WORLD TRADE
ORGANIZATIONWT/TPR/M/60
4 January 2000
(00-0014)
Trade Policy Review Body
4-5 October 1999
TRADE POLICY REVIEW
ROMANIA
Minutes of Meeting
Chairperson:  H.E. Mr. Jean-Marie Noirfalisse (Belgium)
Page
I. INTRODUCTORY REMARKS BY  THE CHAIRP ERSON.....................................................2
II. OPENING STATEMENT BY THE RE PRESENTATIVE OF  ROMANIA..............................3
III. OPENING STATEMENT BY THE FIRST DI SCUSS ANT......................................................5
IV. STATEMENT BY THE SECOND DISC USSANT ...................................................................7
V. STATEMENTS BY MEMBERS OF TH E TRADE POLICY REVIEW BODY ......................9
VI. REPLIES BY THE REPRESENTATIVE OF ROMANIA AND ADDITIONAL
COMMENTS....................................................................................................................... .....15
VII. CONCLUDING REMARKS BY  THE CHAIRP ERSON........................................................25
ANNEX I ........................................................................................................................ .......................27
ANNEX II....................................................................................................................... .......................39WT/TPR/M/60
Page 2
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The second Trade Policy Review of Romania was held on 4 and 5 October 1999 under the
Chairmanship of H.E. Ambassador Jean-Marie Noirfalisse (Belgium).  The Chairperson welcomed
the delegation of Romania, headed by H.E. Mr. Mihai Berinde, Under-Secretary of State at the
Ministry of Industry and Trade, as well as the two discussants, Mr. Knut Brünjes (Germany) and
Mr. Oscar Hernández (Venezuela).  He also welcomed the members of the Trade Policy Review Body
(TPRB).
2. He recalled the purpose of the Trade Policy Review Mechanism (TPRM) contained in
Annex 3 of the Marrakesh Agreement and the procedures for the meeting.  The report by the
Government of Romania was contained in documen t WT/TPR/G/60 and that of the WTO Secretariat
in document WT/TPR/S/60.  As usual, the two discussants would be speaking in their personal
capacities and not as representatives of their govern ments.  The main issues they intended to raise
were contained in document WT/TPR/D/40.
3. The delegation of Romania had received a copy of the written questions submitted by the
delegations of Hong Kong, China;  Switzerland;  Australia;  the European Union;  Japan;  the
United States;  and the Republic of Korea (Annex I).  Other questions had been submitted during the
meeting by the discussants and the delegations of Hungary and Turkey.  The replies to the questionshad been provided at the meeting;  additional written replies had been supplied subsequently to those
questions which could not be fully answered during the meeting (Annex II).WT/TPR/M/60
Page 3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF ROMANIA
4. The representative of Romania stressed the importance that his government attached to the
review of its trade policy.  Given the interest shown by the business community in this WTO activity,
it could be hoped that the review would favour trad e and investment in his country.  At the world
economic level, such effects could also be expected from the implementation of the results of theUruguay Round.  The review was taking place at a time when the WTO Members were mobilizing
themselves for the Seattle Ministerial Conference with a view to launching new multilateral trade
negotiations.
5. The Report by the Government (WT/TPR/G/60)  provided an overview of his country's
situation, and reported the progress achieved since the first review in December 1992 as well as the
difficulties encountered and the challenges to be overcome.  Romania had developed from an
excessively centralized economy towards a market economy.  The social costs of the transition,already high, had been aggravated by the impact on foreign trade of the financial and economic crisis
first in the Asian markets and then in the Russian  market, and the United Nations embargoes against
Iraq, the Gulf zone and certain countries in the area of former Yugoslavia.  In spite of these difficult
conditions, Romania had persistently resisted protectionist pressures and had continued to open up its
economy and to pursue a very liberal trade policy.
6. The purpose of Romania's reform was to create a modern democratic society and a market
economy, for which the legislative framework had been created.  The introduction of a market
economy had permitted Romania to participate, as such, in the Uruguay Round.  However, the
economic reform process, which was complex and difficult, had a particularly serious impact on the
main economic indicators.  Only the volume of foreign trade had grown constantly, while GDP and
other economic indicators had developed erratically with a generally downward trend, strongly
influenced by external factors.
7. There were certain positive aspects in the development of Romania's economy.  Firstly, the
share of the private sector in GDP had increased from 26.5 per cent in 1992 to 58 per cent in 1998,
and was deflected in all of the country's economic activities.  Romania had continued to open up itseconomy to foreign investors, and its investment regime was based on principles such as the freedom
of forms and methods of investment, free access to all sectors, equal treatment for domestic and
foreign investors, guarantees against expropriation and nationalization, and incentives for all
investors.
8. 1999 was a particularly difficult year for Romania owing to the timetable for long-term
foreign debt payments.  However, the privatization of the banks and the insurance system as well as
the state enterprises had produced considerably better results than during the preceding years.  In theframework of the economic reform programme prepared in cooperation with the World Bank and the
IMF, Romania planned, in 1999, to limit the decrease in GDP to 3.5 per cent (as against 7.3 per cent
in 1998 and 6.9 per cent in 1997), to restrict inflation to 38 per cent (as against 40.6 per cent in 1998
and 151 per cent in 1997), and to reduce the budget deficit to 3.9 per cent of GDP.
9. A dramatic change had taken place in trade flows since 1992.  The bulk of trade took place
with the European Union;  however, the volume of  trade with other trading partners outside Europe
had practically doubled.  A strong demand for imported goods and the insufficient development of
exports had resulted in a steady deterioration in the balance of payments.  An import surcharge had
been introduced as an emergency measure in October 1998, and had been the subject of consultations
in February 1999 in the Committee on Balance-of-Payments Restrictions, which had concluded that itwas in conformity with WTO rules.WT/TPR/M/60
Page 4
10. The representative stressed the open nature of Romania's trade policy regime, which enabled
trade to play its role as a driving force in a country's economic and social development.  Romania had
applied a customs tariff since 1992.  All tariff lines had been bound under the WTO, and the annual
reductions scrupulously implemented.  Romania did not apply any import restrictions and, starting on
1 January 1998, all quantitative export restrictions had been eliminated.  Only automatic licensingremained in force in respect of certain products for statistical reasons.  No trade defence measures had
been taken within the framework of the WTO, a situation which contrasted with the measures
encountered by Romanian exporters on certain markets, to the detriment of their access thereto.  The
new Customs Code was WTO-consistent.
11. Romania had become an original WTO Member on 1 January 1995.  Since then it had
notified its legislation and enforcement measures for the areas covered by the WTO Agreements.
This process had shown that Romania respected its obligations.  It had also participated in the WTOnegotiations leading to the Information Technology Agreement and Protocols IV and V of the GATS.
12. With respect to regional integration, the free exchange agreements were a determining factor
in multilateral trade liberalization.  European integration was one of Romania's priorities;  the process
included the association agreement with the European Union and the free trade agreements with the
EFTA countries, the countries of central Europe, Moldova and Turkey.  Other agreements wereplanned with the Baltic States, Morocco, Israel and Egypt.
13. Regarding Romania's participation in the multilateral system, his country's liberalization
efforts could be reinforced with the support of WTO Members through the implementation of their
commitments and through active participation in the liberalization process.  Romania would come to
the Seattle Ministerial Conference with the following proposals:  further liberalization of tradethrough a set of measures that would ensure a balance between the rights and obligations of most
countries;  negotiation of clearer provisions in the area of trade defence instruments;  defining more
precisely, in the agricultural sector, the relationship between domestic support and export subsidies on
the one hand, and further liberalization on the other;  stepping up of liberalization in the textiles and
clothing area;  and development of the synergies between regionalism and globalization.  Romaniahoped that the new round would be completed within a reasonable period of time, determined by the
ambitions of Members, and that its results woul d be acceptable to and applicable by every
participating country.
14. Romania was determined to pursue its policy of restructuring and privatization in order to
strengthen the market economy, to give a new impetus to economic development and to prepare for
the country's integration into the European economic structures.  It would also pursue the process of
trade liberalization on a multilateral and regional basis.  Trade policy instruments would remaintransparent, predictable and common for the entire business environment, thus fostering trade and
domestic and foreign investment.WT/TPR/M/60
Page 5
III. OPENING STATEMENT BY THE FIRST DISCUSSANT
15. The first discussant, Mr. Oscar Hernández, noted that Romania had already established a
market economy when the first Trade Policy Review took place in 1992.  Prices had been liberalized
and the basis for economic activity had been shifted from the state enterprises to the private sector.This had been accompanied by a liberal policy to attract foreign investment.  At the conclusion of this
first review, Romania had been invited to pursue its policy of economic stabilization and its structural
reforms.
16. Exports – in particular those of the state enterprises – had contributed to the recovery of
economic activity as from 1993 which, as it  turned out, did not last long.  The growing trade deficit
had led to a sharp increase in the foreign debt.  In 1997, Romania had resumed its structural reform
and macroeconomic stabilization efforts with the support of the multilateral financial institutions.  In1998, the slippage in financial policy had led to the imposition of an import surcharge, examined by
the WTO Committee on Balance-of-payments Restrictions, which concluded that the measure was in
conformity with multilateral regulations.  Romania had also suffered from the after effects of the
disruptions in the Asian capital markets and the consequences of conflicts elsewhere, such as Kosovo.
17. Romania's investment regime was liberal, and had attracted foreign investors, particularly
since 1998.  The major privatizations (telecommunications, oil, banks) had stimulated foreign
investors to consider the comparative advantages offered by Romania in certain areas, such as its
preferential links with its regional partners, its cheap labour, etc.  However, this interest in Romania
depended on its macroeconomic policy and the transparency of its regulatory regime.  Its investment
policy was in need of stability and predictability, particularly as regards incentives, and the discussantasked the representative of Romania to comment in this respect.
18. While recognising the considerable efforts made by Romania to step up the privatization
process and close down loss-making state enterprises, the rate of progress of the structural reform
process seemed slow.  Since the beginning of privatization there had been little change in the
composition of Romania's GDP.  State enterprises accounted for 55 per cent of industrial productionin 1998, against 45 per cent for the private sector, and imposed a heavy burden on the budget.
Consequently, the Romanian economy still suffered from certain structural problems which had had
an adverse effect on industrial production and trade.  Unless the small and medium-sized enterprises
were stimulated and the privatization process speeded up, it would be difficult to attain the goals that
had been set with respect to exports and the budget.  The discussant asked the Representative of
Romania to comment on the authorities' plans in this respect.
19. In the trade policy area, it was import to highlight Romania's respect for the multilateral
trading system, as reflected by its notifications and the fact that it had never been involved in a dispute
settlement procedure.  However, certain measures relating to the GATS showed inconsistencies, for
example the limitations on the supply of services th rough commercial presence.  As was the case with
other WTO Members, certain notifications, such as subsidies, were not up to date.  Romania had also
concluded a number of regional agreements.  The discussant asked the representative of Romania tocomment on his authorities' plans with respect to the GATS, and wondered whether the number of
regional and bilateral agreements might be a source of conflict which could make it more difficult for
Romania to comply with its multilateral commitments.
20. With respect to measures directly affecting imports, the first discussant noted Romania's
intention to introduce a simplified procedure for customs control which would also allow greatertransparency of customs operations.  He also noted that duties were particularly high for agricultural
products.  Thus, even after 2004 (deadline for the implementation by Romania of its Uruguay Round
tariff commitments), certain agricultural products would be subject to bound rates of 333 per cent.WT/TPR/M/60
Page 6
All of the taxes, exemptions, commissions and surc harges favoured tax avoidance (particularly with
respect to coffee, cigarettes and alcoholic beverages), and the discussant asked the representative of
Romania to comment on his authorities' plans in this respect.WT/TPR/M/60
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IV. STATEMENT BY THE SECOND DISCUSSANT
21. The second discussant, Mr. Knut Brünjes, pointed out that Romania had been faced with the
typical problems of transition.  This process took time, not only because the economy had to be
restructured, but also because it was necessary to eradicate the mentality inherited from the state-
managed economy and to obtain popular support in order to proceed to the radical changes that werenecessary in a democracy.  In addition to these internal difficulties, Romania had had to carry out its
transition in a rather unfavourable external environment, given the economic difficulties of the
neighbouring countries, the Asian financial crisis and the Russian debt crisis, not to mention the
conflict in Kosovo and the economic embargoes imposed by the United Nations.  Consequently,
Romania had experienced several severe macroeconomic crises.  The discussant asked the
representative of Romania to comment on the outlook for the Romanian economy in view of the
stabilization programme introduced in 1999 with the support of the IMF and the World Bank.
