Why Kosovo Is Lifting, But Will Likely Reinstate, Tariffs on Serbia

Serbia is unwilling to meet Kosovo’s terms.

Kosovo’s new prime minister, Albin Kurti, is partially lifting his predecessor’s 100 percent import tariff on Serbian goods. He has offered to lift the tariff completely if Serbia suspends its derecognition campaign. If it fails to reciprocate, the tariffs will be restored in June.

Since reciprocation would imply Serbian recognition of Kosovo’s independence, it seems inevitable the trade sanctions will be back soon.

Why the tariffs?

The 100 percent tariff on Serbian, as well as Bosnian, goods was put in place by former prime minister Ramush Haradinaj, who resigned last year after being summoned to The Hague to face accusations of war crimes. It was a response to Serbia’s successful lobbying effort to deny Kosovo entrance into Interpol.

Did the tariffs work?

A technical report funded by the European Union concluded that Serbian imports were virtually eliminated. Kosovo’s trade with non-EU member states in Southern Europe fell significantly. Serbian goods were substituted by imports from Albania, Austria, France, Poland and others. The report suggested that these new imports may have raised prices as well as government revenues.

The tariffs did hurt Serbia’s export industry, which was the goal. However, Serbia’s economy still grew 6.1 percent in the final quarter of last year.

From a political standpoint, the tariffs only reinforced the deadlock between the parties.

Why did Kurtis make the offer?

European countries and the United States have put pressure on Kurtis to reduce or remove the tariffs. Richard Grenell, President Donald Trump’s acting director of national intelligence and special envoy for Serbia and Kosovo peace negotiations, has called for them to be dropped altogether. EU foreign policy chief Josep Borrell welcomed Kurtis’ proposal as a “first step”.

It isn’t. Serbian president Aleksandar Vučić has dismissed Kurtis’ offer as “another attempted fraud.”

But Serbia is not without blame. It has its own, non-tariff trade barriers, such as a ban on Kosovar license plates in Serbia.

Until the tariffs are eliminated, relations cannot be normalized. But they will not be removed until Serbia gives up its fight to prevent international recognition of Kosovo’s independence. Neither side is likely to back down, and so the gridlock continues.