PRISTINA/SARAJEVO -- On July 20, Pristina imposed an embargo against all imports from Serbia, in retaliation for a similar embargo established by Belgrade. The decision was a precursor to Pristina's bid to establish control of northern border checkpoints with Serbia, which led to clashes that left one Kosovar police officer dead.
Less dramatically, on the very same day, Pristina slapped a 10 percent customs duty on goods coming into the country from neighboring Bosnia-Herzegovina. Although both measures have been cloaked in the language of trade reciprocity, the real issue is the fact that neither of these regional neighbors recognizes Kosovo's independence.
According to Kosovar Trade and Industry Minister, Mimoza Kusari-Lila, the new duty on Bosnian goods is a reciprocal measure for an identical duty on Kosovar goods imposed by Sarajevo in December 2008. Kusari-Lila also points out that Bosnia still refuses to recognize the Kosovar customs stamp even though it has been issued in compliance with a UN Security Council Resolution and has "been accepted by other institutions and EU member states, including some that have not yet recognized Kosovo's statehood."
The new duty could hit Bosnia hard. Kosovo is the only country with which Bosnia has a positive trade balance and its exports to the fledgling country amount to around 100 million euros annually, while imports from Kosovo amount to just 20 million euros.
Political Bickering Spills Over Into Trade Relations
The head of the foreign-trade section of Bosnia's Chamber of Commerce, Duljko Hasic, maintains that his organization has been warning Sarajevo for years about the potential harm that could be caused by its failure to recognize the validity of Kosovo's official customs seal.
He is now dismayed but not surprised that Pristina has finally retaliated.
"We -- the Chamber of Commerce and the Association of Bosnian Exporters -- warned a long time ago that problems would arise," he says. "That's precisely what has happened. In other words, the political bickering between Bosnia and Kosovo has spilled over into trade relations, and now we have to face the consequences, the effects of which are hard to predict. We have lost a market worth more than 100 million euros."
In fact, Hasic says, exports to Kosovo were 80 million euros for the first half of 2011, indicating rapid growth that is now endangered.
To compound matters, Kosovo has warned that if the issue over the customs stamps is not resolved, Pristina will impose a full embargo on Bosnian goods identical to the one it has imposed against Serbia.
Bosnia has not recognized Kosovo because of concerns about the separatist leanings of its own Republika Srpska, the country's predominantly ethnic Serbian entity, which maintains close relations with Belgrade.
Sylejman Konushevci is a manager at a company called Inter in Pristina that produces juices and other foods.
He claims that his firm used to export to Bosnia, but that his business dried up when Sarajevo refused to recognize Kosovar customs stamps. He believes that this policy and all the fees it entailed added 25 percent to the cost of his products, pricing him out of the market:
"Reciprocity measures should have been implemented a long time ago," he says. "It has been a delayed step by our government. Products from Bosnia that are on our market can be easily replaced."
Significant Challenge To Free Trade Agreement
In Bosnia, Dusko Tomic is a manager of a firm called TT Kabel, which makes telecoms cables in the west Herzegovina town of Siroki Brijeg. He describes Kosovo as an "attractive" market, but thinks his firm can "no longer be competitive" because of the new duties introduced by Pristina.
"Something will have to be done because this situation suits no one, least of all the people of Kosovo who cannot rely on domestic production," he says. "They will have to import cables from somewhere, but they are creating obstacles for everyone."
The standoffs between Kosovo and Bosnia and between Kosovo and Serbia present a significant challenge to the Central European Free Trade Agreement (CEFTA), which has been signed by all countries in the region. Bosnia has complained to the CEFTA presidency about Kosovo's new customs duty, but this year the rotating presidency of the body is held by Pristina.
RFE/RL correspondent Robert Coalson contributed to this story from Prague and RFE/RL Kosovo Unit Editor in Chief Arbana Vidishiqi contributed from Pristina.