EU Economic Integration Process of Macedonia

The purpose of this research is to provide a general overview of the accession process with a special reference to the economic integration and the challenges of the Republic of Macedonia in the road of joining the European Union. The European Council of December 2005 granted the status of candidate country to the Republic of Macedonia. The Stabilization and Association Agreement (SAA) between the Republic of Macedonia and the EU was signed in April 2001 and entered into force in April 2004. The Council adopted the Accession Partnership for the country, including key priorities for reform, in February 2008. In October 2009, the Commission recommended to the Council to open negotiations with the country, as well as to move to the second phase of SAA Implementation. These recommendations were reiterated in 2010. The Council has not yet concluded its deliberations on the Commission's proposals. Visa liberalization for citizens travelling to the Schengen area has been in force since 19 December 2009. The country has a small, open economy, with total trade in goods and services recovering to a level of 114% of GDP in 2010, following the 2009 recession. Trade integration with the EU is advanced, with about 63% of all exports currently going to and about 53% of imports originating from the EU. The CEFTA region is the country's second most important trading region, accounting for around 24% of exports and around 10% of imports. The export structure continues to be highly concentrated on a limited range of products, with textiles and clothing accounting for about 17% of total exports and manufactured iron products for 26% in 2010. The stock of FDI increased to about 51% of GDP, with the Netherlands, Slovenia and Austria being the biggest investors. In total, EU countries accounted for about 60% of total FDI inflows. Switzerland, Turkey and Serbia are the most important non-EU investors. The exchange rate against the euro has remained stable in nominal terms. Price competitiveness has remained largely unchanged. Overall, in the last years trade integration with the EU is well advanced, but exports remain concentrated on a few price-sensitive products. International price competitiveness remained largely unchanged.26