August 23 (SeeNews) - Serbia may start duty-free exports of Fiat Chrysler cars produced at its Kragujevac plant to the Euroasia region after Kazakhstan agreed to support its request, Serbian economy minister Goran Knezevic said on Tuesday.
The move is crucial both for the survival of the Kragujevac plant, which cut its staff by nearly a third this summer and reduced output due to a decline in demand for its vehicles, and for the Serbian economy, which relies on significant support by Fiat, the country's biggest exporter.
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Last week, analysts told SeeNews that the recent reduction of production capacity at Fiat Chrysler Automobiles (FCA), a joint venture between Italy's Fiat and the Serbian state, is an obstacle to achieving the central bank's economic forecast for 2017, which envisages growth to strengthen to 3% from a projected 2.5% for this year and 0.8% last year.
Kazakhstan has been the only country of the Euroasia Economic Union (EEU), a customs union of Belarus, Kazakhstan, Russia, Armenia and Kyrgyzstan, that opposed Serbia's duty-free exports to the region because it wanted to protect domestic production.
However, Kazakhstan recorded a solid growth in is automotive industry recently, so the country needed to analyze Serbia's request and decided that Serbian cars are not direct competition to Kazakh production, Kazakh economy minister Kuandyk Bishimbayev said at Tuesday's meeting of the Serbian-Kazakhstan joint commission on economic cooperation.
Bishimbayev also promised that the country would vote in favour of the option at the next Supreme Eurasian Economic Council. Once the Council reaches the decision, all that remains are technical issues, Knezevic explained.
The possibility of duty-free exports of passenger cars from Serbia to Russia was first discussed during talks between Serbian Prime Minister Aleksandar Vucic and Russian President Vladimir Putin in October 2014. Since then Serbia has been awaiting a decision by the EEU.
($=0.8833 euro)