RESTRICTED
WORLD TRADE WT/SPEC/35
15May1996
ORGANIZATION(96-1887)
Original: English
ACCESSION OFALBANIA
Statements byH.E. MrsSuzana Panariti
Minister ofTrade, Transport andIndustry oftheRepublic ofAlbania
atthemeeting oftheWorking Party onAlbania 'sAccession totheWTO
heldon29-30 April 1996
Itisapleasure formetobeheretoday andtoseework begin onthisphase ofAlbania 'sefforts
tojointheWorld Trade Organization (WTO). Forreasons which Iwilldiscuss inafewmoments,
membership intheWTO isoneofAlbania 'smost important economic policy objectives. Iandthe
other members oftheAlbanian delegation lookforward toworking withallofyoutowards thisgoal.
Before webegin discussion ofspecific points inthematerials submitted byAlbania, Iwould
liketomake some remarks about three topics:
first,concerning theevolution andcurrent status ofAlbania 'sprogramme toestablish amarket economy;
second, concerning theroleofinternational trade policy inAlbania 'seconomic reform programme;
andthird, Iwould liketosayafewwords about Albania 'sperspective onpossible membership inthe
WTO -ontheoneside,howweseemembership supporting oureconomic policy objectives, andon
theother side, howwewould expect tofulfil therequirements ofmembership, recognizing that
membership involves obligations aswellasrights.
Establishment ofaMarket Economy
Soon aftertheelection oftheDemocratic Government in1992, Albania began tobuild the
legalandinstitutional framework foramarket economy. Ifwecompare Albania prior to1992 with
Albania today, wecanseehowmuch hasbeenaccomplished inonlyafewyears.
From 1944to1992, Albania wastheantithesis ofamarket economy. Private ownership was
completely forbidden andalleconomic activity wascontrolled bytheState, without exception. For
much ofthisperiod, Albania 'seconomic, political andcultural tieswiththerestoftheworld were
reduced toanabsolute minimum. Thisisafamiliar picture tomaycountries intransition, andyet
Albania 'scaseisperhaps unique interms oftheintensity ofeconomic centralization andisolation from
therestoftheworld.
Thepicture ofAlbania today isstrikingly different.
TheAlbanian Government haspassed lawsproviding forprivate ownership, entrepreneurial
activity, opencompetition, bankruptcy, foreign investment, protection ofconsumers, privatization of
small, medium andlarge enterprises, andmayother elements ofamodern commercial legalrégime.
Thesteady growth ofdomestic andforeign investment overthepastfouryears isavoteofconfidence
bytheprivate sector inAlbania 'scommercial lawreforms.WT/SPEC/35
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TheAlbanian Government hasdramatically reduced itsroleinalmost allfields ofeconomic
activity. Asaresult, theprivate sector nowaccounts forabout 80-85 percentofGDP, 56percent
ofexports and82percentofimports. Approximately 76percentofAlbania 'sworkforce isengaged
inprivate business.
Price controls havebeenalmost completely eliminated. Controls remain ononlytwobasic
food commodities -flour andbread -andafewpublic services, such aselectricity, water and
pharmaceuticals. Even inthese areas, controls areonlypartial andfurther liberalization isforeseen.
Albania 'snational currency, thelek,isinternally convertible andhasbeenfloating freely since
1992. Therelative stability ofthelekoverthepastfouryears isonesign,among others, thatAlbania 's
efforts toexercise fiscal andmonetary control, andmore generally toensure macro-economic stability,
havebeensuccessful.
Albania hasturned itsbackonisolationism andpursued aprogramme tostrengthen itsties
withtherestoftheworld. Wehaveconcluded bilateral economic, trade andindustrial agreements
with30countries andanother 15agreements areunder negotiation; wehavealsoconcluded bilateral
agreements onpromotion andprotection ofinvestment with25countries andanother 15agreements
areunder negotiation. Weareamember oftheInternational Monetary Fund, theWorld Bank, the
European Bank forReconstruction andDevelopment, theBlack SeaEconomic Initiative andthe
Organization ofIslamic States. Looking tothefuture, Albania isworking towards anAssociation
Agreement withtheEuropean Union, and,asyousee,membership intheWTO.
