WORLD TRADE ORGANIZATION
ORGANISATION MONDIALE DU COMMERCE
ORGANIZACIÓN MUNDIAL DEL COMERCIOWT/TPR/M/121/Add.1
20 November 2003
(03-6190)
Trade Policy Review Body
15 and 17 October 2003Original:  English/
                 anglais/
                 inglés
TRADE POLICY REVIEW
BULGARIA
Minutes of Meeting
Addendum
Chairperson:  H.E. Mrs. Mary Whelan (Ireland)
This document contains the advance written questions, and replies provided by Bulgaria.1
__________________________________________________________________________________
Organe d'examen des politiques commerciales
15 et 17 Octobre 2003
EXAMEN DES POLITIQUES COMMERCIALES
BULGARIE
Compte rendu de la réunion
Addendum
Président:  S.E. Mme Mary Whelan (Irlande)
Le présent document contient les questions écrites communiquées à l'avance et les réponses
fournies par la Bulgarie.1
__________________________________________________________________________________
Órgano de Examen de las Políticas Comerciales
15 y 17 de Octubre de 2003
EXAMEN DE LAS POLÍTICAS COMERCIALES
BULGARIA
Acta de la reunión
Addendum
Presidente:  Excma. Sra. Mary Whelan (Irlanda)
En el presente documento figuran las preguntas presentadas anticipadamente por escrito,
junto con las respuestas facilitadas por Bulgaria.1
                                                     
1 In English only./En anglais seulement./En inglés solamente.WT/TPR/M/121/Add.1
Page 3
ADVANCE WRITTEN QUESTIONS BY MEMBERS
AND REPLIES PROVIDED BY BULGARIA
REPLIES TO QUESTIONS RAISED BY ARGENTINA
Policies and Practices by Measures
Duties
Question 1
According to paragraph 25 under item (2)(ii)(h) of th e Report of the Secretariat, autonomous quotas are
maintained, on an MFN basis, at zero or reduced rates of duty on a basis of temporary suspensions year-
by-year or for part of the year.  It is further stated  that quotas vary greatly from year to year.  Could
Bulgaria please provide more information on th e basis for determining such annual variations?
Answer:
Bulgaria applies autonomous measures in the form of quotas with reduced or zero duties or tariff
suspension for the respective year or for a part of the year. The decision is taken by the Council ofMinisters of Bulgaria with the adoption of the resp ective Integrated Customs Tariff of Bulgaria. The
measures cover mainly essentials for the population, agricultural items or raw materials necessary for
particular production for which a shortage occurs for various reasons. All importers are entitled to benefit
from these measures without prejudice of the origin of the product. This is the reason for the difference in
items covered for a particular year or part of the year.
Measures Affecting Production and Trade
State aid
Question 2:
Paragraph 101 of the Report of the Secretariat states that "...state aid is provided for purposes of
compensating high production costs in key economic sectors that have considerable social
implications...".  Could Bulgaria please tell us what types of benefits are granted?  What does the
assistance for the production of coal consist of?
Answer:
The state aid "in key economic sectors that have considerable social implications", such as central heating
and public transport, is aimed at compensing losses arising from the provision of services of general
economic interest to the population (e.g. to compensate the retail prices of these services, which are fixed
by the Government and are of social importance).State aid for the production of coal is provided only to cover the production losses of the enterprises
producing and supplying coal to the population at retail prices fixed by the Government. There is no state
support for these enterprises for supplying coal to other enterprises, production entities, companies, etc.WT/TPR/M/121/Add.1
Page 4
Policy by Sectors
Mining and Energy
Question 3:
Paragraph 62 under item (3)(i) of the Report of the Secretariat refers to the reforms currently being
implemented with a view to phasing  out subsidies on energy prices and increasing prices in the energy
sector to bring them into line with market levels and to reflect production costs.  Could Bulgaria please
indicate how it intends to achieve the proposed dismantling in order to carry out the said reforms?
Answer:
Bulgaria faces serious challenges in the energy sector. The key strategic objectives of the policy in the
energy sector are the rationalization of energy consum ption and energy balance, which are possible under
competitive economy and a liberalized energy market. A number of measures have been taken in the
energy sector to prepare the sector for deregulation and the privatization of separate companies. In June
2000, the legal separation of the National Electricity Company (NEC) into generation,transmission/dispatch and distribution entities was completed and, thus, the first step towards the
privatization of the newly created generation and distribution companies was made. A new Energy
Strategy of Bulgaria
1 was adopted in the first half of 2002. One of the main principles of the new energy
strategy and related measures is the introduction of competitive market relations in the energy sector,
based on cost-reflective tariffs and free contracting. The adjustment of the energy tariffs is crucial tospeed-up the structural reforms in the sector. The table below shows the indicative schedule for the
increase of household electricity tariffs in the period 2002-2005:
First stage (2002) Bringing up household tariffs to a level exceeding the average price for industrial consumers
Second stage (2003)Equalizing household tariffs to the average price for non-household consumers connected to
medium and low-voltage network
Third stage (2004) Recovery of the costs for low-voltage electricity supply
Fourth stage (2005) Prices are set according to the cost-plus method
The increases of prices in percentage are stated in § 71 of the Report:  20% increase in 2002, 15% in
2003, 10% in 2004, and from 2005 the pricing will be determined on "cost-plus" method.
The specific decisions on the periodicity and the parameters of the prices lie within the competencies of
the State Commission for Energy Regulation (SCER).
At present the Government does not grant any subsidies for the generation and distribution of electricity.
REPLIES TO THE QUESTIONS RAISED BY BRAZIL
Market Access and Rules of Origin
Question 1:
Does Bulgaria have its GSP list according to the HS 2002? If so, how could we obtain a copy?
                                                     
1 The new Energy Strategy was also approved by the National Assembly as a sign of the public consensus
on the development of the sector.WT/TPR/M/121/Add.1
Page 5
Answer:
Bulgaria has been granting preferences to developing and least developed countries since 1982. The
preferences are unilateral and involve application of reduced and zero duty rates for some goods
originating in developing and least developed countr ies, respectively. The preferential treatment for the
beneficiary countries is legally established in Article 26, para. 1, point 5 of the currently appliedBulgarian Customs Act as amended in April 2003.
On the basis of the Customs Act, the Council of Ministers adopted Decree № 289/20.12.2001 for the
adoption of the Combined Nomenclature and the Integrated Customs Tariff of Bulgaria. The Decree lists
the goods subject to preferences (Annex 4) as well as the countries for which these preferential measures
apply (Annexes 3.2 and 3.3). The list of goods covered by the GSP scheme is presented below in HS2002
tariff lines.
Tariff
Number
020110000
020120200
020120300
020120500
020120900
020130000
020210000
020220100
020220300
020220500
020220900
020230100
020230500
020230900
030110100
030110900
030191100
030191900
030192000
030193000
030199110
030199190
030199900
030211100
030211200
030211800
030212000
030219000
030221100
030221300
030221900
TariffNumber
030222000
030223000
030229100
030229900
030231100
030231900
030232100
030232900
030233100
030233900
030234100
030234900
030235100
030235900
030236100
030236900
030239900
030240000
030250100
030250900
030261100
030261300
030261800
030262000
030263000
030264000
030265200
030265500
030265900
030266000
030269110
TariffNumber
030269190
030269210
030269250
030269310
030269330
030269350
030269410
030269450
030269510
030269550
030269610
030269660
030269670
030269680
030269690
030269750
030269810
030269850
030269860
030269870
030269880
030269910
030269920
030269940
030269950
030269990
030270000
030311000
030319000
030321100
030321200
TariffNumber
030321800
030322000
030329000
030331100
030331300
030331900
030332000
030333000
030339100
030339200
030339300
030339800
030341110
030341130
030341190
030341900
030342120
030342180
030342320
030342380
030342520
030342580
030342900
030343110
030343130
030343190
030343900
030344110
030344130
030344190
030344900
TariffNumber
030345110
030345130
030345190
030345900
030346110
030346130
030346190
030346900
030349310
030349330
030349390
030349800
030350000
030360110
030360190
030360900
030371100
030371300
030371800
030372000
030373000
030374300
030374900
030375200
030375500
030375900
030376000
030377000
030378110
030378120
030378130
WT/TPR/M/121/Add.1
Page 6
Tariff
Number
030378190
030378900
030379110
030379190
030379210
030379230
030379290
030379310
030379350
030379370
030379410
030379450
030379510
030379550
030379580
030379650
030379710
030379750
030379810
030379830
030379850
030379870
030379880
030379910
030379920
030379930
030379940
030379980
030380100
030380900
030410130
030410150
030410170
030410190
030410310
030410330
030410350
030410380
030410910
030410970
030410980
030420130
030420150
030420170
TariffNumber
030420190
030420210
030420290
030420310
030420330
030420350
030420370
030420410
030420430
030420450
030420510
030420530
030420550
030420560
030420580
030420590
030420610
030420690
030420710
030420730
030420750
030420790
030420810
030420830
030420850
030420870
030420880
030420910
030420950
030490050
030490100
030490220
030490310
030490350
030490380
030490390
030490410
030490450
030490470
030490490
030490510
030490550
030490570
030490590
TariffNumber
030490610
030490650
030490970
030510000
030520000
030530110
030530190
030530300
030530500
030530900
030541000
030542000
030549100
030549200
030549300
030549450
030549500
030549800
030551100
030551900
030559110
030559190
030559300
030559500
030559600
030559700
030559900
030561000
030562000
030563000
030569100
030569200
030569300
030569500
030569900
030611100
030611900
030612100
030612900
030613100
030613300
030613400
030613500
030613800
TariffNumber
030614100
030614300
030614900
030619100
030619300
030619900
030621000
030622100
030622910
030622990
030623100
030623310
030623390
030623900
030624100
030624300
030624900
030629100
030629300
030629900
030710100
030710900
030721000
030729100
030729900
030731100
030731900
030739100
030739900
030741100
030741910
030741990
030749010
030749110
030749180
030749310
030749330
030749350
030749380
030749510
030749590
030749710
030749910
030749990
TariffNumber
030751000
030759100
030759900
030760000
030791000
030799110
030799130
030799150
030799180
030799900
040700301
040700302
050400000
060110100
060110200
060110300
060110400
060110900
060120100
060120300
060120900
060210100
060210900
060220100
060220900
060230000
060240100
060240900
060290100
060290200
060290300
060290410
060290450
060290490
060290510
060290590
060290700
060290910
060290990
080250000
080300110
080300190
080300900
080420100
WT/TPR/M/121/Add.1
Page 7
Tariff
Number
080420900
080430000
080450000
080510100
080510300
080510500
080510800
080520100
080520300
080520500
080520700
080520900
080540000
080550100
080550900
080590000
081090300
090121000
090122000
090190100
090190900
090210000
090220000
090230000
090240000
090300000
090411000
090412000
090420100
090420300
090420900
090500000
090910000
090920000
090930000
090940000
090950000
091040110
091040130
091040190
091040900
091091100
091091900
091099100
TariffNumber
091099910
091099990
100610210
100610230
100610250
100610270
100610920
100610940
100610960
100610980
100620110
100620130
100620150
100620170
100620920
100620940
100620960
100620980
100630210
100630230
100630250
100630270
100630420
100630440
100630460
100630480
100630610
100630630
100630650
100630670
100630920
100630940
100630960
100630980
100640000
110610000
110620100
110620900
110630100
110630900
110814000
120210100
120210900
120220000
TariffNumber
120600910
120600992
120710100
120710900
120720100
120720900
120730100
120730900
120740100
120740900
120750100
120750900
120760100
120760900
120791100
120791900
120799200
120799910
120799980
120810000
120910000
120921000
120922100
120922800
120923110
120923150
120923800
120924000
120925100
120925900
120926000
120929100
120929500
120929600
120929800
120930000
120991300
120991900
120999100
120999910
120999990
121010000
121020100
121020900
TariffNumber
121130000
121140000
121190300
121190700
121190750
121190980
121210100
121210910
121210990
121220000
121230000
121291200
121291800
121299200
121299800
121300000
130220100
130220900
140200000
140300000
140410000
140420000
140490000
150500100
150500900
150600000
150790100
150790900
150810100
150810900
150890100
150890900
151540000
151590150
160414110
170310000
180100000
180200000
180310000
180320000
180400000
180500000
200820110
200820190
TariffNumber
200820310
200820390
200820510
200820590
200820710
200820790
200820910
200820990
200830110
200830190
200830310
200830390
200830510
200830550
200830590
200830710
200830750
200830790
200830900
200891000
200892120
200892140
200892160
200892180
200892320
200892340
200892360
200892380
200892510
200892720
200892760
200892920
200892940
200892970
200899250
200899260
200899320
200899330
200899360
200899380
200899460
200899470
200899610
200899620
WT/TPR/M/121/Add.1
Page 8
Tariff
Number
200899910
200911110
200911190
200911910
200911990
200912000
200919110
200919190
200919910
200919980
200921000
200929110
200929190
200929910
200929990
200931110
200931190
200931510
200931910
200931990
200939110
200939190
200939310
200939390
200939550
200939590
200939910
200939950
200939990
200941100
200941910
200941990
200949110
200949190
200949300
200949910
200949930
200949990
200990410
200990490
200990510
200990590
200990710
200990730
TariffNumber
200990790
200990920
200990940
200990950
200990960
200990970
200990980
240110100
240110200
240110300
240110410
240110490
240110500
240110600
240110700
240110800
240110900
240120100
240120200
240120300
240120410
240120490
240120500
240120600
240120700
240120800
240120900
240130001
240130009
240391000
240399100
240399900
270120000
270210000
270220000
280120000
281820000
282760009
283421000
290290100
290410000
290511000
290514900
290542000
TariffNumber
290611000
290715900
290722900
291429000
291570250
291590800
291611100
291612100
291614900
291619800
291739800
291890100
291890200
291890300
291890900
291900900
292141000
292144000
292149800
292159100
292159900
292214000
292219100
292219200
292219800
292221000
292229000
292242000
292244000
292249950
292250000
292320000
292411000
292419001
292419009
292424000
292429300
292429950
292800100
292800900
293219000
293332000
293333000
293339990
TariffNumber
293341000
293349900
293355000
293359950
293391900
293399100
293399900
293410000
293491000
293499900
293500909
293711000
293810000
294110100
294110200
294110900
294120800
294130000
294140000
294150000
294190000
320110000
320120000
320210000
320411000
320412000
320413000
320414000
320415000
320416000
320417000
320419000
320500000
320810900
320820900
321290390
321290900
321310000
321390000
321511000
321590100
321590800
330112100
330126900
TariffNumber
330129616
330129618
330130000
330190210
330190301
330190900
350190100
350190900
350300100
350610000
350691000
350699000
391000000
391190190
391239800
391290900
400700000
400811000
400819000
400821900
400829900
401410000
401490100
401490900
401519100
401519900
401590000
430219800
520411000
520419000
520420000
520512000
520522000
520523000
520524000
520612000
520939000
521119000
521151000
530710900
530720000
531010100
550200800
680422300
WT/TPR/M/121/Add.1
Page 9
Tariff
Number
681290300
681310900
681390900
681490100
681599900
710700000
711311000
711319000
711320000
711411000
711419000
711420000
711719990
711790000
840810190
841320900
841330990
841381900
841451900
841510100
841510900
841581900
TariffNumber
841582800
841590900
841810990
841821990
841840910
841899909
841939100
841939900
842119910
842123900
842131900
842230000
842240000
842490900
842549900
843710000
843820000
843880100
844090000
844330000
845221000
845290000
TariffNumber
846691950
846729300
847480100
847480900
847710900
848060100
848060900
848210100
848210900
848220000
848250000
848280000
848410900
850213910
850490990
850520000
850680110
850710390
850720310
850910100
850940000
851110900
TariffNumber
851180900
851190000
851240000
851290000
851310000
851410100
851621000
851640100
851821900
851822900
851829800
851830800
851840990
851999180
851999900
852110800
852540990
852713100
852719000
852721520
852721590
852721920
TariffNumber
852729000
852731110
852812520
852812540
852812560
852812810
852813000
852910200
853620100
853641100
853641900
853649000
853690850
854419100
Question 2:
Since Bulgaria is taking part in the Pan-European Cumulation System since 1997, but the cumulationrules of origin for the Bulgarian and the EU GSP are distinct, is it possible to have both cumulations to
be granted GSP treatment? How does the diagonal  cumulation system work on the Bulgarian GSP?
Answer:
The currently applied rules of origin for granting GSP treatment on imports in Bulgaria differ from the
EU GSP rules. It is not possible to cumulate the or igin of a product using both systems because of their
distinct nature and different legislative basis.
Question 3:
Under chapter III, item 27, of the WT/TPR/S/121 document , it is registered that Bulgaria applies rules of
origin for both non-preferential and preferential purposes. In the case that certificate of origin is
required, could Bulgaria inform the authorities that issue the certificate of origin?WT/TPR/M/121/Add.1
Page 10
Answer:
Bulgaria applies both non-preferential and preferential rules of origin. A certificate of origin
accompanying the imported goods is required. The Bulgarian administration, i.e. the Customs Agency at
the Ministry of Finance, the Ministry of Economy and the Ministry of Foreign Affairs, submits the
relevant information concerning origin certificate requirements. As the authorities that issue certificates oforigin vary from country to country it is a difficult task for the administration of any country to coordinate
information with all relevant institutions worldwide. It is therefore a shared task and it is in the interest of
importing country also to provide information concerning the authorities that are entitled to issue
certificates of origin.
Services
Question 1:
Is there any ongoing negotiation under GATS Article VII.4 (Recognition)?
Answer:
Bulgaria has concluded bilateral agreements for recognition of relevant degrees of education, and in some
cases, of the certificates for scientific degrees or titles with the following countries: Austria, Angola,
Algeria, Afghanistan, Benin, Vietnam, Ghana, Guinea, Zambia, Mozambique, India, Iraq, Yemen,
Columbia, Cuba, Kuwait, Laos, Libya, Mali, Mexico, Moldova, Nigeria, Nicaragua, Pakistan, Poland,Romania, Sudan, CIS countries, Serbia and Monteneg ro, Syria, Hungary, Czech and Slovak Republics,
Jordan, Ukraine. In April 2003 Bulgaria signed an agreement with Albania; ratification is pending.
Bulgaria has concluded bilateral treaties for legal assistance in civil cases, providing for relief of
legalization of documents, including documents for acquired education with the following countries:
Austria, Azerbaijan, Algeria, Armenia, Vietnam, Georgia, Greece, Spain, Ye men, Cyprus, China, Cuba,
Kuwait, Libya, Mongolia, Poland, Romania, Russian Federation (including with the countries from the
CIS, except Latvia, Lithuania, Estonia), Syria, Serbia and Montenegro, Macedonia, Bosnia, Croatia,
Slovenia, Hungary, France, Czech Republic, and Slovak Republic.
