RESTRICTED
WORLD TRADE WT/ACC/ALB/14
24September 1996
ORGANIZATION(96-3786)
Original: English
ACCESSION OFALBANIA
Note onServices
Thisnoteisintended toaccompany Albania 'sservices schedule. Partoneprovides information
ontheroleofservices intheAlbanian economy, partIIreviews thelegislation applicable toservices,
andpartIIIprovides some comments onthespecific contents oftheschedule.
I. Services intheAlbanian Economy
Asthefollowing dataindicate, theeconomic importance ofservices activity hasgrown
considerably since thebeginning ofeconomic reform, from 23percentoftotalGDP in1990 to
approximately 33percentin1995.
1990 1992 1994 1995
Total GDP ofwhich:
Industry 40.0 16.9 12.5 11.8
Agriculture 37.0 54.2 54.6 55.1
Services 23.0 28.9 32.8 33.1
Thegrowth ofservices activity asashare oftotalGDP ispartly astatistical phenomenon
reflecting thecollapse ofindustry. Buttherehasalsobeenarealincrease inservices activity, particularly
inareas suchasconstruction, transport, import/export business, hotels andrestaurants, notary and
other legalservices, insurance andbanking. Itisexpected thatthistrend willcontinue asstructural
adjustment proceeds andmore oftheworking population currently engaged inagriculture (65percent
in1995) gradually takes upactivities inother areas.
Dataonparticular service sectors arelimited. Theavailable statistics indicate that,in1995,
construction services represented about 10percentoftotalGDPandabout 2percentofthetotallabour
force. During thesame period, transport services represented about 4percentoftotalGDP and
3percentofthetotallabour force, while people engaged in"trade" services (import/export, retail
sales) represented about 5percentofthetotallabour force (nodataavailable onshare ofGDP).
Theinsurance market inAlbania isstillsmall -US$13.5million gross premium income in
1995-butisgrowing. TheInsurance Institute ofAlbania reports thatincome frominsurance premia
grew byalmost 20percentin1995. Similar growth isexpected in1996. Thelargest market iscar
insurance (88percentoftotalpremium income), followed byproperty insurance (8percent) and
personal accident andtravel insurance (4percent). Lifeinsurance wasintroduced forthefirsttime
inlate1995, andisconsidered tobeanimportant market forthefuture.WT/ACC/ALB/14
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II. Legal Régime Applicable toServices
There isnosingle lawregulating service activities inAlbania. Certain lawsandregulations
apply toallservices sectors, suchastheLawonForeign Investment, foreign exchange controls, tax
laws, etc.TheLawonForeign Investment, asnoted inothersubmissions totheWorking Party, provides
fornational treatment except forforeign ownership ofagriculture landwhich isprohibited. Foreign
exchange controls provide national treatment, andinsome respects better thannational treatment.
Suchlawsofgeneral application arecomplimented byspecific lawsandregulations applicable
toparticular service sectors. Thefollowing paragraphs summarize thelegalrégime applicable toforeign
participation inthemain service sectors. Additional information canbefound intheMemorandum
ontheForeign Trade Régime andinanswers toquestions posed bytheWorking Party.
Banking
Thebanking sector consists ofthecentral bank(theBank ofAlbania), threeState-owned banks
(National Commercial Bank, Rural Commercial Bank, Savings Bank), andagrowing number offoreign
andprivatebanks,includingtheItalian-AlbanianBank,theAlbanian-ArabianIslamicBank,theDardania
Bank, theNational Bank ofGreece, theAlbanian-American Enterprise Fund andtheGerman
Development Fund. (Thelatter twoare,more precisely, non-bank lending andinvestment institutions
inthattheymake loans toandinvest inpromising companies butdonottakedeposits.) Anumber
offoreign banks areintheprocess ofapplying foralicence.
