President of the Chamber of Commerce and Industry of Serbia Marko Čadež: Ukraine can use Serbia as a hub to access markets in the Balkans, the EU, Asia and Africa
Exclusive interview of President of the Chamber of Commerce and Industry of Serbia Marko Čadež with Interfax-Ukraine
Text: PhD in Economics Maksim Urakin
President of the Chamber of Commerce and Industry of Serbia Marko Čadež, in an interview with Interfax-Ukraine, spoke about the prospects for economic cooperation between Ukraine and Serbia, preparations for the resumption of negotiations on a free trade agreement, opportunities for Serbian companies to participate in Ukraine’s post-war reconstruction, the potential of Danube logistics, and the creation of a Serbian-Ukrainian Business Council.
According to him, despite the war, trade between Ukraine and Serbia has returned to the level of the last pre-war year, while Serbian business is interested in deeper forms of cooperation - from joint ventures and industrial cooperation to IT projects, energy, the agricultural sector, construction and logistics.
– How would you assess the current state of economic relations between Serbia and Ukraine after the war reshaped regional trade, logistics and investment flows?
– Although Ukraine and Serbia were not among each other’s main trading partners by trade volume over the past decade, and although the highest level of mutual trade, reached in 2018, amounted to only $517 million, it was precisely the pandemic first, and then the war, that confirmed the great interdependence of our economies. This is especially true when it comes to supplies of Ukrainian raw materials and intermediate products for Serbian industry, which accounted for about 70% of our total imports. It is enough to recall how many problems after February 24, 2022, were caused by disruptions in supplies of Ukrainian iron ore for the Serbian steel mill, coal, aluminum wire, cellulose...
Despite the initial shock, mutual trade continued and, after falling by 25% in the first year of the war - to $339 million - began returning to previous levels and today can be assessed as stable. Last year, trade in goods between Serbia and Ukraine was at the level of 2021, the last pre-war year. It amounted to $442.2 million, of which Serbian exports accounted for $202.9 million, while imports from Ukraine amounted to $239.3 million. About 900 companies from Serbia still trade with Ukraine, of which as many as 670 import Ukrainian goods. In the first quarter of this year, the growth trend continued - Serbian exports to Ukraine doubled compared with the same period last year, while Ukrainian exports to Serbia increased by 4.5%.
However, no matter how important the development of trade in both goods and services is for us, no matter how significant the Ukrainian market is for Serbia as one of the largest in Europe in terms of the number of potential consumers, and Serbia for Ukraine as a hub for entering a broader regional market, it is essential above all that the war stops and Ukraine’s reconstruction begins. And that in the coming years, in parallel, our business communities establish higher forms of cooperation - from individual and joint ventures to the transfer of technologies and knowledge.
– Ukraine and Serbia have been discussing a free trade agreement for many years. What are the main obstacles to advancing this agenda, and is there business demand for such an agreement today?
– Ukraine is the only European country with which Serbia does not have a signed free trade agreement. After direct contacts between the competent institutions on this issue were renewed last year, this week, during the visit of the Ukrainian state and business delegation to Belgrade, we should take that long-awaited step forward. The governments of Serbia and Ukraine have prepared a joint statement on the continuation of negotiations on a free trade agreement, which, as envisaged, will be signed by Taras Kachka, Deputy Prime Minister for European and Euro-Atlantic Integration of Ukraine, and Jagoda Lazarević, Serbian Minister of Domestic and Foreign Trade.
There is interest in such an agreement from both the Serbian and Ukrainian business communities, especially in sectors where lower customs duties, simpler procedures and more predictable business conditions could increase companies’ exports. That is why it is important that in the continuation of negotiations we obtain a sectorally well-prepared agreement focused on specific industries.
With the amended and simplified rules for the cumulation of preferential origin under the Pan-Euro-Mediterranean Convention, to which both Serbia and Ukraine are signatories, we would expand the base of components for products traded under preferential conditions with the EU, EFTA, Moldova, Montenegro, North Macedonia and Türkiye, with which our countries have free trade agreements.
– Serbia’s accession to the World Trade Organization has been blocked for many years, including due to previous objections from Ukraine. How does Serbian business now assess WTO membership? What specific issues would Serbia and Ukraine need to resolve for Ukraine to support Serbia’s WTO accession?
