The European Commission (EC)  decided on February 22 2010 to propose prolonging until 2015 the special autonomous trade preferences which the European Union grants to Western Balkan countries.

"The aim of this proposal is to ensure that Western Balkan economies continue to benefit from an unlimited duty free access to the EU market for nearly all products originating in these countries and territories," the EC said in a statement.

Together with the bilateral agreements in place, these trade preferences support economic integration with the EU and hence foster political stability and economic progress in the entire region, the EC said.

The beneficiaries are participants of the EU Stabilisation and Association process -  Albania, Bosnia-Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Montenegro, Serbia and what the EC statement described as "the customs territory of Kosovo".

The EU has a "status neutral" position on Kosovo, which in February 2008 unilaterally declared independence from Serbia. Of the 27 EU states, five do not regard Kosovo as an independent country.

In 2000, the EU established for the first time exceptional unlimited duty-free access to the EU market for nearly all products originating in the Stabilisation and Association region. This was then renewed in 2005.

In addition, Stabilisation and Association Agreements (SAAs) or Interim Agreements (IAs) on trade and trade-related matters were established with all Western Balkans, except for Kosovo.

The Stabilisation and Association process aims at the eventual accession of the Western Balkans to the EU.

"It is intended to ensure peace and stability in the region by providing support for the strengthening of democracy and the rule of law and the development of a market economy," the EC said. It places great emphasis on regional co-operation, including the promotion of a free trade area and political dialogue.

The current deal on autonomous trade preferences is due to expire on December 31 2010.

Stopping the trade preferences "risks having negative consequences on the overall economic performances of Western Balkans, with repercussions on their domestic reform processes," the EC said.

The EC said that there was a twofold purpose to extending the deal.

First, to allow all Western Balkan countries to further benefit from the preferential trade regime, where this is more beneficial than the treatment foreseen in the SAAs or IAs; and second, to further allow the customs territory of Kosovo to benefit from the current duty-free, quota-free treatment for almost all its exported products (i.e. with the exception of baby-beef, fish and wine which are subject to quotas).

The proposal will be discussed by the Council and European Parliament as a co-decision. It is expected to enter into force on January 1 2011.