Romania WT/TPR/S/60
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II. INSTITUTIONAL FRAMEWORK FOR THE TRADE POLICY REGIME
(1) OVERVIEW
1. At the time of Romania's first TPR in December 1992, the transition to a market economy and
democratic system was at an early stage.  Romania's new Constitution was approved by popular
referendum and the first elections were held in November 1992.  The 1996 elections, which resulted
in the first fully democratic transfer of power since 1928, consolidated the transition to a democraticsystem during the period under review.  The author ities added to the institutional framework for
policy-making and expanded the scope for public participation to mediate social conflicts over the
impact of structural reforms.  For the future, the authorities recognize the need to improve governance
to realize more fully the benefits of the reforms already made.
2. By 1992, the authorities had established the basic economic policy objective of a transition to
the market economy, to which Romania's principal trade policy objectives were further liberalization,
balance-of-payments equilibrium, the full integration of Romania in the world trading system and
participation in European regional and subregional arrangements.
1  During the period under review,
Romania joined the WTO without special conditions, and concluded free-trade agreements with the
European Communities and other regional trade partners.  Significant liberalization initiatives includethe comprehensive coverage of Romania's bindings in Schedule LXIX, and, inter alia,  commitments
on financial and telecom services under the GATS.   Romania's implementation of the TRIPS
Agreement is almost complete.
3. To support the transition to the market economy, Romania's paramount national goal is
accession to the European Union (EU), its most important trading partner.  The
European Commission recommended in its Opinion of July 1997 that accession negotiations be
opened once more progress had been made by Romania towards satisfying the conditions ofmembership.  Generally accepting this Opinion, the authorities intend to accelerate the pace of
political and economic reform, as well as the transposition of the acquis into domestic law, to attain
the objective of membership with the shortest delay.  Under the Europe Agreement's asymmetric
liberalization schedule, economic operators in Romania are preparing for the more intense
competition on the domestic market that will follow the removal of remaining tariffs on industrialproducts by 2002.
(2) G
ENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK
(i) Parliament
4. According to Article 58 of the Constitution of 1991, Parliament is the supreme representative
body of the Romanian people and the sole legislative body.  Parliament is composed of the Senate(143 seats) and Chamber of Deputies (341 seats), elected to four-year terms.
2  Parliament sits in two
sessions each year, from February to June and from September to December.  Following the
1996 elections, a new governing coalition was formed (Box II.1).
5. Each law passed by Parliament is designated by L followed by the number and year of
promulgation (e.g., L37/1990);  the numbering of normative acts starts again each calendar year.Laws fall into three categories:  those that amend the constitution are "constitutional", those that
                                                     
1 GATT (1993), Vol. II, p. 29.
2 The number of deputies and senators is established by dividing the total electorate in each of the
41 counties and the capital city of Bucharest by 70,000 electors per deputy and 160,000 electors per senator,with a minimum of two deputies and two senators per county.WT/TPR/S/60 Trade Policy Review
Page 14
concern the organization of the political system are "organic", and all other laws are "ordinary".
Organic laws concern, for example, elections (L68/1992), the organization and functions of the
Government (L37/1990), and the Economic and So cial Council (L109/1997) to promote consensus
between the Government, trade unions and employer  organizations.  Ordinary laws concern, for
example, the budget, the statutory tariff, investment, and privatization.
Box II.1:  Recent political developments in Romania
A presidential election and parliamentary elections were held in November 1996;  the next elections are
scheduled for 2000.  The presidential election was won by Emil Constantinescu, President of theDemocratic Convention.  The parliamentary elections resulted in the election of eight main politicalformations, most composed of coalitions of much smaller parties or civic organizations.  The DemocraticConvention, a coalition of 13 parties and civic organizations, formed a governing coalition with the Social
Democratic Union and the Hungarian Democratic Union in Romania.  This coalition was the basis of the
first government formed after the 1996 elections, head ed by Prime Minister Victor Ciorbea, replaced by
Prime Minister Radu Vasile in April 1998.
Source:   WTO Secretariat.
6. A legislative initiative for an organic law or ordinary law may be presented by a member in
the Chamber of Deputies or in the Senate, and in either chamber of Parliament by the Government or
by popular initiative.3  The relevant Committee of each chamber examines the initiative and issues its
report on adoption with or without modification, or rejection.4  The initiative is then taken up in a
plenary session of the Chamber.  Passage of an organic law requires a majority of the members ofeach chamber, and passage of an ordinary law requires a simple majority of the members present in
each chamber.  The Senate and Chamber of Deputies have equal status under the Constitution of
Romania;  each one must vote its approval for the adoption of a law.
7. Parliament maintains control on the use of financial resources of the State and the public
sector through the Court of Audit (L94/1992).  Its members are elected by Parliament to a six-year
term.  The Court submits an annual report to Parliament on the budget and any anomalies and abuses,
which is published in the Monitorul Oficial al Romaniei  (Official Gazette of Romania).  Each
chamber of the Parliament may request the Court of Audit to open an investigation or carry out an
audit on specific aspects of the financial operations of the State or other public entities.
(ii) The President
8. The President is elected by universal suffrage to a four-year term and a limit of two terms
applies.  The President acts as Head of State and watches over the functioning of the political system.Powers include the dissolution of Parliament for the purpose of holding elections, the holding of
referenda on matters of national interest, and the conclusion of international treaties.
9. The President designates the candidate for Prime Minister after consulting with the parties
represented in Parliament.  The candidate asks Parliament for a vote of confidence in the Government
                                                     
3 The legislative initiative also rests with 250,000 citizens eligible to vote and comprising a certain
geographical representation of Romania's 41 counties and Bucharest.  According to Article 73(2) of the
Constitution, such initiatives may not concern taxa tion, international affairs, amnesty or pardons.
4 Of particular relevance to economic policy are the standing committees of the Senate on the
Economy;  Privatization;  Budget, Finance and Banks;  Agriculture, Food Industry and Forestry;  and thestanding committees of the Chamber of Deputies on Economic Reform Policy and Privatization;  Budget,Finance and Banks;  Industries and Services;  Agriculture, Forestry, Food Industry and Specific Services.Romania WT/TPR/S/60
Page 15
on the basis of a proposed Programme and a Cabinet.  If validated by a majority of members of
Parliament, the President appoints the Prime Minister as Head of Government with the Programme as
a mandate;  the appointment of each Minister is individually approved by Parliament.  The confidence
of Parliament in the Government may be withdrawn by a vote of censure.
10. The President receives laws adopted by Parliament (the Constitution does not provide for a
presidential legislative initiative) for the purpose of promulgation by decree, designated as D,followed by the number and year of promulgatio n (e.g., D747/1998).  However, the President may
return a law to Parliament for reconsideration, but only once.
(iii) Government
(a) Overview
11. In accordance with the Programme approved by Parliament, the Government ensures the
implementation of domestic and foreign policy and manages the public administration.  A "decision"
(hotarare ) is an action by the government either in th e exercise of its own powers or to implement a
law passed by Parliament, and is designated as HG followed by the number and year of promulgation
(e.g., HG851/1997).  Decisions concern, for example, the structure of the Office of the Prime Minister
and the specific domains of activity of most central government bodies (the Ministries of Defence,Justice, and the Interior are regulated by Parliament), as well as the procedures to elaborate policy.
5
12. The authorities may modify the structure and domains of activity of central government
bodies to achieve administrative efficiencies or to respond to political exigencies. For example, at
Romania's first TPR in December 1992, the Ministry of Tourism and Trade was responsible for trade
policy matters and collaborated with the Ministry of Economy and Finance on customs policy.6  The
Ministry of Tourism and Trade was then split between tourism and trade (HG815/1992), the Ministry
of Trade was reorganized as a stand-alone minist ry in 1994 (HG454/1994), and the Ministries of
Trade and Industry were merged into the present Ministry of Industry a nd Commerce (HG382/1997).7
13. As a general rule, a proposal for an action originates in the ministry or central government
body attributed the domain of activity, which prepares a statement of justification, drafts the text of
the proposal, and obtains the approval of any other ministry or body whose collaboration is
mandatory, and of the Ministry of Justice.  Once the proposal has been approved at the ministeriallevel, it is forwarded to the General Secretariat of  the Government for placement on the agenda of the
Government.  If the proposal concerns legislation, the opinion of the Legislative Council forms the
basis for a final consideration of the proposal.  The Cabinet meets at least twice a month, and
proposals are adopted by a simple majority, provided the Prime Minister approves;  in practice, the
Government takes decisions by consensus.
14. Following its adoption by the Government, a proposal may be submitted to Parliament for
enactment by law in accordance with the legislative procedure.  Another option is enactment by the
Government, in advance of submission to Parliament, by an "ordinance" ( ordonanta guvernului ),
designated as OG followed by the number and y ear of promulgation (e.g., OG17/1998).  Such an
enactment requires the authority granted by Parl iament in an "enabling" law, under terms and
conditions, a practice designed mainly to ensure the continuous functioning of the State between
                                                     