Question 2:
Please indicate the legislation regarding economic needs tests applied to the following: medical and
dental services; veterinary services; wholesale trade services; retailing services.
Answer:
The Bulgarian legislation provides for the possibility to apply economic needs tests in the field of medical
and dental services and veterinary services. This possibility is stipulated in the Law on Health Institutions
and the Implementing Regulation of the Law on Veterinary-Medical Activity.
Question 3:
Bulgaria has no commitments under GA TS for the following services:
• urban planning and landscape architectural services;WT/TPR/M/121/Add.1
Page 11
• postal services;
• courier services for goods;
• general construction work for buildings (CPC 512), other construction and related
engineering services (CPC 511,515, 518);
• tourist guides services (CPC 7472);
• commission agents' services for sales on a fee or contract basis of agricultural raw
materials  and live animals (CPC 62111);
• for sales on a fee or contract basis of food products, beverages and tobacco (CPC
62112);
• and for sales on a fee or contract basis of pharmaceutical and medical goods and
cosmetics (CPC 62117);
• wholesale trade services of grain, oilseeds and oleaginous fruits, seeds and animal feed
(CPC 62211);
• manufactured tobacco and tobacco products (CPC 62213 and 62228);
• motor vehicles (CPC 61111);
• retailing services of beverages not consumed on the spot(CPC 63107); tobacco products
(CPC 63108);
• pharmaceutical, medical and orthopaedic goods (CPC63211);
• 
Are there restrictions of Market Access, National Treatment and domestic regulation that limit the
provision of those services? Is Bulgaria willing to  bind commitments on those sectors in the new round of
negotiations?
Answer:
As a country recently acceded to the WTO (December 1996), Bulgaria undertook considerable
commitments under all WTO Agreements. Notwithstanding its broad and significant commitments in the
area of services, undertaken in the course of its accession, Bulgaria actively undertook further
liberalization in the extended negotiations on basic telecommunications and financial services. In the
services negotiations, Bulgaria aims at having its liberalization, undertaken autonomously, recognized and
taken into account by other trading partners.
Government Procurement
Question 1:
Concessions are treated in the government procur ement universe? Are foreign companies allowed to
participate in bids concerned with concessions?
Answer:
The provisions related to concessions are set out in the Law on Concessions (SG 92/17.10.1995, last
amendments SG 63/28.06.2002). In accordance with the provisions of this law concessions are grantedupon decision of the Council of Ministers. Foreign companies are allowed to participate in bids for
granting of concessions.WT/TPR/M/121/Add.1
Page 12
Question 2:
Does Bulgaria use Built Operate Transfer (BOT), or similar contracts, as a purchasing method? Is the
Built Operate Transfer (BOT), or similar contracts, included in the coverage of commercial agreements
Bulgaria is negotiating or already takes part?
Answer:
The Republic of Bulgaria does not use the Built Oper ate Transfer method in its commercial agreements.
The Built Operate Transfer method is used in relation to infrastructure projects.
Question 3:
Which classification system is employed to goods, services and public work in Bulgaria?
Answer:
According to Article 22, paragraph 1, point 1 of the Public Procurement Law the decision for initiation of
a public procurement procedure should include the subject of public procurement. There is no
requirement to make reference to a classification system in order to define the respective goods or
services.
However there are provisions in the draft of a new Public Procurement Law (at present submitted in
National Assembly for approval) that envisage the introduction of a classification system for goods,services and public works.
Question 4:
Is there a Similarity Examination Procedure that excludes acquisition of foreign products and services
from Government Procurement contracts? If affirmat ive, how the Government identifies similar national
product?
Answer:
The Law on Public Procurement does not provide for a Similarity Examination Procedure that could lead
to the exclusion of foreign products or services from government procurement awards. There are no
requirements for the origin of goods and services.
Question 5:
How is sub-central government procurement treated in international agreements Bulgaria is negotiating
or already takes part?
Answer:
The Republic of Bulgaria applies common rules and requirements for procuring entities on central and
sub-central level.WT/TPR/M/121/Add.1
Page 13
Bulgaria does not have specific international agreements in the field of government procurement. General
government procurement provisions are embodied in certain trade agreements concluded by Bulgaria but
they do not differentiate government procurement in terms of contracting authorities.
Question 6:
Which are the offsets allowed in the Bulgaria bidding process?
Answer:
Bulgarian law on public procurement does not contain definitions or provisions for offsets.Question 7:
(WT/TPR/S/121, p.60)
Regarding paragraph 63, does Bulgaria consider these "additional performance requirements" allowed
to be included in decisions for initiation of a procedure by its law as a kind of offset or national
treatment? If affirmative, how does Bulgaria harmonize, or intends to, its legislation with commercialagreements Bulgaria is negotiating or already takes part?
Answer:
The wording "additional performance requirements" is used in the provision of Article 22, paragraph 2 of
the Public Procurement Law. This provision is not considered to be a kind of offset. Article 22, paragraph2 of the Public Procurement Law stipulates that "the procuring entity has the right to include in its
decision for initiation of a procedure additional requirements to contract performance, such as:
• conditions relating to the solution of environmental issues, unemployment, job creation
for disabled workers, use of local resources and raw materials in certain regions;
• requirements relating to the protection of the national security, defence and public order;
• conditions relating to stimulating the participation of small and m еdium-sized enterprises
as sub-contractors.
Article 22, paragraph 2 of the Public Procurement Law is designed with the purpose of overcoming the
high levels of unemployment in certain regions and sectors.
Question 8:
Are there any eco-labelling or eco-audit offsets in the Bulgaria government procurement regulations and
laws in the central and sub-central level that may be used in government procurement? If affirmative,
please indicate its legal provisions and examples of their use.
Answer:
There are no such provisions in the Bulgarian legislation.WT/TPR/M/121/Add.1
Page 14
Question 9:
Are there any social clause requirements in the Bulgaria regulations and laws in the central and sub-
central level that may be used in government procur ement? If affirmative, please indicate its legal
provisions and examples of their use.
Answer:
The present Public Procurement Law has a special provision for awarding procurements to disabled
people under the Law on Protection, Rehabilitation and Social Integration of Disabled People.
(IV) Investment
Question 1:
Do the restrictions on acquiring ownership by fore ign investors (WT/TPR/S/121; page 25) refer to all
kind of land, or only to the land in border areas?
Answer:
Foreign nationals and foreign legal entities may not directly acquire ownership rights on land. Foreign
nationals and foreign legal entities are free to acquire property rights over buildings and limited property
rights (right to build and right to use) over real estate, including residential property rights. If foreigners
inherit land in the country, they are obliged to transfer  the ownership of the land to local natural or legal
persons within three years after the inheritance becomes effective.  The above limitations, however, do not
concern Bulgarian companies with foreign participation, irrespective of the percentage of the foreign
participation in the company. Thus foreign persons can acquire full land ownership rights, including
ownership rights on agricultural land by setting up or joining a company incorporated under Bulgarian
legislation.
Foreign persons and companies with foreign participation need an advance authorization from the
Council of Ministers only to acquire ownership rights over real estate in border zones and in areas of
national security importance as determined by the Council of Ministers.
Question 2:
Do the "foreign entities" (WT/TPR/S/121; § 26; page 25) include the foreign-owned companies,
registered in Bulgaria?
Answer:
According to the Corporate Income Tax Law, the types of incomes, mentioned in paragraph 26, page 25
of WT/TPR/S/121 are subject to a 15% withholding tax when originating in Bulgaria and when payable
to local individuals, local legal entities which are not traders under the Commercial Act, and to foreign
individuals or foreign companies registered abroad. This means that if legal or non-corporate entities,
registered in Bulgaria (including foreign-owned ones)  pay such income to another company registered in
Bulgaria under the Commercial Act, they do not owe 15% withholding tax. Foreign-owned companies
registered under the Commercial Act are not treated as foreign entities.WT/TPR/M/121/Add.1
Page 15
(V) Customs procedures and licensing
Question 1:
Is there any kind of register required from Bulgar ia importers to the prior import licensing? Which would
be the required procedures?
Answer:
The licensing system and respective procedures are notified by Bulgaria in document G/LI C/N/3/BGR/2.
The import licensing procedure is very simple and takes usually up to five days. The licence is usually
delivered upon presentation of required documents, which are: commercial and tax registration, unified
identity code (code under BULSTAT), and documents necessary to certify the data in the import licensing
application form, such as commercial contract or pro-forma invoice, quality certificate, etc.
Question 2:
In relation to chapter III, item 44, of the WT/T PR/S/121 document, please inform us the licensing fees
value in order to cover administrative expenses on the processing of documents?
Answer:
Since 2001, with the introduction of the "one-stop-shop" concept, licensing is done by the respective
competent Ministry as defined in the Regulation on foreign trade regime of Bulgaria. All the fees,
collected by the state authorities are defined in accordance with the Law on State Fees (SG 104/51). Thelicensing fees cover the costs for the services rendere d and are defined in the respective rules on the tariffs
that are collected by the respective Ministry, adopted by the Council of Ministers. For example, the
licensing fee collected by the Ministry of Eco nomy is 2 BGN (1 EURO = 1.95 BGN). With regard to
arms and armaments and products and technologies of possible dual use, the fee varies from 57 to 120
BGN. Another example is the Ministry of Environment and Waters, the fee for a licence for importationof wild species is 3 BGN. With regard to importation of alien flora and fauna species designated for
propagation and breeding the fee is 46 BGN, and for ozone-depleting substance, subject to licensing
regime the fee varies from 12 to 78 BGN.
(VI) Trade remedies
Question 1:
Anti-dumping and countervailing actions: relating to paragraph 46 (WT/TPR/S/121 - Chapter III), could
Bulgarian authorities elaborate more about an inter-agency commission attributions?
Answer:
In accordance with the provisions of the domestic legislation on anti-dumping and countervailing
measures – Regulation of the Council of Ministers No. 287 (promulgated in State Gazette 106 of 13
December 1996) - the Minister of Economy is in charge of appointing the members of the Inter-Agency
Commission on Protection from Dumped or Subsid ized Imports in the Republic of Bulgaria.WT/TPR/M/121/Add.1
Page 16
The responsibilities of the Commission are in confor mity with the Agreement on the implementation of
Article VI of GATT and include the following attributions:
• To analyse complaints submitted from domestic producers and propose to the Minister of
Economy and thereafter to the Council of Ministers the initiation of anti-dumping orcountervailing investigations, within 45 days of th e date of the complaint, provided that there is
sufficient data of dumping or subsidizing of impor ts causing or threatening to cause injury to the
domestic industry;
• To notify the parties concerned about the complaints submitted and all decisions regarding any
anti-dumping or countervailing actions;
• To seek evidence and information it deems necessary for carrying out the investigation;
• To examine and verify the data supplied by the interested parties;
• To carry out on-the-spot investigations;
• To inspect the records kept by importers, exporters, traders, agents, producers, trade organizations
and associations;
• To conduct public hearings and consultations upon request with the interested parties;
• To propose the termination of the investigation prior to the 12 months period or the extension of
the investigation;
• To elaborate preliminary and final reports and propose to the Minister of Economy and thereafter
to the Council of Ministers the imposition of provisional anti-dumping or countervailing
measures on the basis of a preliminary affirmative determination that the imported product
benefits from subsidies or is being dumped, causing material injury to the Bulgarian industry;
• To propose, accept or reject voluntary undertakings of the parties concerned under certain
conditions, provided that a provisional affirmative determination has been made of subsidizationor dumping and injury caused by them,
• To require any exporter from whom undertakings have been accepted to provide, periodically,
information relevant to the fulfilment of such undertaking, and to permit verification of pertinent
data;
• To propose to the Minister of Economy and thereafter to the Council of Ministers the imposition
of definitive countervailing or anti-dumping duties.
All the decisions of the Commission providing for provisional and final duties, acceptance of
undertakings or termination of the proceedings must be affirmed by an Ordinance of the Minister of
Economy and enforced by a Decision of the Council of Ministers.WT/TPR/M/121/Add.1
Page 17
Question 2:
Safeguards actions: in paragraph 50 (WT/TPR/S/121 - Chapter III), it is said that a safeguard action
must generally be completed not later than nine mont hs from the date of its initiation and there is the
possibility of a two-month extension. Could the authorities elaborate more about the conclusion of the
investigation on crown corks named in the Table III.8?
Answer:
Pursuant to Article 12.1 of the WTO Agreement on Safeguards, the Republic of Bulgaria provided all
necessary notifications to the Committee on Safeguards, including one on the finding of a serious injury
or threat thereof caused by increased imports, and a notification on the imposition of a final measure on
imports of crown corks (tariff No. 8309100000 under the Customs Tariff of the Republic of Bulgaria).
The investigation was initiated on 25 October 2001 and was notified to the Committee on Safeguards in
G/SG/N/6/BGR/2. Less than  four months later, on 11 February 2002, the Inter-Agency Commission on
Safeguard Measures on Imports of Products in the Republic of Bulgaria reached an affirmative
determination that crown corks are imported in substantially increased quantities, thus causing serious
injury to the domestic producers (see notification G/SG/N/8/BGR/1). The date mentioned can be
considered as the date of termination of the invest igation. The competent authority has found that there
was a substantial increase in imports of crown corks in absolute terms and compared to domesticconsumption.
The final measure was introduced on the day of the promulgation of Regulation No. 255 of the Council of
Ministers of 19 November 2002 on the imposition of a safeguard measure on the imports of crown corks
in the Republic of Bulgaria (see notification G/SG/N/10/BGR/1).
Question 3:
Relating to Table III.8 (WT/TPR/S/121 - Chapter III) , could the authorities explain if the investigation on
certain steel products has finished?
Answer:
In the investigation on certain steel products from tariff headings 7208, 7209 and 7213, the competent
authority has found that there were serious reasons to  extend the investigation, with the legitimate time-limit
of two months, in order to acquire additional relevant information such as official statistical data on imports
for the whole year 2002, recent developments on the world market and the current situation of the Bulgarian
producers.
The investigation was terminated on 14 July 2003 and the decision thereto was accordingly notified to the
Committee on Safeguards promptly after the public notice was published in the State Gazette  (notification
G/SG/N/9/BGR/2 of 23 September 2003).
The investigation on steel products from tariff headings  7217 and 7317 is at the stage of data acquisition and
verification.WT/TPR/M/121/Add.1
Page 18
REPLIES TO THE QUESTIONS RAISED BY CANADA
Report by the Secretariat (WT/TPR/S/121)
Part II. Trade Policy Regimes: Framework and Objectives; (4) Laws and Regulations Relating to
Trade and Investment; paragraph 18:
Question 1:
Does Bulgaria publish the criteria or guidelines for approving foreign investments under the Law on
Foreign Investments?
Answer:
The Law on Foreign Investments is published and available to all foreign and domestic entities. Under
this Law Bulgaria does not apply any approval or registration procedure for foreign investments.
Therefore no specific criteria are set up for approval of foreign investments.
Under the Bulgarian legislation certain economic activities are subject to approval (authorization) both for
domestic and foreign entities as pointed out in note 24 to paragraph 18. The criteria applied are publicly
available as they are provided in relevant pieces of national laws and regulations. Most of therequirements are prudential and well known in world practice – for example financial activities in
banking and insurance, trade and production of armaments and weapons, etc.
In order to minimize the administrative requirements to business, both domestic and foreign, the
Government started in 2001 a process of revision of licensing and registration requirements in the
country. More than 50% of all licensing procedures applied in the country have been simplified oreliminated. There are a lot of information sources, including official ones, where all the information
needed by an entity in order to make a decision for an investment is available.
The internet version of the State Administration Register already provides information for the licensing,
permit and registration regimes. Citizens and companies can otain information on the process of issuing
the respective documents. They can read and download the laws and regulations, which set up theprocedures, as well as the samples needed to apply for them. They can also check-up all licences already
issued. The next step towards building up an e-government is to allow the persons to apply for a licence,
permit or registration via the Internet.
In order to facilitate investors, the Bulgarian Government established in April 1995 the Foreign
Investment Agency (BFIA), which provides all assistance to foreign entities that would like to invest in
the country and be involved in economic activity. BFIA is a one-stop-shop institution for encouraging,
attracting and assisting foreign investments. It is a governmental body under the Council of Ministers and
is responsible for coordinating of the activities of the public and private institutions on foreign investment
issues. A key function of the Agency is to provide quality customer services to investors. BFIA provides
general information on the investment framework fo cusing on legal taxation and financial issues; and
provides advisory services, including activities re lated to government policy on incentives to foreign
investments.
Question 2:WT/TPR/M/121/Add.1
Page 19
Does Bulgaria periodically review its procedure of approval under the Law on Foreign Investments to
ensure they are clear and transparent?
Answer:
Please refer to the previous reply.
Question 3:
If a foreign investor is denied approval, is there an opportunity for the investor to resubmit an
application? Is the investor provided with information regarding the reasons for denial of approval?
Answer:
As stated in the first reply there is no approval procedure for foreign investors. There are requirements for
economic operators, domestic and foreign, if they want to perform a specific economic activity that is
subject to registration or authorization requirement under the national legislation. In such cases there are
common criteria applied.
A Law on Limiting the Administrative Regulation and Administrative Control Over Business Activity
was adopted in June 2003. It is one of the steps for simplifying the licensing, permit, and registration
systems, and bringing the role of the government and local administrations in proposing and executing
regimes to the necessary minimum. Some of the key issues in the Law are that licensing and registration
regimes can be established only by a law (primary legislation). Any individual or legal entity can bring
before the Supreme Administrative Court regulatory acts of the Council of Ministers or of the localauthorities on the grounds of failing to comply with the provisions of the Law on Limiting the
Administrative Regulation and Administrative Control Over Business Activity.
Part II. Trade Policy Regimes: Framework and Objectives; (4) Laws and Regulations Relating to
Trade and Investment; paragraph 21:
Question 1:
Does Bulgaria publish, or otherwise make publicly available the specific requirements investors are
expected to meet in order to benefit from various tax incentives? Are these requirements periodically
reviewed to ensure they are simple and transparent?
Answer:
Apart from tax legislation which is publicly available and which stipulates possible tax incentives and the
requirements for the entities in order to benefit from it, BFIA and other governmental bodies and
institutions provide summarized information about the taxation procedures and the taxation treatment
applied. Due to the changes in tax legislation in recent years, directed towards lowering the tax rates in
the country, the requirements are reviewed in order to make them simple and transparent.
Part III. Trade Policies and Practices by Measure; (2) Measures Directly Affecting Imports; (xii)
Standards and Other Technical Requirements;(b)  Sanitary and Phytosanitary Arrangements;
paragraph 73:WT/TPR/M/121/Add.1
Page 20
Question 1:
Canada notes that there is no reference to regulatory measures with respect to products derived through
biotechnology. We would be interested in any in formation that can be provided on this matter.