– Although the formal authority and influence of the World Trade Organization are weakening, in conditions of awakened protectionism and tariff wars, when global trade is increasingly less based on the free market and increasingly depends on geopolitics, the importance of and need to comply with WTO rules are growing, especially for small economies. In this context, the Serbian business community sees Serbia’s membership in the World Trade Organization above all as an important step toward greater predictability of the business environment, more stable trade rules and further integration into global value chains. WTO membership is also an important element of the EU accession process, particularly within Chapter 30, which concerns international economic relations.
When it comes to relations with Ukraine, within the framework of Serbia’s WTO accession negotiations, a number of bilateral issues related to the liberalization of trade in goods and services were opened. Due to the extensive demands of the Ukrainian side, after its accession to the WTO in 2011, negotiations on a free trade agreement between Serbia and Ukraine were launched in order to find a sustainable and mutually acceptable solution through a bilateral framework. After the signing of the Joint Statement this week, the focus will be on negotiations on the liberalization of trade in goods, along with the gradual resolution of issues of market access and harmonization of trade regimes, which, I am convinced, will give an additional impetus to Ukrainian business as well for the development of trade, investment and industrial cooperation with Serbian companies.
– Which goods currently dominate Serbian-Ukrainian trade, and where do you see the strongest growth potential in the next three to five years?
– Trade between Serbia and Ukraine is currently dominated by industrial products, raw materials and goods intended for the processing industry. Last year, as in previous years, Serbia imported mainly iron ore and soybeans from Ukraine, which account for 46% of our imports, while Ukraine imported from Serbia mineral or chemical fertilizers, PVC floor coverings, paper and cardboard, car tires, as well as detergents and cleaning products, which together account for 55% of Serbian exports to the Ukrainian market. Due to the difficulties affecting local production in Ukraine, exports of generic medicines and medical devices from Serbia have recorded stable growth of 5-7% annually, with a tendency to accelerate.
Although iron ore and chemical fertilizers are likely to remain the basis of trade in the coming years as well, the greatest room for growth lies not in raw materials, but in sectors with higher added value. After the end of the war, the first growth driver could be products intended for Ukraine’s reconstruction - from building materials to energy equipment, agricultural machines and mechanization that Ukraine does not produce, irrigation systems, seed material and technologies to increase yields on land being returned to use.
– Serbia’s key trading partners include Germany, China, Italy and countries of the region. How has Serbia’s trade structure changed in recent years?
– The European Union has been and remains by far Serbia’s leading foreign trade and investment partner, although we are also opening new markets in the Far East and the Middle East and preparing for a major return to the African continent. Despite the slow recovery of the eurozone, the growth trend continued last year as well. We directed 62% of total Serbian exports to the EU market, imported 55% of all goods imported from the world from the EU, achieved 58% of total foreign trade turnover with the EU, while 72% of total foreign direct investment in Serbia came from the EU. It is indisputable that trade and investment relations with China are growing and that last year China ranked first among the countries from which we import the most, but Serbia carries out only 11% of its total trade turnover with China, while China’s share in Serbian exports is only 6%.
If we look at the structure of Serbian exports, in trade in goods we are recording a growing share of products with higher added value and a growing share of services in total trade exchange. Today, software is Serbia’s number one export product. Last year, software exports almost equaled in value the exports of the first three goods on the commodity list combined - copper ores and concentrates, ignition wiring sets, cathodes and cathode sections.
– Where could Ukraine find its place in this picture?
– I sincerely hope that peaceful and better times will come very soon for Ukraine, when your companies will strengthen and be able to fully use the opportunities offered by Serbia. I believe that Serbia, located at the center of the Western Balkans and Southeast Europe, with good logistics connections both with the EU and with the East and South, provides sufficient arguments for a decision to invest here in their capacities, produce and export duty-free to markets of 2.7 billion consumers with which we have free trade agreements and preferential status. To jointly produce goods both in Ukraine and here in Serbia for our own and third markets. And so that the strengthening of digital infrastructure and the national platform for the development and application of AI in Serbia also stimulates partnerships between our IT companies and startups.
I am impressed by the resilience of the Ukrainian IT sector, which even in wartime managed to preserve its export performance and during the war reached a record $7.3 billion, maintained Ukraine’s reputation as one of the leading European countries in IT services, brought the Ukrainian startup ecosystem into the ranks of the fastest-growing and most valuable in Central and Eastern Europe in 2024, and created unicorns such as Grammarly, GitLab and Creatio...