5 Established by HG851/1997, which rescinded HG390/1993, which rescinded HG140/1990 and
HG496/1991.
6 GATT (1993), Vol. II, p. 28.
7 The Ministry of Industry was established by HG493/1991, modified and completed by HG759/1991,
16/1992 and 458/1992.WT/TPR/S/60 Trade Policy Review
Page 16
sessions.8  For example, an enabling law is generally issued at the end of each parliamentary session
to permit the Government to conclude loan agreements on behalf of state-owned enterprises with
multilateral financing agencies.
15. Beyond the mandate of an enabling law, paragraph 4 of Article 114 of the Constitution
permits the Government to act in exceptional situations by "emergency ordinance" ( ordonanta de
urgenta ), designated by OU followed by the number  and year of promulgation (e.g., OU3/1997).
Emergency ordinances were seldom  issued during the period under review until 1997, when almost all
major policy initiatives of the Government on structural reform were enacted in advance of
parliamentary approval by emergency ordinance (Table II.1).9  A total of 93 emergency ordinances
concerned investment, privatization, taxation, financial discipline, as well as the agreements with
multilateral financing agencies to support the reforms.
Table II.1
Government ordinances by type, 1992-98
Type of ordinance 1992 1993 1994 1995 1996 1997 1998
(Number)
O r d i n a n c e 2 83 27 14 63 96 8 1 3 1
E m e r g e n c y  o r d i n a n c e 1102 1 0 9 3 7 2
T o t a l 2 93 37 14 84 9 1 6 1 2 0 3
(Share %)
Ordinance 97 97 100 96 80 42 65
E m e r g e n c y  o r d i n a n c e 3304 2 0 5 8 3 5
Total 100 100 100 100 100 100 100
Source : WTO Secretariat.
16. Ordinances, including emergency ones, require pa rliamentary approval for continuing effect,
in the course of which the Government's action may be accepted with or without modification, or
rejected.  Of the 93 emergency ordinances issued  in 1997, for example, 22 were approved without
modification (mainly those concerned with loan ag reements), 46 were approved with modification,
and 11 were rejected;  the authorities report "no further developments" on the remaining
14 emergency ordinances.  Thus, in statistical terms, the chance of approval with modification orannulment – or simply uncertainty – for an emergency ordinance in 1997 was present in
71 of 93 cases (about 76%).  In 1998 and 1999, the Government has continued to enact major policy
initiatives by emergency ordinance to accelerate the reform process.
17. Government ordinances and decisions are signed  by the Prime Minister and countersigned by
the Ministers who execute them. Ministers may issue "orders" ( ordin ), "instructions" ( instructiuni ),
"norms" ( norme ) or "decrees" ( decizie ) to implement the Programme for their ministry's domain of
activity;  such orders, instructions, norms or decrees may be issued jointly by several ministers where
ministerial responsibilities overlap.  A ministerial order is designated as OM followed by the
designation of the ministry (e.g., F for Finance,  IC for Industry and Commerce), and the number and
year of promulgation (e.g ., OMF454/1998, OMIC31/1997).
                                                     
8 The enabling law defines the scope of the government's authority, both in terms of fields of
application and time-period, and also defines whether the resulting ordinances must be submitted to Parliamentfor approval for continuing effect .  For a recent example, see L259/1998.
9 The frequent resort to the emergency ordinance was also noted in European Commission DGIA
(1997).Romania WT/TPR/S/60
Page 17
(b) Central government bodies with responsibilities for WTO-related policies10
18. The Ministry of Industry and Commerce (MIC) is responsible for trade policy in its entirety,
for policy in the sector of industry, and for the coherence of any economic policy matter in the domain
of activity of another ministry with the internat ional commitments assumed by Romania.  The MIC
has the primary responsibility for the Import Customs Tariff of Romania, for administering export or
import bans, quantitative restrictions, and licensing.  A subordinate body, the Romanian Centre forForeign Trade, is responsible for export promotion activities.  The MIC represents Romania in the
WTO, and collaborates with central government bodies whose domains of activity overlap with areas
of WTO commitment, such as intellectual property protection and services.  Any economic policy
initiative originating in another ministry is pr esented to MIC to assess compatibility with the
commitments under trade agreements.
19. The Ministry of Agriculture and Food has the central role in the development and
administration of agricultural policy, and elaborates, in collaboration with the MIC, the trade policy
on agricultural products, including levels of customs duties, export subsidies, and measures of support
(including rural development).  The Ministry is also responsible for phytosanitary measures and
collaborates with the Ministry of Health on sanitary measures.
20. The Ministry of Finance has an important role in trade policy matters due to its
responsibilities for public finances.  On the revenue side, the Ministry formulates the Government's
policy on direct and indirect taxes, in collaboratio n with the relevant ministry.  For example, the
Ministry of Finance collaborated with the MIC on the import surcharge introduced in October 1998,
notified to the WTO and examined by the Committee on Balance-of-Payments Restrictions
(section (4)(ii)).  The Ministry is also responsible for various tax incentives, and the Directorate
General of Customs is a subordinate body.  On the expenditure side, the Ministry is responsible forpublic procurement policies.  The Ministry negotiates international agreements on the avoidance of
double taxation and tax evasion, as well as bilateral investment treaties, in collaboration with the
Ministry of Foreign Affairs.
21. The National Bank of Romania (NBR) functions as the central bank.  Other than monetary
policy, the NBR is responsible for exchange rate policy, overseeing the balance-of-payments, andmaintaining international reserves.  The NBR is also responsible for overseeing the financial system,
including issuing and revoking bank licenses.
22. Established in 1991, the State Office for Inventions and Trademarks (OSIM) is responsible
for the granting of protection for intellectual property rights on industrial property (but not
enforcement).  OSIM registers, publishes, and examines patent applications (National Register ofPatent Applications), and grants protection by issuance of patents (National Register of Patents).
OSIM also maintains the national registers of titles of protection for inventions, trade marks,
appellations of origin, industrial designs, topographies of integrated circuits, and new varieties of
plants.
23. Established in 1997, the Romanian Office for Copyright (ORDA) is responsible for the
recording, observation, and monitoring of the application of copyright and neighboring rights
legislation on the territory of Romania.  At the request and expense of the owners of protected rights,
ORDA exercises observation and monitoring functions in relation to activities that might give rise to
the infringement of copyright and neighboring rights legislation.  Reports drawn up in the course of
these functions are submitted to the police for further action.  ORDA  and OSIM maintain and
                                                     