22. As regards the general constitutional and legal framework, the discussant noted the
consolidation of the transition to democracy since their first review in 1992, which had made the
adoption of the necessary economic reforms more difficult.  Thus, the Government had had to rely on
ordinances in order to govern, which had the disadvantage that they could be modified during
adoption by Parliament.  This had created uncertainty in the economy as a whole and for foreigninvestors in particular.  With the elections coming up in 2000 there was a considerable risk that the
Government might have additional difficulties in pushing through its structural reforms as well as the
necessary budget cuts.  It was important that the Government in future seek the necessary advance
support in Parliament and the public for its draft laws so as to avoid the negative effects of an erratic
policy.
23. On the subject of governance, the Government's draft civil service reform act was in the
process of adoption by Parliament.  A series of m easures had been taken to strengthen the working of
the judiciary, but it was necessary to enhance technical skills.  Romania had introduced efficient
border control measures by a Government decision in 1999, but controls had to be improved on the
borders with Ukraine and Moldova.  It was also necessary to examine whether lowering the currentvery high tariffs and excise taxes on certain products such as cigarettes and chocolate would lower the
incentive for smuggling and therefore reduce border problems significantly.  Romania had made
strong and commendable efforts to fight corruption, which was a major risk to economic stabilization
efforts and foreign direct investment.  The discussant asked the representative of Romania to elaborate
on these points.
24. He congratulated Romania for its active and constructive role in the WTO.  With respect to
measures directly affecting exports, quantitative restrictions had been eliminated in 1998 and replacedby automatic licensing for statistical purposes.  Romania did not levy export taxes, nor did it apply
any export subsidies to industrial goods except for complex exports and certain subsidies on interests
from domestic loans used for export production.  Tax incentives for exports, which had been provided
for a certain time, were suspended in March 1999.  The only exception in this positive record was the
maintenance of export subsidies for agricultural goods.
25. Regarding technical standards, Romania had made considerable progress.  Two independent
bodies – the Romanian Standards Association (A SRO) and the Association for Accreditation of
Romania (AARO) – had been create d in 1998.  ASRO participated in the activities of regional and
international standardization bodies and had been notified as WTO enquiry point under the TBT
Agreement.
26. With regard to competition policy, Romania had also made considerable progress.  The
Competition Council, an independent administrative authority, had handled more than 200 cases in
1998, and its role was destined to grow in the future  with the privatization of state-owned enterprisesWT/TPR/M/60
Page 8
and former monopolies in the energy production and distribution sectors.  Currently, the role of the
competition authorities was limited and further concentration of economic activities in certain sectors
was even possible through privatization measures.  The discussant asked the representative of
Romania to provide further information on this point as well as on the draft law on state aid.
27. Turning to structural reforms, he congratulated the Romanian Government for its efforts since
1997.  Prior to that date, privatization had not made much headway, and losses by large state
enterprises had been an obstacle to macroeconomic stabilization.  Since then, the government has
speeded up the structural reform process.  The number of privatizations of large enterprises had
sharply increased between 1998 and 1999, and included the national telecommunication company,
two banks and an automobile manufacturer.  He asked the representative of Romania to provide
further information on the privatization and restructuring programme, in particular in the steel and
energy sectors.  He also asked for further details concerning public aid for coal and steel and thecancellation of tax arrears, which had had a negative influence on the whole economy, especially tax
receipts.
28. In the agricultural sector, privatization of agricultural land had not bought significant benefits
to the Romanian economy in spite of the good quality of the soil.  Approximately 63 per cent of land
was split off into individual farms with an average size of 2.3 hectares devoted to subsistence farmingand too small to buy their own machinery and equipment.  Larger areas were farmed by farmers'
associations and family associations, and commerci al companies had replaced the former state farms.
Aid to farmers consisted in assistance for the purchase of inputs, and income and other tax
exemptions.  Thus, agriculture was a net recipient of state aid and did not contribute to the budget.
29. In short, Romania had made considerable pr ogress since the Trade Policy Review of 1992.
However, it still had a long way to go in the transition of its economy.  Its trade policy record was also
commendable.  Romania had an ambitious liberalization programme, especially towards the European
Union, and competitive pressures would rise significantly in 2002.  Consequently, it had to pursue the
path of reform vigorously and stabilize its internal framework.  The reforms that were under way
could help to revive, in the near future, an economy that was currently rather bleak.WT/TPR/M/60
Page 9
V. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
30. The representative of Hong Kong, China congratulated Romania for its considerable
liberalization efforts and, in particular, the absence of export subsidies and quantitative export or
import restrictions.  She also congratulated Romania for its statement that its process of regional
integration was complementary to the multilateral pr ocess and strengthened the country's role in the
multilateral trading system, and that the liberalization of trade relations at regional level was
preparatory to an acceleration of liberalization at the multilateral level.
31. She took note of the binding of all tariff lines under the WTO.  However, the significant gaps
between the bound rates and the applied rates, part icularly with respect to agricultural products,
created uncertainty for Romania's trading partners.  Romania should therefore be encouraged to
liberalize its tariff regime.  The discriminatory difference in excise taxes on cigarettes and cars with a
minimum local content was a source of concern.  Romania should be encouraged to eliminate theimport surcharge.
32. In the area of government procurement, Romania had improved its system in order to ensure
more efficient use of public funds.  However, with respect to the conditions for the participation of
foreign suppliers, Romania should eliminate the condition calling for similar treatment of Romanian
suppliers in the country of origin of the foreign supplier.  Certain improvements were needed in orderto bring Romanian government procurement policy into line with the WTO plurilateral agreement.
33. The representative of Switzerland noted the considerable progress achieved by Romania since
the first Trade Policy Review in 1992, as reflected, in particular, by the adoption of a new customs
code:  strengthening of stability and neutrality of the tariff regime as an objective of its trade policy
for 1998-2000;  abandonment of the practice of temporary tariff exemptions subject to volume orvalue quotas;  elimination of export prohibitions and quotas;  liberalization of domestic prices and
exchange rates;  introduction of full convertibility for current transactions;  acceleration of the
privatization of medium-sized and large companies since 1997;  the principle of equal treatment of
foreign and national investors with respect to incentives and taxation of profits;  introduction of a
competition policy covering the private trade operators as well as state enterprises and governmentbodies;  and the transformation of the agricultural sector through the liberalization of prices and trade
and increased transparency in support measures.
34. However, there were important areas in which changes were urgently needed to create the
conditions of transparency and predictability necessary to the proper functioning of economic
activities.  One of these areas was the stability of the legislative and regulatory framework.  Another
important area was customs tariffs, where the sometimes very wide gap between the applied and
bound levels were a source of considerable uncertainty for economic operators.  A third area was thecombat against fraud, where it would be useful to study the link between the tariffs applied to certain
products, such as cigarettes, and the frequency of fraudulent practices.
35. The representative of the European Union congratulated Romania for its active and
constructive role in the WTO.  While aware of the magnitude of the difficulties and challenges facing
the Romanian government and its citizens, the EU supported and encouraged Romania, which itrecognized as playing an important role for the stability of the region.
36. The EC welcomed the considerable progress made by Romania in creating a market economy
since the first review in 1992.  While it shared the Secretariat's concern regarding Romania's
macroeconomic situation, the structural reforms launched by the Government were clearly a step in
the right direction.  The reforms which needed to be carried out with particular determination were:the full implementation of the arrangements conc luded with the IMF and the World Bank;  further
restructuring and restoration of public finances;  the adoption of measures to create a land market;WT/TPR/M/60
Page 10
promotion of competitiveness through the fostering of a competitive environment for enterprises, in
particular the SMEs;  stimulation of domestic and foreign investment;  simplification of legal and
administrative procedures;  and stabilization of rules governing privatization and trade operations,
including the implementation of new bankruptcy procedures.
37. The EU observed with satisfaction the determination with which Romania honoured its WTO
commitments and sought to maintain an open  and transparent trade regime as reflected, inter alia , in
its progressive elimination of the system of temporary tariff exemptions, removal of all export
restrictions and avoidance of trade defence measures in the framework of the WTO.  In spite of the
significant progress in the area of customs procedures - particularly since the adoption of the new
Customs Code - the handling of border operations needed to be improved and reinforced.  The EU
was ready to offer a Romania its full support in that respect.
38. Regarding bilateral relationships between the EU and Romania, the Association Agreement
had stimulated trade and investment and encouraged both parties to continue their negotiations
towards further bilateral concessions.  The economies of the two parties were steadily integrating.
The EU's share in Romania's overall foreign trade was 60 per cent.  While Romania's deficit was
steadily increasing, this was largely due to its efforts to restructure its economy during the first half of
the decade, to the persistent lack of competitiveness of its exports and to the significant imports ofconsumer goods.  These trends revealed the importance of the "accession partnership", which
identified priority areas for the preparation of Romania's accession to the European Union and
established economic criteria aimed at ensuring Romania's capacity to withstand the strong
competitive pressures that would result from such accession.
39. As the Romanian government had stressed in its report, there was no reason to suspect the
slightest conflict between the network of preferential agreements built up by Romania and its
commitment to the multilateral trading system.  One needed only look at the scrupulous way in which
the country respected its WTO obligations and participated in the Organization's activities.  In this
respect, the EU welcomed, in particular, the positions taken by Romania in favour of a new round of
multilateral negotiations and looked forward to working with Romania to that end.
40. The representative of Australia noted its extensive trade relations with Romania, which was
Australia's most important market in the central and eastern European region.  Australia's exports to
Romania totalled $A 75 million, and consisted above all of coal and mineral products, while imports,
which totalled $A 9 million, consisted mainly of textiles, clothing, footwear and agricultural
machinery.
41. She took note of the considerable progress achieved by Romania since 1989 in creating a
market economy.  These efforts had been made difficult by external factors, such as the Russian debtcrisis and the Kosovo conflict, as well as the third year of domestic recession.  There had been
progress in the areas of investment, exchange rate liberalization, and participation in regional and
multilateral integration.  However, there were still areas where there was room for improvement such
as the privatization of state enterprises, customs clearance procedures and private sector development.
42. The representative of Japan noted the good trade relations between his country and Romania
which accounted for a total figure of US$68 million.  He noted the considerable progress achieved by
Romania in creating a market economy and implementing all of its WTO commitments.   Significant
progress had also been made in separating mandatory and voluntary technical standards;  the latter
were developed by the private sector on a consensus basis.
43. However, there were a number of areas of concern.  Firstly, there was the relatively high level
(35 per cent) of average bound tariffs on non-agricultural goods which should be reduced, although he
recognized the importance of the binding by Romania of tariffs for all tariff lines during theWT/TPR/M/60
Page 11
Uruguay Round.  Another source of concern was the recognized practical difficulties vis-à-vis  the
GATS in implementing of Directive 89/552/EEC (tel evision without frontiers) as of 1 January 2003.
The speaker asked the representative of Romania what measures were envisaged to stabilize the
legislative framework and increase transparency, since the report of the Secretariat spoke of an
increase in the risk of doing business following the changes in investment incentives.  Finally,competition policy was an important factor in ensuring transition to a market economy, and the
speaker wondered whether there had been any difficulties connected with the implementation of such
a policy.
44. The representative of the Republic of Korea noted the expansion of bilateral trade relations
with Romania since 1990.  Romania had become the second market for his country in the central and
eastern European region.  The level of Korean investments had reached US$920 million in
February 1999, directed mainly towards the automobile, ship-building and steel sectors.
45. He expressed a certain amount of concern with respect to Romania's trade regime.  Firstly,
there were significant gaps between the applied tariffs and the bound tariffs.  Romania had concluded
a number of regional agreements which gave the partners concerned advantages on the Romanian
market, and he wondered whether it intended to lower its MFN rates.  Secondly, the report of the
Secretariat pointed out that the suspension in March 1999 of certain investment incentives haddamaged Romania's reputation with foreign investors, although such incentives were generally
considered to be ineffective.  He asked the representative of  Romania what measures were planned to
maintain his country's reputation with foreign investors and to make the incentives effective.
