Kosovo signed its Stabilisation and Association Agreement (SAA) with the European Union on October 27, a crucial step towards full EU membership for one of Europe’s poorest countries.

The SAA is considered vital for Kosovo’s integration with the EU in terms of political cooperation and trade exchange. The signing is a further indication of support from the EU at a time of deepening political crisis in Kosovo, with the opposition boycotting the working of the parliament in protest against EU-backed landmark agreements with Serbia, agreed in August.

The SAA was signed in Strasbourg by Kosovo’s Prime Minister Isa Mustafa and EU High Representative for Foreign Affairs and Security Policy
Federica Mogherini.

“Today [October 27], my country officially entered into contractual relations with the EU,” Mustafa was quoted as saying after the ceremony, according to a government statement.

“By signing the agreement, we confirmed the will of the citizens of Kosovo towards the EU integration perspective and opening a new chapter for Kosovo,” Mustafa added.

The government has also committed to undertake reforms in all sectors.

Mogherini was cited in the statement as saying that the SAA is expected to enter into force "as soon as possible”.

“This will be very good for the people of Kosovo and the European Union, and for the stability and integration of the region. It is a good moment," she said.

Earlier on October 27, Kosovan Foreign Minister Hashim Thaci wrote on his Facebook page that the signing of the SAA is a testimony of "our commitment to European values.”

“This contractual agreement contains mutual obligations, Kosovo's commitment to reforms and the EU commitment to help us in the process, until the fulfillment of the EU perspective," Thaci said.

By confirming Kosovo’s progress towards EU integration, the signing of the SAA is expect to increase investor confidence. It is also expected to benefit local businesses since it will open the way for the marketing of Kosovan products in EU markets, although local companies may have to raise the quality of their products to meet EU standards.

Currently the EU is Kosovo’s main trading partner, along with the Central European Free Trade Agreement (CEFTA) countries. In August, the EU accounted for 42.1% of total imports and 29.9% of exports, according to the latest statistics office data. Kosovo has a high trade deficit, and its imports from the EU outweigh exports.

The Kosova Chamber of Commerce said in an October 27 statement that it welcomed the signing of the SAA as “an important step in our country's path to joining the EU ... the signing of the SAA represents an important step towards stability of the political and economic outlook and create conditions for a functioning market economy.”

The SAA process started in 2013, when the European Council decided in June that year to authorise the opening of negotiations on the SAA, after Kosovo met all the short-term priorities identified in a 2012 feasibility study covering the rule of law, public administration, protection of minorities and trade. Negotiations on Kosovo’s SAA started in October 2013 and the agreement was initialled in May 2014. The European Commission approved the proposal for an SAA with Kosovo on April 30, 2015.

Once it enters force, the agreement will be the first contractual relation between the EU and Kosovo. It links integration with the EU - including by establishing a free trade area - and the prospect of future EU membership to economic, political and administrative reforms. The specific progress that needs to be made is decided on a country by country basis.

The SAA provides a framework for political dialogue and covers co-operation in sectors such as justice, trade, education, employment, energy and environment.