EU Pressures Serbia Over Cigarette Imports from Croatia

Belgrade’s press reports a statement from Serbian Minister of Trade Rasim Ljajić that there are pressures from the EU on Belgrade to resolve the issue of cigarette imports from Croatia. Namely, with Croatia’s entry into the EU, preferential customs rates can no longer be applied to Croatian cigarettes as they could when Croatia was a member of the CEFTA agreement.

“Negotiations are ongoing. So far, our arguments have not been accepted and the chances of success are not very high,” Ljajić told Večernje novosti.

According to data in Belgrade, Serbia imported 1,620 to 1,625 tons of cigarettes annually from Croatia at a customs rate of 15 percent, which applies to countries within CEFTA, of which Croatia was a member until its entry into the EU on July 1. Since the customs duty on tobacco products from the EU is 57 percent, cigarettes from the Rovinj tobacco factory in Serbia would become significantly more expensive under that rate, which would noticeably reduce sales.

Brussels is asking Serbia to agree to set a quota for the import of 1,625 tons of cigarettes annually from Croatia at customs rates that are three times lower than the duty for imports from the EU, so that in the future, the Rovinj TDR in Serbia could sell cigarettes at more favorable customs rates than those applicable for exports from the EU. This was reportedly reiterated during the two-day visit of Štefan Füle to Belgrade.

From Belgrade, it is reported that the potential loss to the state budget in this case would be around seven million euros, but the impact on Serbia could be double as the domestic tobacco industry, which has been purchased by international companies, threatens job closures. ‘The solution for them would be for TDR to open a production facility here, employ our workers, and buy raw materials from our producers,’ assessed Vojislav Stanković, advisor to the president of the Serbian Chamber of Commerce (PKS) for agriculture.

‘It is not enough for them to increase our sugar export quota to the Union market by just 1,000 tons in return. Currently, it is 180,000 tons, and we can produce more than 250,000 tons for export, as we have enough arable land,’ Stanković added. Serbia, in fact, requested a more favorable export quota for sugar from the current 180,000 tons to 220,000 tons to compensate for the cigarette quota, but Brussels did not accept this, allegedly offering an increase of only one thousand, instead of the requested 40,000 tons, while Croatia’s export quota, according to claims from Belgrade media, is 217,000 tons of sugar.