WT/TPR/S/60 Trade Policy Review
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III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) OVERVIEW
(i) Trade in goods
1. Participants at Romania's first TPR in December 1992 had congratulated the authorities on the
basic reform of the trade regime since 1989 – both the end of the state's monopoly on trade and the
use of the customs tariff as the main instrument of commercial policy.  Participants were howeverconcerned about the stability and predictability of the tariff regime and recommended an increase in
the level of bindings;  Romania bound all its lines in the Uruguay Round.  Participants also queried
the practice of temporary customs duty reductions or exemptions subject to tariff quotas.  The practice
intensified in 1995-96, but was insignificant in 1997-98.  The Government's Programme for
1998-2000 contains the trade policy objective of further enhancing the stability and neutrality of theregime for imported products.  Moreover, responding to another concern of participants, Romania
introduced in 1997 a new Customs Code to unify the regime for importers and exporters in a single
framework, and approximate to the EU Customs Code.
2. In mid-1995, Romania implemented the results of the Uruguay Round for agricultural
products by applying the levels of MFN tariff rates bound in Schedule LXIX.  Substantial reductionswere made on a temporary basis in 1997, and were largely maintained in 1998 and 1999.  These
reductions brought the simple average MFN tariff on agricultural products down to 33.9% in 1999,
compared with a bound rate of 134.1% according to Schedule LXIX;  if the authorities find it
necessary, this leaves room for tariff increases within bindings.  On non-agricultural products, applied
rates remained steady at 16% throughout the period under review, well below the bound level of some
35%.  Furthermore, Romania did not take any anti-dumping, countervailing or safeguard measures in
the period under review.  Finally, Romania lifted all remaining bans and quantitative restrictions onexports as of 1 January 1998, replacing them with automatic licensing for statistical purposes.
3. The scope of application of Romania's MFN rates is narrowed by the free-trade agreements
with partners in the region – the European Union (EU), EFTA, the CEFTA countries, Turkey and
Moldova – as well as by preferences for developing countries under the GSTP agreement.
Preferences mainly concern non-agricultural products and, as between preferential origins, theirmagnitude is greater, in 1999, on CEFTA origins than the EU or EFTA.  This is due, however, to the
back-loading of Romania's liberalization commitments under the free-trade agreements with the EU
and EFTA.  When Romania eliminates the remaining tariffs on non-agricultural imports from the EU
and EFTA in 2002, more intense competition on the domestic market will prevail, especially for
sensitive products such as footwear, and textile and clothing products.
4. In addition to customs duties, Romania applies at the border an import surcharge, a customs
commission, excise taxes on certain products (mainly tobacco products, alcoholic beverages, coffee
and automobiles), and a basic rate of VAT of 22%.  Given the relatively high levels of duties and
taxes on certain products, developments of particular concern to the authorities are smuggling,
customs fraud and improper conduct by customs personnel.  In response, the authorities havestrengthened controls at the border, although importers may regard the resulting procedures as
complex, cumbersome or time-consuming.  The authorities introduced a new system of
documentation in 1999 to monitor the production, importation and domestic sale of tobacco products,
alcoholic beverages, and coffee, which may also be regarded as cumbersome.
5. Participants at Romania's first TPR noted the customs duty component of incentives available
to foreign investors, which continued to operate in a modified form throughout the period underRomania WT/TPR/S/60
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review.  The incentive for all domestic and foreign investors was suspended in 1999 for budgetary
reasons, but incentives continue to apply to oil and gas exploration, regions disadvantaged by the
closure of coal mines or to certain designated in vestments of at least US$50 million.  In addition, the
authorities grant excise tax reductions to tobacco products and motor vehicles produced with local
content.  The authorities have periodically used a tax incentive to stimulate domestic production for
export;  the latest such measure, a reduction of 50% on the tax on profits from exports of goods andservices, was in force in 1997, was suspended in 1998, reintroduced on 1 January 1999, but suspended
in March 1999 for budgetary reasons.
(ii) Internal measures
6. Progress in establishing a framework for private sector development had been noted at
Romania's first TPR in 1992, and this process continued during the period under review.Improvements made by Romania include transparency requirements for business operations, a
simplified incorporation procedure, a profits tax, and a new bankruptcy procedure.  Key developments
on investment in 1998 are current account convertibility and the principle of equality between foreign
and domestic investors, thus establishing a uniform business framework for all companies established
in Romania.  However, the investment incentive has been repeatedly modified during the period underreview, suggesting that stability is an outstanding challenge for the authorities.
7. Romania's legislative efforts for private sector development reflect the commitment under the
Europe Agreement to approximate to the European Union.  The EU approach was used for Romania's
new framework for regulations and standards, and also  for competition policy.  In the latter case, the
authorities recognize that the addition of a law on state aids is essential, and a draft is currently under
consideration in Parliament.  Government procurement is another area where approximation is an
objective for the future.  However, the authorities dropped the national preference of 20%, introducedin 1995, which had prevented Romania from fully realizing the benefits of competition in the
expenditure of public money and achieving a better fiscal balance.
8. Under the Europe Agreement, Romania made the commitment to provide a level of protection
of intellectual property rights, and a means of enfo rcement, similar to that in the EU by 2000;  the
process is almost complete.  Romania has adopted new standards, inter alia,  for the protection of
copyright, trade marks and industrial designs.  Romania also intends to close the remaining gaps
between the domestic legislative framework and the TRIPS Agreement by the end of 2000, including
by a law on enforcement of rights at the border.  The authorities are of the view that standards for
protection of intellectual property rights in Romania are adequate, but that effective enforcement is an
outstanding challenge, mainly due to the resources  needed to investigate infringements, and the
diminished deterrent effect of fines eroded by high levels of inflation.
(2) M
EASURES DIRECTLY AFFECTING IMPORTS
(i) Registration and customs
(a) Registration
9. Romania does not have separate registration requirements for commercial operators engaged
in foreign trade activities;  natural and legal persons engaged in commercial activity are required to
register with the Trade Registry, and those with foreign trade activities in their constitutive act may
perform import and export transactions (section (4)(i)).1  The great majority of operators engaged in
                                                     
1 Article 1 of HG215/1992.  According to a notification made to the WTO in 1996, G/LIC/N/3/ROM/1,
operators were required, before performing the first foreign trade operation, to obtain the "SICOMEX CODE"WT/TPR/S/60 Trade Policy Review
Page 34
foreign trade are private, estimated at over 30,000.2  However, the private sector share in foreign trade
was just under 50% in 1998, the remainder being accounted for by state-owned enterprises, in line
with their continuing importance in Romania's economy.  The private sector share of 50% however
represents an increase from the share of 30% noted in the Secretariat's Report for Romania's first TPR
in December 1992.3  Also of note is the importance of mineral products in Romania's imports – about
20% in 1998 – the exclusion of which brings the import share of the state sector down to 44.5%.
(b) Customs Code of Romania
10. Romania introduced a new Customs Code in 1997 (L141/1997), to replace the previously
applicable 1978 Customs Code of the Socialist Republic of Romania (L30/1978 as modified);  the
new Code was also designed to approximate to the EU Customs Code.4  The authorities notified of the
Customs Code to the WTO (G/VAL/N/1/ROM/2), and provided the Secretariat with unofficialtranslations of the Customs Regulations ( HG626/1997) for the purpose of this Review.
11. All goods entering or exiting Romania are su bject to customs control, to ensure strict
compliance with the legal conditions and terms for importation and exportation.  To this end,
document inspection is mandatory on all shipments, and physical inspection may also be carried out.
In the future, Romania intends to introduce a simplified procedure for customs control.  Based on thenature of the product, whether it is subject to excise taxes, the customs regime, and information on the
commercial operator, shipments will be channelled into a red line (document and physical inspection),
a yellow line (document inspection), and a green line (automatic customs clearance).  The authorities
also intend to locate customs clearance for exports at certain production units in Romania.
(c) Customs destinations
12. Goods entering or exiting Romania may be assigned to one of three customs destinations:
placement under a customs regime, admission to a free zone, re-exportation from the Romanianterritory.  A customs regime is either definitive (importation, exportation or trade in goods for
personal use) or duty-suspensive (transit, bonded warehousing, inward processing, processing under
customs control, temporary admission, and outward pr ocessing), admission to the latter requiring the
authorization of the Customs Authority.   Another destination is the "free zone", established in the
maritime and river ports of Romania, along the Danube-Black Sea Canal and other navigable canalsand in the neighbourhood of frontier checkpoints (L84/1992).
5  Customs controls are applicable only
at the frontiers of such zones; ordinary custom s procedures apply to the exportation of Romanian
goods into such zones or the importation of goods from the free zones into Romania.
                                                                                                                                                                    
for statistical purposes, and the registration fee was lei 40,000 (about US$12);  these two requirements were
eliminated in March 1997.
2 U.S. ITA (1998a).
3 GATT (1993), Vol. I, p. 54.
4 CCIR (1997).
5 Five free zones have been established:  Sulina (HG156/1993), Constanta-Sud (HG410/1993, modified
by HG191/1997), Galati (HG190/1994), Braila (HG330/1994) and Giurgiu (HG788/1996, modified byHG336/1998).  The operations permitted to be carried out in a free zone are:  handling, storage, sorting,measuring, packaging, processing, assembly, production, branding, testing, auction, sale-purchase, expertise,
repairs, knocking down of goods, organization of exhibitions, stock exchange and financial-banking operations,
transports and domestic or international deliveries, leasing or renting of buildings, storage areas or vacant spacesfor the construction of economic or hotel units, quality and quantity control of goods, freighting, supplying ofships and other transportation means, services and other activities specific to free zones.  The licences foroperations in free zones are obtained from the Free Zones Agency in the Ministry of Transport.Romania WT/TPR/S/60
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(d) Customs Authority
13. The Customs Authority is structured in three levels: customs offices and sub-offices
established at border crossings;  regional customs directorates;  and the Directorate General of
Customs.  The offices are the operative units engaged in customs clearance.  To prevent infringement
of the customs regulations, a customs surveillance control area applies at the perimeter of Romania's
territory, within which the Directorate for Surveillance and Customs Control (HG32/1993), mayoperate permanent, temporary or mobile customs surveillance points.  This Directorate may also
engage in surprise control, pursuit and identification of persons suspected of infringing the customs
regulations.
14. The statute of the customs personnel provides for minimum qualification levels for entry,
hiring by competition, salaries, and conditions for advancement (OG16/1998).   (Stricter provisionsfor improper conduct of customs personnel than those in the Penal Code depend on the approval by
Parliament of the Law on the Prevention of Corruption.)  To stimulate the enforcement efforts of
customs personnel, the authorities established a fund to increase the well-being of the personnel
(HG507/1998), which consists of a portion of the amounts collected at the border in the form of fines,
penalties or confiscation of goods.  The authorities report that the new enforcement incentive resultedin a doubling of the amounts collected by customs, from US$926.3 million in 1997 to
US$1,846 million in 1998, of which US$1.1 million was made available to the fund.
(ii) Customs clearance procedures
(a) Documentation
15. According to Article 45 of the Customs Regulations, the import bill of entry (which also
applies to exports) must be submitted for acceptance and registration to the Customs Authority,
supported by the following documents:
- the transport document of the cargo;
- invoice, whether original or copy, or any other document attesting to the customs
value of the consignment;
- the customs value declaration (Annex 5 of the Customs Regulations)
6;
- documents making the consignment eligible for application of preferential customs
tariffs or for derogation from the basic customs tariff regime (e.g., certificate of
origin);
- any other document required by the specific legal regulations valid for the import of
the goods mentioned in the bill of entry (e.g., licence, certificate of conformity);  and
- the titleholder’s fiscal code.
Goods under a duty-suspensive regime require the authorization of the Customs Authority.7
                                                     
6 At the time of Romania's first TPR in 1992, this declaration and the instructions for its completion
were established by Order 3/1992 of the Ministry of Finance, the relevant portions of which were notified to theWTO in G/VAL/N/1/ROM/1 and examined by the Committee on Customs Valuation.
7 Articles 48 and 50 of the Customs Regulations.WT/TPR/S/60 Trade Policy Review
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16. According to Article 62 of the Customs Code, "the presentation of the goods, the submission
of the customs declaration – the general and items declaration – as well as the warding and handling
of the goods in the warehouse can be carried out with the authorisation of the General Customs
Directorate and by the Romanian legal persons who hold the authorisation of customs brokers".
Thus, in principle, an importer can obtain the authorization from Customs or hire a customs broker to
handle customs clearance.8  The customs broker, initially established in 19969, provides an option for
the commercial operator to avoid direct contact with the customs officer.10  According to the
authorities, approximately 80% of shipments are cleared by customs brokers.
(b) Customs debt
17. The customs value declaration is stamped and registered by the Customs Authority after
customs control, at which point the importer incurs a customs debt covering import or export duties.According to Article 3(i) of the Customs Code, the term "import  duties" covers "customs taxes, VAT,
excise duties and any other sums due to the State upon the importation of goods".  The importer is
required to post a guarantee covering the customs debt with the Customs Authority in the form of a
cash deposit in the national currency or a bank cheque accepted by the authorities.  The customs debt
is settled upon payment of the customs duties and taxes, cancellation of the customs value declaration,or other specified eventualities.
18. Under Article 151(3) of the Customs Code, the General Customs Directorate may grant
exemptions from the obligation to guarantee the customs debt
11, for various categories of goods,
including those subject to governmental agreements or under a duty-suspensive regime.12  To obtain
such an exemption, the importer files an application with the regional customs directorate in the
region where the customs office is located, together with the supporting documentation (e.g., the
customs authorization for the goods received under the duty-suspensive regimes of warehousing,inward processing, transformation under customs control and temporary admission).  The application
is then examined by a deciding committee.
                                                     
8 According to Article 80 of the Customs Regulations, "the customs broker is the Romanian legal entity
established according to law which assumes the duty of performing in the interest of and on behalf of athird party the following operations:  detailed declaration entered inwards or outwards or goods in transit,warehousing and other customs operations, presentation of goods with a view to customs control and payment
of import/export duties to the Customs Authority".
9 The technical norms for the licensing of customs brokers were established by Decision 1075 of the
Director General of Customs, and modified by DMF332/1998.  Persons having obtained the status under thepreviously applicable HG149/1996 could apply for the same status under the Customs Code of Romania, subjectto a satisfactory fulfilment of the applicable conditions.
10 CCIR (1997).
11 Order 1909/1998 of the Ministry of Finan ce, which replaced previous orders (OMF349/1994,
HG94/1994, OMF486/1995, OMF804/1996).
12 The list also includes:  (1) vessels, airplanes, he licopters, locomotives and railway cars, under inward
processing traffic with the suspension of import rights, to be repaired and returned to the foreign partners;(2) merchandise under the transit customs regime, if this is operated under surveillance of units subordinated tothe Directorate for Surveillance and Customs Control;  (3) agricultural machinery and equipment from Moldova
under the temporary admission customs regime with partial exemption from the payment of customs duties, for
work in agricultural campaigns; (4) goods which are granted customs custody for completing some products(before lodging the import bill of entry) and which cannot be imported wholly by a single shipment;  and(5) raw materials, parts and accessories sent by fore ign customers for executing export orders for the same
customers, under inward processing traffic with the suspension of import rights.Romania WT/TPR/S/60
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(c) Customs valuation
19. Article 66(2) of the Customs Code provides that the customs duty is applied only on an
ad valorem  basis;  no specific duties are applied on any product, whether agricultural or
non-agricultural.  This feature of the customs regime of Romania, already in place at the time of the
first TPR in 1992, enhances the transparency of the customs tariff.  Romania also retained
substantially the same principles of customs valuation as the previously applicable procedures notifiedto the WTO.
13  Thus, Article 77 of the Customs Code states that the customs value is determined in
accordance with the Agreement on Implementation of Article VII of the GATT 1994 ("Customs
Valuation Agreement"), and includes transportation, handling and insurance costs.  Foreign currency
values are converted to the national currency according to exchange rates published weekly by the
National Bank of Romania.
20. According to Article 113 of the Customs Regulations, when the customs office has reason to
doubt the accuracy of the information supplied or documents presented for the purpose of customs
valuation, it can require the importer to submit additional documents or evidence.  If such documents
fail to prove the declared value, the Customs Authority may decline to apply the transaction value
method, providing the importer with a written decision upon request.  In such cases, provisionalcustoms clearance may be granted on condition that the importer submits a guarantee for the
maximum amount that the customs debt could be.  If, within 30 days of such provisional clearance,
the importer fails to present the requested documents to Customs, the clearance is deemed final and
the guarantee enforced.
21. A measure that was in place for the period 1993-98, but halted for 1999, was comparison
values (in United States dollars) for certain imported products subject to tariffs, VAT and excise taxes
(mainly coffee, cigarettes, and spirits), on which customs control was mandatory.
14  The customs
officer checked the comparison value against the invoiced price and, if the importer agreed, the
comparison value was used as the basis for final customs clearance, and if not, provisional customs
release was granted.  Unless the importer submitted "conclusive documents" to the customs
authorities within 30 days, the guarantee was enforced and customs clearance declared final. 15  I n
such an event, the customs authorities stated on  the Customs Value Declaration that the comparison
value method (under Article 2 of the Customs Valuation Agreement) was used.
                                                     