Innovation is the greatest strength and key guarantee of development prospects for both the Ukrainian and Serbian economies. Although Ukraine has longer experience in IT outsourcing, I am convinced that in Serbian IT it has the best partner for joint projects and the creation of new innovative products. The Serbian IT sector is one of the fastest-growing in Europe - with exports increasing tenfold over ten years, recording impressive growth of 45% in some years. With only 6.6 million inhabitants, we export software worth $5.1 billion, Serbia’s best-selling product in the world, and have the best performance - $773 per capita in Southeast Europe.
– Do Serbian companies see opportunities to participate in Ukraine’s reconstruction projects, especially in construction, infrastructure, energy, transport, engineering and building materials?
– Serbian President Aleksandar Vučić has already stated that Serbia is ready to participate in Ukraine’s post-war reconstruction - to rebuild one or two cities or a small region. As far as the business sector is concerned, it is obvious that after the end of the war Ukraine will become Europe’s largest construction site, and Serbian companies are interested in and have the potential to participate in the reconstruction of transport infrastructure, energy and residential facilities, as well as industrial enterprises. From construction companies, manufacturers of building materials and a whole range of activities accompanying the construction industry, to manufacturers of transformers for the energy sector and manufacturers of agricultural machinery, as well as companies that have the knowledge and technologies needed for the reconstruction and modernization of industry. Through contacts with the Chamber of Commerce and Industry of Serbia and the Embassy of Ukraine in Belgrade, Serbian entrepreneurs are already expressing readiness to get involved through the supply of their products, for example, for the needs of the energy sector.
– How can Serbia’s position as an industrial and logistics hub of the Western Balkans be used to develop trade routes between Ukraine, Serbia and the wider region, including through Danube logistics?
– Serbia has the potential to become a key logistics and industrial hub between Ukraine and the markets of the Western Balkans and the EU. Using the Danube route from the ports of Izmail and Reni toward Serbian ports and intermodal terminals, goods from Ukraine can be efficiently redirected to Corridor X and the markets of Central Europe and the Adriatic region. With the development of intermodal logistics and free zones, Serbia would be not only a transit point, but also a place where new value could be added to Ukrainian raw materials and semi-finished products before they are brought to the mentioned markets.
– Are the Chamber of Commerce and Industry of Serbia and the Ukrainian Chamber of Commerce and Industry discussing any new forms of cooperation - business forums, B2B meetings, trade missions or a permanent business council?
– Our chambers have excellent bilateral relations, crowned by the Memorandum of Cooperation that we signed three years ago within the framework of a business forum in Belgrade, as well as partnership cooperation and joint initiatives within Eurochambres, the International Chamber of Commerce ICC and the World Chambers Federation WCF. Personally, I am connected with the President of the Ukrainian Chamber, Gennadiy Chyzhykov, through years of our joint work - first on the Board of Directors of Eurochambres, and now on the General Council of the World Chambers Federation - years of mutual understanding, identical views on problems and solutions, as well as on the common European future of our countries and economies. I consider him not only a colleague, but also a great friend, with sincere respect for everything that the Ukrainian Chamber and he personally are doing to help Ukrainian entrepreneurs in the country and connect them with international partners, even under impossible conditions. Behind us and our chambers are business forums and B2B talks that we organized even during the war, as well as online business missions during the pandemic and joint statements on difficult topics even when others remained silent.
This week, we will have another business forum of Ukrainian and Serbian entrepreneurs from industries in which we mutually see potential for cooperation - IT, construction, agriculture and food industry, energy, logistics and transport. I believe that we will soon organize a business forum in Ukraine as well, for which we have the support of our foreign ministers Marko Đurić and Andrii Sybiha. Together, we will also work on establishing a Serbian-Ukrainian Business Council.
– Both Serbia and Ukraine are candidates for EU membership. Can their European integration paths create more cooperation between the two business communities rather than competition?
– I am convinced that nothing can strengthen Serbian-Ukrainian economic ties and cooperation between our business communities more than a common European future. Today, Serbia and Ukraine are candidate countries, but the frameworks within which accession to the European Union is taking place are different. Ukraine has achieved a Deep and Comprehensive Free Trade Area, while Serbia’s relations with the EU are regulated by the Stabilisation and Association Agreement. Ukraine’s agreement provides deeper relations with the EU and gives open access to the single market for your companies, provided the necessary conditions and standards are met. This is not the case for companies from Serbia, because our agreement has no legal basis for all sectors to automatically join the single market once the conditions are met.