10 Bodies with responsibilities for privatization, investment and competition are described in the
respective sections of Chapters III and IV.WT/TPR/S/60 Trade Policy Review
Page 18
develop relations with the World Intellectual Pr operty Organization (WIPO) and, in collaboration
with the MIC, the WTO.
24. The Romanian Standards Institute, a governmental body responsible for standardization
activities, was replaced in 1998 by the Romanian Standards Association (ASRO), a non-governmental
body.  As of 1 May 1999, the standards developed by ASRO are voluntary, while the responsibility
for mandatory technical regulations has been assumed by the various ministries of the Government intheir domains of activity.  ASRO approves national standards, elaborates the principles and
methodology therefore, represents Romania in inte rnational standards-setting activities (ISO, CEI and
ETSI), observes regional standard-setting activities (CEN and CENELEC), and issues certificates on
the conformity of goods and services with Romanian national standards.  ASRO also operates an
information service to receive enquiries on Romanian standards.
25. Another change made by Romania during the period under review is the separation of
accreditation procedures from standardization.  The Ministry of Science and Technology has
promoted the Association for Accreditation of  Romania (AARO), a non-go vernmental body.  AARO
approves national conformity assessment procedures, licenses and monitors the organizations and
laboratories for accreditation purposes, and represents Romania in international conformityassessment.
(iv) Judiciary
11
26. The judiciary consists of a three-tier system of courts.  At the base of the system are the courts
of first instance established in each of Romania's 41 counties and Bucharest, which normally have
jurisdiction over disputes in the territory of the county or Bucharest.  Appeals of the decisions of the
courts of first instance are heard by the relevant County Court and the Court of the Municipality of
Bucharest, and appeals of their decisions are heard by the courts of appeal of the Supreme Court ofJustice.  Judges  and public prosecutors are nominated by the Superior Council of the Magistracy to
the President for appointment to a six-year term.  The Council also decides the promotion, transfer,
and sanctioning of judges.
27. Natural and legal persons may initiate legal action against improper conduct by administrative
authorities (L29/1990 on Administrative Disputes).  Before such action, the person responsible for thedecision has the opportunity to reverse the decision.  The courts of first instance for administrative
disputes are the relevant sections of the County Court or the Court of the Municipality of Bucharest,
and appeals of their decisions are heard by the administrative section of the court of appeal of the
Supreme Court of Justice.  The Constitution of 1991 also provides for the new institution of People's
Advocate ( Avocatul Poporului ) to defend the rights and liberties of citizens in relation to the public
authorities;  established by L35/1997, it began activities in 1998.
28. The Constitution of 1991 added a Constitutional Court to reinforce the equilibrium among the
organs of power and to review their decisions.  Prior to promulgation, the question of a law's
conformity with the Constitution may be referred to the Constitutional Court by the President as well
as by the Senate or the Chamber of Deputies (or at least 25 senators or 50 deputies), the Government,or the Supreme Court of Justice.  The Constitutional Court also rules on the constitutionality of laws
and decrees brought before it by the courts.
                                                     
11 OECD (1995).Romania WT/TPR/S/60
Page 19
(3) GOVERNANCE
(i) Overview
29. At a general level, the State can improve prospects for development by providing a
macroeconomic and microeconomic environment for efficient economic activity by operators, by
providing the institutional infrastructure – property rights, peace, law and order, and rules – that
encourages long-term investment, and by providing the basic public services (education, health,infrastructure) to support efficient economic activity, and protecting the environment.
12  Empirical
evidence across a large number of countries suggest s that investment, growth, and the return on
development projects go hand-in-hand with the State's provision of credible rules that will nurture
markets.13
30. With respect to macroeconomic stabilization (Chapter I(2)), Romania has renewed its efforts
in 1999.  With respect to the microeconomic environment, the regulatory foundations for private
economic activity have been in place since Romania's first TPR and were improved during the period
under review (Chapter III(4)).  The authorities also  recognize the need to accelerate the fundamental
reform of state enterprises by privatization (Chapter IV(2)).  This section considers in detail the
manner in which the authorities are supporting these efforts at the macroeconomic andmicroeconomic levels by more effective governance, through transparency, participation of the public
in policy-making, civil service reform, and the stability of policies.
(ii) Transparency
31. Romania's Constitution of 1991 provides for the right of citizens to information.  According
to Article 31(1):  "A person's right of access to any information of public interest cannot be
restricted", and, according to Article 31(2):  "The public authorities, according to their competence,
shall be bound to provide for correct information of the citizens in public affairs and matters ofnational interest."  A draft law on Public Access to Information is currently under consideration by the
Government prior to being submitted for adoption to Parliament.  Apparently, the law "cancels the
informational bureaucratic monopoly and ensures the basis of an efficient communication in the
institutional domain and between the administration and citizen".
14
32. Article 78 of the Constitution of 1991 provides that each law must be published in the
Monitorul Oficial , and come into force on the day of publication or the date provided in the text.
Furthermore, Article 107 states that government deci sions, and ordinances (except those pertaining to
national security) are also to be published in the Monitorul Oficial ;  according to the Constitution, a
decision or ordinance that is not published cannot be enforced.15  Orders and instructions issued by
central government bodies may also be published and, although there is no obligation to do so, mostministries follow the practice of publication.
(iii) Consultation of the public on policies
33. Article 30 of the Constitution of 1991 establishes freedom of expression and Article 37
provides for the right to associate as political parties, trade unions and other forms of organizations.
                                                     
12 World Bank (1997), p. 31.
13 World Bank (1997), p. 37.
14 Government of Romania (1998a), pp. 158-59.
15 The Ministry of Justice provides on-line access to the texts of laws, government decisions, and
ordinances published in the Monitorul Oficial  (http://domino.kappa.ro/mj/superlex.nsf).  Annexes that are an
integral part of such acts, but have been published separately, are not generally available on-line.WT/TPR/S/60 Trade Policy Review
Page 20
Non-governmental organizations are regulated by L21/1921, and the Ministry of Justice registers such
organizations, which interact with the ministries responsible for the relevant domains of activity.
Although recent data are not available, evidence su ggests that business and professional associations
and unions remain the single most important group of NGOs in Romania.16
34. The authorities noted at the time of the first review of Romania in December 1992 that "a
specific framework for the participation of the private sector in the elaboration of trade policyinstruments and mechanisms has not yet been given Parliamentary attention".
17  In practice, the MIC
consults with the Chambers of Industry and Commerce at the national level and in each county of
Romania, as well as with associations of producers in the different branches of activity.  These
associations participate, for exam ple, in the negotiations on free-trade agreements by presenting their
interests or concerns regarding the negotiating partner.
35. To overcome the difficulty of achieving a social consensus on structural reforms, Parliament
established the Economic and Social Council (L109/1997) to promote a dialogue between the
Government, trade unions, and employers associations , represented in equal proportion.  The Council
began operations in March 1998.  It mediates labour conflicts in areas where strikes are forbidden18,
elaborates the policy on wages, and considers the transposition of international labour standards intodomestic law.
(iv) Civil service reform
36. Romania began the transition with a highly centralized administrative system based in
Bucharest.  The authorities recognize the change re quired in the public administration to support the
market economy, which remains a priority of the Government's Programme for 1998-2000.  The
objective is "the drastic restructuring of public administration and an extended institutional reform,
whose aim is the improving of regulations, the improving of the management of public funds and theenhancement of the capacity of designing and applying policies."   According to the authorities, the
objectives and principles of public administration reform are:  the separation of the political and
administrative functions;  the creation of a single career, professional and politically neutral public
service;  the definition of clear roles, responsibilit ies and relations between institutions;  subsidiarity;
autonomy of local decision-making;  transparency of Government and administration;  simplificationof procedures and legislation;  and respect for the citizen.
37. The civil service presently counts 140,000 persons.  To create a modern and efficient civil
service, which is politically neutral, the Government has submitted a draft Civil Service Act to
Parliament for adoption.  The Act regulates the hiring (by open competition), and defines the rights,
duties, and career development of civil servants.  The adoption of the Act would increase theprofessionalism of the civil service and reduce its links to political parties.
38. To more effectively provide public services to the population, the Government has pursued
the principle of subsidiarity by devolving functions to the regional and local levels of government.  A
recent development is the entry into force on 1 January 1999 of L89/1998 on Public Finances
providing a budgetary source to local authorities of 40% of the salary taxes paid by employers onbehalf of employees, with 50% going to the central government and 10% to the judiciary.
39. There is considerable evidence of the existence of a problem of corruption in Romania,
although precise information is sparse.  Transparency International placed Romania in 61
st position
                                                     