Answer:
The regulatory measures with respect to products derived through biotechnology are stipulated in several
regulations concerning genetically modified organisms (GMOs).
In 1996, the former Ministry of Agriculture and Food Industry issued a Regulation on the Deliberate
Release into the Environment of Genetically Modi fied Higher Plants Obtained by Recombinant DNA
Technology (promulgated in State Gazette 70 of 16.08.1996).  Under the Regulation, a Council on SafeUse of Genetically Modified Higher Plants was established with specific functions to assess and monitor
the distribution of genetically modified supreme plants and to issue the necessary licences for the
distribution of such plants.
At present the range of bio-technology products that are subject to special veterinary and phytosanitary
measures include only genetically modified higher  plants as a result of recombinant nucleic acid
techniques. According to the Regulation of the Minister of Agriculture and Forestry from 16.08.1996 the
techniques that are considered to result in genetic modification include:
- recombinant nucleic acid techniques involving the formation of new combinations of genetic
material by inserting nucleic acid molecules, produced by whatever means outside an organism,into any virus, bacterial plasmid or other vector system and their incorporation into a host
organism, in which they do not naturally occur, but in which they are capable of continued
propagation;
- techniques, involving the direct introduction into an organism of heritable material, prepared
outside the organism including micro-inject ion, macro-injection and micro-encapsulation;
- cell fusion or hybridization techniques where live cells with new combinations of heritable genetic
material are formed through the fusion of two or more cells by means of methods that do not occur
naturally.
Techniques that are not considered to result in genetic modification, are:
- in vitro fertilization;
- natural processes such as conjugation, transduction and transformation;
- polyploidy induction;
- tissue and cell plant cultures (meristem, embryo, callus and pollen cultures).
According to the mentioned Regulation, the distribution of genetically modified higher plants is subject to
licensing by the Council on Safe Use of Genetically Modified Higher Plants at the Ministry of
Agriculture and Forestry. The licence is issued or declined after a risk analysis procedure.
The Law on Seeds and Planting Material (SG 20/04.03.20 03) states that if the variety is genetically
modified it should be explicitly stated when registered in the Official Variety List.
The legislative basis for measures concerning distribution of genetically modified higher plants is to be
supplemented by a new Law on Genetically Modified Organisms (GMOs), which shall regulate:WT/TPR/M/121/Add.1
Page 21
- contained use and handling of GMOs;
- deliberate release of GMOs into the environment;
- placing of GMOs on the market;
- import and export of GMOs;
- control of the activities.
The Law is expected to enter into force as of January 2005.
Part III. Trade Policies and Practices by Measure; (4) Measures Affecting Production and Trade; (iii)
Protection of Intellectual Property Rights; paragraph 103:
Question 1:
Bulgaria is a signatory to most international agreements respecting intellectual property rights, but is not
a signatory to the Patent Law Treaty (PLT). Does Bulgaria intend to ratify and accede to the PLT when it
comes into force, and if so, is there a target date set for such ratification?
Answer:
As a member of the WTO and the WIPO, Bulgaria is interested to accede to the Patent Law Treaty, which
is not yet in force. At present, there is no date set for accession to the PLT.
Part III. Trade Policies and Practices by Measure; (4) Measures Affecting Production and Trade; (iii)
Protection of Intellectual Property Rights; paragraph 105:
Question 1:
Bulgaria has made significant improvements to its regulatory regime for the protection of intellectual
property rights since the WTO review in 1997. Is Bulgaria currently considering any further legislativeinitiatives relating to intellectual property?
Answer:
With regard to industrial property, the respective authorities are drafting bills for the amendment and
supplement of the Law on Marks and Geographical Indi cations and the Law on Industrial Designs, which
are to be tabled at the Council of Ministers by the end of 2003. The new amendments to the Law on
Marks and Geographical Indications envisage the introduction of the institution of opposition at the
registration procedure, and supplements to the provisions on administrative penal sanctions (with regard
to the rights and obligations of the officials who draw up the infringement statements; the authorized body
for the destruction of the infringing goods; repetition of the checks and examinations in case of repeated
infringements, etc.). The same supplements to the provisions on administrative penal sanctions areenvisaged to the Law on Industrial Designs as well as amendments of the definitions involved, viewing
further harmonization of this Law with the respective regulation of the EU on industrial designs.
Amendments are also envisaged to the Patent Law, with regard to utility models.
With regard to the Law on Copyright and Related Rights - it is already harmonized with the EU aquis  and
no further legislative initiatives relating to copyright are being considered now, except for one concerning
the licensing of manufacturers of compact discs and matrices, as well as the terms and conditions for theWT/TPR/M/121/Add.1
Page 22
manufacture and distribution of recorded CDs and other carriers, containing subject matter of copyright
and neighbouring rights, and matrices for their manufacture. These issues will be regulated by a Law and
not by a Regulation as they are at present.
Part III. Trade Policies and Practices by Measure; (4) Measures Affecting Production and Trade; (iii)
Protection of Intellectual Property Rights; (a) Copyrights and Neighbouring Rights; paragraph 108:
Question 1:
One element of Bulgaria’s efforts to address problems related to unauthorized use of copyright-protected
material has been the creation of the Inter-Ministerial Council for the Protection of Copyright and
Neighbouring Rights. Could Bulgaria  elaborate more on the function and authority of this council?
Answer:
The reference made in the Secretariat’s Report is wi th regard to the suspended Inter-Ministerial Council
for the Protection of Copyright and Neighbouring Rights. It was created in 1997, under Decree of theCouncil of Ministers No. 120/1997, with the aim to better coordinate and direct Bulgaria’s anti-piracy
enforcement efforts. The Council was headed by the Deputy Prime Minister, and was broadly based and
included the Secretary of the Interior, the Deputy Ministers of Foreign Affairs, Economy, the Chief of the
Customs Service, and representatives from the Chief Prosecutor’s Office, National Investigation Agency,
Directorate of the National Police, and National Security Service. Its functions were:
- to draft programmes for the prevention and termination of the illegal use of objects protected by the
Law on Copyright and Related Rights;
- to coordinate the activities and measures, undertaken by the state authorities, organizations, and
institutions in the field of copyright, and the local authorities;
- to collect and analyse information with regard to the conditions and tendencies on the market of
copyrighted objects;
- to cooperate with the organizations for protection or management of copyright and related rights;
- to table, at the Council of Ministers, proposals for changes in the legislation, according to the
international obligations of the state.
The Inter-Ministerial Council for the Protection of Copyright and Neighboring Rights was abolished in
July 2002. Its role as a coordinating body for the enforcement of intellectual property right protection was
vested in the newly created Council for Intellectual Property and Related Rights Protection. It wasestablished on November 28, 2002, with an Order of the Minister of Culture and envisages the
participation of non-governmental organizations in the field of intellectual property, such as the Bulgarian
Association Against Copyright Theft (BULACT), the Bulgarian Association of Music Producers
(BAMP), Arsis Consulting. The new Council involves on ly experts for reasons of better efficiency. The
Chairman of the Council is the Director of the Intellectual Property and Related Rights Directorate at theMinistry of Culture, and permanent member are experts from the Ministry of Culture, National Police,
Customs Intelligence Directorate at the Customs Agency, and National Service for Combat of Organized
Crime (NSCOC). The Council ensures better coordination between the state authorities, which are in
charge of the protection of copyright and related rights and who are involved in the day-to-day work onWT/TPR/M/121/Add.1
Page 23
the protection of intellectual property. The Counci l discusses practical issues with regard to the
enforcement of the Law on Copyright and Related Rights. Amongst its functions is to identify problems
with the implementation of the law and to propose or take concrete measures for their solution. It also
aims to ensure close cooperation between government bodies and the non-governmental organizations
and associations of the right-holders and to promote the dialogue between them with a view to providing
better enforcement of the intellectual property legislation.
Part III. Trade Policies and Practices by Measure; (4) Measures Affecting Production and Trade; (iii)
Protection of Intellectual Property Rights; (b ) Industrial Property; Patents; paragraph 112:
Question 1:
Bulgaria grants patents on methods and products, but not plant varieties and animal breeds. Does
Bulgaria grant patents on higher life forms (i.e., pl ants and animals), as distinguished from the specific
exclusions for plant varieties and animal breeds?  If so, does Bulgarian legislation distinguish between
human and non-human animals for the purposes of patenting?
Answer:
Bulgaria does not provide protection through patents to new plant varieties and animal breeds. Protection
for them on the territory of the country is provid ed with a certificate, issued under the Law on the
Protection of New Plant Varieties and Animal Breeds. The Bulgarian legislation does not provide patent
protection for higher life forms (plants and animals).
Part III. Trade Policies and Practices by Measure; (4) Measures Affecting Production and Trade; (iii)
Protection of Intellectual Property Rights; (b) Industrial Property; Marks and Geographical
Indications; paragraphs 115-118:
Question 1:
Could Bulgaria explain how foreign geographical  indications are protected under the Bulgarian
geographical indications system?
Answer:
The protection of geographical indications in Bulgaria is stipulated in the Law on Marks and
Geographical Indications, in particular Chapter 3 of the Law. According to Art.53, paragraph 1, thelegitimate protection of geographical indications is provided through their registration in the Patent
Office. The application for registration is filed at the Patent Office. When the applicant is a foreign
person, a document certifiying the registration of the geographical indication in the country of origin must
be submitted with the application.WT/TPR/M/121/Add.1
Page 24
Question 2:
Does this system offer protection for foreign geographical indications, which are protected as trademarks
by other Members (eg, as certification marks or collective marks)?  If not, how is this consistent with
Bulgaria's obligations under Article 22 of TRIPS?
Answer:
Foreign geographical indications that are protected as certification marks or collective marks in other
countries cannot be granted protection in Bulgaria as geographical indications. They can be registered and
protected as certification marks or collective marks. Paragraph 1 of TRIPS Article 22 contains the
definition for geographical indications; paragraph 2 stipulates the framework of the legitimate protection;paragraph 3 provides for the obligation to deny a registration or to invalidate a registration of a trade mark
which contains or consists of a geographical indication with respect to goods not originating in the territory
indicated, if use of the indication in the trade mark for such goods in that Member is of such a nature as to
mislead the public as to the true place of origin; and paragraph 4 provides for the protection against
homonymous geographical indications.
The legislative regulation of the geographical indicati ons in Bulgaria is compatible with these TRIPS
provisions. The TRIPS Agreement does not prescribe wh at particular means shall be used in order to
provide protection of geographical indi cations. In Bulgaria this legal category is defined as an independent
matter, with its own specificity, which is different  from the one of certification or collective marks.
Part III. Trade Policies and Practices by Measure; (4) Measures Affecting Production and Trade; (iii)
Protection of Intellectual Property Rights; (c) Enforcement; paragraph 121:
Question 1:
Bulgaria provides administrative and civil remedies against infringement of intellectual property rights.
Is such recourse available equally for all types of intellectual property rights? Is this recourse subject togeneral Bulgarian rules of civil procedure? Finally, are all decisions in infringement cases subject to
judicial appeal or review?
Answer:
There are three kinds of intellectual property rights protection in Bulgaria: administrative penal, civil, and
criminal. Special attention is drawn to the border control.
Administrative penal protection
This kind of protection is fast, efficient and entails small expenses for holders of rights; it is intended to
produce a preventive and warning effect on potential infringers rather than confiscate and destroy allobjects of infringement.
For industrial property it covers marks, geographical indications and industrial designs, and it is governed
by Article 81 of the Law on Marks and Geographical Indications and Article 65 of the Law on Industrial
Designs.WT/TPR/M/121/Add.1
Page 25
Administrative penal protection is performed by the Pa tent Office, the infringement statements are drawn
up by an official as appointed by the President of the Patent Office, and the penalty is ordered by the
President himself.
The administrative penal protection is exercised through fines (500 to 5,000 BGN), or seizure of the
infringing goods, regardless of the ownership thereof, and their destruction.
For copyright and neighbouring right infringements it provides for issuance of penal ordinances by the
Minister of Culture or officials authorized by him. Infringers are liable to fines and pecuniary sanctions.
The party concerned has the right to appeal the administrative decision before the respective regional
court in the region where the infringement was performed, and the decision of the regional court may be
appealed before the respective district court.
Civil protection
This consists in the possibility to initiate and institute court proceedings.
With regard to industrial property rights protectio n it is regulated in full detail in the Patent Law
(Article 28), the Law on Marks and Geographical Indications (Article 76), the Law on Industrial Designs
(Article 57), the Law on the Topography of Integrated Circuits (Article 34), and the Law on the
Protection of New Plant Varieties and Animal Breeds (Article 29).
The actions concern: establishment of the fact of infringement; suspension of the act of infringement;
compensation for damages suffered; destruction of the infringing object and, where the infringement isintentional, of the infringement tools.
The competent court is the Sofia City Court. Its decisions are subject to appeal before the Appellate
Court, and the decisions of the Appellate Court can be reviewed  by the Supreme Cassation Court.
With regard to intellectual property rights protection the Law on Copyright and Neighboring Rights
envisages that the right owner or person to whom the user right has been exclusively granted may bring
an action in court for: injunction restraining the unlawful use; seizure and destruction of the illegally
produced copies of the work; seizure and disablement of the copying, decrypting and reproduction
equipment used exclusively for committing the infringement, etc. Disputes under the Law on Copyright
and Neighboring Rights are settled by the district courts.
Criminal penalties
These are provided under  Article 227 of the Penal Code (amended SG No 81/1999), which reads that
"any person using a mark, industrial design or layout design of an integrated circuit without the consent of
the holder thereof shall be sentenced to a three-year  term of imprisonment, or a fine of up to 5,000 BGL".
Article 173 provides for the respective punishment for a person who applies for registration or registers
under his name somebody else’s invention, utility model or industrial design.
Section 7 (Art. 172a and Art.173) of the Penal Code - "Crimes Against Intellectual Property",
incriminates infringements against copyright and related rights. The usage of objects placed under
copyright protection without the necessary legal permission of the holder of such copyright is qualified as
a crime, for which criminal responsibility is to be incurred.WT/TPR/M/121/Add.1
Page 26
Part IV. Trade Policies by Sector; (5) Services; (ii) Banking and Services:
Question 1:
Canada welcomes the efforts that Bulgaria has undert aken in the past several years to reform its
financial sector regulatory regime. In this regard, Canada notes with considerable interest the focus onthe prudential basis underlying the licensing requirements for the banking sector. In order to deepen our
understanding of the sector, and in particular the criteria for authorization, can Bulgaria please
elaborate the features of the prudential framework for the sector?
Answer:
The new banking legislation, as introduced in 1997, enhanced the autonomy and power of the BNB (the
central bank) and strengthened its supervisory powers.
The Law on Banks sets out the activities that banks are allowed to carry out, the licensing requirements
(including requirements on management and information about shareholders and sources of capital) and
the conditions for licence revocation (including insolvency, defined by this law as a failure to pay an
obligation for more than seven days or having negative capital). It specifies that banks shall observe
capital, liquidity, foreign currency positions, and other requirements determined by the BNB and statesthat the minimum paid-in capital requirement is BGN 10 million.
The Law on Banks stipulates that a bank must take the form of a joint-stock company. Foreign banks may
obtain a licence for banking activity on the territory of the country through a branch. A foreign bank may
not perform through a branch banking operations that are not allowed for this bank in the country inwhich it is originally established. Foreign banks may also open commercial representative offices that
cannot perform banking activities.
The Law also addresses conflicts of interest, re lationships between banks and between banks and
customers, bank secrecy, the maintenance and disclosure of information, internal controls, accounting,and annual accounts. Finally it addresses issues of banking supervision, forced and voluntary liquidation,
and administrative penalty provisions.
For prudential purposes the Law on Banks and the supporting regulations require all banks:
- To calculate and maintain a minimum capital adequacy ratio for credit risk on the lines of the
Basel Accord (currently BNB prescribes a minimum CAR of 12 per cent, which is suspected to
be sufficient to cover market risks under current conditions);
- To manage basic banking risks (liquidity, foreign exchange, interest, operational and other risks);
- To put in place systems to identify and measure country risk (from July 2001);
- To adopt and submit to the BNB the policy and rules governing their credit activities including
the establishment of a Credit Committee as a specialized internal body for monitoring,
assessment, classification and provisioning of their risk exposure;
- To assess periodically (at least quarterly) their loans and other risk assets and allocate provisions
to cover the risk of losses;
- To report large exposures, which are defined as exposures equal or more than 10 per cent of the
bank or the bank group, as part of the quarterly reporting system (the limit of the large exposure
stands at 25 percent of the bank’s own funds);WT/TPR/M/121/Add.1
Page 27
- To create and maintain adequate administrative and accounting procedures and effective internal
control to identify and record all large exposures and subsequent changes to them;
- To observe a threshold for connected lending and special rules for taking decisions on connected
lending beyond a threshold, etc.
All banks are supervised on a consolidated basis, which includes the operations of foreign branches.
Domestic banks require prior approval of the BNB for operating branches abroad (for subsidiaries it is not
required). Foreign banks operate in Bulgaria both as branches and as subsidiaries and are subject to the
same supervisory and prudential regime as domestic banks, with minor exceptions, which reflect the
control of the parent bank and the supervisory regime of the host country, in the case of foreign bank
branches.
In 2001, Bulgaria participated in the joint IMF/World Bank Financial Sector Assessment Programme
(FSAP). The assessments of compliance with the Basel Core Principles for Effective BankingSupervision and the Code of Good Practices on Transparency in Monetary and Financial Policies were
updated. According to the assessment, banking supervision fully complies with 18 of the effective
banking supervision principles and largely complies with  six of them. It indicated that the banking system
could resist FX, interest, and credit risk.
The procedure for granting and revoking permits for conducting bank operations is laid down in
Articles 11-17 of the Law on Banks and Articles 7- 21 of Regulation No. 2 of the BNB on the Licenses
and Permits Granted by the BNB.
Part IV. Trade Policies by Sector; (5) Services; (ii) Banking and Services; paragraph 111:
Question 1:
Regarding the privatization programme, paragraph 111 indicates that the contract for the sale of the
State Savings Bank (DSK) was expected to be finalised by the beginning of September 2003. Can
Bulgaria provide an update on the status of this sale?
Answer:
The Government has finalized the privatization of the State Savings Bank (DSK), the second biggest
commercial bank in Bulgaria. It is privatized through its sale to Hungary's OTP Bank. Following this
privatization, the share of private-owned commercial banks is above 96%.
Question 2:
Paragraph 111 makes reference to the "Encouragement Bank" ("a donor financed bank"). Can Bulgaria
please elaborate on how the Encouragement Bank operate s?  For example, what is the structure of donor
financing?