Albania doesnotimpose anyrestriction onmarket access ornational treatment inthebanking
sector except fortheminimum capital requirement forestablishment ofbanks which isUS$1million
forAlbanians andUS$2million forforeigners. Otherwise, thesame conditions forestablishment
andoperation apply equally toAlbanian andforeign providers. Theconditions forobtaining abank
licence, which areallofaprudential nature, aresetoutinthe"Regulations fortheGranting ofaLicence
toOperate asaPrivate BankintheRepublic ofAlbania". Acopyoftheseregulations hasbeenprovided
totheWorking Party.
Itmaybenoted, asreported inprevious communications totheWorking Party, thatthere are
notlimitations onforeign shareholding inprivate banks. Also, foreign banks arepermitted tobranch
directly intoAlbania without prior establishment ofasubsidiary.
Alegalframework isbeing developed formerchant banking.
Insurance
Forthetimebeing, theInsurance Institute ofAlbania (INSIG) isthemonopoly provider of
insurance services inAlbania. However, steps arebeing taken which willresult intheprivatization
ofINSIG andtheopening oftheinsurance sector toparticipation bydomestic andforeign providers.
Thefirststeptowards thisgoalwillbethetransformation ofINSIG intoacommercial company. It
isexpected thatcommercialization willbetaking place inlate1996orearly1997. Privatization would
follow assoonaspossible thereafter incompliance withtheGovernment 'sstrategy forprivatization
oflarge companies.
Themostimportantpartofthelegalframeworkthatwillapplytotheinsurancesectorhasalready
beencompleted. On7March 1996, theParliament approved theLawforActivities ofInsurance and
Reinsurance which defines principles andrules applicable todirect insurance, reinsurance andState
supervision ofcompanies andother legalentities conducting insurance and/or reinsurance activities.
Acopyofthelawinanofficial WTO language hasbeenprovided totheWorking Party.WT/ACC/ALB/14
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Under thelaw,bothAlbanian andforeign companies willberequired tolimittheiractivities
toinsurance orreinsurance activities aswellasoperations stemming directly from these activities,
excluding anyothercommercial activity. Regarding thelegalformofinsurance providers, anAlbanian
company mustbefounded asajoint-stock company orasamutual insurance company, whereas aforeign
company mayconduct insurance orreinsurance activity onlyintheform ofabranch.
AuthorizationrequiredforconductinginsuranceorreinsurancebusinessisissuedbytheInsurance
Supervision Commission. Theconditions forauthorization areessentially thesame forAlbanian and
foreign entities, withafewexceptions. Asnoted above, aforeign provider must beintheform of
abranch. Inaddition, aforeign provider mustbeauthorized toconduct insurance activities initshome
country, musthaveconducted suchactivities foratleast10years, mustlocate within theterritory of
Albania assets withavalue atleastequal tohalfoftherequired minimum guarantee fund, onefourth
ofwhich mustbedeposited. Foreign individuals orlegalentities mayparticipate inthefounding of
Albanian insurance and/or reinsurance companies, ormaybuyshares ofsuchcompanies, butthetotal
amount offoreign participation inanAlbanian insurance orreinsurance company cannot bemore than
40percentofthecapital oftheAlbanian company, or40percentofthevoting rights inthegeneral
assembly.
Direct insurance withacompany outside Albania isnotpermitted except formarine andaircraft
insurance,orinspecialcircumstanceswhereariskcannotbecoveredbyAlbaniancompaniesorbranches
offoreign companies located inAlbania. Reinsurance maybecarried outbyAlbanian companies,
branches offoreign companies inAlbania, orforeign companies which donothavebranches inAlbania.
Tourism
Tourism activities arebased onLawNo.7665 of21January 1993 OnPriority Tourism
Development Zones. This lawdefines which areas ofAlbania areconsidered priority tourism
development zones andtheconditions forexercising tourism activities, suchastheestablishment of
ahotel, insuchzones. (Fortourism activities outside ofpriority zones, conditions aredetermined
bythelocalmunicipality.)
