AmCham Macedonia 1/2019 - Page 12

COVER STORY EU Support for Private Sector Readiness Freek Janmaat, Head of the Section for Economic Development, Institution Building and Cross Border Cooperation, EU Delegation in Skopje A s we all know, 2019 will be an important year for North Macedonia. In January, the Parliament endorsed the changes to the constitution following the agreement with Greece on the name. As the Greek Parliament also supported the agreement, the start of EU accession negotiations could take place already this year. For this to happen, the European Council (consisting of all Member States of the EU) will have to give its green light, looking also at the reforms and policies in key areas such as the rule of law and public administration. What does this European Integration process entail for companies, what are the advantages and challenges? The actual process will be gradual, meaning that companies will not immediately notice big differences with the start of accession negotiations. Already since 2004, Macedonian companies can freely export many products to the EU thanks to the Stabilisation and Association Agreement (SAA). This is the free trade agreement between the country and the EU. Although it is understandable that much attention in the public debate is paid to the opening of accession negotiations, it is perhaps less well known, and sometimes taken for granted, what substantial advantages the SAA already brings to the country and its private sector. Stabilization and Association Agreement The SAA goes much beyond a regular free trade agreement. Besides tariff reduction and elimination, it ensures gradual, legally binding 12 EMERGING MACEDONIA alignment with EU standards and policies in important trade related areas such as competition, intellectual property rights, public procurement, consumer protection, etc. This in turn facilitates domestic companies’ access to the EU’s internal market. Vice versa, the gradual process of the local market opening to EU companies led to more competition in the country. This benefitted citizens, but also strengthened the competitiveness of firms. Over the years, thanks to the SAA, domestic companies have proved to be able to find their way to the EU’s market and substantially increased sales of local goods and services, illustrated by the fact that around 70% of the country’s exports now go to the EU. The ability to freely export to a market of half a billion people has also ensured substantial foreign direct investment into the country, both from the EU and other countries, with positive spill over effects on the activities of local firms and employment. On the 4th of December last year, the second phase of the SAA entered into force. This means that domestic legislation will be further