Answer:
The Encouragement Bank was established in January 1999 and licensed by BNB. The major shareholder
is the State represented by the Minister of Finance (99.99%).WT/TPR/M/121/Add.1
Page 28
The Bank participates in contracting, allocation and management of financial resources attracted
domestically and from abroad. Main resources are own capital, credit lines provided by international
financial institutions, deposits, etc.
In performing its banking activities the Bank has concentrated its priorities on credits for economic
initiatives and business projects of SMEs for implementation of investment projects; establishment ofnew enterprises; modernization of existing ones, promotion of export-oriented activities, etc.
At present the Bank manages the following credit lines:
- a credit line from the EIB for financing of SMEs in Bulgaria;
- a credit line from the Development Bank of the Council of Europe for establishment or
maintenance of working places in SMEs;
- a credit line agreed with the European Investment Fund under the Guarantee Agreement for
SMEs. Part IV. Trade Policies by Sector; (5) Services; (ii) Banking and Services; paragraph
113:
Question 1:
Concerning cross-border trade in financial services, paragraph 113 indicates that Bulgaria's specific
commitments under the GATS remain unbound.  Can Bul garia please clarify what if any are limitations
attached to cross-border trade in this area?
Answer:
There are no such limitations.
Question 2:
Paragraph 113 also sets out conditions in respect of the acquisition of voting shares in a local bank. Can
Bulgaria elaborate on the criteria that guide the BNB’s consideration of foreign acquisition of voting
shares in a local bank?  Is consideration precisely the same as for a non-foreigner’s request to acquireshares? Also, can the BNB exercise discretion in approving acquisition of voting shares by foreigners?
Answer:
The central bank (BNB) grants a permit for acquisition of 10% or over 10% of the voting shares of a  local
bank. In this procedure the BNB has the discretion to decide whether some of the shareholders controlling
over 3% of the votes, by their actions or by their influence on decision-making, may harm the reliabilityor the security of the bank or its operations. The BNB refuses to grant a permit where it establishes that
there is a risk of the bank being affected by the non-bank activity of the applicant, or of close relations
between the bank and the applicant, which may hinder exercising of banking supervision, or of money
laundering. The BNB shall refuse to grant a permit if it ascertains that persons who have subscribed for
3% or more of the capital have ma de the payment with borrowed funds.
The considerations acquisition of voting shares in a lo cal bank is the same for foreign and local requests.
There are no laid-down specialized procedures for approving acquisition of voting shares by foreigners.WT/TPR/M/121/Add.1
Page 29
Question 3:
In addition to the conditions relating to the acquisition of voting shares in a local bank, paragraph 113
indicates that the direct or indirect acquisition by  a bank of more than 10% of the capital of non-financial
enterprises is subject to the permission of the BNB.  Can Bulgaria please elaborate on the policy
rationale underlying acquisition of non-financial enterprises?
Answer:
This requirement is connected with the fact that an acquisition by a bank of non-financial enterprises
makes that bank open to greater risk compared with the acquisition of financial institutions. In the
procedure for granting a permit, the central bank examines whether the acquisition might impair thecapital adequacy, liquidity or asset quality of the bank, whether a possibility might occur for the bank to
sharply increase its credit risk or sustain losses, or whether the investment is fully covered by the bank's
own resources and does not reduce the capital base of the bank below the required minimum. This
acquisition is deducted from the own funds of the respective bank under the terms and procedure of
Article 11, para. 4 of Regulation No. 8 of the BNB on the Capital Adequacy of Banks.
Part IV. Trade Policies by Sector; (5) Services; (ii) Banking and Services; paragraph 116:
Question 1:
Concerning the limitations in the insurance sector on the establishment of combined life and non-life
insurance companies as set out in paragraph 116, does Bulgaria contemplate easing off these limitations
at this time?
Answer:
Bulgaria does not plan, for the time being, to ease off the limitations in the insurance sector on the
establishment of combined life and non-life insurance companies.
Part IV. Trade Policies by Sector; (5) Services; (ii) Banking and Services:
Question 1:
Regarding ownership in the banking and insurance sect ors, does Bulgaria maintain foreign ownership
limits in these sectors? Does Bulgaria maintain individual ownership limits in these sectors?
Answer:
Under the Law on Banks Bulgaria does not maintain ownership limits in these sectors. Under the Law on
Banks the acquisition by domestic or foreign persons, or related persons, directly or indirectly of shares
representing 10% or more of all voting shares is subject to the prior written authorization of the central
bank. The single exception is when these shares are acquired through the stock exchange, than the buyer
may exercise voting rights until written permission from the central bank is obtained.
With regard to the insurance sector, the Bulgarian Insurance Law does not provide for any ownership
limitations, or for any limits over individual ownership.WT/TPR/M/121/Add.1
Page 30
Question 2:
In terms of establishment for the banking sector, can foreign firms establish in a form other than a joint
stock company?
Answer:
The Law on Banks stipulates that a bank must take the form of a joint-stock company. Foreign banks may
obtain a licence for banking activity on the territory of the country through a branch. A foreign bank may
not perform through a branch banking operations that are not allowed for this bank in the country in
which it is originally established. Foreign banks may also open commercial representative offices that
cannot perform banking activities.
Question 3:
Regarding establishment for the banking and insurance sectors, are branches and subsidiaries allowed?
What capital requirements exist, and what are the particular prudential considerations underlying suchrequirements?
Answer:
Banks are allowed to carry out banking activity through subsidiaries or branches. The establishment of
subsidiaries must comply with the capital requirements applicable to banks established by local persons.
When establishing a bank a minimum deposited capital of BGN 10 million is required. The payments
within the minimum required capital must be made only in cash. There are no capital requirements in
relation to the establishment of branches.
Foreign entities can operate in the Bulgarian insurance market through branches and/or subsidiaries on the
same footing as Bulgarian entities. There are no establishment limitations. The following capital
requirements are mandatory for a person or entity to be allowed to establish insurance company:
- for life insurance – minimum BGN 2 million (EUR 1 million) of authorized capital;
- for non-life insurance – minimum BGN 3 million (EUR 1.5 million) of authorized capital;
- for reinsurance or insurance and reinsurance – BGN 4 million (EUR 2 million) of authorized
capital;
- for a branch of a foreign insurer a deposit on the territory of Bulgaria is required. The amount of
the deposit depends on the type of activity the insurer aims to undertake and is equal to the
authorized capital requirement for the respective activity.
The above capital requirements are aimed at the financial stability of the insurance companies and the
whole insurance sector.WT/TPR/M/121/Add.1
Page 31
REPLIES TO THE QUESTIONS RAISED BY THE EU
Report by the Government (WT/TPR/G/121)
Question 1:
We understand, that Bulgaria has taken significant st eps towards uniting the registration of companies
under BULSTAT, the tax registration and the Company Register listing in order to reduce market entry
barriers. What is the status and the time-table for achieving this unification for registration and the more
comprehensive "one-stop-shop"-concept menti oned in the Governments report (paragraph 30)?
Answer:
In order to simplify company registration and further reduce market entry barriers, the Bulgarian
Government has decided to unify company registration. At present companies have to register underBULSTAT, to have tax registration and to be registered at the Company Court Register. Therefore a new
law regulating companies’ registration has been drafted. Under the terms of the draft law companies’
registration with the tax authorities will be abolished and companies will be identified by their BULSTAT
identification number only. The necessary changes will be performed ex officio by the respective state
agencies without companies’ representatives needing to attend their offices. After the introduction of thechanges companies will have to inscribe in their invoices and tax declarations only their BULSTAT
number. At present they are required to use both their BULSTAT number and tax registration number.
For the time being no court re-registration is envisaged. These changes are now in a procedure of inter-
ministerial approval. After that the draft law is to be considered by the Council of Ministers. It is expected
that the changes will take effect as of the beginning of the next year at the earliest.
The concept of "one-stop shop " was adopted in December 2002 by the Council of Ministers for the
improvement of administrative services.  This concept, the strategy for the e-government, and the strategy
for the state administration form the core of the m odernization of administrative services provided to
citizens and business. An inter-ministerial council has been established to coordinate the activities for
improvement of administrative services.
The concept determines the different modes of improvement of administrative services. Pilot
administrations were specified and they have already started introducing the "one-stop shop" model.
These are the National Building Control Directorate, the Ministry of Labour and Social Policy, the
Executive Agency General Labour Inspectorate, the Employment Agency, and the Agency for Social
Assistance.
The "one-stop shop" concept will be completely introduced by 2005.Implementation of the e-government started on 9 September 2003. At present it is applied for four types
of administrative services: changes in the address registration of citizens, inquiries for the court
registration of companies, and information from the Na tional Social Security Institute regarding the social
security of persons and companies. This is the first phase of the e-government project and by the end of
2005 the administration will perform at least 20 different types of electronic services for physical personsand corporate bodies, including registration of a company or a vehicle, submission of income-tax forms,
bills of entry, etc. A short-term goal is to make possible the submission of VAT declarations via the
Internet by the end of 2003.WT/TPR/M/121/Add.1
Page 32
Over 50 municipalities have already built the necessary infrastructure to offer electronic services to
citizens and companies. The majority of electronic se rvices are within the competence of local authorities,
and only 30% belong to the central administration.
The Internet version of the State Administration Register already provides information for the licensing,
permit, and registration regimes. Citizens and companies can find information on the process of issuingthe respective documents. They can read and download the laws and regulations that set out the
procedures, as well as the samples needed to apply for them. They can also check-up all licences already
issued. The next step towards building up of an e-government is to allow persons to apply for a licence,
permit or registration via the Internet.
Question 2:
We have further understood that Bulgaria has been working on legislation to speed up the bankruptcy
and liquidation proceedings in the context of reducing ma rket exit barriers. What is the status of these
efforts?
Answer:
In order to reduce market exit barriers the Government  has taken steps to improve the legal framework for
bankruptcy and to facilitate procedures. The ame ndments of Commercial Ac t - Part Bankruptcy were
adopted and officially published in SG 58/27.06.2003.  These changes aim to improve the whole
organization of the procedure. The major changes are as follows:
• Speeding up the procedures by introducing a two-instances procedure for bankruptcy
cases (until now it was of three instances); shortening the procedure for submitting claims
by creditors and for their acceptance; introducing clearer criteria for insolvency.
• Strengthening the protection of creditors by giving new rights to the Creditors Committee
and the Meeting of the Creditors in fixing the remuneration of the receiver (assignee) inbankruptcy, method of selling the debtor’s assets, and alleviated regime for appointing
and replacing the receiver (assignee) in bankruptcy by the creditors.
• Improving the regime of the procedure in order to avoid bankruptcy proceedings by
providing a possibility of converting creditors' receipts into stocks and shares and a
possibility for the appointment of a body/person to supervise the debtor’s activity in
fulfillment of the plan to avoid bankruptcy proceedings.
• Creation of rules for more competent management of the bankruptcy estate by
introducing higher requirements for persons who can be appointed for a receiver(assignee) in bankruptcy:  taking of an exam, professional qualification of receivers
(assignees) in bankruptcy, an obligation for making professional risk insurance.
• Setting up a separate special procedure for the sale of the bankruptcy estate: until now
this sale was carried out under the general rules of the Civil Procedure Code, which
regulates the individual compulsory execution (by one creditor) over the debtor’s wealth.
The provisions of the Civil Procedure Code are not adapted to the bankruptcy procedure,
which is a universal compulsory execution procedure (many creditors) by nature.WT/TPR/M/121/Add.1
Page 33
Question 3:
The report notes the size of the private sector and foreign ownership i.e. in the banking sector. Does the
data include the recent privatisation of the last  but one commercial bank by a foreign investor?
Answer:
The banking sector in Bulgaria comprised 34 comm ercial banks at the end of 2002, of which six were
branches of foreign banks. During the second half  of 2002 one of the biggest  banks - Biohim Commercial
Bank, was privatized. As a result, 83.4 % of commercial banking in terms of total assets are private and
about 72% majority foreign-owned. The share of the state-owned banks in the total banking system assets
decreased from 18% at the end of 2001 to 14.2% at the end of 2002. The share of banks with municipalcontrol remains at 2.4%.
The Government has recently finalized the privatiz ation of the State Savings Bank (DSK), the second
biggest commercial bank in Bulgaria. It is privatiz ed through its sale to Hungary's OTP Bank. Following
this privatization the share of private-owned commercial banks is above 96%.
Question 4:
Bulgaria has undertaken great efforts to align itself with the European Union. In the latest official
assessment of the European Commission’s 2002 Regular Report it is generally concluded that Bulgaria
has done well and that efforts are still to be undertaken in certain economic areas in other to fully
complete the alignment with the acquis communautaire.  What is Bulgaria’s assessment of the progress
made and the remaining challenges?
Answer:
Since the launch of the negotiations for the accession of Bulgaria  to the EU in early 2000, the country has
made considerable progress in meeting EU criteria for membership. Bulgaria had closed on a provisional
basis 25 negotiating chapters, which is a valuable result that proves the level of readiness of the country.Negotiations still continue on Competition, Agriculture, Regional Policy, Justice and Home Affairs, and
Budget. Progress on all those remaining chapters is tangible.
The conclusions of the European Council with regard to  the Bulgarian accession are very positive. At its
meeting in Copenhagen (December 2002), the European  Council concluded that the accession of Bulgaria
is a part of the same inclusive and irreversible enlargement process that led to the successful conclusion
of accession negotiations with the ten "Laeken" candidates. Furthermore, at its meeting in Thessaloniki
(19-20 June 2003), the European Council reconfirmed the objective to welcome Bulgaria as a member in2007, and supported our efforts to achieve the objective of concluding negotiations in 2004.
Since 2000, the Republic of Bulgaria has made considerable progress in consolidating and deepening the
stability of its institutions guaranteeing democracy, the rule of law, human rights and respect for and
protection of minorities. Significant progress has been made on the judicial reform strategy with the
adoption of an Action Plan and major amendments to the Law on the Judicial System. There have alsobeen positive further developments in the fight against corruption, with the adoption of an action plan to
implement the National Anti-Corruption Strategy. Bulgaria has considerably improved the legal
framework for tackling trafficking, corruption, and organized crime.WT/TPR/M/121/Add.1
Page 34
Bulgaria has made further progress in the public admi nistration reform with the recent revisions to the
legislative framework and the adoption of a Strategy for Modernisation of the State Administration. The
framework was established for the new structure of the Bulgarian administration, including the de-
concentrated general and specialized offices of local state administration. An electronic register for the
administrative structures has been created, providing for communication at central and local level. Policyanalysis capacity in respective government authorities was further developed.
Bulgaria has made substantial improvements in its legislation in the economic area by amending the
existing laws and regulations and thus has successful ly progressed in the process of alignment with the
EU in this field.
Bulgaria has achieved a substantial approximation of domestic legislation with the acquis
communautaire .
In the context of EU accession and the process of introducing comprehensive and coordinated policies
and their implementation, the major principles followed by the Bulgarian side are transparency, targeting
and consistency.
In 2002 Bulgaria registered one of the highest GDP growth rates (4.8%). The adherence to tight fiscal
policy also contributed positively and led to an overa ll fiscal deficit of 0.7% of GDP at the end of 2002. In
2002, the shares of government revenues and expenditures declined to around 38.7% and 39.4% of GDPrespectively, compared to 40% and 40.8% respectively in 2001. At the end of the year inflation was 3.8%
and core inflation was negative (-0.7%) due to devaluation of the US dollar and lower food prices. The
Bulgarian Currency Board is functioning smoothly. Its stability has been guaranteed by the high foreign
reserves-to-reserve money coverage ratio (199%).
The implemented economic policies resulted in improvement in the standard of living for Bulgarians.
Households' real incomes increased by 7.7% per household member, which was mainly due to an increase
in incomes from wages and entrepreneurial activity by 11.2% and 21.8% respectively. Real wages in the
economy increased by 7% and households' consumption by 4.2%.
Latest developments and priority areas identified concern the administrative and judicial reforms that
have been started and successfully implemented; finalizing privatization; development of SMEs policy;active social policy – further decreasing unemployment by implementing labour market policies, aiming
at socio-economic integration of disadvantaged groups by means overcoming of their social isolation; rise
in incomes in the country; reform in the social assistance system.
The short-term objective of the Bulgarian side is to close on a provisional basis the five remaining
chapters under negotiations in the process of accession of Bulgaria to the EU.
Bulgarian follows EU recommendations and the EU road map for Bulgaria and the medium-term
objectives are directed to cover the EU requirements in the respective fields and to continue with thereforms, improvement, and strengthening of the legislation and practice in order to meet fully the EU
standards.WT/TPR/M/121/Add.1
Page 35
Report by the WTO Secretariat (WT/TPR/S/121)
Question 1:
The WTO Secretariat raises "concerns of trade diversion" due to difference between Bulgaria’s MFN
rates and preferential rates. (Paragraph 15). The EC is rather surprised by this conclusion, and we arecertain that other members of this organisation would question this as well.  In the view of the EC, free-
trade areas and preferential treatment compatible with the rules and obligations of the WTO are
important instruments for advancing global trade. The EC has, as all other members of the WTO,
recognised ‘the contribution to the expansion of worl d trade that may be made by closer integration
between the parties to such agreements’, as it s read in the preamble of the Understanding on the
Interpretation of Art. XXIV of GATT 1994. To the EC, the positive economic effects of bilateral trade-
agreements compatible with the rules and obligat ions under the WTO are truly important and may
become of increasing importance to world trade in the future. Following, the EC should like to ask
Bulgaria whether it shares this assessment, that free-trade agreements compatible with the rules and
obligations of the WTO are counterproductive to the liberalisation of trade? We do not.
Answer:
Bulgarian does not support the assessment that free-trade agreements in line with WTO rules and
disciplines are counterproductive to the liberalization of  trade. This is also proved by the growing number
of regional trade agreements concluded worldwide. Bulgaria views regional trade agreements as a useful
tool to foster trade liberalization and integration and as a complementary tool for expansion of trade. We
firmly believe that the process of regional trade integration can only lead to positive economic effects.
Question 2:
In the summary of the report, the WTO Secretariat ar gues that lowering of Bulgaria’s  MFN-rates would
facilitate its transition to the EC's common external tariff. Bulgaria is currently in great transition in
order to shift from a communist to a market ec onomy. Such a transition is quite cumbersome and
demanding. It requires great efforts of Bulgaria and the Bulgarian people to adjust to the pressures of a
market-economy. As a great number of members of the WTO are well aware, it will also require special
external conditions favourable to such a transition. The EC has again and again supported the view that
countries, such as Bulgaria, should be given the necessary external conditions favourable for such a
country to gain strength, also if this requires that the country maintains a tariff-level appropriately higher
than that of industrialised countrie s. The premature alignment of Bulgaria’s tariffs with those of the EC
would provide great difficulties for Bulgaria’s efforts. Does Bulgaria share this view that it is necessaryfor transition economies to maintain a certain tariff-level in order to restructure and prepare for the
competitive pressure of the global market?
