Delivery costs, consumer discrimination, e-signatures: Obstacles that must be solved in CEFTA region

Zdravko Ilic, CEFTA's expert for trade in services/Photo: CEFTA

CEFTA is a contract designed to facilitate trade between the countries of Central and Eastern Europe, while its importance came to the fore particularly in the time of coronavirus, when it enabled the so-called green corridors, i.e., easier traffic and trade in the period when borders were closed.

What it means for Serbia can be illustrated by the small fact that, for example, a fifth of flower exports from Serbia go to the CEFTA markets in the region.

The original agreement was signed by the Visegrad Group countries - Poland, Hungary and Czechoslovakia in 1992. Today, the signatories of this agreement are Albania, Bosnia and Herzegovina, North Macedonia, Moldova, Serbia, and Montenegro. Serbia signed this agreement on December 19, 2006.

CEFTA has a great role in the dialogue between Belgrade and Pristina, but also in the negotiations on EU accession.

Zdravko Ilic, an expert for trade in services with the CEFTA Secretariat, told Telegraf Biznis in an interview about the challenges faced by CEFTA members during the pandemic, trade and the changes it undergoes, and above all what trade looks like in the region and how it can improve.

• Online shopping has exploded in Serbia, particularly since the start of the coronavirus epidemic, but when it comes to regional e-commerce, what are the main challenges?

- Last year, CEFTA adopted the Action Plan for e-commerce that focuses on four groups of obstacles, identified in close cooperation with the business sector. The first group refers to the costs associated with the fact that each market has its own rules.

Companies that want to sell their goods online in the entire CEFTA market must align not with one, but with seven groups of rules. This is one of the reasons why they often decide to limit themselves to only one or two markets that they know well. The second group of barriers is the high cost of transactions, which is about expensive package deliveries and payments that take too long.

Unnecessarily high costs of electronic identification have also been recognized as a problem, because the use of, for example, electronic signatures or stamps is restricted outside a domestic market. Finally, the cost and time of customs procedures is one of the main problems faced by companies in the region.

• What then should members do in order to speed up development of e-commerce in the region?

- CEFTA follows the European Union in everything. Thus, our job is to connect individual markets into a common regional market that operates according to European rules, thus reducing business costs in the region.

• How do you plan to achieve that?

- Specifically, we want to allow all our companies to, by respecting domestic rules by and large respect the rules in the region. To achieve this, we need to agree on common rules based on EU rules, which will be implemented equally throughout the region.

Next, we need to establish transparency of postal delivery prices and improve cooperation between parcel carriers in order to have efficient delivery from one CEFTA market to another.

Currently, prices are such that it is often not worth delivering outside the local market. This is also linked to establishment of fast and secure customs procedures. As required by the CEFTA agreement, we must enable mutual recognition of electronic signatures so that our people can use their e-signature in all CEFTA markets.

If we add to this elimination of unjustified discrimination of consumers based on their location, the so-called geo-blocking, we have a good overview of our activities for the next four years.

• When we speak about advantages of networking, what are concrete benefits for a common regional market in the area of e-commerce?

- The potential benefits are really great, both for the economy and for consumers. Today, more than ever, due to anti-pandemic measures around the world, we are turning to online shopping.

The National Bank of Serbia reports that the use of cards in Serbia has doubled, while the use of cards on the internet saw 66% growth in 2020. This means that the annual income generated by card payments online is today almost half a billion euros.

• And for the companies?

- Polls show that an increasing number of companies receive orders online. As a result of the pandemic, in 2020, more than half of businesspeople who participated in the USAID survey stated that online and traditional sales channels are equally important, which is twice as many as in 2019.

The E-Commerce Association of Serbia also speaks about increased interest in establishing a national e-commerce academy.

Photo: Shutterstock

All this tells us that this is the moment we must seize to develop regional e-commerce that would offer domestic companies a market of 20 million consumers, estimated to be worth more than a billion euros.

• How to use that potential in the right way?

- A market of this size can encourage companies to invest in funds and people needed to digitize their businesses and prepare for the opportunities provided by a large European digital market.

To enable companies access to regional e-commerce means encouraging them to invest in digital transformation which will allow them to reach consumers in the region, and tomorrow consumers across Europe and the world.

We are also creating new exporters, because for small companies that don't have enough resources for agents and fairs, online trade may be the only way to conquer foreign markets.

Finally, we are creating room for a new generation of millennials, who have grown up communicating on the internet and who know how to make and sell digital products.

They are already big generators of jobs and of economic growth, and tomorrow they will be the pillars of a modern economy.

(Telegraf Biznis)