Source: EURLEX
Language: en
Format: md

***

- 
- 
 - *** 

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 15.07.1997
COM(97) 2003 final

**Commission Opinion**

**on Romania's application**

**for membership** **of** **the European Union**

**CONTENTS**

**A. INTRODUCTION**

**a) Preface**
The Application for Membership
The Context of the Opinion
The Contents of the Opinion

**b)** **Relations Between the European Union and Romania**
Historical and Geopolitical Context
Romania's Position concerning the European Union
Contractual Relations

The Pre-Accession Strategy

Trade Relations

General Evaluation

**B. CRITERIA FOR MEMBERSHIP**

**1.** **Political Criteria**

**1.1 Democracy and the Rule** **of** **Law**
Parliament and legislative powers: structure
Functioning of Parliament
The Executive: Structure

Functioning of the Executive
The Judiciary: Structure
Functioning of the Judiciary

**1.2 Human Rights and the Protection** **of** **Minorities**
Civil and Political Rights
Economic, Social and Cultural Rights
Minority Rights and the Protection of Minorities

**1.3 General Evaluation**

**2. Economic Criteria**

**2.1 The Economic situation**

Background

Liberalisation

Stabilisation of the Economy
Structural Change
Financial Sector

Economic and Social Development

ii

Page

**2.2 The Economy** **in** **the Perspective** **of** **Membership**

Introduction

The Existence of a Functioning Market Economy
The Capacity to Cope with Competitive Pressure and Market Forces
Prospects and Priorities
**2.3 General Evaluation**

**3. Ability to Assume the Obligations** **of** **Membership**

**3.1 Internal Market Without Frontiers**

The Four Freedoms

    - General Framework

    - Free Movement of Goods

    - Free Movement of Capital

    - Free Movement of Services

    - Free Movement of Persons

    - General Evaluation

Competition
**3.2 Innovation**

Information Society
Education, Training and Youth
Research and Technological Development

Telecommunications

Audio-visual

**3.3 Economic and Fiscal Affairs**

Economic and Monetary Union

Taxation

Statistics

**3.4 Sectoral Policies**

Industry
Agriculture

Fisheries

Energy
Transport
Small and Medium Enterprises
**3.5 Economic and Social Cohesion**

Employment and Social Affairs
Regional Policy and Cohesion
**3.6 Quality** **of** **Life and Environment**

Environment

Consumer Protection

**3.7 Justice and Home Affairs**

**3.8 External Policies**

Trade and International Economic Relations

Development
Customs

Common Foreign and Security Policy

iii

3.9 Financial Questions

Financial Control

Budget Implications

4. Administrative Capacity to Apply the _Acquis_

**4.1 Administrative Structures**

**4.2 Administrative and Judicial Capacity**
**4.3 General Evaluation**

**C. SUMMARY AND CONCLUSION**

**Annexes**

Composition of Parliament
Single Market: White Paper Measures

Statistical Data

iv

**A.** **INTRODUCTION**

**(a)** **Preface**

**The** **Application** **for** **Membership**

Romania presented its application for membership of the European Union on
22 June 1995 and the Council of Ministers decided on 17 July 1995 to implement the
procedure laid down in Article O of the Treaty, which provides for consultation of the

Commission.

That is the framework in which the Commission submits the present Opinion, responding
to the request of the European Council in Madrid in December 1995 to present the
Opinion as soon as possible after the conclusion of the Intergovernmental Conference,
which began in March 1996 and ended in June 1997.

**The Context** **of** **the Opinion**

The Romanian application for membership is being examined at the same time as
applications from nine other associated countries. Romania's accession is to be seen as
part of an historic process in which the countries of central and eastern Europe overcome
the division of the continent, which lasted for more than 40 years, and join the area of
peace, stability and prosperity created by the Union.

The European Council in Copenhagen in June 1993 concluded that:

"The associated countries in central and eastern Europe that so desire shall become
members of the Union. Accession will take place as soon as a country is able to assume
the obligations of membership by satisfying the economic and political conditions.
Membership requires:

that the candidate country has achieved stability of institutions guaranteeing
democracy, the rule of law, human rights and respect for and protection of
minorities;

the existence of a functioning market economy, as well as the capacity to cope
with competitive pressure and market forces within the Union;
the ability to take on the obligations of membership, including adherence to the
aims of political, economic and monetary union.

The Union's capacity to absorb new members, while maintaining the momentum of
European integration, is also an important consideration in the general interest of both the

Union and the candidate countries".

This declaration spelled out the political a'i1d economic criteria for exammmg the
accession requests of the associated countries of central and eastern Europe.

The European Council in Madrid in December 1995 referred to the need, in the context
of the pre-accession strategy, "to create the conditions for the gradual, harmonious
integration of the applicant countries, particularly through:

the development of the market economy,
the adjustment of their administrative structure,
the creation of a stable economic and monetary environment".

In its Opinion, the Commission ar1lyses the Romanian application on its mer:~s, but
according to the same criteria as the other applications, on which it is delivering Opinions
at the same time. This way of proceeding respects the wish, expressed by the European
Council in Madrid, to ensure that the applicant countries are treated on an,_ qual basis.

In addition to th~ individual Opinions the Commission is presenting separately to the
Council, in the framework of its communication "Agenda 2000"; a general assessment of
the accession requests, and its recommendations concerning the strategy for successful
enlargement of the Union. At the same time, it is presenting an evaluation of the impact
of enlargement of the Union's policies.

**The Contents** **of** **the Opinion**

The structure of the Opinion takes account of the conclusions of the European Council in
Copenhagen. It:

describes the relations up to now between Romania and the Union, particularly in
the framework of the Association Agreement;
analyses the situation in respect of the political conditions mentioned by the
European Council (democracy, rule of law, human rights, protection of
minorities);
assesses Romania's situation and prospects in respect of the economic conditions
mentioned by the European Council (market economy, capacity to cope with
competitive pressure);
addresses the question of Romania's capacity to adopt the obligations of
membership, that is the _acquis_ of the Union as expressed _in the Treaty, the
secondary legislation and the policies of the Union;
makes finally a general evaluation of Romania's situation and prospects in
respect of the conditions for membership of the Union and a recommendation
concerning accession negotiations.

In assessing Romania in respect of the economic criteria and its capacity to assume the
_acquis,_ the Commission has included a prospective assessment; it has attempted to
evaluate the progress which can reasonably be expected on the part of Romania in the
coming years, before accession, taking account of the fact that the _acquis_ itself will
continue to develop. For this purpose, and without prejudging the actual date of
accession, the Opinion is based on a medium-term horizon of approximately five years.

During the preparation of the Opinion, the Commission has obtained a wealth of
information on Romania's situation from the Romanian authorities and has utilized many
other sources of information, including the Member States and numerous international
organisations.

2

**(b) Relations Between the European Union and Romania**

Historical and Geopolitical Context

Romania is situated between the Black Sea and Danube delta to the south-east and is

crossed by the Carpathian Mountains to the north-west, which also form a north-south
barrier across much of the_ country. Its area is 23 7 500 km [2], and its population

22.6 million.

Romania was founded as an independent state in 1859 with. the union of Wallachia and
Moldavia. In the First World War Romania sided with the Allies, and was occupied by
Austro-Hungarian, Turkish and Bulgarian forces. In the post-war settlement Romania
recovered Bukovina and Transylvania. In the Second World War Bessarabia and
Bukovina were occupied by the Soviet Union, and Romania also had to cede
Transylvania back to Hungary and Dobruja to Bulgari4:1. In the 194 7 Treaty of Paris
Romania again recovered Transylvania and parts of Bukovina.

By 194 7 the Communist Party had achieved power in Romania. In 1965 Nicolae
Ceausescu became First Secretary of the Party, and subsequently President. As from the
1960s Romania maintained some distance from the Soviet Union in its external policies.
Hence its membership both of Com econ and the IMF and the World Bank. Ceausescu's
internal policies, however, were highly repressive, based on fear and manipulation. By
late 1989 there was revolt within the party and popular uprising, which led to the
removal and execution of Ceausescu in December of that year.

Free elections in May 1990 led to the adoption of a new constitution in December 1991,
under which parliamentary and presidential elections took place in 1992 (which returned
the former-Communists to power). The 1996 elections saw the first alternation of power.
During this period Romania has also worked hard to regularise relations with its
neighbours, concluding agreements with Hungary and Ukraine on recognitim of borders
and minority rights.

3

**Romania's Position Concerning the European Union**

Romania submitted its application for membership of the European Union on
22 June 1995 along with a national pre-accession strategy and a declaratjon signed by the
Presidents of the Republic, the Senate and the Chamber of Deputies and the Prime
Minister and the leaders of all the political parties represented in Parliament. This
declaration expresses Romania's political will to pursue the consolidation and
development of the rule of law, political pluralism, the separation of powers, free
elections, respect for human rights and the establishment of a market economy
compatible with the principles governing the European Union.

The change of government in November f996 and the reforms launched by the new
government have brought preparations for "Euro-Atlantic" integration to the centre of
Romania's foreign policy. This was clear from the statement issued by President Emil
Constantinescu when Mr Santer visited Bucharest on 10 April 1997. The President saw
European and Euro-Atlantic integration as a major political priority for Romania, indeed
as the only avenue for development in the national interest. Romania's most important
and pressing objective was to take its place among continental Europe's democracies.
The President said that the country would be pressing on with the major structural reform
of its economy, legislation and institutions required for integration into Europe. The crux
of this effort, the true significance of taking on the Community acquis, was, however, the
assimilation of democratic values and respect for human and civil rights. Respecting and
consolidating these values was the ultimate goal of Romania's integration into Europe.
For Romania, the Union was above all a gateway to a balanced and harmonious structure
organising the continent's micro- and macrocosms under the flag of European
civilisation, a common home in which all are equal in dignity, while remaining

themselves.

**Contractual Relations**

Romania was the first CEEC to have contractual relations with the EC: a Generalised

System of Preferences Agreement in 1974, and an Agreement on Industrial Products in
1980. Romania's diplomatic relations with the EC date from 1990. Following
Romania's return to democracy a Trade and Cooperation Agreement was signed in 1991.
This was superseded by the entry into force of the Europe Agreement in February 1995,
the trade provisions of which had already come into force in May 1993 under an Interim
Agreement. Trade in wine is covered by a parallel agreement expiring at the end of

1997.

The Europe Agreement is now the legal basis for Romania's relations with the European
Union. Its aim is to provide a framework for political dialogue, promote the expansion of
trade and economic relations between the parties, provide a basis for Community
technical and financial assistance, and an appropriate framework to support Romania's
gradual integration into the Union. The institutional framework of the Agreement
provides the necessary mechanism for implementation, management and monitoring of
all areas of relations. Subcommittees examine questions at a technical level. The
Association Committee, at a senior official level, provides for in-depth discussion of
issues and often finds solutions to problems arising under the Agreement. The

Association Council examines the overall status of and perspectives for the relationship
and provides the opportunity to review Romania's progress in preparing for accession.

In order to strengthen government policy- and decision-making in matters related to
European integration, the Government set up the Department for European Integration,
which in January 1997 was upgraded into a Ministry answering to the Prime Minister.
Advice on European integration is provided by an interministerial committee chaired by
the Prime Minister and served by the Department for European Integration. Ministries
retain responsibility for the execution of their respective parts of the Europe Agreement
and the pre-accession preparation, including, inter alia, the approximation of legislation.
The Department for European Integration has been responsible for the preparation of the
national strategy for the implementation of the Commission's White Paper on the internal
market, in consultation with the 23 EU Integration Working Groups.

**The Pre-Accession Strategy**

_Implementation_ _of_ _the Europe Agreement and the White Paver_

The EA is being implemented for the most part according to the timetable set out in the
Agreement. The Association Council has met at ministerial level once each year, and the
Association Committee has met twice at senior official level. A Joint Parliamentary
Committee comprising representatives of the Romanian and European Parliaments has
met on four occasions. A structure comprising nine multidisciplinary subcommittees has
also been established and is operating.

For certain provisions of the Agreement there have been delays in entry into force. The
implementing rules on competition among companies, which should have entered into
force in 1996, did so only in 1997, while the regulation of state aids has yet to be defined.
The trade provisions of the Agreement are being implemented on schedule with few
problems. The Romanian authorities have not invoked any of the trade defence
provisions in the Agreement. An anti-dumping procedure was opened in 1996 by the
European Commission in respect of seamless pipes, and provisional duties have been
applied since June 1997.

Currently, the main issues discussed in the framework of the Europe Agreement are:
approximation of legislation and pre-accession strategy; macroeconomic progress; trade
issues; opening of Community programmes; certification and standardisation issues; and
third-pillar cooperation.

The Commission White Paper of 1995 on the internal market set out the legislation which
the candidate countries would need to transpose and implement in order to apply the
_acquis,_ and identified elements essential to the implementation of the Single Market
(known as Stage I measures) for priority attention. Romania has attached importance to
this work. The Government adopted in December l 995 a detailed strategy for the
adoption of the _acquis._ In parallel, it called for the involvement of large sectors of the
society in the process, namely trade unions, business associations and the professional

associations.

5

In general, implementation of the Europe Agreement is going ahead without problems,
though there have been some delays. Slow economic liberalisation and a lack of real
administrative reform have made it difficult to exploit the Agreement fully, but the new
government is improving this.

_Structured Dialogue_

Romania has participated iri the structured dialogue, seeing it as a key part of its
preparations for accession. It has used the di~logue to report on its reform policy and
called for it to be stepped up. In the context of the dialogue Romania has played a
significant role in work to recreate .stability in former Yugoslavia .

...

In 1996, ECU 118.4 million was committed for Romania. Total commitments for the

period 1990-96 were ECU 731 million. The principal sectors for which Phare has been
used are: agriculture; education, training and research; infrastructure; and the private
sector, restructuring and privatisation.

Romania has no common border (terrestrial or maritime) with any EU Member State. No
Romanian region is, therefore, eligible for Phare cross-border cooperation programmes
between CEECs and EU Member States. But a cross-border cooperation programme was
approved in 1996 for the border with Hungary; it includes projects in the sectors of
economic development, transport, environment and the third pillar.

There have been difficulties with programme implementation owing to the lack of a clear
commitment to policy reform, particularly in agriculture and industry. But reasonable

commitment rates have been maintained.

_Participation in CommunityProgrammes_

As from 1997 Romania will be participating in Socrates, Leonardo and Youth for Europe.
It is preparing to take part in LIFE, SA VE and various social programmes too.

**Trade Relations**

EU exports to Romania in 1995 amounted to ECU 3.8 billion, up from ECU 1.2 billion in
1990. EU imports were at ECU 3.4 billion in 1995, up from ECU 1.6 billion in 1990.
Romanian trade with other CEECs is not developing at the same pace as that with the
EU. Textiles are the main EU export, light industry products the main import.

Difficulties in the development of bilateral trade are mainly linked to regulatory and
administrative issues, such as the issuing of export licences or certification requirements.
But recently introduced Romanian legislation showld help to overcome difficulties over
the latter, while the remaining Romanian export restrictions are due to be eliminated by
January 1998. 

6

**General** **Evaluation**

Since 1989 relations between Romania and the EU have developed positively. There
have been few significant policy obstacles to overcome, though Romania will need to
tighten i_ts border controls. The speed of Romania's progress towards integration has
been determined by the economic and political reform and has been hampered by the
continuing weakness of its administrative structures.

7

**B.** **CRITERIA FOR MEMBERSHIP**

**1.** **Political Criteria**

The European Council in Copenhagen decided on a number of "political" ccriteria for
accession to be met by the candidate countries in central and eastern Europe. These
countries must have achieved "stability of institutions guaranteeing democracy, the rule
oflaw, human rights and respect for and protection of minorities".

In carrying out the assessment required in this connection, the European Commission has
drawn on numerous sources of information: answers given by the Romanian authorities
to the questionnaire sent to them by the Commission sservices in April 1996, bilateral
follow-up meetings, reports from Member States' embassies and the Commission's
delegation, assessments by international organisations (in particular the Council of
Europe and the OSCE), reports produced by non-governmental organisations, etc.

The following assessment involves a systematic examination of the main ways in which
the public authorities are organised and operate, and the mechanisms for the protection of
fundamental rights. It does not confine itself to a formal description but seeks to assess
the extent to which democracy and the rule of law actually operate.

This assessment relates to the situation in June 1997. It does not examine in detail any
changes which have taken place in the past or which may come about in the future,
though it generally takes account of any stated intention to reform a particular sector.
The situation of the administrative structures is,mentioned here only in passing: it will be
examined in greater depth in Chapter 4.

**1.1** **Democracy and the Rule** **of** **Law**

The new constitution ~dopted by referendum in December 1991 marked Romania's
transition to parliamentary democracy. The country's institutions work normally, with
the different powers taking care not to overstep the bounds and cooperating with each

other.

**Parliament and Legislative Powers: Structure**

The Romanian Parliament is bicameral: the Chamber of Deputies has 343 members and
the Senate 143. Members are elected for four years by proportional representation
(subject to parties obtaining at least 3% of tl1e vote). Fifteen seats are reserved for
minorities in the Chamber of Deputies.

Article 89 of the Constitution allows the President of the Republic to dissolve Parliament
if, after at least two unsuccessful attempts, no government is formed within sixty days.
Parliament may not be dissolved more than once in any year. Nor may it be dissolved
during the last six months of the President's term of office or under a state of siege or

emergency.

8

Members of Parliament enjoy the usual immunities. Either chamber may set up a
committee of enquiry if a third or more of its members so decide. Representation on a
committee is proportional to the number of seats held by a group in the chamber
concerned. ~

Romania is a multiparty democracy: 57 parties fielded candidates in -the parliamentary
elections of November 1996. Parties obtaining over 2% of the vote receive budget
funding, more if they are represented in Parliament.

The two chambers exercise legislative power on a footing of strict equ~lity, each of them
able to block the law-making process. They share the right of initiative· with the
Government. A bill may also be submitted to Parliament if sponsored by a quarter of a
million citizens, provided it does not concern taxation, international affairs or an

amnesty.

Article 114 of the Constitution permits the Government - with Parliament's authorisation

- to stand in for Parliament and legislate by emergency decree. The Government would
appear to have made considerable use of this possibility ( over a third of the last
government's acts are said to have been adopted in this way), sometimes in the matter of
"organic laws", which are normally excluded from the procedure.

Under Article 90 of the Constitution, the President may, after consulting Parliament,
organise a referendum on "matters of national interest." Amendments to the Constitution
must be endorsed by a referendum before they can t4ke effect (see Article 147.3). The
referendum procedure has not been used since the Constitution took effect.

**Functioning** of **Parliament**

Notwithstanding a few organisational problems, the November 1996 elections were free
and fair, permitting the first real democratic handover since 194 7.

Parliament operates satisfactorily: its powers are respected and the opposition plays a full
part in its activities.

**The Executive: Structure**

The President of the Republic is elected by universal suffrage under a two-round system.
Election is for a four-year term, renewable once only. Candidates must be supported by
I 00 000 electors and over 35 years of age. In addition to the usual powers of a head of
state, the President plays a major role in the institutional and political life of the country.

The Government is answerable to Parliament, which may overturn it by a simple majority
of the two chambers sitting together. It comprises a prime minister and ministers
appointed by the President after confirmation by Par! iament.

Ministers are individually liable only under criminal law. Article I 08 of the Constitution
lays down the procedure for bringing an action against a minister (impeachment by the

9

Chambers or the President, judgement by the Supreme Court). The Government 1s
currently drafting a law on ministers' responsibilities in the exercise of their duties.

Central government has devolved the administration of the country to the counties
_(judets)._ There are 41 counties plus Bucharest, which enjoys comparable status. Each
county is headed by a prefect, who coordinates public services and supervises the acts of
the local authorities, which he may refer to the courts. Counties, municipalities, towns
and communes all have elected assemblies (2686 councils). The president of a county,
like a mayor, is elected by universal suffrage.'

The county councils coordinate the activities of local councils. Mayors exercise
executive power at communal level. They are answerable to the• local council and the
general council. A prefect has the power to dismiss elected local officials on the grounds ·
of negligence or corruption. This power, which has in the past been abused (1992-95 saw
the dismissal of 133 mayors and 98 town councillors), is now exercised within the
framework of a law adopted in 1996 and amended in 1997.

The Romanian administration is not governed by a civil service act setting out the rights
and obligations of officials. The Government is planning to introduce legislation on
administrative accountability, which is currently lacking.

The army, the secret services and the police are controlled by the civilian authorities.
The police -. a branch of the military in Romania - is subject to military tribunals. There
are, however, certain procedural guarantees, with the military section of the Supreme
Court serving as a court of final instance. In the case of the armed forces, the Supreme
Council of National Defence submits a certain number of decisions for parliamentary
approval under Law No 39/90. There is, however, no supervision of their application.

**Functioning** **of** **the Executive**

The central institutions of the State operate normally, with the President playing a key

role in their activities.

