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According to the World Trade Organization agreements frameworks, individual countries can agree to lower customs tariffs and other trade barriers, in order to open and keep service markets open. In this context, Albania has already concluded free trade agreements with nine countries of the region: Macedonia, Croatia, Bosnia & Herzegovina, Yugoslavia, Moldova, Turkey, Kosovo, Romania, Bulgaria (the last two are EU members now) and by January 2009 the ratification process from the European members’ countries finished. What this means is free exchange of goods and services between these countries by better exploiting their competitive advantages. To better exploit the advantages from free trade at first we need to find out which the Albanian sectors that have competitive advantages are and then compare them with other countries. In order to do this we will use Trade Performance Index (TPI) which measures the competitiveness and diversification level of each sector taken in consideration using the comparison with other countries. Before starting the negotiation process with each EU country we need to know the level of competitiveness and diversification of our sectors. Only in this way we will have an idea in which sector and with which country the trade we bee profitable. Using TPI we can draw up the list of sensitive products to be negotiated, find out the sectors with best initial product or geographic specialization, etc.


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