16 Johnson and Young (1997).
17 GATT (1993), Vol. II, p. 32.
18 Otherwise, the procedure to resolve such conflicts is provided for in L15/1991.Romania WT/TPR/S/60
Page 21
(with Argentina, Nicaragua and Thailand) on the 1998 Corruption Perceptions Index, an assessment
that has not improved in the past several years.19  The problem of corruption has also been noted by
the European Commission in its reports on Romania and by other sources.20
40. According to the authorities, the Prime Minister's Control Department was established as an
anti-corruption unit within the Government (HG672/ 1998).  At present, a government official found
to have engaged in improper conduct is subject  to the Penal Code (Articles 254-257), but the
authorities report few instances where a finding of guilt has been established.  The European Union
noted in its first Regular Report of November 1998 that the establishment of this unit "will not bear
fruit without a legal basis" because "without the adoption of the Law on the Prevention of and Fight
Against Corruption, unclear institutional responsibilities and the lack of specialised bodies dealing
with the problem will continue to affect any efforts in this field"21;  the Government submitted the law
to Parliament in September 1998 for consideration and adoption.  The authorities have also indicated
that relevant instruments in the fight against corruption are decentralization, specialization and
increasing the quality, number and wages of civil servants.
(v) Stability of the framework for economic operators
41. Recent experience has shown that major policy initiatives of the Government that are put into
effect by ordinance are often modified in the course  of parliamentary approval or simply lapse without
action being taken.  For example, three quarters of the policy initiatives to advance structural reform
in 1997 were subsequently modified.  Although change can be beneficial – an improvement –
economic operators are also concerned by the risk of adverse developments, which raises the cost of
investing in Romania.  Policy instability also affe cts the transparency of the regulatory framework
since a succession of normative acts often concerns the same issue.  On major business-related topics,
economic operators may have to devote considerable time, effort or expense to tracking the course ofpolicy initiatives from the Government to the Parliament and back.
42. On investment, for example, the improvements made since the first law on foreign investment
in 1991 (L35/1991) include the extension of the guarantee to portfolio investment and the end of the
implicit discrimination against domestic investors by granting equal access to the incentive.  At the
same time, the number of modifications made to the investment regime since 1991 may indicate alack of legislative stability in this key area (Table AIII.10).
22  These developments may help explain
the fact that the level of foreign direct investment (on a per capita basis) in Romania is, to date, the
lowest among countries in transition in Central and Eastern Europe.23  Greater stability of policies in
key business-related areas – taxation, investment, privatization – could moderate the risk of adverse
developments for economic operators in Romania, provide a more favourable regime for investment,and anchor the structural reforms.
                                                     
19 Transparency International (1998).  See also Transparency International (1997).
20 U.S. ITA (1998a), states that "the customs service, municipal zoning offices, local financial
authorities and other bodies are affected to some degree by this problem".  A World Bank study on the
development of the private sector in Romania indicated th at 27% of the managers of SMEs were forced to offer
bribes ( Ziua, 14 March 1998).
21 European Commission DGIA (1998b), Section 1.1.
22 Herzfeld & Rubin (1999a).
23 European Commission DGIA (1998b), noted in November 1998 that "repeated changes in the legal
framework for foreign investment and privatisation have made foreign investors cautious to invest in Romania
since the autumn of 1997" (Section 2.3).  U.S. ITA (1998a), noted that "the Government does not have an
effective means of communicating with foreign investors or with Romanian private businesses about changes inthe regulatory framework.  These changes which can significantly change the costs of doing business, make itdifficult for investors to develop effective business plan s.  Many successful foreign investors choose to work
with a local Romanian partner to alleviate some of these problems".WT/TPR/S/60 Trade Policy Review
Page 22
43. During the period under review, the authorities have increasingly recognized the importance
of a uniform application of taxation policies among economic operators to remove implicit or explicit
subsidies/taxes that affect the competitive position of enterprises and reduce government revenues.
Of note is the reduced scope for exemptions or reductions from the payment of customs duties since
the peak of 1995-96 (Chapter III(2)(v)).  Still, th e authorities recognize that "the vast number of
exemptions granted to different lobbies" (tax avoidance), together with relatively low effective ratesof (direct) taxes and problems of revenue collection, notably tax evasion, explain the relatively low
share of revenues in GDP (30.7% in 1997) compared to other transition economies.
24  The lack of a
uniform application of the duty and tax regime imposes a significant administrative burden on the
authorities.
(4) INTERNATIONAL AGREEMENTS , CONVENTIONS AND TREATIES
(i) Negotiation, elaboration and ratification of agreements in Romania
44. Agreements are negotiated by the Ministry concerned with the domain of activity, in
collaboration with the Ministry of Foreign Affairs (L4/1991).  Such an agreement is then proposed by
the Prime Minister to the President of Romania, w ho concludes treaties in the name of Romania, and
submits them to Parliament for ratification within 60 days;  a treaty may be the object of a referendumto gauge the level of popular support.  According to Article 11(2) of the Constitution of 1991,
"treaties ratified by Parliament, according to the law, are part of national law", and this principle also
applies to agreements concluded at the level of the Government or at the level of department.
(ii) WTO
45. Romania actively participated in the Uruguay Round and was a founding member of the
WTO, joining without special conditions, unlike its accession to GATT 1947 (Box II.2).
25  T h e
Parliament of Romania ratified by L133/1994 the Marrakesh Agreement Establishing the WorldTrade Organization.  Romania is also a member of the Plurilateral Agreement on Trade in Civil
Aircraft.  Regarding the plurilateral agreement on Government Procurement, Romania had indicated
its intention to join at the time of the first TPR in 1992, but this intention was not realized during the
period under review (Chapter III(4)(vi)).
46. In the Uruguay Round, Romania bound all lines in its GATT 1994 Schedule of
Concessions LXIX.  Aside from the small number of items bound in its GATT 1947 Schedule,
Romania bound its tariffs on non-agricultural products at a ceiling level of 35% (Chapter III(2)(iii).
Since the entry into force of the WTO, Romania has modified its GATT Schedule to implement the
HS 1996 and to eliminate by 1 January 2000 the tariffs on products covered by the "Information
Technology Agreement" (ITA).
                                                     