Inshort, overthepastfouryears, Albania hasvigorously pursued aprogramme toestablish
amarket economy andtobecome afullparticipant intheinternational community. There is,ofcourse,
more work tobedone. Forexample, intheareaoftaxreform, itisforeseen thattheturnover tax
willbereplaced withavalue added tax.Privatization inAlbania isconsidered asthemostimportant
problem ofeconomic reform. Thisprocess began inAugust 1991, bypassing intheParliament of
thelaw"OnPrivatization". Until now, more than75percentofNational patrimony isprivatized:
- 96percentofagricultural land;
- 100percentoftheservices;
- 100percentofagriculture mechanics;
- 100percentofroadtransport.
InMarch 1995, onthebasisofthePresidential decree, started themassprivatization oflarge
enterprises through vouchers, nowwehavethefirstAlbanian shareholders, whom are114,840 people,
andthisprocess continues. Privatization ofsome keypublic services, suchaselectricity andwater
supply, hasalsobegun theprocess ofprivatization andwillcontinue. Andthose ofyouwhohave
hadanopportunity tovisitAlbania know thatthere isagreat dealofwork tobedoneindeveloping
modern communications, transportation andhydro-electric infrastructure. Nevertheless, itcantruly
besaidthatagreatdealofprogress hasbeenmade inarelatively shorttime, andthatthemostimportant
elements ofamarket-based economy havebeenestablished.
TheRoleofInternational Trade Policy
Itisimportant toconsider theroleofinternational trade policy inAlbania 'soverall economic
reform programme. Trade liberalization hasbeenoneofthemain pillars ofeconomic stabilization
andreform along withprice liberalization, exchange liberalization, fiscal control, monetary restraint
andrapid privatization ofagricultural landandsmall enterprises. Thechoice wasmade early inthe
reform process topursue rapid trade liberalization rather thanslow, progressive liberalization. This
choice waspartly dictated bytheseverity ofAlbania 'seconomic andsocial crisis atthetime. TheWT/SPEC/35
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collapse ofAlbanian production meant thatAlbania hadtoopenitstrade régime inorder toensure
supply ofconsumer goods andother commodities needed torebuild theeconomy. TheGovernment
ofAlbania recognizes thatanopentraderégime hasmade andcontinues tomake important contributions
toAlbania 'seconomic andsocial wellbeing.
Total trade andservices hasgrown steadily overthepastfouryears andin1995 represented
approximately19.9percentofGDP.Importsaccountedfor31.5percentofGDPandexports9percent
ofGDP. Imports helptoensure competitive conditions intheAlbanian market, andserve asastimulus
tostructural adjustment andefficient allocation ofresources. Imports alsoserve asanexample to
Albanian producers whoarethinking about exporting. Export activity isslowly growing andbecoming
amore important source offoreign exchange. Although Albania stillhasasizeable merchandise trade
deficit -US$475 million in1995 -merchandise exports grew by45percentlastyear. Exports of
goods andservices totalled US$303 million in1995, a35percentincrease over1994.
Thegrowth intotal trade hasbeen facilitated byarelatively open trade régime. The
Memorandum andother materials thatwehavesubmitted gointodetail about Albania 'strade régime,
butIwould liketohighlight itsmain characteristics:
- asimple import tariffstructure comprised ofonlyfouradvalorem tarifflevels: zero,
seven, twenty-five andforty percent;
- notariff peaks;
- noimport surcharges;
- noexport subsidies;
- norestrictions oncurrent transactions;
- notrade-related investment measures;
- nointernal taxes orother charges higher forimported products thanforthedomestic
ones.
Inaddition, Iwould liketoemphasize thattheroleofState foreign trading enterprises has
beenreduced dramatically. Ofthe7Stateforeign trading enterprises thatexisted intheprevious régime,
onehasbeenprivatized, therestaretransformed intoshareholders 'companies byactions. Whereas
these enterprises usedtohandle 100percentofAlbania 'sinternational trade, theynowhandle only
asmall partofAlbanian imports andexports.