13 The relevant portions of Article 8 of OG26/1993, as approved and modified by L102/1994, were
notified to the WTO in G/VAL/N/1/ROM/1, and were retained in Articles 66(2) and 77(1) of L141/1997establishing the Customs Code of Romania (which abrogated Article 8 of  OG26/1993).
14 Orders 76/1993 and 13/1994 of the Ministry of Finance, followed by HG864/1995, as modified by
HG954/1995, HG152/1996 and HG1126/1996.  According to the latest such decision, HG940/1997 as modifiedby OMF1545/MIC220795/1998, the products subject to mandatory customs controls in 1998 were:  coffeebeans;  soluble coffee;  sunflower seed oil;  biscuits;  olives and other preserved vegetables, frozen andunfrozen;  beer;  ethyl alcohol;  whisky, gin, vodka and liqueurs;  cigarettes;  liquid and powder detergent;matches;  plastic bags;  used and new tyres of rubber.
15 The list of justifications, documents and records required for solving complaints and claims of
importers are listed in Annex 2 to HG940/1997:  price tenders of the producer of the goods;  commercialinvoice;  the sale-purchase contract;  transport documents;  specification lists;  insurance policy;  invoicesrelated to export of identical or similar goods to other countries than the import country;  statute of the importercompany;  statute of the exporter company;  documents on the relation between the importer and exporter;  dataon the bookkeeping records of the importers;  payment orders of hard currency, endorsed by the bank;
statement of the hard currency account out of which the payment was made;  the document on taking delivery of
the goods;  accountancy note on goods registration and their payment;  sale documents to domesticbeneficiaries;  documents for currency exchange on the currency market;  any other justification or record of therespective transaction.  Annex 2 of HG940/1997 is identical to the "conclusive documents" required underprevious decisions establishing mandatory customs controls.WT/TPR/S/60 Trade Policy Review
Page 38
22. Products are no longer subject to mandatory customs controls in 1999.  Instead, the invoiced
prices of certain products (mainly coffee, cigarettes, and spirits) are compared with the values in the
internal statistical database of the Customs Authority.  The use of the database is limited to cases
where the customs officer has reason to doubt the accuracy of the documents or information supplied
by the importer, in which case provisional customs clearance is granted after payment of the customs
debt based on the submitted invoice and a guarantee for the difference between that amount and thecustoms debt based on the comparison value method.  The guarantee is enforced by the
Customs Authority after 30 days unless the importer submits "conclusive documents" to the
customs authorities.
23. Article 109(5) and (6) of the Customs Regulations provides rules on customs valuation for
new and used motor vehicles, including cars, all-terrain vehicles, trucks, motorcycles and trailers(HS items 8702, 8703, 8704, 8711 and 8716).  For new cars, the customs value is established on the
basis of the price in the invoice issued by the manufacturer or by its immediate dealer.  For used cars,
the customs value is established by an order issued by the Minister of Finance, per individual type,
age, and the vehicle's technical characteristics.
(d) Appeals
24. The appeal process has three stages.  The importer first complains against the decision of the
customs office, which must issue a ruling within 30 days.  An importer not satisfied with this ruling
may contest it at the regional customs directorate, which solicits the advice of a commission of
experts, and issues a ruling within 30 days.  The commission is composed of a legal advisor of the
regional customs directorate, an expert in customs matters from the regional customs directorate, and
an expert in foreign trade designated by the president of the chamber of industry and commerce for
that county.  The stamp tax for the complaint procedure is 1% of the value of the duties and taxes,subject to a minimum amount of lei 10,000 (less than US$1).
16
25. The ruling of the regional customs directorate can be either overturned by the General
Customs Directorate on its own initiative, or be contested by the importer to the General Customs
Directorate;  the number of such actions was 32 in 1995, 136 in 1996, 183 in 1997 and 197 in 1998.
The General Customs Directorate solicits the advice of a commission, and issues a ruling within30 days.  The commission is composed of a legal advisor of the General Customs Directorate, an
expert in customs matters from the General Customs Directorate, and a representative of the National
Association of Importers and Exporters of Romania.  This ruling can then be appealed to a county
court or to the Court of the Municipality of Bucharest, and is heard by the section responsible for
complaints against the administrative authorities.
(iii) Customs duties
(a) Schedule LXIX - Romania
26. Schedule LXIX contains bindings on all lines, both agricultural and non-agricultural products,
and notes the customs commission of 0.5%.  According to the authorities, Romania established a
simple average base rate of duty of 142% on agricultural products in the context of the tarifficationexercise of the Uruguay Round, to be reduced to 112% (a reduction of 21%) at the end of the
                                                     
16 For example, the appeal of a decision on imports valued at US$100,000, on which a customs debt of
US$10,000 applies, would be subject to a stamp tax of US$100, payable in lei.Romania WT/TPR/S/60
Page 39
implementation period of 1995-2004.17 By 2004, the highest bound rates on agricultural products will
be 333% on swine meat (HS 0203), also subject to a special safeguard provision, and 315% on frozen
bovine meat (HS 0201), edible offal (HS 0206) and wine (HS 2204).
27. Romania also committed to establishing tariff rate quotas for imports of 12 agricultural
products from WTO Members during the period 1995-2004:  meat and edible offals of pork or bovine
meat;  powder milk;  cheese;  potatoes for seeding;  chocolate;  other pasta;  ice-cream;  beer;vermouth;  ethyl alcohol;  and cigarettes.  Romania opened tariff quotas in 1999 only for beer and
vermouth, on which import licences are required;  the remaining scheduled tariff quotas could be put
into effect if applied MFN rates rose above applicable in-quota rates.  Certificates for in-quota imports
are allocated on a first-come-first-served basis, with a limit of 5% of the total quota per allocation,
taking into account the usual commercial shipment for each product.
18
28. On non-agricultural products, Romania entered the Uruguay Round with a small number of
Tokyo Round bindings and the zero-tariff commitments on products covered by the 1979 Agreement
on Trade in Civil Aircraft (a plurilateral agreement of the WTO).  As a result of the Uruguay Round,
Romania introduced bindings on other lines at 35%.  Since the entry into force of the WTO, Romania
has modified Schedule LXIX to implement HS 1996 and the Ministerial Declaration on Trade inInformation Technology Products (commonly referred to as the "Information Technology Agreement"
(ITA)).  Accordingly, Romania will eliminate by 1 January 2000 the tariffs on products covered by
the ITA, on which the customs commission has already been abolished.
(b) Import Customs Tariff of Romania
29. The Government's Report for Romania's first TPR had noted the introduction of the Import
Customs Tariff of Romania (HG673/1991)
19, based on HS 1992 and containing 5,018 lines at the
six-digit level.   In 1993, the tariff was replaced (OG26/1993), and transposed to the eight-digit level
to implement the EU Combined No menclature (CN) tariff classification (HG120/1993), as agreed by
Romania in the Europe Agreement.  The tariff was then modified on 1 July 1995 by the introduction
of the bound levels in Schedule LXIX on most agri cultural products (HG353/1995).  Romania ratified
the HS 1996 Convention by L98/1996;  there is a one-to-one correspondence between the CN and the
HS 1996 up to the six-digit level.  Romania's tariff contains 10,587 eight-digit tariff lines.
30. The Ministry of Industry and Commerce issues annually a guide on the tariff ( Ghid de
Utilizare a Tarifului Vamal de Import al Romaniei ) as a reference for importers and the Directorate
General of Customs.20  The first two columns of the guide report the MFN rate:  the tariff provided by
the law or statutory rate ( taxa vamala );  and the applied rate (in the latest guide,  taxa vamala 1999 ), if
different.  The other 11 columns report the customs duties applied to imports from origins covered bypreferential conventions and international agreements, if different:  EU, Turkey, EFTA, each of the
CEFTA origins (Bulgaria, Czech Republic, Hung ary, Poland, Slovak Republic and Slovenia)
21,
developing countries under the Global System of Tr ade Preferences (GSTP) or under the "Protocol of
                                                     
17 According to the European Commission, "Romania was able to set very high binding ceilings for
agricultural products" (DGVI, 1998, p. 96).  According to the IMF "Romania now has one of the highestagricultural tariff bindings of any country in the EU and Central and Eastern Europe", (IMF, 1997, p. 56).
18 Notified to the WTO in G/AG/N/ROM/1 and G/AG/N/ROM/4.
19 GATT (1993), Vol. II, pp. 52-55.
20 Government of Romania, Ministry of Industry and Commerce (1998).  Made available in database
format to the Secretariat for the purpose of the TPR.  Romania made a submission to the IDB on 26 May 1999.
21 Tariff preferences are granted under CEFTA accordi ng to the bilateral agreements concluded by each
of the parties with the other parties, and the tariff treatment varies accordingly (Chapter II(4)(iv)(c)).WT/TPR/S/60 Trade Policy Review
Page 40
16". Note that customs duties are not applied in bilateral trade with Moldova, whose relations with
Romania were formalized in a free-trade agreement in 1994.
31. The distinction between statutory and applie d rates is only meaningful for agricultural
products.  On non-agricultural products, the equality between the simple average applied and statutory
MFN rates, 16.2% in 1999, indicates a stable tariff during the period under review, well below the
bound rate of some 35% (Table III.1).  On agricultural products, in contrast, the substantial gapbetween the simple average MFN applied rate of 33.9% in 1999 and the statutory rate of 134.1% is
due to liberalization of tariffs on agricultural products since 1997.  The higher statutory levels of July
1995 (HG353/1995) were largely maintained as a pplied rates until April 1997 (HG1055/1995), when
reductions were made (HG161/1997), maintain ed for 1998 (HG947/1997) and further reduced
(HG237/1997).  In 1999, applied rates were again re duced, with the exception of alcoholic beverages
(HG935/1998).
22  Levels of applied rates on agricultural products require annual renewal by
governmental decision.
Table III.1
MFN and preferential tariffs, simple averages, 1999(Per cent)
Origin Agricultural products Other products All products
MFN
Statutory 134.1a16.2 40.0
Applied 33.9 16.2 19.8
Preferential
European Union 31.6 7.0 12.0
Turkey 32.5 7.1 12.2
EFTA 32.2 6.1 11.4
CEFTA
Bulgaria 22.7 0.9 5.3
Czech Republic 22.8 0.0 4.6
Poland 22.6 0.6 5.0
Slovak Republic 22.8 0.0 4.6
Slovenia 24.6 0.5 5.3
Hungary 22.8 0.9 5.3
GSTP 33.2 15.9 19.4
Protocol of 16 32.7 15.4 18.9
a Corresponding to rates bound in Schedule LXIX.
Notes: 1.  WTO definitions of agricultural and other products.
2.  See Tables AIII.1 and AIII.2 for applied MFN and preferential tariffs, respectively.
Source : WTO Secretariat calculations based on data provided by the Romanian authorities.
32. The gap between applied and statutory rates leaves room, if the authorities find it necessary,
for tariff increases within bindings on agricultural products (Table AIII.1).  In absolute terms, the
highest gaps are in the product categories "preparations of cereals, flour, starch or milk;  pastrycooks'products" (a statutory rate of 198.8% compared with an applied rate of 29.1%), "beverages, spirits and
vinegar" (288.2% compared with 121.1%), and "cocoa and cocoa preparations" (194.7% compared
                                                     
22 Article 70 of the Customs Code of Romania permits the Government to decide on temporary
modifications to applied rates, for a calendar year or period thereof;  Article 70 replaced Article 35 of
OG26/1993, which provided for this authority,  previously in Article 19 of HG673/1991.Romania WT/TPR/S/60
Page 41
with 39.2%).  The highest applied rates in 1999 were 248% for beer and 144% for wine, vermouth
and other fermented beverages – these products also correspond to those subject to peaks (defined as
above 100%, or three times the average applied MFN rate on agricultural products) in Romania's
applied tariff for 1999.
33. Selected liberalization measures for non-agricultural products during the period under review
include the reduction of duties on raw hides and skins and furskins (HG237/1997), maintained in1998 and 1999, and the reduction in the tariff on cotton (HG80/1998), maintained in 1999.  Romania
also implemented the first, second and third-stage reductions for products covered by the ITA on
31 December 1997, 1 January 1998, and 1 January 1999, respectively, in accordance with the agreed
timetable.  There are no non-agricultural product categories subject to peaks (defined as above 48.6%
or three times the average applied MFN rate on such products) in 1999.  A degree of tariff escalation,particularly between the second and third stages of processing, is evident.
34. A comparison between the simple averages of the rates applied on different preferential
origins reveals that preferences mainly concern non-agricultural products and, as between origins,
their magnitude is greater in 1999 on CEFTA origins than the EU or EFTA (Table AIII.2).  This is,
however, the result of the "back-loading" of Romania's liberalization commitments in the agreementswith the EU and EFTA on sensitive products to 2002.  Footwear, and textile and clothing products
account for two thirds of the product categories impor ted from the EU subject to preferential rates of
15% or more in 1999 (Table AIII.3).  By 2003, when tariff elimination on covered products will be
completed, the preferences accorded by Romania under its free-trade agreements will be uniform
across origins.
35. The reductions of the applied MFN rates on agricultural products since May 1997 have
affected the opening of tariff rate quotas on agricultural products from MFN origins under Romania'sUruguay Round commitments (Table III.2).
23  In 1999, applied MFN rates on only two of the
12 agricultural products subject to tariff rate quotas – vermouth and beer – were above the in-quota
rates, making quotas redundant on the other ten products.  In addition, Romania opened a total of
73 tariff rate quotas, in 1999  (Table AIII.4), from preferential origins (except for EFTA):  EU (20),
Turkey (7), Bulgaria (9), Czech Republic (6), Poland (4), Slovakia (6), Slovenia (13) and
Hungary (8).  Such quotas are allocated on a first-come-first-served basis and each request is subject
to a ceiling allocation.  For out-of-quota imports, the applied MFN rates are in effect.
36. The practice of introducing temporary reductions  or exemptions on applied rates in the course
of the year, subject to value or volume quotas, was queried by participants at the first TPR in 1992.24
At that time, 45 tariff lines were concerned.  During the period under review, the practice intensified,
reaching a peak in 1996, in which year 654 lines were subject to tariff quotas, in most cases for
relatively short periods of time.  However, Romania shifted away from the practice starting in 1997,
in recognition of the benefits of a more stable tariff regime.  In 1998, the latest year for which
complete data are available, only four tariff lines were subject to such tariff quotas (Table III.3).
These quotas were administered by the Ministry of Industry and Commerce.
                                                     
23 Romania notified the WTO of its tariff rate quotas on meat, cheese, beer and undenatured ethyl
alcohol in G/AG/N/ROM/1, and in-quota imports in G/AG/N/ROM/5, resulting in fill rates of 5%, 63%, 22%
and 100%, respectively.  Romania notified the WTO in G/AG/N/ROM/5 of tariff quotas in 1996 on the same
four items, the fact of temporary reduced rates applied to five items, and the initial zero quotas for the remainingthree items;  in-quota imports for 1996 were also notified in G/AG/N/ROM/10.  In-quota imports for five itemswere notified for 1997 in G/AG/N/ROM/10.
24 GATT (1993), Vol. II, p. 4.WT/TPR/S/60 Trade Policy Review
Page 42
Table III.2
Tariff rate quotas on agricultural products from WTO Members, 1999
Product Tariff  item Initial quota Final quotaIn-quota tariff
rate (%)Applied MFN
tariff rate (%)
0201 19,000 tonnes 19,000 tonnes 115 40
0202 40
0203 60Meat and edible offals of bovine and
pork, fresh, chilled or refrigerated
0204 18.5
Powder milk 0402.10 500 tonnes 900 tonnes 100 45
Cheese 0406 1,600 tonnes 2,600 tonnes 110 45
Potatoes for seedinga 0701.10 0 3,300 tonnes 60 40
Chocolate 1806 200 tonnes 700 tonnes 100 45
Other pasta 1902 2,400 tonnes 3,900 tonnes 100 35
Ice-cream 2105 400 tonnes 700 tonnes 90 45
Beer 2203 400,000 hl 680,000 hl 110 248
Vermoutha 2205 0 500 hl 100 144
Undenatured ethyl alcohol (1)a 2207 0 500 hl 95 95
Undenatured ethyl alcohol (2) 2208 4,300 hl 9,600 hl 90 90
Cigarettes 2402.20 800 tonnes 1,500 tonnes 100 98
a The initial quota is nil and the final tariff quota is to be implemented in 2004.
Note: The applied MFN tariff rate for 1999 is a simple average of rates applied at the 8-digit level;  rates on all individual i tems are
below the in-quota rate unless the average is above the in-quota rate.
Source : Schedule LXIX and data provided by the Romanian authorities.
Table III.3
Temporary customs duty exemptions subject to quotas, 1998
Government
decisionProduct description Tariff itemApplied
MFN tariff
rate (%)Quota Period of validity
HG61/1998 Rails (of a weight > 20kg) 7302.10.31 15 US$60 million 02/17/98 - 31/12/98
HG212/1998 Sunflower seeds 1206.00.91 180 US$35 million 04/09/98 - 15/09/98
HG212/1998 Sunflower seeds 1206.00.99 180 US$1 million 04/09/98 - 15/09/98
HG878/1998 Sewing, wire stitching and
stapling machines8440.10.30 15 DM31.5 million 14/12/98 - 15/02/99
Source : WTO Secretariat.
(iv) Taxes on products assessed at the border
(a) Excise taxes
37. The current regime for excise taxes was established with effect from 1 January 1998
(OU82/1997 as modified).25  Excise taxes are levied on four categories of products: alcoholic
beverages, tobacco products, petroleum products, and a general category of other products (including
coffee and motor vehicles), and are identified by tariff line in Annex 1 of the implementing
regulations (Table AIII.5).
                                                     
