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Yugoslavia The Industrialized West
Yugoslavia became a member of the General Agreement on
Tariffs and Trade
(
GATT--see Glossary) in 1965, when Tito's
reform program brought tariff and trade regulations into line
with international practice. The International Monetary Fund
(
IMF--see Glossary) began substantial loan support to Yugoslavia
in 1965. Although the United States provided Yugoslavia
substantial financial aid throughout the postwar years,
Yugoslavia's trade with the industrialized West focused on
Western Europe. In the 1980s, economic relations with that
region, which was also the greatest source of foreign loans to
Yugoslavia, became even more important. A 1981 agreement with the
European Economic Community allowed Yugoslavia to sell 70 percent
of its industrial goods duty-free in EEC markets. This concession
led to a Yugoslav policy of large-scale below-cost export to
Western Europe, and to resentment from EEC members whose products
were undercut. The quality of Yugoslav products often remained
unsatisfactory to West European markets, however, and competition
increased as EEC members granted concessions to their former
colonies in the 1980s. Overall trade between Yugoslavia and the
EEC fell by 15 percent between 1980 and 1985. The trade deficit
with the EEC was cut by 75 percent in the same period (from US$4
billion to US$1 billion), but only because of severe cuts in
imports associated with Yugoslavia's overall economic decline.
The Common Agricultural Policy of the EEC, designed to
protect EEC farmers from low-priced outside competition, excluded
most Yugoslav agricultural products from that market in the
1980s. In the late 1980s, Yugoslavia's trade imbalance crisis
brought EEC concessions in the sale of specific products such as
wine and veal, but clothing, textiles, and most produce remained
subject to EEC duties.
Full membership in the EEC became a goal of Yugoslav economic
policy in the late 1980s, and the media discussed the prospect
constantly; in 1990 Prime Minister Ante Markovic officially
declared that recent economic and political reforms qualified his
country for inclusion. In response, the EEC strongly encouraged
Yugoslav emulation of Western market economics and extended
favorable financial terms wherever possible. Nonetheless,
formidable reasons remained to delay full membership. One major
obstacle, the Yugoslav trade deficit with the EEC, had virtually
disappeared by 1989. But Yugoslavia would also have to eliminate
all duties and accept all EEC standards to include itself in the
EEC free trade zone; the Yugoslav economic structure did not
permit such changes in 1990.
Politically, in 1990 Yugoslavia was still far from the
genuine national multiparty system required of EEC members, and
continued regional conflict jeopardized the long-term credibility
of overtures by the Markovic government. Yugoslavia's strongly
neutral international position also was a negative factor until
Austria, neutral but wealthy, applied for EEC membership in 1989.
Meanwhile, Yugoslavia had established special trading
relationships with EEC members West Germany and Italy (accounting
for 70 percent of Yugoslavia's EEC trade in 1989), as well as
most members of the neutralist European Free Trade Association
(
EFTA--see Glossary). In 1988 the EEC granted a five-year
extension of Yugoslavia's special commercial status. West
European experts generally agreed that if it remained politically
stable, Yugoslavia would be admitted to the EEC ahead of former
Soviet bloc members such as Poland and Hungary.
Data as of December 1990
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