Further Trade Integration in the Regional Economic Area of the Western Balkans: Steps Toward EU Enlargement

The economies and political systems of most European countries have successfully integrated to the European Union while also maintaining their sovereignty. Today, the countries of the Western Balkans (Macedonia, Serbia, Montenegro, Albania, Bosnia and Herzegovina, and Kosovo) are also seeking European integration, but mainly lag behind in terms of the human rights and economic indicators of readiness to integrate. A solution to this problem is the Regional Economic Area of the Western Balkans, an initiative which all the Western Balkans governments have agreed to, which would not replace eventual European Union membership but rather serve as an important stepping stone towards it. An action plan for regional economic integration was created at a meeting of Western Balkans heads of state in July 2017, but its steps are vague and leave out significant risks facing all Western Balkan governments. We identify, empirically and theoretically, the main risks to effective regional trade integration specifically, and find that the presence of administrative barriers to trade (ATBs) and regional political conflicts may prevent or deter full regional trade integration, an important step before European integration. We look to the most significant barriers to trade in the region in order to provide recommendations and more detailed action steps to make regional trade integration a reality.