RESTRICTEDWORLD TRADE
ORGANIZATIONWT/BOP/G/7
15 January 1999
(99-0113)
Committee on Balance-of-Payments Restrictions Original:  English
1999 CONSULTATION WITH ROMANIA UNDER ARTICLE XII:4(A) OF GATT 1994
AND THE RELATED UNDERSTANDING
Basic Document Supplied by Romania
1. On 10 October 1998 the Romanian Government introduced a temporary 6 per cent import
surcharge, according to the relevant WTO provisions on the balance of payments. The introduction ofthis surcharge is one of the measures adopted with a view to safeguarding the external financial
position and the balance of payments.
2. WTO Members were informed about this measure through document WT/BOP/N/4l of
16 November 1998 containing Romania's notification of 6 November 1998.
3. As of  1 January 1999 the surcharge was reduced from 6 per cent to 4 per cent.
I. BALANCE OF PAYMENTS CURRENT POSITION AND FUTURE PROSPECTS
A. C
URRENT ACCOUNT
4. The current account has recorded a strong deterioration. During the first 10 months of 1998
the current account deficit amounted to US$2.230 billion, 57 per cent higher than in the same period
of 1997.
5. Current account deterioration was caused mainly by the increase in the trade balance deficit.
The net import of goods contributed by 91 per cent to the current account deficit, the remaining part
of the deficit coming from the positions "Services" and "Incomes", of which 73 per cent was covered
by the surplus of the "Current transfers" position.
6. During the first 10 months of 1998, the trade balance deficit reached US$2.033 billion and is
the highest deficit recorded in the last seven years. It exceeded by 64 per cent the trade deficit
recorded during the first ten months of 1997.
7. During the first 10 months of 1998 as compared to the same period of 1997, the import of
goods increased by 7.4 per cent, while the export of goods decreased by 2.6 per cent. Imports were
covered by exports in proportion of 77.3 per cent, 7.9 per cent less than in the first 10 months of 1997.
8. The worst deteriorations of the trade balance were recorded in the case of agro-food products
(the surplus of US$10.5 million turned into a US$431.4 million deficit), chemicals, rubber andplastics (the deficit increased by 2,1 times) and machinery, appliances, equipment and transportation
(the deficit increased by 13.4 per cent).
9. The decrease in exports was caused both by domestic and external factors. Among the
domestic factors was the drop of industrial production by almost 18 per cent and the reduction of the
livestock production, high production prices, low productivity, rigid export structure as well as anovervalued exchange rate in the first 8 months of 1998.WT/BOP/G/7
Page 2
10. Among the external factors adversely influencing exports one can mention the drop in foreign
demand, especially for aluminium, steel, metals, fertilizers, the low prices on the world market,
especially those for  energy products, cereals, fertilizers and other chemical products as well as for
metals.
11. The increase in imports was caused, among other things, by the drop in the domestic
production of agro-food products and durable consumer goods, the technical upgrading of production
capacities, the high level of domestic production costs and the overvalued exchange rate in the first
8 months of the year.
B.  CAPITAL AND FINANCIAL ACCOUNT
12. During the first 10 months of 1998 the surplus of the Capital and Financial Account increased
by 2.7 times as compared to the same period of 1997.
13. Current account deficit  financing and foreign debt service payments were met both through
capital inflows (mainly direct investment and foreig n borrowing for investment financing) and the use
of the foreign exchange reserves of the banking system.
14. It is worth mentioning that in 1998 Romania did not benefit from loans granted by the IMF or
other international financial organizations with a view to covering the balance of payments deficit.
C.  FOREIGN EXCHANGE RESERVES
15. The foreign exchange reserves of the National Bank of Romania diminished from
US$2089.6 million at the end of 1997 to US$1723.5 million as of 31 October 1998.
16. At the end of October 1998 the foreign exchange reserves of the banking system covered only
2.6 months of imports as compared to 3.6 months of imports at 31 December 1997.
17. At the same time, the foreign reserves of the commercial  banks dropped from
US$1609.9 million as of 31 December 1997 to US$948.9 million on 31 October 1998.
D.  FOREIGN DEBT
18. As of 31 October 1998, the  medium  and  long- term  debt  amounted  to  US$8834.5 million,
recording an increase by 4.8 per cent as compared to 31 December 1997.