46. The representative of the Czech Republic pointed to two aspects of the external environment
that had affected the Romanian economy.  Firstly, a series of unfavourable events had had an adverse
effect on Romania's economic and trade developmen t.  Secondly, the government report spoke of
obstacles to Romanian exports such as restrictions on textiles and clothing, safeguard and anti-
dumping measures, and the harmful effects on the Romanian market of goods exported by third
countries benefiting from subsidies.  These important measures had not been analysed in the
Secretariat report.
47. In spite of external obstacles to the development of its exports, Romania had maintained an
open and liberal trade policy based on a combination of multilateral, regional and unilateral
initiatives.  Romania fully respected its WTO commitments, had concluded a number of regional
agreements, had unilaterally reduced its tariffs and had refrained from resorting to trade defence
measures.  Its ambitious macroeconomic stabilization programme and its open and liberal trade policy
would clear the way for the elimination of the import surcharge.  Moreover, Romania had participated
actively in the preparation of the Seattle Ministerial Conference, both individually and with itsCEFTA partners.  In conclusion, the speaker stressed the importance attached by his country to the
development of relations with Romania, facilitated by the bilateral agreement within the CEFTA.
48. The representative of Canada congratulated Romania for the far-reaching structural reforms
undertaken since 1997.  At the time of the last Trade Policy Review in 1992, Romania had not yet
carried out the substantial reform required to lay the foundations for economic recovery.  Since then,the situation had significantly improved.  Romania's initiatives in the banking area, the creation of a
land market, the recovery of public finances and the further restructuring provided evidence of the
government's determination in this respect.  This  determination had been recognized by the IMF and
the World Bank.
49. There were, however, areas in which there was room for improvement.  The substantial losses
of the large state enterprises, although better controlled than in the past, could hinder the
macroeconomic stabilization programme.  The informal sector was expanding.  Investors were
discouraged by a proliferation of regulations and incentives which appeared not to be applied with anyWT/TPR/M/60
Page 12
consistency.  Canada had confidence in the determination of the Romanian authorities to introduce the
necessary reforms.
50. Since the first Trade Policy Review of 1992, Romania had made considerable progress on the
trade front.  It was an original Member of the WT O and had fully participated in the WTO's activities;
indeed, Romania was a model citizen of the multilateral trading system.  It had also concludedfree-trade agreements with the European Union, the EFTA countries, the countries of Central Europe,
Moldova and Turkey.  It had eliminated the practi ce of temporary tariff exemptions subject to volume
and value quotas.  These initiatives had contributed to the country's economic development, and
Romania should prepare for new commitments in the context of the GATS negotiations.
51. The representative of Hungary shared the Secretariat's concern with Romania's
macroeconomic situation, but the recent initiatives were positive.  Romania intended to increase its
budgetary discipline, pursue its privatization programme to reduce the deficit to 2.5 per cent of  GDPin 1999, and speed up the reform process.  Inflation would thus be kept under control and the current
account deficit could be reduced to 5.5 per cent of GDP.  The fact that it had received IMF support
was proof that the programme was justified.
52. The speaker congratulated Romania for speeding up its transition towards a market economy
and for its progress towards its priority objective of joining the European Union.  Romania hadintroduced a regulatory framework for the development of the private sector involving measures such
as taxation of profits, simplification of registration formalities for Romanian companies, and
bankruptcy procedures.  The liberalization of prices and exchange rates had continued, and resulted in
the convertibility of current account transactions in March 1998 and the easing of price controls.  He
understood the difficulty of closing down loss-making state enterprises in terms of social costs.Romania had maintained its liberal investment policy and had opened up the country to trade in
services through its commitments under the GATS.  However, the enormous discrepancy between the
productivity of state enterprises and that of private sector enterprises was proof of the dichotomy
between the traditional basis for industrial activity and the dynamism of the emerging private sector.
The competition policy adopted in 1996 was a positive factor.  Romania should be encouraged topursue its transition, in particular in the area of structural reform.
53. Regarding trade policy, he noted the progress made since the first Trade Policy Review of
Romania in 1992, in particular the elimination of export prohibitions and quotas, the adoption of a
new customs code and the opening up of the investment regime.  Tariffs in Romania were applied
only on an ad valorem  basis, and the average rate applied to agricultural products (33.9 per cent) was
well below the bound levels under the WTO (134.1 per cent).  He asked the representative of
Romania for further details concerning the justification of the reductions in the excise tax oncigarettes and cars on the basis of local content.
54. Regarding bilateral relations, Hungary and Romania had close economic ties in view of their
geographical proximity and the large number of Romanian citizens that were ethnic Hungarians.  The
conclusion of the bilateral agreement within the CEFTA had favoured trade, and direct investment
had grown on both sides.  In conclusion, he hoped that bilateral relations would continue to developwithout any major friction.
55. The representative of Thailand, speaking on behalf of ASEAN, noted the considerable
progress made by Romania since 1989 in creating a market economy, as a result of which economic
relations between the ASEAN countries and Romania had developed significantly.  The ASEAN
countries had also experienced economic difficulties similar to those of Romania, involvingsignificant drops in GDP.  He encouraged Romania to continue its reform process.WT/TPR/M/60
Page 13
56. He congratulated Romania for its active role in the WTO.  Romania had eliminated its regime
of temporary tariff exemptions and avoided recourse to trade defence measures.  It should work to
increase the stability of its investment regime to reduce business-related risks.
57. The representative of the United States congratulated Romania on the progress made in the
area of trade liberalization, privatization and reform of the economic system since the first
Trade Policy Review in 1992.  It supported the country's efforts to create a democratic society and a
market economy, as confirmed by Secretary of Stat e Madeleine Albright during her recent visit to
Romania.  The United States was providing Romania with support in the form of technical assistance
measures, and direct investment through the "Romanian-American Enterprise Fund".
58. The Report of the Secretariat had noted the difficulties encountered by Romania since the
beginning of the transition, and the speaker wished to congratulate Romania for the considerable
progress made.  The experience of other countries with transition had shown that there was a closelink between the pace of liberalization, reform and privatization, and economic growth.  Given
Romania's economic difficulties, the Government and the Parliament were encouraged to step up the
pace of reform and privatization.
59. The close relations between Romania and its European partners were a fundamental element
in its economic reforms, and the United States fully supported regional integration in Europe.However, preferential agreements could divert trade from partners treated on an MFN basis, such as
the United States and other WTO Members.  The United States was confident that the Romanian
authorities would continue to liberalize MFN duties.  The speaker also congratulated Romania on its
accession to the Information Technology Agreement, to Protocols IV and V of the GATS and to the
Agreement on Trade in Civil Aircraft.
60. In spite of Romania's considerable progress, the speaker was somewhat concerned regarding
the country's WTO commitments.  These concerns had been submitted by the United States in the
form of written questions.  Firstly, there was the question of consistency of the application of
minimum and maximum prices with Customs Va luation Agreement.  Secondly, Romania was
strongly urged to implement all of its commitments under the TRIPS Agreement before the1 January 2000 deadline.  Thirdly, Romania had participated in the discussions of the Working Group
on Transparency in Government Procurement, and had announced its forthcoming accession to the
Government Procurement Agreement.  The United States encouraged Romania to submit an offer to
begin its negotiation.  Its laws on government procurement already complied with several essential
provisions of the Government Procurement Agreement.
61. The United States encouraged Romania to improve the sectoral coverage of its commitments
within the GATS in order to attract investments in  that sector.  For example, Romania's commitments
did not cover infrastructure and citizen welfare services such as health, education and training,
audiovisual and delivery services, and certain professional services.  Moreover, Romania's
commitments on financial services did not support investment, although certain changes in the
legislative framework were planned.  Another concern arose from the recognized practical difficulties
vis-à-vis  the GATS in implementing Directive 89/552/EEC (television without frontiers) as of
1 January 2003.  The speaker wished to know Romania's plans in that respect.
62. The United States congratulated Romania for its accession to all of the core ILO conventions
and encouraged its efforts to ensure that their provisions were fully respected.  In conclusion, the
speaker encouraged Romania to continue speeding up the process of reform and privatization.  The
United States looked forward to Romania's partic ipation in the new round of multilateral negotiations
and in the Seattle Ministerial Conference.WT/TPR/M/60
Page 14
63. The representative of Turkey pointed out that Romania was among the most important
markets for Turkey in central and eastern Europe.  The entry into force of the free exchange
agreement between the two countries in February 1998, together with Romania's participation in the
Black Sea Economic Cooperation, had helped to foster trade, and the level of direct investment was
equally high on both sides.
64. He noted the progress achieved by Romania since the first review of its trade policy in 1992.
The private sector share in GDP had risen from 26.5 per cent in 1992 to 58 per cent in 1999, and
privatization had accelerated in 1998.  All tariff lines had been bound under the WTO, all quantitative
export restrictions had been eliminated, and Romania had taken no trade defence measures in the
framework of the WTO.
65. In spite of this progress, an expansionist budgetary policy and a real currency appreciation,
together with the effects of the crises in Asia, Russia and the Balkans, had resulted in a considerableslump in exports and an increase in the current account deficit, which had risen to approximately 7 per
cent of GDP.  Consequently, Romania had impos ed an import surcharge in conformity with
Article XII of the GATT 1994.  The speaker asked the representative of Romania for further
information on its privatization and restructuring programme.
66. The representative of the State Ownership Fund of Romania presented his country's policy
with respect to the privatization of State enterprises.  It was based on three principles:  speeding up of
the process, preference for strategic investors over portfolio investments without forgetting or
neglecting the latter, and a total commitment strategy.  Thus, where loss-making companies could not
be saved by privatization, their operations would be shut down or they would be liquidated.  The Fund
intended to complete its operations during 2000.  To that end, the number of institutions participatingin the privatization process had been increased through the decentralization of the Fund's operations
and recourse to foreign specialists.  Privatization of the régies autonomes  in the energy, transport and
agricultural areas was also under way.
67. The representative of Switzerland asked for further clarifications concerning the conditions
governing the acquisition of State enterprises with an unfavourable environmental balance sheet.
68. The representative of the State Ownership Fund of Romania pointed out that this balance
sheet, established for each enterprise undergoing privatization, set forth minimum environmental
objectives for the buyer subject to adjustment of the conditions of purchase.
69. The representative of Japan asked whether these minimum environmental objectives were a
factor in explaining the delay in the implementation of the privatization programme.
70. The representative of the State Ownership Fund of Romania noted that results had improved
in 1998 and in 1999, in a period in which the investment climate had degenerated following the
increase in Romania's risk rating on international financial markets.WT/TPR/M/60
Page 15
VI. REPLIES BY THE REPRESENTATIVE OF ROMANIA AND ADDITIONAL 
COMMENTS
71. The representative of Romania replied to the comments of the discussants and to the
questions raised by the delegations, classified into three main categories:  (i) the economic
environment;  (ii) trade policy measures;  (iii) sectoral policies.
(i) The economic environment
72. Regarding the economic environment (comments by the discussants and questions by
Switzerland, the United States, Hungary, Turkey  and the European Union), he stressed the
establishment of a market economy in Romania and the fact that foreign trade had constituted a
driving force for economic development in his coun try since the first review in 1992.  The other
economic indicators had developed erratically, but the outlook was now better.  The Government
expected a slight decline in GDP in 1999, followed by an economic recovery in 2000.  Theseprospects were based on factors such as the decrease in foreign debt servicing, the recovery of
industrial production, the decrease in energy imports, the increase in exports and the speeding up of
the reconstruction and privatization process.
73. The Government also expected a positive response from the business community circles to
the new regulatory framework which included elemen ts such as the laws for the SMEs, privatization
and the aggregate income tax.  The stability of this new framework was guaranteed by the fact that  it
complied with Romania's commitments with the inte rnational organizations and was linked to the
preparation for its accession to the European Union.
74. Regarding the formal and informal sectors, he  observed that the latter sometimes emerged in
periods of crisis.  The Government was committed to eliminating it by strengthening customs and
judicial control and the application of the law, and by pursuing international cooperation in
combatting fraud originating outside the country.
75. Regarding privatization, he elaborated on the statement by the Representative of the State
Ownership Fund, pointing out that the decision to speed up the process was above all economic, since
the country needed foreign investors at the macroeconomic level and since state enterprises weremaking considerable losses.  Preference for strategic investors was mainly linked to the importance
attached to the post-privatization commitments of buyers with respect to the investment, debt
coverage or restoration of the environment, or to social commitments.  The authorities had supported
these decisions through an increase in the number of agents involved in the privatization process and
had improved the quality of the process by applying the principles of transparency, equal treatment of
domestic and foreign investors, and sale on the basis of market price.  He pointed to the improvement
in results following these changes in 1998 and 1999.
