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Viewing cable 07ZAGREB86, CROATIA'S EXPORT OFFENSIVE

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Reference ID Created Released Classification Origin
07ZAGREB86 2007-01-25 15:07 2011-08-25 00:00 UNCLASSIFIED Embassy Zagreb
VZCZCXRO8306
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHVB #0086 0251507
ZNR UUUUU ZZH
R 251507Z JAN 07
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC 7198
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS ZAGREB 000086 
 
SIPDIS 
 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV HR
SUBJECT: CROATIA'S EXPORT OFFENSIVE 
 
1. Summary: Hoping to reduce its chronic trade 
deficits and accelerate economic growth, the 
Government of Croatia launched an "Export Offensive" 
on January 22 aimed at boosting the number of 
businesses involved in the export sector by 25% over 
the next three years. At the core of the plan is the 
creation of six industrial "clusters" around small 
boat building, textiles and clothing, information 
and communications technology (ICT), woodworking and 
furniture, aquaculture and fishing, and mineral 
waters.  The intent is to improve coordination among 
these sectors, which the GOC hopes will lead to 
increased production and quality. The initiative 
seems to have received a positive, if guarded, 
assessment from the Croatian business community. 
End Summary. 
 
2. The Croatian Government unveiled a new "Export 
Offensive" on January 22 with a goal of increasing 
the number of exporting firms by 25%, from the 
current 11,000 to 13,800, by 2010.  This initiative 
comes as a measure to address what is a chronic 
weakness in Croatia's otherwise decent economic 
performance over the last several years, namely its 
$10 billion trade deficit, over 25% of GDP. In 2005, 
Croatia's imports totaled $18.5 billion, while 
exports were $8.7 billion, or 47% of imports. 
 
3.  To address this deficit and attempt to increase 
GDP growth, the GOC plans to create six "export 
clusters" around small boat building, textiles and 
clothing, information and communications technology 
(ICT), woodworking and furniture, aquaculture and 
fishing, and mineral waters.  The intent is to link 
producers and suppliers and thereby increase the 
domestic content of exports, as well as their 
quality and competitiveness.  Alongside the creation 
of the "clusters," the Government has promised other 
measures, such as the creation of a center for 
standards and certificates to enable businesses not 
familiar with export requirements to obtain the 
necessary certificates for export.  The Government 
has also promised, through its "regulatory 
guillotine," to ease regulations that hinder 
exports. 
 
4.  Croatia's business community generally welcomed 
this initiative, although the measures fail to 
address several key problems that hurt Croatia's 
competitiveness.  Foremost among these is the 
relatively strong currency, the kuna, which is held 
in a managed float against the euro.  Although 
Croatia's exchange policy has enabled the country to 
achieve macro-economic stability, it has also kept 
imports cheap and hurt the competitiveness of 
Croatian products in other markets.  Added to the 
exchange rate are relatively high social charges and 
local fees for services, which businesses say 
aggravate the problem. Nevertheless, any measure 
that reduces bureaucratic obstacles and attempts to 
bring government to the service of business finds a 
positive if, albeit, skeptical, reception among 
Croatia's business community. 
 
BRADTKE