19. During the first 10 months of 1998, the medi um and long-term debt service amounted to
US$1648.3 million, representing 20.8 per cent of the export of goods and services.
20. Net payments (the difference between drawings and debt service) continued to record a
negative trend, reaching US$363.1 million as of 31 October 1998.
21. In 1999 more than US$3 billion are due for foreign debt settlement and this amount exceeds
by much Romania's annual payments for this purpose (under US$2 billion).
22. Public debt service and the service of the debt guaranteed by the Government will amount to
US$2.2 billion. The State will pay almost US$1.6 billion, of which US$280 million are interest and
commissions. For the remaining due debt (US$600 million) the State provided governmental
guarantees, which means that it will pay a part of this amount. (In the first 11 months of 1998, the
Romanian State paid US$300 million in settlement of commercial companies' debt which was
guaranteed by the Government).WT/BOP/G/7
Page 3
23. Reimbursement, in 1999, of the public debt and of debt guaranteed by the Government will
have a negative impact on foreign exchange reserves in case no other financing sources will be found.
E. MEASURES FOR THE IMPROVEMENT OF THE EXTERNAL BALANCE OF PAYMENTS
24. The Government has adopted certain measures with a view to improving the external balance
of payments, among which:
− consolidation of the macroeconomic stabilization through fiscal and monetary measures
aiming to reduce inflation and ensure a realistic exchange rate of the national currency;
− restructuring and modernization of the natio nal economy with a view to increasing export
capacity by producing goods that are demanded on the world market and by improvinginternational competitivity through the reduction of production costs and the improvement of
product quality;
− acceleration of  privatization; this process contributes to the increase in the economic
efficiency of the enterprises involved, including those producing for export and to the creation
of foreign exchange resources, in the case of  privatization with foreign capital participation;
− fostering an economic environment that is favourable to the development of the private
sector, especially of the small and medium-sized enterprises in the field of exports;
− facilitating foreign capital investments which besides the increase in foreign exchange
reserves may also contribute to the increase in exports;
− further encouraging exports while observing WTO rules in this field.
It is expected that these measures, along with the temporary import surcharge will allow
significant progress to be made in about two years time as regards the external balance of payments.
II. RÉGIME OF THE TEMPORARY IMPORT SURCHARGE
25. The 6 per cent temporary import surcharge is applied to the customs value of imported goods
and was introduced by Romania on 10 October 1998 through the Government Emergency Ordinance
No. 22 of 29 September 1998, published in Monitorul Oficial al României  (Romania's Official
Gazette), Part I, No.370 of 30 September 1998. Th is Emergency Ordinance was approved by the
Parliament, with certain modifications and additions, through Law No.247 of 22 December 1998,
published in Monitorul Oficial al României  (Romania's Official Gazette), Part I, No.493 of
22 December 1998.
26. By Government Decision No. 984 of  29 December 1998,  published in Monitorul Oficial al
României   (Romania's Official Gazette), Part I, No. 518  of  30 December 1998, the import surcharge
was reduced to 4 per cent beginning on 1 January 1999.
27. The surcharge is applied according to the relevant provisions of Article XII of GATT, of the
Declaration on Trade Measures taken for balance of payments purposes and of the Understanding on
balance of payments provisions of GATT 1994.
28. By making recourse to a temporary import surcharge  the Romanian Government chose a
measure that distorts trade to the least extent.
29. The level of the surcharge does not exceed what is strictly necessary for the improvement of
the balance of payments. The surcharge aims only to monitor the general level of imports and isWT/BOP/G/7
Page 4
applied to imports irrespective of their origin, including to imports from countries with which
Romania concluded preferential trade agreements.
30. The import surcharge is applied to all products, except for certain products responding to
fundamental consumption needs or which contribute to  the efforts made with a view to improving the
balance of payments (medicines, some fuels and raw materials, goods needed for complex objectivesor long production cycle goods (produced for expor t), goods exempted by law from customs duties,
goods imported by public institutions financed by external loans.  The products exempted from the
surcharge are listed in Annex No. I.
III. EFFECTS OF THE IMPORT SURCHARGE
31. As the import surcharge has been applied for only a short period of time, there are not yet
sufficient elements to evaluate its effects on imports.