76. With respect to investment policy (questions from Switzerland, Japan, the United States and
the European Union), the representative took note of the different views of the participants concerning
the merits of the facilities granted to investors.  However, these practices were common among the
WTO Members that were trying to attract investment and among the countries of the central European
region.  His country had chosen to align itself with the others in order to avoid being at adisadvantage.  Under Emergency Ordinance 67/1999, th ese facilities formed part of a whole which
covered the sales price and the post-privatization commitments.  The policy applied to foreign and
domestic investors alike.
77. Regarding the stability of investment policy, he noted that the granting of facilities sometimes
depended on the financial means available, but that other elements of the investment regime werestable.  Thus, access to all sectors of economic activity was free and there was no limit on foreignWT/TPR/M/60
Page 16
participation.  The regime was also stable with respect to the forms and methods of investment and to
the guarantee against expropriation and nationalization without compensation.  Regarding SMEs, the
Government had recognized their importance as a driving force for economic development and had
adopted Law 133/1999 to create a more favourable legal framework.  The Law defined the SMEs,
simplified the formalities for creating them and provided access to information on services, assistance,research and technical innovation, and to state-run vocational training programmes.
78. In the field of competition policy (questions raised by the second discussant, Japan and
Switzerland), Romania had adopted Law 143/1999 on state aids.  This Law was to enter into force on
1 January 2000, and the text was available with the Secretariat for consultation by WTO Members.
The Law would be administered by the Competition Council, and all unauthorized state aids would be
considered illegal.  This body, together with the Competition Office, was also responsible for
administering Law 21/1996 on competition and coul d by decision, grant exemptions for certain
understandings having a favourable effect on the economy such as the promotion of technical-
economic progress, the improvement of the quality of products and services, and consumer price
reduction.  The Law applied to all economic operators, including foreign operators, if the effects of
their activities were reflected in the domestic market.
79. The Competition Office was involved in setting the prices for certain pharmaceutical products
as a means of assisting the most vulnerable populations.  This policy applied to the products
concerned regardless of their origin, and for social reasons there were no plans to modify it in the
short term.
80. Regarding regional integration (questions from Australia, the Republic of Korea and Japan),
he noted the magnitude of the phenomenon in Europe as well as in America and other continents.Romania had chosen to participate in this developm ent because it considered that regional integration
was complementary to multilateralism.  Thus, regionalism had made it possible for Romania to speed
up the introduction of a market economy and to participate more actively in the multilateral process.
The regional agreements had also enabled Romania to promote its exports.  At the same time, the fact
that barriers to third countries had not been incr eased meant that the volume of trade with those
countries had doubled.
81. All of Romania's free trade agreements had been concluded in the framework of
Article XXIV of the GATT and had been notified to the WTO, where they were currently under
examination.  Article XXIV did not contain a precise definition of the term "substantially all the
trade".  The agreements between Romania and the European Union, EFTA and Turkey contained
provisions for trade liberalization, covering agricultural goods as well.  These agreements aimed at
eliminating restrictions as well as tariffs and measures with the equivalent effect, the products inquestion still being subject to excise tax and VAT.  Romania had introduced a safeguard measure on
meat under Article 14 of the CEFTA, and had temporarily suspended the preference granted under
that Agreement.
82. To open up discussions on this category of replies by the Representative of Romania, the
second discussant, Mr. Knut Brünjes, took the floor to express his satisfaction with the "total
commitment" strategy applied to structural reforms.   The results already obtained were encouraging,
as were the prospects for economic recovery in 2000, particularly after the very poor figures for the
past few years.  Regarding the stability of investment policy, he asked whether Parliament had
adopted Emergency Ordinance 67 /1999 or whether it was being applied pending adoption, and was
therefore subject to subsequent amendment.  Regarding competition policy, he noted with satisfactionthe entry into force in 2000 of Law 143/1999 on state aids.  He suggested that the Representative of
Romania should present his country's agricultural policy.WT/TPR/M/60
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83. The representative of Romania pointed out th at Emergency Ordinance 67/1999 had not been
adopted by Parliament.  However, with respect to the comments of certain participants concerning
recourse by the Government to the emergency ordinance, it was important to note that this instrument
was used to avoid delays and to speed up the reform process.  Regarding Romania's agricultural
policy, the authorities were acting in four main areas:  the land fund and the transfer of landownership to all those entitled thereto;  the deve lopment of efficient agriculture through the joint
farming of agricultural land, the area of which was often limited;  institutional reform to develop
appropriate instruments and mechanisms for a modern agricultural policy;  and development of rural
areas.
84. The first discussant, Mr. Oscar Hernández, also stressed the importance of the "total
commitment" strategy for the success of the structural reforms in view of the concerns raised by the
social dimension of closures and the difficulties involved in privatizing certain state enterprises thatwere not profitable enough.  Regarding the policy of financial facilities for investors, he asked
whether it was not important to avoid economic distortions when the investments in question did not
benefit all sectors of economic activity for example, telecommunications, energy or infrastructure.
With respect to regional integration, he wondered whether Romania's intention to conclude regional
agreements might detract from its efforts to join the European Union or to respect its multilateralcommitments.
85. The representative of Romania confirmed the difficulties encountered in pushing forward
with privatization, particularly in the case of large units or when there was a need for prior
restructuring, as had been the case for the mining sector.  However, privatization was necessary to
ensure real activity based on market mechanisms, and had already been accomplished, inter alia , for
telecommunications, transportation products, shipyards and ball bearing factories.  Regarding the
policy of granting financial facilities to investors, Romania's room to manoeuvre was limited by the
policies of the adjacent countries with respect to  investors wishing to establish commercial presence
in a country to serve the entire region.  As for regional agreements, experience had shown that they
functioned well.  In the case of the agreements with the European Union and EFTA, the asymmetricliberalization timetable, slower for Romania, woul d enable economic operators to become gradually
accustomed to the rigours of competition.  These ag reements had also enabled Romania to develop its
exports.
86. The representative of Japan noted with satisfaction the entry into force of Law 21/1996 on
competition and the implementation of a policy in this respect, which contributed to Romania's
economic development.  Regarding regional integration, while it was true that Romania adhered to the
principles of Article XXIV of the GATT, Japan had its doubts concerning the exclusion of theagricultural sector from the coverage of the agreements.
87. The representative of Romania confirmed that the regulatory and institutional framework for
the competition policy was operating in a positive and comprehensive manner, and formed part of
Romania's efforts to ensure that its economy was opened up on the right basis. The regional
agreements concluded by his country did not exclude  agricultural products and the provisions for the
first stage of liberalization of agricultural products were accompanied by an evolutionary clause
which provided the possibility of further liberalization.
88. The representative of the Republic of Korea took note of the remarks of the representative of
Romania on the subject of investment policy, and encouraged the firm and categorical commitment to
the introduction of a more stable investment regime.  He hoped that foreign investments wouldcontribute positively to Romania's economic development.  In the area of regional agreements, while
it was clear that the doubling of the country's trade volume with third countries was a good sign, trade
with regional partners had also steadily increased.WT/TPR/M/60
Page 18
89. The representative of Romania answered that the increase in the share of trade with regional
partners was attributed not only to regional agreemen ts, but also to the comparative advantages in the
region, such as lower trade costs.
90. The representative of Switzerland noted that the Romanian authorities viewed their recourse
to the emergency ordinance as necessary to speed up the reform process.  However, this recourse had
not been viewed in the same way by the business community, which saw in it a sign of erraticism in
Romania's economic policy.  They felt that a slower and more regular pace of legislative reform with
better defined goals would be preferable.  Rega rding customs fraud, the speaker took note of the
efforts made by the authorities to strengthen customs controls.  However, he pointed out that for
example, a revision of the charges on certain products, such as cigarettes, would be a more efficient,
and above all less costly approach.  Concerning the policy of granting financial facilities to investors,
he wondered whether such measures were effective from the economic point of view, what their costwas, and whether investment was in fact sensitive to this type of measure.  He also asked for further
details concerning tax rebates for investments exceeding US$50 million, available within the
framework of Emergency Ordinanc e 67/1999, which had given rise to lively discussions with the
IMF.
91. The representative of Romania answered that from the view of stability of the legal
framework, it was preferable for a law to pass through Parliament before entering into force.
However, recourse to the emergency ordinance was necessary in the context of the transition from a
centralized economy to a market economy, which required action on several fronts at the same time,
for example investment and privatization.  With respect to fraud, it should be stressed that Romania
was not a hotbed of fraud or corruption.  However, the staff had caused a certain amount of concern,and Romania was taking advantage of various vocat ional training programmes offered by different
countries to solve the problem, and various staff incentive programmes had been implemented.  At the
same time, cigarette smuggling was not only a Romanian problem, but concerned other countries as
well.  Regarding investments, Romania had to harm onize its policy with the regional policy.  Under
Emergency Ordinance  67/1999, tax rebates for investments exceeding US$50 million formed part ofthe Government's privatization policy, under which the final transaction took account of the entire
package of commitments by the purchaser and the Government's post-privatization objectives.
(ii) Trade policy measures
92. The representative noted the liberal nature of the overall thrust of Romania's trade policy.
There were no import and export restrictions.  Licensing was necessary for certain products, but it was
automatic, and its purpose was statistical.  No trade defence measures had been taken at the
multilateral level.  The policy was consistent with the determination to open up the Romanianeconomy to competition, including foreign competition, in order to ensure rapid transition.
Furthermore, the country had introduced a new customs code and completed its custom's policy.
Romania had participated actively in the WTO notification process and the negotiations.
93. Regarding consultation of the public on trade policy (question raised by the United States), he
observed that the Ministry of Industry and Trade had held different forms of consultations withbusiness circles including foreign investors:  meetings with professional associations and direct
contacts with the business community;  consultations with consumer protection organizations and
NGOs; and meetings with the Chambers of Commerce and Industry.
94. On the subject of customs valuation (questions from the United States and
Hong Kong, China), Romania fully respected the provisions of the Agreement on Customs Valuationand those of the Decision Regarding Cases where Customs Administrations have Reasons to Doubt
the Truth or Accuracy of the Declared Value.  The main method for determining customs value was
the price actually paid or payable, and the agreement provided for recourse to other methods when theWT/TPR/M/60
Page 19
value could not be determined by that method.  The customs authorities had established an internal
databank for products frequently subject to fraud or under-invoicing.  The chief data sources were:
the value determined on the basis of the transaction value of the similar or identical goods imported
earlier;  the values established following subsequent verification;  the decisions in case of disputes
relating to the customs value;  and the data communicated by countries of origin with which Romaniahad customs cooperation agreements.
95. Where the customs authority has reasons to doubt the value declared by the importer, the
latter had to provide additional documentation consisting, depending on the case, of trade documents
certifying that the requirements of Article 1 of the Agreement on Customs Valuation had been
fulfilled, documents relating to payments in connection with the transaction, to transport and
insurance, etc.  In such cases, the importer had to  deposit a security in order to withdraw the goods
from customs, and had 30 days to supply the additional documentation.  If prior to that deadline thedocumentation submitted confirmed the truth of the importer's declaration, the customs authority
released the security as soon as the customs debt had been paid.  If the importer failed to supply the
requested documentation before the deadline, the security remained due.  The importer had a right of
appeal.
96. This procedure consisted of three stages.  The complaint filed with the customs office was the
first stage, and was free of charge.  An importer not satisfied with the decision could resort to the two
other stages by challenging the decision at the level of the regional customs directorate or at the level
of the General Customs Directorate.  Each of these stages was subject to a stamp tax of one per cent
of customs duties.  If the challenge was successful, the stamp tax was reimbursed.  Finally, the case
could be appealed in court.
97. Concerning the creation and utilization of incentive funds for customs staff, the intention of
the authorities was to boost customs staff motivation by increasing merit pay and improving the
quality of their activities.  One of the results of this initiative had been to double the amounts
collected, but there were other more significant results, such as increased staff loyalty, enhanced
motivation and a different approach to the professional career.  With respect to safeguards againstpossible abuse, the provisions of the Customs Code and the regulations governing its implementation
as well as a statute of the customs personnel were very clear concerning the conduct of staff and the
rights of economic operators with respect to cust oms, such as the right to information and the
possibility of challenging the decisions of the customs authorities.
