China and Serbia's Landmark Free Trade Agreement: A Gateway to the European Market

The Free Trade Agreement (FTA) between China and Serbia came into effect earlier this month. This is the first FTA that China has signed with a Central and Eastern European country.

According to the provisions of the FTA, Chinese exports of photovoltaic modules will enjoy tax-free status starting from the first year. Chinese exports of lithium-ion batteries to Serbia will have a gradually decreasing tax rate, decreasing by 0.7% annually until reaching a 0% tax rate in the tenth year. Chinese exports of inverters to Serbia will also have a gradually decreasing tax rate, decreasing by 2% annually until reaching a 0% tax rate in the fifth year. To apply for the preferential tax rates, the aforementioned goods need to obtain a certificate of origin from the customs certification authorities.

In mid-month, the European Union and Serbia signed a strategic cooperation agreement on sustainable raw materials, battery value chains, and electric vehicles.

Despite Serbia's relatively small size, it boasts an excellent geographical location, bordering eight countries and having convenient water and land transportation. With the close China-Serbia relationship and the benefits of the China-Serbia trade agreement, Serbia could potentially serve as a gateway to the European market, helping to mitigate tariff risks.