32. Due to the fact that the surcharge is applied to almost all products, in a non-discriminatory
manner, competition among different products or countries will not be affected. On the other hand,
the surcharge is meant to stop the alarming increases in imports.
IV. CALENDAR OF THE PROGRESSIVE REDUCTION AND ELIMINATION OF THE
IMPORT SURCHARGE
33. The following calendar was established for the progressive reduction and elimination of the
import surcharge:
− starting 1.01.1998 6 per cent
− starting 1.01.1999 4 per cent
− starting 1.01.2000 2 per cent
− ending 31.12.2000 0 per cent
According to this calendar the surcharge was reduced to 4 per cent as of 1 January 1999.
34. It is understood that the calendar of the progressive reduction and elimination of the import
surcharge may be modified according to the evolution of the balance of payments.WT/BOP/G/7
Page 5
ANNEX I
The Products Exempted from the Temporary Import Surcharge
No Code HS Description of products
1 2507.00.20 Kaolin
2 2507.00.80 Other kaolinic clays
3 2601 Iron ores and concentrates, including roasted iron pyrites
4 2606.00.00 Aluminum ores and concentrates
5 2701 Coal ; briquettes, ovoids and similar solid fuels manufactured from coal
6 2709.00.90 Other
7 2711.21.00 Natural gas
8 2716.00.00 Electrical energy
9 2807.00.10 Sulphuric acid
10 3003 Medicaments (excluding goods of heading No. 3002, 3005 or 3006), consisting of
two or more constituents which have been mixed together for therapeuticor prophylactic uses, not put up in measures, doses  or in forms or packings for
retail sale.
11 3004 Medicaments (excluding goods of heading No. 3002, 3005 or 3006) consisting of 
mixed or unmixed products for therapeutic or prophylactic uses, put up in 
measures, doses or in forms or packings for retail sale.
12 3902.30.00 Propylene copolymers
13 5201 Cotton, not carded or combed
14 5203.00.00 Cotton, carded or combed
15 7801.10.00 Refined lead
16  7801.99.91 Lead alloys
17 8507.90.93 Separators
18 Goods under provisions of the Government Ordinance No.14 / 1995 regarding 
certain measures for stimulating the achievement of complex objectives or long 
production cycle goods, meant for exports, approved through Law No. 70/1995.
19 Goods exempted by Law from customs dutie s as well as goods imported by public 
institutions,  finances by foreign loans.
Goods imported under the temporary import regime, stipulated in Article 111 of
Law No. 141/1997 regarding Customs Code of Roma nia, goods benefiting from the suspension of
import duties, are also exempt from the deposit of the surcharge.
In case of exports, which contain imported parts, other than those imported under the
temporary import regime, and on which the surcharge was paid, the corresponding amounts arereimbursable, according to the provisions of the Customs Code.WT/BOP/G/7
Page 6
ANNEX II
STATISTICAL DATAWT/BOP/G/7
Page 7
Table I
Main Economic Indicators
1995 1996 1997 1998
(6 months)
1 Industrial production (variation %) % 9.4 9.9 -5.9 -19.1
2 Current Account Balance Mil.US$ -1774 -2571 -2338 -1075
