Serbia, Belarus agree free trade to woo investors

BELGRADE, March 31 (Reuters) - Serbia and Belarus signed a free trade agreement on Tuesday, in a latest bid by the Balkan nation's authorities to woo investors and prop up the economy, hit by the global recession and absence of new capital inflows.

'The agreement we signed today is very important because our economy will be able to export goods free of duty to the market of 10 million people,' Deputy Prime Minister in charge of economy Mladjan Dinkic said in a statement.

'Foreign investors who produce in Serbia will enjoy the same benefits,' he said of the pact signed in Belarus capital Minsk.

The list of duty free products excluded sugar, alcohol, cigarettes, second-hand cars, buses and tyres.

But new cars -- the domestically assembled Punto by Italy's Fiat (nyse: FIA - news - people ) -- will be traded free of duty.

The free trade agreement was signed three weeks after Belarus leader Alexander Lukashenko made a rare foreign trip, taking a week-long skiing holiday in Serbia.

Both Serbia and Belarus have been hit hard by the global financial and economic crisis and both have sought loans from the International Monetary Fund to prop up their currencies.

Trade between the two countries stands at a mere $65 million, but free trade will likely lead to joint ventures and partnerships in energy, telecommunications and agriculture sectors, the statement said.

Serbia is the only European state outside the former Soviet Union to have signed a free trade agreement with Russia during the rule of late autocrat Slobodan Milosevic.

The pact, signed in 2000 and still pending ratification by the Russian Duma, had envisaged the lifting of customs duties over a five-year period.

(Reporting by Gordana Filipovic; Editing by Chris Pizzey)



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