The exercise of local autonomy is hampered by the lack of an official regulatory
framework for local government employees and by local authorities' limited financial
resources. Furthermore, rules have still to be drawn up on the ownership of communal
property. The new government has already adopted a law strengthening and clarifying
local powers. It is now drafting a law on local authority financing, which should enter
into force early in 1998 together with a law on communal property.

The situation of the administration remains difficult. The lack of a civil service act and

particularly low salaries pose problems. The appointment of political place-men to
certain levels of the administration has in the past stimulated corruption. The new
Government has tabled a civil service law including stringent penalties for corruption.

Acts of brutality by the Romanian police force have not always been prosecuted, and
there have been cases of corruption. The secret services continue to wield extensive
powers regarding the classification of official documents, phone tapping and searches.
This state of affairs is largely attributable to the ambiguity of the legislation governing

10

their activities. The new government plans to reform this legislation to strengthen
parliamentary control over the secret services, notably through the establishment of a
parliamentary committee to supervise the activities of the foreign intelligence services.

The Judiciary: Structure

Romania's courts have increasingly asserted their independence from the other powers.
Judges appointed by the President (80% of judges, the remainder being trainees) enjoy
tenure. Judges are managed by the Supreme Council of the Magistracy, which is chaired
by the Minister of Justice and made up of judges and prosecutors ( 5 of the Council's 15
members) elected by Parliament for four-year terms.

The executive supervises the activities of judges via a body of inspectors under the
authority of the Minister of Justice. Though judges are the best paid staff in the public
sector, low wages are causing many to seek better-paid work in the private sector.

The department of public prosecutions, which is headed by a Prosecutor-General
appointed bf the President, is under the umbrella of the Minister of Justice. Prosecutors
have extensive powers; in particular, the Prosecutor-General may, on either his own
initiative or that of the Minister of Justice, seek a review of a final court ruling in a
number of civil and criminal cases. Moreover, large areas of pr9secutors' activities are
not subject to judicial control.

Appeals against acts of the administration may be lodged with ordinary courts, which
have special chambers for this purpose.

The "People's Advocate" introduced by the Romanian Constitution fulfils the functions
traditionally assigned to an Ombudsman. However, his powers and the means of
exercising them are not clearly defined.

The Constitutional Court, which was set up in 1992, consists of nine members appointed
for a single nine-year term of office. The President,_ the Chamber of Deputies and the
Senate each appoint three members to the Court. It verifies the constitutionality of bills
at the request of various authorities (the Presidents of the Republic, the Chamber of
Deputies or the Senate, the Government, the Supreme Court,· or a group of 50 deputies or
25 senators) and also scrutinises existing laws at the request of any interested party
involved in legal proceedings. However, the Court's ruling that an act is unconstitutional
is without effect if Parliament upholds its original decision by a two-thirds majority
(Article 145 of the Constitution), which limits considerably the scope of the supervision

exercised.

**Functioning** **of** **the Judiciary**

..
The Romanian judicial system is not working satisfactorily. The courts are overloaded
and judgements can be a long time coming. The problems can be attributed to a shortage
of qualified judges (23% of posts are vacant), a lack of equipment, complex procedures
and the great number of new rules to be enforced. The Government has tabled a bill
reforming dealings between the executive authorities and the department of public

11

prosecutions to increase the latter's autonomy, especially with regard as to whether cases
should come to court. There are also plans to increase salaries (already substantially
increased towards the end of 1996) and staffing in the Romanian judiciary.

The fact that the Constitutional Court's rulings can be overturned by a two-thirds
majority of Parliament is a 111ajor 9bstacle to genuine constitutional control in Romania.

**1.2** **Human Rights and the Protection** **of** **Minorities**

Romania has introquced various internal rules designed to ensure respect for human
rights and the rights of minorities. Such rights are also underpinned by the application of
certain international conventions, in the forefront of which is the European Convention
for the Protection of Human Rights and its main additional protocols. Under Article F of
the TEU, observance of human rights is part of the _acquis communautaire:_ any State
wishing to join the European Union must first ratify the said texts.

In June 1994 Romania, which has been a member of the Council of Europe since
October 1993, ratified the European Convention for the Protection of Human Rights and
the additional protocols thereto. It also permits individuals to take their case to the
European Court of Human Rights if they consider that their rights under this convention

have been violated.

It has ratified the European Convention for the Prevention of Torture and the Framework
Convention for the Protection of National Minorities. By contrast, it has signed but not
ratified the European Social Charter. It has also ratified the main human rights

conventions concluded in the framework of the United Nations.

Under Article 11 of the Constitution international conventions ratified by Parliament
become part of the domestic legal or~er, with treaties on fundamental rights taking
precedence over Romanian domestic law (Article 20.2 of the Constitution).

**Civil and Political** **Rights**

The Romanian Constitution recognises the right of any person to seek redress through the
courts. The principle is backed up by a relatively well-developed system of legal aid.
However, judicial control over the activities of the police is not sufficient to enable
people to bring grievances to court, the liability of police officers being extremely limited
under current legislation. The latest draft regulations for the police forces do not
substantially improve this situation of near-impunity.

Capital punishment was abolished for all offences in 1989.

There are certain obstacles to the exercise of the right not to be arbitrarily arrested.
Whtie a person may not be held for more than 24 hours without a warrant issued by a
prosecutor or judge, there are exceptions to this rule, especially in the case of minors. A
judge may, moreover, authorise someone to be held on remand for 30 days. During this
period a suspect may appeal to a court for release. The judicial authorities, however,
make excessive use of preventive detention.

12

All citizens over 18 years of age have the right to vote.

The freedoms of association and peaceful assembly are likewise guaranteed by the
Constitution and exercised without difficulty. There are today almost 12 000 NGOs in

Romania.

Freedom of expression is exercised by a broad spectrum of print and audio-visual media
(2 national public channels, IO private channels and many others available by cable and
satellite). The Constitution prohibits censorship. The severe penalties laid down in the
Criminal Code for false reporting and defamation can be powerful constraints on
journalists' freedom of expression. The Government has announced its intention to
revise the provisions in question. Economic pressure can also be exerted on the press
through the dominant position of the state-owned enterprise LETEA in the distribution of
newsprint. The government has been known to interfere in the management of state
owned radio and television stations.

The right of ownership is now guaranteed: expropriation is possible only in the public
interest and after fair compensation has been awarded. Foreigners may own land in
Romania provided it is for the purposes of an economic activity. The process of
compensating people expropriated by the Communists is now under way, its progress
differing according to the nature of the property. Jewish property has been restored to its
rightful owners. A bill has been tabled restoring property to IJlembers of minorities.
Negotiations now under way with the Orthodox Church should soon permit the Uniate
Church to recover its property.

Respect for privacy is endangered by the considerable powers uf the secret services,
which may in some circumstances conduct searches and monitor communications

without a warrant.

The position of asylum seekers is disturbing because they are not always given
satisfactory access to justice and accommodation. In particular, the ten-day deadline for
lodging a request for asylum seems too tight.

Several organisations have reported cases of inhumane and degrading treatment by the
police. This is particularly alarming because Romania has no provision for punishing
such actions. Despite recent improvements, the state of the country's prisons remains

poor.

As regards equality before the law, homosexuals are exposed to abuses by the vagueness
of the term "public scandal" as applied to homosexual acts by Article 200 of the Penal

Code.

The rights of the child have long been a matter for concern in Romania. The system
introduced in 1970 in an attempt to boost population growth were not accompanied by
the requisite machinery for helping birth families or placing children in foster 11.omes; as a
result many children were abandoned in squalid state orphanages. Over I 00 000 children
are affected, a figure which has risen slightly of late. In response to a situation that flies
in the face of some of Romania's international obligations (and in particular the 1989
Convention on the Rights of the Child), the Union has spent almost ECU 70 million,
much of it through the Phare programme.

13

The situation may improve shortly. The Government has approved two emergency
decrees: the first abolishes the system introduced by Law No 3/1970 and replaces it with
new provisions and the second facilitates adoption under a system administered by the
counties. Family allowances have been increased and other measure adopted to help
families in difficulty.

Economic, Social and Cultural Rights

The right to the minimum means of subsistence and social security is written into the
Constitution. 

The right to belong to a trade union is recognised except in the public sector. Trade
unions' prerogatives in the matter of collective bargaining and the guarantees accorded to
protected employees seem inadequate. About 40% of Romania's workers are members
of trade unions, with most belonging to one of four confederations.

The right to strike is recognised in all sectors other than those considered to be of public
interest by the Government (public services and certain strategic state-owned
enterprises), which may also impose a minimum service ( one third of normal service) in
other fields. In practice, however, public-sector employees have gone on strike without
incurring sanctions. Elsewhere the right to strike is ofteri undermined by the obligation to
notify a conciliation body before withdrawing labour. Many strikes are, moreover,
declared illegal by the courts.

The rights to education and freedom of religion are guaranteed in Romania.

**Minority Rights and the Protection** **of** **Minorities**

Minorities account for 13-15% of Romania's population. The largest minorities are
Hungarians (7.8%) and Roma (gypsies), who are estimated to make up to 5-7% of the
population.

The protection of minorities in Romania is guaranteed by a number of international
agreements. In 1995 the country ratified the Council of Europe's Framework Agreement
on Minorities. It also endorsed the principles laid down in (non-binding)
Recommendation 1201 of the Council of Europe's Parliamentary Assembly when signing
a bilateral treaty with Hungary in September 1996. However, a footnote added to the
treaty at Romania's request expressly rules out any recognition of collective rights under

the Recommendation.

Minorities in Romania enjoy special rights of representation in Parliament (see above). In
the new government, a minister from the UDMR (a party representing the Hungarian
minority) has been placed at the head of a Department for Minorities. Since 1993 issues
concerning minorities have been put to a national council, which can investigate
complaints. In contrast, Article 236 of the Criminal Code punishing any person singing a
foreign national anthem or carrying a foreign flag has been seen. as an attack on

minorities.

14

Relations with the· Hungarian minority have improved appreciably since the signing of a
bilateral treaty with Hungary in September 1996 and the arrival in office of a government
including two ministers from the UDMR. A new education act should shortly replace
that of June 1995 (never applied), which limited the scope for teachirig in a minority
language and increased the percentage of teaching in Romanian. Romania's minorities
will therefore be able to continue to be educated in their own languages .. A new decree
entitles members of minorities to deal with the administration and obtain birth, marriage
and death certificates in their ·own language in areas where they account for over 2°0% of
the population. This currently applies to 1624 places in Romania, 1379 of them inhabited
by the Hungarian minority.

The Roma, who account for a considerable percentage of the population (1-1.5 million,
depending on the estimates), are the victims of discrimination in many areas of everyday
life. They are quite often assaulted by police officers or members of the public, offences
that go unpunished. Besides the discrimination they suffer from the rest of the
population, sociological and cultural factors account to some extent for their very
difficult social situation. It is important that the Government step up the integration
measures recently announced to take full account of the difficulties encountered by this
section of the population.

Further information is needed on the situation of the Roma and a reliable assessment of

their numbers and social situation (rate of unemployment, health statistics, level of
education) in Romania, for which no figures are currently available.

15

**1.3** **General Evaluation**

Romania's new institutions are democratic and their stability now seems guaranteed.
They do, however, need to be anchored by greater respect for the primacy of law at all
levels of the apparatus of State. Elections are free and fair; they led to a genuine change
over in November 1996.

There remain a number of shortcomings wit~ regard to respect for fundamental rights,
even if the measures adopted and the undertakings given by the Romanian authorities
since November 1996 are steps in the right direction. For instance, much still remains to
be done in rooting out corruption, improving the working of the courts and protecting
individual liberties from the activities of the police and secret service campaign or in the
course of criminal proceedings.

By the same token, even if the Hungarian minority seems well integrated (given the
recent improvement in its situation), the same cannot be said for the Roma (gypsies), who
constitute a sizeable minority in the country.

Lastly, the reforms concerning the protection ofchiidren in orphanages are a major step

forward but have still to bear fruit.

The improvement now un'der way since the new government came to power suggest that
Romania is on the way to meeting the political conditions laid down by the Copenhagen
European Council.

**2.** **Economic Criteria**

In examining the economic situation and prospects of Romania, the Commission's
approach is guided in particular by the conclusions of the European Council in
Copenhagen in June 1993, which stated that membership of the Union requires "the
existence of a functioning market economy, as well as the capacity to cope with
competitive pressure and market forces within the Union".

This section of the Opinion therefore gives a concise survey of the economic situation
and background, followed by a review of Romania's progress in key areas of economic
transformation (liberalisation of the price and trade system, stabilisation of the economy,
structural change, reform of the financial sector) as well as its economic and social
development. It concludes with a general evaluation of Romania in relation to the criteria
mentioned by the European Council and a review of prospects and priorities for further

reform.

16

**2.1** **THE ECONOMIC SITUATION**

**Background**

Romania, with a population of 22.6 million, had in 1995 a gross domestic product (GDP)
of ECU 93 billion (expressed in purchasing power parity); its population was about 6.5%
of the Union's, while its eco~omy was only about 1.5% Per capita GDP is about 24% of
the Union average. Average monthly wages were estimated at about ECU 65 at end

March 1997.

Romania is a founder member of the WTO. On 1 July 1997, it became a member of

CEFTA.

_Progress in EconomicTransformation_

When Romania emerged from the Ceausescu regime at the end of 1989 it was one of the
. central and east European countries whose institutions, as well as economic, legal and
social infrastructure, were the furthest from those of a market economy. Its economy had
gone through a particularly difficult decade. In a determined but ill-advised drive to pay
off the country's external debt, the authorities had engaged in a forced export drive and in
a ruthless compression of imports, which starved the country of badly needed inputs.
Prestige projects with little economic return absorbed a substantial fraction of gross
domestic product. At the beginning of the nineties, the collapse of Comecon, the Gulf
War and the disintegration of Yugoslavia represented formidable external shocks, which
hit the country at a time of major political turmoil.

After the overthrow of the Ceausescu regime in December 1989, Romania found itself in
a deep economic and social crisis. For several years, the country failed to marshal
sufficient political will to decide and implement successful reforms. Confusion
characterised 1990, with acute economic disorganisation, exacerbated by a breakdown of
law and order and dramatic worker absenteeism. Though comprehensive in scope, the
1991 and 1992 reform programmes were not fully implemented and went off the rails. It
was only with the programme launched at the end of 1993 that significant progress was
achieved: a tighter monetary policy, greater fiscal discipline, a reduction in inflation and
some acceleration of enterprise reform all contributed to a resumption of growth. But
reforms were slowed down again in late 1995/early 1996.

In fact, the authorities repeatedly launched new reform programmes, only to abandon
them a few months afterwards in the face of mounting political resistance. Public support
for reform has fluctuated accordingly: it was substantial at the beginning of the
transformation, then substantially diminished in the face of mounting costs· brought by
the transition, only to strengthen again when it became apparent that the path of partial
reforms conducted between 1989 and 1996 was leading nowhere:

The inherent contradictions of this strategy were only fully addressed after the legislative
and presidential elections of November 1996, when the new government devised a
radical programme of macroeconomic stabilisation and structural reforms, and began its
implementation.

17

As a result the country is in a peculiar situation. While in 1996, the private sector
generated 52% of GDP, the economy is still dominated by state-owned, loss-making
monopolies and value-subtracting enterprises. However, if the measures that have been
announced in early 1997 are effectively implemented, the Romanian economy will be
radically different at the end of 1997.

_Foreign Direct Investment_

Foreign Direct Investment (FDI) is low for a country of Romania's size: at the end of
1996, the cumulative stock of FDI was only ECU 1.1 billion (source: EBRD). In the first
years of the transition, given the great uncertainties on the political and economic course
of the country, investors adopted a very cautfous stance, reinforced by the defiance of
some leading political forces to accept foreign investment. Only in 1994 did the flows of
FDI picked up. However, they have remained insufficient to make a strong impact on the
economy. In a clear change of policy, the new government has been actively courting
foreign investors. Foreign investors are now authorised to own land and an emergency
ordinance introduced in June 1997 makes profit repatriation easier and clarifies support
measures for foreign investors.

_Economic Structure_

Agriculture is a major economic activity in Romania. In 1996 it contributed about 20% of
total Gross Value Added (GVA), a proportion that has been rising since 1990.
Employment in the sector is high by international standards - more than a third of the
total active population - and has even been incr~asing during transition, reflecting its role
in absorbing labour shed by other sectors. Productivity in farming and in the food
industry remains low. The share of the private sector in agricultural production stood at

87% in 1996.

The reforms implemented in 1991 led to a parcelization of land. Property rights were illdefined - the majority of farmers were assigned only temporary ownership titles. The
resulting uncertainty about property rights means that individmils are currently able
neither to sell land nor use it as collateral. However, the new government is committed to
pass a new Land Law before June 1998, which should clarify ownership rights and
establish the bases for a competitive land market. Land sales are now possible.

Capital resources for restructuring and modernisation are insufficient. The development
of private-sector agriculture is hampered by an insufficient degree of mechanisation, and
a shortage of adequate support facilities and credits. However, the closure of the most
inefficient state-owned farms, rapid privatisation, the reduction in directed credits and the
liberalisation of the trade and price regimes should lead to greater incentives for a more
efficient agricultural production.

**18**

|Main indicators of economic structure<br>(all data far 1996 unless otherwise indicated)|Col2|
|---|---|
|Population<br>_million_<br>Per capitaGDP<br>_PPS-ECU(1995)_<br>_as_% _ofEV-15 average_<br>_percent (1995)_<br>Shareofagriculture in:<br>gross value added<br>_percent (1995)_<br>employment<br>_percent (1995)_<br>Gross foreign debt/GDP<br>_percent_<br>Exportsofgoods & services/GDP<br>_percent_<br>Stockofforeign direct investment<br>_billion ECU_<br>_ECUpercapita_<br>|22.6<br>4100<br>24<br>19.9<br>34.4<br>25<br>27<br>1.1<br>50|
|~~_Source: Commission services, national sources,EBRD_~~<br>|~~_Source: Commission services, national sources,EBRD_~~<br>|
|~~*FOi stock converted at end 1996 exchange rateofECU1 = USO 1.25299~~|~~*FOi stock converted at end 1996 exchange rateofECU1 = USO 1.25299~~|

Industry accounts for more than a third of total gross value added (GVA), a percentage
which has fallen rapidly in the recent years and is now more in line with levels in the EU.
Industrial employment is roughly of the same magnitude, but has declined in absolute
values. However, industrial structures have not changed much since 1989. Industry is still
dominated by the same very large state-owned enterprises which were set up by the
previous regime in the years of forced industrialisation, and which are characterised by
very high energy intensity, low productivity and privileged access to state funding.
Relatively easy availability of cheap energy and raw materials, and the high priority
given to the development of heavy industry, have led to a specialisation in sectors like the
oil and petrochemical industries, which are not in line with the country's natural
endowment or comparative advantages. The share of the private sector in industrial
production remains low (24% in 1996) and has not progressed much in the recent years
(it was 20.7% in 1995).

Many of the large enterprises which dominate the industrial sector remain inefficient and
unprofitable, and represent a major source of macroeconomic instability. However, the
new government has decided to take drastic actions, including outright closure of some of
the biggest loss-makers, restructuring, privatisation and the end of directed credits.

Small and medium-sized private enterprises have been rather dynamic, especially in
sectors of light industry, such as food processing, textiles and furniture. However, the
growth of small and medium-sized enterprises and the privatisation process have affected
the employment structure in the industrial sector only marginally: at the end of 1994,
enterprises with more than one thousand employees employed more than 60% of the total
labour force, and state-owned firms accounted for more than 84% of total employment,
despite the fact that they represented only 6.5% of the total number of firms. Although
the situation has somewhat evolved since then, the concentration of the labour force in a
few large, inefficient enterprises still represents a major obstacle to industrial

19

restructuring. The social costs which are unavoidably linked to this process have often
been used as an argument to postpone the necessary changes.

Productivity has been increasing steadily since 1994. This improvement has occurred
predominantly in small and medium-sized enterprises.

Romania was among the least service-oriented economies in central and eastern Europe.
Services accounted for less than 20% of GDP during the 1980s. A rapid expansion has
taken place after 1989, mostly through flour_ishing private activity in retail sales and
tourism. In 1996 services accounted for about 36% of GV A, with the private sector
contributing over three quarters of this total.

...

According to Romanian estimates, the size of the informal sector could be around 2030% of GDP. The high marginal rates of the wage tax, as well as of the social security
contributions, have led a sizeable proportion of workers either to escape the channels of
the official economy or to seek other, not officially-declared sources of income.