3 Foreign Trade (fob)
3.1   Exports Mil.US$ 7910 8085 8431 4095
3.2   Imports Mil.US$ 9487 10555 10411 5012
3.3   Balance Mil.US$ -1577 -2470 -1980 -917
3.4   Level coverage of imports through 
exports% 83.4 76.6 81.0 81.7
4 External debt medium and long term 
debt to the end of the periodMil. US$ 5482.1 7208.9 8391.8 8308.2
5 Average interest rate of the banking 
institutions (non-banking clients)
5.1 Active (% p.a.) 48.6 55.8 63.7 61.3
5.2 Passive (% p.a.) 36.5 38.1 51.6 39.1
6 The exchange rate on the financial 
market
6.1 Average period Lei/US$ 2033.26 3082.60 7167.90 8359.60
6.2 End of period Lei/US$ 2578.00 4035.00 8023.00 8670.00
7 Financing provided by foreign 
investors in foreign currency (direct 
investments and portfolio investments)Mil.US$ 1595.0 2208.7 2780.0 -WT/BOP/G/7
Page 8
Table II
Balance-of-Payments
First 10 months 1997/first 10 months 1998
(US$ million)
ITEM 1997 1998
CREDIT DEBIT NET CREDIT DEBIT NET
1 CURRENT ACCOUNT (A+B+C) 8905 10323 -1418 8691 10921 -2230
A Goods and Services 8342 9780 -1438 7925 10274 -2349
(a)   Goods (export fob-import fob) 7100  8337 -1237 6918 8951 -2033
(b)   Services 1242 1443 -201 1007 1323 -316
- Transportation 497 455 42 434 520 -86
- Travel 430 575 -145 216 311 -95
- Other services 315 413 -98 357 492 -135
B Income 112 410 -298 132 541 -409
C Current transfers 451 133 318 634 106 528
2 CAPITAL AND FINANCIAL   
   ACCOUNT (A+B)4942 4294 648 4811 2937 1874
A CAPITAL ACCOUNT 0 0 0 0 0 0
(a)   Capital transfers 0  0 0 0 0 0
(b) Acquisitions/sales of non-produced -
non-financial assets0 000 00
B. FINANCIAL ACCOUNT 4942 4294 648 4811 2937 1874
(a) Direct investment 861  3 858 1062 8 1054
(b) Portfolio investment 895 109 786 326 297 29
(c) Other investment 3077 2502 575 2938 2601 337
- assets 575 434 141 1024 238 786
1 Long-term loans and credits 46 65 -19 35 36 -1
2 Short-term loans and credits 526 331 195 275 192  83
3 Currency and deposits 3 38 -35 714 10 704
- liabilities 2502 2068 434 1914 2363 -449
1 Use of Fund credits and loans from the 
Fund164  99 65 0 67 -67
2 Long-term loans and credits 1861 1302 559 1330 1284 46
3 Short-term loans and credits 477 417 60 584  953 -369
4 Currency and deposits 0 250 -250 0 59 -59
(d) Documents in transit 65 0 65 0 26 -26
(e) Barter and clearing accounts 44 32 12 1 5 -4
(f) Reserve assets (N.B.R.) 0 1648 -1648 484 0 484
- monetary gold 0 0 0 0 0
- SDRs 0 146 -146 89 0 89
- reserve position in the IMF 0 0 0 0 0 0
- foreign exchange 0 1502 -1502 395 0 395
- other assets 0 0 0 0 0 0
3 NET ERRORS AND OMISSIONS 770  0 770 356 0 356WT/BOP/G/7
Page 9Table III
Foreign Exchange Reserves
DEC 31
1996DEC 31
1997JAN 31
1998FEB28
1998MAR 31
1998APR 30
1998MAY 31
1998JUN 30
1998JUL 31
1998AUG 31
1998SEP 30
1998OCT 31
1998
NATIONAL BANK OF ROMANIA1592.2 3061.0  3053.4 3011.7 2940.6 3105.8 3110.7 3056.8 3173.5 2961.9 2832.6 2674.9
- gold 1041.5 867.5 913.9 900.5 935.5 959.3 944.8 918.2 920.7 891.6 934.2 936.5
(quantity in tones)  87.660 93.899 95.312 95.596 96.280 96.683 97.112 97.476 98.410 98.724 98.903 99.161