Answer:
Bulgaria shares the view that transition economies that have undergone the process of restructuring need
to maintain a certain level of tariff protection in order to meet competitive pressure.
Bulgaria passed through the process of transformation of the economy from a centrally planed one to a
market economy. This is a difficult process that influences both the economy and the social sphere. The
process of successful restructuring of the economy requires sound reforms to be accompanied by gradualWT/TPR/M/121/Add.1
Page 36
opening of markets. Through the reform process in order to ensure viable conditions for the development
of our industrial and agricultural sectors we need to maintain a certain level of protection.
Question 3:
As part of its programme to integrate its systems with  that of the EU, Bulgaria has carried out important
reforms in the field of trade facilitation as customs simplification. We would be interested to hear what
lessons Bulgaria has gained from this experience that could be of value to other countries considering
whether or not to carry out trade facilitation reform.
Answer:
One of the main tasks of the Bulgarian Customs Agency is to facilitate trade and to improve cooperation
with economic operators. In this respect, the fo llowing measures and activities have been taken:
− A Consultative Committee to assist the Minister of Finance and the Director General of the
Customs Agency in customs policy was established on 16 July 2002 with Decree No 147 of theCouncil of Ministers. Its basic functions are  to ensure that proposals businesses and society as
regards the development of customs policy are duly taken into account; to provide a link betweenthe customs administration, businesses and NGOs, to guarantee proper coordination and
exchange of information with a view to ensuring as high as possible facilitation of trade;  to
collect, analyse, and distribute information about progress in the reform, through consulting the
business society, officials in the Customs Agency, and other parties concerned.
− The official web site of the National Customs Agency was designed in the beginning of 2002
both in Bulgarian and English languages to provide economic operators and the public with
updated information on customs matters.
− An Inter-Departmental Council on the Border Ch eckpoints comprising high-ranking officials
from all services in charge of border control is in  place in order to reduce the waiting time at the
border. Among its main priorities is to ensure highly efficient and fast border control through
improving the coordination between the relevant services.
− In June 2002 the Council of the World Customs Organization embarked on a new, crucial
initiative for security and facilitation of the international trade supply chain by adopting a special
Resolution in this respect. Bulgaria has been ac tively involved in a Task Force on security and
facilitation, established by the Council as a first stage in the process of elaborating global
standards and methodologies to strengthen the security of the supply chain while ensuring the
continued smooth flow of international trade. It brings together customs administrators,
intergovernmental organizations, trade associations as well as representatives involved in air,maritime, and road transport. Among the topics discussed by the Task Force during its regular
sessions are the following: the exchange of in formation and development of partnership between
trade and Customs, increasing the use of technology, the advance electronic transmission of data
to Customs to enable the identification of risk consignments and conveyances for examination
and the enhancement of import, export, and in-transit controls.
− During the years the National Customs Agency of Bulgaria has implemented or is currently
implementing several projects in the field of trade facilitation. The main benefits include thereorganization and the modernization (especially in the area of the IT) of the customs
administration enabling it to face tasks resulting from Bulgaria’s accession to EU.  There are also
specific projects, resulting in direct gains for the trade community. For example a project
"Development of trade and customs offices facilitation enhancements " envisages completion of aWT/TPR/M/121/Add.1
Page 37
National Customs Data Dissemination System and de velopment of a Direct Trader Input Facility,
directly linked with the NCA’s integrated inform ation system. This will allow the opportunity for
the traders to prepare and send to the NCA all the necessary customs declaration works
automatically.
− The Trade and Transport Facilitation in Southeast Europe Project for Bulgaria is part of the
World Bank Regional Programme, which includes eight countries: Bulgaria, Albania, Bosnia and
Herzegovina, Croatia, Macedonia, Romania, Serbia and Montenegro, and Moldova.
The Project and the Regional Programme are among the first specific initiatives seeking to reduce non-
tariff costs to trade and transport and to limit smuggling and corruption at border crossings, by improving
border processing procedures and border crossing-point infrastructure.  As such, they appear to be a
challenge to the countries in the region. The Project’s complex structure requires the coordination and
cooperation of all five agencies exercising border control, as well as of other ministries and institutionsrelated to the Project’s objectives and implementation.
The Project involves the following components: (i) cu stoms administration institutional reform; (ii) trade
facilitation development; (iii) Bulgarian Integrated Customs Information System improvement;
(iv) improvement of border crossing facilities; and (v) programme and Project implementation.
The Project started at the end of 2000. In an account of the efforts by the Ministry of Finance and the
National Customs Agency in 2002 (due to some deterioration of performance indicators data, collected at
the selected pilot sites, and procurement delay), the Project’s implementation is assessed "satisfactory"
with regard to performance indicators and procur ement arrangements. During the last World Bank
supervision mission a continued progress was noted in meeting the Project’s development objectives with
a sharp increase in revenue collected by the Customs Agency in the first quarter of 2003, as well as ofprocessing time performance targets at pilot sites.
Considering the sound approach and practices at the pilot site, further efforts were made by the Customs
Agency, jointly with the US Advisory Team, to develop similar initiatives to be introduced at inland and
border Customs offices that process 50% of the traffic, as follows: (i) advance customs declarations; (ii)
expedited procedures for delivery of containers arriving at seaports; and (iii) uniform reporting andanalysis of physical examination results.
Question 4:
Further to these comments, the EC should like to present the following corrections and clarifications to
report of the WTO Secretariat.
Question 5:
In paragraph 52 of the report it is stated that "Bul garia would also need to join the GPA in order to
accede to the EU". The GPA membership is not a pr e-condition for Bulgaria’s entry to the European
Union.
Question 6:
In paragraph 45 and footnote 61, it is written that there are 29 EU accession negotiating chapters. There
are indeed 31 chapters. 25 have been closed so far. The Regional Policy and Co-ordination of Structural
Elements should be added to the list of chapters that remain open.WT/TPR/M/121/Add.1
Page 38
Question 7:
Finally the EC can inform that the Government of Bulgaria drafted a new Public Procurement Law, that
was passed by Parliament on first reading in September 2003. The law aligns the legislation of Bulgaria
in this area with the ‘acquis communautaire’ of the European Union.
Answer:
Bulgaria agrees with the above comments.
REPLIES TO THE QUESTIONS RAISED BY INDIA
Question 1:
As per the Bulgarian technical regulations, consumer goods are required to have labels featuring
information about the manufacturer, importer, type of the product, physical characteristics, price,
instructions for use etc. in Bulgarian language. We  would request the government to indicate whether
such a compulsory labelling is required before the customs clearance of exported goods or it could be
done after clearance of goods by the importer before selling in the Bulgarian market.
Answer:
Bulgarian legislation provides for labelling requirements of different products intended for human
consumption or use. The compulsory labelling requirements are stipulated in the respective ordinances of
the Government and differ for specific products. The most important is that the requirements should bemet prior to the placement of the products for sale on the domestic market. Therefore these requirements
do not prevent the customs clearance of the goods, and labelling could be done following importation.
Question 2:
Table III-2 in the Secretariat Report indicates that the percentage of tariff lines where the applied tariff
exceeds the average applied tariff has gone up from 0.7% in 1998 to 5.1% in 2002. We request the
Bulgarian government to indicate the sectors and the corresponding increase in the applied tariffs during
the period 1998 to 2001.
Answer:
Since 1998, in line with its WTO commitments, Bulgaria has progressively reduced its tariff rates from a
simple average MFN rate of 18.06% in 1998 to 11.13% in 2002. These reductions also resulted in a
decrease of the level of the tariff spikes and a change in the range of the tariff lines covered. The applied
simple average MFN tariff rate in 2002 was lower than in 1998, and the level of tariff spikes is also
lower:  hence the number of the tariff lines with applied tariff rates above the tariff spikes is higher (5.1 %of the total number of the tariff lines). Practically, there has been no increase in the applied tariff rates of
the respective tariff lines above the tariff spikes since 1998.
Question 3:
The Secretariat Report in Para 14 of its Summary observes that if at the time of Bulgaria’s accession to
the EU, agricultural prices within the EU remain hi gher than those in the world market; this could leadWT/TPR/M/121/Add.1
Page 39
to trade diversion in agricultural goods. We would request the Bulgarian government to offer its
comments on this observation.
Answer:
Regarding the issue of trade diversion as a result of  Bulgaria's integration with the EU, stated in the
Secretariat Report: Bulgaria experienced major trade diversion in the 1990s with the collapse of the
CMEA. Following sharp geographical reorientation of  Bulgarian external trade, the EU has been a
leading trade partner of Bulgaria for years. Trade with the EU is steadily increasing as a result of the
liberalization undertaken. Having in mind the forthcoming enlargement of the EU in 2004, we consider
that the share of trade with the EU will further increase. Therefore we do not expect a substantial trade
diversion in agricultural goods, including after accession to the EU.
REPLIES TO THE QUESTIONS RAISED BY JAPAN
III. TRADE POLICIES AND PRACTICES BY MEASURE
Measures Directly Affecting Imports
Tariffs(From p38, paragraph 10, to p49, paragraph 26, of the Secretariat Report)
Concerning the applied tariff rate of Bulgaria, th e large gap between goods of EU origin and those of
non EU origin including Japan, might be an obstacl e for export from Japan, which is considered one
of the reasons for recent decrease in trade between Japan and Bulgaria.
Question 1:
Is Bulgaria considering the possible reduction of the applied tariff rate for the goods of non EU origin?
Answer:
We believe that Bulgaria has already provided a level of MFN protection that ensures the necessary
competitive pressure on the domestic market and on national producers.
Regarding treatment provided to EU products, it should  be considered that Bulgaria has an Association
Agreement with the EU, in line with the WTO rule s, which is a main instrument for the country
preparation for accession to the EU.
Other main aspects that should also be taken into consideration in reply to the question are the following:
Bulgaria went through the process of transforming the economy from a centrally planed to a market one.
This is a difficult process that influences both the economy and the social sphere. Successful restructuringof the economy requires sound reforms to be accompanied by gradual opening of markets. Through the
reform process in order to ensure viable conditions for the development of our industrial and agricultural
sectors we need to maintain a certain level of protection.
In order to establish the necessary conditions for development of competitive production, Bulgaria has
proceeded with balanced opening of its market and ensuring adequate competitive pressure. In thisprocess Bulgaria has also gained positive economic effects through regional trade cooperation. The
positive effects from trade integration are also demonstrated by the growing number of regional tradeWT/TPR/M/121/Add.1
Page 40
agreements concluded worldwide. Bulgaria views regiona l trade agreements as useful tools to foster trade
liberalization and integration, and as a complementary tool for expansion of trade. We firmly believe that
the process of regional trade integration can only bring positive economic effects.
It is well known that going through the reform process Bulgaria could not afford effective support for its
producers and the tariff is the only instrument of protection of domestic production.
We see regional trade agreements that are compatible with the WTO disciplines as a complementary tool
for expansion of world trade and not as counterproductive for the liberalization process.
Government procurement
(From p57, paragraph 95, to p58, paragraph 101, of the Secretariat Report)
Japan appreciates the improvement of government procurement system in Bulgaria. However, in
implementing or operating the system, the procedure is not always smooth, for example the specific
deal depends on the person in charge.
Question 2:
Does Bulgaria plan on taking further measures in implementing or operating the government
procurement system smoothly, such  as the establishment of the single window for the procedure?
Answer:
Bulgaria has developed a modern legal framework on public procurement since 1997. The main features
of public procurement legislation are transparency and equal opportunities for participation for all
potential contractors on the principle of non-discrimination. Considerable efforts have been made to
ensure smooth operation of the government procurement system.
Information related to the initiation of public procurement procedures is available in a fully transparent
manner to all interested procuring entities and suppliers of goods, services and works.
A Public Procurement Register has been established and will be further developed containing all
information on the awarding of public procurements in Bulgaria.  The register is public and is designed as
a unified electronic database.
In order to further facilitate the procurement procedures, the Government proposed the establishment of a
Public Procurement Agency. Apart from its administrative functions, the Agency will assist both
procuring entities and contractors on all aspects of procurement and at all stages of the procurement
procedure.
Measures Affecting Production And Trade
Protection of intellectual property rights
(p.70, paragraph 103, to p.76, paragraph 123, of the Secretariat Report)
Japan appreciates that Bulgaria has endeavoured to  improve the enforcement for the protection of
intellectual property rights so that its intellectual property legislation is considered to be amongst themost modern in Central and Eastern Europe.WT/TPR/M/121/Add.1
Page 41
Question 3:
Please indicate which measures specifically effect the enforcement of the protection of intellectual
property rights
Answer:
The efficient implementation of measures in the field of the protection of intellectual property rights is
guaranteed by the existing legal basis, functioning structures, and efficient implementation mechanism.
These ensure a level of enforcement that is better and higher than the minimum standard required by the
TRIPS Agreement.
In the field of copyright and related rights protection the responsible bodies are the Ministry of Culture,
the police structures, the prosecution and investigation structures, and the courts (civil, criminal andadministrative-penal cases for infringement of intell ectual property rights). Following the introduction of
border measures, a substantial role is entrusted to the Customs Agency at the Ministry of Finance.
One of the measures for the enforcement of intellectual property right protection and the fight against
piracy production is the licensing regime for the producers of CDs and matrices (stampers) for theproduction of CDs. The producers of CDs are subject to  licensing in compliance with Regulation of the
Council of Ministers No. 87 of 1996, on the control over the usage of copyright and related rights objects,
on licensing of the producers of compact discs and of matrices (stampers) for the production of compact
discs (published in State Gazette No. 35 of 1996, am ended in SG No. 34 of 1997, SG No. 14 and No. 86
of 1998). The regime is compulsory and due to its strict application, there are no detected companies thatproduce CDs without a licence.
The controlling bodies – mainly the specialized bodies at the Ministry of Interior-conduct periodical on-
the-spot examinations of the licensed companies. Th e companies are obliged to ensure free access to the
production sites as well as to their entire documentation. Policemen are present at the introduction into
exploitation or at the testing of the lines and capacities for production of CDs and/or matrices. Thisguarantees that the licensed equipment produces only legal CDs.
The Ministry of Interior has entrusted to the Economic Police Directorate, at the National Police Office,
the combat against intellectual property infringements as a prime obligation. It is in charge of the
detection and filing of the criminal acts against intellectual property rights. Under an Ordinance of the
Director of the National Police Office Directorate, the specialized police operations against illegal optical
media distribution are to be conducted weekly and the results reported regularly.
Another element of the measures against optical media piracy is customs control at the borders, under the
Regulation on Border Measures for Protection of Intellectual Property Rights. The customs authorities
perform strict examinations of imports into and exports from the Republic of Bulgaria of CDs and DVDs.
Question 4:
Concerning copyright and neighbouring rights, the Se cretariat Report states that the 2000 amendments
(of the law) provided for a new communication right and the setting up of an Inter-Ministerial Council forthe Protection of Copyright and Neighbouring Rights.  Please de fine the new communication right.WT/TPR/M/121/Add.1
Page 42
Answer:
This is defined under Article 18, paragraph 2, item 10 of the Law. Under this provision, within the scope
of the exclusive rights of the author is included the "making available to the public" of the work, which
means its bringing to the attention of an unlimited number of persons for the first time, irrespective of the
form and manner in which this is done.
Question 5:
Please indicate specifically how the Inter-Ministerial Council is organized, which actions it has been
taking and what effects have taken place through it.
Answer:
Please refer to the response to the question by Canada on the same subject.
REPLIES TO THE QUESTIONS RAISED BY KOREA
II.  TRADE POLICY REGIME : FRAMEWORK AND OBJECTIVES
P. 19 (para. 7)
Question 1:
The Bulgarian government has implemented a five-yea r judiciary reform programme to tackle problems
in the current judicial system, including weak court administration, corruption, and the slow pace of
judicial proceedings.  However, foreign companies operating in Bulgaria reportedly still have difficulties
in effectively settling commercial disputes.Please explain in detail the actions taken so far and those to be taken in future regarding the judiciary
reform programme.
Answer:
In the past two years the Bulgarian Government has set a strategy for implementation of an integral reform of
the judiciary system. There are two main aspects of the reform process:
1. Judicial system, application of laws, implementation of contracts
There is an upsweep in the courts’ activity with regard to companies (increase in the number of registered
companies, liquidated companies, a nd companies declared insolvent).
The Government has initiated a radical reform of the Company Act (Commercial law) in its section on
liquidation and insolvency procedures. These amendments are aimed at a considerable reduction of the
time periods necessary for completing insolvency procedures, as well as improving the efficiency of the
process. The role of the courts is to be reduced, whil e more power is to be given to trustees. In addition,
the balance will be significantly shifted from protecting the interests of debtors towards protecting the
interests of creditors. Measures have been proposed to improve the process of appointment of trustees on
insolvency as well as the monitoring of their work.WT/TPR/M/121/Add.1
Page 43
In November 2002 changes were adopted pertaining to the so-called enforcement procedures in the Civil
Procedures Code, with a view to speeding up the civil legal procedure and to improve the executive
process.
Measures were also taken for the gradual restriction of the licensing, permit and registration regimes.
The Council of Ministers recently passed amendments to the Currency Law, which are to remove the
currently existing restrictions on the export of capita l and to improve the process of collecting information
for the purposes of balance-of-payments calculations and monitoring.
An amendment to the Law on Judicial Authority is in force from 8.07.2003
An amendment to the Constitution of the Republic of Bulgaria was voted by the National Assembly
providing for changes in the status of the judges, their immunities, and mandate.
2. Improvement of the performance of the judiciary system, particularly on civil code cases, by
enacting amendments to several laws and procedures
Some other reform measures of the Judiciary will have an indirect beneficial impact on the economy,
such as:
• A strategy for the judicial system reform was adopted in October 2001, and adoption of
changes in the Judicial Authority Law is forthcoming.
• Establishment of specialized courts for insolv ency and enterprise liquidation procedures,
with a view to speeding up these procedures.
• Introduction of the requirements of EU directives pertaining to the restructuring of
companies.
• The establishment of a National Justice Institute is under way. The Institute is to be based
on the Centre for Magistrate Training. This project is aimed at improving the quality ofwork within the judicial system by means of providing specialized training to all judges,
prosecutors, and examining magistrates.
• Preparation of a strategy for the overall computerization of the judicial system.
The statistics show that:
• According to Ministry of Justice data, 41,731 cases for company registration were
conducted in 2002 at the Company Court Register. Sole proprietors and their branches
comprised the largest share (52.3%), followed by limited liability companies and theirbranches (39%). In 2002 there were 692 more newly established companies than in 2001.