**Liberalisation**

_Price Regime_

A phased programme of price liberalisation was introduced at the end of 1990. Most
consumer subsidies were eliminated in 1993, when the number of consumer goods under
direct price control was also greatly reduced. By the end of 1995, administered prices
accounted for 3% of consumer goods and services, about 7% of industrial producer prices
and more than 27% of raw and basic materials. In· early 1997, the new government
decided to further complete price liberalisation, by limiting the number of controlled
prices to less than 20 items (essentially prices of public utilities and energy). In
particular, the prices of a number of key agricultural products were liberalised in March

1997.

_Trade Regime_

The liberalisation of the foreign trade regime has been rather rapid: it was largely
completed by the end of 1992. It started in 1990 with the abolition of the monopoly on
foreign trade. Already in 1991 enterprises, and to a more limited extent the public, were
authorised to detain, and to trade in, foreign currency. Export and import licenses were
largely eliminated in 1992, vihen a new tariff code was introduced. However, a feature of
Romania's trade policy has been the proliferation of discretionary and temporary
reductions in tariff rates, in particular in the form of tariff quotas (i.e. departures from the
"statutory" levels of import duties, through the application of lower duties or outright
duty exemptions for pre-determined quantities of goods). In fact, in l 995, around half of
Romania's imports (in value terms) were subject to special arrangements, rendering
largely irrelevant the country's import tariff schedule. In 1996, substantial trade
restrictions were introduced (including derogations from the basic duties, export
prohibitions a11d export quotas), in an attempt to curb a rising trade deficit. Some
measures were not in conformity with the provisions of the Europe Agreement on trade

relations between the EU and Romania.

20

However, the new government is committed to introduce a new customs code in the
cour~~ of 1997, which should improve the transparency of the trade regime. In particular,
the authorities intend to end all export 1.--ans and quotas by 1998. Already, in May 1997,
they have reduced significantly the external tariff for agricultural products. Romania will
become a member of CEFT A on 1 July 1997.

_Foreign Exchange Regime_

The foreign exchange regime has been substantially liberalised. The old system of
multiple exchange rates was abolished at the end of 1991, with the unificn.tion of the
"official" and the "commercial" rates. Subsequently, however, the market was
characterised by forms of administrative interference. In August 1994, a foreign
exchange interbank market was established, but in March 1996 the authorities introduced
substantial controls which led international lender: (including the EU and the IMF) to
suspend their financial assistance. A significant spread appeared between the official
parity and the rate used at the private exchange bureaux. ·control of the exchange market
led to an overvaluation of the national currency, which in turn helped to keep down the
cost of energy imports for the large, energy-intensive, state-owned enterprises.

In 1997, the new government again liberalised the foreign exchange market; all banks
recovered their dealership licences and other curbs were lifted. The spread between the
official and unofficial rates disappeared, the currency adjusted to more realistic levels,
and transaction volumes on the interbank market increased significantly.

At present Romania enjoys only a limited form of current- and capital-account
convertibility. The adoption of Article VIII of the IMF Articles of Agreement, and
consequently of a more advanced form of convertibility, would require addressing the
remaining administrative restrictions and ensuring a higher level of official reserves.

**Stabilisation** **of** **the Economy**

_Domestic_

In 1995, Romania's GDP grew by 7.1 % in real terms. However, in 1996, despite
declining unemployment, the macroeconomic performance was not so good: growth
slowed down to 4.1 %, inflation accelerated to 56.9% at the end of December and the

budget deficit of the general government soared to 3.9% of GDP (and to 8.3% of GDP for
the quasi-fiscal deficit, which includes a number of hidden expenditure items and quasifiscal subsidies from the National Bank of Romania). In 1996 real GDP reached 88% of

1989 levels.

In fact, macroeconomic policy has not always followed a coherent course: periods of
restrictive policies, responsible for most of the positive results in terms of
macroeconomic stabilisation, have been followed by periods in which policies were
relaxed to a degree in response to pressures from interest groups. Indeed, in the run-up to
the November 1996 elections, there was a substantial loosening of both the monetary and
fiscal stance. As a result, the new government, besides structural reforms, has had to take
drastic stabilisation measures, which should lead to a temporary contraction of the
economy in 1997.

21

|Main economic trends|1994|1995|1996|
|---|---|---|---|
|Real GDP growth rate<br>_percent_<br>Inflation rate<br>annual average<br>_percent_<br>December on December<br>_percent_<br>Unemployment rate, end-year<br>_percent_<br>.._/LO definition_<br>General government budget<br>balance<br>_percentofGDP_<br>Current account balance<br>_percentofGDP_<br>Debt/export ratio<br>_percent_<br>Foreign direct investment inflow<br>_percentofGDP_<br>|3.9<br>136.7<br>61.7<br>8.1<br>-2.0<br>-1.47<br>76.6<br>1.1|7.1<br>32.3<br>27.8<br>8.0<br>-2.6<br>-4.6<br>73.9<br>1.0|4.1<br>**38.8**<br>56.9<br>6.3*<br>-3.9<br>-5.8<br>85<br>1.5|
|~~_Source: Commission seniices, national sources,_~~_EBRD_<br>|~~_Source: Commission seniices, national sources,_~~_EBRD_<br>|~~_Source: Commission seniices, national sources,_~~_EBRD_<br>|~~_Source: Commission seniices, national sources,_~~_EBRD_<br>|

  - Registered unemployment

_External_

Both the trade balance and the current account have been in deficit since 1990. The

current account deficit reached an all-time high in 1996, amounting to ECU 1.8 billion.
The worsening of the external position is the result of several factors. It is in part due to
an increase in imports of capital goods determined by the strong economic recovery. This
is not a negative development since imported capital will add to productive capacity.
However, the deterioration also reflects serious structural weaknesses: a marked increase
in imports of consumer goods as well as a very sizeable increase of imports of fuels and
raw materials, used primarily by unreformed sectors of the economy characterised by
poor value-added and high energy intensity. In 1996, exports suffered from the
overvaluation of the currency. The stabilisation measures introduced in early 1997 should
have a positive impact on the trade balance (already reflected in the figures for the first
quarter) but a negative impact on the volume of trade ( especially on imports, as shown by
the trends observed in the first months of 1997).

Romania's external debt remains relatively low, but has recently been increasing rapidly.
At the end of 1996, the medium and long term external debt stood at ECU 5.5 billion.
Debt servicing (ECU 950 million in 1996) does not represent for the time being a major
drain on resources, but could rapidly become more problematic given the short-term
profile of Romania's debt. In 1995 Romania managed to regain access to the
international private financial markets through a series of syndicated loans. It also
obtained quite favourable credit ratings from major international rating agencies - helped,
no doubt, by its low level of external indebtedness. In 1996, it raised ECU 1.1 billion on
the international capital markets and there is considerable interest from commercial and
investment banks to do business with the country. For 1997, the government set a ceiling
of USO 2,5 billion for external commercial borrowing.

22

The exchange rate has-reflected the uneven path of macroeconomic policy. A period of
relative stability from late 1993 to mid-1995 was followed by a policy of artificial
overvaluation. This has been now reversed and the national currency has been allowed to
depreciate rapidly at the beginning of 1997 ( cf. above).

**Structural** **Change**

_Foreign_ _Trade_

External trade has been substantially re-oriented away from the former Comecon partners
and towards western Europe. Trade with EU member countries represented about half of
Romanian's foreign trade in 1996. Trade with Germany, France and Italy has been
particularly dynamic, although Romanian exports in 1996 have suffered due to the low
level of demand in some of the main EU countries. However, Russia, and to a lesser
extent some developing countries in the Middle East and Asia, still are significant trade
partners for Romania.

The commodity composition of trade is undergoing a similar adjustment. Since 1990
Romania has slowly, but steadily reduced its traditional exports of mineral and chemical
products, as well as products of the machine-building industry. The reduction of the
former reflects increasingly binding import constraints. Th(? reduction of exports of
manufactures, instead, is largely related to the collapse of intra-Comecon trade, with
declining demand from traditional partner~ of the former socialist bloc. In recent years
there has been a substantial increase in exports by the textile and leather industries, as
well as wood products (pulp, paper and furniture). On the import side, minerals and fuels
account for an increasing share of the total (slightly less than one quarter in 1996).
Imports of textiles and leather products have also increased significantly.

It is hard to say whether this commodity composition of trade is likely to prevail also in
the medium term. On the one hand, the reduction of exports of heavily energy-intensive
products is probably going to continue and should be seen as a positive development. On
the other, the expansion of trade in textiles and leather products is largely related to
outward processing trade (OPT), which is based on low unit labour costs.

_Labour Market_

The Romanian labour market is characterised by a striking reallocation of employment in
favour of the agricultural sector. This sector appears to have absorbed a large proportion
of labour released by the reduction of industrial activity. Also the dramatic increase of
self-employment has contributed to limit the negative impact of the recession. The
unemployment rate declined substantially between the beginning of 1995 and the end of
1996 (when it reached 6.3% according to Romanian official figures, which are not
compiled by. ILO methods), but is forecast to jump t0 more than 10% at the end of 1997
following the introduction of the new · economic programme. High levels of
unemployment could well be a feature of the years to come if the restructuring process of
the large state-owned enterprises sector continues.

There has been a steady increase in labour productivity (measured as GDP per person
employed) since 1993. This is caused more by the shedding of excess labour and a

23

reduction in absenteeism, than by effective restructuring of production processes in the
many large industrial enterprises.

_Public Finances_

Fiscal policy and institutions have undergone significant changes since the beginning of
the transformation. Major changes have aimed at adapting the taxation system to a new,
decentralised economy, at redefining priorities for expenditure and improving budget
management. A value-added tax was introduced in July 1993, replacing the existing
turnover tax. The tax on the wage funds of the enterprises was replaced by a tax on wage
income at the end of 1993. In August 1994 a new profits tax law was issued.

Social protection has undergone marked improvements. An unemployment fund was
established in 1990, while pensions were partially indexed. The major remaining problem
concerns the long-term financial sustainability of the system.

While Romania managed to have budget surpluses in the 1980s, the fiscal situation has
deteriorated significantly since 1991. The budget deficit of the consolidated general
central government reached 3.9% of GDP in 1996 (5.7% of GDP on an accruals basis)
and the quasi-fiscal deficit soared to 8.3% of GDP. The worsening state of the public
finances reflected the growing support to loss-making and inefficient sectors of the
economy ( especially agriculture and "regies autonomes"). While the new government is
committed to reduce the budget deficit to 3. 7% of GDP in 1997 (including expenditures
previously considered as of a quasi-fiscal nature), the improvement hinges critically on
the successful restructuring of the enterprise sector and on the privatisation of medium
and large state-owned companies.

_EnterpriseSector: Privatisation andEnterprise Restructuring_

The development of the private sector has been slow but noteworthy. In 1996, the private
sector accounted for 52% of GDP. The expansion of private activity is th~ result of two
phenomena: the transfer of property from the state sector, and the creation of new
enterprises. Altogether about 750 000 private firms, about a third of which are small
family-run enterprises, have been registered over the last five years. Privatisation is fairly
advanced in small enterprises and in the agriculture sector. It is less so in industry,
especially among large firms. Private-sector involvement in sectors such as energy and
telecommunications remains largely non-existent. In fact, in 1996, the share of the
private sector accounted for less than 25% of industrial production. The slow pace of
privatisation and the limited availability of credit represent, as in most economies m
transition, the main obstacles to the further development of the private sector.

Given that privatisation has been largely restricted to worker/management buyouts, the
impact on the performance of medium-sized and large enterprises has so far been limited.
At end May 1997, only 840 of the 3257 medium-sized and large enterprises offered for
privatisation in 1991 had been privatised.

The new authorities have put forward an ambitious plan for privatisation and enterprise
restructuring. The official goals are for 50 medium- and large-scale companies to be
privatised per week beginning on 1 March 1997; to close rapidly some of the largest
state-owned loss-makers; and to transform most of the so-called "regies autonomes" into

24

commercial companies. Furthermore, no minimum prices will be set at auctions, which
should increase the pace of the privatisation pro~ess.

**Financial** **Sector**

A two-tier banking system was introduced in Romania in December 1990: the National
Bank of Romania (BNR) assumed the traditional central banking functions, while its
commercial operations were transferred to four state-owned commercial banks. Since
then the banking system has undergone important changes. By end-I _Q96,_ there were 40
banks operating in Romania, including nine branches or subsidiaries of foreign banks.
Despite plans to increase bank privatisation, the sector continues to be dominated by
state-owried banks, some of which have a high proportion of bad loans in their portfolios.
Some banks might be exposed to difficulties in the course of the current restructuring
process of the enterprises sector, when some of their corporate clients will be liquidated.

The banking sector continues to present considerable segmentation and concentration, for
deposits as well as loans: each of the large banks tends to service a particular part of the
market, with limited competition. Five state-owned banks account for more than twothirds of aggregate assets, and for three quarters of commercial loans.

Legislation on bank s:.ipervision by the BNR is fairly advanced. An effort is under way to
redefine the role of its regional branches, which is deemed essential to strengthen
supervision. With the assistance of major foreign central banks, the supervision
department of the BNR is being expanded. Critical legislation on bank insolvency will
be introduced, and prudential and accounting regulations are being brought in line with
international standards. However, although formally independent and subordinated to the
Parliament, the central bank was subject in the past to a certain degree of interference
from tht government. Pressures have been repeatedly exerted on the central bank not
only on issues like exchange-rate management, but also on supervision, licensing and
crisis management. The clearest example was the special credits extended by the central
bank to loss-making state-owned enterprises and a~ricultural companies.

T [1 ] e monetary authorities gradually moved from direct instruments of monetary control
(credit ceilings) to more market-oriented ones. Currently the policy instruments of the
BNR include refinancing credits, interest rates and minimum reserve requirements. A
multilateral clearing system was established in April 1995. Commercial banks are
actively encouraged to introduce new payment instruments, although non-cash
transactions are still quite limited.

About 40 insurance and reinsurance companies are registered in Romania. However; the
sector is still dominated by three state-owned companies. An official stock exchange
(BSE) started to operate at the end of 1995,. and a private secondary market (Rasdaq)
opened in September 1996, where shares from the mass privatisation programme are
traded. However, the financial markets are still in their infancy: the number of companies
listed on the BSE is very small, volumes are relatively limited and the disclosure
requirements remain unclear ( especially on Rasdaq).

25

Economic and Social Development

_Social_ _Indicators_

Romania's population is relatively young: in 1995 about 66% was less than 44 years old.
This is the result of the previous regime's policy to strongly encourage childbirth, which
included generous financial provisions for families with· children, a strict law against
abortion, a total ban on contraception, and harsh penalties on those breaking these laws.
Birth rates declined dramatically after 1990, when this policy was officially abandoned.
Falling fertility and increased emigration have contributed to an overall reduction of the
population by almost 500 000 since 1991.

Romania continues to have high infant and maternal mortality rates, well above those in ·
the EU and other countries of central and eastern Europe. This is testimony of the relative
degradation of the quality of the health system; in fact, Romania has one of the lowest
levels of health spending among European countries (3 .9% in 1991 ). A large number of
Romanian households (one unofficial estimate puts it at 9%) are living below the poverty

line.

Basic education is generally good, with a very high literacy rate. However, secondary
education has traditionally been heavily directed towards vocational training, and
enrolment ratios in higher education are low. Since 1989, the number of students in
higher and university education has increased significantly, probably as a result of the
removal of enrolment restrictions ar:id because of sharply increased youth unemployment.

_Regional_ _and_ _Sectoral Differences_

Bucharest concentrates 10% of Romania's population and enjoys a level of development
well above the national average. Its population has much better access to health and other
public services, and unemployment is lower. This is linked to the relatively diversified
structure of the economy, the importance of the services sector (which is growing) and
the presence of many foreign investors.

Historically, some regions of the country (Bucharest, Galati, Transylvania) were more
industrialised than others. However, during the forced industrialisation of the post-war
period, the authorities decided to locate the new industrial centres in all regions, often
with little consideration for the regional economy's comparative advantages (e.g. the
Calarasi steel complex). At present, some regions remain very specialised in heavy
industry, and a few towns rely almost exclusively on one industry or one large _combinat_
( e.g. Resita).

In 1994, Romania was characterised by significant disparities in unemployment levels.
Regions with above-average figures included areas with obsolete heavy industries
( counties of Caras-Severin, Dolj and Olt in the South, Galati, Iasi and Bacau in the northeast) or in relatively less industrialised areas (counties of Tulcea, Vaslui, Botosani in the
north-east).

26

**2.2** **The Economy** **in** **the Perspective ofMembership**

Introduction

The European Council in Copenhagen in 1993 defined the conditions that the associated
countries in central and eastern Europe need to satisfy for accession. The economic

criteria are:

- -the existence of a functioning market economy;

- -the capacity to cope with competitive pressure and market forces within the Union.

These criteria are linked. Firstly, a functioning market economy will be better able to
cope with competitive pressure. Secondly, in the context of membership of the Union, the
functioning market is the internal market. Without integration into the internal market,
EU membership would lose its economic meaning for both Romania and its partners.

The adoption of the _acquis,_ and in particular the internal market _acquis,_ is therefore
essential for a candidate country, which must commit itself permanently to the economic
obligations of membership. This irreversible commitment is needed to provide the
certainty that every part of the enlarged EU market will continue to operate by· common

rules.

The capacity to take on the _acquis_ has several dimensions. On the one hand, Romania
needs to be capable of taking on the economic obligations of membership in such a way
that the single market functions smoothly and fairly. On the other hand, Romania's
capacity to benefit fully from the competitive pressures of the internal market requires
that the underlying economic environment be favourable, and that the Romanian
economy have flexibility and a sufficient level of human and physical capital, especially
infrastructure. In their absence, competitive pressures are likely to be considered too
intense by some sections of society, resulting in a call for protective measures, which, if
implemented, would undermine the single market.

The capacity and determination of a candidate country to adopt and implement the _acquis_
will be crucial, since the costs and benefits of doing so may be unevenly spread across
time, industries and social groups. The existence of a broad based consensus about the
nature of the changes to economic policy which membership of the Union requires, and a
sustained record of implementation of economic reforms in the face of interest group
pressure reduces the risk that a country will be unable to maintain its commitment to the
economic obligations of membership.

At the level of the public authorities, Membership of the Union requires the
administrative and legal capacity to transpose and implement the wide range of technical
legislation needed to remove obstacles to freedom of movement within the Union and so
ensure the working of the single market. These aspects are examined in later cpapters. At
the level of individual firms, the impact on their competitiveness of adopting the _acquis_
depends on their capacity to adapt to the new economic environment.

27

The Existence of a Functioning Market Economy

The existence of a market economy requires the equilibrium between supply and demand
is established by the free interplay of market forces. A market economy is functioning
when the legal system, including the regulation of property rights, is in place and can be
enforced. The performance of a ma~ket economy is facilitated and improved by
macroeconomic stability and a degree of consensus about the essentials of economic
policy. A well-developed financial sector and an absence of significant barriers to market
entry and exit help to improve the efficiency with which an economy works.

Rom~nia has made enormous progress since .the beginning of the transition, although it
cannot be considered, as yet, to be a functioning market economy. Prices have to a great
extent been liberalised and the main barriers to trade removed. However, Romania
remains a country characterised by a significant degree of government interference with
the working of the economy. Property rights and their transferability are not yet fully
assured for at least one factor of production: land. Regulatory bodies are still being set up
and their capacity to ensure that legislation is respected and implemented still needs to be
developed.

Policy-making on economic issues has not always been coherent. As a result, progress
towards macroeconomic stability has not been steady: recent years have been
characterised by widely fluctuating performances in term of growth, inflation and
unemployment. Economic agents do not necessarily perceive the macroeconomic
environment to be stable enough to promote the necessary level of savings and
investment (both domestic and foreign).

If fully implemented, the comprehensive programme of macroeconomic stabilisation and
structural reforms announced by the authorities in early 1997 should radically transform
Romania's economy and lay the foundations for healthy growth in the years ahead. But
the implementation of the basic features of the programme, especially with regard to
restructuring, will take many years. It is yet too early to assess whether the programme
will be implemented fully and successfully. Moreover, the uneven path of reform and
macroeconomic instability in the recent past point to the fact that some economic agents
do not seem yet to be fully committed to reform. Some powerful groups that stand to lose
from the current reforms are calling for more state intervention in the economy, more
price controls and a return to old methods of economic management. The consolidation
of the market mechanisms that are being put in place in all sectors of the economy largely
depends on the emergence of a clear and broad consensus on a medium term strategy by
the most important economic, social and political forces.

In order to complete its transformation process successfully and prepare for EU
membership, the country still needs to implement many, detailed and complex measures.
Good progress in implementation of the Europe Agreement should help to complete the
functioning of the market economy and should ensure that the transition to membership
of the Union is relatively smooth. This requires a government and administrative system
which are fully committed to these ends. The transparent, consistent and effective
application of laws, coupled with economic agents' expectations that this will be the
case, enable a market economy to function more efficiently. In Romania the public
administration (taken here to include regulatory and supervisory agencies as well as
decision-making bodies) has some way to go in ensuring that laws are effectively applied

28

after they have been adopted. In the past, foreign investors have singled out the
unpredictable evolution of the legal system and the different interpretation of double
taxation treaties as obstacles to doing business in Romania.