98. Romania had bound all of its tariff lines under the WTO and had not resorted to any increases
in excess of the bound ceilings.  On the contrary, it had sharply reduced the tariffs applied.  Regarding
tariff exemptions (questions from Australia;  Republic of Korea;  the United States;Hong Kong, China and Switzerland) a temporary reduction could be justified for specific economic
reasons, such as a shortage of raw materials, a te mporary drop in domestic production, etc.  Even the
limitation in volume or value of such an advantage offered to all WTO Members could be justified
during a transition period.  However, the Romanian authorities, firmly determined to use tariffs as a
leading trade policy instrument, an instrument of negotiation, and to ensure increased predictabilityfor economic operators, had examined the possibility  of doing away with reduced-duty tariff quotas
for imports on an erga omnes  basis.  The practice had been eliminated in 1998, and an ordinance was
adopted in that respect by the Government in September 1999.
99. Regarding tariffs on agricultural products, the representative stressed the close relationship
between the level of border protection and the sectoral policy in force.  The authorities had to consider
consumer interests and the necessary agricultural policy mechanisms for the development and
restructuring of agriculture while at the same time ensuring the protection of agricultural producers.
However, the rates applied by Romania were lower than the bound rates.  The predictability of these
rates was ensured by the annual publication of the Romanian Tariff Guide.WT/TPR/M/60
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100. Regarding excise taxes (questions from Hong K ong, China;  Hungary;  Switzerland and the
European Union) Romania respected the principle of applying the same rates to imported and
domestic products.  Recently, Ordinance 127/99, ap proved by the Government on 20 September 1999,
had established a level of excise tax on cigarettes independently of the origin of the raw materials.
The difference in excise taxes on cars depending on the local content had also been reduced, and wasto be eliminated as of 2000.  Excise taxes on petrol and fuel of all origins were the same, in full
conformity with the multilateral rules.
101. Concerning the import surcharge (questions from the Republic of Korea;  Hong Kong, China;
and the European Union), the timetable for progressive elimination had been announced in
February 1999 in the WTO Committee on Balance-of-Payments Restrictions:  6 per cent in 1998;
4 per cent in 1999;  2 per cent in 2000;  and complete elimination by 1 January 2001.  The
Government would examine the evolution of the economy and the balance-of-payments situation inorder to reach a decision concerning the possible elimination of the surcharge before the mentioned
deadline.
102. Regarding technical standards and sanitary and phytosanitary measures (questions from
Hong Kong, China;  Japan;  and the European  Union) they applied equally to imported and
domestically manufactured goods.  Since 30 April 1998, all Romanian standards had been voluntary,except for mandatory standards aimed at protecting the life, health or safety of the population or at
protecting the environment.  As of 1 August 1999, Romania had 16,650 standards of which 6,843
were identical to international standards and the others showed no significant deviations.  Romanian
standards were identical to European standards in the following sectors:  petroleum products,
machines and appliances for various economic activities;  automobiles;  products of the chemical,plastic and rubber industries;  medical instruments and apparatus;  toys, textiles and leather goods;
food;  metrology;  environment;  and information technology.
103. There was no list of products whose import required a certificate of conformity with an
international standard or a Romanian standard.  Such certification was necessary for the marketing of
any imported or domestically manufactured product that could affect the life, health or safety of thepopulation or protection of the environment, and could take the form either of a certificate or of a
declaration of conformity with the standards.  A certificate supplied by the National Veterinary Health
Agency was required for the export, import or transit of live animals, animal products or fodder.
104. The authorities hoped to conclude a European agreement on conformity assessment and
accreditation with the European Union in view of Romania's accession to the EU.  A mutual
recognition agreement had been concluded between the Romanian Standardization Association
(ASRO) and its Hungarian counterpart concerning the mark of conformity, and the negotiation of
similar agreements were planned with Slovenia, the Czech Republic, Belarus and Turkey.
105. On the subject of government procurement (questions from the United States;
Hong Kong, China;  Switzerland;  and the European Union), the Government had adopted
Ordinance 118/1999, which entered into force on 1 January 2000.  This Ordinance was harmonized
with European Standards and also concerned the local authorities.  The new Law provided for atendering procedure for government procurement exceeding minimum thresholds:  €30,000 for supply
and services contracts, and €125,000 for public works contracts.  For contracts below those
thresholds, the authorities could use competitive procedures.  Transparency of the process was
ensured through the publication of government procur ement plans in the Official Journal of Romania.
106. Concerning Romania's accession to the plurilateral Agreement on Government Procurement,
the decision could be taken one year later, thus  enabling the authorities to ensure the smooth
functioning of the new Law by developing the administrative capacity in the Ministry of Finance to
implement it, training staff and building capacity to manage the budget, and developing anWT/TPR/M/60
Page 21
information programme for users.  In order to attain these objectives, Romania had already introduced
programmes financed in the framework of the "Training of Trainers" and "Training and Monitoring
for Public Procurement" (PHARE) projects.
107. Regarding the questions raised by the United States on intellectual property rights, the draft
law to enforce intellectual property rights at the border was at an advanced stage, and had been
submitted to Parliament for adoption.  It contained provisions that were consistent with the TRIPS
Agreement.  However, the customs authorities were responsible for trade marks and geographical
indications under the regulations in force (Law 84/19 98), and "could order, ex officio or at the request
of the right holder, the suspension of import or export clearance of products carrying trade marks or
geographical indications".
108. To combat copyright piracy, the Romanian  Copyright Office (ORDA) had supported the
creation of certain NGOs working to that end, such as the Romanian Anti-Piracy Association in theaudiovisual field, supported and financed by Motion Picture Association;  the Union of Phonogram
Producers of Romania, whose members also repr esented the main phonogram producers (member of
the International Federation of the Phonographic Industry);  and the Romanian Anti-Piracy Group, the
status of which was awaiting an opinion from th e ORDA.  The Government decision concerning the
single marking of original phonograms within the territory of Romania with holographic labels hadreached the final stage of approval.  The Government intended to develop the administrative capacity
of the ORDA, and would be implementing an intensive vocational training programme in all of the
institutions concerned;  two weeks had been organized for the months of October and
December 1999.
109. Regarding the status of the 19 criminal cases, in 15 cases the offender had been sentenced to a
fine of lei 1 to lei 5 million or six months to one year imprisonment, seizure of the products that had
violated the intellectual property laws and payment of lei 500,000 to lei 18 million in damages.  In the
four other cases, the complaint had been withdrawn during the proceedings.  The authorities intended
to increase the fines in order to compensate for the decline in real terms due to inflation, in particular
in the area of copyright, patents and industrial designs, since the fines were discouraging in otherareas.  With respect to trademarks, for example, the fine amounted to lei 15 million.
110. Under Law 8/1996 on copyright and neighbouring rights, the right holder whose rights had
been infringed could apply to the courts for recognition of his right and compensation for the damage
caused (Article 139, paragraph 2), such compen sation being provided for in the Civil Code
(Articles 998 and 999).  Law 8/1996 provided for damages, and the holders of violated rights could
ask the courts to order the application of the follow ing measures:  seizure, with a view to remedying
the injury sustained, of the sums gained by the unlawful action or, if the injury could not be remediedin this way, seizure of the goods that had resulted  from the unlawful action, with a view to their sale,
to the extent of integral remedy for the injury caused;  destruction of the equipment and media
belonging to the defendants, whose sole or main  purpose had been to produce the unlawful action;
withdrawal by confiscation and destruction of un lawful copies from the channels of trade, or
publication of the judgement in the press at the offender's expense (Article 139, paragraphs 4(a), (b),(c) and (d)).  The Romanian civil courts had judged three cases at the request of right holders, in
which the defendants had had to pay damages ranging from lei 5 to lei 44 million.
111. Regarding the protection of confidential information on pharmaceutical products, a draft law
was being prepared with a view to improving La w 11/1991 on unfair competition.  This draft law also
contained provisions on the protection of undisclosed information, to ensure conformity withArticle 39 of the TRIPS Agreement.  The use of experimentation data obtained through considerable
effort or secret information relating to such experimentation transmitted to the competent authorities
to obtain authorisation for the marketing of pharmaceutical products was to be qualified as an offence.WT/TPR/M/60
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112. Concerning the maximum period of validity of a patent (question from Japan), a draft law was
being prepared to improve Patent Law 64/1991 with a view to fully transposing provisions of the
TRIPS Agreement into Romanian law.  There was to be an amendment of Article 33 concerning
improvements on already patented inventions, which would be abrogated in favour of the relevant
provision:  "The term of validity of patents shall be 20 years, starting on the date on which a regularnational filing was effected".
113. The term of protection for industrial designs and patents (question from the European Union)
was initially five years, with two successive five-year extensions possible (Article 31 of
Law 129/1992).  Consequently, the maximum term of  protection in Romania was 15 years, exceeding
the ten-year period provided for under Article 26 of the TRIPS Agreement.  However, to ensure
conformity with that Agreement and with Directive 98/71/EC of 13 October 1998 on the legal
protection of designs, a draft law to improve Law 129/1992 was being prepared.
114. Introducing the discussions on this second category of replies by the representative of
Romania, the representative of the United States took the floor to express his satisfaction at the
progress made in the areas of intellectual property and government procurement, and asked whether itwas really necessary for Romania to wait an entire year before acceding to the plurilateral Agreement
on Government Procurement.  He also asked for clar ification concerning the prices used for customs
valuation and wondered whether Romania intended to eliminate recourse to minimum prices in order
to implement the Agreement on Customs Valuation.  Wi th respect to the elimination of the practice of
exemptions from tariffs subject to tariff quotas, he asked how this decision could be reconciled with
the practice of granting preferences to regional partners.  He also asked for a further explanation of
the preferences granted for agricultural products in connection with the annual adjustment of the levelof duties applied.
115. The representative of Romania said that his country was ready to prepare its accession to the
plurilateral Agreement on Government Procurement and to ensure full conformity with its rules in
order to avoid complications in that respect.  Regarding customs valuation, he stressed that his
country did not apply minimum prices, but had introduced a database in conformity with multilateralregulations for cases in which the customs authorities had reasons to doubt the value declared by the
importer.  Regarding tariff quotas, he pointed out that this practice had been eliminated for imports on
an erga omnes  basis, but that it remained in force for regional agreements.  However, even at that
level, it was always possible to revert to the bound tariff.
116. The representative of Switzerland noted with satisfaction the progress that had been made by
Romania in the areas of tariffs and the harmonization of excise taxes as well as government
procurement.  He looked forward to Romania's joining the plurilateral Agreement on GovernmentProcurement.  The sometimes significant gap between the bound tariffs and those actually applied
constituted a risk for economic operators, in addition to other elements such as the stability of the
legal framework.  Concerning the US$60,000 thresh old for transfers abroad established by the
National Bank of Romania, defined as capital operations and hence requiring the Bank's agreement,
he asked what criteria were used for obtaining such agreement and what the prospects were for theliberalization of such operations.
117. The representative of Romania pointed out that  the board of directors of the National Bank
had approved, on 7 July 1999, a three-stage plan for liberalizing capital transfer operations.  The first
stage entered into force with the publication of the Bank's decision in the Official Journal of Romania.
Certain operations were liberalized immediately:  the entry of international credits with areimbursement period exceeding one year;  the entry of financial credits and loans with a
reimbursement period exceeding one year, financial leasing included;  the entry of sureties,
guarantees, and other auxiliary financial facilities.  Other operations were liberalized 60 days after the
publication of the Bank's decision:  securities specific to the capital market;  collective investmentWT/TPR/M/60
Page 23
instruments issued by private entities;  life insurance;  and capital outflows relating to life insurance.
The second stage called for the elimination of capital export authorizations, and the third stage called
for the liberalization of the remaining operations .  The criteria used by the National Bank in
authorizing transfers were prudential, and were applied uniformly and without distinction as to the
nationality or the nature of the capital.
(iii) Sectoral policies
118. Regarding tariff protection of textiles and clothing (questions from the Republic of Korea and
Japan), the representative pointed out that the reduction and elimination of such protection by the end
of 2002 concerned only preferential duties, and not erga omnes  duties.  The latter had been bound
under the WTO, no commitment having been made with respect to the reduction of tariffs on
industrial products in the Uruguay Round.  Given the sensitivity of the textiles and clothing sector, the
pace of elimination of tariffs under the free exchange agreements was slower than for other industrialproducts.