25 Approved and modified by L196/1998, modified by OU18/1998, OU50/1998 and OG1/1999.  The
implementing regulations for 1999 are contained in Order 2577/1998 of the Ministry of Finance.Romania WT/TPR/S/60
Page 43
38. For alcoholic beverages, the excise taxes are specific.  The level on spirits depends on the
pure alcohol content, and for wines, on the alcoho lic degree, in keeping with the practice of the
Member States of the EU.  On tobacco products, excise taxes are also specific, except for cigarettes,
on which a specific rate is combined with a 20% ad valorem tax on the duty-inclusive value of the
product.26  On petroleum products, the specific excise tax is established in ECU, to provide a
consistent and stable basis for taxation as world market prices evolve.  In the category of otherproducts, the excise taxes are assessed on an ad valorem  basis.  For motor vehicles, excise taxes vary
between 0 and 18%, in accordance with engine capacity and the degree of pollution
27;  present levels
are reduced from the 50% rate that applied until the end of 1997.
39. In principle, excise taxes are levied on both imported and domestically produced products.
However, Article 9 of OU82/1997, as subsequently modified, provides for a reduction of 35% in theexcise tax on cigarettes produced with a minimum 50% local-tobacco content.  This measure is
intended, according to the authorities, to redevelop tobacco crops.  In addition, the footnote to
Annex 2 of OU82/1997 provides for a reduction of 75 % in the excise tax on motor vehicles produced
with at least 50% local content.  This measure ai ms, according to the authorities, to encourage the
domestic industry. Furthermore, under the present regime, only domestically produced crudepetroleum and natural gas are subject to excise taxes;  in contrast, both imported and domestically
produced gasoline are subject to excise taxes.  Exporters of products purchased from domestic
producers on which the excise tax is paid and which are exported within 60 days may submit a claim
for reimbursement of the tax under Article 21(a) of OU92/1997.
(b) Value-added tax
40. Romania introduced the value-added tax (VAT) on 1 July 1993 (OG3/1992 as modified).
VAT is levied at the border on imported products, and on services provided in connection withimportation, and is payable by domestic producers of  goods and services, with certain exceptions.
28  A
basic exception applies to goods and services for export, and services supplied in connection with
exportation.  In addition, the categories of products generally exempted from the payment of customs
duties are also exempted from payment of VAT.
41. For 1999, the basic VAT rate is 22%.  At the border, the VAT is assessed on the customs
value augmented by the customs duties, import surcharge, customs commission and excise taxes, if
applicable. For the purpose of social protection, Romania has established certain categories of
imported and domestically produced products that are subject to a reduced rate of VAT or an
exemption, according to Order 963/1998 of the Ministry of Finance (Table AIII.6).
42. Since 1995, Romania has permitted applicants meeting certain conditions to temporarily
suspend (postpone) the payment of VAT for certain imports listed by the Ministry of Finance, subject
to its agreement.  The latest such measure covers ut ilities, installations, equipment, and industrial and
                                                     
26 On 1 January 1998, this system replaced the previously applicable multi-tier system of taxation of
cigarettes based on the quality of the product.  L42/1993V1, republished with modifications on12 November 1995, had set the excise tax on "superior" quality (imported) cigarettes at ECU 12 per 1,000compared to ECU 2.5 per 1,000 and ECU 1 per 1,000 on medium and inferior quality (mainlydomestically-produced) cigarettes.  OMF919/1997 classified the foreign and domestic brands of cigarettes in the
three categories of quality;  the inferior quality brands were generally Romanian.
27 For example, the top rate of 18% applies to gasoline-powered vehicles with an engine capacity of
over 2,500 cubic centimetres, reduced by 50% (to 9%) for vehicles with a lower level of pollution.
28 Including activities of non-profit organizations, religious establishments, trade unions, private farms,
self-employed persons in the liberal professions.WT/TPR/S/60 Trade Policy Review
Page 44
agricultural machinery used to establish a productive unit29, and the 44 categories of raw materials
listed in the annex to OG34/1997 (Table AIII.7).  A time-limit of 60 days applies to a suspension for
raw materials and a time-limit of 120 days applies to a suspension for utilities, installations,
equipment, and industrial and agricultural machinery.  The Minister of Finance has accepted only a
few applications for suspension since the measure came into force;  these involve large amounts of
VAT, are for less than 60 days, and concern investments that could prove valid contracts for theoutput.
(v) Exemptions or reductions from customs duties and taxes
(a) General exemptions from customs duties and taxes
43. The Government's Report for the first TPR of Romania had noted that the Import Customs
Tariff of Romania provided a general customs duty exemption for seven categories of goods.
30  These
categories remained exempted during the period under review (OG26/1993, as modified by
L102/1994), and have also been introduced in the Customs Code:
- aid and donations of social, humanitarian, cultural, sports and educational character,
received by humanitarian and cultural organizations, ministries and other
administrative state bodies, trade unions and political parties, religious organizations,federations, sport associations or clubs, educational institutions, without being
destined to or used for subsidizing electoral campaigns or activities which may
threaten the national security;
- materials for tests, experiments or research; foreign goods which, according to the
law, become State assets;
- samples without commercial value, advertising, publicity and documentary materials;
donations made by foreign governments, international organizations and non-profit orcharity organizations;
- goods of Romanian origin;
- goods repaired or replaced by foreign partners within the guarantee period;
- goods received as legacy, proved by official documents;  and
- goods returned to the country as a result of wrong delivery.
In addition, a general customs duty exemption applies to:
- fish caught in waters outside the territory of Romania and imported by ships
registered in Romania and flying the Roma nian flag or fish products produced from
such fish on factory ships meeting the registration requirements in Romania and
flying the Romanian colours.
31
                                                     
29 Order 166/1997 of the Ministry of Finance superseded OMF1538/1997, which superseded
OMF779/1995.
30 GATT (1993), Vol. II, pp. 53-54.
31 Article 80 of L141/1997, which corresponds to Article 188 of the EU Customs Code.Romania WT/TPR/S/60
Page 45
(b) Direct investment
44. The Government's Report for the first TPR had noted the customs duty component of the
incentive for foreign direct investors.32  The incentive was modified during the period under review
(Table AIII.10), but in all cases, the incentive that wa s granted to the investor remains in effect until
the expiry of the period of application.  The incentive for 1998 was introduced by OU92/1997,
approved and modified by L241/1998, and extended to both domestic and foreign investors, with theendorsement of the Ministry of Finance.
 33  The incentive was suspended in March 1999 by the
State Budget, but investors having previously been granted the incentive or one under a previous
investment regime (e.g., L41/1994, OU31/1997) may continue to claim it.  Other incentives that
remain in effect for 1999 are exemptions from customs duties and VAT for title holders of agreements
for the exploration and exploitation of oil and gas fields (L134/1995), for investment in"disadvantaged" regions (OU24/1998), and for ce rtain designated investments of at least
US$50 million (OU67/1999).
(c) Leasing contracts
45. According to the regime for the importation of products leased by Romanian persons
(L90/1998, which approved and modified OG51/1997)
34, such products are considered to be imported
under the temporary admission regime, and exempted from payment of the customs debt or the
obligation to post a guarantee for the period covered by the leasing contract.  The maximum period
for a leasing contract is seven years.  If, at any time during the leasing contract, the products are
purchased by the lessee – that is definitively imported – then the customs debt is paid on the purchase
price negotiated by the parties to the leasing contract.
(d) Complex exports
46. Romania has introduced certain measures to stimulate the export of complex installations and
products with long manufactu ring cycles (OG14/1995).35  Complex installations include factories,
nuclear power and thermal energy plants, and port fa cilities.  Products with long manufacturing cycles
are defined as contracts of at least US$500,000 (ships, tractors, agricultural machinery), with a
production cycle of six months and a minimum 50% Romanian content (raw materials, labour, spare
parts, project and technical assistance) in the contract, with the exception of ships.36  Imports of parts
and components for complex exports are exempt from the payment of customs duties, the customs
commission, and VAT.  The policy purpose of the measure, according to the authorities, is to avoid
extra outlays for producers of complex exports for which imports of parts and components are
necessary.  Such extra outlays would usually be drawn back by customs upon exportation.
                                                     
32 GATT (1993), Vol. II, p. 54.
33 According to OU92/1997 as modified by L241/1998, imported tangible and intangible mobile assets
(defined by L15/1994) that constitute an in-kind contribution are exempted from customs duties and VAT, and
imported depreciable technological equipment identified on a list (HG100/1998) is also exempted from customs
duties (but not VAT).  In addition, Article 21(f) of  OU82/1997 exempted imported motor vehicles constituting
an in-kind contribution to an investment from customs duties and VAT (but not excise taxes);  this provisionwas abrogated by OU18/1998, but reintroduced by L196/1998, approving and modifying OU82/1997.
34 Repealing HG72/1993 and OG12/1995, the previously applicable regime for goods imported under
leasing contracts.
35 Notified to the WTO under Article 29.3 of the Agreement on Subsidies and Countervailing Measures
in G/SCM/N/9/ROM.
36 NT1791/1995 provided for a production cycle of more than 12 months, which was shortened by
NT101325/MC/1998, as modified by OMIC246668/MF19819/MLPAT696/CS/BE-IR1819/1998, which alsointroduced the local-content requirement.WT/TPR/S/60 Trade Policy Review
Page 46
(e) Krivoi Rog, Las Camariocas and Cao-Cun Projects
47. Prior to the start of the transition in 1989, the Government of Romania entered into contracts
for the completion of a mining enrichment project in Krivoi Rog, Ukraine, a nickel plus cobalt
containing production unit in Las Camariocas, Cuba, and a utility in Cao-Cun, China.  The authorities
exempt the import and export transactions that constitute a performance of the underlying contract
from the payment of customs duties, the customs commission, and VAT.  For example, L15/1993exempts iron ores and concentrates imported from the unit in Krivoi Rog as payment for the
Ukrainian side of the contract
37, and exports of parts and components from Romania for the Krivoi
Rog complex.  Similar exemptions are in effect for the other two projects (OG7/1994).
(vi) Customs commission
48. L8/1994 established a special fund for the development and modernization of customs offices,
for which a customs commission of 0.5% is assessed on the value of imports and exports.38  T h e
commission applies to all products, with the excepti on of imports in the context of loan agreements,
non-reimbursable assistance from the G-24 and other international economic bodies, and
humanitarian aid.  Also exempted are vessels, airplanes, helicopters, locomotives, and railway cars
listed in the Annex to OG22/1995, goods related to the Krivoi Rog project under HG219/1994, andproducts covered by the ITA.
39  Imports and exports of covered products to and from MFN origins
and Moldova are subject to the customs commission;  imports and exports from other origins are also
covered, except for products on which free-trade-area treatment has been completely implemented
under the Europe Agreement and the free-trade agreements with EFTA, members of CEFTA and
Turkey.
(vii) Import surcharge
49. On 10 October 1998, Romania introduced a surcharge of 6% on imports by OU22/1998 until
the end of the year 2000.  The measure was approved and modified by Parliament, and the list of
products exempted from the application of the measure was enlarged (L244/1998).  The surcharge
was then reduced to 4% for 1999 (HG984/1998).  The exemptions concern about 38% of the value of
imports – crude petroleum, natural gas, electricity, medicine, imports by public institutions financed
by foreign loans, products imported under a duty-suspensive regime, as well as products exemptedfrom the payment of customs duties (e.g. under an investment incentive), and imports for complex
exports. The measure was the subject of consultations in the WTO, which concluded that Romania
was in conformity with its obligations under Article XII (on balance-of-payments restrictions) of
GATT 1994.
40
                                                     
37 The product is exempted from the payment of customs duties (but not the customs commission or
VAT) under the 1999 Guide on the Tariff.
38 To replace the fee of 0.5% of the value of imported and exported goods for customs services
rendered at importation and exportation (GATT, 1993, Vol. II, p. 56).
39 Paragraph 2(a)(iii) of the Annex on Modalities and Product Coverage to the Ministerial Declaration
on Trade in Information Technology Products provides for the elimination of other duties and charges in the
sense of Article II:1(b) of GATT 1994.
40 Notified to the WTO in WT/BOP/N/41 and WT/BOP/N/42.  The Committee on
Balance-of-Payments Restrictions held consultations with Romania on 1-2 February 1999 (basic documents areWT/BOP/G/7 and WT/BOP/S/8).  The Committee concluded that the measure was in conformity withArticle XII of GATT 1994 (WT/BOP/R/45).Romania WT/TPR/S/60
Page 47
(viii) Tax avoidance and tax evasion41
50. Imported products are assessed ordinary customs duties (or preferential rates if applicable)
plus an import surcharge of 4% (until the end of  2000) and a customs commission of 0.5%;  (mainly
specific) excise taxes on certain products (mainly alcoholic beverages, cigarettes, petroleum products
and motor vehicles);  and a basic VAT rate of 22%.  Particularly on products subject to excise taxes,
these levels of customs duties and taxes appear to provide a strong temptation for evasion. Forexample, a carton of cigarettes imported from an MFN origin is subject to a 98% tariff plus a 4%
import surcharge and a 0.5% customs commission, plus an excise tax combination of lei 96,000
(about US$8) and 20% of the tariff-inclusive value, plus a VAT of 22% on the combined duty and
tax-inclusive value of the product (Table III.4).  This temptation also applies (in a form diminished by
the absence of the tariff) to domestic producers.
Table III.4
Combined rates of customs duties, import surcharge, customs commission, excise taxes and VAT on selected products, 1999
Description Tariff itemApplied MFN
tariff rate (%)Import
surcharge
(%)Customs
commission
(%)Excise taxVAT
(%)Total
Whisky 2208.30 90.0 4 0.5 lei 2,640,000
per hl of pure
alcohol22 115% +
lei 3,220,000 per hl
of pure alcohol
Wine
(sparkling)ex. 2204.21 144.0 4 0.5 lei 12,000 per hl
and per degree
of pure alcohol22 181% + lei 14,640
per hl and perdegree of pure
alcohol
Cigarettes 2402.20 98.0 4 0.5 lei 96,000 +
20% of thetariff-inclusive
value22 150% + lei 117,000
Coffee,
roasted0901.21.00 25.0 4 0.5 lei 14,400,000
per tonne22 36% +
lei 18,000,000 per
tonne
Note: The VAT is assessed on the basis of the duty-inclusive customs value plus the excise tax.
Source : Data provided by the Romanian authorities and WTO Secretariat calculations.
51. One method of avoiding customs duties and taxe s is to import under a statutory exemption or
reduction.  For example, an importer obtaining a licence to import at an in-quota tariff rate under a
quota avoids the out-of-quota duty.  At present, spec ific statutory exemptions from customs duties and
VAT are available for imports by investors in the framework of an oil and gas exploration ordevelopment agreement, as well as for investors in disadvantaged regions, or for certain designated
investments of at least US$50 million.
52. Tax evasion is a serious concern of the authorities, both on the domestic market and at the
border.
42  The authorities require document and physical inspection for each shipment of products
susceptible to such evasion – coffee, cigarettes, and alcoholic beverages, which bear the highest
                                                     
41 Tax avoidance refers to legitimate methods used by taxpayers to avoid the payment of taxes
stipulated under the law through tax planning, and is distinct from tax evasion, which refers to dishonestwithholding of taxes due.
42 According to Harry Waskiewicz of the World Customs Organization, dependence by developing
countries on customs revenue as a major source of funding has resulted in high levels of customs fraud, andgovernments could consider reducing duties and taxes to curb the temptation of fraud ( Electronic Mail &
Guardian , 16 October 1997.  Available at http://www.mg.co.za/mg/news/97oct1/16oc-customs.html
[27 November 1998]).WT/TPR/S/60 Trade Policy Review
Page 48
combined rates of customs duties, excise taxes, and VAT.  The response to the tendency for
under-invoicing of the value of such products has been the imposition of comparison values, requiring
the importer to substantiate a lower level to the Customs Authority by a conclusive set of documents.
Importers may find such procedures complex, time-consuming and cumbersome;  the simplified
procedures the Customs Authority intends to introduce will continue to require document and physical
inspection for products subject to excise taxes.
53. The authorities have engaged in efforts throughout the period under review to halt the
development of the black market in coffee, cigarettes, and alcoholic beverages.  One aspect is
increased border enforcement activities to prevent smuggling.  A new approach is a system of
documentation to monitor the production, importation, and domestic sale of tobacco products,
alcoholic beverages, and coffee, in each of Romania's 41 counties and Bucharest, as of 1 April 1999(OU50/1998).
54. Tax avoidance and tax evasion have significant implications for the revenues collected by the
authorities and the fiscal situation.  The authorities recognize that "the vast number of exemptions
granted to different lobbies", together with relati vely low levels of (direct) rates of taxation and
problems of revenue collection explain the relativ ely low share of tax revenues in GDP (34.3% in
1998) compared with other transition economies.
43  The authorities recognize that such facilities lead
to fewer revenues and the Government's Programme for 1998-2000 provides for the gradual
elimination of such facilities.
55. The revenues raised by the customs authorities concern in principle the collection of customs
duties, the customs commission and import surcharge, excise taxes and VAT.  Data  provided by the
authorities on the amounts raised from each source for the period 1992-98 (Table III.5), confirm that
revenues collected at the border have risen significantly since the practice of temporary exemptions orreductions was curtailed, starting in 1997, and since controls at the border were strengthened.
Table III.5
Revenues collected at the border, 1992-98
(US$ million)
Customs duties Import surcharge Customs commission Excise taxes VAT Total
1992 7.3 0.08 0.7 0.0 0.0 8.1
1993 24.7 0.2 3.4 3.6 25.1 57.0
1994 52.1 0.0 12.2 10.8 74.9 150.0
1995 96.7 0.0 22.5 15.6 154.0 288.8
1996 155.3 0.0 20.9 23.1 245.3 444.6
1997 311.1 0.0 54.4 49.3 511.5 926.3
1998 523.9 59.4 60.6 106.7 1,115.9 1,866.5
Source : Data provided by the Romanian authorities.
(ix) Rules of origin
56. According to Article 74 of the Customs Code, rules of origin are based on the criteria of
goods wholly produced in a country or goods  obtained through processing or substantial
transformation, where two or more countries have taken part in the production of the goods.(Romania's free-trade agreements contain detailed rules of origin (Chapter II(4)(iv)).)  Detailed
regulations on the determination of origin are contained in Part II of Annex 2 of OG26/1993, which
remains in force.  Romania applies the wholly produced criterion to natural products and to goods
                                                     