The financial sector, an essential feature of a modem market economy, has so far been
unable to exert its financial intermediation role in an appropriate way. The viability of the
financial sector must be strengthened by further privatisation and by the introduction of
effective supervision. Once the banking sector is properly monitored and privatised, it
will be able to help impose financial discipline on the enterprise sector. A law on bank
privatisation has recently been adopted.

Finally, competition has been enhanced by privatisation and greater opening to
international trade. Nevertheless, there are severe limits to free entry and exit in specific
economic activities. Private involvement in sectors such as energy and
telecommunications remains largely non-existent despite the clear benefits this would
bring in terms of fresh capital and know-how. However, changes have only recently
begun: two GSM mobile telephone networks are now in operation and the authorities
have decided to dismantle the Romanian Petroleum Company. The absence of market
mechanisms in much of the agricultural sector has resulted in high prices, high levels of
protection and inefficiencies. Despite radical reforms being introduced with the support
of the international financial institutions, a very substantial amount of restructuring and
investment needs to be carried out over many years to bring the s.ector more 'in line with
developments in the European and world markats.

29

**The** **Capacity** to **Cope** **with** **Competitive** **Pressure** **and** **Market** **Forces**

It is difficult, some years ahead of prospective membership, and before Romania has
adopted and implemented the larger part of Community law, to form a definitive
judgement of the country's ability to fulfil this criterion. Nevertheless, it is possible to
identify a number of features of Romania's development which provide some indication
of its probable capacity to cope with competitive pressure and market forces within the

Union.

This requires a stable macroeconomic framework within which individual economic
agents can make decisions in a climate of a· reasonable degree of predictability. There
must be a sufficient amount of human and physical capital including infrastructure to
provide the background so that individual firms have the ability to adapt to face increased
competitive pressures in the single market. Firms need to invest in greater efficiency so
that they can both compete at home and take advantage of economies of scale which flow
from access to the internal market. A firm's capacity to adapt will be proportional to its
access to investment finance, the quality of its workforce and the success of its efforts to

innovate.

Moreover, an economy will be better able to take on the obligations of membership the
higher the degree of economic integration it achieves with the Union ahead of accession.
The more integrated a country already is with the Union, the less the further restructuring
implied by membership. The level of economic integration is related to both the range
and volume of goods traded with member states. Direct benefits from access to the single
market may also be greater in sectors where there are a sizeable proportion of small
firms, since these are relatively more affected by impediments to trade.

In the case of Romania, an evaluation of competitiveness is made particularly difficult
because of the major reforms that have been launched recently. Indeed, the ability to
withstand competitive pressure depends not only on the current structure of the economy,
but also on the way in which it will develop in the near to medium-term future. In this
respect, Romania offers a contrasted situation: the existing economic structure points to
very important structural weaknesses, while the reforms that have been announced at the
beginning of 1997 could have a very positive impact in a relatively short period of time,
especially if rapid privatisation is achieved and foreign direct investment is forthcoming.
However, in order to withstand competition within the Union both the industrial and
agricultural sectors would need to undergo major structural transformation.

The current production base in industry relies to a large extent, although not exclusively,
on sectors with very high energy intensity, or which are strongly dependent on imported
raw materials, or have been the object of exercises of capacity reduction within the
Union. Given Romania's labour costs and skilled workforce, specialisation in these
sectors (metal-working, chemicals, shipbuilding, machine building) is not necessarily a
bad strategy, provided of course that products are adapted to the needs, standards and
quality requirements of western markets. At present, major efforts have to be
accomplished in these respects. Furthermore, many of the large state-owned enterprises
have benefited from direct and indirect subsidies, which have slowed or even hampered
their necessary adaptation and modernisation. The current structural reforms should aim ·
at the restructuring of the very large state-owned _combinats,_ which, in their present
condition, would face strong competitive pressures from their western competitors.

30

A diversification of the industrial base towards li~hter industries, entailing the creation of
a large number of new, small and medium-sized enterprises, and increa~ed participation
of foreign capital and know-how, will help Romania adjust to the restructuring of the
large enterprises. Light industry is already well-developed in some sectors (wood
products, leather, textiles) and has achieved good performances on exports markets.

Although agriculture has bee-n neglected in the last decades, it represents a potentially
important source of comparative advantage for Romania, which used to be a substantial
exporter to European and world markets before the second world war. But the process of
modernisation of the agricultural sector has just begun and will require a policy ~iming at
stimulating investments both in the farming sector and in the food industry.

Foreign direct investment has been low for a country the size of Romania: at the end of
1996 cumulative FDI per capita stood at ECU 50. With a few notable exceptions, FDI has
not made a significant contribution to the modernisation of either industry or agriculture.
This means that production in many sectors still relies on old and obsolete technologies.
Increasing the chances that Romanian producers will be able to withstand competition of
high-quality, high-standards EU goods, and improving the level of skills in the economy
calls for much bigger inflows of FDI.

The level of FDI is also linked to the technological level of the economy. At present,
spending on research and development is very low in commercial companies.
Fundamental research is still carried out mostly by state laboratories, and often in the
context of military programmes. The bulk of the research and technological development
is carried out by state-owned enterprises. The limited availability of public funds means
that companies will have to fund a growing share of their R&D or seek the help of
foreign partners. In fact, FDI provides a quicker way to raise the level of technological
development through embodied technologies in - industrial processes and
production/management techniques.

At present, the relatively low level of technological development points to a comparative
advantage in those industries with high content of low-quality factors of productions_
Furthermore, most of Romania's industry has not yet started the process of modernisation
and upgrading of the quality of its factors of production. In these circumstances, most of
the economy would be in a difficult position to withstand the competitive pressure of the
single market.

In a market economy the financial sector is also a significant element in enhancing the
competitiveness of a country, by helping to distinguish between viable and unviable firms
and by creating the conditions for viable enterprises to prosper. In this respect the
situation in Romania is not satisfactory: the sector is too weak, riddled with bad debts and
dominated by state-owned banks. Access to -risk capital for small and medium-sized
private enterprises is more difficult than for big, state-owned firms. Medium- to longterm loans are not readily available, nor is equity financing. Nevertheless, actions taken
in the first months of 1997, such as initiating the privatisation process for State-owned
banks and modernisation of key legislation, should lead, if fully implemented, to a
significant improvement in the strength of the country's financial sector.

31

Economic growth and modernisation hinges on the development of proper transport
infrastructures, as well as on an improvement of the human capital of the country through
better health care and education. In all three domains, given the poor starting conditions,
current efforts will most likely not be sufficient to give Romania the basis for competing
successfully in the single market in the near future.

Romania possesses a number of key advantages: its geographical location at the crossroads of many trade routes and in particular as the sea-gate for accessing central
European markets; the size of its population which will attract industries with economies
of scale; the relatively young population which points to vast needs for durable goods;
and its low level of labour costs. All these factors could make Romania a strong export
base for accessing markets of smaller neighbours, especially for consumer goods.

Major increases in productivity have been observed in the last couple of years, and even
more are expected in the future. As part of the new programme, trade unions have
accepted a reduction in the indexation of° nominal wages, which should ensure that real
wages remain relatively low. Moreover, while the unavoidable tendency of the real
exchange rate to appreciate in the medium term will increase Romania's labour costs
with respect to its competitors, this is not likely to happen quickly, given the recent steep
real depreciation of the currency.

Romania has reoriented a large part of its trade towards EU markets. Trade with the EU
in 1996 has· been lacklustre and will probably remain so in the next year or so, as the
recession in Romania affects negatjvely the volume of trade. This suggests that economic
integration with the Union remains relatively low at present, and that an early opening-up
to the competitive pressures of the Single Market would create a significant shock for the
Romanian economy.

**Prospects** **and** **Priorities**

The relative success which Romania achieved - in macroeconomic stabilisation during
1995 and 1996 rested on very fragile foundations. In fact, given the very slow progress in
structural reforms, the high growth rates of this period were not sustainable, and not
compatible with the aim of integrating Romania in the European and world economy.
This diagnosis was at the heart of the economic and social programme of the new
government elected in November 1996.

The programme of macroeconomic stabilisation and structural reforms announced in
February 1997 represents a very ambitious attempt to radically transform, in a relatively
short period of time, the old economic structures and lay the foundations for a fullyfunctioning market economy. However, this is only a first step in the right direction and

much remains to be done.

A stable and predictable macroeconomic framework is the first key condition for laying
the foundations of sustainable growth and modernisation of the microeconomic side of
the economy. The adoption of strict monetary and fiscal policies over the medium term
will be critical in this respect and should, among other things, avoid the resurgence of
high and variable inflation. Inflation has accelerated in the first months of 1997 (reaching
174% on an annualised basis in May), reflecting the liberalisation of controlled prices

32

and adjustments in the structure of relative prices. Although monthly inflation is already
declining sharply, it will be a challenge for the new authorities to bring down this rate to
much lower levels in the next few years.

Tight control over public finances will have a number of benefits. By reducing
inflationary expectations and eliminating outdated and inefficient public programmes, - it
will free much-needed public resources for investment in critical areas ( e.g. education,
health, infrastructure). 

In the medium term, the grqwing foreign debt could become a factor for macroeconomic
instability. A growing foreign debt should not in itself be a source of concern, provided
the country earns enough foreign exchange to service it, in particular through dynamic
exports, and the current account deficit is financed soundly, notably through regular
inflows of long-term foreign investment. Although the policies of the new government
should help in those respects~ these conditions are not yet firmly established in Romania.

The new Romanian authorities have already recognised the crucial role that foreign

- investors· and international financial institutions will play in the success of their reform
efforts. Restoring confidence among international investors and lenders and securing
their medium-term investment in Romania calls for a stable macroeconomic framework,

a sustained and credible commitment to structural reforms, a clear and broad political
consensus over a medium-term strategy and the continuing legit.imacy of reforms among
the population. These conditions are indispensable to reduce political and economic
uncertainty and so lay the foundations for su~cessful investment planning.

The new economic programme involves very important structural reforms in almost all
sectors of the economy: financial sector reform; enterprise restructuring; agriculture and
the foreign exchange market. Important measures have already been implemented: the
foreign exchange market is now almost fully liberalised, some large, loss-making stateowned enterprises have been closed, privatisation has accelerated and most input prices
have been brought to international levels. But further reforms, in addition to those
identified in the previous sections, will be needed to prepare for EU membership.

The financial system is still characterised by the overwhelming presence of statecontrolled banks, which remain vulnerable to moral suasion and do not always operate in
a completely transparent way. The ultimate objective should be to provide an appropriate
framework for financial intermediation and to ensure new entry into the sector, both in
the form of creation of new enterprises, or through foreign participation., Further
progress is necessary in order to restructure and privatise state-owned commercial banks.
The speed and efficiency of the payment system should be improved.

Repeated attempts to impose financial discipline on state-owned enterprises, particularly
"regies autonqmes", have run into obstacles. The effective execution of programmes of
enterprise restructuring and financial recovery suffered from the lack of (adoption and
implementation of) the necessary legislation. There is the need to put in place efficient
corporate governance for the state ente!'prises not slated for privatisation.

More generally, Romania will need to develop a more effective culture of corporate
governance, through the creation of a class of managers trained in western methods of
management, better supervision by banks and investment funds of their loans and

33

investments, more transparent disclosure of financial information and a less passive
involvement of shareholders. In th;~. respect, the successf~J completion of the
privatisation programme in the years ahead is a crucial condition for preparing the
economy to function in a market environment.

Tli,~ capacity of the public sector to implement structural reform~ will need to be adapted
to the basic features of market economy. In particular, implementation of the _acquis_ will
require new skills. 

Consolidating the instituticnal and legal framework of a market economy is an important
part of creating an environment in which the large number of small enterprises which
have been established in recent years, and private enterprise in general, can flourish. It is
not surprising that some of the features of more mature market economies are somewhat
underdeveloped. Specifically, there is a need to strengthen the regulatory mechanisms
which enable a market economy to function effectively. At the most basic level, this
means ensuring that property rights and commercial contracts are readily enforceable.
Progress in this domain is likely to be incremental: an efficient system of commercial law
does not emerge instantly.

Beyond this elementary but crucial aspect of the legal framework lies the need for an
effective competition policy. The legal mechanisms are now in place: a competition Law
has been passed in April 1996 and a competition council has been established. After the
privatisation of dominant firms, Romania will need to ensure that they operate in an
appropriate regulatory/competitive environment and that potential competitors can
effectively enter the market.

The poor state of Romania's transport and telecommunications infrastructures represents
a serious bottleneck for the medium-term growth prospects of the economy. Better
infrastructure will improve the total productivity of production factors. They will
contribute to facilitate and expand trade with close and distant neighbours. They will also
help Romania reap advantages and transport revenue from its strategic location at the
cross-roads of many regional trade routes.

Finally, improving the quality of the human capital is also a key issue for the medium
term prospects of the economy. There are three interrelated challenges in this respect: to
reform the health system in order to improve public health of the population at large;
adapt and develop higher and technical education; and devise and implement active
l~bour market policies to help displaced workers acquire rapidly a number of basic skills
needed in the new economic environment. The latter will be especially relevant for those
areas dominated by single industries slated for closure or significant restructuring.

**2.3** **General Evaluation**

Romania has made considerable progress in the creation of a market economy. The
reorientation of economic policy since the recent change of government marks a change
for the better, but much still needs to be done. While prices have been almost fully
liberalised, property rights are not yet fully assured for land, the legal system is still
fragile and policy-making on economic issues has not always been coherent. Further

34

efforts to consolidate the legal and administrative framework, and to address persistent
macroeconomic imbalances, are required to ensure a stable environment.

Romania would face serious difficulties coping with competitive pressure and market
forces within the Union in the mec!ium term. It has recently made progress towards
improving the competitive capacity of its economy, notably by addressing major
distortions such as low energy prices, acceJerating privatisation and beginning to wind up
large loss-making state-owned firms. However, much of Rvmania's industry is obsolete,
and agriculture needs to be modernised. The low levels of research and development, and
of skills among the workforce also suggest that the economy needs a number of years of
sustained structural reform.

35

**3.** **Ability to Assume the Obligations** **of** **Membership**

The European Council in Copenhagen included among the criteria for accession "the
ability to take on the obligations of membership, including adherence to the aims of
political, economic and monetary union".

In applying for membership _on the basis of the Treaty, Romania has accepted without
reserve the basic aims of the Union, including its policies and instruments. This chapter
examines Romania's capacity to assume the obligations of membership - that is, the legal
and institutional framework, known as the _acquis,_ by means of which the Union puts into
effect its objectives.

With the development of the Union, the _acquis_ has become progressively more onerous,
and presents a greater challenge for future accessions than was the case in the past. The
ability of Romania to implement the _acquis_ will be central to its capacity to function
successfully within the Union.

The following sections examine, for each main field of the Union's activity, the current
and prospective situation of Romania. The starting-point of the description and analysis is
a brief summary of the _acquis,_ with a mention of the provisions of the Europe Agreement
and the White Paper, where they are relevant. Finally, for each field of activity there is a
brief assessment of Romania's ability to assume the obligations of membership on a
medium-term horizon.

**3.1** **Internal Market Without Frontiers**

Article 7a of the Treaty defines the Union's internal market as an area without internal
frontiers in which the free movement of goods, persons, services and capital is ensured.
This internal market, central to the integration process, is based on an open-market
economy in which competition and economic and social cohesion must play a full part.

Effective implementation of the liberties enshrined in the Treaty requires not only
compliance with such important principles as, for example, non-discrimination or mutual
recognition of national regulations - as clarified by Court of Justice rulings - but also
concomitant, effective application of a series of common specific provisions. These are
designed, in particular, to provide safety, public health, environmental and consumer
protection, public confidence in the services sector, appropriately qualified persons to
practise certain specialist occupations and, where necessary, introduction or coordination
of regulatory and monitoring mechanisms; all systematic checks and inspections
necessary to ensure correct application of the rules are carried out on the market, not at
frontier crossings.

It is important to incorporate Community legislation into national legislation effectively,
but even more important to implement it properly in the field, via the appropriate
administrative and judicial· structures set up in the Member States and respected by
companies. This is an essential precondition for creating the mutual trust indispensable
for smooth operation of the internal market.

36

This chapter must be read in conjunction with, _inter alia,_ the chapters on social policy,
the environment, consumer protection and sectoral policies.

**The** **Four** **Freedoms**

A step-by-step approach is being taken to absorption of the _acquis_ _e_ by the candidate

countries:

The Association Agreement between the Community, its Member States and
Romania was signed in 1995 and is being ratified. With regard to the four
freedoms and approximation of legislation, the Agreement provides, in particular,
for immediate or gradual application of a number of obligations, some of them
reciprocal, covering, in particular, freedom of establishment, national treatment,
free trade, intellectual property and public procurement.

The Commission's 1995 White Paper (COM (95) 163 final), guidelines intended,
to help the candidate countries prepare for integration into the internal market
gives a closer definition of the legislation concerned. It identifies the "key
measures" with a direct effect on the free movement of goods, services, capital
and persons and outlines the conditions necessary in order to operate the
legislation, including the legal and organisational structures. Twenty-three areas
of Community activity are examined, dividing the measures into two stages, in
order of priority, to provide a work programme for the pre-accession phase. The
Technical Assistance and Information Exchange Office (T AIEX) was set up with
the objective 6f providing complementary and focused technical assistance in the
areas of legislation covered in the White Paper. A legislative database has
recently been established by the Office.

The candidate countries will have to implement all the _acquis._ The "Action plan
for the single market" submitted to the Amsterdam European Council gives
details of the priority measures necessary to make the single market work better
between the Fifteen in preparation for introduction of the single currency. This
will inevitably entail changes to the _acquis._

**General Framework**

Whatever their field of activity, undertakings must be able to operate on the basis of
common rules. These are important since they shape the general framework within
which economies operate and, hence, the general conditions of competition. They
include the rules on competition (on undertakings and State aid) and tax measures
discussed elsewhere in this opinion, the opening-up of public works, supply and service
contracts, harmonisation of the rules on intellectual property (including the European
patent), harmonisation of the rules on company law and accountancy, protection of
personal data, transfer of proceedings and recognition of judgements (Article 220

conventions).

37

**Descriptive Summary**

Public procurement is governed by Ordinance No 12/1993, which describes the
procedures applicable to government purchasing and investment.

Intellectual and commercial property is governed by the 1992 law on patents, Law No
16/1996 on semi-conductors, Law No 8/1996 on copyright and related rights and Law No
129/1992 on the protection of designs and models.

Romania will be seeking to accede to the Munich Convention before the end of 1997. As
the adjustment of its domestic legislation advances, Romania plans to accede to the
relevant WIPO (World Intellectual Property Organisation) conventions. It is a party to
the TRIPs (Trade Related Aspects of Intellectual Property Rights) agreements, which will
apply to it in full from 1 January 2000.

Company law is governed by Law No 31/1990, as amended in July 1996. Several
categories of company exist: general and limited partnerships and public and private
limited companies. There are about 500 000 companies. Shares may be transferable or
registered, as may bond issues.

The liability of shareholders in a corporation is limited to their investment. The
formation and maintenance of capital, including the minimum capital, are covered by the
law. Creditors' rights are protected, in particular by the Law No 64/1996 on the
reorganisation and winding-up procedure. There is a compulsory register, in which all
companies must figure along with key details of their business.

A standard model for company accounts was introduced by Law No 82/1991, an
ordinance in 1993 and ordinance 22/1996. Official rules have been issued by the
Ministry of Finance. With the prior authorisation of the Ministry of Finance, ministries
and official organisations may draw up specific rules for certain branches of industry.
There are no rules on the consolidation of accounts. Auditing is covered by Ordinance
No 65/1994 on the accounting profession.

Romania has no general legislation on the protection of personal data. A draft law is
being prepared. Accession to Council of Europe Convention No 108 is planned for 1999.

**Current and Prospective Assessment**

Romanian law on public procurement is out of step with the principles of Community
law. In general, the law does not provide a sufficient basis for assessing whether the
scope of the different directives has been respected, particularly as regards services.
Community rules on the water, energy, transport and telecommunications sectors are not
covered by Romanian law. Romania applies a blanket national preference for goods and
services contracts under 1.5 billion and 7 billion lei respectively. Six ministries are
involved in the cumbersome procedures for contracting and ensuring that the rules have
been applied: slow and inefficient procedures mean that the rights of plaintiffs cannot be
guaranteed. Though some amendments are planned for the purposes of harmonisation
with Community directives, no timetable has been presented.

38

As a result of a major harmonisation effort, intellectual property law is now broadly in
line with the 1973 Munich Convention and Community directives.