The total number of registered companies increased from around 222,000 at the end of
2001 to nearly 248,000 at the end of April 2003. New firms were established faster than
firms were closed. This suggests that it is relatively easier to establish a company and
operate in Bulgaria.WT/TPR/M/121/Add.1
Page 44
• The World Bank survey on entry regulations for 20022 shows that 10 procedures are
required for entering the market in Bulgaria – the second best result among the CEEcountries - and the average duration of the procedures is 30 days (also the second best
result). The cost of establishment is also quite low, at 9.20% of the GNI per capita.
• According to Ministry of Justice data, 12,060 cases for dissolving companies
3 were filed
in the Company Court Register in 2002, which is approximately 1,500 higher than in
2001. Similarly to company registration data, sole proprietors comprise the biggest share
(73.7%), followed by limited liability companies (12.5%). The number of the dissolved
cooperatives (783) is also impressive.
• The Ministry of Justice reported 1,707 insolvency cases handled in 2002, and 399
pending cases (cases instituted during the preceding years, including 2000, but remaining
pending as per 31.12.2002).  To a large extent the duration of cases was less than 3
months (1,405), while 335 cases proceeded over 3 months.
• According to the World Bank’s Court-Powers Index for 20024, the index for Bulgaria
(0.33) indicates less court involvement in the insolvency process, hence less time and
cost to go through insolvency, as well as more likelihood of achieving an efficient
outcome.5
P. 23 (para. 21)
Question 2:
We understand that, when producing and exporting g oods in Bulgaria, companies have to deposit a
value-added tax (20%) and this deposit is refunded appr oximately 1-2 months thereafter.  Unable to make
use of the deposit during the time span between the deposit and the refund, companies can find this
procedure financially burdensome in their operation.
Does the Bulgarian government have any plan to improve the system?
Answer:
Under the provisions of the Value Added Tax Act, VAT is charged on supplies of goods and services
within the territory of the country. The VAT rate for Bulgaria is unified at 20 per cent over the tax base,
including importation. Export is taxed at zero rates. The person has the right of tax credit. No deposits arerequired. The procedure for deduction of tax credit takes 3 months. The undeducted excess is refunded to
exporters having the right of VAT refund within 45 days. These shorter terms were introduced at the
beginning of 2003. The amended terms meet the standards in VAT practices and we do not envisage
further reductions.
                                                     
2 It takes into account all the procedur es that are officially required for an entrepreneur to obtain all necessary
permits, and to notify and file with all the requisite authorities, in order to legally operate a business. For moredetails - http://rru.worldbank.org/DoingBusiness/TopicReports/EntryRegulations.aspx
3 Companies, sole proprietors, cooperatives and NGOs
4 Documents the success of a jurisdiction in reachin g the three goals of insolvency, as stated in Hart (1999).
5 See http://rru.worldbank.org/DoingBusiness/TopicReports/Bankruptcy.aspxWT/TPR/M/121/Add.1
Page 45
III. TRADE POLICIES AND PRACTICES BY MEASURE
P. 41 (para. 16)
Question 3:
It is reported that the Bulgarian government applies tariff rates of 40% or more on some items includingfood products (like instant noodles).  The tariff rates are far higher than the rates applied to other items.
Please explain why the Bulgarian government applies such high tariff rates to these items, in particular
instant noodles.
Does the Bulgarian government have any plan to reduce these high tariff rates in future?
Answer:
The food processing industry (including pasta industry) is important sector for Bulgaria. The tariffs for
pasta products are necessary for the production to restructure and develop. Therefore Bulgaria does not
intend to reduce present tariffs.
P. 110-112 (para. 122-128)
It is reported by the Secretariat that, taking into account the requirements for Bulgaria’s accession to
the EU and NATO, the Bulgarian government has taken various measures including improving theregulatory framework and strength ening the telecommunications infrastructure.  To help us make a
better and clearer understanding of the measures above, please respond to the following questions.
(para. 122)
Question 4:
Please elaborate on the meaning of ‘separati on of regulatory functions from ownership’.
Answer:
As stated in paragraph 124 of the Secretariat’ s report, the Communications Regulations Commission
(CRC) was established under an amendment of the Telecommunications Act in December 2001. It is anindependent specialized state authority with regulatory functions in the fields of both posts and
telecommunications. The CRC replaced the State Telecommunications Commission (STC) and differs
from it significantly in terms of its independence, composition, and mandate. The CRC is an independent
regulatory body while the STC and BTC were both subordinate to the Ministry of Transport and
Communications and to the Council of Ministers. The separation of regulatory functions from ownership
envisages the independence of the CRC as a regulatory body from the BTC, which is still state-owned.
The authority of the CRC (refer to para.124) includes: execution of the telecommunication policy of the
state; execution of the state policy on planning and allocation of the radio-frequency spectrum for civil
use; and the postal policy. The CRC can grant, amend, suspend, terminate, and revoke licences for
telecommunication activities.  The CRC defines and examines the market and decides over the specific
obligations to be incurred on operators with significan t influence over the market. It grants the right of
provision of a universal telecommunication service. Th e CRC also drafts bills to be approved by the
Council of Ministers and controls the observance of:
• the legislation in the field of telecommunications;WT/TPR/M/121/Add.1
Page 46
• the principles of price-making, as provided by the law;
• the quality of the services provided;
• the conditions for licensing;
• the requirements for the provision of universal telecommunication service.
New functions of CRC include regulation and control over the provision of postal services, registration
and control over activities for providing certification of services related to electronic signatures.
The Commission is a national standardization organiza tion at the European Institute for Standardization
in the Telecommunications.
(para. 124)
Question 5:
What is the decision-making procedure of the CRS and how related or separated are the roles between
CRS and other Ministries in charge of making telecommunications policy?
Answer:
The Minister of Transport and Telecommunications pursues the state policy in the field of
telecommunications and prepares and tables for approval by the Council of Ministers the
telecommunication policy. He is in charge of activities connected with: development of
telecommunications, information, and communication technologies; building and development of theinformation society; and euro-integration. He repr esents the Republic of Bulgaria in international
organizations in the field of telecommunications.
The CRC executes the telecommunication policy. It regulates and controls the performance of
telecommunications and regulates the market. It is in  charge of the granting, amendment, suspension,
termination, and revocation of the licences for telecommunication activities.
Question 6:
What is the share-holding percentage between BTC and Mobite?
Answer:
BTC is a shareholder in the first analogue mobile operator in Bulgaria, Mobikom, established in
December 1992, which uses NMT 450i standard. It is a joint venture of Cable & Wireless (49%),
Bulgarian Telecommunications Company (39%), and Radioelectronic Systems.
Mobiltel is the first GSM operator in the country. Mobiltel is a private company. BTC has no shares in
Mobiltel.WT/TPR/M/121/Add.1
Page 47
REPLIES TO THE QUESTIONS RAISED BY SWITZERLAND
Summary, § 43
Question 1:
Do the Bulgarian authorities consent with the view that further lowering the applied MFN rates and thus
reducing the gap between applied MFN and preferential rates would be beneficial to Bulgarian
producers and consumers?
Answer:
Please refer to the response to Question 1 by Japan on the same subject.
Recent Economic Developments, Table I.2
Question 2:
Regarding Table I.2, we would like to kindly point out that - in accordance with §19 of the TPR itself and
data published by the IMF and the World Bank - the current account balance was  -4.4% of GDP in
2002, not positive as reported in the table.
Answer:
The point is correct. There is a technical error in the Table I.2. In absolute terms the deficit is at about
4.4% of the GDP in 2002, i.e. in 2002 the current account balance is negative (-4.4% of the GDP). (The
source of the data provided in Table I.2 is the World Bank.)
Foreign Direct Investment, § 40/41
Question 3:
The report of the Secretariat notes that FDI in flows rose steadily from 1997 to 2001 but declined
markedly in both 2001 and 2002 irrespective of good macroeconomic performance and improvement ofbusiness climate. How do you explain this contrasting development of inflow of FDI in the last years? In
March 2002, the government adopted a new law on privatisation in order to speed up the privatisation
process. How do you assess the impact of the law on the privatisation process and what is the actual
stand of the process? Are there any particular incentives offered to "green-field" investments?
Answer:
The decline in FDI inflows for the years 2001 and 2002 is due to several factors – both external and
internal. Some of the external factors are the sl owdown in the world economy and the related decline of
investments, the crisis in Kosovo, and developments  in the Balkan region that have influenced the
determination of foreigners to invest in the region.WT/TPR/M/121/Add.1
Page 48
Regarding internal factors:
The new Privatization Act from March 2002 provided for higher transparency and acceleration of the
privatization procedures, equal treatment of all participants, and economic efficiency of the privatization
process. The share of privatized assets amounts to 82.33% of the assets tabled for privatization and to54.37% of total state-owned enterprises' (SOEs) assets . Privatization in the main economic sectors, the
chemical industry, metallurgy, military and defence industry, and machine engineering, is almost
completed. Banking privatization is finalized as well.
For the period 2002-2003 the objectives defined were the restructuring and privatization of the
infrastructure monopolies: in the infrastructure i ndustries, i.e. energy, telecommunications, and railway
transport. The major state companies in tobacco and telecommunication sector – Bulgartabac and
Bulgarian Telecommunications Company (BTC) were envisaged for privatization in the year 2002, butnegotiations with the selected preferred buyers have been delayed by claims of failed bidders. A new
strategy for privatization of Bulgartabac Company was approved by the Government in October 2003 and
the aim is to have it privatized in the course of 2004. The privatization of BTC has also been prolonged
due to court appeals. Acceleration in the privatisation process is also under way in the energy sector.
In accordance with our last agreements with the World Bank and IMF the privatization process should be
completed by the end of 2005.
Apart from tax incentives, which Bulgaria offers (described in Paragraph 21, Part II of the WTO
Secretariat Report), there exists an institutional support mechanism. The Law on Foreign Investments
(paragraphs 21 - 22) allows for special institutional help to investors to accomplish an investment project
that is acknowledged by the Council of Ministers as a priority one. At the request of the investor, the
Foreign Investment Agency may propose to the Council of Ministers to form an inter-ministerial group,
comprising representatives of the ministries and agencies concerned, in order to provide institutional
support for appointed investment projects acknowledged by the Council of Ministers as priority
investment projects. This is a good scheme for reducing red tape and is very favourable for foreign
investors.
Tariffs, Table III.2
Question 4:
The Table indicates a decrease in the number of  duty-free tariff lines between 2002 and 2003. Could
Bulgaria elaborate on the reasons of this decrease?
Answer:
The decrease of the number of tariff lines with zero rates is due to changes in the structure of the elements
of the Customs Tariff, but MFN treatment has been maintained for the products for which imports for
consumption were registered in the last three years.
Because of the necessity upon accession to the EU to apply the EU customs information system based on
the rates of the Common Customs Traiff of the EU, in 2002 and 2003 separate definitions were
introduced for "conventional rates " – corresponding to the schedules agreed in WTO for the respective
year, "autonomous rates " – equal or lower than the rates applied upon accession to the WTO and
"suspended rates " - which have been abolished or partially reduced for a certain period of time. UponWT/TPR/M/121/Add.1
Page 49
customs clearance the lowest among all these rates is applied, therefore the final MFN treatement was not
changed.
Import Prohibitions, Restrictions, and Licensing, § 41
Question 5:
Could Bulgaria indicate if the 3 months validity pe riod for import permits, i.e. in the case of non-
automatic licenses, can be extended, for how long, and how far in advance the request for extension must
be filed to the competent authorities?
Answer:
The administration of import permits is handled by the competent authority with respect to the particular
good subject to the import licence. For each type of good there exists only one such authority, which hasset up the rules for the terms for extension of the validity of import licences under the relevant regulatory
and administrative acts under which provisions the particular licensing regime is applied. The general rule
is that when the shipment for which the permit is issu ed is delayed, the validity of the particular permit
may be extended for the period necessary for this shipment to be completed. The request must be filed 5
days before the expiry date. For some goods (e.g. powder, explosive and pyrotechnical materials, andproducts of civil application, trinitrotoluole, smooth-barrel weapons, weapons for hunting and sports
purposes) the licence can be extended for one month with 15 days prior application. In other cases the
licence can be extended only once and for the same period.
The general rule is that the expiry of the validity of a licence does not preclude the right to apply for a
new licence.
Import Prohibitions, Restrictions, and Licensing, § 42 and Table III.7
Question 6:
It is indicated that Bulgaria requires non-automatic licenses for the importation of medicaments for
human medicine in order to protect human health. Could Bulgaria elaborate on the assumption that non-
automatic import licenses for medicines seems to ensu re the protection of human health? How can a non-
automatic import license ensure that a medicine is safe and is not a fake which could harm human
health?
Answer:
The regime for non-automatic import licences (permits) for the import of medicaments for human
medicine is applied in accordance with the provisions of the Act for Medicaments and Pharmacies in
Human Medicine (Art.83). It stipulates that an import permit is issued only to producers or traders that are
licensed for production/trade activities in medicaments under this Act. Furthermore, the Act provides that
import licences can be issued only for medical products that are allowed for use in the country. Non-
automatic import licensing is used to monitor trad e in medicaments to ensure that all the imported
medicines comply with the respective requirements for safety, quality, etc., set by the Act.WT/TPR/M/121/Add.1
Page 50
Safeguard Actions, § 50/51 and Table III.8
Question 7:
As indicated in paragraph 50 and Table III.8, a safeguard investigation was initiated in July 2002 on
certain steel products (from tariff headings 7208, 7209, and 7213). According to the law of Bulgaria(Article 6.1), a safeguard procedure shall be terminat ed no later than 9 months from the date of its
initiation. In excepti onal cases, this period may be prolonged for two months. As the investigation on
certain steel products was initiated more than 9 months ago, we would be interested in the present situation
of the investigation. When is the end of this investigation as well as the publication of its results and
notification to the WTO foreseen?
Answer:
As stated in paragraph 50, a safeguard procedure must  generally be completed not later than nine months
from the date of its initiation. Furthermore there is a possibility of a two-month extension. The competent
authority found that there are serious reasons to exte nd the investigation with the legitimate time-limits of
two months in order to acquire additional relevant inform ation such as official statistical data on imports for
the whole year 2002, recent developments on the world ma rket and the current situation of the Bulgarian
producers.
The investigation was terminated on 14 July 2003 and the decision thereto was notified to the Committee
on Safeguards after the public notice was published in  the State Gazette (notif ication G/SG/N/9/BGR/2 of
23 September 2003).
REPLIES TO THE QUESTIONS RAISED BY THE UNITED STATES
III.  Trade Policies and Practices by Measure
(2)   Measures Affecting Imports
(vi)  Customs Valuation
We note with approval that Bulgaria’s Customs Act and Regulations now follow the WTO transaction
value based system.
III.  Trade Policies and Practices by Measure,
(2)   Measures Affecting Imports,
(vi) Customs Valuation
We note with approval that Bulgaria’s Customs Act and Regulations now follow the WTO transaction
value based system
III.  Trade Policies and Practices by Measure
(2)   Measures Affecting Imports
(xi)  Government Procurement
Table III.9 provides information on government procur ement by type of contracting procedure for the
years 1999 through 2003.  The U.S. Government appreciates the provision of these statistics.WT/TPR/M/121/Add.1
Page 51
Question 1:
We note that from 1999 – 2003  negotiation as a contracting procedure  increased  each year.   Is this
trend expected to continue?  What contracts are typically awarded under a negotiation procedure?
What are the nationalities of the suppliers who win the contract awards?
Answer:
The data provided in Table III.9 show an increase in  the total number of initiated procedures for awarding
of public procurement during the period 1999 to 2002. There is also an increase in the number of the
initiated negotiation procedures on year-on-year basis for the same period. There is no increase in the
total value of the contracts awarded in 2002 compared  to that for 2001. Nevertheless it is obvious that
data do not support a trend of increase.
Currently the Public Procurement Register in Bulgaria does not provide summarized data for the types of
the contracts typically awarded under a negotiation procedure and for the nationality of the suppliers to
whom the contracts are awarded. Data are available only on a case-by-case basis.
III.  Trade Policies and Practices by Measure
(4)  Other Measures Affecting Production and Trade
(ii)  State Aid Section
Question 2:
According to the report, "state aid is provided for purposes of compensating high production costs in key
economic sectors that have considerable social implications..."  Could you please provide more
information regarding which economic sectors (in addition to energy and transportation) are eligible forstate aid as well as the types of aid that are provided under Bulgaria’s State Aid law?  Are there any
limits to state aid?
Answer:
Bulgaria applies a specific system for monitoring and surveillance of the state aid. The rules and
procedures governing the granting, monitoring and control of state aid in Bulgaria are laid out in the Lawon State Aid, the Rules on Application of the Law on State Aid, and Ordinance No. 6 of 25 July 2002 on
the Procedure for Monitoring and Ensuring Transparency of State Aid.
State aid may be provided only if the requirements of the Law are met. The Law stipulates the conditions
under which a state aid is considered eligible. These include inter alia state aid that promotes theeconomic development of areas where the standard of living is abnormally low or where there is high rate
of unemployment.
The following types of state aid are specified in the Rules for the Application of the State Aid Act:
• State aid granted to small and medium-sized enterprises;
• State aid for environmental protection;
• State aid to promote the employment;
• State aid for restructuring or recovering of enterprises;WT/TPR/M/121/Add.1
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• State aid for research and development;
• State aid for regional development;
• State aid for operating costs;
• State aid for education and training;
• De minimis  state aid.
The Rules for the Application of the Law on State Aid stipulate the terms and conditions for granting state
aid to all enterprises or services, except the state aid granted for structural adjustment or recovering
programmes in the following sectors: steel industry, mining, shipbuilding, automobile industry, transport,
textile industry and the production of synthetic fibers.
The granted state aid in absolute terms depends on the purpose and the cost of the project as provided for
in the Rules for the Application of the Law on State Aid, and practically there are no limitations on the
value of the aid granted.
III.  Trade Policies and Practices by Measure
(4) Other Measures Affecting Production and Trade
(iii) Intellectual Property Rights.
(a)  Copyright and neighbouring rights
Question 3:
Bulgaria’s amended copyright law provides protection for technological protection measures (TPMs),
including both "access controls" and "copy controls," in a technology-neutral manner.  Within this
framework, however, there are a few opportunities to strengthen the IPR regime.  First, Bulgaria’s
copyright law provides for protection of temporary copies of computer programs but does not expressly
mention other subject matter.  Please provide clarification of the scope of protection for temporarycopies.
Answer:
The protection granted to computer programs is equal to the protection of literary works. It is defined
under Art. 3, paragraph (1) of the Law on Copyright and Neighbouring Rights, which stipulates that
"subject matter of copyright shall be any work of literature, art and science, which is a result of creative
activities and is expressed in whatever manner and in whatever form, such as: 1) literary works, including
works of scientific and technical literature, editorials, columnist works, political essays and the like, and
computer programs...".