43 Government of Romania (1998a), p. 82.Romania WT/TPR/S/60
Page 49
made entirely from them, excluding goods containing any imported parts or materials from its field of
application.
57. Romania expresses the criterion of substantial transformation by a rule requiring a change of
tariff heading from the headings corresponding to each of the materials used to obtain the final
product, subject to certain exceptions for operations that do not confer origin and a rule of 50% for
value added to confer origin.  Accordingly, operations that do not confer origin include thosenecessary for the preservation of goods during trans portation or storage;  operations to improve the
packaging or the marketable quality of the goods or prepare them for shipping;  mixing of goods of
different origin, provided that the characteristics of the resulting product are not essentially different
from the characteristics of the goods that have been mixed;  simple assembly operations;  any
combination of the previous operations;  and the slaughter of animals.
(x) Prohibitions and products subject to licensing
58. The Government's Report for Romania's first TPR noted the liberalization of imports and
exports from mandatory licensing (HG215/1992), which was required under central planning, with
exceptions.
44  The six same categories of goods are prohibited for import/export for reasons of public
morality, health, protection of human life, environmental protection, and national security (Order62/1992 of the Minister of Trade and Tourism).  In addition, the authorities notified the licensing
regime to the WTO in 1999;  this applies to goods subject to the import control system, sent from
abroad as economic aid, subject to tariff quotas, or subject to automatic licensing.
45
59. In relation to the import control system in place at Romania's first TPR in 1992, the main
development is the implementation by Romania of its commitments under multilateral environmental
agreements with trade provisions, joined during the period under review (Table AIII.8).46  O f
particular note is the Basel Convention on hazardous wastes and the Montreal Protocol and relatedagreements and amendments thereto on the protection of the ozone layer.  The import control system
currently applies to:
- weapons and ammunition, military equipment, spare parts, and any technical
documentation or material used to manufacture such products (HG547/1992 and
OG31/1994);
- scrap metal and other wastes (Annex 1 of HG340/1992, as amended by HG437/1992
and HG145/1995);
- products dangerous for human health, including drugs and narcotics, or for the
environment (Annex II of HG340/1992, as amended by HG437/1992 and
HG145/1995);  and
- goods under control of the final destination, for reasons related to non-proliferation of
mass destruction weapons and missile carriers, as well as radioactive materials,
nuclear installations and nuclear-related  products (HG594/ 1992 and OG31/1994).
                                                     
44 Weapons and ammunition, except those authorized by the law;  explosive and toxic products, except
those authorized by the law;  drugs and narcotics, except those authorized by the law;  military equipment,
except those authorized by the law;  medicines, medi cal apparatus and technical or sanitary materials not
authorized by the Ministry of Health;  and  written documents and printed matter not authorized by the law.(GATT, 1993, Vol. II, p.115).
45 G/LIC/N/1/ROM/2 notifies Order 13c/1998 of the Ministry of Industry and Commerce.
46 See also GATT (1993), Vol. II, p. 116.WT/TPR/S/60 Trade Policy Review
Page 50
60. Commercial operators that have included foreign trade activities in their constitutive act may
perform import and export transactions and are therefore eligible to obtain a licence for products
subject to import control.  The procedures to obtain an import licence are handled by the Ministry of
Industry and Commerce, but approval of a request for a licence is conditional upon a favourable
opinion of the governmental body concerned with the matter.  Thus, for example, the Ministry of
Waters, Forests and Environment Protection issues the authorization to import or export substancesand products containing substances that deplete th e ozone layer (Order 506/1996), and the Ministry of
Health considers requests for licences to import products dangerous to human health.
61. The Ministry of Industry and Commerce handles the licensing procedure for goods imported
as economic aid (HG470/1992) and therefore qualifying for a general exemption from the payment of
customs duties, under a tariff quota or subject to automatic licensing of imports or exports.  In 1999,automatic licensing covers scrap of non-ferrous and ferrous metals, crude petroleum and petroleum
products, and iron and steel products for destinations other than the EU.
47  The procedure is
straightforward, and takes on average two days to  complete, compared with ten days under the
previous procedures.  Such licences are generally valid for the calendar year and are non-transferable.
62. According to the authorities, a category of licences separate from import or export licences
are "transaction licences" for certain operations, including import-export counter-purchase operations
concluded at the level of commercial operators.48  Such an operation concerns the importation of
goods and/or the equivalent of services under a contract with a foreign partner, paid for with local
goods and/or services, of equal value, without effective transfer of foreign currency.49  S u c h
countertrade operations are exempt from the ot herwise applicable requirement (HG148/1993), to
deposit in Romania all proceeds from export transactions.  Only certain types of transactions are
permitted.  For example, a permitted transaction is the import of energy products and raw materialswith payment against complex exports.  Products not permitted on the export (Romanian) side of the
transaction include live animals, raw logs and chemical products.
50  Such countertrade is estimated by
the authorities to have accounted for some 5% of trade in 1998.
(xi) Sanitary and phytosanitary measures
63. The import, export and transit of live animals, animal products, and fodder is subject to a
favourable opinion by the Ministry of Agriculture and Food prior to its occurrence (L60/1974). The
import, export and transit of such products is re quired to be certified as meeting the standards
                                                     
47 The list also includes ingots and primary produced products of non-ferrous metals;  wood products
(logs and sheets);  raw skins of sheep, pigs and cows;  human and animal blood;  concentrates of copper, lead,
zinc and precious metals, and uranium;  radioactive an d nuclear installations other than those under export
control;  selected chemical products to avoid misuse;  strategic products (COCOM);  hunting and sportsweapons;  and products containing precious metals and stones.
48 Other covered operations are exports for compensation of external debts of the trade companies and
of the regies autonomes , resulting from late payment for their imports of goods and services;  trade operations to
be settled through clearing, barter or cooperation accounts, based on governmental agreements concluded
between Romania and operations for recovering Romania’s debt through the import of goods;  and operationscarried out on the basis of credits granted or received at governmental level.
49 The regime for "linked import-export operations" is established under HG276/1995, as modified by
HG969/1996;  HG267/1997 applies to transactions with Moldova.
50 Annex 2 of HG276/1995 specifies exclusions for exports under the following positions of the Import
Customs Tariff of Romania:  Chapter 1, 0401, 0402, 0405, Chapters 10-12, 1507, 1512, 1520, Chapter 17,
Chapter 23, 2401, Chapters 25-31, Chapter 37, 3901-3912, 4002, 4003.00.00, Chapter 41, Chapter 44,Chapter 45, Chapter 47, Chapter 48, 5001.00.00, 5201. 00, 5202, 5203.00.00, Chapters 53-55, 6203-6208, 6403,
6812, Chapters 69-70, Chapters 72-81, Chapter 84, 8502, 8503.00, 8504, 8505, 8507, 8544, Chapter 86, 8701,8705, 8716, 9401, 9403, 9406.00, Chapter 97.Romania WT/TPR/S/60
Page 51
established by the National Sanitary and Veterinary Agency within the Ministry of Agriculture prior
to the contract being concluded (Order 70/1998 of the Ministry of Agriculture and Food).  The
authorities may impose temporary import bans as sanitary or phytosanitary measures.  Romania
notified the WTO (G/SPS/N/ROM/1) of an import ba n on live bovines, sheep and goats and certain
products therefrom for the countries where BSE and sheep and goat scrapie exists.  This measure
remains in effect.
(xii) Contingency measures
64. Romania has notified its laws and regulations on anti-dumping, countervailing and safeguard
measures to the WTO (G/ADP/N/1/ROM/1, G/SCM/N/1/ROM/1, G/SG/N/1/ROM/1).  These laws
and regulations are combined in a single trade policy instrument, adopted in 199251, and have not been
modified since the entry into force of the WTO from those previously notified to the relevantCommittee of the Tokyo Round Agreements.  The authorities clarify that WTO rules shall apply in
case a contingency measure is taken because L133/1994 ratifying the Marrakesh Agreement takes
precedence over domestic laws and regulations according to the Constitution of Romania.  No
anti-dumping, countervailing or safeguard measures have been taken during the period under review,
as regularly notified by Romania to the WTO.
(xiii) State trading
65. Romania notified the WTO that it has no state-trading enterprises as defined in GATT
Article XVII (G/STR/N/1/ROM).
(3) M
EASURES DIRECTLY AFFECTING EXPORTS
(i) Duties and taxes
66. At Romania's first TPR in December 1992, the authorities reported that Romania had no
export taxes, charges, and levies, other than the customs commission of 0.5%, and no change in thissituation has been reported for the period under review.  Of note is the fact that goods and services for
export, and services supplied in connection with exportation, are exempt from VAT.
(ii) Drawback
67. Romania has in place a drawback regime under the Customs Code for customs duties paid on
imported inputs incorporated into exports to destinations other than those covered by preferentialtrade agreements
52;  the drawback system extends to excise duties and VAT under certain conditions.
Drawback applies to imports under a duty-suspensive regime and must be requested at the time of
importation of the inputs.  Regarding exports to destinations covered by preferential trade agreements,
each such agreement contains provisions specific to the drawback regime.53
                                                     
51 HG228/1992 and Order 127/1992 of the Ministry of Trade and Tourism and Joint Order 128/1992 of
the Ministry of Trade and Tourism and the Ministry of Economy and Finance.
52 Superseding HG1274/1990 modified by HG673/1991 and by HG75/1997.
53 As described by the authorities, for exports to the EU, Romania applies a non-drawback rule for the
non-original materials.  According to Art.15 para. 6 of Protocol 4, a derogation is maintained only on customs
duties as follows:  “Notwithstanding para. 1, Romania may apply arrangements for drawback of, or exemption
from, customs duties or charges having an equivalent ef fect, applicable to materials used in the manufacture of
originating products, subject to the following provisions:  a 5% rate of customs charge shall be retained inrespect of products falling within Chapters 25 to 49 and 64 to 97 of the HS, or such lower rate as is in force inRomania;  a 10% rate of customs charge shall be retained in respect of products falling within Chapters 50 to 63WT/TPR/S/60 Trade Policy Review
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(iii) Prohibitions and products subject to licensing
68. Romania does not currently have in place any export bans or quantitative restrictions on
exports, a significant liberalization of the trade regime during the period under review.  The
elimination of export bans and quotas took place in stages as the liberalization of domestic prices
progressed (Table III.6).54  In December 1992, the authorities had reported a list of 35 product
categories subject to export prohibition and 100 product categories subject to quantitative restrictionson export.
55  These categories included energy products, all species of logs and cut wood, raw hides,
basic necessities (e.g., flour, sugar, bread, milk), iron and steel products, raw materials and medicines,
and domestic producers were in some cases granted subsidies (energy, basic necessities).  In 1999,
automatic licensing for statistical purposes covers most of the products previously subject to export
bans or quantitative restrictions, including scrap of non-ferrous and ferrous metals, crude petroleumand petroleum products, and iron and steel products for destinations other than the EU.
56
Table III.6
Number of tariff lines (HS 8-digit) subject to export prohibition, quantitative restriction or automatic licensing, 1996-99
1996 1997 1998 1999
Export prohibition 178 155 - -
Quantitative restriction 52 67 - -
Automatic licensing 358 376 511 511
- Nil or negligible.
Source : Data provided by the Romanian authorities.
69. An export licence certificate regime applies to textile and clothing products currently under
restriction by Canada or the United States under the WTO Agreement on Textiles and Clothing
(ATC).57  As of 1 January 1998, the European Communities and Norway lifted their restrictions.58
                                                                                                                                                                    
of the HS, or such lower rate as is in force in Romania.  The provisions of this paragraph shall apply until
31 December 2000.”
54 By the end of 1997, Order 33/1997 of the Ministry of Industry and Commerce provided for export
prohibitions on 56 tariff lines in the product categories of wood, metal scraps and wastes, marble and travertine;
quantitative restrictions applied to 28 tariff lines in the same product categories plus railway constructionmaterials;  and automatic licensing for statistical purposes concerned 110 tariff lines in the same productcategories plus hides and skins, leather, and iron and steel.  According to OMIC36/1997, the 84 tariff linessubject to export bans or quantitative restrictions in 1997 were shifted to automatic licensing for statisticalpurposes, which then concerned 194 tariff lines in the product categories of wood, metal scraps and wastes,
marble and travertine, railway construction materials, hides and skins, leather, and iron and steel.
55 GATT (1993), Vol. II, Section B of Annex 14, p. 117, and Annex 16, p. 120.
56 The list also includes ingots and primary produced products of non-ferrous metals;  wood products
(logs and sheets);  raw skins of sheep, pigs and cows;  human and animal blood;  concentrates of copper, lead,zinc and precious metals, and uranium;  radioactive an d nuclear installations other than those under export
control;  selected chemical products to avoid misuse;  strategic products (COCOM);  hunting and sports
weapons;  and products containing precious metals and stones.
57 At the time of entry into force of the ATC, restrictions were notified to the WTO by Canada
(G/TMB/N/62), the European Communities (G/TMB/N/64), Norway (G/TMB/N/61) and the United States(G/TMB/N/63).
58 G/TMB/N/315 and G/TMB/N/306, respectively.Romania WT/TPR/S/60
Page 53
(iv) Export promotion
70. Romania notified the WTO (G/SCM/N/9/ROM) under Article 29.3 of the Agreement on
Subsidies and Countervailing Measures of export promotion activities in 1995 and 1996, which
remained in place throughout the period under review59, described as follows:
- supply of commercial information by the Romanian Foreign Trade Centre, free of
charge, through its publications;
- supply of market surveys against small fees (covering only the cost of materials);
- coverage of functioning expenses for the TRADE POINTS;
- partial coverage (up to 50%) of the expenses for participation in international fairs
and exhibitions;
- guarantees for participation in international auctions;
- guarantees for export credits;
- subsidization of up to 60% of interests to domestic credits in national currency to
stimulate complex exports (section (2)(v)), within the limits of total annual amounts
established through the State Budget (for 1999, lei 100 billion or US$6.7 million);
and
- exemption from the payment of customs duties, VAT and the customs fee for imports
of parts and components for complex exports.
71. Romania notified the WTO (G/SCM/N/16/ROM)  of another programme of financial
assistance to exporters, administered by the Expor t-Import Bank of Romania, to reimburse 50% of the
interest paid on domestic loans when used to produc e for export.  According to the authorities, the
funding made available in 1999 amounted to lei 253 billion (US$16.7 million).
(v) Export subsidies
72. Aside from the measures of financial assistance to exports noted above, the Romanian
authorities confirm that subsidies, conditional upon exportation, are not granted from the State Budget
in 1999 to non-agricultural products.  Such subsidies are granted from the State Budget in 1999 only
to certain agricultural products.
73. Selected export stimulation measures in effect during the period under review include a
programme notified to the WTO for eligible  companies (L71/1994) registered between
22 August 1994 and 17 June 1997.60   Companies became eligible for the customs duty and profits tax
holidays by investing at least US$50 million in i ndustry, producing with a Romanian content of at
                                                     