Some adjustment~ still have· to be made with regard to trademarks, border enforcement
and the .additional protection certificate required in some fields. Draft laws on the first
two aspects were planned for 1996/97, while a draft on the third was scheduled for 1998.

Romanian company law is broadly in line with the First, Second, Third, Eleventh and
Twelfth Directives. Further amendments to be made by 1998 will bring Romanian law
completely into line with t~e Community's.

An ambitious work programmes concerning both accounting and auditing has been
launched, including amendments to the present regulations as well as new regulations and
norms. Most changes are to be introduced during 1997. The planned changes are
intended to bring about full conformity with the Accounting Directives, but texts of the
draft laws are not yet available. Certain transitional problems are in evidence relating to
the practical implementation of the new rules, including a shortage of qualified
accountants and auditors, and it seems unlikely that these can be solved in the medium

term.

The drzft law being prepared on data protection is aimed at bringing Romanian
legislation into line with the Community framework directive. It provides in particular
for the estab!ishment of an independent supervisory authority to see that the law 1s
enforced. Acces:,ion to Council of Europe Convention No 108 is planned for 1999.

In the field of civil law the Convention of Lugano on jurisdiction and the enforcement of
judgements in civil and commercial matters is not yet open to Romania. Progress must
first be made on the protection of civil interests.

**Conclusion**

Romania will have to make very intensive efforts to align on Community rules
concerning public contracts.

The legislative effort made with regard to intellectual property attests to Romania's
desire to conform to the _acquis._ Implementation will, however, have to be watched
closely.

Romania's assimilation of the _acquis_ in the matter of company law will present no major
problems. The information available on the work currently in hand on accounting and
auditing does not provide a sufficient basis for a detailed assessment of conformity with
the _acquis_ or the appreciation of Romania's prospects of achieving this in the medium

term.

- Harmonisation with Community data protection law has still to take place.

39

Free Movement of Goods

Free movement of goods can be achieved only by removing measures which restrict trade

- not only customs duties and quantitative restrictions but all measures with equivalent,
i.e. protectionist, effect,_ irrespective of whether or not they are specifically aimed at
domestic or imported products. Where technical standards are not harmonised, the free
movement of goods must be ensured by applying the principle of mutual recognition of
national rules and acceptini the rule that national specifications should be no more
stringent than is required to achieve their legitimate objectives. This rule was established
in the _Cassis de Dijon_ judgement.

For the purpose of harmonisation, the European Community has developed the "New
Approach" which introduces an approach carefully balanced between government and
private autonomous bodies and in which European Community legislation and European
standards play a distinct complementary role. Thus, instead of imposing technical
solutions, European Community legislation is limited to establishing the essential
requirements which products must meet. Products manufactured in accordance with
European standards are presumed to meet such essential requirements, but European
standards are not the only way to prove such conformity. The "New Approach" works in
conjunction with the "Global Approach" on product certification which governs the
apposition of the "CE Mark" on the product. For other products such as pharmaceuticals,
chemicals, motor vehicles, and food products, European Community directives follow the
traditional regulatory pattern of providing fully detailed rules.

The free movement of goods also dictates that a number of Community harmonisation
measures be transposed into national law. Implementation of health and safety
harmonisation rules is particularly important and requires the establishment of
appropriate mechani.sms and organisations, both for businesses and the authorities.

Two of the "horizontal" directives essential to smooth running of the single market are
the Directive on general product safety and the Directive on liability for defective
products. The rules on general product safety are covered in the section on consumer
protection.

The rules on agricultural products ( compliance with veterinary and _1-ilant-health
standards) are explained in detail in the section on agriculture.

40

**Descriptive Summary**

In February 1997 Romania announced the complete liberalisation of prices, breaking
with the previous system of administered prices, and effectively liberalised the foreign
exchange market. Some basic products (including petroleum products and bread)
continue to be regulated, however, to ensure a more gradual transition.

As provided for in the Europe Agreement, exports, which are in some cases subject to
regulation (licences, official permits or bans), will be completely liberalised by 1998 at

the latest.

Under Law No 21/1996, responsibility for price regulation has been transferred to the
Competition Office, which is under the umbrella of the Ministry of Finance.

Concerning legislative alignment, the Government's legislative timetable was drawn up
in 1995. Romania applies national quality standards to imports and has recently (April
1997) accepted the principle of automatically recognising EC labelling. However,
certification rules in line with the new principles have yet to be drawn up.

With regard to the structures necessary to apply the _acquis,_ in 1992 Romania set up new
institutions, including the Romanian Institute for Standardisation (IRS) and the office for
Legal Metro logy (BRML ). The IRS is affiliated to both the European Committee for
Standardisation (CEN) and the European Committee for Electrotechnical Standardisation
(CENELEC).

**Current and ProspectiveAssessment**

The excise system includes an element of discrimination in favour of national products
(alcohol, mbacco etc.).

Romania has so far made little progress towards legislative alignment. Some of the legal
foundations necessary for introducing EC rules have been laid, though the general
framework legislation - on standardisation and conformity assessment - does not satisfy
EU principles. The Government's 1995 legislative timetable lacks some of the
legislation listed in the White Paper and appears to lack overall consistency.

New draft legislation is supposed to pursue an acceptable degree of compatibility. In the
automobile sector, the relevant directives should be in place in 1998. However,
implementation may take even longer, and transition periods may be sought regarding the
EC emissions directives. The food, chemical and pharmaceutical sectors have seen less
progress so far. Overall, the process seems to be moving rather slowly. It also has to be
borne in mind that secondary legislation is often required for the implementation of the
general legislative framework. Standardisatio~ activity is slow and hampered by the lack
of a clear distinction between voluntary and mandatory standards. A certain number of
standards in force in Romania are reported to conform to European standards.

Romania has yet to complete the necessary separation between the regulatory,
accreditation, standardisation and product ce1iification functions, the latter two of which
should be left mainly to the private sector. For example, the IRS is part of the Ministry
of Research and performs standardisation, accreditation and product certification

41

functions. Market surveillance should come under ministerial responsibility, but suffers
from a lack of coordination, equipment and suitable staff and from the prevailing

economic conditions.

Romanian law on civil liability for defective products is not in line with Community
provisions; there is currently no evidence of plans to amend the current legislation.

In the areas subject to national rules and not covered by Community harmonisation, there
is too little information available to assess whether Community legal principles on the
free movement of goods are properly applied in Romania. The reporting procedures
which form part of the internal-market machinery are not yet operational and so cannot
be used in the pre-accession period. The most important instruments in this connection
are: Directive 83/189, requiring governments to report draft national technical standards ·
and regulations; Decision 3052/95 on measures derogating from the principle of the free
movement of goods; procedures by which complaints can be submitted to the
Commission; and Article 177 of the Treaty, enabling Member States to ask for
preliminary rulings from the Court of Justice. It is also hard to assess whether Romania
complies with the principle of mutual recognition; more information is required on its
national rules, and on administrative practices, which can have an effect on product sales.

**Conclusion**

After a period in which trade with Romania was n0t without difficulty, the new approach
adopted by the authorities early i_n 1997 offers hope of improvements, along wit!1 a
determination to adhere to the timetable laid down in the Europe Agreement for
eliminating restrictions on bilateral trade. The Romanian authorities will also have to
ensure that their legislation in areas not covered by Community harmonisation is not
likely to hinder trade, notably by checking that the measures in force are proportional to
the objectives pursued.

Considerable efforts will have to be made before the situation develops to a point
warranting the conclusion that Romania can fully and effectively imp!ement the _acquis._

**Free Movement** **of** **Capital**

The Association Agreement establishes the principle of free movement of capital
between Romania and the European Union. This, as far as the obligations of Roumania
are concerned applies to direct investment made by companies already established in
Romania and as regards branches and agencies of Community companies (as well as the
self-employed) gradually during the transitional period

The Europe Agreement provides that the parties shall consult each other with a view to
facilitating the movement of capital between the Community and Romania in order to
promote the objectives of the Agreement.

The White Paper highlights the link between the free movement of capital and the free
movement of services. It suggests a sequence for the liberalisation of capital movements
starting with medium- and long-term capital movements and movements linked with
commer~ial transactions to sho1t-term capital.

42

**Descriptive Summary**

Romania has one of the lowest levels of foreign direct investment (FDI) in the region.
The aggregate total for the period 1986-96 stands at USO 1.4 billion. However, other
sources suggest th~t the amount is higher. This meagre amount can be ascribed to
substantial delays in the privatisation of almost all of the secondary and tertiary sectors
and an unhelpful legal, regulatory and administrative environment.

The lei is convertible for most current account transactions. The Romanian authorities

expect to be able to assume the obligations of Article VIII of the IMF Agreements in the
course of 1997. Capital movements ( capital transfers and external borrowing) generally
require the authorisation of the central bank. The following inward capital movements
are exempt from this requirement:
non-residents' deposits with credit institutions in Romania;
loans and credits received by residents and guaranteed_ by the State;
deposits made or received by banks for their own account.

Under the foreign investment law of 3 May 1991, there are no limits on foreign equity
holdings in commercial firms set up in Romania. Foreigners may invest in any sector of
the economy, save areas declared to be of national interest for defence or environmental
protection reasons. Profits and invested capital may be repatriated in' convertible

currencies.

Romania's rules on capital movements are generally in line with the relevant provisions
of the Europe Agreement.

**Current and ProspectiveAssessment**

There is a lot of legislation regulating foreign investment and business activities.
Law No 35/1991 on foreign investment was supplemented by a new foreign investment
law in May 1997. The purpose of the new law is to improve conditions for the
repatriation of invested funds, but above all to accord tax incentives to major investors
( over ECU4 million) and purchasers of shares in privatised firms. Compulsory
registration with the Romanian Development Agency, which had been a barrier to
establishment, has now been abolished. Romanian subsidiaries of foreign firms now
have clear access to the land necessary for the exercise of their activities, though this is

not the case for branches and offices.

Some problems will have to be resolved before an efficient and secure capital market is
established, notably the transfer of the management of all types of intangible assets to
independent registers, the organisation of transparent company reporting and the
calculation of the assets of the old Private Ownership Funds.

Until recently foreign investors did not enjoy free access to the securities market. This
gap has been plugged by the new foreign investment law, which makes specific provision
for "portfolio investors", i.e. investors on stock exchanges or on the secondary market for
shares in privatised companies (Rasdaq). The transfer of capital gains and dividends
remains subject to prior verification of the foreign currency investment.

43

**Conclusion**

The trend in Romanian law is towards opening up the market to foreign direct
investment. The very low level of investment is mainly attributable to administrative
practices (be it in the area of trade, customs, taxation etc.), which are often cited by
investors and which substantially limit legal certainty and transactions. A significant
improvement in the administ~ative and judicial framework is a prerequisite for increasing

investment.

Romania has made significant progress in the area of financial markets in the past two
years. There is no doubt that an effective market will be established in the medium term,
the only risks being those inherent in any emerging market and the lack of experience of
the brand-new supervisory institutions.

Free movement of capital has been established on paper, but constraints on the
development of a competitive market must be eliminated in practice. Romania has
introduced limited liberalisation of capital movements. The liberalised transactions,
notably direct investment, concern inward capital flows only. Provided that efforts to
remedy the structural weaknesses of the financial system and to stabilise and reform the
economy continue, Romania should be able to assimilate the _acquis_ in the area of capital

movements in the medium term.

Free Movement of Services .

The basis of the free movement of services is the prohibition of discrimination, in
particular on grounds of nationality, and rules on the alignment of divergent national
legislation. These rules often concern both the right of establishment, which comes under
the heading of the free movement of persons, and the freedom to provide services. Their
implementation implies the establishment of administrative structures (banking control
boards, audio-visual control authorities, regulatory bodies) and greater cooperation
between Member States in the area of enforcement (mutual recognition arrangements).

A substantial amount of the legislation applicable to the free movement of services
relates to financial services. It also concerns the problems relating to the opening-up of
national markets in the sectors traditionally dominated by monopolies, e.g.
telecommunications and, to a certain extent, energy and transport. These subjects will be
dealt with in the sections of the Opinion specifically referring to them.

**Descriptive** **Summary**

Modernisation of the banking sector began in 1991, when the Romanian National Bank
(BNR) was given the usual responsibilities of a central bank.

The banking sector continues to be dominated by five public-sector institutions, chiefly
because they have branches throughout the country. They hold over 70% of the market.
Private banks therefore remain small in terms of market share, tending to specialise in
such areas as international trade, investment banking, cooperative banks etc. The main
state-owned banks set up under Law No 15/1990 reflect the old set-up. Their capital is

44

held by the State Ownership Fund (70%) and the five former Private Ownership Funds
(6% each). Romania has also retained the Savings Bank {CEC), which is under the
responsibility of the Minister of Finance. This bank has a special legal status as a
specialised household institution.

Despite clear warning signs, the present supervisory system has been unable to prevent
the collapse of two private banks (accounting for over 10% of assets) with losses of about
ECU 400 million, made good by the Treasury. Other banks, among them the Banca
Agricola, a state-owned bank accounting for 30% of bank assets, are under close
supervision because of the risks they pose.

The banks are generally overstaffed, have inadequate reporting systems and carry large
portfolios of doubtful debts (most of them in connection with loss-making state-owned
enterprises in such sectors as steel, heavy machinery, petrochemicals etc.).

Until the end of 1996 the state-owned b:.mks had a _de_ _facto_ monopoly on the foreign
exchange market: of the four licences issued by the BNR, three were held by state-owned
banks. At the beginning of 1997, the Government decided to liberalise the foreign
exchange market completely. Banks are still not listed on the stock market.

Prudential supervision is exercised by a department of the BNR.

The Government decided to set up a dep~sit guarantee, system in August · 1996
(Government Ordinance No 39/1996). This is· a public-law fund, whiGh guarantees the
deposits of natural persons, residents or otherwise, up to a limit of 10 million lei
(ECU 1100) a head, regardless of the currency.

Securities markets are a recent development. They are expanding rapidly. The
Bucharest stock exchange was inaugurated in June 1995. The number of companies
quoted ( about 40 in May 1997) is increasing, with strong demand from investment
companies (prices are now listed daily). A new over-the-counter market, Rasdaq, set up
in September 1996 to trade in the intangible assets of the 4000 companies privatised
under the mass privatisation programme, is expanding rapidly.

Exchanges are supervised by the National Securities Commission (CNVM) established
by Law No 52/1994, which has regulatory and supervisory powers and is responsible for
licensing brokers and exchanges (registers of shareholders and the National Settlement
and Clearing Company set up at the same time as Rasdaq).

Under Law No 133/1996, the five Private Ownership Funds set up in 1991 as instruments
for the transition to privatisation were converted into private investment companies with
effect from 1 November 1996.

The insurance sector is governed by Law No 47/1991 on the establishment, organisation
and operation of insurance companies and Law No 136/1995 on insm;_ance and
reinsurance. The sector is supervised by the Office for the Supervision of Insurance and
Reinsurance Activities (OSAAR) set up by Law No 47/1991 [which has a staff of 14].

45

Though there is no longer a legal monopoly, there is a _de_ _facto_ monopoly. The market is
dominated by 8 comp~'lies which, in 1995, accounted for 92% of the premiums paid.
The lion's share of the market is held by three state-controlled companies.

**Current and Prospective Assess·ment**

There has been no privatisation in the banking sector since 1989. There have been
several privatisation attempts, ?11 of them blocked by Parliament. A new bill to privatise
the banks was adopted by Parliament in April 1997: it permits shares to be sold or new
shares issued to persons and private companies, whether Romanian or foreign. The
passage of the bill repr~sents a significant breakthrough, though certain provisions pose
problems (the provfsion for the State Ownership Fund to retain 10% of the capital or a
golden share permitting it to oppose decisions deemed "contrary to the nation&; interest",
the determination by the government of the "optimal share structure", the limits on the
maximum shareholding, the right to pawn shares etc.). All these restrictions have the
potential to hinder much-needed r~structuring in the sector. There is, however, no
restriction on the right of establishment of foreign banks.

Prudential requirements (banking Law No 33/1:)91 and rules laid down by the BNR) are
generally in line with the first Banking Directive and the directives on banks' own funds
and solvency. Romania is somewhat behind schedule for the introduction of the Second
Banking Directive and the measures concerning (i) money laundering, (ii) the supervision
of banks on a consolidated basis, (iii) the limiting of credit establishments' credit risks
and (iv) the supervision of the exposure of credit establishments. Transposition of the
directive on large exposure and the directive on annual and consolidated accounts is in
the pipeline. Recovering debts from defaulting debtors is rendered very difficult by poor
application of the bankruptcy law.

The Romanian Government has made the passage of the law to prevent the financial
system from being used for money laundering a priority for 1997. This draft law is
consistent with Community legislati011 on the matter.

Legislation in the securities sector has been partly harmonised by Law No 52/1994 on
securities and securities exchanges. With a view to completing harmonisation, the
Government proposes to amend this law in the course of 1997: the draft law is part of the
legislative programme for the implementation of the reform programme. Legislation on
investment funds has also been harmonised by Government Ordinance No 24/1993 on the
creation and operation of public investment funds run by investment companies acting as
financial intermediaries (approved by Law No 83/1994).

Information provided by Romania shows the country to have made very little progress
towards introducing insurance legislation consistent with the basic Community
provisions (Stage I measures). For instance, the authorities impose the same solvency
margin for life and non-life companies, which is in principle inconsistent with
Community legislation and disadvantages life companies.

Insurance business in Romania is currently governed by Law No 4 7 /1991 on the creation,
organisation and operation of commercial insurance companies. The provisions of this
law are completely in line with Directive 72/166/EEC concerning the green card system
and Directive 90/332/EEC plugging gaps in respect of compulsory for the use of vehicles

46

inside the Community. In 199? the Romanian Government plans to adopt a draft law
concerning supervision of insurance companies .•

The market access of foreign companies is limited to insurance polici~s for foreigners
and reinsurance business. They may only operate in Romania via the agency of a joint
venture set up under RomanLm law with a Romanian partner. A new law pending should
rectify matters.

**Conclusion**

.
The key decisions for the effective restructuring of the banking sector have been taken.
Respect for prudential rules and, above all, the National Bank's supervisory capacities
must, however, be reinforced to guarantee the sector's soundness.

The ce!l.tral bank is still not totally independent of the government: it continues to
function as the governr'lent' s banker, contributing significantly to the funding of the
budget deficit.

The banking sector remains very fragile. The law being drafted must help consolidate
and reform the sector, and the privatisation of the state-owned banks - for which there is
still no firm timetable - must increase transparency and competitiveness. As this is bound
to be a lengthy process, there is no prospect of integrating the Romanian banking system
into the internal market in the medium term.

The securities market is still embryonic. Supervision is currently inadequate and there
are grounds for doubting its efficiency. The continuation and acceleration of the mass
privatisation programme is neverthel~ss going to make this market grow, which makes
the adoption and rapid application of the new stock-exchange and securities law all the

more necessary.

In the field of insurance, Romania seems to have a long way to go in terms both of the
adoption and implementation of legislation and of the elimination of barriers to access to

its market.

**Free** **Movement** **of** **Persons**

The free movement of persons encompasses two concepts with different logical
implications in the Treaty. On the one hand, Article 7a in Part One of the Treaty on
_ 'Principles' mentions the concept in connection with the establishment of the internal
market and implies that persons are not to be subject to controls when crossing the
internal frontiers between the Member States. On the other hand, Article 8a in Part Two
of the Treaty on 'Citizenship of the Unio!l' gives every citizen of the Union the
individual right to move and reside freely within the territory of the Member States,
subject to certain conditions. The abolition of frontier checks must apply to all persons,
whatever their nationality, if Article 7a is not to be ·meaningless. While the rights
deriving from Article 8a apply in all Member States, those stemming from Article 7a
have never been fully applied throughout the Union.

47

_(a)_ _Free_ _Movement_ _of_ _Union_ _Citizens,_ _Freedom_ _of_ _Establishment_ _and_ _Mutual_
_Recognition_ _ofDiolomas_ _and_ _Qualifications_

The Europe Agreement provides for the non-discriminatory treatment of workers who are
legally employed (as well as their families). It covers the possibility of cumulating or
transferring social security rights, and encourages Member States to conclude bilateral
agreements with Romania on access to labour markets. During the second stage of the
transition period, the Association Council will examine ways of further improving the
movement of workers. '

The White Paper considers the legislative requirements for the harmonious development
of the labour market, while simultaneously preventing distortions of"competition.

Free movement of labour is one of the fundamental freedoms enshrined in the Treaty;
freedom to practise certain professions (e.g. in the legal and health fields) may, however,
be subject to certain conditions, such as qualifications. Depending on the case, these may
be dealt with through coordination or by applying the principle of mutual recognition.
Freedom of establishment is also guaranteed under the Treaty and covers the economic
activities of self-employed natural persons and companies.

The free choice of the country of residence may thus be subject to minimum conditions
as to resources and -health· insurance where the person does not exercise a profession in
the country concerned.

