By Fatos Bytyci and Kole Casule
PRISTINA/SKOPJE (Reuters) - Kosovo has banned the import of all products from neighboring Macedonia, officials said on Monday, in a tit-for-tat trade dispute that could cost Macedonian producers one of their most lucrative markets.
Landlocked Macedonia exported goods worth $392 million to Kosovo last year, mainly cement, medicine, oil, steel, beverages, fruit and vegetables.
In July, Macedonia imposed a measure to limit the import of wheat and flour from all members of the Central European Free Trade Agreement (CEFTA), including Kosovo, in an effort to protect domestic production. Macedonia imported around $29 million worth of goods from Kosovo last year.
Kosovo responded by blocking imports of Macedonian food, beverages and cigarette products. On Sunday, Skopje said it would impose fees on all Kosovo citizens entering Macedonia.
A Macedonian government official, who declined to be named, said Prime Minister Nikola Grusevski and his Kosovo counterpart, Hashim Thaci, had discussed the dispute on Sunday evening but failed to find a solution.
Kosovo imposed the blanket ban at midnight. "Following a decision from the government, from today we have blocked all Macedonian products," Adriatik Stavileci, a spokesman for the Kosovo customs service, told Reuters.
Kosovo Trade Minister Mimoza Kusari-Lila said late on Sunday: "We want to show to our neighbor that if it continues to treat Kosovo citizens in such a manner then it will feel the losses directly to its economy and budget."
Risto Velkov, the president of Macedonia's Regional Alliance of Farmers, urged both sides to back down.
"This is bad for both countries," Velkov told local media.
"The Kosovo market is important to us because we export most of our vegetables and fruit there. We appeal to both sides to sit down and figure out what's the reason for this and to find a quick solution."
(Editing by Matt Robinson/Mark Heinrich)