59 Article 18 of L36/1999 on the State Budget for 1999;  Article 19 of L109/1998 on the State Budget
for 1998;  Article 26 of L72/1997 on the State Budget for 1997;  Article 17 of L29/1996 on the State Budget for
1996;  Article 22 of L22/1995 on the State Budget for 1995;  Article 20 of L36/1994 on the State Budget for
1994;  Article 17 of L21/1993 on the State Budget for 1993.
60 The notification to the WTO, G/SCM/N/9/ROM, was made under Article 29.3 of the Agreement on
Subsidies and Countervailing Measures, and the programme was also notified as a TRIM inG/TRIMS/N/1/ROM/1.WT/TPR/S/60 Trade Policy Review
Page 54
least 60% (equivalent, according to the author ities, to a maximum import content of 40%) and
exporting a minimum 50% of annual production.
74. The authorities have periodically used a tax incentive to stimulate domestic production for
export.  According to Article 7(1)(b) of L73/1996, passed by the Parliament to approve and modify
OG70/1994 on the Profits Tax, a reduction of 50% on the profits tax applied to the portion
corresponding to the share of exports of goods and services in total sales as of 1 January 1997.  TheGovernment removed the measure on 30 January 1998 (OG40/1998 to modify and complete
OG70/1994, as subsequently modified), but the measure was reinstated by Parliament for 1999
(L249/1998), and then suspended in March 1999 (L36/1999).
(4) I
NTERNAL MEASURES
(i) Business framework
(a) Company law and registration
75. The commercial company is the basic form of business organization recognized by the
Company Law.61  The limited liability company is the most common in Romania, accounting for
some 80% of total incorporations recorded at the Trade Registry between 1991 and 1998 (Table III.7).
The Registry is operated by the Chamber of Commerce and Industry of Romania, through the nationaloffice in Bucharest and 42 territorial offices.  Commercial operators are required to record basic facts
of their legal existence and significant developments, from incorporation to dissolution and
striking-off
62, and mention may also be made of intellectual property rights.  Interested persons may
access such information, free of charge, in the databases of the Trade Registry63;  such a step is
advised before concluding a business transaction with a Romanian company.
76. The Trade Registry offers "one-stop" services for the establishment of companies.  The
incorporation procedure (Box III.1) starts with a check at the Trade Registry on the availability of thefirm's name and/or emblem, and its reservation.  The second step is the certification by a notary public
of the "constitutive act", whose requirements vary depending on the form of business organization
that is chosen.
64  The next step is the deposit of the social capital in the company's bank account;  for a
limited liability company, the registered capital is a minimum of lei 2 million (about US$175 in
                                                     
61 L31/1990, modified by OU32/1997 approved and modified by L195/1997.
62 L26/1990, as amended by L12/1998.  Methodological norms were issued by the Chamber of
Commerce and Industry and the Ministry of Justice in 1998 (NMCCIR/MJP/608-773/1998) to replace the norms
issued in 1994 (NCCIR3021/1994).
63 Accessed at http://www.onrc.ccir.ro.
64 For a limited liability company, the constitutive act contains the following information:  the name,
place and date of birth, domicile, and citizenship of the associates when they are natural persons, and thedenomination, the registered office, and the nationality of the associates, when they are legal persons;  the form,
denomination, the headquarters, and the emblem of the company, as the case may be;  the company’s object of
activity, specifying the field of action and the main activ ity (e.g., foreign trade activities);  the subscribed and
the paid-up capital, with special mention of each associate’s contribution, whether in cash or in kind, the valueof the contribution in kind and the method of evaluation, the date when all subscribed registered capital shall be
deposited, the number and the nominal value of all partic ipating shares as well as the number of participating
shares attributed to each associate for his contribution shall be specified; the associates who represent and
manage the company or the independent administrators, natural or legal persons, the powers vested in them and
whether they are going to exert the powers together or separately; each associate’s part in profits and losses;
location of its subsidiaries – branches, agencies, or other offices of the same kind without legal personality –when they and the company are set up at the same time, or conditions to set them up at a later date if such asetting up is considered; duration of the company; the method of dissolution or liquidation of the company.Romania WT/TPR/S/60
Page 55
January 1999), and may include an in-kind contribution.  The final step for incorporation occurs at the
Trade Registry, to obtain the authorizations required and publish the notice of incorporation.  This
process generally takes five to ten business days, compared with 20-30 days under the previous
procedure.65  Incorporation for financial service providers is lengthier due to the need to obtain the
prior authorization of the regulatory body concerned (Chapter IV(3)(iii)).
Table III.7
Incorporations by form of business organization, 1991-98
Form Description Total
Societate în nume colectiv
(S.N.C.)General partnership, whose obligations are guaranteed with its registered assets and by
the unlimited and joint liability of the associates.29,771
Societate în comandit ă
simplă (S.C.S.)Limited partnership, whose obligations are guaranteed with its registered assets and by
the unlimited and joint liability of the active partners (the limited partners are liable only
up to the value of their subscribed registered capital).1,373
Societate în comandit ă pe
acţiuni (S.C.A.)Limited partnership by shares, whose registered capital is divided into shares and whose
obligations are guaranteed with its registered assets, by unlimited and joint liability of the
active partners (limited partners may be kept liable up to the value of their subscribed
registered capital).4
Societate pe ac ţiuni  (S.A.) Joint-stock company, whose obligations are guaranteed with its registered assets (the
shareholders are liable only up to the value of their subscribed registered capital),
established by the subscription of the registered capital by all signers of the constitutiveact or by public subscription.21,200
Societate cu r ăspundere
limitată  (S.R.L.)Limited liability company, whose obligations are guaranteed with its registered assets,
and the associates are liable only up to the value of their subscribed registered capital,and which may be established by a single person.562,957
Note: The Trade Registry recorded 709,247 legally active companies between December 1990 and December 1998, including 89,131
natural persons and family associations (12.6%), 4,160 cooperative associations (0.6%), and 651 regies autonomes  (0.1%).
Source : Information provided by the Romanian authorities.
(b) Fiscal regime
77. Commercial companies are subject to the following direct taxes:  profits tax;  local taxes and
community charges;  salary tax and other employee and employer withholding taxes;  and dividend
withholding tax, and other withholding taxes for payments made to companies.
78. Taxable profit is computed as income derived from the delivery of goods, services, and
works, income from any source, minus expenses, to which are added certain non-deductible
expenses.66  An important development in the profits tax during the period under review is the
deduction of expenses for advertising and public relations, starting in 1998, bringing Romania into
line with OECD practice.  Under the Romanian accountancy system, the valuation of assets is based
on the prudence principle and records are maintained on the basis of “commitment accounting”,
                                                     
65 Herzfeld & Rubin (1998a).  Under the previous procedures, the investor registered the company at
the local court to obtain an authorization from the judge,  issued upon the advice of the local chamber of industry
and commerce, concerning the usefulness of the company, the size of the capital with respect to the businesspurpose, and the reputation of the founders or partners.  Under the present procedures, the District Court
delegates a judge to the Trade Registry to grant such authorizations, and the advice of the local chamber is no
longer required (Box III.1).
66 OG70/1994 entered into effect on 1 January 1995, and was approved and modified by L73/1996, and
modified by OG34/1995 and OG23/1996 (republished as OG70/1994V1), OU83/1997 approved by L106/1998,and OG40/1998.WT/TPR/S/60 Trade Policy Review
Page 56
according to which commitments are recorded when made, rather than at delivery or payment, and
revenues are recorded at the time of transfer of ownership.67
Box III.1:  Procedure to incorporate a Roma nian company in 1999
 The four steps to incorporate a Romanian co mpany, with or without foreign capital, are:
Step 1: Location:  Trade Registry Office
Purpose:  check the availability of and reserve the firm’s name/emblem.Documents required:  none.
Step 2: Location:  Public Notary Office
Purpose:  certification of the Constitutive Act.Documents required:(a) Constitutive Act;  and(b) proof from Trade Registry of the availability of firm’s name/emblem.
Step 3: Location:  Bank
Purpose:  open company account and deposit social capital.Documents required:  none.
Step 4: Location:  Trade Registry Office
Purposes:(a) request for incorporation;
(b) authorization from Judge;
(c) Act of incorporation;(d) publication in Monitorul Oficial ;  and
(e) fiscal code.
Documents required:
For all investors:
(a) certified Constitutive Act;
(b) proof of payments made according to Constitutive Act;(c) proof of headquarters;(d) documents attesting ownership over the contribution in kind;(e) documents attesting operations concluded on behalf of company and approved by the 
associates;
(f) declaration by the founders, the managers and the auditors that they fulfil the condition 
required by the law;
Only for foreign investors:(g) letter of good standing from the chamber of commerce in the country of origin;  and(h) certified copy (in Romanian) of the incorporation deed and the decision of the statutory 
body on the participation, if the investor is a legal person.
Within 15 days of the certification of the Constitutive Act, the incorporation of the company may be
requested at the Trade Registry Office.  To this end, a judge appointed by the District Court to the TradeRegistry examines the documents and the deeds to be registered, and may request an expertise orpresentation of other evidence;  an expertise is required for joint-stock companies, in-kind contributions,advantages reserved for the founders or operations concluded by the founders on behalf of the proposed
company.  If the legal requirements are fulfilled, the judge authorizes within five days the incorporation of
the company with the Trade Register.  The judge's conclusions are forwarded to the office of the financialadministration for the purpose of obtaining the company's tax code.
Source:   Information provided by the Romanian authorities.
                                                     
67 L82/1991, modified by OG22/1996, approved and modified by L245/1998.  The system applies to all
commercial companies, regies autonomes , and other legal persons engaged in business activity, but excluding
banks, subject to a separate accounting system.Romania WT/TPR/S/60
Page 57
79. On the taxable base, the profits tax is 38%, with the exception of gambling establishments
(60%) and of companies realizing 80% or more of their revenues from agricultural activities (25%).
In addition, a reduction of 50% in the tax on profits derived from the export of goods and services has
periodically been in effect during the period under review (section (3)(v)).  Moreover, investors may
qualify for a fiscal incentive under the various investment laws introduced since 1991.  Companies are
also subject to community charges and local taxes, mainly consisting of taxes on buildings, land,vehicles, on certificates, approvals and authorizations for construction, and on advertising, publicity,
and display facilities.
68
80. Romania has not yet introduced a personal income tax.  Instead, employers are liable for the
salary tax on a monthly basis.69  On average, the salary tax is 23%, but individual assessments are
based on a progressive grid, with a top rate of 45% for monthly salaries above US$250.  In addition,the employer is liable for his own contributions  to certain funds, including social security,
unemployment, health fund and a fund for the protection of disabled persons, as well as the
employee's contributions for the supplementary pension, unemployment and health insurance.  It
should be noted that foreign nationals employed by Romanian companies are treated on the same
basis as local employees for the purpose of the assessment of the employer contributions, but are notassessed for the employee's contributions for the supplementary pension and unemployment.  Such
foreign employees do not have access to unemployment or social security benefits.
81. Dividends paid by a Romanian company are subject to a 10% withholding tax, whether paid
to a Romanian natural person or to another company.  Such dividends are translated as revenues when
paid to another Romanian company and subject to the profits tax;  in contrast, Romania does not tax
personal income.
82. Income earned by non-residents in Romania is subject to withholding taxes unless a treaty on
the avoidance of double taxation applies (Table AIII.9).
70  If not, interest earned by non-residents is
subject to a 10% withholding tax with the exception of payments made by banks registered in
Romania (down from 10% under OG47/1997);  payments for services are taxed at 15%71;  royalties
due to non-residents for the use of intellectual property rights are taxed at 15% (down from 25%);
income from performances and speeches is taxed at a 20%;  and prizes or gambling income are taxedat 10% (down from 50%).
(c) Reorganization and bankruptcy
83. In 1995, Romania introduced a new procedure for commercial operators in distress to replace
the provisions of the 1887 Commercial Code.  The new regime applies to (privately owned and
state-owned) commercial companies and natural persons, but not to regies autonomes .
72  Creditors
may initiate a procedure against a debtor in the local court which, after consideration of the evidence,
including that presented by the syndic-judge appoin ted to oversee the proceeding, decides whether the
company can be saved by reorganization or if it should be declared bankrupt and liquidation ordered.
                                                     
68 L27/1994, republished in 1998, modified by OU62/1998.
69L32/1991, republished in 1996, modified by OG62/1997 approved by L75/1998, modified by
OG6/1998.
70OG83/1998 entered into effect on 1 September 1998, and abrogated the previous regime under
OG47/1997, which in turn replaced the regime esta blished under socialism (Herzfeld & Rubin, 1998b).
71Income derived by a non-resident from the provision of international air, ship, highway or rail
transportation is taxed at 15% on the condition that the non-resident comes from a country where a similar tax isapplied to Romanian companies for similar activities.
72L64/1995, as modified by OU58/1998.  The new title is "Law regarding the procedure of
reorganization and bankruptcy", the term "bankruptcy" having replaced "judicial liquidation" in L64/1995.WT/TPR/S/60 Trade Policy Review
Page 58
84. The new bankruptcy procedure is an instrument available to the State to impose financial
discipline on state-owned commercial companies having accumulated arrears to the budget for salary
and employee and employer withholding taxes.  Moreover, the procedure may be applied to
regies autonomes  which have been restructured into commercial companies.  However, the procedure
began to be used in earnest only in 1998 (Table IV.2).
(ii) Investment regime
(a) Framework
85. The Government's Report for the first TPR in 1992 had noted Romania's liberal regime for
foreign direct investment under L35/199173, containing guarantees against nationalization or
expropriation without compensation, and an incent ive with a customs duty component and a profits
tax holiday.  This incentive was modified during the period under review by successive investmentlaws and was suspended by L36/1999 on the State Budget in March 1999;  other incentives continue
to apply to investment in oil and gas exploration, disadvantaged regions, and to certain designated
investments of at least US$50 million.  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.
86. The authorities also improved the administration of the investment regime during the period
under review by lifting the requirement of prior approval by the Romanian Development Agency
(RDA) in 1997.   Proof of the status of foreign inve stor by the "Certificate of Investor" from the RDA
was a requirement that was lifted in 1998 (L241/1998).  The RDA remains in existence, however,
having taken over the functions of the Ministry of Privatization (OU56/1998 );  it is currently
responsible for encouraging foreign investment and proposing investments of at least US$50 million
for designation by government decision to receive the incentive (OU67/1999).  The RDA provides
foreign investors with the contacts in government mi nistries and agencies to facilitate investment and
participation in privatization (HG977/1998).
(b) Sectoral access and form of investment
87. A Romanian company may be established, with or without foreign capital, in all sectors of
economic activity, including those in which the State owns commercial companies or has established
a regie autonome .  Investors can acquire ownership rights over all assets except for natural resources,
reserved to the State, and land, reserved to Romanian natural and legal persons (including 100%
foreign-owned Romanian companies).
74  Investment in the exploration and exploitation of oil and gas
fields is separately regulated by L66/1992 and OU1/1993 (Box IV.1).  Insurance is the only sector
where a foreign investor is required to have a Romanian partner (Chapter IV(3)(iii)).
88. Investors are free to choose the form and manner of the investment, including direct or
portfolio investment.  The latter option is a relatively recent development.  The Bucharest Stock
                                                     
73 GATT (1993), Vol. II, p. 47.
74 According to Article 47 of L18/1991 (the "Land Law"), title to land cannot be acquired by natural
persons who do not have Romanian citizenship and are not resident in Romania, or by legal persons that do nothave Romanian nationality and a head office in Romania.  Furthermore, Article 1 of L35/1991 specified thatforeign investment did not include the acquisition of land ownership rights.  However, these provisions left open
the issue of the land ownership rights of foreign investors that became Romanian legal persons.  Decision
831/1994 of the Supreme Court of Romania stated that such persons, if fully capitalized by foreign funds, couldnot acquire title over land (Meyer and Raftopol, 1996);  OU31/1997 clarified the situation to permit landownership by 100% foreign-owned Romanian companies, also of relevance to the interpretation of Romania'sSchedule of Specific Commitments for GATS.Romania WT/TPR/S/60
Page 59
Exchange (BSE) opened for trading in 1995, and the Romanian over-the-counter market (RASDAQ)
opened in 1996.  In addition, non-resident investors gained access to the government securities market
in 1997 (OG66/1997).  If their participation in an auction is explicitly permitted, foreign investors
may purchase T-bills, subject to recording transactions at the National Bank of Romania and a tax of
1.5% on the value of the purchase.
89. The participation of a direct investor may take the form of:
- capital in domestic or foreign currency;
- industrial equipment, transport equipment, subcomponents, spare parts and other
goods (which may be imported);
- services, industrial and intellectual proper ty right patents, licences, know-how and
trade marks;  or
- proceeds and profits from business activities carried out in Romania, as well as goods
and assets acquired after performance of fiscal obligations.
90. The authorities report that the total level of foreign direct investment between December 1990
and December 1998 reached US$3,649 million, invested in 63,225 companies.  Of this total, about
75% was invested in joint ventures;  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 (Chapter II(3)(v)).75  However, a large number of companies – some 30,000 – are
100% foreign-owned.
(c) Guarantees and rights of investors
91. All investors, domestic and foreign, benefit from a general guarantee against nationalization
or expropriation.  Exceptions are measures for public use, provided they are applied on a non-
discriminatory basis, according to the specific provis ions of a law, and with compensation in advance
based on the real market value.  Certain provisions apply only to foreign investors:
- the guarantee for portfolio investment, applies pending the introduction of a law on
the matter76;
- the provisions of bilateral investment treaties, if more favourable, take precedence
over domestic law;
- transfer abroad of profits, proceeds from the sale of the investment, incomes, subject
to the applicable foreign exchange regulations and the fiscal regime;  and
- disputes with the Romanian State resolved through a domestic or international
procedure chosen by the investor.77
                                                     