24 Government of Romania (1998a), p. 82.
25 Upon entry into force of the WTO, the United States invoked Article XIII:1 (non-application) of the
Agreement Establishing the WTO with respect to Romania (WT/L/11).  The invocation was withdrawn in 1997(WT/L/203), following the grant by the United States of permanent most-favoured-nation status to Romania in1996 (MFN status had been suspended on 28 July 1988).Romania WT/TPR/S/60
Page 23
Box II.2:  Trade policy developments under GATT 1947
Upon its accession to GATT 1947 in October 1971, the (then) Socialist Republic of Romania had a
monopoly on trade, established imports and exports acco rding to a central plan, and participated in the
trade and payments arrangements of the Council for Mutual Economic Assistance (CMEA).
Romania's Protocol of Accession (BISD 18S/5) contained special conditions.  The Protocol provided that
the rules of the GATT would be applied by Romania to its trade with contracting parties to the fullestextent not inconsistent with its trade and payments arrangements.  Romania pledged to expand importsfrom the CONTRACTING PARTIES as a whole at a rate not smaller than the growth of total imports
foreseen in each of the successive five-year plans.  The Protocol permitted contracting parties to maintain
quantitative restrictions on imports from Romania;  the reservation was also a feature of the accessionprotocols of Hungary and Poland (BISD 20S/3 and BISD 15S/46, respectively).  The United Statesdeclined to apply GATT 1947 to Romania (L/3619), invoking GATT Article XXXV on the non-application
of the Agreement between particular CONTRACTING PARTIES.
As a result of the Tokyo Round, Romania bound 167 CCCN tariff items in its Schedule of Concessions
(GATT 1947 Schedule LXIX) and gave domestic effect to the "Decision on Differential and more
Favourable Treatment, Reciprocity and Fuller Particip ation of Developing Countries", the "Declaration on
Trade Measures Taken for Balance-of-Payments Purposes" and the "Understanding RegardingNotification, Consultation, Dispute Settlement and Surveillance".  Romania also acceded to the Agreementon Technical Barriers to Trade, the Agreement on Implementation of Article VII ("Customs Valuation
Code"), the Agreement on Import Licensing Procedures, the Agreement on Implementation of Article VI
("Anti-Dumping Code"), the Arrangement Regarding Bovine Meat, the International Dairy Arrangement,and the Agreement on Trade in Civil Aircraft.
In January 1990, the State ended its monopoly on trade.  Following the switch of CMEA payment
arrangements from the transferable rouble to convertible currencies in January 1991,  imports and exportsfell sharply, contributing to the severe recession in Romania in 1991-93.  On 1 January 1992, Romania
introduced a new customs tariff based on the Harmonized System (HS), and requested a conversion of its
terms of participation in the world trading system to a standard format for a market economy.  Thisobjective was achieved, and the special conditions superseded, by commitments assumed by Romania inthe WTO.
Source:   WTO Secretariat.
47. On agricultural products, Romania bound its lines at a simple average level of 142%, to be
reduced to 112% by 2004.  Romania also opened tariff rate quotas for 12 items in 1995 and 1996, but
subsequent reductions in applied rates made quotas redundant in most cases (quotas were opened in
1998 and 1999 for beer and vermouth).  Romania pledged to reduce the value of direct export
subsidies on agricultural products to a level 27% below the 1986-90 base period level by 2005, andthe quantity of subsidized exports by 16% over the same period.  Romania's commitment on domestic
support – as defined by Article 7:2(b) of the Agreement on Agriculture – is not to provide domestic
support in excess of the de minimis  level of 10% of the value of production.
48. Romania's GATS Schedule of Specific Commitm ents (GATS/SC/72) contains commitments
assumed in the Uruguay Round, as modified for commitments on basic telecommunications andfinancial services (GATS/SC/72/Suppl .1 and GATS/SC/72/Suppl.2, respectively).
26  Significant
liberalization measures include the policy of open, non-discriminatory access for the establishment of
                                                     
