembly plants of Belarusian tractors and buses are successfully selling equipment not only in Serbia but also in other Balkan region countries.

Last year, during the visit of the Head of State to Belgrade, the ­potential of trade turnover was estimated at $500 million. What are the most promising areas for achieving this level of mutual trade?

The existing potential and conditions for converting our political contacts into trade and economic results have been discussed at all levels.

There are practically no serious challenges to expanding cooperation in the economic sphere, but the rules of the game may change. For example, Serbia may introduce quotas for the supply of steel reinforcements (the government is currently investi­gating the so-called excessive imports from Turkey, Belarus and Bosnia and ­Herzegovina).

Such restrictions, if they are introduced, will affect not only the volume of exports of Belarusian Steel Works (BSW) products to the region but also complicate the implementation of the project on joint production of fire-proof materials for the needs of BSW in Serbia.

As for the $500 million target, this task requires specific efforts on both sides. And we are not talking about a simple summation of export and import indicators. Belarus and Serbia need to look for new forms of co­operation, jointly develop projects that would ensure mutual benefit and take into account the interests of both sides.

Our proposal to the Serbian side is to develop a comprehensive program for the development of bilateral relations, the so-called Road Map, and now we are actively drafting its content.

For example, the volume of assembly and sales of Belarusian tractors to ­Serbia could be significantly increased by offering installment selling of equipment against the future deli­veries of agricultural products ­(melons, grapes, apricots, peaches, pomegranates, kiwis, figs, wheat, tobacco, etc.) to ­Belarus.

Another example is linking the export of Belarusian steel products to the region with the supply of joint-­production refractory materials to BSW. Currently, our main metallurgical plant and the Serbian company ­"Malbex" are developing a project to create a joint production of refractory materials in the Serbian city of Kraljevo at the former "Magnochrom" plant.

The Serbian side has already indicated its interest in developing cooperation in the field of electric transport and related infrastructure, as well as the introduction of digital technologies and innovations. There are prospects of opening the Belarusian market for Serbian wines, vinjac and rakia, as well as for the admission of our alcoholic ­beverages to the Serbian market.

Special attention should be paid to the joint projects developed in the field of breeding activities in animal husbandry.

The pandemic and the formation of a new Government in Serbia in 2020 have made some adjustments to the joint activities, but we expect that such projects will find their place on the agenda of the Intergovernmental Commission on Trade and Economic Co­operation and will become the core of the new Road Map.

How do you assess the competitiveness of Belarusian products? What domestic products are of major interest to Serbian consumers?

The main share of Belarusian exports to Serbia is formed by the supply of Belarusian industrial goods, as well as the work of joint ventures. The pro­ducts of our metallurgical, machine-building, oil refining, woodworking industries, as well as Belarusian dump trucks, buses, trolleybuses, cargo and fire trucks have already proven themselves in ­Serbia. Moreover, the specialists of MAZ, MTZ, and ­Gomselmash elaborate and improve their equipment, develop new models taking into account the specific demand in Serbia.

As already mentioned, in general, the technical and other requirements for the products imported to Serbia and the Balkans are equivalent to the EU standards. Almost all the goods that have access to the European market can be freely supplied to Serbia. In some cases, this factor is the bottleneck, but at the same time, it forces Belarusian producers to work on improving the competitiveness of their products.

I would like to pay special attention to agricultural products. In 2020, we managed to agree on certificates for the export of Belarusian dairy pro­ducts, meat products, poultry and fish products to Serbia. Since October, it's been possible to export to Serbia dairy and fish products certified by the EU, as well as products made from milk and poultry meat without European certificates, but meeting the requirements of ­Serbia.

Raising awareness about Belarusian products would considerably facilitate the promotion of these and other new products to the local market (parquet, cosmetics, underwear and knitwear, shoes, children's goods and toys, etc.) In this context, it is extremely important to participate in specialized exhibitions in Serbia, especially given their regional aspect.

Before the pandemic, business events with the participation of companies of the two countries were held regularly – forums, visits and exhibitions. Are you considering arranging such events, including the online format?

International forums, visits, exchange of business delegations, exhibitions remain the main channel for building bridges and setting up new contacts. The ban on such activities during the pandemic had a negative impact, first of all, on business activity in the context of developing new agreements. That is why there was no leverage to compensate for the slowdown in implementing the current projects.

