Technical meeting on imports of beef and pork meat from the EU and preferential treatment of domestic bidders (public procurement)

A technical meeting took place on 15 April 2021 between the European Commission and Bosnia and Herzegovina to discuss the situation on the beef and pork market of Bosnia and Herzegovina, as well as the 2020 decision by Bosnia and Herzegovina to give preferential treatment to domestic bidders in public procurement procedures.

During the meeting, the Commission stressed that, based on the trade data for 2018-2020, it could not detect any disturbance for the concerned products on the Bosnia and Herzegovina market that imports from the EU could cause. On the contrary, EU exports of fresh beef and pork meat to Bosnia and Herzegovina in 2020 have decreased. The Commission notes that Bosnia and Herzegovina has not presented any new different data. The Commission considers that introducing safeguard measures would not be justified. Should the measures be adopted, Bosnia and Herzegovina would be in violation of the Stabilisation and Association Agreement (SAA). Therefore, the Commission urges Bosnia and Herzegovina to refrain from actions that lead to a breach of its international commitments under the SAA and undermine its international credibility.

The Commission recalled that overall trade growth is a welcome effect of any free trade agreement. It notes that Bosnia and Herzegovina currently benefits from additional autonomous trade measures (ATM) on certain agricultural products, mostly fruit and vegetables. These measures have recently been extended until 2025. Should Bosnia and Herzegovina proceed with adopting measures in breach of the SAA, the EU will consider all available means to restore the balance in its trade relation with Bosnia and Herzegovina.

The Commission took note of the socio-economic consequences of the COVID-19 pandemic on the farmers in Bosnia and Herzegovina. The Commission reminded of the significant financial assistance the EU has granted to the agricultural sector in Bosnia and Herzegovina (€35 million in the 2020-2024 period), including to help to recover from the COVID-19 crisis. It encouraged Bosnia and Herzegovina to make the best of the EU assistance to modernise its agricultural sector and reap the benefits of open market and the EU accession process for the benefit of its farmers and its citizens.

The meeting was also an opportunity to discuss the May 2020 decision of the Bosnia and Herzegovina Council of Ministers to extend preferential treatment of domestic bidders in public procurement procedures in violation of the SAA. The Commission urged Bosnia and Herzegovina to end such treatment of domestic bidders without further delay in order to restore compliance with the SAA in this area. Bosnia and Herzegovina authorities indicated that the measure would not be extended beyond 1 June 2021.

Background:

The meeting was organised following the announcements of plans to introduce protectionist import duties on beef and pork for up to 2 years, as proposed by the Bosnia and Herzegovina Ministry of Foreign Trade and Economic Relations to the Bosnia and Herzegovina Council of Ministers. This technical meeting was not a formal consultation in line with Art. 30 of the Stabilisation and Association Agreement (SAA). The Commission had urged Bosnia and Herzegovina multiple times in the past few months not to adopt any measures without prior consultations as required under the SAA.

One of the main objectives of the SAA between the EU and Bosnia and Herzegovina concluded on 16 June 2008 is to “create a new climate for economic relations between them and, above all, for the development of trade and investment, factors crucial to economic restructuring and modernisation of Bosnia and Herzegovina”.

The EU is the main trading partner and the biggest donor to Bosnia and Herzegovina, supporting the country’s efforts to meet the EU accession requirements and fully benefit from the access to the EU market of around 450 million consumers. Trade concessions under the SAA were established in 2013. The agreement with the EU has been very favourable for the Bosnia and Herzegovina trade development. The EU27’s share of total imports into Bosnia and Herzegovina decreased from 64% in 2008 to 61% in 2019. Bosnia and Herzegovina’s total exports to EU27 increased from 69% in 2008 to 72% in 2019. The ratio of Bosnia and Herzegovina exports / Bosnia and Herzegovina imports with EU27 has improved from 45.6% in 2008 to 69.7% in 2019, while the rest of the world only improved from 36.3% to 41.8% between 2008 and 2019.

The EU has also recently extended its Autonomous Trade Measures (ATMs) for certain agricultural products (fruit and vegetables, and wine) for the Western Balkans for five more years, until December 2025. The enhanced access to the EU market for these products under the ATMs is conditional upon the countries concerned refraining from introducing new duties or charges and restrictions. Bosnia and Herzegovina was already suspended from benefitting from ATMs between 2016 and 2017.

The EU also provides essential assistance under IPA2018 to the agricultural sector in Bosnia and Herzegovina, which currently amounts to €30 million for the 2020-2024 period. Of these, €15 million from the IPA2018 eu4agri project are dedicated to grants to farmers and agri-food businesses and rural populations to support their modernisation and foster rural economy. Moreover, in order to help the recovery of the sector from the consequences of the COVID-19 pandemic, the EU allocated an additional €5 million from the IPA2020 Special Measure to the eu4agrirecovery project that lasts from January 2021 to June 2023.

As regards public procurement, on 29 May 2020 by the Council of Ministers of Bosnia and Herzegovina adopted a decision to extend the application of preferential treatment of domestic companies in awarding public contracts until 1 June 2021. That decision was in breach of Art 74(4) of the SAA with Bosnia and Herzegovina, which stipulates that domestic bidders’ preferential treatment must end at the latest five years after the entry into force of the SAA, i.e. by 1 June 2020. On several occasions, the Commission urged Bosnia and Herzegovina’s authorities to withdraw the decision and restore compliance with the SAA in this area.