26 These commitments are broadly parallel to those assumed by other countries in transition in Central
and Eastern Europe.  An overview of Romania's commitments, and those of other countries in transition inCentral and Eastern Europe, is contained in U.S. ITC (1998).WT/TPR/S/60 Trade Policy Review
Page 24
banks, subject to prudential regulation, as well as the opening of Romania's basic market for telecom
services in 2003 (Chapter IV(3)(iii)).  Romania's list of GATS Article II (MFN) exemptions
(GATS/EL/72) relate to agreements concluded with countries in the region on internal waterways
transport (e.g., on the Danube) and road transport services, and bilateral agreements on air transport
based on reciprocity.
49. According to Romania's GATS Schedule, the supply of services through commercial presence
(mode 3) is restricted by limits on the ownership of land, reserved for Romanian natural persons and
companies headquartered in Romania, minimum representation of Romanian citizens on the Board of
Administration of commercial companies, and preference for Romanian investors in privatization;
these limitations on commercial presence in the Schedule are more restrictive than the regime
currently applicable to foreign investors (Chapter III(4)(ii)).  Although Romania has not bound thesupply of services by the entry of natural persons (mode 4), in keeping with the practice of other
WTO Members, temporary entry is permitted for managers and experts necessary to operate a foreign
direct investment in Romania.
50. Romania had recourse to the transitional arrangements under Article 65 of the TRIPS
Agreement (which applies to developing countries and countries in transition), to allow until 2000 forthe full application of the TRIPS Agreement (other  than Articles 3, 4 and 5).  Notwithstanding this
action, Romania notified its standards for intellectual property rights and their enforcement to the
Council on TRIPS for examination (Table II.2).  Romania intends to complete the process of
implementing its obligations under the TRIPS Agreement by adoption of a law on enforcement of
intellectual property rights at the border (Chapter III(4)(iii)).
51. Since the entry into force of the WTO, Romania has completed its notification obligations for
legislation on covered measures, as well as its noti fication to the Integrated Database (IDB).  Romania
has regularly notified the absence of anti-dumping, countervailing and safeguard measures, but has
not finalized the updating notification for subsidies.  Romania notified the WTO of its agreements
falling under GATT Article XXIV (on customs unions and free-trade areas), for examination by the
Committee on Regional Trade Agreements (CRTA) .  As of mid-1999, the CRTA was considering
draft reports on the examination of the EC-Romania and EFTA-Romania agreements (WT/REG2/ andWT/REG16/, respectively), was drafting the report on the examination of the Romania-Moldova
agreement (WT/REG44/), and was well engaged in the examination of CEFTA (WT/REG11/),
including Romania's accession (WT/REG11/8), and the Turkey-Romania agreement (WT/REG59/).
52. Romania also notified the WTO in WT/BOP/N/41 and WT/BOP/N/42 of the import
surcharge introduced on 10 October 1998 for which the cover of GATT Article XII (on restrictions tosafeguard the balance of payments) is invoked.  Romania consulted on the measure in the Committee
on Balance-of-Payments Restrictions on 1-2 February 1999 (basic documents are WT/BOP/G/7 and
WT/BOP/S/8), which found Romania in conform ity with its obligations under Article XII of
GATT 1994 (WT/BOP/R/45).Romania WT/TPR/S/60
Page 25
Table II.2
Selected WTO documents of Romania, 1995 to June 1999
Agreement WTO document Content
Multilateral Agreements on Trade in Goods
GATT 1994 Schedule LXIX – Romania of 15 April 1994 Tariff concessions
WT/LET/260 of 25 November 1998 Certification of changes to Schedule
LXIX for ITA products
WT/LET/265 of 30 November 1998 Certification of changes to Schedule
LXIX for implementation of HS 1996
Article XVII (state trading) G/STR/N/1/ROM of 22 August 1995 No state trading
G/STR/N/2/ROM of 30 July 1997 No change in state trading
G/STR/N/3/ROM of 2 February 1999 No change in state trading
Article XXIV (customs unions andfree-trade areas)WT/REG2/1 of 15 February 1995 Europe Agreement
WT/REG11/N/3 of 8 January 1998 Accession to CEFTA of Romania
WT/REG11/N/4 of 20 August 1998 System of European Cumulation of
Origin
WT/REG44/N/1 of 24 September 1997 Romania-Moldova FTA
WT/REG59/N/1 of 18 May 1998 Turkey-Romania FTA
Article XII (restrictions to safeguard thebalance of payments)WT/BOP/N/41 of 16 November 1998 Import surcharge
Agreement on Agriculture
Tariff quotas G/AG/N/ROM/1 of 11 October 1995 Tariff quotas – 1995
G/AG/N/ROM/4 of 4 July 1996 Tariff quotas – 1996
G/AG/N/ROM/5 of 4 July 1996 In-quota imports – 1995
G/AG/N/ROM/10 of 4 March 1999 In-quota imports – 1996, 1997
Special safeguard provisions G/AG/N/ROM/2 of 10 May 1995 None – 1995
G/AG/N/ROM/6 of 21 July 1997 None – 1996
G/AG/N/ROM/11 of 5 March 1999 None – 1997
Export subsidies G/AG/N/ROM/3 of 13 May 1996 None – 1995
G/AG/N/ROM/7 of 21 July 1997 None – 1996
G/AG/N/ROM/12 of 4 March 1999 Exports of covered products – 1995, 1996
G/AG/N/ROM/13 of March 1999 Exports of covered products – 1997
Domestic support G/AG/N/ROM/8 of 28 July 1997 Measures – 1995
G/AG/N/ROM/9 of 28 July 1997 Measures – 1996
Agreement on the Application of
Sanitary and Phytosanitary MeasuresG/SPS/N/ROM/1 of 18 August 1997 Emergency measure
Agreement on Technical Barriers to
TradeG/TBT/2/Add.17 and Corr.1 of 2 August 1996
and 11 September 1996Implementation and administration
G/TBT/CS/N/5 of 29 June 1995 Acceptance of Code of Good Practice
Agreement on Trade-Related Investment
MeasuresG/TRIMS/N/1/ROM/1 of 7 April 1995 Investment law (L71/1994)
Agreement on Implementation of
Article VI of GATT 1994G/ADP/N/1/ROM/1 of 4 April 1995 Laws and regulations
G/ADP/Q1/ROM/1 of 5 July 1996 Replies to questionnaire
Agreement on Implementation of
Article VII of GATT 1994G/VAL/N/1/ROM/1 of 28 August 1995 Principles of customs valuation
G/VAL/N/1/ROM/2 of 14 July 1999 Principles of customs valuation
(L141/1997)
Agreement on Rules of Origin G/RO/N/1 and Add.1 of 9 March 1995 and
22 June 1995Non-preferential rules (OG26/1993)
Table II.2 (cont'd)WT/TPR/S/60 Trade Policy Review
Page 26
Agreement WTO document Content
Agreement on Import Licensing
ProceduresG/LIC/N/1/ROM/1 of 3 October 1996 Regulations on export and import
licensing (OMC6/1996)
G/LIC/N/2/ROM/1 of 6 October 1995 Automatic licensing for the export and
import of oil and oil products
(OMC47/1995)
G/LIC/N/3/ROM/1 of 22 October 1996 Replies to questionnaire
G/LIC/N/1/ROM/2 of 17 March 1999 Changes in regulations
Agreement on Subsidies andCountervailing MeasuresG/SCM/N/1/ROM/1 of 4 April 1995 Laws and regulations
G/SCM/Q1/ROM/1 of 5 July 1996 Replies to questionnaire on laws and
regulations
Article XVI of GATT and Article 25(Subsidies)G/SCM/N/3/ROM of 31 October 1996 Subsidy programmes 1995
G/SCM/N/16/ROM of 31 October 1996 Subsidy programmes 1996
G/SCM/N/16/ROM/Suppl.1 of 16 January 1997 Updating notification 1996
Article 29.3 (Transformation to a market
economy)G/SCM/N/9/ROM of 31 October 1996 Measures to support privatization 1996
G/SCM/N/9/ROM/Suppl.1 of 8 January 1997 Updating notification 1996
Agreement on Safeguards G/SG/N/1/ROM/1 of 30 March 1995 Laws and regulations
General Agreement on Trade in Services
Schedule of specific commitments on services GATS/SC/72 of 15 April 1994
List of Article II (MFN) Exemptions GATS/EL/72 of 15 April 1994
Specific commitments on basic telecommunications GATS/SC/72/Suppl.1 of 11 April 1997
Specific commitments on financial services GATS/SC/72/Suppl.2 of
16 February 1998
Agreement on Trade-Related Aspects of Intellectual Property Rights
Laws and Regulations under Article 63.2 of the TRIPS Agreement IP/N/1/ROM/1 of 20 February 1997
IP/N/1/ROM/1/Add.1 of 30 January 1998
Law on Copyright and Neighbouring Rights IP/N/1/ROM/C/1 of 23 January 1998
Industrial Designs Law IP/N/1/ROM/D/1 of 18 March 1997
Law on Trademarks and Geographical Indications IP/N/1/ROM/I/1 of 27 April 1998
Ordinance on Industrial Property Fees and the Use Thereof IP/N/1/ROM/I/2 of 26 May 1999
Law on Protection of Topographies and Integrated Circuits IP/N/1/ROM/L/1 of 18 March 1997
Regulations for the Registration of Topographies and Integrated Circuits IP/N/1/ROM/L/2 of 20 March 1997
Patent Law IP/N/1/ROM/P/1 of 18 March 1997
Regulations for Implementing the Patent Law IP/N/1/ROM/P/2 of 20 March 1997
Law on Fees for Patent Applications and Patents IP/N/1/ROM/P/3 of 20 March 1997
Law on Transitional Protection for Patents for Inventions IP/N/1/ROM/P/4 of 26 May 1999
Agreement between Romania and the European Patent Organization on Cooperation in the
Field of PatentsIP/N/1/ROM/P/5 of 25 May 1999
Law on Protection of New Plant Varieties IP/N/1/ROM/P/6 of 26 May 1999
Source: WTO Secretariat.
(iii) European Union
53. Romania requested accession to the EU on 22 June 1995.27  Romania's application was
accompanied by a national pre-accession strategy and a declaration signed by the President, the Prime
Minister and the Presidents of the Chamber of Deputies and the Senate.  This declaration expresses
Romania's political will to pursue the consolidation and development of the rule of law, politicalpluralism, the separation of powers, free elections, respect for human rights and the establishment of a
market economy compatible with the principles governing the Union.
                                                     
