19th meeting of the Stabilisation and Association Agreement Subcommittee between the European Union and the Republic of North Macedonia on trade, industry, customs and taxation

Virtual meeting, 1 December 2022

The 19^th meeting of the Stabilisation and Association Subcommittee on trade, industry, customs and taxation between North Macedonia and the European Union,took place virtually on 1 December 2022. The meeting was co-chaired by Ms Abazi - Ramadani, Head of European Integration Department, Ministry of Economyand Mr Cammarata, Deputy Head of Unit in the Directorate General for European Neighbourhood Policy and Enlargement Negotiations at the European Commission.

On trade related issues, the European Commission welcomed the country's continued high level of trade integration with the EU. The parties exchanged detailed trade statistics. In 2021 the EU accounted for 61% of the country's total trade in goods (79% of total exports and 46% of total imports) and over 95% of FDI inflows into the country. The Commission briefly presented the EU approach to FDI screening for security reasons, and encouraged North Macedonia to introduce a similar screening mechanism. The Commission welcomed the government's decision to lift the export ban on agricultural products and took note of the intention to remove the remaining export restrictions on wood end December 2022. The Commission offered assistance to support the country's efforts to align with the acquis on export controls on dual use goods and welcomed the steps taken so far. North Macedonia continues to be committed to enhance administrative capacity regarding trade policy and CEFTA and to implement the Common Regional Market Action Plan. The Commission encouraged the country to complete its implementation of CEFTA protocol 6 on trade in services.

On the free movement of goods, the European Commission stressed the continued need to strengthen administrative capacity to enforce the legal framework. North Macedonia was encouraged to complete alignment with the EU General Product Safety Directive, to prepare required legislation to align its new approach product legislation with the EU acquis, and to ensure further work to remove barriers to trade.

On taxation, the European Commission urged North Macedonia to amend by end 2022 the law on technological industrial development zone in accordance with the commitment given to the Forum on Harmful Tax Practices and to the EU Code of Conduct Group on Business Taxation. North Macedonia presented the main features of the upcoming legislative proposals implementing the Tax System Reform Strategy aiming to broaden the tax base and streamline tax exemptions. The Commission welcomed plans to develop a new integrated IT tax system for the Public Revenue Office. On customs, the Commission welcomed the country's active role in enhancing cooperation with neighbouring countries in managing border crossing points. The Commission encouraged continued consolidation and full application of IT systems. The authorised economic operators (AEO) programme continues to be implemented and promoted. The electronic system to process customs declarations and excise documents is fully functional. The Commission recommended to swiftly ratify and subsequently implement the Protocol on Elimination of Illicit Trade in Tobacco Products.

On enterprise and industrial policy, North Macedonia referred to measures aimed at improving the business environment. The Commission encouraged North Macedonia to ensure effective implementation, monitoring and evaluation of strategies and policy measures in this area (including the upcoming strategy for smart specialisation) and to proceed with the progressive alignment of the Law on financial discipline to the EU Payment Directive. Finally, the Commission stressed the need to implement measures foreseen in the Economic Reform Programme as well as the Policy Guidance based on the Economic and Financial Dialogue.