- SDR  4.1 103.9 104.0 83.2 80.2 80.5 57.6 37.1 37.3 17.2 14.6 14.9
- convertible foreign 
exchange546.6 2089.6 2035.5 2028.0 1924.9 2066.0 2108.3 2101.5 2215.5 2053.0 1883.8 1723.5
COMMERCIAL BANKS 1552.1 1609.9 1444.7 1475.1 1306.3 1147.7 1078.1 1131.7 956.9 1051.8  974.2 948.9
- convertible foreign 
exchange1552.1 1609.9 1444.7 1475.1 1306.3 1147.7 1078.1 1131.7 956.9 1051.8 974.2 948.9
TOTAL RESERVES  3144.3 4670.9 4498.1 4486.8 4246.8 4253.4 4188.7 4188.6 4130.4 4013.6 3806.7 3623.8
of  which
- convertible foreign 
exchange + SDR2102.8 3803.4 3584.2 3586.3 3311.4 3294.2 3243.9 3270.3 3209.7 3122.0  2872.5 2687.3
- non-residents (reserve 
liabilities) 604.1 366.8 300.3 309.8 335.7 336.9 350.5 400.4 361.4 265.9 214.4 189.2
NET INTERNATIONAL 
RESERVES 2540.2 4304.1 4197.8 4177.0 3911.1 3916.5 3838.3 3788.2 3769.0 3747.8 3592.3 3434.6
of which
NET FOREIGN 
EXCHANGE RESERVES1498.7 3436.6 3283.9 3276.5 2975.7 2957.3  2893.5 2869.9 2848.3 2856.2 2658.1 2498.1
Memo:
-     Gold evaluated at the international market price on the respective days
- SDR: SDR holding within IMF account-  Convertible foreign exchange: ash, cheques, sight and term de posits, and other external assets in convertible currenciesWT/BOP/G/7
Page 10Table IV
Exports (fob) and Imports (fob) of Goods by Section (HS)
SECTIONEXPORTS
(FOB)IMPORTS
(FOB)
10 month 98
- mil. USD -10 month 97
- mil. USD -per cent
(98/97)10 month 98
- mil. USD -10 month 97
- mil. USD -per cent
(98/97)
   TOTAL 6917.6 7100.2 97.4 8950.7 8336.6 107.4
I   of which :
Live animals and animal products 78.4 174.2 45.0 158.1 40.2 393.3
Percent in total  1.1  2.5  1.8 0.5
II Vegetable origin  products 126.3 111.0 113.8 167.0 116.8 143.0
Percent in total 1.8 1.6 1.9 1.4
III Animal oils and fats 50.8 112.4 45.2 43.7 23.5 186.0
 Percent in total 0.7 1.6 0.5 0.3
IV Food products, beverages and
tobacco80.9 85.9 94.2 399.0 292.5 136.4
Percent in total 1.2 1.2  4.5 3.5
V Mineral products 413.6 574.1 72.0 1311.9 1834.5 71.5
Crude oil 411.6 668.7 61.6
Percent in total 6.0 8.1 14.7 22.0
VI Chemical products and connected
products290.7 480.7 60.5 785.4 666.3 117.9
Percent in total 4.2 6.8 8.8 8.0
VII Plastics, rubber and related
products147.1 155.8 94.4 391.4 326.5 119.9
Percent in total 2.1 2.2  4.4 3.9
VIII Undressed leather and dressed
leather furs and fur products53.0 53.1 99.8 229.6 213.4 107.6
Percent in total 0.8 0.7 2.6 2.6
IX Wood products and wickerwork 313.4 273.7 114.5 44.4 38.3 115.9
Percent in total 4.5 3.9 0.5 0.5
X Woodpulp, paper and cardboard
residue paper, cardboard and
articles thereof39.5 54.7 72.2 238.3 184.6 129.1
Percent in total 0.6 0.8 2.7 2.2
XI Textiles and articles thereof 1811.7 1660.1 109.1 1361.3 1172.0 116.2
Percent in total 26.2 23.4 15.2 14.1WT/BOP/G/7
Page 11SECTIONEXPORTS
(FOB)IMPORTS
(FOB)
10 month 98
- mil. USD -10 month 97
- mil. USD -per cent
(98/97)10 month 98
- mil. USD -10 month 97
- mil. USD -per cent
(98/97)
XII Footwear, hats, umbrellas and
similar articles507.8 475.4 106.8 153.9 121.2 127.0
Percent in total 7.3 6.7 1.7 1.5
