engleski

The impact of the Stabilization and Association Agreement on the Croatian foreign trade

The signed Stabilization and Association Agreement with the European Union is of a high importance for Croatian economy. Besides establishing political and economic relations between the EU and Croatia on the agreement bases, this Agreement stipulates the foundation of Free trade area. Considering that the European Union is the most significant foreign trade partner of Croatia, participating with 55% in the total Croatian foreign exchange, implementation of the Agreement&#8217 ; s trade part will accelerate changes in Croatian economy. The first positive effects of the Agreement are expected in the improvement of resource allocation, the redirection of local consumption from the more expensive home product towards cheaper imported ones, the production specialization, the decrease of role of monopolies, the decrease of customs administration costs etc. Through longer period, the effects will stimulate the competition of home industry. On the short run, they can increase unemployment rate due to restructuring and termination of uncompetitive production.

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