Ukraine’s experience and the European Commission’s involvement in ensuring the harmonization and implementation of EU rules can also serve Serbia - both during the negotiation process with the EU and as an example of good practice that all stakeholders in Serbia, and especially the Chamber of Commerce and Industry of Serbia, should insist on. At the same time, the gradual harmonization of regulation according to the EU model and practice will ensure that mutual trade cooperation and investments between Serbia and Ukraine move along a more predictable and legally harmonized “path.”
The war in Ukraine has made the EU member states realize that the enlargement process must be approached more energetically and with a different methodology - both with regard to Ukraine and Moldova, and with regard to the Western Balkans - with the aim of political, security and economic stabilization of the European continent. Only a fully integrated and enlarged European Union would be able to respond in the best possible way to global geopolitical and economic challenges.
– Has Serbia seen a noticeable inflow of Ukrainian entrepreneurs, companies or professionals since 2022, especially in IT, trade, services and small business?
– According to data from the Serbian Business Registers Agency, more than 480 businesses with majority Ukrainian capital are currently operating in Serbia - 161 companies and 320 entrepreneurs, mainly in IT, consulting services, trade and small business.
For comparison, in 2021, a total of 202 Ukrainian companies and 117 entrepreneurs operated in Serbia. Since then, about 40% of them have been closed, that is, more than one hundred companies, but after 2022 we recorded a significant number of newly registered businesses, which mostly choose to operate as entrepreneurs and which are staying on the market. Last year, for example, not a single company or entrepreneur was closed. It is noticeable that in recent years Ukrainian business has been moving from traditional trade, where it was previously most represented, to digital and other knowledge-based services, so the number of IT entrepreneurs, consulting firms and design studios is growing year by year.
– Energy security has become one of the central issues for Europe. Are there areas where Serbian and Ukrainian companies could cooperate in electricity, renewables, energy efficiency, grids or equipment supply?
– Serbia has knowledge and capacities, especially in the energy sector - in the design and construction of power grids, repair services and the production of transformers of various voltage levels and capacities, power cables and related electrical equipment. There is also potential for cooperation in the thermal energy sector, as well as in the supply of equipment for gas distribution systems.
When it comes to renewable energy sources, Serbia still relies to a large extent on imports of such equipment as wind turbines, solar photovoltaic panels, inverters, battery systems and biogas plants, but it is precisely in this field that there is room for the development of new partnerships and the inclusion of domestic companies in regional supply chains and infrastructure projects. As for renewable energy sources, we also see potential for cooperation in the thermal energy sector, where Serbia has proven production capacities for biomass furnaces and boilers based on wood biomass, as well as significant capacities for the use of solar energy through the production and installation of solar collectors.
– More than 130 countries have confirmed their participation in Expo 2027 in Belgrade. Is Ukraine expected to participate, and would Serbia like to see a Ukrainian pavilion or business program at the Expo?
– The invitation is open, and we respect the motives of each individual country, but we sincerely hope that after the visit of the Ukrainian state and business delegation to Serbia, Ukraine will become the next, 138th country to confirm participation in Expo 2027 Belgrade. This would also be beneficial for the Ukrainian economy, because it opens great opportunities to present the potential of its economy, companies and technological capacities, strengthen our bilateral state and business relations, as well as business and economic ties with partners from all over the world.
EXPO 2027 will be not only an exhibition, but also a global platform for connecting countries, companies, investors and new development ideas. Therefore, I believe Ukraine’s presence would be important, especially in the context of the country’s reconstruction, attracting investment and creating new partnerships with the international business community.
– What message would you send to Ukrainian companies that are considering Serbia as a market, logistics base or production location for the Western Balkans and the EU?
– First of all, I would like to express deep and sincere recognition to Ukrainian entrepreneurs for everything they are doing to preserve their companies and employees even in wartime, maintain production and ensure supplies for citizens and businesses, continue exporting, retain old markets and win new ones.
They have a reliable partner in Serbian companies, and in Serbia they have a logistics, production and technological hub where they will be able, independently or together with local entrepreneurs, to fully use their potential and operate profitably, and from where they will expand their business operations both in the region and beyond it - toward the European Union, as well as Asian and African markets. Because Serbia truly is a house on the road that opens these doors.
