Contents

Executive Summary 5

1. Introduction 6

2. Scope for Deeper EU–WB Economic Integration 8

Area I. Goods Market Integration 8

Mutual Recognition of Conformity Assessment 8

Rules of Origin 9

Customs Integration 9

Agri-Food Market Integration 10

Area II. Logistics Integration 10

Resolving Border Delays 10

Facilitating Truck Driver Mobility under the Entry/Exit System (EES) 11

Transport Market Integration 12

Area III. Services Integration 12

Digital Integration 12

Professional Qualifications and Business Services 13

Financial Services Integration 13

Summing-Up Quantified Trade Barriers 14

Implementation Complexity and Potential Impact 14

3. Economic Gains from Deeper EU-WB Integration 15

Export Effects 15

GVC Participation and Growth Effects 16

Overall GDP Effect 17

4. Conclusions 19

References 21

Annex 1. Depth of EU Trade and Integration Frameworks—Detailed Table 22

Annex 2. Construction of GVC Indicators and Empirical Calibration of the Exports–GVC Participation Relationship . 24

A. Data and construction of GVC participation indicators 24

B. Relationship between exports and GVC participation 24

C. Summary 25

References for Annex 2 25

FIGURES

1. EU Economic Footprint in the Western Balkans 7

2. The Western Balkans are Geographically Embedded within the EU Economic Space . 7

3. Quantified Non-Tariff Barriers to WB–EU Industrial Goods Trade 14

4. GVC Participation Index: Historical Benchmark and Recent Convergence . 16

TABLES

1. Depth of EU Trade and Integration Frameworks 8

2. Complexity and Potential Impact of Economic Integration Measures 15