75 U.S. ITA (1998a).
76 Articles 11-15 of OU31/1997.
77 The domestic procedure is L29/1990 and L105/1992, and the options for the international procedure
are (a) the Convention on the Settlement of Investment Disputes between States and Nationals of Other States;and (b) the Arbitration Rules of UNCITRAL/CNUDCI.WT/TPR/S/60 Trade Policy Review
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Romania has concluded 79 bilateral investment treaties, covering most significant potential investors,
except for Japan (Table AIII.9).  Romania also became a member of the Multilateral Investment
Guarantee Agency (MIGA) in 1992.
92. The foreign exchange regulations applicable to foreign investors (which apply to both direct
and portfolio investments), reflect the acceptance by Romania of full current account convertibility
since 25 March 1998.78  According to Article 8 of Regulation 3/1997 of the National Bank of
Romania, "non-residents may transfer without restrictions the foreign currency acquired and held in
accounts with banks, in accordance with the provisions of the law, of the regulation and of the
norms".  Transfers abroad of up to US$60,000 are considered current account transactions, and
amounts above the threshold are considered capital account transactions, requiring the approval of the
National Bank of Romania.   Under the tax regime, the repatriation of capital and capital gains is freeof taxes in Romania, dividends paid by a Romanian company are subject to a 10% withholding tax,
and interest income earned by a non-resident is subject to a 10% withholding tax, unless the payment
is made by a Romanian bank, in which case it is tax-exempt (section (i)(b)above).
(d) Investment incentive
93. At Romania's first TPR, the incentive under L35/1991 consisted of reductions or exemptions
from the payment of customs duties on imported equipment, machinery and components, and from
the profits tax, for limited time-periods.
79  In addition, only foreign investors were eligible for the
incentive, not domestic investors.  This incentive was modified during the period under review – first
by L71/1994, then by OG70/1994, OG12/1995, OU3 1/1997, OU92/1997, L241/1998 and OU67/1999
(Table AIII.10).  The investment regime establis hed by OU92/1997 applied the principle of equality
of treatment for foreign and domestic investors on the incentive and profits taxation80, and, to
demonstrate the commitment of Romania to improving the stability of the regime for investment(Chapter II(3)(v)), the authorities undertook to maintain the incentive for five years.
94. Article 6 of L36/1999 on the State Budget, as interpreted by OU32/1999, suspended the
incentive under OU92/1997 as modified by L241/1998.   The suspension does not modify the
incentive granted to investors under any of the previously applicable investment regimes.  The
suspension is intended to help bring the budgetary de ficit within the 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 (Box III.2), but the
suspension appears to have damaged Romania's reputation with foreign investors.
81
95. Romania introduced in 1996 (and notified to the WTO) a subsidy programme for investment
in three counties (HG1007/1996).  This approach was renewed and broadened in 1998 by theprogramme for new investment in "disadvantaged regions", designated as such by government
                                                     
78 "Romania accepts Article VIII obligations", IMF Pr ess Release, No. 98/22, 9 June 1998.  The release
states that in accepting Article VIII, Sections 2, 3, and 4 of the IMF Articles of Agreement, "Romania gives
confidence to the international community that it will pursue sound economic policies that will obviate the need
to use restrictions on the making of payments and transfers for current international transactions, and therebycontribute to a multilateral payments system free of restrictions".
79 Commenting on the incentive under L35/1991, one set of observers noted that "not only do these
exemptions open room for abuse (through the importation of non-essential goods for resale), but they areunfairly discriminatory against domestic entrepreneurs if not matched by similar exemptions for domestic firms.
As an alternative, Romania could lower its tariffs on certain capital goods and raw materials for all investors"
(Gray et al., 1992, p. 20).
80 OG70/1994 provided for a surtax of 6.2% on permanent establishments of non-resident companies,
which was eliminated by OU92/1997.
81 "Investors hit out at Bucharest", Financial Times , 12 February 1999.Romania WT/TPR/S/60
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decisions (OU24/1998).   Qualified regions are mono-industrial coal-mining areas having experienced
substantial lay-offs and with relatively high unemployment rates (at least 25% above the national
average).  The Jiu Valley, a mono-industrial coal-mining area to the north west of Bucharest, was the
first region designated as such, in 1998, for ten years (HG992/1998).  The facilities apply to all
imported machinery, equipment, means of transport,  know-how, and depreciable capital assets for the
purpose of investing in the region, as well as to all inputs, spare parts, assemblies, and sub-assembliesfor the purpose of producing in the region.
82
Box III.2:  Evaluation of the effectiveness of incentives
Romania provides incentives for investment, as is the case of many other transition economies, to attract
foreign direct investment (FDI) and develop local industry.  While it is difficult to judge the extent to whichincentives have actually been a factor in FDI inflows, evidence from other economies raises doubts abouttheir effectiveness, and they may even be counter-productive in some instances.
In the first place, incentives are seldom among the main determinants of business decisions.  Proximity to
markets, the availability of sufficiently skilled labour at relatively low cost, adequacy of essentialinfrastructure and a stable economic and legal envi ronment are usually much more important.  Other
countries' experience with evaluation of tax and non-tax incentives suggests that the cost of such measures tothe Government (in terms of expenditure or tax revenue forgone) may exceed the investment generated.
Their high cost is related to the difficulty in identifying incremental investment;  that is, investment that
would not have been undertaken without the incentive.
Tax cuts for foreign multinational enterprises (MNEs) th at are taxed in their home countries purely on a
residence basis (that is, they receive a full credit for taxes paid abroad) may have little or no effect on theincentive for those firms to invest in the country offering such relief.  Such cuts would provide an effectiveincentive only insofar as MNEs are in an excess foreign credit position, taxes on repatriated income can be
deferred, the MNE's home country exempts foreign-source income from domestic taxes, or "tax sparing" is
allowed.
Secondly, to the extent that incentives stimulate partic ular types of investment, a less efficient allocation of
national resources may result than if the Government remained neutral and refrained from influencingprivate decisions.  Any adverse effect of incentives on resource allocation would manifest itself as lowertotal factor productivity (TFP).  In the case of investme nts, such as those in R&D, which are thought to yield
social benefits (externalities) that are not adequately taken into account by private investors, it is usually
extremely difficult to measure such externalities accurately, with the result that incentives may turn out to beexcessive.
Thirdly, incentives are usually expensive for the Government, involving large losses in tax revenues.  A tax
system involving many special incentives is also much more susceptible to tax avoidance, and tax evasion,which further contribute to the loss in tax revenues.  Incentives tend to worsen the fiscal balance, therefore,
thus reducing national savings and showing up as a deterioration in the current account balance.
Lastly, use of incentives may provoke countermeasures by trading partners.  Even where they do not
contravene the WTO Agreement on Subsidies and Countervailing Measures, they may nevertheless be usedby other countries as a justification for countervai ling actions.  Alternatively, countries may react by
adopting incentives of their own, thus resulting in a beggar-thy-neighbour situation.  Such an "incentives
race" is harmful to all countries concerned.
Source :  WTO Secretariat.
                                                     
82 Herzfeld & Rubin (1999b).WT/TPR/S/60 Trade Policy Review
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96. In addition, on 24 May 1999, the Official Ga zette of Romania published OU67/1999 on
measures to develop economic activity.  The measures apply to investments by foreign and domestic
persons "having a major impact on economic activity" (Article 2(1)), defined as investments of at
least US$50 million, and meeting certain conditions.  The incentive includes customs-duty and VAT
exemptions, a profits-tax holiday, and postponement of payment of taxes (e.g. for one to three years
on VAT), the latter considered to be of value to an enterprise operating in Romania's inflationary
environment.  Investments granted the incentive are designated as such by government decision,
adopted on a proposal by the Romanian Development Agency, which is responsible for encouraging
investment in Romania.  As of mid-1999, one  such decision had been adopted (HG445/1999),
providing for the most important national car comp any, Dacia, to receive the incentive under the
privatization contract with Renault concluded on 2 July 1994.  According to the authorities, theoperation of the decision is "frozen" until July 1999.
(e) Employment of foreign nationals
97. Romania offers a large skilled and literate labour force at comparatively low wage rates in
most sectors (a monthly average wage of US$150), with a high proportion of engineers and software
designers.  With appropriate on-the-job training, the labour force is reported to perform well with newtechnologies and more exacting quality requirements.
83  Labour/management relations are
occasionally tense as a result of economic restructuring efforts and attendant personnel lay-offs,
especially in the case of privatization.
98. The employment of foreign nationals is permitted in managerial positions and as experts in
the fields of activity necessary to operate the fo reign investment in Romania.  Such employment is
conditional upon the issuance and renewal of work permits;  the authorities describe their approach to
such permits as liberal, in spite of an unemployment rate of over 10%.
(iii) Protection of intellectual property rights
(a) Framework
99. At Romania's first TPR, the framework for the protection of intellectual property rights
inherited from socialism had been modified by the introduction of a new Patents Law (L64/1991) and
the Industrial Designs Law (L129/1992).84   Protection was granted to literary works.  In addition,
patents, trade-marks and industrial designs registered at the State Office for Inventions and Marks
(OSIM), were granted terms of protection of 20 year s for patents, ten years for trade-marks with the
possibility of renewal, five years for industrial designs with the possibility of renewal over two
consecutive periods of five years.  Romania extended to foreign rights holders, inter alia,  the
protection of the Paris Convention (1881) and Berne Convention (Rome text of 1928), the facilities of
the Hague Agreement (1967) and Madrid Agreement (1967).  Romania joined the World Intellectual
Property Organization (WIPO) in 1970.
100. During the period under review, Romania engaged in a dynamic legislative process to
complete this framework, in recognition of the importance of protection for foreign direct investment,
and spurred by the commitments assumed under Article 67 of the Europe Agreement (1995) and inthe bilateral agreement with the United States (1993), as well as the need to achieve full conformity
with the obligations under the TRIPS Agreement by the end of the transitional arrangements in
Article 65.  As of July 1999, Romania's standards fo r the protection of intellectual property rights,
notified to the WTO (Table II.1), are:
                                                     
83 U.S. ITA (1998a).
84 Gray et al. (1992), pp. 8-13.Romania WT/TPR/S/60
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- the Law on Copyright and Neighbouring Rights (L8/1996);
- the Patents Law (L64/1991) and implementing regulations (HG152/1992), the law on
Provisional Patent Protection (L93/1998), and the law on Fees for Patent Applications
and Patents (OG41/1998, repealing L120/1992);
- the Law on Trademarks and Geographical Indications (L84/1998) and implementing
regulations (HG833/1998);
- the Industrial Designs Law (L129/1992);
- the Law on the Protection of Topographies for Integrated Circuits (L16/1995) and
implementing regulations (HG535/1996);  and
- the Law on the Protection of New Plant Varieties (L255/1998).
Romania also notified provisions on the protection of undisclosed information under various laws and
the fact that anti-competitive practices in contractual licences are not regulated, as well as the
procedures for the enforcement of intellectual property rights.  Each aspect of Romania's legislation
was examined in the TRIPS Council.  On that basis,  the authorities intend to take legislative action to
close the remaining gaps with the obligations under the TRIPS Agreement, including a law on
enforcement of intellectual property rights at the border.
101. Romania joined a number of the major multilateral conventions on the protection of
intellectual property rights during the period under review (Table AIII.11).  In 1998, Romania ratified
nine major conventions, including the Berne Convention (1971), the 1989 Protocol and 1998
Regulations of the Madrid Agreement, the Rome Convention (1961) and the Geneva Phonograms
Convention (1971), as well as the various agreements on classification;  in 1999, Romania acceded to
the Budapest Treaty (1980).  Furthermore, a cooperation agreement with the European Patent
Organization (EPO) required Romania to register patents granted by the EPO starting in 1996.  On29 January 1999, the Administrative Council of the EPO invited Romania to accede to the European
Patent Convention, starting on 1 July 2002.
(b) Copyright law
102. The protection of copyright in Romania, rudimentary at the time of the first TPR, was
substantially increased in 1996 by the adoption of the new law.  An original intellectual creation, or acreation derived therefrom, benefits from protection for the life of the author plus 70 years.
85  Objects
of copyright include literary works, works of art, musical compositions, movies and other audiovisual
works, and photographs.  The law also recognizes and protects the neighbouring rights of performers
for their performances, producers of sound recordin gs for their own recordings, and television and
radio broadcasting stations for their broadcasts.  Specific terms of protection include lifetime plus50 years for computer programs
86, 50 years for a sound recording, and 50 years for radio and
television programmes.
                                                     
85 Exceptions to copyright pertain to ideas, theories, concepts, disc overies and inventions;  official
documents or symbols of the State;  means of payment;  simple facts and dates;  and news or press releases.
86 Defined to include any expression of a program, application program and operating system,
expressed in any language, either source code or object code, the preliminary conceiving materials, and themanuals.WT/TPR/S/60 Trade Policy Review
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103. Romania's law recognizes the author's exclusive right to use and exploit the creation.  Specific
rights of the author include the authorization to tr ansmit, broadcast or expose the work to the public,
to communicate the work through audio or audiovisual recording, rent original and copies of the
work, as well as the importation for trading purpose s of copies of the work made with the author's
consent.  For example, radio and broadcasting statio ns, as owners of neighbouring rights in their own
programmes, have the exclusive economic right to authorize the retransmission by cable by a cableoperator.  Such rights can be yielded to another person by contract.  Limitations on the exercise of
copyright include reproduction for personal use, subject to the payment of a fee on recording
equipment.  Foreign authors benefit from the protection provided to domestic authors on the basis of
national treatment or in accordance with the provisions of international agreements concluded by
Romania.
104. The author may either exploit a copyright on an individual basis or entrust the rights to a
"collective management body" established for the branch of creative activity of relevance;  six
collective management bodies have been established since 1996, including for musical compositions,
movies, and other audiovisual works.  Such bodies may negotiate a remuneration fee with the users up
to a maximum of 10% of the monies generated by the exploitation of copyright, and 3% forneighbouring rights.  They also forward to the Ro manian Copyright Office (ORDA) a record of the
repertoire of works under management.
105. The ORDA has the unique authority to enforce the law on the territory of Romania with
respect to the gathering of evidence, monitoring, and control.  In practice, the ORDA cooperates with
copyright holders (either individually or through the collective management body) on investigations
of possible copyright infringements.  Between 1 September 1997 and 31 December 1998, the ORDA
handled 693 investigations in the fields of audio (72%), video (15%), and cable TV, written worksand software (together 13%).
87  Most of these investigations were then forwarded for further action to
the police or the courts, although the copyright holder withdrew the complaint in a small number of
cases.
106. When infringement is determined to exist,  the infringer may be subject to a fine,
compensation for damages or imprisonment.  However, because the level of fines was established inthe national currency at the time the law was drafted, Romania's high levels of inflation have eroded
their real value and their dissuasive effect.
88  During 1996-99, the civil courts in Romania solved three
cases in the field of copyright and related rights, through which the defendants were obliged to pay
some amounts for the prejudice caused by infringing L8/1996.  During the same period, the criminal
courts solved 19 cases under L8/1996 concerning copyright and related rights;  in four other cases, thecomplaint was withdrawn during the procedure.  The authorities also recognize that insufficient
enforcement at the border is an outstanding gap in the protection of copyright and neighbouring
rights, and plan to introduce a law to this end.
                                                     
87 The International Intellectual Property Alliance (1998) estimated that, in 1997, losses from copyright
piracy on motion pictures, sound recordings and musical compositions, and computer software (excluding
entertainment software) amounted to US$39.4 million, assessed on the basis of prevailing standards of
protection in the United States.
88 For example, the retransmission of a work by cable is punishable with a fine of lei 700,000 to
7 million or a prison term of three months to three y ears.  In 1996, US$1 was equivalent to lei 2,000 compared
with lei 10,000 in 1998, indicating that the maximum fine fell from US$3,500 to US$700.Romania WT/TPR/S/60
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(c) Industrial property
Patent law89
107. In Romania, the patent for invention is the sole title of protection for inventions.  A patent
may be requested for an invention that is new, involves an inventive step, and is susceptible of
industrial application;  such an invention may relate to a product, a process or a method, or to a new
animal breed.90  The authorities have adopted a law on the protection of processes for the production
of plants.  Romania also provides a transitional pr otection of patents for certain inventions, including
chemicals and pharmaceuticals.
108. An application for a patent may be filed at OSIM by:
- Romanian natural and legal persons;
- foreign natural persons that are domiciled in Romania and foreign legal persons
having their headquarters in Romania;  or
- foreign natural or legal persons that are domiciled outside Romania, within the
framework of international agreements.
A decision to grant the patent is made between 18  and 48 months following its registration at the
National Register of Filed Patent Applications (Chart III.1).
109. The application for a patent contains, in addition to the request for a grant, a description of the
invention, claims, and drawings.  A claim for conventional priority or exhibition priority (in
accordance with Article 4 of the Paris Convention) may also be included in the patent application.  In
order to have priority recognized, the application must be filed within 12 months of the date of the
earliest priority or within six months from the date on which the invention was exhibited.  A claim for
priority may be added to the application up to two months from the date of filing, and supporting
evidence provided within three months.  The langua ge of the application is Romanian;  however, a
foreign applicant may file the request for a grant in  Romanian and, in another language, a description
of the invention, claims, and drawings, provided a translation is filed within two months.
110. The information on the invention is kept confidential until OSIM has published the
application.  OSIM decides whether to refuse an application or grant a patent within 19 months of the
filing, subject to payment of all fees;  reductions in fees are available to businesses with a turnover
below a threshold and natural persons meeting certain  income criteria.  According to the authorities,
foreign natural and legal persons can expect to pay up to US$1,500 for the grant of patent procedure.
A decision to grant the patent is published within 30 days in the Buletinul Oficial de Proprietate
Industriala  (Official Industrial Property Bulletin).  The decision not to grant a patent may be appealed
at the Municipal Court of Bucharest.
                                                     