XIII Stone products, cement, ceramics 132.1 127.5 103.6 124.6 107.3 116.1
Percent in total 1.9 1.8 1.4 1.3
XV Common metals and articles
thereof1366.6 1276.3 107.1  606.3 486.8 124.5
Percent in total 19.8 18.0 6.8 5.8
XVI Machinery, appliances and electric
equipment ; sound and video
recorders and players638.8 620.4 103.0  2029.1 1941.7 104.5
Percent in total 9.2 8.7 22.7 23.3
XVII Transport means 350.1 361.4 96.9 366.2 280.4 130.6
Percent in total 5.1 5.1 4.1 3.4
XVII
IOptical instruments 30.7 20.5 149.8 190.9 186.6 102.3
1 Percent in total 0.4 0.3 2.1 2.2
XX Miscellaneous goods and products 429.5 440.4 97.5 169.9 151.7 112.0
Percent in total 6.2 6.2 1.9  1.8WT/BOP/G/7
Page 12 Table V
Exports by Destination and Imports by Origin
(US$ millions)
Country Group10 months 1998 :
export fob10 months 1998 :
import fob10 months 1997 :
export fob10 months 1997 :
import fobDynamic Dynamic
Value per cent Value per cent Value per cent Value per cent Export
98/97Import
98/97
TOTAL : 6917.6 100.0 8950.7 100.0 7100.2 100.0 8336.6 100.0 97.4 107.4
Industrial countries 5010.1  72.4 5914.1 66.1 4616.4 65.0 5163.7 62.0 108.5 114.5
Of which :
EU 4472.0 64.6 5126.8 57.3 4032.2 56.8 4330.2 51.9 110.9 118.4
    Of which :
    Germany 1347.9  19.5 1557.1 17.4 1211.0 17.1 1371.1 16.4 111.3 113.6
    Italy 1539.2  22.3 1547.3 17.3 1376.7 19.4 1322.4 15.9 111.8 117.0
    France 408.4  5.9 594.2 6.6 401.4 5.7 472.1 5.7 101.7 125.9
    UK 253.7 3.7 305.8 3.4 255.0 3.6 284.1 3.4 99.5 107.6
    Netherlands 255.4 3.7 204.4 2.3 224.2 3.2 162.8 2.0 113.9 125.6
    Austria 202.8 2.9  267.1 3.0 146.2 2.1 215.7 2.6 138.7 123.8
    Sweden 39.4 0.6  109.7 1.2 42.5 0.6 95.3 1.1 92.7 115.1
Other countries
    Of which :
    USA 266.9 3.9 408.1 4.6 277.1 3.9 331.5 4.0 96.3 123.1
    Japan 21.7 0.3 60.8 0.7 31.9 0.4 106.6 1.3 68.0 57.0
EFTA 83.2 1.2 120.4 1.3 84.6 1.2 115.6 1.4 98.3 104.2
    Of which :
    Switzerland 39.8 0.6 102.7 1.1 39.1 0.6 103.5 1.2 101.8 99.2
    Norway 40.0  0.6 15.2 0.2 43.2 0.6 10.8 0.1 92.6 140.7
Developing
countries1113.4 16.1 1085.4 12.1 1577.9 22.2 1369.9 16.4 70.6 79.2
    Of which :
    Turkey 257.3 3.7 204.2 2.3 304.1 4.3 153.7 1.8 84.6 132.9
    Egypt 151.9 2.2 35.2 0.4 196.3 2.8 102.1 1.2 77.4 34.5
    Sirian Arab   
Republic55.9 0.8 6.3 0.1 93.6 1.3 3.0 0.0 59.7 210.0WT/BOP/G/7
Page 13Value per cent Value per cent Value per cent Value per cent Export
98/97Import
98/97
    South Korea 17.4 0.3 180.1 2.0 23.8 0.3 505.1 6.1 73.1 35.7
Former central
planned economies482.4 7.0 912.6 10.2 471.4 6.7 558.2 6.7 102.3 163.5
    Of which :
    Hungary 179.9 2.6 422.7 4.7 144.3 2.0 238.3 2.9 124.7 177.4
    Poland 65.0 0.9 111.2 1.2 84.8 1.2 61.4 0.7 76.7 181.1
    Yugoslavia 91.9  1.3 51.5 0.6 48.3 0.7 42.5 0.5 190.3 121.2
    Bulgaria 57.7 0.8  39.0 0.4 112.2 1.6 38.4 0.5 51.4 101.6
Former USSR 311.7 4.5 1038.6 11.6 434.5 6.1 1244.8 14.9 71.7 83.4
    Of which :
    Russia 73.0 1.1 813.7 9.1 213.1 3.0 1009.1 12.1 34.3 80.6
    Ukraine 46.5 0.7 129.3 1.4 73.3 1.0 140.5 1.7 63.4 92.0
    Moldova 115.8 1.7 42.9 0.5 101.6 1.4 41.4 0.5 114.0 103.6
__________