Temporary copies are referred to in Art. 18, paragraph (2), which states that reproduction of a work is
within the scope of the exclusive rights of the authors. According to Paragraph 2, item 3 of the Additional
Provisions to the Law, "reproduction of a work" means directly or indirectly duplicating the work or part
thereof in one or more copies, in any manner and in any form, whether permanent or temporary, including
the digital storage of the work on an electronic medium.
Additionally, the fair use of computer programs is de fined with Art. 70 and 71 of the Law, which also
explicitly state that the person who has lawfully acquired the right to use a computer program shall not
use it for creation and distribution of computer programs that differ only slightly from the program withWT/TPR/M/121/Add.1
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translated programming code, or for any other acts liable to violate the copyright in the program as
follows:
"Art. 70.  Unless otherwise agreed, it shall be understood that the person who has lawfully acquired the
right to use a computer program may use that program, display it on screen, operate it, transmit it, store itin the memory of his computer, translate it and make adaptations and other alterations to it, provided this
is necessary for achieving the purpose for which the right to use the program has been acquired, as well as
for the elimination of errors.
Art. 71.  The person who has lawfully acquired the right to use a computer program need not seek the
consent of the author or pay additional compensation in order to:
• make a back-up copy of the program provided this is necessary for the respective kind of
use for which the program was acquired;
• observe, study and test the operation of the program, in order to determine the ideas and
principles which may be embodied in any of its components, as long as this is done in theprocess of loading, displaying, running, transmitting and storing the program in the
memory of a computer, and only if that person is entitled to perform such acts under Art.70;
• translate the programming code from one form into another, but only if this is absolutely
necessary to make an existing program compatible with other programs, and on thecondition that the necessary instructions for doing so are not provided and that such acts
are performed only in relation to those parts of the program that require it forcompatibility to be achieved.  The information so obtained shall not be used for creation
and distribution of computer programs that differ only slightly from the program with
translated programming code, or for any other acts liable to violate the copyright in the
program".
Question 4:
Second, any limitations on the prohibition to circumvention of TPMs should be narrowly crafted to
preserve the effectiveness of these measures.  Bulgaria’s copyright law, which does not make trafficking
in circumvention devices a separate offense, could be interpreted to allow a fair use defense for suchconduct, thereby undercutting the effectiveness of these measures.   Bulgaria should clarify this aspect of
the law.
Answer:
The protection against trafficking in circumvention devices/decrypting devices is provided with the
following paragraphs of Art. 97of th e Law on Copyright and Neighbouring Rights:
(5) The sanctions under paragraphs (1)6 and (2)7 shall be imposed on any person who 
produces, distributes, advertises or imports, or possesses for commercial purposes, a 
                                                     
6 Paragraph (1) provides for a fine or pecuniary sanction ranging from 200 to 2,000 BGN (1EURO=1.95
BGN), unless the infringement is punishable by a more severe penalty; subject matter of the infringement, regardlessWT/TPR/M/121/Add.1
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decrypting device capable of affording access to an encrypted signal for persons who are 
outside the reception area specified by the broadcasting organization.
(6) The sanctions under paragraph 1 and 2 shall be imposed also on persons who, without 
having the right, remove, modify, destroy or disrupt technological means of protection knowing or having grounds to know that thes e devices are primarily designed for such 
purposes.
(7) The sanctions under paragraphs 1 and 2 shall be imposed also on persons who 
manufacture, import, distribute, sell, rent, offer for sale or rental, or possess for 
commercial purposes devices, products or components which are primarily designed to 
remove, damage, destroy or disrupt technological means of protection, or persons who provide services for such circumvention with commercial purposes.
(8) The sanctions under paragraphs (1) and (2) shall also be imposed on any person who does
the following without authority and being aware or having reason to believe that the act is
liable to cause, permit, facilitate or conceal the infringement of a right protected by this Law:
1. removes or modifies information in electronic form on the regime of rights in the subject
matter of copyright or neighbouring rights;
2. distributes, including import for the purposes of distribution, performs in public,
broadcasts by wireless or transmits via cable or other technical means subject matter of copyright or
neighbouring rights, offers an unlimited number of persons access to subject matter in a manner whereby
that access may be had from a place and at a time individually chosen by each of those persons, knowing
that the information in electronic form on the regime  of rights in the subject matter has been removed or
modified without authority."
Paragraph (9) of Art. 97 defines "information on the regime of rights" as used in para.8 as: information
which identifies the subject matter of copyright or neighbouring right, the holder of such a right,
information about the terms and conditions of use of such subject matter, and any numbers or codes that
represent such information, when any of these items of information is attached to a copy of the subject
matter or appears in connection with its disclosure to the public.
Additionally, items 10 and 14 of Para. 2 of the Addi tional Provisions to the Law give the following
definitions:
10. "means of decrypting" is any device, appliance, mechanism or decoding card which has
been made or specially adapted to provide, by itself or in combination with others, access to an encrypted
signal in the form that it had prior to encryption;
                                                                                                                                                                          
of whose property may be, shall be seized in favour of the State and shall be handed over for destruction by agencies
of the Ministry of Interior.
7 Paragraph 2 states that: "A repeat offence under paragraph (1) committed within one year of the
imposition of the previous penalty shall be punished with a fine or pecuniary sanction ranging between 1,000 and5,000  BGN; subject matter of the infringement, regardless of whose property it may be, shall be seized in favor of
the State and shall be delivered for destruction by agencies of the Ministry of Interior.WT/TPR/M/121/Add.1
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14. "technological measures" means any technology, device or component that, in the normal
course of its operation, is designed to prevent or restrict acts in respect of works or other subject-matter
protected by this Law, which are not authorized by the right holder, if through these measures the use of
protected subject matter is controlled by the right holder through an access code, scrambling or other
transformation of the subject matter or a copy control mechanism.
Bulgaria has successfully harmonized the Law on Copyright and Related Rights with the EU aquis  and
we are of the view that the provisions with regard to technological protection measures are fully in line
with the respective provisions of Art. 6 of the EC Directive 2001/29 on the harmonization of certain
aspects of copyright and related rights in the information society.
(b)  Industrial PropertyPatents
Question 5:
According to Article 6(1)(2) of the Patent Law of Bulgaria, "programs for computers" are not regarded
as inventions.  Please explain whether, under this provision, inventions within the categories specifiedbelow are not eligible to be patented under the Patent Law, notwithstanding the fact that the invention is
novel, involves an inventive step and are industrially applicable:
(a) process inventions which, in whole or part, cons ist of steps that are performed by a computer and are
directed by a computer program,
Answer:
According to Art. 6, paragraph 2, item 3 and paragraph 3 of the Patent Law, computer programs are not
considered as an invention as far as legal protection is sought for them as such. According to the practice
of the Patent Office of the Republic of Bulgaria, the examination of patent applications for inventions,
related to computer technologies includes the estimation whether the patent claims, formulated for such
inventions, contain technical characteristics; whether the effect is technical, after which the requirements
for patentability according to Art. 6, para. 1 of the Patent Law are examined.
There are no obstacles for granting of a patent for a method whose steps in whole or in part are performed
by a computer or a computer program, providing that it has technical character, solves a technicalproblem, and is formulated with technical characteristics. When the method contains as characteristics
program steps, they should be presented through technical operations, executed by separate computer
knots/modules. The method should not contain non-technical characteristics and the algorithmic
operations must be presented with the inherent to the computer system technical operations.
(b) product inventions consisting of elements of a computer-implemented invention, including in
particular
(i) machine-readable computer program code stored on a tangible medium such as floppy disk,
computer hard drive or computer memory; and
(ii) a general-purpose computer whose novelty over the prior art arises primarily due to its
combination with a specific computer program.
With regard to a computer or its separate structure, the carrier of the program product should not be its
only new technical characteristic and the effect should not be due to the computer program in it. With
regard to a new computer structure, created as a result of a new program product assigned, there are noWT/TPR/M/121/Add.1
Page 56
reasons to reject as technical characteristics the sepa rate knots/modules of a new computer structure and it
can be patented, provided that it complies with the requirements for patentability.
Question 6:
Article 6 of Bulgarian Patent Law also states that "presentation of information" shall not be regarded as
an invention.  Please explain what is meant by "presentation of nformation."
Answer:
According to Art. 6, para. 2, item 4 of the Patent Law,  the presentation of information is not considered as
an invention when the latter is characterized only by the contents of the information. This is valid for the
cases when claims are for presentation of information per se , as well in cases when the information is
recorded to a carrier. Similarly, methods and devices for presentation of information are not considered as
inventions when they are characterized only through the information presented and not through some
technical characteristic.
Question 7:
Article 6 of Bulgarian Patent Law states that "m ethods for performing mental acts, playing games or
doing business" are not regarded as inventions.  Does the Patent Law allow for the patentability of
methods of doing business having a "technical character"?
Answer:
According to Art. 6, para. 2, item 3 of the Patent Law the methods for doing business are not considered
as inventions, but in cases when they have entire "technical character", i.e. they do not containcharacteristics that are instructions for business making, they could be protected with a patent.
Question 8:
Please explain how Article 29 of the Patent Law complies with TRIPs Article 34(3), which requires that
the legitimate interests of defendants in protecting their manufacturing and business secrets shall be
taken into account.
Answer:
A legal definition of the term ‘commercial secret" is provided in the Law on the Protection of
Competition – Paragraph 1, item 7 of the Additional Provisions – "facts, information, decisions and data,related to the economic activity, which preservation as a secret is of interest to the proprietors of rights,
and for which they have taken the necessary measures."
The practice of the Supreme Court, as well as of the Commission for the Protection of Competition in
such cases always takes into account protection of the commercial or industrial secrets, being aware of its
importance with regard to the evidence of circumstan ces and facts for the case. According to Art. 29 of
the Patent Law, the burden of proof is transferred upon the defendant and this enables him to choose the
method of protection in such a way as to protect his interests. In such cases the defendant may request the
hearings to be hold closed.WT/TPR/M/121/Add.1
Page 57
The term ‘commercial and industrial secret" is present also in many laws of the Republic of Bulgaria:
Law on Telecommunications, Law on Access to Public Information, Law on Internal State Financial
Control, Law on Energy and Energy Efficiency, Law on Plant protection, Law on Privatization and Post-
Privatization Control, Law on Postal Services, Law on the Protection of the Environment, etc. All the
legal texts refering to this term prove that commercial and industrial secrets enjoy special protection.
Question 9:
The following questions pertain to the Compulsory License provisions of Article 32 of the Patent Law:
(a) In Article 32(1)(1), please explain the meaning of  "failure to use" the invention.
Answer:
The expression "failure to use ", as used in item 1, para.1 of Art. 32 of the Patent Law, reflects the fact of
actual non-use in the meaning of Art. 19, para. 3 of the Law:
"The right to use an invention shall comprise of the making, offering for sale, putting on the market of thesubject matter of the invention, import included, the use of the subject matter of the invention as intended,
as well as the application of the patented method."
Art. 32, para. 1, item 1 provides for reasonable time limits for the patent owner to start the use of the
invention.
(b) In Article 32(1)(2), please provide a definition of "valid reasons" for insufficient working.
Answer:
"Valid reasons " are the reasons that do not rest with the patent owner  – e.g. legal obstacles, such as
limitations on the production or use of a particular product.
(c) In article 32(1)(2), please define "insufficient working of the invention to satisfy the national
market."  Does importation satisfy the working requirement?
Answer:
The expression "insufficient working of the invention to satisfy the national market" means cases in
which a patented technology or a patented product has no analogues on the national market, whether from
production or import, and the demand or the need for them exceeds significantly the supply from the
patent owner.
(d) Please explain how the Bulgarian patent law complies with each of the conditions set forth in
TRIPS Article 31 regarding use of inventions without the authorization of the right holder (compulsory
licensing).
Answer:
Art. 32 defines the conditions under which a compulsory licence may be requested:WT/TPR/M/121/Add.1
Page 58
• failure to use the invention for a period of four years from filing of the application for a
patent or of three years from the grant of a patent, the time limit which expires last beingapplicable;
• insufficient use of the invention to satisfy the needs of the national market, within the
time limits set out in item 1, above, unless the patent owner gives valid reasons therefor;
• a declared national state of emergency - for its duration.
Paragraph 2 of Art.^32 provides for additional requirements for the person requesting a compulsory
license to prove that he is in a position to work th e invention within the limits of the compulsory licence
requested.
A compulsory licence may be granted also to a patent owner whose invention is included in the scope of
another patent if the owner of this patent refuses to grant a licence under fair conditions.
A compulsory licence is not granted to an infringer of the patent. Art.32, para.4 defines, that the
compulsory license may only be non-exclusive and may only be assigned together with the enterprise in
which the invention subject to this licence is being used.
A compulsory licence may be terminated if within one year of its grant the licensee has made no
preparation for using the invention. A compulsory licence  shall be terminated in all cases if the licensee
fails to start using the invention within two years of grant.
The compulsory licence is subject to the general provisions for licensing, under which the patent owner
has the right of adequate remuneration. Under Art. 66 of the Patent Law, disputes on the amount of the
remuneration in cases of granting of a compulsory licence are heard by the Sofia City Court. The
competent body for granting and termination of compulsory licences is the Patent Office and the requestsare examined by Disputes Division of the Patent Office. There are no cases up to now in the practice of
the Patent Office for a request for a compulsory license.
It should be noted that, paragraph 7 of Article 32 envi sages the direct application of other conditions, in
case they are provided in bilateral and multilateral treaties to which the Republic of Bulgaria is a party.
Industrial Designs
Question 1:
Bulgaria’s Law on Industrial Designs generally appea rs to be in conformance with TRIPs Arts. 25 and
26.  Some items of concern are:
Bulgaria’s Law on Industrial Designs Art. 4 (1) states that the "right of authorship . . . shall be unlimited
in time[.]"  Please clarify whether this provision relates to the term of protection afforded by design
registration.
Answer:
The provisions of Article 4 of the Law on Industrial Designs do not cover time limits for the protection
provided by the registration of industrial designs. The right of authorship, practically, is the right of the
author to be named in the registration certificate of the design, in publications of registrations, and in the
Industrial Designs Register. For these reasons this right is unlimited in time.WT/TPR/M/121/Add.1
Page 59
Question 2:
Bulgaria’s Law on Industrial Designs Art. 11(2) exempts from registration those designs in which the
specific features "are solely determined by the necessity the product in which the design is incorporated
or to which it is applied to be mechanically assembled or put in, around or against another product, sothat both products realize their technical function[.]"  This provision appears to be overly broad.  Please
clarify if the article may exempt designs from protection that would otherwise be new or original, in
contravention of TRIPs Art. 25.
Answer:
As it is with designs, the specific features of which are determined by the technical function, the mutual
exchangeability of products of different producers should not be prevented through extension of
protection over designs of mechanical couplings. Consequently these characteristics of the design,
excluded from protection due to the mentioned reasons, shall not be taken into account in the assessment
whether the other or the rest of the peculiarities/characteristics meet the requirements for protection.
Question 3:
Bulgaria’s Law on Industrial Designs Art. 4(1) states  that the person who created the design has the right
of authorship and that this right "shall not be transferable."  Art. 19(1), however, confers on the holder of
a registered design the right to transfer it, while Art. 24 specifies that all rights are transferable.  Thisapparent inconsistency raises concerns with respect to compliance with TRIPs Art. 26.1 because it is not
clear who the owner of the design would be in the e vent of a transfer.  Please elaborate on the right of
authorship provision.
Answer:
The rights of the holder of the registered industrial design are stipulated in paragraph 1 of Article 19 of
the Law on Industrial Designs, including the right to transfer. The right of authorship is limited to the
scope of Article 4 (see item 2 above) and does not infringe the rights of the owner of the industrial design.
When the author of the design and the owner are one and the same person, he can benefit from these
rights independently one from another.
Question 4:
Bulgaria’s Law on Industrial Designs Art. 19 does not explicitly mention the act of selling as an
infringing activity.  Please clarify if and how Art. 19 is compliant with TRIPs Art. 26.1.
Answer:
The act of selling is mentioned as a part of the expression "offering and putting/placement on the market "
in para. 2 of Art. 19 and for this reason it shall not be considered as inconsistent with Article 26.1 of
TRIPS.WT/TPR/M/121/Add.1
Page 60
Question 5:
The limitations on rights specified in Arts. 20(1)(1) and 20(1)(2) appear to be very broadly drawn and do
not appear to take into account the balance of interests specified in TRIPs Art. 26.2.  Please explain how
Arts. 20(1)(1) and 20(1)(2) are compliant with TRIPs Art. 26.2.
Answer:
The meaning of the quoted provisions of paragraph 1 of Article 20 is the achievement of the balance of
interests of the parties. In particular, item 2 stipulates that the use of the design shall be compatible with
fair trade practice and shall not unduly prejudice the normal exploitation of the design. The legitimate
interests of the third parties are always taken into account when the provisions of Article 20 are applied.
Question 6:
TRIPS Art.  25.2 requires members to provide protection for textile designs under certain conditions.  It is
not clear whether Bulgaria’s Law on Industrial Designs or Copyright Law satisfies this requirement.Please provide guidance on where Bulgaria’s Law provides protection for textile designs.
Answer:
The Law on Industrial Designs does not exclude textile designs from protection. It foresees facilitated
conditions for obtaining protection over designs, which are also applied to the textile designs.
Art. 3 provides for the following definition of industrial designs:
"the appearance of the whole or a part of a product resulting from the specific features of the shape, lines,
contours, ornamentation, colors, or combination of such ", where product means "any industrial or
handicraft article, including parts intended to be assembled into a complex article, sets or compositions of
articles, packaging, graphic symbols and typogra phic typefaces, but excluding computer programs. "
Marks and Geographical Indications
Question 1:
How are well-known marks protected in Bulgaria?  Specifically, how are the provisions of the Paris
Convention Article 6bis and TRIPs Article 16, which require unregistered well-known marks to be
protected against uses that are likely to be confused with the well-known mark, incorporated into law?
Answer:
The Bulgarian Law on Marks and Geographical Indications provides for a prohibition of registration of a
mark if it is identical or similar to an earlier well-known mark, and which is registered for similar or
identical goods or services (Art. 12, paragraph 1 and paragraph 2, item 3). The right holder of a well-
known mark may resort to the Competition La w Article 33 (2) (Amended, SG No. 81/1999) "The use of
trade names, marks or distinctive symbols identical or similar to those of other persons in a way that may
result in impairing the interests of competitors and/or consumers, shall be prohibited. "WT/TPR/M/121/Add.1
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Questions 2 and 3:
What are the civil and criminal penalties for wrongful use of a trademark?  Who enforces any judgment
related to the wrongful use of a trademark?  In cases of infringement, how are damages calculated?