AninterministerialbodycalledtheTourismDevelopmentCommitteeisresponsibleforapproving
orrefusing applications byphysical orjuridical persons forthegranting ofpermits toconduct tourism
activities inpriority zones. Adecision togrant ornottogrant apermit isbased onananalysis of
thefollowing elements:
(i) submission ofanexplanatory paper, including afeasibility study, ontheproject;
(ii) fulfilment ofanapplication form, which includes information on,forexample, experience of
theapplicant, environmental impact, business plan, etc.
Theterms oftheLawonPriority Tourism Development Zones, andthecriteria forobtaining
apermit from theTourism Development Committee apply equally todomestic andforeign entities.
Telecommunications
Itisforeseen thattheAlbanian telecommunications agency willcontinue tobethemonopoly
provider ofbasic telecom services forabout eight years. During thattime, Albanian Telecom will
begradually transformed intoajoint-stock company andthenpartially privatized withtheparticipation
ofastrategic partner. Itisexpected thatthepartner willholdanimportant share oftotalstock, but
theprecise percentage isstilltobedefined.WT/ACC/ALB/14
Page4
Regarding value-added telecom services, theGovernment willgrant fixed-term licences to
business entities selected toprovide suchservices. Aregulatory body willbesetupunder the
responsibility oftheCouncil ofMinisters which willdefine thecriteria forissuing licences forthe
provision ofvalue-added services. Itisforeseen thatthere willbelimited competition inmobile
communications, paging anddatatransmission, andafullyliberalized market forterminal equipment.
Maritime Transport
Thelegalframeworkformaritimetransportservicesisstillbeingdeveloped.Generally,maritime
transport isnotregulated asfarasinternational trade flowisconcerned, beitlinerorbulktransport.
There isnoregulation concerning multimodal transport. There arenocargo sharing orreservation
arrangements ofanykind. Albania isnotaparty totheUNLiner Code ofConduct anddoesnothave
access toanylinerconference orsimilar cooperation arrangements.
Forthetimebeing, therighttoflytheAlbanian flagorownAlbanian flagvessels isgranted
onlytoAlbanian nationals. Also, foreign investors cannot carry outauxiliary services inportareas.
Legislation isunder consideration which would define theterms forforeign ownership ofAlbanian
flagvessels.
OtherthantherestrictiononforeignownershipofAlbanianflagvesselsandprovisionofauxiliary
portservices, therearenodiscriminatory measures limiting theability ofaforeign investor toestablish
acommercial presence inAlbania withaviewtoproviding international maritime services. Thelicence
toprovide maritime services, obtainable fromtheMinistry ofIndustry, Transport andTrade, isissued
onthesame terms andconditions forAlbanian andforeign applicants.
Road Transport
Thegeneral regulatory environment forroadtransport services issetoutintheOrder ofCouncil
ofMinisters No.7of17August 1993, Regulation ofMinistry ofIndustry, Transport andTrade
No.2324/1 of28October 1993 (passengers) andDecision ofCouncil ofMinisters No.621of
20December 1993, Regulation ofMinistry ofIndustry, Transport andTrade No.72(commodities).
Theseinstrumentsprovideregulationsforroadtransportservice,includingrelationshipsbetween
transportation service providers andmunicipal authorities, licensing ofproviders (such astaxidrivers,
etc.), andticketing systems forbothpassengers andcommodities. There arenorestrictions onthe
provision ofroadtransport services byaforeign provider.
AirTransport
RegardingauxiliaryairtransportservicescoveredbytheGATS-aircraftrepairandmaintenance;
selling andmarketing ofairtransport services; andcomputer reservation system (CRS) services -
thesituation isasfollows:
Concerning aircraft repair andmaintenance, there arenolawsorregulations specifically
addressing thiskindofservice. Asapractical matter, commercial aircraft repair andmaintenance
takes place outside ofAlbania, butthere arenorestrictions ontheability ofaforeign operator togain
access totheAlbanian market andprovide suchservices.