Inshort, webelieve thatAlbania 'straderégime, while perhaps notthemostliberal intheworld,
iscomparatively open, transparent andnon-discriminatory initstreatment offoreign goods, services
andservice providers.
Membership inWTO
Howwould membership intheWTO affect theeconomic reform process thatIhavedescribed?
More fundamentally, whyisAlbania seeking membership? Forthoseofyouwhohavealongexperience
intheGATT and,more recently, intheWTO, theanswers tosuchquestions mayseem obvious for
your countries. Nevertheless, since youareintheposition ofjudging Albania 'sapplication for
membership, perhaps itisuseful foryoutohaveanunderstanding oftheconsiderations thatmotivate
ouraccession efforts andourperspective onwhatmembership entails.
First, werecognize thatifAlbania istosucceed inoneofitsmain trade policy objectives -
increasing exports -weneedbetter access andmoresecure access toforeign markets. Themosteffective
waytopursue thisobjective isthrough membership andactive participation intheWTO. Inthis
connection, wealsorecognize thattrade isatwo-way street. Werealize thatwewillnotobtain better
andmore secure access toforeign markets ifwedonotoffer similar access toothers.WT/SPEC/35
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Asecond consideration concerns themaintenance ofanopen trade régime. Itisonething
toestablish anopentraderégime. Itisanother thingtomaintain one.AstimegoesonandasAlbania 's
domestic production begins tore-establish itself andgrow, there willbeincreasing pressures touse
trade policy instruments toprotect domestic producers. Asallofyouknow, thecommitments that
anacceding country mustmake regarding theopenness ofitstrade régime canbeuseful inresisting
thetemptation toslidebackintoprotectionism, atemptation thatallcountries faceatonetimeoranother.
Wealsorecognize thatsuchcommitments serve asastamp ofcredibility forthepermanence
ofeconomic reforms. Thiscredibility isessential foracountry intransition thatistrying toconvince
potential investors thattoday'sreforms willnotdisappear tomorrow.
Finally,weknowfromexperiencethatsmallcountriesareespeciallyvulnerabletodiscriminatory
orunfair trade practices. Wehope thatwewould never needtousetheWTO dispute settlement
procedures, butitisreassuring toknow that,asaWTO Member, wecould usethem ifweneeded
to.
Closing Remarks
Before concluding, Iwould liketodraw theWorking Party'sattention toseveral documents
which wehavebrought withusandaremaking available forinformation.
Thefirstdocument isadraftLawonCustoms Valuation which wasapproved bytheAlbanian
Council ofMinisters on25March 1996. Webelieve thislawconforms fullytoWTO rules inthe
areaofcustoms valuation. Thisdraftlawwillbeintroduced intoParliament assoonaspossible.
Thesecond document istheLawNo.8072ontheEstablishment ofFreeTrade Zones inAlbania
which wasapproved byParliament on15February 1996. Thislawisanimportant stepinourefforts
toencourage foreign investment andexport growth.
Thethirdandfourth documents are,respectively, draftschedules forservices andagriculture.
Wewould welcome anycomments onthese draftschedules, perhaps towards theendoftheWorking
Party session iftimepermits. Inaddition, weinvite anyinterested Members oftheWorking Party
toschedule informal bilateral meetings toexchange views onthese documents oranyother matters.
Finally, Iwould liketonotethatwehaveprovided theSecretariat withacopyofAlbania 's
complete customs nomenclature andtariff schedule.WT/SPEC/35
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Presentation onTRIMs, Services andTRIPS
Asagreed, Iwould liketopresent some information onthesituation inAlbania concerning
trade-related investment measures (TRIMs), services andtrade-related intellectual property rights
(TRIPS).
Letusfirstconsider TRIMs. Thesituation hereisverysimple. Albania doesnothaveany
trade-related investment measures. Albania doesnotmaintain orapply anyinvestment measures which
violate WTO rules onnational treatment andquantitative restrictions, such asdomestic content
requirements orrequirements which restrict theability ofanenterprise toimport orexport.
Aswementioned inouranswer toaquestion about Albania 'sinvestment régime there isno
across-the-board,case-by-caseapprovalprocessforforeigninvestment.Theabsenceofsuchanapproval
process eliminates thepoint atwhich TRIMs areusually imposed bycountries thatmaintain them.