119. With respect to services (questions from the Republic of Korea;  the United States;
Hong Kong, China;  Japan;  and the European Un ion), the Government imposed no restrictions on the
purchaser's share in the capital of the state banks undergoing privatization.  Decision 563/1999 of the
Government on the privatization strategy for 1999 had called for the continuation of the process forstate banks.  This strategy would be carried out through the sale of the remaining state shares in the
Banc Post (17 per cent) and the Romanian Development Bank (9.7 per cent), and the initiation of the
privatization of the Banca Agricola and the Banca Comerciala Romana, the second of these objectives
forming part of the agreement concluded between Romania and the World Bank.  The authorities
hoped to complete this process by the middle of 2000.
120. In the areas of insurance and reinsurance, Romania's legislative framework was fully
consistent with its commitments under Protocol V of the GATS on financial services.  These activities
were subject to authorization by the Insurance and Reinsurance Monitoring Body through a process of
examination and approval in which the general prudential measures were applied in conformity with
Article VI of the GATS.  Romania did not apply any quantity or value restrictions in that area.  Adraft law aimed at improving the legislative framework was currently being prepared.
121. The insurance and reinsurance market had evolved positively.  Thus, by the end of 1998, the
number of insurance companies had reached 65, of which 90 per cent were privately owned.  For
example, eight new insurance companies had been authorized to offer compulsory civil liability
insurance for automobiles in 1998.  The State had a majority share in only one of the 10 companies in
that area, but that company formed part of the privatization programme for 1999.  Generally speaking,
Romania was committed to participating in the multilateral negotiations to broaden the scope of itsfinancial services concessions.
122. The problem of the purchase of land by foreign investors had been resolved by Law 241/1998
which stipulated that "land may be purchased by natural or legal persons of Romanian nationality"
(Article 6).  Thus, a foreign services supplier could purchase land by becoming a Romanian legal
person, or be entitled to use or administer such land for 99 years.  Regarding transport services, theconditions which had given rise to the exemption from the obligation of granting MFN treatment
under the GATS continued to prevail.
123. Current account operations had been carried out freely since 25 May 1998, pursuant to a
decision of the National Bank of Romania.  In certain cases, capital transfers were subject to
authorization by the National Bank:  the admission of foreign securities on the Romanian capitalmarkets;  operations involving instruments specif ic to the money market; operations involving leiWT/TPR/M/60
Page 24
deposit accounts opened by non-resident Romanians;  and capital transfers abroad by Romanian
residents exceeding a threshold of US$60 million.
124. The representative of Japan opened the discussions on this third category of replies by the
representative of Romania by welcoming the progress made in the area of services, including
important initiatives to liberalize financial services and telecommunications, useful to thedevelopment of the country's infrastructure.  He asked for clarifications on tariff protection of textiles
and clothing at the end of 2002.
125. The representative of Romania confirmed that th e planned reduction or elimination of tariffs
concerned only preferential tariffs, and not erga omnes  tariffs.
126. The representative of Switzerland asked for additional details concerning the second and third
stages in the liberalization of capital transfer operations.
127. The representative of Romania took note of his request and promised to provide a written
reply later on.
128. The representative of the United States asked how Romania intended to implement its
commitments under the GATS in the area of audio-visual services starting on 1 January 2003 given
the absence of any exemption from the obligation of granting MFN treatment.
129. The representative of Romania took note of the request and promised a written reply later on
(Annex II).
130. The representative of the European Union took  the floor to thank the delegation of Romania
for its efforts in undergoing the review process and stressed the exemplary way in which it had done
so.  The bulk of the questions asked by his delegation had been answered.WT/TPR/M/60
Page 25
VII. CONCLUDING REMARKS BY THE CHAIRPERSON
131. The Chairperson of the TPRB remarked that discussions on Romania's trade regime had been
very informative, allowing Members an appreciation both of the challenge of transition in Romania
and the contribution of trade policy reform to results to date, in particular steps toward establishing amarket economy with a clear legal framework.  Members had uniformly welcomed Romania's active
and constructive role in the multilateral trading sy stem.  Romania's tariff commitments in the Uruguay
Round were comprehensive, and were followed by WTO commitments on ITA products and on
telecom and financial services.   Romania had removed quantitative export restrictions and had not
taken trade defence measures under the multilateral trade agreements.   Members had also appreciated
the progress by Romania on the regulatory framework  for private sector development, but were aware
that instability of key elements of the business regime appeared to be adversely affecting theperceptions of foreign direct investors.  Privatization efforts had been redoubled in recent years, and
had contributed to a rise of foreign investment, albeit from a low base.  They had also taken note of
the more difficult external environment for Romania' s reforms in recent years, due to the east-Asian
and Russian economic crises, as well as recent events in the Balkans including, inter alia , the
consequence of embargoes.
132. Together with the internal challenges of transition, these external events had contributed to
the ongoing recession and the deteriorating balance of payments.  The latter had occasioned the
introduction of a temporary surcharge in October 1998, but which was scheduled to be phased out by
1 January 2001 at the latest.  Romania's recently concluded agreements with the IMF and World Bank
indicated confidence in the Government's policy mix of tight fiscal and monetary policy, combinedwith an acceleration of structural reform.  They s hould also help increase the confidence of investors.
133. In addition to these general points, Members we re grateful for the comprehensive explanation
given by the Romanian delegation on many specific points, including:
(a) The finalization of privatization and the discretionary nature of the new regime of
incentives for large investments, taking into account the international context;
(b) the competition policy and its impact on state aids;
(c) the complementary relationship between Romania's regional trade agreements and its
multilateral commitments, and in particular the effect of tariff removal on high-rate
items from preferential trade partners on third countries' access to the Romanian
market;
(d) the gap between applied and bound rates, in particular on agricultural products, which
may create uncertainty for exporters;
(e) customs clearance procedures, in particular the relation between fixed prices for
customs valuation of certain products and WTO commitments;
(f) excise tax reductions on domestically-produced cigarettes and motor vehicles in
relation to national treatment;
(g) the scope of technical requirements on imported products and the adoption of
European or international standards;
(h) price controls on insurance products and pharmaceutical products;WT/TPR/M/60
Page 26
(i) reform of government procurement policies and Romania's willingness to accede to
the Government Procurement Agreement;
(j) the role of small and medium-sized enterprises;
(k) policies in the agricultural sector;
(l) the law on television broadcasting requirements and GATS commitments;
(m) limits on the supply of services on the Romanian market, in particular on insurance
and financial services;  and
(n) measures ensuring consistency of intellectual property rights regulation and TRIPS,
together with steps to improve enforcement.
134. Members had appreciated that in spite of the difficult internal and external environment
Romania had faced in its transition to a market economy, it had maintained an open trade regime
while aware of the social impact.  Members had noted the concerns of Romania about certainmeasures maintained by trading partners, that had an inhibiting effect on its exports, such as anti-
dumping or countervailing meas ures and quotas on clothing.
135. In conclusion, the Members had complimented Romania on its strong commitment to the
WTO, reflected both in the conduct of its trade policy and in its active participation in the preparation
for Seattle. Members had welcomed Romania's intention to participate actively in the forthcomingnegotiations, noting in particular its interest in agricultural policies and industrial tariffs.  They had
also urged Romania to continue with the structural reform begun in 1989, particularly privatization.
Noting the difficult external environment for Romania of recent years, Members had pledged their full
support for Romania's efforts.WT/TPR/M/60
Page 27
ANNEX I
Written Questions
Questions from Hong Kong, China
1. Customs clearance procedures
(WT/TPR/S/60, page 35, paragraph 14)
We note that the Romanian authorities have established a fund to stimulate the enforcement
efforts of customs personnel, which consists of a portion of the amounts collected at the border in the
form of fines, penalties and confiscation of goods.  It is also mentioned that the new enforcementincentive resulted in a doubling of the amounts collected by customs.  Would Romanian authorities
share with us if they have put in  place any safeguards to ensure that the enforcement work will not be
abused given the potential conflict of interests of the customs personnel?
(WT/TPR/S/60, page 38, paragraphs 24-25)
We note that the Romanian customs authorities maintain a three-stage appeal system, and a
stamp tax at 1 per cent of the value of the duties and taxes is collected for the complaint procedure.
We would like to know whether the tax is collected separately for each stage of appeal; and whether
the stamp tax is refundable should the custom s decision complained against be overturned.
2. Technical standards and regulations
(WT/TPR/S/60, pages 69-71, paragraphs 120-128)
We welcome Romanian authorities' efforts in harmonizing their national standards with
international or European standards.  We note that  all Romanian standards are voluntary except those
determined mandatory by the relevant authorities.  We are interested to know the proportion of
mandatory standards out of the 16,025 national standar ds and how many of the mandatory standards
are equivalent to international standards.  We would appreciate it if Romania could advise whether itwould provide a full list of products the importation of which are required to bear the mark of
conformity and be accompanied by conformi ty certificates on request from traders.
3. Services - financial services
(WT/TPR/S/60, pages 93-94, paragraphs 53-54)
Since 1997, three major state-owned banks have been  identified for privatization.  Of the two
for which privatization has been completed, only 45 per cent and 51 per cent of the stake were sold to
the private sector.  Are there any restrictions with respect to the percentage of the stake that can be
sold in such privatization?
Besides, it is mentioned that state-owned banks still dominate the banking sector.  Does the
Government have any plan to privatize more state-owned banks?WT/TPR/M/60
Page 28
(WT/TPR/S/60, page 95, paragraph 60)
We welcome the plan to introduce a new law on the establishment of insurance providers,
lifting the limits on the establishment of foreign insurance services providers in Romania.  We would
be grateful if the Romanian authorities would share wi th us more details of this initiative, e.g. the
scope, implementati on time-frame, etc.
Questions from Switzerland
1. Taxes on products assessed at the border
Article 9 of Ordinance OU82/1997 provides for a 35 per cent reduction in excise tax on
cigarettes having a minimum 50 per cent local-tobacco content.  The footnote to Annex 2 of
Ordinance OU82/1997 provides for a 75 per cent redu ction in excise tax on motor vehicles produced
with at least 50 per cent local content.  How are these two provisions compatible with Article III with
GATT 1994?
2. Competition policy - administered prices
Under Ordinance OU7/1998, the list of goods and services of which the prices were set in
1998 on the advice of the Office of Competition included domestically produced drugs for human
consumption.  Furthermore it appears that insurance and reinsurance services are also subject to an
administered price system.
Are price controls exercised through a procedure of price fixing or of price approval?  What
are the criteria used in this procedure?
With regard to drugs, price controls appear to apply only to those produced within the
country.  Why?
With regard to insurance and reinsurance, are price controls applied to all types of service or
only some of them?
Does Romania intend in future to maintain a system of administered prices for locally-
produced drugs for human consumption and for insurance and reinsurance services, and if so, why?
3.  Government procurement
In the report prepared for the first review in 1992, Romania stated that it intended to accede to
the Agreement on Government Procurement (Tokyo Round Agreement, which afterwards became a
WTO Plurilateral Agreement).  When does Romania intend to accede to the Agreement on
Government Procurement?
The present framework for government pr ocurement laid down in Ordinance OG12/1993
covers procurement by central government bodies and by the régies autonomes .  What is the situation
with regard to procurement by local government bodies?
4. Investment regime
The exchange regulations applicable to foreign investors authorize full convertibility for
current transactions.  However, transfers abroad for an amount of up to US$60,000 are considered
current transactions, while transfers involving a higher amount are considered capital transactionsWT/TPR/M/60
Page 29
requiring the approval of the Romanian National Bank.  What are the criteria on the basis of which
the National Bank gives its approval?  Does Romania intend to raise or perhaps abolish the
US$60,000 limit?
Ordinance OU67/1999 on measures to develop economic activity provides for tax benefits in
favour of investments of at least US$50 million.  There is, however, some uncertainty as to the
application of this decision aimed at encouraging large-scale investment.  Could Romania provide
some clarification in this respect?  What measures are taken by Romania to promote investment in
small and medium-sized enterprises?
