THE IMPACT OF FOREIGN TRADE IN AGRICULTURAL PRODUCTS OF BOSNIA AND HERZEGOVINA WITHIN THE FRAMEWORK OF CEFTA 2006

In modern conditions, characterized by the growing importance of foreign trade between the countries, relations of a country with international environment play an increasingly important role in economic development. Over the last decade the process of economic integration through the removal of barriers for the free movement of goods, services, money and people has improved job creation and economic growth. From economic cooperation with foreign countries should expect positive effects on the economy of the state if the external economic factor used in accordance with the plans and programs of economic development of a country. Thereto, there are social forces that can decide relatively independently to all elements of internal development and cooperation with foreign countries. The objective of this study was to investigate the effect of the CEFTA 2006 on the foreign trade of agricultural products in Bosnia and Herzegovina. In this respect it may be noted that foreign trade of agricultural products has an impact on the agricultural sector in Bosnia and Herzegovina.


Introduction
After almost five years of experience in trade liberalization in Southeast Europe, gained through the implementation of bilateral free trade agreements, countries in the region have been at the end of 2006 decided to enhance their economic and trade cooperation and to conclude a single free trade agreement known as CEFTA (Central European Free Trade Agreement) 2006. Bosnia and Herzegovina (BaH) signed the agreement on modification and accession to CEFTA on December 19 th 2006 in Bucharest and the agreement entered into force on November 22 nd 2007.
Even before this agreement, socio-historical, geographical, cultural and other factors had effects that Bosnia and Herzegovina most of its foreign trade performed with the countries of the Danube basin (e.g. in the period 2000-02, 60-70%), (Vaško, 2003) of which most later joined CEFTA.
The agriculture has a special place in the process of free trade given the usually limited effects in the liberalization of agricultural products. A good example is the free trade area of Central European countries from CEFTA group where the most sensitive agricultural products are classified into individual groups and in mutually accepted rules (Ćejvanović et al, 2011).
Most countries make efforts in making the above agreements to provide a balance of trade of agricultural products in a way that they have approximately the same export options as well as the partner with whom the agreement concluded. More competitive and developed countries often granted asymmetrical concessions in favor of the weaker partner and they often remain unused. Anyway, the agreements on trade liberalization create prerequisites for the promotion of mutual trade which contributes to the growth of economic activity and strengthening the role of the market (Ćejvanović, 2009).
When signing a contract on trade liberalization it is important to take care of ensuring peer conditions to domestic economies by such agreements as well as to take care not to jeopardize a vital economic and national interests (Ćejvanović et al., 2009).
Advantages or benefits which, among other things, bringing the Agreement are as follows (MOFTER a): 1. Successful regional, and within that particular economic and trade cooperation is an important prerequisite for convergence countries of the Western Balkans to the European Community; 2. The new agreement has facilitated administration of contracts i.e. simplification of contractual relations; 3. The agreement introduces new areas of which is for Bosnia and Herzegovina particularly important the harmonization of investment conditions in the region because this country is a net recipient of investment; 4. Diagonal cumulation of origin of goods is applied among all CEFTA members; and 5. Improved mechanisms for resolving disputes, facilitating the removal of technical barriers to trade etc.
EP 2014 (61) 4 (975-987) Compared with bilateral agreements CEFTA agreement (MOFTER a) is far more complex and comprehensive. Besides being concerned plurilateral agreement it introduces some new issues that previously were not covered or significantly improves the provisions that in bilateral agreements showed as insufficiently precise or effective in application.
The complexity is reflected not only in its content but also in the structure. Since the "old" CEFTA proved to be good preparation for EU membership from its signatories it was decided to form a new agreement includes modified old one and the simultaneous accession of new members. Next table (Table 2) shows total world foreign trade of agricultural products BaH.     Due to the significantly higher value of import of agricultural products the CEFTA 2006 and the World in relation to the value of export of the same (which shows low coverage of import by export) growth rates and decline of trade deficit in agricultural products BIH are mostly directly related to the movement of agricultural import in BIH, while the impact of export of agricultural products from BIH to the movement of deficits significantly lower.
In Table 3 is shown the share of CEFTA 2006 foreign trade with BaH agricultural products. The export-import ratio of agricultural products in BaH trade with CEFTA 2006 in the period from 2005 to 2011 ranged from 18.14% in 2005 to 33.19% in 2011 There is an evident trend of improving the coverage of import by export in that period. Compared to the export-import ratio of total foreign trade BIH agricultural products, export-import ratio within CEFTA 2006 is much more favourable. Export-import ratio of the total foreign trade of BIH agricultural products in the period 2005 -2011 ranged from 11.27% (2005) to 22.10% (2010 and 2011).

Consequences of Croatian accession to the EU
Bosnia and Herzegovina and Republic of Croatia (RC) have traditionally good trade and economic relations. The Republic of Croatia was the first country that Bosnia and Herzegovina has signed a bilateral agreement on trade liberalization. Naturally after signing the agreement CEFTA trade relations between the two countries are governed by this agreement. Trade Balance (RC-B&H) was on the Croatian side. But for many of BaH agricultural and food products the Republic of Croatia has become a major export market (Ćejvanović and Džafić, 2011).  Republic of Croatia on July 1 st 2013 became a full member of the European Union, which closes one chapter of trade cooperation and opens up completely new. As already mentioned trade links between Republic of Croatia and Bosnia and Herzegovina have so far been regulated by CEFTA agreement, however after EU membership this agreement is automatically suspended. Suspending the agreement CEFTA with Republic of Croatia Bosnia and Herzegovina is likely to lose the most important export market for agricultural products worth an average of 150.87 million. It is very difficult for BIH to compensate this loss of market. In such a situation agricultural enterprises will be forced to reduce production or purchase from the family farm and it would be a major blow for domestic agricultural production which will feel the consequences already in the 2014. From agricultural products represented in the structure of export largely participate producers of animal products especially milk and milk products so that the greatest effects can be expected in this sector. In addition to producers of milk and dairy products, we can expect consequences for sectors of the meat (whether it be on unprocessed meat or processed meat) and of plant products in potato sector. All listed products in addition to being the largest volume of exports to Croatia are "critical" because they are still (working conditions of export) cannot be exported to the EU market. Given counted it means BIH can export to Croatia only products that can be exported to the EU market. In BIH such products is only few, especially when it comes to animal products and their processed products.
The table shows that the export from BIH to Croatia ranged from 86.5 up to 213.5 million, which represents the largest export of agricultural products in one country that makes Croatia's major trading partner in agricultural products. With Croatian membership in the EU this export for most of (and most important) products will effectively be stopped because they missed the chance for an agreement before accession Croatia to the EU.
The second and perhaps more important issue is the problem of transit through Croatia and the EU about which are still performed trilateral negotiations between BIH, Croatia and the EU. Since Croatia became a member of the EU it is valid for EU legislation on the movement and transit of animals and products of plant origin. This can represent a serious problem for local exporters because alternative transportation and alternative export routes make export more expensive and therefore it below probably reduced after. The aforementioned problems, although agronomic professions indicated to, are not adequately resolved for political reasons from political positions holders and the tremendous consequences will be felt by BIH agriculture (Bilić et al., 2011).