In 2020, we didn't manage to organize important promotion events, i.e. the presentation of the industrial potential of Belarus in Belgrade and the Made in Belarus pavilion at the International Agricultural Exhibition in Novi Sad.

The remote format has already proven effective in terms of opportunities for business representatives to demonstrate their positions on specific issues, as well as to promptly discuss details and solve existing problems. However, the effectiveness of the so-called online exhibitions is hardly comparable to the targeted presentation of goods and services in a traditional format, especially given the sociability of Serbs and their focus on open and constructive dialogue.

We are anticipating the relaunch of exhibition activities in Serbia as soon as the epidemiological conditions are improved. And we are ready to provide full assistance to potential exhibitors from Belarus. In addition to the events mentioned above, we invite Belarusian manufacturers to take a closer look at such major specialized forums in the region as the International Tourism Exhibition (February) and the International Construction Exhibition SEEBBE (April). We also announce the launch of activities to arrange the National Exhibition of Belarus in Serbia in 2022.

Serbia and Montenegro in 2020 were among the few countries that Belarusians could visit without health certificates and self-isolation. Did this contribute to the growth of tourism services turnover? And how often do Serbian tourists visit Belarus? How, in your opinion, can the growth of the tourist attractiveness of our country be promoted?

It is no secret that all foreign guests arriving in Belarus describe with admiration what they saw during their trips. The opinion of Serbian tourists is no different from those of other foreign visitors: Belarus is worth a visit and coming back again. Therefore, we propose to talk not about the need to promote the growth of tourist attractiveness, but about the demand for marketing and information activities, encouraging representatives of the tourism industry of both the countries to increase co­operation, developing customized tours, and the existing travel programs to be mutually complemented by the visits to our countries.

Surprisingly, Belarus and Serbia are not popular tourist destinations for the citizens of both countries, even though they are only 1000 km away from each other; there are linguistic, Slavic, religious similarities, as well as regular flights and a visa-free regime.

Just before the pandemic, during the first meeting of the Belarus-Serbia Working Group on Tourism, it was stated that the mutual tourist flow is so limited that the situation requires active actions to improve it. In 2020, we couldn't implement the arrangements for promotional missions of tour opera­tors, media representatives of the two countries, holding presentations and other joint marketing events. However, this effort will be resumed as business activity picks up.

In terms of figures, the turnover of tourist services with Serbia increased slightly in 2020 and amounted to only $800 thousand with 94 percent made up of Belarusian exports (services provided to tourists from Serbia in ­Belarus). At the same time, according to Belstat, in Montenegro, which remains one of the key tourist destinations for Belarusians hosting at least 35 thousand of our tourists annually, the import of Belarusian services ­barely exceeded $70 thousand.

Therefore, for a realistic estimation of tourist flows, we focus not so much on statistical data, but on the number of direct charter flights, the number of requests for consular and advisory assistance we receive at the Embassy, etc.

And in terms of developing relations with Montenegro, we see prospects for the supply of products, and Belarusian tourists will be among the potential consumers of these products.

While the whole world is facing the second wave of COVID-19, it is pro­bably difficult to make plans for the future. But perhaps there are some events, projects that are planned to be accomplished? What are the preliminary expectations for the develop­ment of bilateral cooperation in 2021?

We remain optimistic and set ambitious goals. We will build on cooperation and accelerate efforts in all the areas in order not only to implement new plans in 2021 but also all the projects stopped in the context of the pandemic.

We will organize the exchange of vi­sits at various levels, launch a new Free Trade Agreement between ­Serbia and the EAEU, hold a meeting of the Intergovernmental Commission with a new, result-oriented co-chair from the Serbian side, as well as several sectorial commissions and consultations, ensure the participation of ­Belarusian representatives in exhibitions and facilitate the establishment of new partnerships for the promotion of Belarusian goods and services in the region.

I would like to take this opportunity to thank the senior management and staff of the Belarusian Chamber of Commerce and Industry for the coherent teamwork to foster the relations of Belarus with Serbia, Montenegro and North Macedonia and facilitate Belarusian business activities abroad.