27 Other applicant countries from Central and East ern Europe are Bulgaria, Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia.Romania WT/TPR/S/60
Page 27
54. In the Opinion submitted to the European C ouncil in July 1997, in accordance with Article O
of the Treaty of Rome, the Commission stated that, on  the side of the EU, Romania's "request is part
of the historic process of ending the division of Europe and consolidating the establishment of
democracy across the continent", and recommended that negotiations for accession should be opened
with Romania as soon as it had made sufficient progress in satisfying the conditions of membership
established by the European Council in Copenhagen in June 1993.28  At the December 1997 meeting
of the European Council in Luxembourg, Romania was not among the applicant countries selected for
the "first wave" of accession negotiations.29
55. The authorities generally accepted the European Commission's Opinion and focussed
Romania's pre-accession strategy accordingly.30  In 1998, the Government established the
Interministerial Committee on European Integration (HG119/1998), to elaborate the NationalProgramme for the Accession of Romania (NPAR) to the EU, based on the initiatives to this effect of
central government bodies in their domains of activity.  The Committee is backed by the Department
for European Integration established in the Pr ime-Minister's Office (HG141/1995), which is the
interface with the European Commission.
56. To support Romania's efforts, the Europe an Commission approved an "Accession
Partnership" on 25 March 1998, identifying priority areas for further work and the financial assistance
from the EU available to this end.
31  Romania presented its National Programme for the Adoption of
the acquis communautaire (NPAAC) to the European Commission in a screening process in
April 1998.  The NPAAC is conceived as an evolving document, reflecting internal developments;
the latest version was published in October 1998, along with the Government's plans for political and
economic reform, and public administration reform, which stressed the priorities of the Accession
Partnership.32
57. The Commission issued a first Regular Report on Romania's progress towards accession on
4 November 1998.  The Report states that "despite progress made in transposition of key parts of the
acquis, Romania has a long way to go in terms of additional legislative transposition, implementation
and enforcement before the country will be able  to assume the obligations of membership".33  Th e
authorities consider that the Commission's report "represents a realistic evaluation of Romania'sprogress since publication of the Commission Opinion in July 1997"
34, and have updated the NPAR
accordingly.  Romania began a "screening process" in April 1999.
                                                     
28 These conditions are:  stability of institutions guaranteeing democracy, the rule of law, human rights
and respect for and protection of minorities;  the existence of a functioning market economy, as well as the
ability to cope with competitive pressures and market forces within the Union;  and the ability to take on theobligations of membership, including adherence to the aims of political, economic and monetary union(acquis communautaire) .  According to European Commission, DGIA (1997), Romania "i) is on its way to
satisfying the political criteria with respect to the existence of stable institutions, guarantees for the rule of law,human rights and the protection of minorities, ii) has made considerable progress in the creation of a market
economy, but it would still face serious difficulties to cope with competitive pressure and market forces within
the Union in the medium term, and iii) despite the progress that has been made, it has neither transposed nortaken on the essential elements of the acquis , particularly as regards the internal market".
29 Czech Republic, Estonia, Hungary, Poland and Slovenia.
30 Gouvernement de la Roumanie (1997).
31 European Commission DGIA (1998a).  Accession part nerships were also approved for the other nine
applicant countries from Central and Eastern Europe.
32 Government of Romania (1998a).
33 European Commission DGIA (1998b), p. 52.  Reports were also issued for each of the other nine
applicant States.
34 Government of Romania (1998b).WT/TPR/S/60 Trade Policy Review
Page 28
(iv) Regional trade agreements and arrangements
(a) Europe Agreement35
58. The basis for relations between the EU and Romania is the Europe Agreement, signed on
1 February 1993, which established an association and entered into force on 1 February 1995.36  The
trade provisions of the agreement came into force through an Interim Agreement on 1 May 1993,
notified to the GATT in 1994 and examined by the WTO Committee on Regional Trade Agreements(WT/REG2/)
37.  In addition to trade provisions, the Europe Agreement contains provisions on
political dialogue (Title I), movement of workers, establishment, supply of services (Title IV),
payments, capital, competition and other economic provisions, approximation of laws (Title V),
economic cooperation (Title VI), cultural cooperation (Title VII), financial cooperation (Title VIII),
and institutional provisions (Title IX).  Of relevance to Romania's programme to implement theacquis  (NPAAC), noted above, is the commitment under Article 70 of the Europe Agreement to
approximate "customs law, company law, banking law, company accounts and taxes, intellectual
property, protection of workers at the workplace, financial services, rules on competition, protection
of health and life of humans, animals and plan ts, food legislation, consumer protection including
product liability, indirect taxation, technical rules and standards, transport and the environment".  Inaddition, Romania has pledged (under Article 67) to provide by 2000 for a level of protection of
intellectual, industrial, and commercial property righ ts, similar to that exis ting in the EU, including
comparable means of enforcing such rights.
59. Romania and the EU are committed to eliminating tariff and non-tariff barriers on industrial
products by the start of 2002, according to a liberalization schedule that is faster for the EU than for
Romania;  processed agricultural products are subject to enhanced market access and raw agricultural
products are subject to limited concessions.
38  The EU accelerated its liberalization schedule on
industrial products for all Europe Agreement countries at the Copenhagen European Council in
June 1993.  According to the authorities, Romani a is implementing its liberalization commitments on
schedule.  However, the back-loading of commitments to the year 2001 could require substantial
efforts in the next few years on the part of Romania's industries to be in a position to cope with the
competitive pressure of a more open market.
60. The MIC has responded by preparing state-owned enterprises for the more intense
competition by a strategy of restructuring and development.  For example, the Romanian steel
industry is being encouraged to produce in relation to domestic demand and export markets;  achieve
                                                     
35 The other Europe Agreement countries are Bulgaria, Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Poland, Slovakia and Slovenia.
36 Offical Journal of the European Communities L357, 31 December 1994, pp. 2-189.
37 GATT Document L/7618/Add.1.
38 On industrial products other than textiles and cl othing, coal, and steel, the EC eliminated customs
duties on imports from Romania on 1 January 1995;  Romania has eliminated the customs duties on two
categories of products (Annexes IV and V) and will complete the process by 1 January 2002.  On such products,
the EU implemented a ban on quantitative restrictions and measures having an equivalent effect on imports atentry into force;  Romania introduced a similar ban with one exception, maintained until 1 January 2001.  On
exports of such products, the European Union implemented a ban on entry into force and Romania implementeda ban as of 1 January 1998.
On textiles and clothing, customs duties were eliminated by the EC on 1 January 1997 and quantitative
restrictions and measures having an equivalent effect on imports were eliminated on 1 January 1998.  Romania
does not apply quantitative restrictions on imports of su ch products and will eliminate tariffs by 1 January 2002.
For coal and steel, covered by a Protocol to the Agreement, the EC maintained certain quantitative
restrictions and duties on imports on 1 January 1997.  Romania does not apply quantitative restrictions onimports of such products and will eliminate tariffs by 1 January 2002.Romania WT/TPR/S/60
Page 29
a utilization rate of 85%;  increase the share of products with high value added;  and concentrate
investment on improved productive capacities.  The MIC is also tackling energy use and production,
and plans to eliminate subsidies for industrial users.  More generally, the authorities are relying on
enterprise restructuring through privatization and investment to improve the competitiveness of
industries.
61. Trade between Romania and the EU has expanded significantly during the period under
review.  Although trade with Romania accounted for less than 1% of the EU's exports and imports,
respectively, in 1998 (excluding intra-EU trade), trade with the EU accounted for 64.5% of Romania's
exports and 57.7% of imports in 1998.  Roughly one quarter of two-way trade is accounted for by
textiles and clothing products, mainly as a result of outward-processing activities of EU
manufacturers (Chapter IV(3)(ii)).  In comparison, Ro mania's exports and imports, respectively, to the
European Union represented 35.2% and 41.3% of the total in 1992.
62. A recent development in trade relations between the EU and Romania, and more generally
among European countries having concluded bilateral or plurilateral free-trade agreements, is the
introduction on 1 January 1997 of the System of European Cumulation of Origin.39  With respect to
trade between Romania and the European Union, the system provides that products imported into theEU are of Romanian origin when incorporating inputs from other European countries having
concluded free-trade agreements with the European Union and with Romania;  similarly, products
imported into Romania are of EU origin when inco rporating inputs from other European countries
having concluded free-trade agreements wi th the European Union and with Romania.
(b) EFTA-Romania Free Trade Agreement
63. The EFTA-Romania Free Trade Agreement was signed on 10 December 1992, notified to the
GATT (L/7215/Add.1) and examined by the WTO Committee on Regional Trade Agreements(WT/REG16/).
40  This Agreement is largely patterned on the trade provisions of the Europe
Agreement concluded between the European Union and Romania.  Romania and EFTA have pledged
to establish a bilateral free-trade area by the start of 2002.  On industrial products, tariff and non-tariff
barriers to trade are to be eliminated according to a liberalization schedule that is asymmetric, slower
for Romania than for EFTA.  Available information indicates that Romania is implementing itsliberalization commitments for products originating in EFTA on schedule, while the EFTA
accelerated its schedule at entry into force.  Processed agricultural products and fish products are
subject to enhanced market access and raw agricultural products are subject to limited concessions.
(c) CEFTA
64. CEFTA was originally established by the Czech Republic, Hungary, Poland and the Slovak
Republic on 21 December 1992 to strengthen the process of economic integration in Europe.
41  The
object of establishing a free-trade area by 2001 is achieved by a system of bilateral free-trade
agreements, functioning in a framework of common rules.  Protocols annexed to CEFTA establish the
scope and pace of liberalization commitments for agricultural products and industrial products,
respectively, between:  the Czech Republic and Sl ovak Republic, on the one side, and Hungary on the
                                                     
