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Four Balkan Countries Issue Ultimatum Over Croatia's Import Taxes

Croatia has raised its fees for border controls on fruit and vegetables, citing compliance with European Union standards.

Four Balkan countries have threatened to retaliate against Croatia unless it revokes its decision to dramatically raise import fees on fruits and vegetables.

Bosnia-Herzegovina, Macedonia, Montenegro, and Serbia issued an ultimatum to Croatia following a meeting of government officials in the Bosnian capital, Sarajevo.

Serbian Trade Minister Rasim Ljajic said Croatia's neighbors "don't want to enter into the spiral of measures and countermeasures," but they would be "compelled to do it" if Croatia didn't return to the previous level of taxes by the end of this week.

Ljajic called the new import taxes "absolutely protectionist in an economic sense" and "not in the spirit of good neighborly relations."

The Balkan countries maintain that the taxes violate their preaccession agreements with the European Union, under which they are guaranteed equal access to markets.

Serbia, Bosnia, Macedonia, and Montenegro are not members of the European Union, while Croatia joined the bloc in 2013.

Croatian officials said the taxes were imposed on 168 non-EU countries to improve the quality of imports, and were not meant to hurt the economies of its Balkan neighbors, although they are the main exporters of fruit and vegetables to Croatia.

Croatia also cited the need to comply with EU standards in raising the fees last month, which it said would be used to pay for border phytosanitary controls on fruit and vegetables. The fees were raised to 2,000 kunas ($319) from 90 kunas ($14).

The Balkan ministers asked for an urgent meeting with Croatian Agriculture Minister Tomislav Tolusic, who later offered to meet with his Balkan counterparts on August 14 in Zagreb, the Croatian capital

Tolusic said he expected to resolve the issue "in a week or two after we see what the problem is."

In warning of possible retaliatory measures if Croatia doesn't lift the taxes, Ljajic said Serbia had already increased phytosanitary controls on organic produce from Croatia and will ratchet them up further. That means that goods such as meat and dairy products could be held up at the border for up to a month.

Macedonia and Montenegro said they would file complaints with the World Trade Organization and seek compensation from Croatia, which raised fees during the peak season for exports of fruits and vegetables.

Bosnian Foreign Trade Minister Mirko Sarovic dismissed Croatia's argument that its fees were intended to hit exports from all non-EU members, not just the Balkans.

"Croatia does not import raspberries from Trinidad and Tobago but from Serbia and Bosnia," he said.

The Balkan ministers said Croatia's move was also making it more difficult for them to export to other EU countries because Croatia is the entry point for exports to the EU.

Most of the Balkan countries import more from Croatia than they export there.

Independent economists say Croatia's fees appear aimed at protecting its farmers from cheaper imports, but the measures could backfire if the four Balkan countries retaliate by blocking Croatian exports.

With reporting by AP and Reuters