89 Based on OSIM (1998a).
90 Exceptions to patentability are inventions contrary to public order or morality, as well as ideas,
discoveries, scientific theories, mathematical methods, computer programs as such, solutions of an economic ororganizational character, diagrams, educational and teaching methods, rules of games, city planning systems,systematization plans and methods, physical phenomena as such, culinary recipes, and creations of a purelyaesthetic character.WT/TPR/S/60 Trade Policy Review
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 Patent
 application-forms
-description
-claims
-drawings
Revocation of 
the decisionNational Register of Filed 
Patent Applications
Preliminary 
examination
Publication of patent 
applications
Decision to grant
National Register of Patents
Publication of the 
decision.  PatentExamining 
BoardSubstantive examination
Issue of patentDecision to 
refuse grantChart III.1
Patent Grant Procedure
18 months
18 - 48
months
1 monthAcceptance of
appeal
Refusal of 
appealNotice of
appeal
3 months
6 monthsNotice of
appealAcceptance of appeal
Reexamination 
Board
Reexamination 
Board Request for
revocation
End of procedure6 months
Source : State Office for Inventions and Trademarks.Reexamination 
Board
Refusal of
appeal
Refusal of
revocationRomania WT/TPR/S/60
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111. According to the authorities, OSIM granted  12,572  patents between 1992 and 1998, covering
all major areas of invention;  in 1997, 67% of applicants were granted patents.  Of the total number of
granted patents during 1992-98, inventors domiciled in Romania were granted 11,505 patents and
1,067 were granted to applicants domiciled abroad, including from the United States, Germany, the
United Kingdom, and France (Table III.8).   Inve ntors from Romania mainly consist of research
institutes.
Table III.8
Granted patents, 1992-98
1992 1993 1994 1995 1996 1997 1998 Total
Total 2,100 1,713 1,804 1,860 1,860 1,417 1,818 12,572
Of which:
Romanian 1,958 1,590 1,705 1,791 1,742 1,122 1,597 11,505
Foreign 142 123 99 69 118 295 221 1,067
France 10 8 9 5 11 29 13 85
G e r m a n y 2 41 61 31 02 03 2 2 1 1 3 6
I t a l y 15646 2 2 3 4 7
J a p a n 7 81 1 6 31 0 75 2
United Kingdom 8 9 6 7 4 35 20 89
United States 70 40 23 20 26 63 75 317
O t h e r 1 53 22 71 23 4 1 0 4 8 2 3 4 1
Source :  Information provided by the State Office for Inventions and Trademarks (OSIM) of Romania.
112. A patent has a maximum term of 20 years, but 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.  The holder is entitled to an exemption from tax on the profit from
the exploitation of an invention for the first five years.  The renewal of a patent must be requested
annually subject to payment of a fee.  The owner may exploit the patent either individually or in
cooperation with other natural or legal persons;  another option is the transfer of rights by assignment,licensing, or by testamentary succession.
91  The manufacture, illegal use or commercialization of the
subject matter of a patent or any other infringement of the rights conferred by the patent is punished
by the Criminal Code at the initiative of the owner.
Protection of marks and geographical indications92
113. Romania introduced in 1998 a new regime for the protection of trade marks and geographical
indications.  The law protects verbal, figurative, th ree-dimensional or combined signs, provided they
are registered by OSIM.  Applications for protection are subject to the same requirements as patents,
and are handled by OSIM in the same manner.  In addition, Romania accepts international
registrations at WIPO made by persons from contracting parties of the Madrid Agreement;  since
1998, Romania also accepts applications for registration under the system established by the 1989Protocol and 1998 Regulations of the Madrid Agreement.  The initial term of protection is ten years,
and the exercise of rights and their transfer are subject to essentially the same provisions as under the
Patent Law.
                                                     
91 If a patent has not been exploited or is insufficiently exploited without justification, and the owner
has not reached an agreement on the transfer of rights, the Municipal Court of Bucharest may grant acompulsory licence four years from the date of application or three years from the grant of the patent.
92 Based on OSIM (1998b).WT/TPR/S/60 Trade Policy Review
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114. OSIM recorded a doubling of registration applications for trade marks during the period under
review – from 5,331 in 1993 to 10,891 in 1998.  Of the applications filed in 1998, 4,039 were
Romanian applicants, 1,429 were foreign applicants through national channels and 5,393 were foreign
applicants under the Madrid Arrangement.
115. The law also protects designations of geographical origins which serve to confer a reputation,
quality or characteristic on a product.  These can be protected by registering them with OSIM, in theRegistrul National al Indicatiilor Geografice  (National Register of Geographical Indications) or in
accordance with the terms of L84/1998 or of the international conventions to which Romania is party.
Such indications are protected for an indefinite period and the applicant's right to use them is granted
for a period of ten years with unlimited possibilities of renewal (if the conditions under which the
right was acquired continue to apply).  No applicati ons to protect designations of geographical origins
have been registered to date.
Industrial designs
116. Romania's law on industrial designs and ratifi cation of the Hague Agreement took place in
1992, just before the first TPR.  To be eligible for industrial property protection, such designs must be
original or novel and must be registered at OSIM.  Applications for protection are subject to the samerequirements as patents, and are handled by OSIM in the same manner.  In addition, Romania accepts
international registrations of industrial designs at WIPO made by residents of contracting parties of
the Hague Agreement.  Protection of an industrial design entitles the owner to an exclusive right for
ten years to authorize the production, sale or importation of articles bearing or embodying a design
which is a copy, or substantially a copy, of the protected design, when such acts are undertaken for
commercial purposes.
117. Between 1993 and 1998, OSIM received a total of 8,296 design applications, of which 4,479
were from domestic applicants and 3,817 from foreign applicants.  In 1998, The Hague Agreement
was the preferred route for foreign applications, accounting for 96% of the total.
Topographies of integrated circuits
118. Romania introduced in 1995 a regime for the protection of topographies of integrated circuits
registered at OSIM.  In 1997, OSIM issued two certificates of registration for topographies ofintegrated circuits belonging to Romanian applicants;  no applications were registered in 1998.
Enforcement of industrial property rights
119. OSIM, unlike ORDA in the field of copyright, is not responsible for investigations of
infringement or resolving disputes between persons ov er inventor status or other rights.  Instead, the
rights holder is required to pursue such a claim through the domestic courts.
93  P o s s i b l e  r e m e d i e s
include civil damages.  According to information pr ovided by OSIM, the Ministry of Justice reported
249 cases of possible infringement of intellectual property rights in 1996, and 206 cases in the first
three quarters of 1997.
                                                     
93 Romania responded to the check-list on enforcement of the TRIPS Council (IP/N/6/ROM/1).Romania WT/TPR/S/60
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(iv) Technical standards and regulations
(a) Framework
120. At Romania's first TPR in 1992, the authorities reported on the framework for setting
domestic standards and technical regulations, and the procedures for conformity assessment94, which
were notified to the WTO in 1996 (G/TBT/2/Add.17).  This framework consisted of a single central
government body – the Romanian Standards Institute – which set standards in accordance with theCode of Good Practice, participated in international standard-setting activities, and functioned as the
WTO Enquiry Point for the purpose of Article 10 of the Agreement on Technical Barriers to Trade.
Romania had also noted that conformity assessment procedures were not yet fully developed, but
would be notified in due course.
121. Starting in 1998, this framework was completely overhauled, supported by extensive
technical assistance from the European Commission.
95  A first objective was to achieve a clear
separation between mandatory and voluntary standa rds.  The authorities retained the regulatory
function of issuing mandatory standards necessary for the protection of human health or safety,
animal or plant life or health, protection of the environment, or the prevention of deceptive practices,
and devolved to the private sector voluntary consensus standard setting and product certification.Thus, on 30 April 1999, all of the 16,025 Romanian standards became voluntary with the exception of
those determined to be mandatory by the authorities.
122. The Association for Standardization of Roma nia (ASRO) was established by OG39/1998 to
replace the Romanian Standards Institute.  ASRO is a non-governmental body of public interest,
under the guidance of the Ministry of Research and Technology, and approves and lists national
standards ("standard roman" (SR)).  Its work pr ogramme is aimed at the adoption of international
standards or the development of equivalent Romanian  standards.  ASRO participates in the activities
of regional (CEN, CENELEC, ETSI) and internationa l standardization bodies (ISO, CEI).  ASRO also
offers assistance to commercial operators on national standards, and is the WTO Enquiry Point under
Article 10 of the Agreement on Technical Barriers to Trade.
123. A second objective of the new framework was to achieve a clear separation between
standard setting and conformity assessment.  To this end, the Association of Accreditation ofRomania (AARO) was establishe d by OG38/1998, for the purpose of developing a national network
of product certifiers and testing laboratories certified on the basis of EN 45000.  Under this new
framework, the authorities recognize the competence of conformity-assessment persons or bodies on
the basis of an evaluation process, and such notified persons or bodies may seek accreditation by
AARO.  Certified bodies may also carry out ISO 9000 certification of quality management systems or
ISO 14000 certification of environmental quality, such standards having been adopted as national
ones.  According to a survey conducted by the ISO, 214 Romanian enterprises had been issued ISO
9000 certificates by the end of 1997, compared with six as of mid-1994, indicating a rapid
development of quality management certification;  no ISO 14000 certificates had been issued.
96
124. As experience with the new national framework for standard setting and
conformity-assessment advances, the authorities hope to conclude mutual recognition agreements.  In
particular, the conclusion of European Conformity Assessment and Accreditation Agreements
(ECAA) will remove important obstacles to the free movement of goods between Romania and its
                                                     
94 GATT (1993), Vol. II, pp. 61-62.   OG19/1992, which amended L20/1984, and was approved by
L11/1994.
95 Notified by the European Communities to the WTO in G/TBT/W/43.
96 ISO (1998).WT/TPR/S/60 Trade Policy Review
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major export market, the European Union.  Such agreements allow products that used to need
technical approval in both the exporting and importing countries to be sold on the basis of
certification in the country of origin, and custom s authorization;  the Commission has described this
process as extending the single market to the countries in Central and Eastern Europe for particular
products in advance of accession.  No such agreements have as yet been concluded.
(b) Romanian standards
125. As of the end of 1998, there were 16,025 national standards ("standard roman" (SR)), of
which 39.3% were identical to or equivalent to international standards, and a further 9.2% were
identical to European standards.  In comparison, some 30% of domestic standards corresponded to
international or European norms according to the Secretariat's Report for the first TPR in 1992.97  The
remaining standards correspond, for the most part, to specifications for products or processesdeveloped under central planning, prior to the st art of the transition.  Since 1995, Romania has
adopted 3,636 standards, of which 86% are identical to international or European standards
(Table III.9).  The authorities intend to pursue the objective of the integration of Romania in the
Single Market of the EU by the transposition of European directives.
98  The authorities also intend to
promote transparency by implementing, at the national level, European Directive 83/189/EEC on theprocedure for information exchange in the field of standards and technical regulations.
Table III.9
New Romanian standards, 1995-98
1995 1996 1997 1998 Total
New Romanian standards 844 947 915 930 3,636
-  Identical to ISO/IEC standards 475 421 433 404 1,733
-  Identical to European standards 203 407 352 445 1,407
-  Other 166 119 130 81 496
Source:   Information provided by the Association for Standardization of Romania (ASRO).
(c) Conformity assessment
126. Romania began requiring certificates of conformity on 19 November 1996 for imports of
certain goods, including construction materials, gas-driven machines, high-voltage electrical
equipment and electrical appliances that are potentially explosive, protection equipment, pressurized
containers, toys for children under age 14, and processed foods and food products (HG 629/1996).99
This requirement was replaced by HG168/1997 on the status of products and services that may
endanger life, health, work security, and environment protection.  Article 4 of this Decision stipulates:
"The market launching and the entering into circulation of the products and services which are
regulated by the normative technical documents is accepted if they are covered by one of the
following situations:
(a) they are accompanied by conformity certificates issued by accredited certification
bodies or/and notified as per the law;
(b) they are accompanied by the declaration of conformity;
                                                     
97 GATT (1993), Vol. I, p. 69.  Romania adopted only about 0.2% of CMEA standards due to its
special status within the group.  Romania implemented such standards only when they corresponded tointernational requirements.
98 Government of Romania (1998a), pp. 194-225.
99 U.S. ITA (1998b) and Bureau of National Affairs (1998), p. 22.Romania WT/TPR/S/60
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(c) they bear the mark of conformity with the mandatory Romanian standards;
(d) they bear the CE marking in conformity with the European Directives or a mark of
conformity with standards, different from the one mentioned at (c), if the mark is
recognized in Romania as per the law.
The products and services which are not covered by one of the situations mentioned in previous
paragraphs are forbidden to be marketed, or to enter into circulation."
(d) Quality requirements
127. To ensure the protection of consumers, quality requirements apply to certain domestically
produced and imported products sold on the domestic market;  these are treated alike, except for the
requirement that the label of the imported product must include a translation in Romanian of the main
characteristics of the product (period of validity, possible interdiction of use, and maincomponents).
100  Quality requirements at the initiative of the Ministry of Health concern medicines
and products for human use (e.g., cosmetics, homeopathic treatments).101
128. Quality requirements on other products are at the initiative of the Office of Consumer
Protection, in collaboration with the Ministry of Industry and Commerce.  Requirements issued during
the period under review include the mandatory labelling in Romanian of footwear, throughHG261/1998 (described as a harmonization to Directiv e 94/11/EEC), for textile and clothing products
(HG785/1996)
102, household refrigerators (HG857/1996),  and food products (HG784/1996).  The
authorities intend to amend the mandatory labelling requirements on textile and clothing products in
accordance with Directives 96/74/EC and 97/37/EC.
(v) Competition policy
(a) Framework
129. Romania's competition policy at the time of the first TPR in 1992 was rudimentary, in
keeping with the early stage of the transition.  Basic protection against anti-competitive practices
undertaken by restructured state-owned enterprises was provided by Article 36 of L15/1990, and
enforced by private rights of action in the courts.  However, a comprehensive framework for
competition policy was missing, including a body with the technical competence to administer and
enforce the law, and specific criteria to balance Romania's need for rapid private sector developmentagainst the potentially negative effects on competition in a fledgling market economy.  In order to
address the situation, and also to approximate its legislation with that of the European Union,
Romania established a competition policy under L21/1996, which came into force on
1 February 1997.
130. The Law aims to protect, maintain, and st imulate competition and a normal competitive
environment for the benefit of the consumer.  It applies to anti-competitive practices by private
commercial operators and state-owned enterprises, including commercial companies where the State
is a major shareholder and regies autonomes .  The Law also applies to anti-competitive practices by
central and local public administration authorities when they intervene in market operations or take
                                                     
100 OG21/1992, approved by L11/1994, modified by OG42/1995 and HG168/1997.
101 OMS1010/1992, as modified by OMS59/1993.
102 According to EURATEX, "complex and onerous customs procedures, labelling requirements and
mandatory certification system have developed into the most harmful NTBs for the [European] textile sector",(European Commission, DGI, 1997).WT/TPR/S/60 Trade Policy Review
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decisions that limit the freedom of trade or th e autonomy of commercial operators or establish
discriminatory conditions for the activities of operators.  The Law covers acts and deeds on the
territory of Romania, and those perpetrated abroad, if they have effects in Romania.103
131. The Law is administered by the Competition Council, an independent administrative authority
in the field of competition, and the Office of Competition, within the Government.104  The Council
and the Office conduct investigations and may cooperate in this respect.  The investigations arefinalized by decisions of the Competition Council;  both authorities monitor jointly or separately, their
enforcement.  During 1998, the Competition Council handled 231 cases compared with 171 cases in
1997.  In addition, the Council issues advisory opinions on the restructuring of state-owned
enterprises and regies autonomes , including on their privatization (Box III.3).
132. According to Article 4 of L21/1996, the Office of Competition approves and monitors the
prices and tariffs set by regies autonomes , as well as of companies operating in a natural monopoly
situation (e.g., Romtelecom has a monopoly on basic telecom services until 2003) or other situations
of special legal regimes.  In economic sectors or markets where competition is excluded or
substantially restricted by law or by the existence of a monopolistic position (defined as three
companies or less), the Government can decide price controls for a period no longer than three years.In addition, the Government can decide to impose price controls in crisis situations for a six-month
period, extended for three months only.  The Government's decisions on price controls take into
consideration the advisory opinion of the Competition Council.
133. The authorities recognize that a law on state aids is a missing element in Romania's legislative
framework for competition policy and is necessary to complete the approximation with the EU.
105
Such a law was drafted by the Competition Council and Competition Office and proposed toParliament in mid-1998, for adoption by the Government.  The Chamber of Deputies adopted the draftlaw in March 1999 and the Senate is conducting proceedings on adoption of the law.  The law
provides for the mandatory reporting of state aid by the granting central government body to the
Competition Council for the purpose of authorization.  Once the law is in force, the Office of
Competition will establish an inventory, and monitor and report on state aids in order to promote
transparency in this area of government policy.  The authorities also intend to update the notificationsto the WTO of state aids, under Articles 25 and 29 of the Agreement on Subsidies and Countervailing
Measures, in accordance with the agreed format (G/SCM/6).
106
                                                     