Questions from Australia
1. Romania is party to a number of regional trade agreements, including with the European
Union, EFTA, CEFTA countries, Turkey and Moldova, which provides preferential access to regional
partners.  Could Romania comment on the relationship between its regional and multilateral
arrangements?
2. We note that the practice of using temporary customs duty exemptions or reductions subject
to value or volume quota, has declined considerably in 1998.  Does Romania have plans to completely
phase-out the use of such temporary customs duty exemptions?
3. We are pleased to see that there has been a reduction in applied tariffs, particularly on
agricultural products, and hope that tariff levels will continue to be reduced.  However, we are
concerned that levels of applied rates on agricultural products require annual renewal bygovernmental decision, and that as the bound rates are much higher there is scope to raise applied
tariff levels.  We would be interested to hear of Romania's future plans concerning tariffs .
Questions from the European Union
1. Import surcharge
(WT/TPR/G/60, page 14, paragraph 69)
The Government mentions that it will eliminate the import surcharge by 1 January 2001.  In
the meantime Romania has discussed with the IMF an early phase-out of the import surcharge on
1 January 2000.  Which date does Romania intend to respect?
2. Taxes on products assessed at the border - excise taxes
(WT/TPR/S/60, page 43, paragraph 39)
The text mentions an excise tax reduction for cigarettes using domestically produced tobacco.
According to our information this tax exemption has recently been suspended by governmentordinance.  Can the suspension be confirmed?
The text indicates a difference in the tax treatment of domestically produced petroleum and
natural gas on the one hand and gasoline on the other hand, but does not make clear what the
difference is.  Could the situation be clarified?
Please provide a detailed description of the excise tax reduction for domestically produced
cars.WT/TPR/M/60
Page 30
3. Investment regime
(WT/TPR/S/60, page 60, paragraph 94)
The text describes the tax incentives granted to foreign direct investors until earlier this year
and mentions the suspension of these incentives.  It  is important to know that the Commission was
very critical of these incentives.  The reasons are the intransparent nature of these tax incentives, the
potentially negative impact on resource allocation in the economy, the high costs to the budget, and
their likely ineffectiveness.  The Commission communi cated its concerns to the Romanian authorities
on a number of occasions and welcomed the suspension of the incentives.  We hope that the
Romanian authorities will not cede to the pressure on the part of several foreign companies for
reintroduction of these incentives.
4. Protection of intellectual property rights
(WT/TPR/S/60, page 62, paragraph 99)
The Industrial Designs Law (L129/1992) is said to provide for a period of protection of
five years with the possibility of renewal over two consecutive five-year periods.  Could the
Romanian authorities please clarify how this provision complies with Article 26.3 of the TRIPS
Agreement which requires a minimum period of protection of ten years?
(WT/TPR/S/60, page 67, paragraph 112)
This paragraph highlights a provision in the Patent Law which affords certain patents a period
of protection of ten years.  Could the Romanian authorities please clarify this provision and explain
how it complies with Article  33 of the TRIPS Agreement?
(WT/TPR/S/60, page 65, paragraph 110)
We are pleased with the overall progress in this area.  However, could the Romanians confirm
that the fee reductions that are available to businesses apply to all applicants and not just to
Romanian nationals?
5. Technical standards and regulations
(WT/TPR/S/60, page 69, paragraph 121)
The reform of the standardization system undertaken during the last three years is a major
step towards modernizing the Romanian business environment and bringing it closer in line with EU
legislation.  However, some standards still remain mandatory.  What is the exact number of
mandatory standards and in which areas are they applied?
(WT/TPR/S/60, page 69, paragraph 124)
The text mentions the future conclusion of a European Conformity Assessment and
Accreditation Agreement (ECAA).  It should be clar ified that the EU is not currently negotiating an
ECAA with Romania and that a date has not even been established for the opening of such
negotiations.
Could Romania indicate the countries with which it is negotiating a mutual recognition
agreement?  And the fields covered by these Agreements?WT/TPR/M/60
Page 31
(WT/TPR/S/60, page 70, paragraph 125)
In accordance with this paragraph, less than 50 per cent of the new Romanian standards
adopted in the 1995-1998 period are identical to or equivalent to European standards.  Could Romania
indicate the sectors covered by these standards?
(WT/TPR/S/60, page 71, paragraph 127)
Could Romania clarify where all quality requ irements are mandatory?  And if they are
demanded at the border or on the market?
(WT/TPR/G/60, page 14, paragraph 66)
The Romanian Government states that standa rds notification to the TBT Committee was not
compulsory, "Romanian standards not differing from the international ones".  However, under the
section on Romanian standards in the Secretaria t Report (WT/TPR/S/60, page 70, paragraph 125) it
was noted that 86 per cent of standards adopted by Romania since 1995 are identical to internationalor European standards.  Have the other 14 per cent been notified?  If not, why?
(WT/TPR/S/60, page 70, paragraph 125)
We welcome the fact that so many of Romania's standards adopted post-1995 are equivalent
to international standards.  However, in the same paragraph it is noted that, overall, only 39.3 per cent
of Romanian standards are identical or equivalent to international ones.  This suggests that there are a
number of long-standing standards (pre-1995) which are not equivalent/identical to international
standards.  What action is Romania taking to address this?
6. Competition policy
(WT/TPR/S/60, page 72, paragraph 133)
The Law on State Aid mentioned in the text has been adopted in the meantime and constitutes
a major step towards transposing the EU legislation in this field.
7. Government procurement
(WT/TPR/S/60, pages 77-78, paragraphs 146-152)
The EC considers that the description of the public procurement framework in these
paragraphs is obsolete, since a new government ordinance, based largely on the EU legislation in this
field, was adopted in August 1999 significantly changing the framework for public procurement inRomania.
(WT/TPR/S/60, page 79, paragraph 2)
The description of the restructuring process of the Romanian economy is accurate.  We share
the disappointment about the slow progress in the restructuring in various of the industrial sectors.
However, recent progress in the banking sector could also be reflected here:  the Government has
privatized two banks for the first time and started to deal with the problems of non-performing loans
by closing some banks in the course of 1998 and 1999.WT/TPR/M/60
Page 32
8. Services – financial services
(WT/TPR/S/60, pages 93-94, paragraphs 54-56)
Of the three banks (Bancorex, Banca Agricola, Banca Commerciale), mentioned in these
paragraphs, one (Bancorex) has been partly closed and the remaining assets handed over to BancaCommerciale.  For Banca Agricola and Banca Commerciale, the selection of the privatization advisers
has started.  Could Romania indicate the expected timetable for finalizing the privatization of Banca
Agricola and Banca Commerciale?
Questions from Japan
1. Sanitary and phytosanitary measures
(WT/TPR/S/60, page 50, paragraph 63)
It is reported that the import, export and transit of live animals, animal products, and fodder is
subject to favourable opinion by the Ministry of Agriculture and Food prior to its occurrence.  Please
explain what the "favourable opinion by the Ministry of Agriculture and Food" means.  Does the"favourable opinion"-condition apply even when the import, export and transit meet the standards
established by the National Sanitary and Veterinary Agency"?
2. Regional trade agreements and arrangements – textiles and clothing
(WT/TPR/S/60, page 92, paragraph 48)
It is reported that import of textile and clothing products is subject to a relatively high level of
tariff protection at the border (40 per cent on carpets and 35 per cent on garments for women, men,
girls or boys).  It is also reported that tariffs will be eliminated by 2002.  Does this mean that tariffs
will be eliminated not only on imports from th e European Union but also on those from any other
country and region?  Please also explain the schedule for elimination (e.g. setting some phases
towards elimination).
3. Technical standards and regulations – conformity assessment
(WT/TPR/S/60, page 70, paragraph 126)
The Secretariat Report explains the requirements of certificates of conformity for certain
goods which began on 19 November 1996 and replaced by the Decision HG168/1997.  Do these
requirements equally apply to domestically produced goods?
The condition "(b) they are accompanied by the declaration of conformity" is described as one
of such requirements in the Secretariat Report.  Please explain if there exists any scheme to verify
such declaration for example by sampling.
4. Investment
The Secretariat Report states as follows:
"For economic operators, a succession of measures on key business-related areas - taxation,
investment, privatization - creates a volatile and uncertain environment, increasing the risk of
doing business and discouraging investment.  Grea ter stability of Romania's policies in these
key areas could moderate the risk of adverse developments for economic operators, provide aWT/TPR/M/60
Page 33
more favourable regime for investment and an anchor for further structural reform."
(WT/TPR/S/60, page iix, paragraph 9)
It is also reported that the investment incentive has been repeatedly modified during the
period under review (WT/TPR/S/60, page 33, paragraph 6).
Why has there been repeated modification of the investment incentive?Please outline the efforts taken by Romania for stabilizing its policy regime and for
increasing transparency.  For example, does Roma nia establish enquiry point to obtain information
on its investment scheme?
(WT/TPR/S/60, page x, paragraph 17)
It is reported that foreign direct investment played only a minor role in Romania's transition
between 1989 and 1996.  Please explain why such situation occurred.  Is it because of investment
incentives having been diminished?
(WT/TPR/S/60, page 58, paragraph 85)
It is reported that an improvement, as of 1998, is the application of equality of treatment for
both foreign and domestic investors on the guarantee, incentive and profits taxation.  Please explain
the policy objective of applying an equal treatment.
(WT/TPR/S/60, page 59, paragraph 90)
It is reported that about 75 per cent of total FDI was invested in joint ventures and that at least
one reason why foreign investors choose to work with a local partner is familiarity with local
conditions, an advantage when the business environment changes frequently.  Please explain if there
is any other reason why foreign investors choose the form of joint ventures rather than 100 per cent
foreign-owned.
5. Competition policy
(WT/TPR/S/60, page 74, paragraph 136)
According to the Secretariat Report, in order to be granted an exemption, a category of
agreement, association decision or concerted practice must meet cumulatively the conditions of
Article 5(2)(a)-(d) of L21/1996.  "[P]ositive effects prevail over negative ones" is described as one of
such conditions.  Please explain how the authorities judge whether "positive effects prevail over
negative ones".
Please explain how the authorities cope with transborder anti-competitive behaviour.
6. Regional trade agreements and arrangements
(WT/TPR/G/60, page 7, paragraph 16)
According to the Government Report, Romania did not take any new trade defence measures
on a multilateral level.  However, certain safeguard measures have been taken within some regional
integration agreements.  Please explain the scheme of such safeguard measures and in which case
such measures were taken.  Please explain why the measures were not notified to the WTO.WT/TPR/M/60
Page 34
(WT/TPR/S/60, pages 28-31, paragraphs 58-67)
Romania concluded free trade agreements with the EU, EFTA and Turkey.  However, those
agreements exclude all or most of the agricultural products.  As stipulated in Article XXIV of the
GATT, a free-trade area shall be understood to mean a group of two or more customs territories inwhich the duties and other restrictive regulations of commerce are eliminated on substantially all the
trade between the constituent territories in products orig inating in such territories.  In the light of this
Article, it is doubtful if such free-trade areas whic h exclude all or most of agricultural products could
be said to be eliminating the duties and other restrictive regulations of commerce on "substantially all
the trade".  Please explain Romania's view on this point.
7. Services
(WT/TPR/S/60, page 95, paragraph 60)
Romania intends to introduce a new law which aims at lifting the limits on the establishment
of foreign insurance service providers in Romania and this will facilitate the privatization of state-
owned insurance companies as a means to attract capital and expertise to the sector.  Japan welcomessuch liberalization initiatives conducted by the Government of Romania.  The Report also states that
the authorities also intend to tackle the limits on the range of products available to clients, in
recognition of the need to support financial market development.  Could Romania explain further on
the liberalization initiative on the range of products available to clients?
(WT/TPR/S/60, page 23, paragraph 48)
Romania lists MFN exemption in the transportation field.  Does the condition which created
the need for the exemption still prevail?
8. Protection of intellectual property rights
(WT/TPR/S/60, page 67, paragraph 112)
It is reported that a patent has a maximum term of 20 years, but that in the case of a patent for
an invention that improves on other patented inventions and cannot be worked without the previously
patented inventions, the term is ten years.  Please explain Romania's view on whether this term of
protection conforms with Article 33 of the TRIPS Agreement which stipulates that the term ofprotection available shall not end before the expiration of a period of twenty years counted from the
filing date.