**Descriptive Summary**

An office for the recognition of education, diplomas and vocational training was set up in
1996 under the Ministry of Education. Some draft laws are scheduled for 1997.

**Current and Prospective Assessment**

48

There is not enough information available on the content and duration of studies to
permit conclusions to be drawn as to the equivalence of diplomas and vocational
qualifications. The _acquis_ has not been transposed (not even on paper). The situation is
exacerbated by the fact that institutions have not been set up to certify diplomas and
implement the _acquis._

49

**Conclusion**

Without a major effort to harmonise legislation and set up and strengthen implementing
structures in this field, it will not be possible to achieve recognition for Romanian
diplomas and qualifications in the Community in the medium term.

_(b)_ _Abolition_ _oJChecks_ _on_ _Persons_ _atlnternalFrontiers_

The free movement of persons within the meaning of Article 7a of the EC Treaty, i.e. the
abolition of checks on all persons, whatever their nationality, at the internal frontiers has
not yet been fully implemented in the Union: Doing away with checks on persons is
conditional on the introduction of a large number of accompanying measures, some of
which have yet to be approved and implemented by the Member States (see separate
section on Justice and Home Affairs). However, that objective has been achieved by a
limited number of Member States in accordance with the Schengen convention (seven
Member States already apply it and another six are working towards implementation).

The draft Treaty aims to make that objective easier to achieve within the Union by
including a new chapter on the establishment of an "area of freedom, security and
justice" and incorporating the Schengen _acquis_ into the EU.

General Evaluation

1. Romania's progress in the implementation of legislation relating to the White
Paper is summarised in the annex. This table shows that Romania had, by its own
reckoning, transposed 426 of the 899 directives or regulations listed in the White
Paper by 30 June 1997. These figures concern legislation that Romania considers
either to have been transposed or checked for compatibility with Community
rules. This report does not address the compatibility of legislation, the
Commission being unable to express an informed opinion on the matter at this

stage.

2. In most of the key areas of the internal market, the _acquis_ has been very sketchily
incorporated into Romanian law, save in the area of industrial and intellectual
property. The scale of the problems calls for a major an<l sustained effort both to
approximate legislation and to set up the structures for its implementation. The
top priority must be the complete restructuring of the financial sector to conserve
the necessary level of confidence on the part of the public and investors.

3. In general, the shortcomings of Romania's administration pose a major problem,
compromising both the pace and the quality of legislative approximation. The
various departments central to the implementation of internal market legislation
are currently incapable of coping with the task. Similar reservations must be
expressed with regard to the capacity of economic operators, and SMEs in
particular, to comply with the legislation.

4. Checks at the internal frontiers of the Union can only be abolisqed once sufficient
legislative harmonisation has been achieved. This calls for mutual confidence,
based in particular on sound administration (e.g. the importance of safety checks

50

on some products at the place of departure). As far as goods are concerned, the
completion of the internal market on 1 January 1993 was only achieved by doing
away with all the fonnalities and checks performed by the Member States at the
internal borders of the Union. In particular these checks covered particularly
technical points (product safety), veterinary, animal-health and plant-health
matters, economic and commercial matters ( e.g. prevention of counterfeiting of
goods), security (weapons, etc.) and environmental aspects (waste, etc.). In most
cases, the abolition of checks was only made possible by the adoption and
application of Community measures harmonising the rules on the movement and
the placing of goods on the market (particularly as regards product safety) and,
where applicable, by shifting the place where controls and formalities within the
Member States or on their markets are conducted (in particular as regards VAT
and excise duties, veterinary and plant-health checks, and the collection of
statistics).

A section of Romania's present borders will become the Union's external frontier
and this means border checks will need to be stepped up (see separate section on
Customs).

In view of the overall assessment that can be made of progress achieved to date
and the rate at which work is advancing in the various areas concerned, it is
difficult at present to put a timescale on Romania's ability to take over and
implement all the instruments required to abolish internal border checks and to
transfer those checks to the Union's external frontier.

5. Romania has not yet taken up the key elements of the _acquis_ concerning the
internal market, other than in the matter of industrial and intellectual property. A
considerable effort will have to be made if it is to adopt and implement the Single
Market legislation and equip itself with the machinery needed for the application
of that legislation. As matters stand today, there is no way that Romania will be
able to participate fully in the internal market in the medium term.

**Competition**

European Community competition policy derives from Article 3(g) of the Treaty
providing that the Community shall have _a system ensuring that competition_ _in_ _the_
_internal market_ _is_ _not distorted._ The main areas of application are anti-trust and state aid.

The Europe Agreement provides for a competition regime to be applied in trade relations
between the Community and Romania based on the criteria of articles 85 and 86 of the
EEC Treaty (agreements between undertakings/abuses of dominant position) and in
article 92 (state aid) and for impelmenting rules in these fields to be adopted within three
years of the entry into force of the Agreement. Furthermore it provides that Romania will
make its legislation compatible with that of the Community in the field of competition
The White Paper refers to the progressive application of the above provisions and those
of the Merger Regulation (4064/89) and of Articles 37 and 90 (Monopolies and Special
Rights).

51

**Descriptive Summary**

The recent Law No 21/1996 on competition is based on the principles of Community law.
It was adopted by Parliament in February 1996 and entered into force in February 1997.
It covers cartels, abuse of a dominant position and concentrations.

The law provides for the establishment of two bodies: a Competition Council with
investigative and decision-making powers and, under the authority of the Government, a
Competition Office. Set up in 1996, these two_ bodies have been given the staff and the
financial resources of their predecessor (MOF).

Sectors traditionally controlled by monopoties, and especially telecommunications, are
gradually being liberalised. Liberalisation is, however, less extensive in air transport,
postal services and energy sectors.

In the matter of exclusive rights, Romania maintains exclusive arrangements for the
granting of mining concessions. In practice such arrangements have also been introduced
for 83 "Regies Autonomes" considered to be of strategic importance (arms, energy, rail
transport etc.). Manufacturing monopolies have been accorded in some branches of
industry (tobacco, cigarettes, distilling, medicines containing narcotics etc.). They
generally cover the production and import of the products concerned. In some branches
licences may be issued to national operators.

The information available on state aid is incomplete and does not guarantee the
transparency required by Community rules. Procedures for the supervision of state aid
have still to be put in place. Export subsidies and operating subsidies for ailing
enterprises have also been identified.

**Current and Prospective Assessment**

Legislation on competition, cartels, abuse of a dominant position and concentration are
generally developing in line with Community legislation. The supervisory institutions
would appear in theory to have sufficient autonomy to operate independently. Some
overlapping between their areas of competence could, however, bring them into conflict.

Romania justifies the maintenance of state monopolies in sectors that should be open to
private enterprise on the grounds of their "strategic" or public interest (alcohol, tobacco,
forestry etc.). Licences, which can only be issued to Romanian operators, discriminate
against non-nationals and are incompatible with the Europe Agreement.

The Competition Office maintains extensive powers in the area of pricing, which should
be limited to services and products of public utility.

Romania has yet to satisfy the criteria for a credible system for the control of state aid.
The legislative framework has still to be established. The granting of aid is not yet
sufficiently transparent and it is essential that an inventory of national, regional and local
aid and any other publicly funded measures be drawn up in short order.

It should be added, moreover, that certain aid measures seem to be contingent upon
export performance, which is clearly not compatible with the Europe Agreement and an

_52_

important part of state aid seems to be granted in such indirect forms as tax relief, debt
write-offs and tax arrears. These aid measures constitute operating aid, which is allowed
only under very strict conditions. Due to the lack of transparency, it is as yet unclear
whether the conditions for granting operating aid are satisfied.

In addition to the adoption of legislation sufficiently approximate to that of the EU,
credible enforcement of competition law requires the establishment of properly
functioning anti-trust and state aid monitoring authorities. It also requires the judicial
system, the public administration and the relevant economic operators to have a sufficient
understanding of competition law and policy.

**Conclusion**

Notable progress has been made towards approximation of legislation in the field of antitrust. What matters now is the enforcement of the law,_which makes further substantial
training for the two competition authorities indispensable.

As regards state aid, not much progress has been achieved so far and a considerable effort
will be necessary to fulfil the requirements in the field of state aid control over the
medium term, in particular as regards the establishment of transparency through a
credible aid inventory in accordance with Community practice and the adoption of the
necessary rules for credible monitoring of state aid.

One of the immediate challenges in the field of competition policy is to ensure that the
competition rules apply to the so-called "Regies Autonomes", which seem to be excluded
from the normal application of the rules on competition, including state aid.

In some sectors, moreover, there appear to be exclusive or special rights which are not
compatible with the Community _acquis._ These problems should be addressed in the near

future.

**3.2** **Innovation**

**Information Society**

**Present Situation**

The economic and social potential benefits from the combination of information
technology and telecommunications are particularly great in Romania. These
possibilities were neglected before 1989 although basic education received a high
priority. As a result the demand for personal computers has been developing much more
rapidly than what would have resulted from normal growth. If Internet connections
follow the same patters of growth, the telecommunications infrastructure, which is at
present about 40 years behind the EU average, will act as a brake on information society
(IS) development. At the beginning of 1997 the number of host computers on the
Internet was estimated at 0.4 per 1000 inhabitants and the total number of PCs in the
country at 65 000, with a growth rate of about 17%. [n May 1997 RoEduNet, a public
network for higher education, launched its high-speed connection over a VSA T link.

53

The Government created at the beginning 1997 a National Commission for Informatics
under the Secretary General of the Government, which elaborated a "Strategy to prepare
the accession of Romania to the European Union in the field of information technology".
The aim is to promote an architecture including:
a national backbone network,

documents management in administration (a tender has been launched for this
purpose),
kernel of national systems (registers and nomenclatures),
legislative framework for information (including laws on protection of personal
data and privacy based on EC legislation),
promotion of software industries.

**Conclusion**

As liberalisation has been so far slow and per capita GDP remains among the lowest in
the region, the Information Society potentialities may be realised later than in the average
CEECs, unless significant improvements are made.

Education, Training and Youth

Articles 126 and 127 of the EC Treaty provide that the Community shall contribute to the
development of quality education and implement a vocational training policy aimed at
promoting the European dimension in education and at enhancing industrial adaptation
and the responsiveness of the labour market through vocational training policies.

The Europe Agreement and its additional protocol provide for cooperation in these areas
notably through participation in the FrameworkProgramme .. The White Paper includes
no measures in this field.

**Descriptive Summary**

Romania's spending on education amounts to 3.4 % of GDP. Government expenditure
on education is around 9.9 %. 75% of the Ministry of Education's budget is spent on
salaries, 5% on capital repairs and investments and the rest on operating expenses and

core textbooks.

There are 3 600 000 pupils, 350 000 students, 280 000 teachers (22 600 in higher
education) in Romania. In the Romanian pre-university system there are over 29 000
schools, among which there are 1 300 lycees, 800 vocational, complementary or
apprentice schools and 1 300 special post-lycee and technical schools. In the university
system, there are 325 units made up of 63 public institutions and 262 private institutions.

The institutional bodies operating in these fields are: the Ministry of Education, the
Ministry of Labour, together with the Social Partners, the National Committee of
Romania for Unesco, the Institute for Educational Sciences, the universities and other
interested parties (social partners, undertakings).

54

An ambitious reform ag_epda has been set up for all levels of education (basic, secondary,
vocational and higher). The education law promulgated in July 1995 is a progressive law
in line with EU s4tndards.

The Te!llpus programme has contributed to the achievement of the goals of higher
education reform and created the basis for cooperation with the EU higher educatjon
institutions.

**Current and Prospective Assessment**

The Government is committed and convinced of the necessity to reform its educational
system to face the new needs of democratic society and a market economy and to
upgrade the quality of the system to EU standards.

The main problem facing reform is the paucity of government funding allocated to the
educational sector for upgrading and maintaining the educational infrastructure,
purchasing educational materials and equipment and paying attractive salaries to the

. teachin~ staff.

Other major risks that may affect the success of the reform are the weak institutional
capacity of the Ministry of Education to implement the reform and resistance to the
changes at the national and local level.

Romania will participate in the Community Programmes Socrates, Leonardo and Youth
for Europe from 1997, and this will contribute further to the preparation of Romania for
integration.

**Conclusion**

In the perspective of accession, no major problems should be expected in these fields.

Research and Technological Development

Research and technological development activities at Community level, as provided for
by the Treaty and in the Framework Programme, are aimed at improving the
competitiveness of European industry, the quality of life, and supporting sustainable
development, environmental protection, and other common policies.

The Europe Agreement and its additional Protocol provide for cooperation in these
areas, notably through participation in the Framework Programme. The White Paper

includes no direct measures in this field.

**Descriptive Summary**

Under the supervision of the Ministry of Research and Technology, activities in this field
are performed by the following bodies: universities, research units dependent on
Ministries, institutes belonging to the Academies (Romanian Academy, Academy of
Agriculture and Forestry, Academy of Medical Sciences).

_55_

Total expenditure is currently 0.68% of GDP; the target figure for the year 2000 is 1 %.

Main Government priorities are:
preservation of the national potential taking into ar.count the actual needs of the

country
restructuring and integration into the system of the European Union
conformity with the tr~nsition to the market economy

Regular cooperation with the European Community started in 1992 with the 3rd Research
and Technology Development Framework Programme. So far, cooperation has mainly
been concentrated on COPERNICUS (Specific Programme for Cooperation with CEECs
and NIS), with participation in the 4th Framework Programme remaining rather limited.
Romania is a member of COST (European cooperation in the field of scientific and
technical research) and EUREKA (European Research Coordination Agency).

A wide-ranging national programme on "Horizon 2000" has recently been adopted and a
special fund created. To be managed by the National Agency for Technology Transfer
and Innovation, the fund is intended for industries and small and medium-sized
enterprises.

The statistics in this field are not yet compatible with OECD standards.

**Current and Prospective Assessment**

Since the creation of the Ministry of Research and Technology in 1992, strong efforts

have been made to rationalise and modernise the overall structures within a state which is

still strongly centralised, and where private initiative remains weak and uncertain. These
measures, accompanied by a drastic reduction in the total number of researchers, have
given positive results; nevertheless the Romanian system is still heavily influenced by a
high concentration of resources in the public sector and poor demand by industry (private
and public) for research output.

Bilateral and multilateral cooperation (in particular with the European Union) shows that
the country's scientists and scientific structures qualify for international partnership.
However, unless drastic economic reforms are undertaken the structures will remain
dependent on government decisions and financial support. Consequently, the
competitiveness of the overall system will remain weak and will not allow Romanian
scientists to participate fully in international cooperation activities. It is therefore
necessary to continue support for initiatives aimed at rationalising the system, and
upgrading infrastructure, equipment and the scientific profession.

**Conclusion**

Making the Romanian research and technological development system efficient and
compet1t1ve at international level will need greater efforts. Nevertheless, in the
perspective of accession, no major problems should be expected in this field.

56

Telecommunications

The objectives of EC telecommunications policy are the elimination of obstacles to the
effective operation of the Single Market in telecommunications equipm~nt, services and
networks, the opening of foreign markets to EU companies and ~he achievement of
universally available modem services for EU residents and businesses. These are
achieved through harmonisation of the standards and conditions for service offerings the
liberalisation of the markets -for terminals, services and networks and the adoption of
necessary regulatory instruments. The Directives and policies needed to achieve this have
now been established, but the liberalisation of public voice telephony and operation of
related infrastructure will be deferred for a year or two after 1998 in certain member

states.

The Europe Agreement provides for cooperation aimed at enhancing standards and
practices towards EC levels in telecommunication and postal policies, standardisation,
regulatory approaches and the modernisation of infrastructure. The White Paper focuses
on the approximation of regulation, networks and services, followed by further steps
ensuring gradual sector liberalisation.

**Descriptive Summary**

In the late 1980s Romania had a poorly developed network which comprised obsolete
electro-mechanical equipment and, in most rural areas, only manual switches) The
telephone penetration in 1991 was 10.8 which increase to 13.9% in January 1997
( expected to rise to 30% in 2005). The average waiting time for a telephone connection
is 4.8 years. The regulatory authority is the Ministry of Communications from which
the operator, Rom Telecom, is ostensibly separated. A new Telecommunications Law
was adopted in June 1996 which will complete the institutional framework by a separate
regulatory body, the General Inspectorate of Communications, responsible for the
application of postal and telecommunications regulations.

**Current and Prospective Assessment**

_Degree ofliberalisation_

According to the commitments at the WTO negotiations in 1997, the Government will
abolish the exclusive rights of Rom Telecom for the operation of the fixed network and the
provision of voice telephony on 1 January 2000. In addition to the analogue mobile
network, two networks for digital mobile telephony (GSM) were licensed at the end of
1996. The license for another digital mobile network (DCS 1800 standard) was awarded to
Rom Telecom in June 1997. Twenty-five paging operators as well as two data transmission
operators have been licensed. Furthermore, there are 8,500 VSA T networks with 160,000
subscribers. After the year 2002, concessions for local telecommunications services in rural
areas are planned. Since March 1997 the use of CA TV networks for the provision of data

transmission services is allowed.

During 1997, the Government has awarded a set of measures defining the gradual change
of Rom Telecom's status towards a more commercially oriented enterprise. A strategy for
partial privatisation has been announced earlier in 1997 and an alliance with a strategic
partner is planned for 1998.

57

_Aooroximation_ .. _to_ _EC_ _law_

Before 1996, part of the sector had partially been adapted to the _acquis communautaire_ by
an opening of segments of the market by ministerial decrees and licenses, e.g., in the field
of data transmission, VSAT services and analogue mobile telephony. Other decrees have
implemented certain harmonisation principles like Open Network Provision for Leased
Lines. 

A new Telecommunications Law, elaborated with the advice of the European Commission
and in line with EC legislation, was adopted in June 1996 which will introduce a regulatory
authority to become in 1998 a fully-fledged National Regulatory Agency.

The ownership supervision in relation to Rom Telecom will be transferred from the
Ministry of Communications to the State Property Fund, thereby separating regulatory
and operational functions within the Government umbrella. Substantial measures must be
taken to implement the law, e.g., licensing, universal service and interconnection
regulation.

A draft law on the use of the radio frequency spectrum is expected to be adopted in 1998
and would create a framework for a more transparent and non-discriminatory procedure
for allocation and manag~ment of frequencies.

The administrative capacity necessary for issuing new regulation to adapt to the _acquis_ and
to implement the new legislation; in particular to monitor fair competition, seems to be
insufficient. However, it can be expected that the new regulatory authority will improve the
ability to cope with the approximation requirements.

_Infrastructure_

The long-term policy objectives are to complete network digitisation by 2005 and to
complete the national backbone fibre optic cable network. At the beginning of 1997,
3 .000 kilometres interconnecting the main regional centres had been installed and the
extension of the network to 7.000 kilometres is underway. In 1998, ISDN services will be
implemented. The digital switching equipment is produced locally at about 200,000 lines
per year, by joint ventures with Siemens and Alcatel.

From 1991 to 1997, the rate of telephone penetration increased from 10.8 to 13.9 lines
per 100 inhabitants. It is planned to reach 28 lines per 100 inhabitants by the end of the
year 2005 ( compared to an average of 44 lines per 100 inhabitants presently in IrelandPortugal-Greece ). The network digitisation is progressing reasonably well and reached
28% by the end of 1996 (compared to 62.4% as an average in Ireland-Portugal-Greece).
The Government plans to digitise the network completely by 2005. With only 1.1 % of
GDP devoted to telecommunications, investment in the sector in 1995 and 1996 was
small. The number of lines to be installed in 1997 is expected to increase three times,
which implies a substantial investment. The number of subscribers for analogue mobile
telephony services at the end of 1996 was about 20,000 equivalent to a penetration rate of
1.2 lines per I 00 inhabitants. Digital mobile services (GSM) launched_ in April and June
1997, immediately raised a strong public interest with more than 30,000 subscribers in a

58

few weeks. About 2,000,000 CATV subscribers are connected (several hundred network
operators; 80% of the territory is covered).

There is a participation of foreign companies in Telefonica Romania for the operation of
analogue mobile telephony (59.9% Telefonica Spain, 19.9% for both Rom Telecom and
Radio Comunicatii), in the data transmission operator Global One Romania (Global One
50.3%, Rom Telecom 49.5%) and in the two GSM network operators MOBILROM
(France Telecom 51%, Romanian companies 41%) and MOBIFON (Telesystems,
Canada 39.9%, Airtouch 10%, Romanian companies 50.l %).

_Competitiveness_ _ofthe_ _Sector_

In 1995 there were 17.9 telecommunications employees per 1000 lines (the average is
about 6.2 in Ireland-Portugal-Greece). In 1996 unsatisfied demands for a telephone line
stood at a high level and the average waiting time was 4.8 years. The infrastructure is
particularly lacking in rural areas. The price of a standard line for business
communications (ECU 112) is among the lowest in the region. Revenue per line (about
ECU 90 in 1995) is also among the lowest in the region and is not sufficient to ensure
that Rom Telecom can increase its investments without a substantial support from
outside. Yet tariff rebalancing started in 1997.