103 An analysis of the law reaches the conclusion:  "The Romanian Law on Competition, though as yet
barely tested by enforcement, is in the mainstream of  competition laws in market economies throughout the
world", Pittman (1997).
104 Competition Council (1998).
105 Government of Romania (1998a), pp. 284-285.
106 G/SCM/N/16/ROM and G/SCM/N/16/ROM/Suppl.1.Romania WT/TPR/S/60
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Box III.3:  Competition policy and restructuring of state-owned enterprises in transition economies
The role of competition policy in transition economies, and its interface with the liberalization of prices and
trade policies, is distinct from its role in mature market economies, already characterized by a relatively
high degree of product market competition.  In contrast, the starting-point of most transitions is a highlyconcentrated state-owned enterprise sector, with virtually no competition due to price controls and
licensing of imports and exports.  A degree of product market competition can be attained immediately by
liberalizing domestic prices and trade policies, thus exposing state-owned enterprises to competition.  In
the short-term, reaping the benefits of restructuring at the economy-wide level depends on financialdiscipline and over the medium term, on privatization, particularly of the largest industrial enterprises.
In this context, the interaction between privatization and competition is described by Fingleton et al.
(1996), p. 154:
Privatization decisions may adversely affect competition in several ways.  First, a dominant or
monopoly enterprise may be privatized without being restructured horizontally (i.e. broken up)even though this is feasible, resulting in the persistence of concentration.  Second, a non-dominantenterprise may be sold to its main competitor, thereby increasing concentration.  In both cases, thereceipts for the privatization agency will be higher, the more concentrated the market is afterprivatization, especially if potential entry and import competition were weak.  The agency may
also face pressures from other policy objectives, such as the arguments about national champions
or the managed development of strategic or declining industries.
For Romania, the advent of competition policy and agencies to administer and enforce the law date from
1997;  however, privatization of large state-owned enterprises has lagged since the transition began in1989, leaving an outstanding stock of such enterprises to be privatized.  The advice of Romania'sCompetition Council was solicited by the State Ownership Fund (SOF) in 43 cases (out of which 21 on
divestiture) in 1998, compared with 23 in 1997, on which favourable opinions were granted in each case.
In addition, the Competition Council was notified in 52 cases on an ex post basis in 1998, after the
privatization agreements had been reached, of econo mic concentrations for which an authorization was
solicited;  in all cases, it was granted.
For example, S.C. Lafarge Romania (a wholly owned subsidiary of Lafarge of France), purchased from the
SOF the controlling interest (51%) for S.C. Romcim, which accounts for just under 50% of domestic sales
of cement.  The resulting economic concentration was notified to the Competition Council and authorizedby Decision 71/1998, subject to a fee of some US$75,000 (0.1% of  the combined turnover).  In support,the decision notes the deal did not alter the conditions of competition on the domestic market, importcompetition was facilitated by a low level of tariffs (10% in 1999), and Lafarge would invest to upgradeRomcim's production facilities, fulfilling the criterion  of positive effects required under Article14(2) of
L21/1995.
Source:   WTO Secretariat.
(b) Anti-competitive practices
Categories
134. Three categories of anti-competitive practices are prohibited:
(i) "any express or tacit agreements among undertakings or groups of undertakings, any
decisions of partnership or concerted practices among these, having as object or as
effect the restriction, prevention or distor tion of competition on the Romanian market,
or on part of it" (Article 5.1);WT/TPR/S/60 Trade Policy Review
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(ii) "any misuse of the dominant position held by one or several undertakings on the
Romanian market or on part of it, by resorting to anti-competitive deeds having as
object or as effect the distortion of trade or prejudice to the consumers" (Article 6);
and
(iii) "any mergers which, by setting up or consolidating a dominant position, cause or may
cause a significant restriction, prevention or distortion of competition on theRomanian market or on  part of it" (Article 13).
Thus, in accordance with the approach of the EU, the Law does not prohibit agreements, dominant
positions or mergers, as such, but subjects them to the oversight of the competition authorities to
ensure that potential anti-competitive practices are as sessed in accordance with the criteria established
under the law.
135. Article 5 of the Law prohibits certain agreements, association decisions and concerted
practices:  concerted fixing of prices, fees, rebates, mark-ups;  limiting or controlling production,
distribution, technological progress, or investments;  allocating distribution markets or supply sources;
imposing unequal terms for equivalent services;  conditioning the conclusion of contracts;
participating with rigged bids to auctions;  and eliminating other competitors from the market.  TheCompetition Council may grant, by decision, exemption for individual cases of agreements,
association decisions or concerted practices, and establish exemptions for certain categories of
agreements, association decisions or concerted practices by regulations/guidelines.  The following
categories qualify to be exempted from the provisions of Article 5(1):  exclusive distribution;
exclusive purchase;  research and development;  specialization;  transfer of technology and/or
know-how;  franchising;  distribution, service and spare parts during the warranty and post-warranty
period for vehicles;  and insurance.
136. 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):  positive effects
prevail over negative ones;  consumers benefit from the agreements as much as the parties involved;
the possible restrictions on competition are indispensa ble to obtain the expected benefits;  competition
is preserved;  and the agreement contributes to one of the following objectives enumerated in Article5(2) (e):
- improvement of the production or distribu tion of goods, the carrying out of works or
provision of services;
- promotion of technical or economic progress, improvement of the quality of the good
or service;
- consolidating the competitive position of small and medium-sized undertakings on
the home market;
- increasing the competitiveness of Romanian products, works and services on the
international market;  and
- charging, in the long run, considerably lower prices to the benefit of consumers.
137. For economic concentrations, the Competition Council uses criteria to appraise compatibility
with a normal competitive environment, which include  the need to preserve and develop competition
on the Romanian market, taking into account the structure of all markets concerned, and the actual orRomania WT/TPR/S/60
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potential competition between undertakings located in Romania or abroad.107  The Competition
Council may authorize a concentration provided the undertakings concerned prove that all the criteria
in the Law are met, namely that the concentration contributes to increasing economic efficiency,
distribution or technological progress, or to enha ncing export competitiveness;  positive effects
prevail over negative effects of restricting competition;  consumers benefit from resulting gains to a
reasonable extent, especially through lower prices in the long run.
138. The Law applies to agreements and economic concentrations that meet certain minimum
threshold values.  Articles 5 and 6 of L21/1995 apply to the agreements, decisions, and concerted
practices where the parties involved have a combined turnover above the threshold established
annually by the Competition Council, and where their joint market share is over 5% of the market.
The provisions on economic concentrations apply where the parties involved have a turnover abovelei 25 billion (about US$2 million), a threshold set annually (Decision 7/1998 of the Competition
Council).
Procedures
139.  Cases handled by the Competition Council result from complaints of consumers or
competitors, from the notification of agreements or mergers, or are self-initiated;  cases also resultfrom requests for advisory opinions on restructurin g state-owned enterprises (Table III.10).  Upon
receiving a complaint alleging an anti-competitive practice, the Council or the Office first examines
whether there is a basis for the complaint in law or in fact, and responds to the complainant within
30 days in writing with a decision, including, where relevant, the reasons the complaint was rejected.
If the complaint is accepted, the Council or Offi ce initiates an investigation and a rapporteur is
appointed to draw up the report, which forms the basis for a final decision by the Council, and any
possible fines, sanctions or directions.
Table III.10
Cases registered at the Competition Council, 1998
Total Ongoing Finalized
Total 231 20 211
Complaints, ex officio investigations on anti-competitive
practices86 9 77
Agreements 12 3 9
Abuse of dominant position 30 6 24
Other practices 44 0 44
Requests for non-intervention 8 2 6
Individual exemptions 1 0 1
Exemptions on categories of agreements 22 2 20
Notifications of economic concentration 50 7 43
Advisory opinions 57 0 57
Miscellaneous 7 0 7
Source : Information provided by the Competition Council of Romania.
                                                     
107 Other criteria are the market share held by the undertakings concerned, and their economic and
financial power;  the alternatives available to suppliers and users, their access to market and supply sources, andany barriers to market entry, legal or of any other nature;  the demand and supply trend for the goods andservices concerned;  the extent to which the interests of  users or consumers are affected;  and the contribution to
technical and economic progress.WT/TPR/S/60 Trade Policy Review
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140. Notifications of agreements/economic concentrations are either made on a prospective basis
to obtain "negative clearance" (no objection) or, once such agreements/economic concentrations have
been concluded, to obtain an exemption/authorization from the Competition Council.  Most
notifications of agreements received by the Competition Council in 1997 and in 1998 concerned
exclusive distribution, and most requests for exemptions were authorized, subject to the payment of
the fee.
141. The Law provides for fines in cases where:  an economic concentration is not notified;  the
provisions of the Article 5 and 6 are infringed;  misleading or incomplete information or documents
are provided;  the required information is not provided;  the control to be effected according to the
provisions of the Law is refused.  In cases where the measures decided by the Competition Council
are not respected, the Council may apply the maximum fine provided by the Law or it may resort tothe legal authorities.  The Competition Council and Competition Office may impose deterrent fines to
induce the parties to supply correct and complete info rmation;  to submit to the control;  to respect the
provisions of Articles 5, 6 and 13 of the Law;  and to respect the measures taken by a decision issued
according to the Law (Articles 54-58).
(c) Administered prices (price controls/subsidized prices)
142. Under OU7/1998, the list of goods and services whose prices were set with the advice of the
Office of Competition in 1998 were:  electric and thermal energy (only for energy transport and
distribution to captive consumers);  railway (only for persons), river (only in isolated areas), and
urban transportation services;  basic postal services;  water, drinking water, and sewage;  services
provided by the Ministry of the Interior (passports, identity cards, driving licences); and human drugs
produced domestically.  For 1999, the regulatory basis for electric and thermal energy production and
consumption was modified by OU63/1998, and the Of fice of Competition is therefore concerned only
with prices for energy transport and for distribution to captive consumers.
143. The authorities report that certain of these services were subsidized from the central
government budget in 1998:  thermal energy for domestic consumers;  river transportation services for
persons in isolated areas;  and urban transportation services in certain localities.  The subsidies for
river and urban transportation services are to be assumed by local budgets in 1999, in accordance withthe Law on local public finances (L189/1998).  In addition, the authorities report subsidies from the
central government budget for 17 products of the mining industry.
108
144. Administered prices on these goods and services were also reported in the Government's
Report for Romania's first TPR in 1992.109  However, a significant liberalization took place during the
period under review by virtue of the substantially reduced scope of administered prices in 1998.  The
subsidies on meat and meat products, eggs, sugar, edible oil, and medical cotton wool were eliminated
in September 1992;  subsidies on bread, milk, butter, housing rental rates, and school books were
eliminated in 1993.  The list of goods and services whose prices were set with the advice of a central
government body in 1998 contained many fewer entries than in 1992 due to the switch to commercial
company status of regies autonomes  and the advance of privatization.
                                                     
108 Pit coal;  lignite;  brown coal;  copper in copper concentrate;  copper in concentrate traces;  zinc in
concentrate traces;  lead in l ead concentrate;  lead in co ncentrate traces;  zinc in zinc concentrate;  iron ore
merchandise with 48% Fe;  uranium in concentrate, products of molybdenum;  gold in gold concentrate;  gold insludge;  gold in amalgam;  non-copper lead;  and bauxite washed and dry type Dobresti.
109 GATT (1993), Vol. II, Annex 17 (c), p. 127.Romania WT/TPR/S/60
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(d) State aids
145. Romania is in the process of introducing a legi slative framework for state aids.  Under the
draft law, state aid is defined as any specific advantage, resulting in a net transfer of public funds or
tax revenue forgone.  The draft states that a list of covered measures would therefore include (but not
be restricted to):  subsidies;  debt write-offs;  compensation for operating losses;  tax exemptions,
reductions or deferrals;  loans on preferential terms;  and equity injections by the State or publicbodies if the rate of return is below normal.  Subs equent to the passage of the law on state aids, the
Office on Competition intends to issue secondary legislation on procedural aspects such as the
notification of state aid, the procedure for analyzing the notification, and the definition of criteria to
be met when authorizing an aid.  The Competition Council will also issue the secondary legislation on
categories of state aids to be exempted, such as the conditions for de minimis aid or the definition ofcategories of aids considered to be authorized.  The Competition Office will establish an inventory of
aids, which would also be notified to the WTO.
(vi) Government procurement
(a) Framework
146. The Government's Report for the first TPR described the framework for government
procurement (HG156/1992) and expressed Romania's intention to accede to the (then Tokyo Round
now plurilateral WTO) Government Procurement Agreement.
110  At that time, Romania qualified
foreign and domestic suppliers to participate in selected central government procurements on a non-
discriminatory basis (except for IBRD credits, where a 10% domestic preference applied to price),
and provided for transparency and selection on the basis of the criterion of competitiveness.111
147. The current framework for government procurement is established by OG12/1993, as
modified.112  The law covers purchases by central government bodies – Parliament, the Presidency,
the Government and ministries, institutions of hi gher learning, and the judiciary – as well as by
regies autonomes113, of goods and services, and public inve stment, with the exception of procurement
of armaments or public works by the Ministry of Defence;  state-owned companies with the status of
commercial companies have their own internally elaborated purchasing policies based on commercial
principles.
148. A national preference of 20% was introduced in 1995, but was eliminated in 1998
(HG568/1998).  The authorities became aware that the framework for public procurement did not
provide the full benefits of competition and the law had to be modified to harmonize with the
European Union.114  Such benefits include greater commercial opportunities to industry, better value
for public money, and providing taxpayers with the confidence that public funds are used efficiently,as well as improved fiscal balance.
                                                     
110 GATT (1993), Vol. II, p. 64.
111 Covered entities were the Government and ministries, and covered purchases were selected office
equipment and machinery.  For example, Annex 2 of HG156/1992 covers the purchases by the Ministry ofIndustry of calculating machines;  office furniture and equipment;  telecom, contro lling, measuring, recording
apparatus;  and typewriters.
112 OG12/1993 was approved and modified by L83/1994, was modified by OG19/1995, approved and
modified by L96/1995, modified by OG55/1998, and modified by HG568/1998.
113 According to Article 13 of OG15/1993 on the restructuring of the activity of regies autonomes,  the
provisions on procurement apply to public corporations whose financing is wholly or partially allotted from agovernment budget.  OG12/1993 was m odified by OG19/1995, approved by L96/1995, to explicitly include the
regies in the list of covered entities.
114 Government of Romania (1998a), pp. 293-294.WT/TPR/S/60 Trade Policy Review
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(b) Conduct of auctions
149. All procurements above a floor threshold, established periodically by government decision,
require an auction; the latest such decision, HG568/1998, established a threshold of lei 500 million
(about US$35,000).115  Romania uses three tendering procedures:  open, selective and limited.
Qualified suppliers may be pre-selected by the authorities on the basis of the criteria in the tender
document, and published on a list.  The law states that such criteria cannot discriminate amongRomanian suppliers, or between private and state-ow ned enterprises, or between domestic and foreign
suppliers.  A single tender procedure is permitted under certain conditions, duly substantiated by the
purchasing entity.
150. Article 5 of OG12/1993, as modified, establishes the conditions for the participation of
foreign suppliers:
- on the condition that Romanian suppliers are granted similar treatment in the country
of origin of the foreign supplier, certified as such by the Ministry of Industry and
Commerce;  and
- on the condition that a Romanian supplier is either not available or cannot fulfil the
conditions of the purchase, duly substantiated by the purchasing entity on the tenderdocument.
151. The authorities are required to publish all relevant documents and conduct all communication
with potential suppliers on a written basis. The outcome of an auction is decided by a tender
commission composed of five persons, including a representative of the Ministry of Finance, on the
basis of an established methodology.  Suppliers may contest decisions taken in the course of a
procurement, with the exception of the type of tendering procedure selected, the restriction to
Romanian suppliers, or the economic or technical conditions required for the performance of thecontract.  A complaint must first be lodged with the deciding Commission within seven days of the
decision allocating the contract, followed by, in the event of a negative outcome, a notification to
contestants of the basis of the decision taken.  Such a decision may be appealed in a judicial
procedure.
152. The implementing regulations for procurements of goods and services are contained in
HG63/1994, as modified, and those for public works ar e contained in HG592/1993, as modified.  For
goods and services, a tender must be publicized at least ten days before the date for the submission of
bids (30 days for public works).  The tender documents must include all relevant information such as
economic and technical conditions, financial guarantees, and the method of evaluating the bid.
According to Article 2.11(b) of the norms established by the Ministry of Finance for the conduct oftenders for goods and services, bids are evaluated on a point basis, of which a minimum 70% are
attributed to price characteristics and 30% to non-price characteristics.
116
                                                     
115 The law prohibits the splitting of the contract's value in order to avoid an auction.
116 The Ministry of Finance has published the methodological norms for the conduct of tenders for
goods and services in OMF45184/1996, as modified by OMF47735/1996, and, with the Ministry for PublicWorks and Land Planning, the corresponding norms for public works in OMF-MLPAT784-34/N/1998.