Insome Albanian sectors, suchasbanking ortourism, there areconditions which investors
mustfulfilinorder toobtain alicence todobusiness inthatsector. Butthese conditions arenottrade-
related, theyrelate tonormal prudential considerations, inthecaseofbanking, ortoadesire toprotect
theenvironment inthecaseoftourism.
Theregime thatIhave justdescribed istrueforboththecentral government andlocal
government. Inshort, Ibelieve thatAlbania 'sinvestment régime fullyconforms toWTO rules in
thisarea.
Regarding services, thesituation isalittlemore complex, reflecting thecomplexity ofthis
field, butisnevertheless quitepositive. Asageneral observation, onecansaythataccess toAlbania 's
services sectors isrelatively liberal, andtreatment offoreign service providers isgenerally non-
discriminatory. Thisgenerally positive picture reflects several factors.
First, there arerelatively fewareas oftheAlbanian economy, which areclosed toforeign or
domestic services providers asaresult ofaState monopoly. There areafew,suchasinsurance,
telecommunications, electricity andwater supply, butthere arenotsomany, and,asImentioned
yesterday, theopportunities inmany ofthese areas aregrowing asprivatization moves forward.
Second, thefactthatAlbania 'sinvestment régime isquiteliberal, aswehavealready discussed,
means thatservice providers whowishtodobusiness through investment andtheestablishment of
acommercial presence aregenerally quite freetodoso.Thisfactisreflected inourdraftservices
offer.
Athirdconsideration, which Iwould notcharacterize aspositive ornegative, butsimply as
areality, isthatformany sectors andsub-sectors, regulations either donotexist atallorarein
development. Thisisalsotrueforcertain modes ofsupply, particularly cross-border operations. this
hasbeenreflected inourdraftservices schedule inthesense thatwehaveincluded sectors where basic
lawsandregulations exist, andhaveleftoutsectors where thelegalrégime iseither changing ornon-
existent. Weprovided totheSecretariat thecopies ofthelawonpriority tourism development zones
andadministrative rules ofthedepartment ofbanking supervision.
Without going intodetails about ourdraftoffer, which canbediscussed further atthenext
meeting oftheWorking Party letmemake twopreliminary observations.WT/SPEC/35
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First, wehavetriedtorespect theWTO guidelines forstructuring theoffer. Ifwehavemade
anyerrors ofatechnical nature, wewould appreciate anysuggestions bytheWorking Party.
Second, wehavetried, andwebelieve wehavesucceeded, inmaking adraftoffer which is
relatively interesting andforthcoming interms ofthenumber ofsectors included, thekinds ofsectors
included andtherelatively minor restrictions noted inthecolumns onmarket access andnational
treatment. Attheriskofcongratulating ourselves toomuch, wethink suchandofferwould beavery
serious oneandindeed would compare favourably withtheschedules ofmany WTO members.
Finally,thesystemofintellectualpropertyrightsinAlbaniaiscomprisedinlegislation.Industrial
PropertyLaw,whichwasadoptedin1994protectsthefollowingtypesofindustrialproperty:inventions,
trademarks, industrial designs andappellation oforigin. Thelaw"OnCopyright" adopted in1992
gives protection toliterary, artistic andprofessional works aswellasother works thatinclude every
intellectual andoriginal creativity. Iwould liketomention thatthispackage oflawsiscompatible
withmodern legislation inthefield. There arealsosome regulations, implementing thelawsaspatent
regulations, industrial designs regulations, regulations ontheboard ofappeal ofthePatent Office,
regulations onsecret patents, etc.
Since thetimeofsubmission oftheMemorandum, Albania hasincreased theintegration in
international organizations dealing withthisissue. Since 1995weareamember oftheWorld Intellectual
Property Organization, aswellastheParis Convention Treaty andtheMadrid Agreement forthe
International Registration ofTrademarks.
Wewillprepare andsubmit amemorandum onservices assoonaspossible, andwillinclude
more information, suchasinformation regarding thesizeandeconomic trends inAlbania 'sservices
sector.