**Conclusion**

Romania would have some difficulty in adopting the EC model of telecommunications
liberalisation because of slow sector development and delays in liberalisation. With the
implementation of the new legislation during the next few years, Romania can be
expected to fully achieve the approximation to EU regulation in the medium term. The
competitiveness of the sector will crucially depend on the acceleration of the
modernisation programme for networks and services, on the increase in foreign
investment, as well as on more market-oriented and flexible management of the public
network operator.

**Audio-visual**

The audio-visual _acquis_ aims, in the context of the internal market, for the provision and
free movement of audio-visual services within the EU as well as the promotion of the
European programme industry. The Television Without Frontiers Directive, which is
applicable to all broadcasters regardless of the modes of transmission (terrestrial,
satellite, cable) or their private or public nature, contains this _acquis,_ setting down basic
rules concerning cross-border broadcasting. The main points are: to ensure the free
movement of television broadcasts throughout the Member States; to promote the
production and distribution of European audio-visual works (by laying down a minimum
proportion of broadcasting time for European works and those by independent
producers); to set basic standards in the field of television advertising; to provide for the
protection of minors and to allow for the right of reply.

The Europe Agreement provides for cooperation in the promotion and modernisation of
the audio-visual industry, and the harmonisation of regulatory aspects of audio-visual
policy.

59

The Television Without Frontiers Directives is a Stage I measure in the White Paper.

**Descriptive Summary**

The legal framework for the audio-visual sector is determined by the Act on Radio and
Television Broadcasting. A National Audio-visual Council (NAC) was established as an
independent regulatory body in July 1992.

The public service broadcaster is Romanian Television, although many private national
and local companies were set up during the 1990s; ProTV, a private commercial national
channel, is currently ( early 1997) the leading television broadcaster. Cable television has
an important share of the market.

The State's monopoly over film production was ended in 1990 with the setting up of the
independent National Film Centre (CNC) which is charged with producing and
distributing films. A number of private film production companies now operate in
Romania. The State sector, under the Ministry of Culture, continues to produce films,
but funding has been drastically reduced. Film distribution is carried out by the State
monopoly RADEF-Romaniafilm. No foreign companies are directly involved in the film

distribution sector.

**Current and Prospective Assessment**

The audio-visual sector in Romania is attempting to re-establish itself after major
upheavals in recent years, and is characterised by rapid growth and constant change. Its
ability properly to adhere to the _acquis_ presupposes an upgrading of the capacity of the
programme-making industry to meet the important challenges of an adapted regulatory

framework.

Romanian audio-visual legislation is not fully compatible with the Television Without
Frontiers Directive; numerous deficiencies remain, notably on central questions such as
freedom of receptien, the promotion of European works (although an amendment is in
preparation), indep~ndent producers and the contents of advertising.

Amendments to the audio-visual legislation have been prepared and are due . to be
discussed in parliament in late 1997. The draft amendments are largely in line with the
audio-visual _acquis_ and are expected to be adopted sometime in 1998.

**Conclusion**

Provided that necessary structural adaptations of the industry are made, sustained efforts
as regards legislative changes will have to be followed through in order for Romania to
meet EU requirements in the audio-visual sector in the medium term.

**3.3** - **Economic and Fiscal Affairs**

**Economic and Monetary Union**

By the time of Romania's accession, the third stage of EMU will have commenced. This
will mark important changes for all Member States, including those that do not

60

participate in the euro area. All Member states, including the new ones, will participate
fully in the economic and monetary union. Their economic policies will be a matter of
common concern and they will be involved in the coordination of economic policies
(national convergence programmes, broad economic guidelines, multilateral surveillance,
excessive deficit procedure). They will be required to respect the stability and growth
pact, to renounce any direct central bank financing of the public sector deficit and
privileged access of public authorities to financial institutions, and to have completed the
liberalisation of capital movements.

Accession means closer monetary and exchange rate cooperation with the European
Union. This will require strengthening structural reforms in the area of monetary and
exchange rate policies. Member States not participating in the euro area will be able to
conduct an autonomous monetary policy and participate in the European System of
Central Banks (ESCB) on a restricted basis. Their central banks have to be independent
and have price stability as their primary objective. Monetary policy has to be conducted
with market-based instruments and has to be "efficient" in transmitting its impulses to the
real economy. Therefore, reforms need to be pursued to tackle factors that hinder the
efficiency of monetary policy, such as the lack of competition in the banking sector, the
lack of development of financial markets and the problem of "bad loans" in the banking
sector. Finally all Member States shall treat their exchange rate policy as a matter of
common interest and be in a position to stabilise their exchange rates in a mechanism yet
to be decided.

As membership of the European Union impli~s acceptance of the goal of EMU, the
convergence criteria will have to be fulfilled by Romania, although not necessarily on
accession. While the fulfilment of the convergence criteria is not a precondition for EU
membership, they remain key points of reference for stability oriented macroeconomic
policies, and must in time be fulfilled by new member states on a permanent basis.
Hence the successful conclusion of systematic transformation and market oriented
structural reforms is essential. Romania's economic situation and progress has already
been analysed in preceding chapters of this Opinion.

_Current_ _and_ _Prospective Assessment_

Formally, the Romania's central bank is relatively independent from the government,
both in the Governor's appointment procedure and in the conduct of monetary policy.
The statutory objective of the central bank is the stability of the domestic currency, but
this objective has not always been interpreted as price stability. The Law on the Central
Bank is still not compatible with the Treaty provision which prohibits budget deficit
financing. Furthermore, in the past, the Romanian central bank has not respected the
provisions in the Law concerning the limits on the amount of financing of the budget
deficit. The government elected in November 1996 has pledged to tighten m·onetary
policy, which implies that no more central bank budget deficit financing should be
expected for the time being.

Monetary policy has not always been directed towards price stability. In particular, after
three years of declining inflation, the inflation rate increased again in 1996. This was
caused by the substantial budget deficit (motivated by the November elections) financing
and the commercial bank refinancing activity of the central bank. The- central bank has,
moreover, extended cheap loans to whole inefficient sectors of the economy through
"specialised'' banks. The new government seems to have embraced a tighter monetary

61

and fiscal policy strategy. However, the efficiency of monetary policy is hindered by all
the factors that are common to a slowly restructuring economy. The banking sector is still
dominated by state-owned banks and it is highly segmented. Financial markets are still
in their infancy and the central bank lacks any significant experience in the use of
market- based instruments of monetary policy. Finally, the recently approved bankruptcy
law is still difficult to enforce and bad loans are a substantial problem.

Since 1991, the Romanian exchange rate regime has formally been a free float. Since
early 1994 the Romanian central bank has extensively intervened on the foreign
exchange market: the exchange rate regime has worked in practice as a crawling peg. In
addition, at times of devaluating pressures on· the commercial exchange rate, the central
bank has reacted b'y introducing administrative restrictions on the foreign exchange
interbank market. This was particularly significant in 1996, when the central bank
withdrew foreign exchange licenses from all the private banks to avoid a depreciation of
the commercial exchange rate in response to a profligate policy mix. The new
government has favoured the unification of the "official" and the "commercial" exchange
rate which is stable at present thanks to tight monetary and fiscal policies.

**Conclusion**

It is too soon to judge whether Romania will be in a position, by the time of its accession,
to participate in the euro area; that will depend on a successful structural transformation
permitting it to attain and adhere permanently to the convergence criteria, though these
are not a condition of accession.

Romania's participation in the third stage of EMU as a non-participant in the euro area
still poses problems in the medium term. Central bank legislation is not fully compatible
with EC rules and monetary and exchange rate policies have still to show a significant
stability-oriented record.

**Taxation**

The _acquis_ in the area of direct taxation mainly concerns some aspects of corporation
taxes and capital duty. The four freedoms of the EC Treaty have a wider impact on
national tax systems.

The indirect taxation _acquis_ consists primarily of harmonised legislation in the field of
Value Added Tax and excise duties. This includes the levying of a non-cumulative
general tax on consumption (VAT) at every stage of the production and distribution of
goods and services. This implies an equal tax treatment of domestic and non-domestic
(import) transactions. The VAT _acquis_ also contains transitional arrangements for the
taxation of transactions within the European Union between taxable persons. In the field
of excise duties the _acquis_ contains harmonised tax structures and minimum rates of duty
together with common rules on the holding and movement of harmonised excisable
goods (including the use of fiscal warehouses). As a result of the introduction of the
Single Market, all fiscal controls at the Community's internal frontiers were abolished in
January I 993.

62

Mutual assistance between Member State tax authorities is an important feature of
administrative cooperation in the internal market; the respective Directive covers both

direct and indirect taxation.

The Europe Agreement contains provisions on approximation of legislation in the area of
indirect taxation.

The White Paper contains -as Stage I measures those which make up the main
requirements of the indirect taxation _acquis_ ( essentially those measures applied in the
Community up to 1993), and as Stage II measures those which are in addition necessary
to implement the full indirect taxation _acquis._ - 

**Descriptive Summary**

_Direct_ _Taxation_

The two company taxation Directives and the Arbitration Convention provide for a
mechanism which applies on the basis of reciprocity. Respective provisions can
therefore by definition not be expected to exist before accession

_Indirect_ _Taxation_

The overall contribution of VAT and excise duty revenue to the Romanian state budget
was about 27% and 6% respectively in 1995. More recent statistics indicating trends in
these figures are not currently available.

_Value_ _Added_ _Tax_

The current Romanian VAT system was introduced on 1 Ji.ily 1993 replacing the previous
tax on goods in circulation. Romania applies a dual rate VAT system: a standard VAT
rate of 18% and a reduced VAT rate of 9%. The standard rate is applicable to all goods
and services, including imports, which are not specifically taxed at the reduced VAT rate.

The supply of certain goods and services is exempt from VAT without the right to claim
the input credit on such supplies~ The Romanian VAT Act does not make a distinction
between what are considered as supplies of goods and services respectively.

Taxable persons are in principle entitled to deduct VAT incurred on their purchases for
business purposes of goods and services. It is uncertain whether the Romanian VAT
legislation contains provisions enabling tax to be refunded to taxable persons not
established within the country.

The current system of excise duty in Romania was introduced at the same time as the
VAT system. Excise duties are levied on a wide range of products including products
other than those subject to common excise duties within the Community (mineral oils,
alcohol and alcoholic beverages and manufactured tobacco). For each product category
except cigarettes, the duty is ad valorem in nature.

63

_Mutual_ _Assistance_

The tax administration has not yet had to develop its capacity for mutual assistance with
the tax authorities of Member States, since mutual assistance is a feature which would
only become applicable on accession.

_Current and Prospective Assessment_

_Value_ _Added_ _Tax_

The current VAT system in Romania has been based on the main principles of the VAT
legislation of the Community. However, it is relatively general and inconsistent in its
application.

The scope of exempt transactions under the Romanian VAT Act is significantly broader
than is permitted in the Community. Also, ·in the absence of arrangements for the refund
of VAT to non-registered foreign taxable persons, VAT would represent an increased

cost to such traders.

Romania's membership of the European Union would require substantial adjustment to
bring the VAT legislation into line with the requirements of the Community _acquis,_ both
in respect of the general provisions of the Community VAT legislation and as regards the
system of taxation necessary in a Community with no internal frontier controls.

The Romanian national strategy plan for implementing the recommendations of the
White Paper regarding VAT does not contain specific details as to future alignment on
Community legislation. Romania does, however, expect its VAT legislation to be in line
with the Community's by the end of 1997, with the exception of the Community's
transitional VAT provisions.

There are · significant discrepancies between the Romanian excise regime and EU
requirements.

Firstly, there exists no excise suspension system where goods can move between
authorised tax warehouses without payment of duty.

Secondly, there are differences in taxation of alcoholic beverages and cigarettes which
provide for a higher level of taxation on imported products than that imposed on similar
domestic products.

In the event of accession, excise duties on products not belonging to the above-mentioned
categories could be maintained as long as they did not give rise to border-crossing
formalities in trade between Member States and complied with the principles of nondiscrimination between national products and products originating in other Member

States.

In order to ~nsure a correct application of the Community excise legislation it is essential
for Romania to set up a warehousing system based on the Community model as soon as

64

possible, strengthen control procedures and adapt the structure and Jevel of its excise
rates so that they comply with the Community principle of non-discrimination between
national products and those originating in other Member States.

The Romanian national strategy plan for implementing the provisions of the White Paper
does not provide a clear and detailed timetable for future adjustments of Romanian excise
legislation. Legislation is in place to introduce fiscal marking on alcoholic beverages
(this is not, however, part ofthe Community _acquis)._ Further objectives include gradual
approximation of excise rates on tobacco products, moving away from the _ad_ _valorem_
system of duty on alcoholic beverages and narrowing the scope of excisable products.
However no full harmonisation of legislation is planned.

_Mutual_ _Assistance_

There would also be a need, on accession, to implement the appropriate arrangements for
administrative cooperation · and mutual assistance between Member States. These
requirements are essential for the functioning of the internal market.

65

**Conclusion**

The _acquis_ in respect of direct taxation should present no significant difficulties.

As regards indirect taxation, although a start has been made, a sustained effort will be
required in Romania to comply with _acquis_ concerning VAT and excise duties in the
medium term.

It should be possible to start participating in mutual assistance as the tax administration
develops its expertise in this respect.

**Statistics**

The main principles of the Community _acquis_ relate to the impartiality, reliability,
transparency, confidentiality (of individual information) and dissemination of official
statistics. In addition there exists an important body of principles and practices
concerning the use of European and international classifications, systems of national
accounts, business registers, and various categories of statistics.

The Europe Agreement provides for cooperation to develop effective and reliable
statistics, in harmony with international standards and classifications.

The White Paper includes no provisions in this field.

**DescriptiveSummary**

The National Commission for Statistics (NCS), an independent public office, is charged
with producing and disseminating official statistics in Romania.

The legal basis for Romania's official statistics consists of the Government Ordinance

No 9/1992 and Law No 11/1994.

**Current and Prospective Assessment**

Romanian legislation is, with a few exceptions, compatible with the current standards
applied within the European Union.

The official statistics are generally of a high quality, but there are deficiencies in sectors
such as regional, household and environment statistics, and national quarterly and
financial accounts. The quality and coverage of the business register needs improvement.

**Conclusion**

Provided that progress continues to be made, Romania should be able to comply with EU
requirements for official statistics within the next few years.

66

**3.4** **Sectoral Polices**

Industry

EC industrial policy seeks to enhance competitiveness, thus achieving rising living
standards and high rates of employment. It is aimed at speeding up adjustment to
structural change, encouraging an environment favourable to initiative, to the
development of undertakings throughout the Community, and to industrial cooperation,
and fostering better exploitation of the industrial potential of policies of innovation,
research and technological development. EC industrial policy is horizontal by nature.
Sectoral communications aim at transposing horizontal concepts into specific sectors.
EU industrial policy results from an articulation of instruments from a number of
Community policies; it includes both instruments related to the operation of markets
(product specification and market access, trade policy, state aids and competitions policy)
and measures related to industry's capacity to adapt to. change (stable macroeconomic
environment, technology, training etc.).

In order to cope with competitive pressure and market forces within the Union, the
industry of applicant countries needs to have achieved a certain level of competitiveness
by the time of accession. The applicant countries need to be seen as pursuing policies
aimed at open and competitive markets along the lines set out in Article 130 ("Industry")
of the Treaty. Cooperation between the EU and the candidate countries in the fields of
industrial cooperation, investment, industrial standardisation and conformity assessment,
as provided for in the Europe Agreement, is also an important indicator of development
in the right direction.

**Descriptive Summary**

Industrial output of Romania stood at around ECU 11.6 billion in 1995, slightly lower
than the industrial production of Ireland. In the period 1990-1995 the share of industry in
GDP declined from 46% to 42%. Total employment in industry is around 2.7 million
people. There are an estimated 34 000 or so industrial enterprises, of which 96% have
less than 500 employees. However, SMEs account for only 18% of industrial output.
Roughly one fifth of production was exported in 1994.

Before the transition towards a market economy began in 1989, Romanian industry was
run by the government under very tightly control, including high levels of concentration
and with a strong emphasis on heavy industries. Several industries are characterised by
obsolete production technologies, products not adapted to market conditions, low
capacity utilisation rates, low levels of managerial skills, and a very heavy losses.
Industrial investment has decreased since 1990. Nevertheless, Romanian producers are
becoming increasingly active on export markets, reflecting growing competitiveness in

some sectors

67

**Romania, main industrial sectors** **in** **1995**

Foodstuffs

Mechanical & electronic engineering
Steel, metallurgy, non-ferrous materials

Chemicals

Textiles, clothing and leather
Raw material processing (including cement, glass, ceramic,
paper, wood)

Automotive

Furniture

Pharmaceuticals

Information technologies

Others

Sub-total

Construction

TOTAL

_Industrial production as_ % _of_ _GDP_

% share industrial

production
15

12

14

10

8

6

6

2

16

91

9

100

_36_

% share industrial

employment
9

21

6

4

4

8

7

4

1

1

_5_

84

16

100

**Foodstuffs** This sector is one of the most important in the industry. The majority of the
companies are state-owned. Low productivity, under-utilisation of production capacity and
lack of adjustment constitute principal weaknesses of this sector. The government
implemented a protectionist policy by increasing import duties. Discriminatory levies were
also introduced. Owing to low product quaqty, exports are not significant and mainly
intended for other countries of central and eastern Europe.

**Mechanical engineering** is the second largest industrial sector. It is not considered to
have the capacity, specialisation, labour productivity and technology necessary to
compete internationally. A large part of the installed production capacity ( currently used
at a rate below 50%) will have to be dismantled in the coming years. On the other hand,
the industry may, by relying heavily on low wages, hope to save some production and
export simple machinery and components requiring a particularly high labour input.

The **fabricated metal products** sector is undergoing a deep crisis and the scope for of
competitive upgrading is limited. Production is dispersed and labour productivity is low.
Romanian manufacturers are faced with excess capacity and a depressed home market.
There is some continuing export performance but it remains small in absolute terms.
Most of the large installed production capacities would have to be disposed in the coming
years. The lowering of import tariffs vis-a-vis third countrles to the EC level would
expose Romania to a large increase of imports from East Asia. However, there are
increasing links with EU industry (notably Italian tool-making industry) for low valueadded parts.

The **chemical** sector is a third major industrial sector in Romania. The utilisation rate of
production capacities is low and most production facilities are obsolete. Major
rationalisation and a profound restructuring are necessary, and privatisation has not taken
off yet.

68

The **steel** industry is characterised by its large scale ( crude steel production ·capacity in 1995
was only slightly behind that of Poland) and obsolescence of facilities. It has a high
concentration in low added value products that have a high sensitivity in the markets. The
necessary restructuring process has not so far started despite a formal restructuring strategy.
Implementation has been delayed mainly by the absence of a single decision-making body

and the lack of financial resources.

The **textile and clothing** sector is characterised by a high number of small companies along
a small number of large enterprises, mostly state-owned companies with massive problems
and heavy losses. There is rapidly rising FDI which modernises the entire production chain.
Most trade is carried out with the EU, and as of 1 January 1998 there will be neither tariffs
nor quantitative restrictions for Romanian textile/clothing exports to the EU.

The **leather and shoe** sector is an important traditional sector with a particularly cheap
labour force. Imports of hides and leather products is l~beralised, as well as exports of
leather and leather products. However, exports of some raw hides and skins were subject in
1996 to export quotas and a temporary export prohibition. This situation provides a
competitive advantage to the Romanian tanning sector, but the system is scheduled to end

in 1998.

The **furniture** industry is one of the most important ones of Eastern Europe. Low
productivity levels are targeted by a poliGy of encouraging investments and exports.

**Automotive** sector: There are three car producers and two manufacturers of commercial
vehicles. In cars, the capacity utilisation is low. About one third of production is
exported, mostly to price-sensitive markets and other Eastern European markets. A jointventure between a Korean manufacturer and the government represents the first large
scale foreign investment. But at a time of limited growth prospects it threatens to create
in the region. Applied import duty rates on automobiles from the EU were reduced but
have subsequently been increased again.

The **information technology (IT) industry** started in early 1970s with importing
licenses and growth in the sector was mainly the result of the important R&D network
activity. It is producing a range of components destined to automate production processes
but has not yet played an important role as a production base.

The **pharmaceutical** sector remains small and production is mainly intended for local
consumption. Moreover, local companies are highly dependent on imported raw materials
and have a low R&D potential.