Questions from the United States
1. Investment regime
US firms have pointed out that frequent changes in trade, investment, tax and privatization
rules and in licensing requirements have adversely affected the investment climate.  Could Romania
provide information on steps it is taking to improv e the predicability of its trade, tax and investment
regimes?
2. Consultation of the public on policy
Does the Government of Romania regularly consult with representatives of the private firms,
including representatives of foreign investors, in the elaboration of trade or tax policy that could
affect them?WT/TPR/M/60
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3. Customs clearance procedures – customs valuation
It appears that Romania is using minimum and maximum prices to determine customs
valuation in certain instances.  In our view, these procedures as implemented appear to contravene
Romania’s obligations under the Agreement on Customs Valuation.
How do Romanian customs officials determine their maximum and minimum prices?  How
are the values in the internal statistical database of the Customs Authority determined?  How do those
values relate to the maximum and minimum prices?  How do the customs officials select the products
to be covered by these procedures?  When does Romania expect to abolish these prices and bring its
customs valuation practices into line with the ob ligations of the Agreement on Customs Valuation?
Do customs officials automatically have doubts about  the accuracy of the c.i.f. value, if it is
below the minimum price?  How do customs officials verify the accuracy of c.i.f. values?  What
"conclusive documents" do they look for?
In practice, how long does it take for customs officials to return the guarantee deposit to an
importer?
4. Tariffs
The IMF has reported that "Romania now has one of the highest agricultural tariff bindings of
any country in the EU and Central and Eastern Europe" (WT/TPR/S/60, page 39, footnote 17).  What
percentage of the average disposable income of a fa mily in Romania is spent on food?  Does Romania
have any plans to lower import duties on food thereby reducing the burden to its consumers?
Romania’s participation in the Information Technology Agreement is to be applauded.  It
signals Romania’s understanding of the positive impact on business and investment from having theseproducts available at the lowest possible cost.  Does Romania have any plans to lower import duties
on other industrial items needed fo r business growth and development?
5. Intellectual Property Rights
Romania intends "to take legislative action to close the remaining gaps with the obligations
under the TRIPS Agreement, including a law on enforcement of intellectual property at the border"
(WT/TPR/S/160, page 62, paragraph 100).  The United States strongly urges Romania to take thesteps necessary to implement its TRIPS obligations by the end of this year.  What intellectual property
right legislation does Romania plan to enact and when will it become effective?
The report  highlights weaknesses in criminal enforcement of intellectual property rights.  It
states that Romania recognizes that insufficient en forcement at the border is an outstanding gap in the
protection of intellectual property rights, and plan s to introduce a law on border control that would
help counter piracy.  The rates of piracy in Romania for copyright works have been increasing, but
Romanian criminal courts have solved only 19 cas es, during the period 1996-99, concerning copyright
and related rights.  Further, the deterrent effect of the fines appears to be eroding due to high inflation.
What steps does Romania plan to take to incr ease its efforts to combat copyright piracy?
Have prosecutions occurred in the 19 criminal cases mentioned in the report?  In how many
cases were the defendants found guilty? Were fines levied or jail time imposed?  What was the
maximum sentence or fine imposed?WT/TPR/M/60
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Does Romania plan to increase the amount of fines for violations of intellectual property
rights?
Are civil remedies also available for intellectual property rights holders?  Under what
circumstances?  If available, have civil remedies been pursued?  What have been the outcome of thesecases?
What is the status of the legislation to improve enforcement of protection of intellectual
property rights on the border?  Will this legislation be enacted before January 1, 2000?
It is important for Romania to ensure the proper storage, handling and protection of
proprietary data submitted to Health Ministry and other authorities on pharmaceuticals.  What
protection does Romania provide for proprietary data submitted by pharmaceutical companies to the
Health Ministry and other authorities?
6. Government Procurement
The United States notes that in Romania’s first TPR, it expressed its intention to join the (then
Tokyo Round now WTO plurilateral) Government Procurement Agreement.  The description of
Romania’s current law indicates that your laws already comply with several essential GPA provisions.
We encourage Romania to submit an offer to begin its negotiation to accede to the GPA.   We also are
pleased to see that Romania has supported discussions at Geneva regarding transparency in
government procurement.  Please describe how the floor threshold that require an auction for a
government procurement is determined.
What percentage of government procurements  are completed using the auction process?
What are Romania’s current plans regardi ng joining the WTO Government Procurement
Agreement?
7. Investment regime - Transport equipment
Romania has notified to the WTO its investment legislation (L71/1994), which requires,
among other things, a 60 per cent minimum local content, as both a TRIM and a subsidy.  What steps
is Romania planning to take to ensure that its investment regime comports with its WTO obligations
when the transition period expires?
8. Services
Romania currently does not guarantee the ability of foreign service suppliers to purchase land
necessary to carry out services activities.  Has the situation evolved?  How are foreign service
suppliers treated in practice?
9. Insurance Services
When does Romania expect to have the new law in place liberalizing foreign access to
Romania’s insurance market?  Will it pertain to all types of insurance?
Will the planned work to enhance the role of the Insurance and Reinsurance Activity
Surveillance Body bring its practices closer to GATS norms?
In light of the small number of authorizations  granted to private insurance companies, the
practice of the Insurance an Reinsurance Activity Superveillance Body would not seem to be inWT/TPR/M/60
Page 37
accordance with GATS Article VI and the prudential clause.  Please explain.  Please describe the
current practice?
10. Audiovisual Services
Romania states that "This legislation (L41/1 994) was ... modified to harmonize with the
European Union’s Directive 89/552/EEC (televisi on without frontiers), as modified .… Such
harmonization is also a condition for Romania’s participation in the EU-funded support programmes
for the development of the audiovisual sector."  What does Romania mean by stating in Section 3(iii),
Audiovisual (para. 3), that "Such harmonization is also a condition for Romania’s participation in the
EU-funded support programmes ..." ? (WT/TPR/S/160, page 97, paragraph 68.)  Is such a "condition"
written into the programmes’ rules and regulations?  If so, where is such a condition written?
Romania reports that its Audiovisual Law (L 19/1999) states that "up until 1 January 2003,
operators should broadcast a majority of European works "in a progressive manner, and where
practicable and by appropriate means" (WT/TPR/S/160, page 97, paragraph 69).  What will happen to
the "where practicable" language in Romania’s Audiovisual law after 1 January 2003?
11. Financial Services
Romania made high quality commitments in the (non-insurance) financial services sectors it
bound under the 1997 Financial Services Agreement. Agreement.  These commitments make
Romania a more attractive destination for foreign investment in the financial sector, which will aid
efforts to strengthen the financial system.  As a reflection of this, the Secretariat’s report notes thatforeign investors have already played an important role in the privatization of two state-owned banks.
We encourage Romania to continue its efforts to strengthen its financial system, including through
continued privatization of remaining state-owned banks and improvements in prudential regulation.
While Romania's financial services commitments are strong overall, we note that Romania
did not bind many important financial services subsectors under the 1997 agreement, such as:
- Trading (for own account or account of customer) of basic financial assets such as
foreign exchange, money market instruments,  exchange and interest rate instruments,
and gold bullion;
- financial leasing;- pension fund management; and- the full spectrum of financial advisory and information services.
Commitments in these areas would further support Romania's efforts to build stable and
efficient financial markets.  We would appreciate hearing to what extent Romania would consider
making commitments in these areas in the future.
Questions from the Republic of Korea
1. Taxes on products assessed at the border
The Secretariat's report mentions that, at the border, Romania levies customs duties, an import
surcharge (4 per cent in 1999), a customs commission (0.5 per cent) specific or ad valorem  excise
taxes on certain products (including automobiles) on top of which a basic VAT rate of 22 per centapplies.WT/TPR/M/60
Page 38
Also, Romania has concluded a number of free-trade agreements in recent years, implying
that signatories of these agreements enjoy preferential access to the Romanian market.  Because
Romania applies high MFN rates on many products, products from partners of FTAs enjoy a marked
advantage.
Is the Romanian Government envisaging lowering its MFN tariffs and taxes?  Also, as there
remain wide gaps between most bound and applied rates - the report states that "average applied
rates have remained steady at 16%, well below the bound level of same 35%" (WT/TPR/60, page ix,
paragraph 15) - is the Romanian Government planning to bridge such gaps, given the degree of
uncertainty they create?
2. Investment regime
The Secretariat's Report mentions that "Article 6 of L36/1999 on the State Budget, as
interpreted by OU32/1999, suspended the incentive under OU/92/1997 as modified by L241/1998.
The suspension does not notify the incentive granted to investors under any of the previously
applicable investment regimes.  The suspension is intended to help bring the budgetary deficit withinthe target of 2.5% of GNP, in order to facilitate macroeconomic stabilization, which is one element of
the strategy for attracting foreign investment.  Investment incentives are generally considered to be
ineffective, but the suspension appears to have damaged Romania's reputation with foreign investors."
(WT/TPR/S/60, page 60, paragraph 94).
Are there any measures that the Romanian Government plans to take in order to maintain its
reputation with foreign investors, while ensuring that investment incentives are effective, keeping in
view that foreign direct investment has great pros pects to be a significant source of economic growth
in Romania?
3. Industry - textiles and clothing
The Secretariat's report states that "imports of textile and clothing products in Romania are
free of quantitative restrictions, but are subject to a relatively high level of tariff protection at the
border." (...) In particular, tariffs apply on carpets (40 per cent) and garments for women, men, girls or
boys (35 per cent)", (WT/TPR/S/60, page 92, paragraph 48).
Can Korea expect such tariffs to be substantially lowered in the near future?  The
Secretariat's report mentions that "tariffs wi ll be eliminated by 2002" (WT/TPR/S/60, page 92,
paragraph 48).  It is not clear which trading partners will be affected by such elimination.  We would
like to be provided with more information on this aspect.WT/TPR/M/60
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ANNEX II
WRITTEN REPLIES BY ROMANIA
Questions from the United States on audiovisual services
1. Romania states that "This legislation (L41/1994) was modified to harmonize with the
European Union's directive 89/552/EEC (television without frontiers), as modified … Such
harmonization is also a condition for Romania's participation in the EU-funded support programmes
for the development of the audiovisual sector."  What does Romania mean by stating that "such
harmonization is also a condition for Rom ania's participation in the EU-funded support
programmes"? (WT/T PR/S/60, page 97, paragraph 68)?  Is such a "condition" written into the
programme's rules and regulations?  If so, where is such a condition written?
Reply:  The preparation of Romania's accession to the European Union requires the progressive
alignment of its legislation with that of the Co mmunity, including in the audiovisual sector.  The
evolution of Romanian legislation in this sector reflects that alignment.
The conditions for Romania's participation in EU-funded support programmes for the
development of the audiovisual sector are decided on a case-by-case basis.  The general conditions are
established in a Protocol to the European Agreement between the EU and Romania.  The conditionsapplicable to each programme are set forth in a supplementary bilateral agreement.
The EU-funded support programme for the development of the audiovisual sector is based on
two Council Decisions (95/563/EC and 96/564 /EC).  The preamble to decision 95/563/EC
(paragraphs 4 and 16) establishes a link between these programmes and the relevant Community rulesin that sector.  In particular, the programme refers to European works, as provided for under the
Community rules.  In other words, the European Commission clearly established as a condition for
participation in the Media II programme an alig nment with the Community rules.  Thus, Romania
introduced changes in its audiovisual legislation that would bring its rules closer to the Community
rules and enable it to participate in the programme.
2. Romania reports that its Audiovisual Law (L19/1999) states that "up until 1 January 2003,
operators should broadcast a majority of European works 'in a progressive manner, and where
practicable and by appropriate means' "(WT/T PR/S/60, page 97, paragraph 69).  What will happen to
the "where practicable" language in Romania's Au diovisual Law after 1 January 2003?  What does
Romania mean by stating that "such harmonization is  also a condition for Romania's participation in
the EU-funded support programmes" (WT/TPR/S/60, page 97, paragraph 68)?  Is such a "condition"written into the programme's rules and regulations?   If so, where is such a condition written?
Reply:  The clause " in a progressive manner, and where practicable and by appropriate means" in
Romania's Audiovisual Law (L19/1999) provides fo r a progressive application of the principle
"through mandatory standards developed by the National Audiovisual Council".  This flexibility will
be unaffected by the 1 January 2003 deadline.  Moreover, it is possible that these provisions couldevolve before 2003, inter alia  owing to the evolution of the Community rules.
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