Selling andmarketing ofairtransport services andcomputer reservation services (CRS) are
ensured forairlines withwhich Albania hasconcluded abilateral agreement. Each party tosuchan
agreement undertakes toensure fairandequal opportunity forthedesignated airlines ofbothparties
toparticipate intheinternational airtransportation, andtotakeallappropriate action within itsWT/ACC/ALB/14
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jurisdiction toeliminate allforms ofdiscrimination orunfair competitive practices adversely affecting
thecompetitive position oftheairlines oftheother party.
Regarding theselling andmarketing ofairtransportation services, thedesignated airlines of
bothparties totheagreement areensured theability to:
(a) establish intheterritory ofother party offices forthepromotion ofairtransportation andsale
ofairtickets aswellasother facilities required fortheprovision oftheairtransportation;
(b) allow intheterritory oftheotherpartytoengage directly and,atthatairline 'sdiscretion, through
itsagent inthesaleofairtransportation;
(c) bring inandmaintain intheterritory oftheother party itsmanagerial, commercial, operational
andtechnical staffasitmayrequire inconnection withtheprovision ofairtransportation.
Regarding computer reservation systems thedesignated airline ofacontracting party andthe
airline 'sagents willhaveunrestricted andnon-discriminatory access toanduseoftheCRS'sinterritory
oftheother party. Each contracting party guarantees totheCRS'schosen asitsprimary system by
thedesignated carrier oftheother party freeandunimpaired access initsterritory. Neither contracting
party will,initsterritory, impose orpermit tobeimposed ontheCRSofthedesignated carrier of
thecontracting party more stringent requirements thanthose imposed ontheCRSofitsowndesignated
carrier, suchaswithrespect to:
(i) theoperation andsaleoftheCRSservices including CRSdisplay andediting rules, and
(ii) theaccess toanduseofcommunication facilities, selection anduseoftechnical hardware and
software ortheinstallation ofhardware.
III. Comments onServices Schedule
Albania 'spreliminary offeronservices, asreflected intheservices schedule, hasbeenprepared
withprimarily three considerations inmind. Thefirstconsideration isourdesire tomake aserious
andforthcoming offer inthisimportant area. Accordingly, theschedule includes some ofthemost
importantservicesectors,suchasbankingandotherfinancialservices,engineeringservices,construction
services, tourism andtravel related services. Itmayalsobenoted thatforvirtually allofthesectors
included intheschedule, therearenolimitations onmarket access ornational treatment. Thisreflects
several factsabout theAlbanian economy andregulatory régime:
(i) there arerelatively fewareas which arecompletely closed toforeign ordomestic services
providers asaresult ofthepresence ofaStatemonopoly. There areafewStatemonopolies,
suchasinsurance, television, basic telecommunications andwater supply, butthere arenot
somany andopportunities willgrow inthese areas asprivatization moves forward;
(ii) there arenolimitations onmarket access ofthekindforeseen under theGATS Agreement.
Forexample, there arenoguidelines orlimitations onthemarket share thatforeign service
providers mayoccupy inaparticular sector. Market share isdetermined bymarket forces;
(iii) ingeneral, theinvestment régime isquiteliberal. Withfewexceptions, which havebeennoted
intheschedule, national treatment applies totheestablishment andconduct ofbusiness
operations.WT/ACC/ALB/14
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Asecond consideration isthefactthatanumber ofhighly sophisticated service activities and
products simply donotexistyetinAlbania, suchasoptions onfinancial futures, noristhere alegal
orinstitutional structure inplace yettosupport them. Thisisalsotrueforcertain modes ofsupply,
particularly cross-border operations. Accordingly, itseemed premature toinclude themintheschedule.
Afinalconsideration isthatforcertain service sectors, astheWorking Party iswellaware,
negotiations among WTO Members arecontinuing inorder todetermine therulesapplicable tothose
sectors (e.g., maritime services). When those negotiations arecompleted, Albanian would beable
toconsider adding those sectors toitsschedule.
Insummary, Albania hasattempted toprepare aschedule which isforthcoming interms of
thenumber ofsectors included, theimportance ofsectors included andtherelatively minor restrictions
noted inthecolumns onmarket access andnational treatment. Welookforward toanexchange of
views withtheWorking Party.