Answer:
The Law on Marks and Geographical Indications gives an opportunity to the trade mark right holder to
request the court to ascertain the fact of infringement, to oblige the infringer to terminate the illegal use of
the mark, and to eliminate the material consequences from the infringement. The right holder has the right
to claim compensation for the property and non-property damages caused by the infringer.
Simultaneously, the right holder may also request processing or destruction of the object of infringementand a publication of the court decision in two daily newspapers at the expense of the infringer.
The provisions of Article 81 of the Law provide for administrative and penal sanctions for protection
from illegal acts from a third party: execution of examin ations at sites of infringement by an official from
the Patent Office and drawing up of a statement of the infringement. A fine or a property sanction of 500to 5,000 BGN shall be imposed on any person who offers for sale, places on the market or stocks for
those purposes goods bearing a sign that is identical or similar to a registered mark without the consent of
the holder. The infringing goods shall be seized, rega rdless of the ownership thereof, and they shall then
be destroyed, the owner or an authorized person being allowed to witness the process of destruction.
According to Article 78 of the Law on Marks and Geographical Indications the owner of a mark or hisrepresentative may file a request at the Customs Office for the detention of goods carried through the
border of the Republic of Bulgaria that bear a registered mark without the consent of its holder or an
imitation thereof.
Article 227 of the Penal Code (Amended, SG 10/93; SG 50/95; SG 81/99) envisages a punishment by
imprisonment of up three years or by a fine of up to 5 000 BGN for any person who, without the consent
of the owner, uses in his trade activity a registered trade mark.
In all cases of protection the damages suffered are estimated for every particular occasion and all the facts
and circumstances connected to the infringement are carefully examined, for example: volume of seized
goods, value and reputation of the mark, degree of infringement of the interests of a third party, etc.
In case of lack of voluntary execution of the court decision by the infringer, execution proceedings are
performed by a bailiff, as provided by the Civil Procedure Code.
Question 4:
In what way does Bulgaria provide geographical-indications protection in general, as required under
Article 22 of the TRIPs Agreement, and geographical-indications protection in particular for wines and
spirits, as required under Article 23 of the TRIPs Agreement?   Specifically, what are the legal means
provided to interested parties to prevent the misleading use of a geographical indication or any use that
constitutes an act of unfair competition within the meaning of Article 10bis of the Paris Convention?WT/TPR/M/121/Add.1
Page 62
Answer:
Legal protection of geographical indications is granted through registration in the Patent Office of the
Republic of Bulgaria. Legal protection is provided under Article 53, paragraph 2 of the Law on Marks
and Geographical Indications.
That legal protection consists in the prohibition of:
• any commercial use of the geographical indication for goods that are similar to those for
which it is registered in so far as the reputation of the registered geographical indication
is exploited;
• improper use or counterfeiting of the geographical indication, even where the genuine
origin of the goods is specified, use of a translation thereof or use in combination with
terms such as "sort", "kind", "type", and the like;
• use of any other incorrect or deceptive indication of the source, origin, nature or essential
properties of the goods designated on the packaging thereof in advertising material orpapers concerning the goods, such indication being likely to mislead as to the genuine
origin of the goods;
• any other action that may mislead users as to the true origin of the goods.
The legal protection refers to all registered geographical indications, regardless of the goods for which
they are registered, i.e. there are not two levels of protection as provided in Article 22 and Article 23 of
TRIPS.
Question 5:
What procedures are in place for the protection of third-country geographical indications, whether via
registration or by other means?
Answer:
The protection of geographical indications in the Republic of Bulgaria is stipulated in the Law on Marks
and Geographical Indications, Ch apter III. Under Article 53, paragraph 1 the legal protection of
geographical indications is granted through their registration in the Patent Office. The request for
registration is submitted to the Patent Office. When the applicant is a foreign person a certificate
acknowledging the registration of the geographical indica tion in the country of origin is attached to the
request.
Question 6:
In what way does the law preserve the legal rights of trademark owners, consistent with Article 24(5) of
the TRIPs Agreement?
Answer:
Under Article 52, paragraph 1, item 4 of the Law on Marks and Geographical Indications, the registration
of a geographical indication in the Republic of Bulgaria can be rejected if it is identical to a mark already
registered for identical goods.WT/TPR/M/121/Add.1
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The registration of a geographical indication is erased when a court rules that it has been made in
violation of Article 52 of the Law on Marks and Geographical Indications.
Question 7:
What civil and criminal penalties for wrongful use of a geographical indication are under consideration?
Who will enforce any judgment related to the wrongful use of a geographical indication?  In cases of
infringement, how will damages be calculated?
Answer:
In cases of infringement of geographical indication the Bulgarian legislation provides for the following
types of protection:
Administrative penal protection: this is handled in accordance with the Article 81, paragraph 6 of the Law
on Marks and Geographical Indications. In accordance with the Article 81, paragraph 3 the President of
the Patent Office shall appoint the official to draw up a statement of infringement. The penalty could be
fines or a property sanction of 500 to 5000 BGN imposed on persons found infringing such rights anddestruction of the infringing goods. The penal injunctions are issued by the President of the Patent Office
and may be appealed in the court.
Civil protection (under the Law on Marks and Geographical Indications) covers the right to claim for:
establishing the fact of infringement; suspension of  the act of infringement; compensation for damages
suffered as a result of the infringement. The examinat ion of appeals is under the competence of the Sofia
City Court and the procedure is handled in accordance with the terms set out in the Civil Procedures
Code. Decisions of the Sofia City Court can be appeal ed before the Court of Appeal and decisions of the
Court of Appeal can be appealed be fore the Supreme Court of Cassation.
Protection of Undisclosed Information
Question 1:
Please provide any laws, rules, decrees, bulletins, etc.  from pertinent institutions indicating that Bulgaria
protects test data and other information submitted to health authorities as a condition of approving the
marketing of pharmaceutical or agricultural chemical products against unfair commercial use by thirdparties.
Answer:
The protection of test data and other information submitted for the approval of marketing of
pharmaceutical products is provided with the new amendments to the Law on Drugs and Pharmacies in
Human Medicine, introduced with SG120/2002, in  force from 29.12.2002. The newly amended Article 18
introduces provisions for protection of test data when such are submitted for registration of a
pharmaceutical product.
Article 18 states that for an application for market authorization, filed for an original medicinal product,
the applicant shall not be required to provide the phar macological and toxicological test data or the results
of clinical trial data if he can demonstrate:WT/TPR/M/121/Add.1
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(i) there is a written consent of the proprietor of the authorization for use of the original
medicinal product that proves that he has consented the data from the pharmacological, toxicological or
clinical trials to be used for the purpose of examin ing the application of a essentially similar medicinal
product;
(ii) or there is available published scientific literature that the constituent or constituents of
the proprietary medicinal product have a well established medicinal use, with recognized efficacy and an
acceptable level of safety;
(iii) or that the medicinal product is essentially similar to a product which has been authorized
for use in Bulgaria and not less than six years have passed from the date of issuance of the first
authorization for use (or 10 years in the case of high-technology medicinal products) in the EU or
Bulgaria. In such cases, the 6-year, or 10-year term, respectively, is not applied after the expiry of the
term of effect of a patent for an original medicinal product, issued for the territory of the Republic ofBulgaria.
Where the medicinal product is intended for a different therapeutic use from that of the original medicinal
products marketed or is to be administered by different routes or in different doses, the results of
appropriate pharmacological and toxicological tests and/or of appropriate clinical trials must be provided.
In the case of new medicinal products containing known constituents not hitherto used in combination for
therapeutic purposes, the results of pharmacological and toxicological tests and of clinical trials relating
to that combination must be provided, but it shall not be necessary to provide references relating to each
individual constituent.
In cases when for the medicinal product or for the method of its production there is a valid patent on the
territory of the Republic of Bulgaria, the applicant must inform in writing the Bulgarian Drugs Agency at
the filing of the application.
The statement of the Pharmaceutical Research And Manufacturers of America (PhRMA) in its written
submission with regard to the Annual 301 Review is: "PhRMA members applaud the Government of
Bulgaria for taking significant steps to bring their in tellectual property laws in line with TRIPS, including
the addition of a data exclusivity provision. PhRMA commends the Bulgarian Government for including
a provision to provide data exclusivity for pharmaceutical products in the Drug Law.  This law was
published in the State Gazette in end-December 2002, coming into force on January 1, 2003."
With regard to protection of test data for agricultural chemical products, it is provided for in Article 15 of
the Law for Plant Protection (SG 91/1997, amended in 2001). It states that the confidentiality of the data,
submitted with the documentation for the authorization of the products for plant protection shall be
ensured when it is an industrial or commercial secret.
Question 2:
We would also appreciate the opportunity to revi ew Bulgarian documents on specific  protection for
undisclosed information.  For example, does protec tion apply to products that are not under patent
protection in Bulgaria;  can others rely on information and data submitted by others withoutauthorization from the party submitting the information and data?WT/TPR/M/121/Add.1
Page 65
Answer:
In the Bulgarian legislation undisclosed information is protected under the Competition Law. Article 35,
paragraphs (1), (2), (3) of the Law state that the knowledge, the use or disclosure of an industrial  or trade
secret in contravention to good trade practice shall be prohibited. The knowledge of an industrial or tradesecret runs contrary to the good trade practice, and where recourse has been made to tapping, penetration
into a premise, opening of correspondence, taking pictures or investigation without the consent of the
holder of documents or chattels safe-guarded in a way which restricts the access to them, and also by
means of deceit or offering a benefit to persons who have access to the secret as a result of their official or
contractual relations. The use or disclosure of an industrial or trade secret, where it has become known or
communicated on condition that it should not be used or disclosed, shall be prohibited.
With regard to the specific protection for undisclosed information in the Bulgarian legislation, Article 593
of the Commercial Law envisages a particular situation under a licence contract where the licensee shall
be bound to keep in secret the information about a non-patented invention, utility model or know-how,
which he has been granted the right to use.
(c) Enforcement
There are additional opportunities for Bulgaria to strengthen IPR enforcement.  Paragraph 123 notes
that "despite these improvements to the regulatory environment and efforts to enforce regulations,
there have still been allegations and complaints fr om some sources about lack of enforcement against
trade-mark infringements, violations of copyrigh ts, including the production, distribution, and
importation of optical disc media, and lack of enforcement of court decisions.  Though Bulgaria has
not been on the U.S. Trade Representative's Sp ecial 301 list since 1999, reflecting the improved
intellectual property regulatory environment, recent trends have led the International Intellectual
Property Alliance to request that Bulgaria aga in be placed on the Special 301 Watch List."
Comment from Bulgaria:
In response to 2003 "Special 301" Bulgaria submitted to the Office of the United States Trade
Representative "Information on the Protection of Intellectual Property in the Republic of Bulgaria in
Relation to the Annual Section "Special 301" Review  Under the 1988 U.S. Trade Act". This information
presented the opinions of all government institutions responsible for the control over optical media piracy(Ministry of Culture, Ministry of Economy, the Mini stry of Interior, National Police Office Directorate,
National Service for Combat of Organized Crime (N SCOC), and Customs Agency) and set forth all the
relevant measures taken with regard to the implementation and observation of intellectual property rights
in Bulgaria.
The main points in this information can be summarized in the following:
• All government institutions as well as non-governmental organizations in the field (e.g.
the Bulgarian Association of Music Producers, etc.) firmly state that there is no illegalproduction of optical disc media in Bulgaria. There is good and effective co-operation
between the national competent authorities and civil organizations in the fight againstoptical media piracy.WT/TPR/M/121/Add.1
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• Bulgaria does not support the statement that during the last two years there are serious
loopholes in the implementation of the licensing regime for producers of CD. The regimeis compulsory and there are no detected companies that produce CDs without a license.
• Bulgaria has a well-developed and efficient regulatory and legislative framework for the
protection of intellectual property rights, particularly of copyrights and related rights,which responds to international requirements and standards. Bulgaria strictly observes the
commitments undertaken in accordance with the bilateral and multilateral agreements towhich it is a signatory.
The licensing regime for producers of CDs and matric es (stampers) for the production of CDs, which led
to the removal of Bulgaria from the Watch List after 1998, still exists in its original form. The producers
of CDs are subject to licensing in compliance with Regulation of the Council of Ministers No. 87 from
1996 on control over the usage of copyright and related rights objects, on licensing of the producers of
compact discs and of matrices (stampers) for the production of compact discs (published in State GazetteNo.35 from 1996, amended in SG No. 34 from 1997, SG No. 14 and No. 86 from 1998). The regime is
compulsory and there are no detected companies that produce CDs without a licence.
The controlling bodies – mainly the specialized offices at the Ministry of Interior-conduct periodical
examinations of the licensed companies. The comp anies are obliged to ensure free access to the
production sites as well as to their entire documentation. Policemen are present at the introduction into
exploitation or at the testing of the lines and capacities for production of CDs and/or matrices. This
guarantees that the licensed equipment produces only legal CDs.
Taking into account that the fight against piracy is a priority and there must be adequate anti-piracy
sanctions, the Ministry of Interior has entrusted to the Economic Police Directorate, at the National Police
Office, the combat against intellectual property infr ingements as a prime obligation. It is in charge of
detecting and filing criminal acts against intellectual property rights under Articles 172a, 173 and 174 of
the Penal Code. Under an Ordinance of the Interior Minister, 24-hour physical control is implemented in
the production premises of licensed compact discs producers. In order to improve control over opticalmedia piracy, the Director of the National Police Office Directorate ordered, in March 2003, specialized
police operations against illegal optical media distribution to be conducted weekly and the results to be
regularly reported.
The United States remains concerned about reports of  increased piracy and counterfeiting in Bulgaria,
which had been a model in its region for taking th e necessary steps to tackle optical media piracy by,
for example, enacting optical media controls.  We are also concerned that counterfeit spirits
production appears to be a serious problem in Bulgar ia.  Problems include refilling bottles, trademark
infringement and improper use of geographical in dications , such as "bourbon" and "scotch whisky."
Comment from Bulgaria:
There are no complaints for such infringements filed within the competent government bodies of
Bulgaria.
There are particular concerns about police enforcement and whether or not Bulgarian courts are
issuing deterrent-level sentences in copyright piracy cases.WT/TPR/M/121/Add.1
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Comment from Bulgaria:
According to the data received by the National Police Office Directorate, the police performed
examinations of 7,768 distribution sites in 2002. Infringements were established in 1,464 of them and the
respective penal procedures were started. The police bodies have confiscated 66 700 CDs with music,4,732 audiocassettes, 3,038 computer configurations with entertainment and business software, and 6,348
pirate video films (on video-cassettes and DVD).
In March 2003 the police conducted a specialized operation throughout the country aimed at
counteracting the distribution of pirated optical media. During this operation over 500 distribution sites
were examined. Infringements were detected in 147 of them, for which the respective penal procedures
have been started. The police has detained over 1,700 optical discs with music, 39 video movies, and 54computer configurations with entertainment and business software.
The total number of specialized police operations, conducted in the country only for the period January-
March 2003 is 154. For the same period the number of the distribution sites inspected by the police is
approximately 1,000. In 347 of them were infringements detected and the police have confiscated over7,000 CDs with music, 169 audiocassettes, over 3 000 video films (on DVD and videocassettes), and 176
computer configurations.
In order to improve control over optical media piracy, the Director of the National Police Office
Directorate ordered, in March 2003, the specialized police operations against illegal optical mediadistribution to be conducted weekly and the results to be reported regularly.
Question 1:
Please describe the number of administrative enforcement actions carried out by the Patent Office
relating to seizure of infringing goods, penalties and destruction of infringing merchandise.
Answer:
During 2002 the Patent Office performed 48 examinations for infringements and 35 infringement
statements were drawn up. The President of the Patent Office issued 16 penal injunctions. With regard to
the current year, until 1 October 2003, the statistical data are: examinations performed – 56; infringementstatements – 43; penal injunctions – 24.
Question 2
Please describe the frequency in which courts in civil cases grant requests for interim measures in
infringement suits.
Answer:
The register for court statistics at the Ministry of Justice does not provide statistical data as requested in
this question.
Question 3:
Please provide any information rela ting to the amount of damage awar ds in civil infringement cases.WT/TPR/M/121/Add.1
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Answer:
The register for court statistics at the Ministry of Justice does not provide statistical data as requested in
this question.
Question 4:
Please describe the number of cases in which criminal penalties and sentences were issued in
infringement cases, penalty amounts and length of sentences.
Answer:
According to the data available from the register of the Ministry of Justice the total number of the cases
under Articles 172a and 173, paragraph 1 of the Penal Code, which envisage infringements of copyrights
and neighbouring rights, is 116 for 2002 and 102 for the first six months of 2003.
Penalties: Article 172: "who records, reproduces, circulates, broadcasts or transmit by a technical device
or uses in any other way another's work of science, literature or art, without the consent of the bearer of
the copyright required by the law, shall be punished by imprisonment of up to three years and a fine of
one thousand to three thousand levs".
Article 173. (1) (amended. SG 92/02): "who issues or uses under his name or under a pseudonym
another's work of science, literature or art or a substantial part of such a work shall be punished by
imprisonment of up to two years or by a fine of one hundred to three hundred levs, as well as by public
reprobation".
The total number of the cases under Articles 227 and 227a of the Penal Code, which envisage penalties
for infringed industrial property, is 42 for 2002 and 35 for the first six months of 2003.
Article 227: "who, without the consent of the owner, uses in his trade a trade mark, industrial design or
the topology of integrated circuits, shall be punished by imprisonment of up to three years or by a fine of
up to five thousand levs".
Article 227a: "who sends, exports, registers, cedes, sells or realises acknowledged or not yet
acknowledged inventions, rationalisations or technical documentation abroad or cedes them, delivers or
sells them to foreign citizens or companies in this country, but not under the established procedure, unless
this represents a more serious crime, shall be punished by imprisonment of up to three years or by a fine
of one hundred to three hundred levs".
The number of sentences issued in cases of infringement of copyright and neighbouring rights, are 15 for
2002 and 11 for the first six months of 2003.
The number of sentences issued for infringement of industrial property are 15 for 2002 and 7 for the first
six months of 2003.
The length of sentences for violation of copyright and neigbouring rights are as follows:
- punishment by imprisonment up to three years: 9 for 2002 and 6 for the first six months 
of 2003;WT/TPR/M/121/Add.1
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- fines imposed: 35 for 2002 and 33 for the for the first six months of 2003;
With regard to cases for industrial property violations, the punishments are:
- punishment by imprisonment up to three years:  10 for 2002 and 2 for the for the first six 
months of 2003;
- fines imposed: 14 for 2002 and 13 for the for the first six months of 2003;
Note: The data provided is with regard to first instance cases.
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