39 WT/REG1, 2, 12, 15, 16/N/1;  WT/REG7, 8, 9, 20, 28, 29, 30, 32, 33, 34, 35, 37, 41 42, 45, 46, 47,
48, 62/N/2;  WT/REG/18/N/3;  WT/REG11/N/4.
40 Signed with Austria, Finland, Iceland, Liecht enstein, Norway, Sweden and Switzerland.  Austria,
Finland and Sweden joined the European Union on 1 January 1995.
41 Notified to GATT (L/7495/Add.1) and examined by the Committee on Regional Trade Agreements
(WT/REG11/).WT/TPR/S/60 Trade Policy Review
Page 30
other side;  the Czech Republic and Slovak Republic, on the one side, and Poland on the other side;
and Hungary and Poland.  The liberalization schedules converge in 2001.
65. Romania's accession to CEFTA was signed on 12 April 1997 and entered into force on
1 July 199742;  Bulgaria joined CEFTA on 1 January 1999.  Reflecting the reciprocity principle
underlying the exchange of concessions by members of CEFTA, Romania's liberalization schedule for
the Czech Republic and Slovak Republic, Hungary, Poland, and Slovenia, respectively, is containedin Protocols 14, 15, 16 and 17 of CEFTA:
- customs duties on products originating in the Czech Republic and the Slovak
Republic listed in Annex B to Protocol 14 are being progressively reduced from
1 July 1997 (to 80% of the basic duty rates) by 1 January 2001;  for all other products
zero tariffs are applied from 1 July 1997;
- customs duties on products originating in Hungary are being progressively reduced
for some sensitive products (listed in Annexes A, B and C to Protocol 15) from
1 July 1997 (to 70%-80% of the basic duty rates);  remaining duties will be gradually
eliminated by 1 January 2000 and 1 January 2002;  all other customs duties were
abolished;
- customs duties for some products originating in Poland (Annexes H, J, K and L to
Protocol 16), will be abolished between 1999 to 2002;
- customs duties applicable to sensitive products originating in Slovenia will be
progressively eliminated by 1 January 2000 and 1 January 2001 (Annexes A, B and C
to Protocol 17).
(d) Turkey-Romania Free Trade Agreement
66. As part of their objective of European integration, both Turkey and Romania have sought to
conclude free-trade agreements with countries with which the European Union has concluded such
agreements.  Accordingly, the Turkey-Romania Free Trade Agreement was signed on 29 April 1997
and entered into force on 1 February 1998, and has the objective of establishing a bilateral free-trade
area covering, according to the parties, substantially all trade by the start of 2002.
43  Both Romania
and Turkey have tailored their commitments to grant each other market access for the same productsand under the same conditions as that granted to the EU in their respective agreements.
(e) Romania-Moldova Free Trade Agreement
44
67. Reflecting the traditional political, economic and social links between Romania and Moldova,
a free-trade agreement was signed on 15 February 1994 and entered into force on 1 January 1995.45
                                                     
42 Notified to the WTO (WT/REG11/8), and examined by the Committee on Regional Trade
Agreements.  Supersedes the free-trade agreements between Romania and the Czech Republic (WT/REG26/1)and the Slovak Republic (WT/REG27/1), respectively.
43 Notified to the WTO (WT/REG59/1) and examined by the Committee on Regional Trade
Agreements.
44 Moldova requested accession to GATT 1947 in November 1993 and a working party was
established.  Moldova requested accession to the WTO on 12 December 1995 and its GATT working party wasaccordingly converted.
45 Notified to the WTO (WT/REG44/1) and examined by the Committee on Regional Trade
Agreements.Romania WT/TPR/S/60
Page 31
The Agreement provides for the parties to implement a ban on customs duties on 100% of bilateral
trade, formalizing the existing situation between the two countries.  However, in cases of shortage
each partner may temporarily restrict exports of the product concerned;  annexes to the agreement list
the categories of goods subject to such temporary export restrictions.  This agreement does not formpart of the European System of Cumulation of Origin.
(v) Black Sea Economic Cooperation (BSEC)
46
68. The Black Sea Economic Cooperation (BSEC) was established by the signing of the "Summit
Declaration on Black Sea Economic Cooperation" on 25 June 1992 by representatives of Albania,
Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russian Federation, Turkey andUkraine.  The BSEC was transformed from a cooperation initiative to a regional economic
organization by the Charter adopted by members on 5 June 1998.  Its main purpose is to intensify the
cooperation between the members and make efficient use of their geographical proximity, the
complementary nature of their economies and, especially, the potential of a market of over
350 million consumers.
69. Although the BSEC is not a framework for pref erential trade relations among its members,
the members signed the "Declaration of Intent for the Establishment of the BSEC Free-trade Area" on
7 February 1997, an objective planned for 2010.  In the meantime, the BSEC functions primarily as a
forum for multilateral cooperation on issues of regional significance – economic cooperation,
protection of the environment, combatting organized crime and terrorism – and as a means to focusthe attention of foreign investors on the region's potential.  With respect to economic cooperation, the
BSEC has achieved a common approach to the development of  rail and road transportation, ports,
and shipping lines in the region, and their interconnection with European networks up to the
year 2005.
70. The Black Sea Trade and Development Bank began operations in 1999 in Thesssaloniki,
Greece.  The Bank is to become the principal mechanism of the BSEC in working out, financing and
implementing joint regional projects and providing the necessary financial resources for theParticipating States.  In August 1998, the BSEC Committee of Legal and Political Affairs met to lay
the groundwork for the abolishment of double taxation among its member states.
(vi) Bilateral trade and economic cooperation agreements
71. Romania's first TPR in 1992 had noted the bilateral trade and trade-related agreements
concluded with GATT members and a nu mber of states not party to GATT.
47  Most of these
agreements were concluded prior to the start of the transition in 1989 and were replaced during the
period under review by a new generation of bilateral agreements.  These agreements generally have a
five-year term with a possibility of automatic renewal.  They generally provide for the mutual grant of
most-favoured-nation treatment according to the provisions of the GATT 1994, measures of trade
facilitation, payment in convertible currencies, and the establishment of a joint committee on tradeand economic cooperation to meet on a periodic basis.
                                                     
46 Based mainly on information available on the website of the Government of Turkey,
http://www.turkey.org/turkey/f_business.htm, and on the website http://www.photins.com/bsec/bsec.html.
47 GATT (1993), Vol. I, p. 37.