Kosovo is one of the most open economies in the region, with trade representing 82% of its GDP (World Bank, 2018). The government is currently negotiating Kosovo’s membership to the World Trade Organisation (WTO) but has not made much progress in this regard since 2017. According to the national Agency of Statistics (KAS), in 2018 Kosovo's main exports were base metals and by-products, prepared foodstuffs, beverages and tobacco, plastics, rubber, mineral products and plant products. Mineral products (mostly hydrocarbon) were also the main item of imports, followed by machinery, mechanical and electrical equipment, foodstuffs, beverages and tobacco, vehicles, base metals and chemical products.
Kosovo mainly trades with its neighbours, with CEFTA countries receiving 47.2% of its exports at the end of 2018 (Albania 18.6%, North Macedonia 11.9%, Serbia 9.1% and Montenegro 5.3%). The EU accounted for 30.2% of total exports, mainly towards Germany (6.8%), Pays-Bas (4.0%), Slovenia (3.7%) and Great Britain (2.7%). On the imports side, the EU supplied 43.5% of Kosovo’s total imports (Germany 11.8%, Italy 6.1%, Greece 3.7%, Slovenia 2.8%); while imports from CEFTA stood at 25.5% (Serbia 11.6%, Albania 6.2% and Macedonia 5.1%). In 2016, Kosovo implemented the Stabilization and Association Agreement (SAA) negotiations with the EU, focused on trade liberalization. Products exported to the European Union are tax-exempt because the country benefits from the non-reciprocal preferential agreement granted to countries participating in the Stabilisation and Association Process. However, border tensions with Serbia impede the expansion of trade. Kosovo had introduced a new tax on imports from Serbia and Bosnia-Herzegovina (tariff at 100%), which led to a sharp decline in mutual trade; however, in 2019 Prime Minister Albin Kurti declared that such tariff should be shortly replaced by reciprocity measures.
Kosovo has a small domestic market and limited industrial production, and its imports remain higher than exports. According to Kosovo Agency of Statistics, Kosovo's trade deficit continued to widen in 2018 to EUR 2.97 billion, from EUR 2.45 billion a year earlier, with imports rising to EUR 3.34 billion, from EUR 3.05 billion, whereas exports fell to EUR 367 million, from EUR 596 million a year earlier. IMF estimates that the 2018 balance of payments (net trade in goods and services) to be USD -2.2 billion. According to the World Bank, Kosovo's overall trade deficit, which includes trade in both goods and commercial services, stood at an estimated 29.1% of GDP in 2018.