Returning to my Blog after much travel, I recently read that Serbia wants to keep import duties on 453 agriculture and food products from the EU. The argument says this will protect Serbia’s agricultural sector which will not be able to compete with European companies. But can we be sure it is in the interest of Serbian citizens?
Let me first explain what I am talking about. Under the Stabilization and Association Agreement (SAA) signed with EU in 2004 Serbia must phase out tariffs on industrial and most agriculture products from the EU by 2014. As we are approaching the effectiveness date of the agreement, many interested groups are claiming they will not be able to cope with competition from the EU from 2014.
Maybe, indeed, when Serbia entered into this commitment, it expected to join the EU earlier than it will. However, it may be hard to argue that the sector did not have plenty of time, and could not have done much more in a decade to prepare for this time.
The question is: who is going to be protected? Consumers should be looking forward to liberalization. A simple example: I did my shopping for Christmas and New Year over the weekend. I found an imported product at RSD 161 for a certain quantity, while the locally produced one was being sold for RSD 204 for the same quantity and content, both non-organic. And the imported product price included import tariffs. Unfortunately, this was not an isolated case. One can indeed love one’s country and be eager to support domestic producers, but should that love really cost 20% more for each local product one buys? Given the share of food products in the consumer price index, protection may not be the best tool to lower inflation? How credible is the industry if, after being given ten years to adjust to forthcoming and predictable pressure from competition, it claims it still needs “some more time”? Maybe the voices of the consumers should be louder and contribute more to shaping agriculture sector policies?