Romania has a relatively small **aeronautics industry.** The sector existed prior to 1991 as
a sub-contractor to the USSR industry and has now lost its main export market. Joint
ventures with European companies and/or sub-contracting for European companies is one
option to make use of their skilled work-forces. Romania also has some **space**
technological capability, having been part to the 1967 Intercosmos agreement. This
involved supplying hardware and other support to Soviet-led scientific missions. The
sector presents some opportunities for the European industry in the growing satellite
communications segments such as private networks, direct broadcasting, personal

communications and broadband services.

69

There is a long tradition of **shipbuilding.** All companies are still, if only partly, stateowned. Investment has been delayed during the recent years.

State ownership of enterprises is still a predominant feature in Roman~an industry. Of
the total 2. 7 million jobs, 2 million are in the public sector. Only one fifth of industrial
output is generated by the private sector. Privatisation has proceeded slowly despite the
adoption of a comprehensive mass privatisation programme in 1995. The State
Ownership Fund (SOF) created in 1991 has the responsibility for state-owned
commercial companies and for any restructuring_ measures prior to privatisation.

After suffering three years of economic decline during the initial transition shock, the
Romanian economy since 1993 recovered to produce four years of consecutive growth.
Production has increased in response to growing domestic and international demand.
One-fifth of total production was exported in 1994, particularly light industrial goods.

Industrial investment has decreased since 1990 and inward investment remains low.

**Current and Prospective Assessment**

Romanian industry is not yet very advanced in the process of adaptation to a market
based economy. Obsolete production technologies are still widespread, products are often
not adapted to market conditions, capacity utilisation rates are generally very low, and
managerial skills for bringing about the necessary change are largely absent, in particular
in state-owned enterprises.

Inter-enterprise arrears are still a problem in Romania, especially for industry. There will
be· yet another attempt at stabilisation this year but it is unlikely to achieve lasting results
unless the deeper problems ( e.g. cheap directed credit and large losses in the state-owned
enterprises) are addressed. The heavy industry that was built on indigenous sources of
energy and raw materials wastes less energy than that in some other applicants since
Romania could not rely in the past on cheap supplies from the USSR. However, its
future is not promising since the costs of sourcing raw materials domestically are
increasing as Romanian deposits are nearing completion. The centralisation of oil trade is
not a sign that restructuring will proceed quickly. If the current government pushes
through serious reforms industrial output might first decline from the subsidised level
reached last year.

There is a need for far-reaching restructuring in particular for foodstuffs, steel other
heavy industry and mining. However the ability of the Romanian industry to make
necessary changes is hindered by a number of factors, including infrastructure
deficiencies, delays in information technology development, weakness in corporate
governance, lack of financial resources and inflationary pressure. Effective
implementation of the privatisation process and the reduction of state involvement in
enterprises are still lacking too.

Romania maintains a system of exclusive rights and concessions for oil exploration and
production, as well as for ore mining. An exclusive regime was created for 83 "Regies
Autonomes" of strategic importance to the State. State monopolies are currently
maintained in some areas of industry, including tobacco, alcohol, medicines,; a system
which will require adjustment to EU legislation.

70

The commitment of the. new government elected in November 1996 for an economic
policy based on tight budgetary constraint will have considerable repercussions on
industry. Thus, the intention to liquidate the ten biggest loss-making companies was
announced in early 1997, but the process is likely to have political and legal ramifications
which make it difficult to see any short-term results. Concerning the steel sector in
particular, the government has adopted a Strategy for the Restructuring of the Romanian
Steel Industry that would need to be implemented. The Romanian government still
protects certain sectors of inaustry, including food, leather/shoes and automobiles, by
means of tariff measures, import restrictions on used vehicles etc., which would need to
be adapted.

**Conclusion on Industrial Competitiveness**

Romania has not yet created conditions conducive to a dynamic and competitive private
sector. Its industry will only be ready to withstand competitive pressures in the single
market in the long term. Comprehensive restructuring needs to be undertaken to prepare
for future accession. The removal of the remaining barriers to private-sector growth will
-require a•high degree of political commitment and administrative competence. Although
there have been notable successes in the reform of industry, significant work remains to
be done, specifically the restructuring of the largest of the loss-making state-owned
enterprises.

An evaluation of the _acquis_ specific to the free circulation of industrial goods is to be
found in the separate section on the internal '?arket.

**Agriculture**

The Common Agricultural Policy is aimed at maintaining and developing a modern
agricultural system guaranteeing a fair standard of living for the agricultural community
and the supply of food at a reasonable price for consumers, and ensuring the free
movement of goods within the EC. Special attention is given to the environment and rural
development. Common market organisations exist to administer the CAP. These are
complemented by regulations on veterinary health, plant health and animal nutrition and
by regulations concerning food hygiene. Legislation also exists in the area of structural
policy, originally developed primarily to modernise and enlarge agriculture, but more
recently with an increasing emphasis on the environment and the regional differentiation
of the policy. Since reforms in 1992, direct aid payments have made an increasing
contribution to farm support, compensating for reduced agricultural support prices.

The Europe Agreement provides the basis for agricultural trade between Romania and the
Community and aims to promote cooperation on the modernisation, restructuring and
privatisation <?f Romania's agriculture sector as well as the agro-industrial sector and
plant-health standards. The White Paper covers the fields of veterinary, plant-health and
animal nutrition controls, as well as marketing-requirements for individual commodities.
The purpose of such legislation is to protect consumers, public health and the health of
animals and plants.

71

**Descriptive Summary**

_Agricultural_ _Situation_

The value of the agricultural production in 1995 was approximately 4.93% of that of the

Union.

In 1995 agriculture accounted for about 20% of Romania's GDP and employed 34.4% of
the working population.

At the outset of the transition period, agriculture held up better than other sectors of the
economy and, by 1994, had returned to 1989 levels. Output nevertheless remains
vulnerable, in particular owing to a fall in the use of fertilisers and irrigation, and
fluctuates considerably from one year to the next; in 1996 arable output - principally
grain - collapsed, mainly as a result of bad weather. The livestock sector appears to be
stabilising.

Farmland (minus forests) accounts for 14.8 million hectares (62% of the country's total
surface). Mountain areas represent 30 % of total land area.

Forest covers 6.69 million hectares or 28% of Romania; timber production, which stood
at 14 million m [3 ] in 1994, has fallen by a third since the transition period began, but
remains nonetheless one of the country's main export sectors.

Irrigation is vital to a major part of Romania'.s farmland. With 3.1 million hectares of
irrigable land, Romania has Europe's second largest irrigable area, though only
800 000 hectares are currently under irrigation (inefficient installations, fragmentation of
holdings, shortage of funding).

Until 1989 the sector was dominated by 511 state farms (14% of the utilised agricultural
area (UAA)) and 3776 agricultural production cooperatives (61 % of the UAA), with
private farmers holding the remaining 25%. The break-up of the agricultural cooperatives
in 1990-91 was followed, in 1991, by the introduction of a new system of land tenure.
Several types of farm now coexist: non-privatised companies (former state farms
averaging 2002 hectares: 12% of the UAA), associations (13% of the UAA - average
size: 366 hectares), family associations (14% of the UAA - average size: 113.6 hectares),
smallholdings (38% of the UAA - average size: 1.8 hectares) and others (research
centres, common land: 23% of the UAA). This is reflected in the fragmentation of plots
and farms. Private sector activity in arable and livestock primary production accounted
for over 85% of gross agricultural output in 1996 but significantly lower shares of total
sales and commodity purchasing activities, where SOEs continued to dominate, due to
the large subsistence economy in the private sector.

In the period 1989-1993, the reduction in the size of farms and a shortage of funding
led farmers to plant more cereals and cut down on other crops (especially beet). Grain
maize production has been stepped up at the expense of wheat. Overall grain production
in 1996 amounted to only 14.25 million tonnes, markedly down on the previous year's

19.9 million tonnes.

72

Compared with 1995, 1996 was a good production year for fruits (+70%), potatoes
(+20%) and sunflower (+ 17%). The surface planted with vines has also risen steadily
( + 10%) throughout the 1990s, with production now exceeding the levels of the mid
l 980s.

After progressive declines in livestock numbers between 1989 and 1995, Romanian pig
and cattle numbers increased by 2% and 5% respectively in 1996. Sheep and goat
numbers continued to ran: Production of milk (3.9 million tonnes) and beef
(240 000 tonnes) was greater in 1995 than in 1989, whereas pigmeat (647 000 tonnes)
and poultrymeat (274 000 tonnes) remained substantially down. How.ever, overall meat
production increased slightly in 1996 and egg and milk production were up 2% and 3%
on 1995. The bulk of the increases came from private farm activity although state pig
and poultry farms continue to dominate their respective sectors.

The agri-food sector accounts for 20-25% of industrial activity in Romania; structural
handicaps (the creation of production units in the 1970s on the basis of political decisions
rather than economic criteria) are exacerbated by obsolete technologies and know-how, a
consequence of a lack of major investment since the plants were established and
shortcomings in the management of human resources.

As a result, fewer than a third of enterprises have been privatised and foreign investment
remains very low.

The agricultural trade balance has worsened considerably since 1989: in 1995 the
country's farm imports (8.4% of total imports) stood at ECU 835 million (ECU 267
million from the EU), while farm exports totalled ECU 460 million (6.5% of total
exports), ECU 117 million to the EU.

_Agricultural Policy_

This section describes the main components of Romanian agricultural policy from the
start of the transition period to the end of 1996. The reforms put in hand in the first half
of i 997 are dealt with in the section entitled "Current and Prospective Assessment".

In the early years of the transition the Romanian government sought to preserve a system
obliging producers to sell cheaply through the state distribution network as part of a
strategy to maintain a social consensus and fight inflation.

The pricing system has since undergone gradual liberalisation and become more flexible:
producer and consumer prices on local markets have been liberalised, resulting in a swift
rise in real terms, though, under Law No 83/1993 (November 1993), the government can
set "guaranteed minimum purchase prices" on 1 March every year for products "of
national importance", at a level corresponding to 80% of the previous year's average
world market price. The law covers a wide range of arable products (grain, oilseeds,
vegetables, sugar beet, potatoes etc.) and milk, pigmeat and poultrymeat. In 1995,
however, only wheat, milk, pigmeat and poultrymeat were seen as products "of national
importance" and placed under the system. The guaranteed minimum price (GMP) is in
fact the price offered to producers by official or officially-mandated agencies.

73

This results in a dual-pricing system for the four products concerned ( combined with the
restrictive arrangements concerning production subsidies), whereas prices for all other
agricultural products on the Romanian market can be considered completely liberalised.

Since 1993 a pro-active policy of subsidising inputs has been pursued; in most cases
subsidies are reserved for, or preference given to, farms supplying all or part of their
production to state agencies a~ prices lower than on the open market.

Producers selling on the open market appear _td_ receive only limited support.

SOEs also benefit from lower taxes, subsidised government loans and, in some cases,

direct aid.

Fluctuations in Romanian farm prices are linked to those on the world market: since 1993
Romanian wheat prices have practically matched Community prices, reflecting relative
trends in Community and international prices; for pigmeat and poultrymeat institutional
and market prices expressed in ECU have remained relatively stable at levels close to
those on the Community market. Prices for poultrymeat on the open market have
remained 40% higher than the GMP, reflecting the country's situation as a net importer.

In the case of milk, comparison with Community prices is particularly tricky; prices on
the open market seem to be dictated by competition from products reconstituted from
Community milkpowder, with the real purchase cost of "controlled" milk representing
only a third of the price on the open ~arket owing to the premiums paid to state dairies.

In 1994 the Ministry of Food and Agriculture accounted for 9.5% of budget spending.
Consumer price support was removed in 1993 but premiums to the four main farm
subsectors took up almost half of the agriculture budget in 1995, i.e. almost 5% of total
budget spending. Combined transfers to agriculture from state resources in 1996
amounted to 4% of GDP. About half these transfers were direct budget transfers (interest
rate subsidies, producer premiums); the rest were quasi-fiscal transfers via directed
credits financed by the National Bank. The expansion of quasi-fiscal transfers in 1996,
particularly, was not sustainable and contributed significantly to over-lax national
monetary policy and inflation. Tax revenue from agriculture contributed some l % to
government income in comparison with the above outflows.

For the purposes of applying the Uruguay Round agreements, Romania has made its
commitments in national currency - albeit in real terms - and has also opted for
developing-country status, which offers a longer transition period (l O years). It has not
specified its commitments on internal support and is therefore, as a developing country,
bound to limit spending to 10% of the value of its production.

Since 1 July 1995, the tarification of import measures has resulted in a considerable
increase in protection for Romania's domestic market for agricultural and food products.
Romania has higher import duties than the Union on most products. Romania has
pledged to cut export subsidies to 2.2 billion lei (less than ECU 1 million) by 2004.

The Europe Agreement with Romania has been applied since 1995.

74

As and when necessary, the Government introduces temporary export bans to guarantee
domestic prices lower than those on the international market. Romania does not
currently appear to be subsidising exports.

Veterinary and plant-health legislation is in the process of being harmonised with the
Community provisions set out in the White Paper and negotiations are under way for an
equivalence agreement.

Agricultural policy is implemented by the Ministry of Agriculture; Romania does not
have intervention bodies comparable to those of the fifteen Member States.

**Current and Prospective Assessment**

Up to early 1997, the Romanian authorities sought to liberalise the country's agricultural
economy while minimising the immediate impact on agricultural output and industries
up- and downstream, effectively delaying the restructuring needed for the switch to a
completely liberalised economy.

Relatively cheap loans and support for producers in the form of aid for the supply of seed
and fertilisers have brought some recovery in arable production. It is likely, in the
medium term, that Romania will once again become a grain exporter.

This policy cannot, however, be sustained, ~ince it generates a public deficit and
consolidates state distribution and marketing structures; the privatisation of the agri-food
industry has fallen way behind schedule, with SOEs continuing to receive direct or
indirect support. In the absence of restructuring and investment, their economic results
are getting worse but at the same time private economic operators are not really able to
break through.

The GMP systems do not have similar or comparable effects to the CAP rules for the
products concerned. They are fixed in the light of trends in prices on the open market at
levels attractive enough to ensure supplies to public purchasing and processing bodies.
They have risen in the past three years in response to rising international prices and local
inflation, but any drop in international prices would be accompanied by a fall in the

GMPs.

Thus Romania does not at this time have institutional prices directly comparable to those
in the Community.

However, the national economic recovery programme set out by the Romanian Prime
Minister in February after negotiations with the IMF and World Bank marks a complete
break with the Romanian authorities' previous approach, without going so far as to lay
the foundations for machinery akin to the common market organisations. Since
18 February price controls have been removed from all agricultural products, and key
measures have been announced (speeding-up of land reform, privatisation, re,..duction in
direct support for food-processing firms and reform of support to farmers, reduction in
export barriers and a cut in import duties). The measures relating to foreign trade have
been applied since March and some input aid has been abolished.

75

It is extremely difficult to forecast trends in prices in the run-up to accession; this will
depend on a number of factors including the domestic economy, the situation on export
markets and developments in the level of price support in the Union.

European marketing standards and classification systems will also have to be applied.
Romania has neither the main instruments used for managing markets and supporting
agriculture in the Community (milk quotas, compensatory payments, premiums in the
livestock sector etc.) nor -rural development measures. Their management and
supervision require quite sophisticated administrative arrangements; were they to be
applied in Romania, their implementatioh would be a considerable challenge to the
country's administr~tion.

Romania is correctly applying the provisions of the Europe Agreement concerning trade
with the Union in agricultural products.

Romania has made progress towards aligning its legislation on the measures in the White
Paper. Veterinary legislation has been partly harmonised, but that on animal welfare
does not satisfy Community requirements. 1997 has been set as the target for
harmonisation, but no schedule has been established for effective implementation.
Border inspection arrangements do not meet Community standards; there is no provision
for inspecting live animals and animal products, with checks generally being confined to
documents; most physical controls take place at the destination. As for internal
arrangements, the Romanian authorities will have to test their animal health rules against
the Community requirements and make the requisite adjustment with regard to the
registration of herds and the identification of animals. To align on Community
legislation it will also be necessary to discontinue vaccination against classical swine
fever, which will not be easy. Processing plants will also have to be brought up to
Community standards.

Romanian law provides for a national inspection service, but financial problems appear to
be delaying its establishment; this means there is not yet sufficient assurance as to the
implementation of internal market rules.

The schedule presented in the area of plant health provides for the harmonisation of
legislation in 1997; a further exchange of information will be needed to assess the real
capacity of the services concerned, which are undergoing restructuring, to apply these

arrangements.

The legislation on seed and propagation materials should be harmonised in mid-1997;
equivalence is recognised for many varieties, but the certification services will have to be
given extra resources; harmonisation has to a great extent been achieved for pesticide
residues, only partially for animal nutrition and not at all for plant-protection products
and organic farming.

**Conclusion**

Limited progress has been made in adapting to the Community _acquis_ and considerable
sustained effort will be needed with regard to restructuring agriculture and the agri-food
sector, and with reform of agricultural policy to prepare Romania to apply the _acquis._

76

Particular efforts are needed in relation to :

implementation and enforcement of veterinary and plant-health requirements and
upgrading of establishments to meet EC standards; this is particularly important with
regard to the inspection and control arrangements for protecting the EU external
borders;
- strengthening of the administrative structures to ensure the necessary capacity to
implement, and enforce the policy instruments of the CAP;
- restructuring of the agricultural and agri-food sector to improve its competitive
capacity.

Fundamental reforms are necessary before Romania will be able to meet the obligations
of membership.

**Fisheries**

The Common Fisheries Policy includes common market organisations, structural policy,
agreements with third countries, management and conservation of fish resources, and
scientific research in support of these activities.

The Europe Agreement includes provisions concerning trade in fisheries products with
the Community. The White Paper includes no measures in this field.

**Descriptive Summary**

In 1995, Romania's fisheries sector employed 6 000 people. Approximately 69 000
tonnes of fish and fish products valued at ECU 232 million was produced, equivalent in
value to 2.8% of EU production.

In 1995 the fleet consisted of 34 vessels, of which 19 (employing 1 300 people) were
registered for the high seas and 15 ( employing 109 people) for Black Sea coastal waters.
Further information is needed on the number of active fishing vessels: data on structure
by age, displacement and length give significantly smaller totals (ranging from 14 to 21
vessels).

The total. catch was 39 000 tonnes (up from 1 400 tonnes Black Sea plus 1 300 tonnes
distant water catches in 1993). 95% (36 500 tonnes) of the 1995 catch came from the
north-east Atlantic (mainly mackerel and herring) and the rest (1 500 tonnes) from the
Black Sea (mainly sprat).

Other important Romanicln fish supplies in 1995 originated from freshwater aquaculture,
mostly carp (28 000 tonnes), and imports mainly from EU Member States
(46 300 tonnes).

The processing sector includes 14 enterprises employing I 700 people, conqmtrated in
four large firms. Its output in 1995 was 69 105 tonnes ( double that of 1993), of which
30% came from the private sector.

In 1995, Romania imported 46 300 tonnes and exported 5 099 tonnes of fish and fish
products. Fish imports for the first nine months of 1996 amounted to 13 000 tonnes and

77

exports 230 tonnes - a substantial fall on 1995. As a trading partner, Romania accounts
for 0.02 % of EC total fish imports and 0.8 % of EC imports of fisheries products from
the candidate countries alone (in terms of value). As regards EU exports, Romania
accounts for 0.39 % of total exports of fisheries products and 4. 7 % of such exports to the
candidate countries (in terms of v·alue ).

No specific institutional capabilities or structures exist to monitor or enforce catch quotas
in the high seas, the Black Sea or internal waters, although various bodies are empowered
to enforce the laws.

**Current and Prospective Assessment**

Romania's production and foreign trade data, when compared to the corresponding EC
figures, are quite low and apparently on a declining trend. Therefore they should not have
a significant impact upon the Community as a whole.

Romania intends to modernise the high sea fleet and increase catches to some 80-100 000
tonnes a year by 2000, after restructuring deep sea and Black Sea state fishing companies
to facilitate accelerated privatisation. Further exchange of information on the sources of
increased catches and progress with restructuring are needed to assess the achievability of
these ambitious targets and the new government's acceptance of them.

The industry is outdated and will require modernising. It will be necessary for Romania
to establish a fisheries administration which is capable of implementing the Common
Fisheries Policy - in particular, the management of resources, the keeping of a fishing
fleet register, the application of structural policy for the sector, the management of the

market scheme and the collection of all statistical and scientific data - as well as the EC's

policies on health, hygiene and environmental matters.

Further exchange of information is needed to assess the situation about agreements with

other countries.

**Conclusion**

Significant efforts are needed in order to adapt the sector for accession. The integration of
Romanian fishing industry into the Common Fisheries Policy will not cause major
problems.

**Energy**

The main EU energy policy objectives, as reflected in the Commission White Paper "An
energy policy for the EU" include enhancement of competitiveness, security of energy
supplies and protection of the environment. Key elements of the energy _acquis_ comprise
of Treaty provisions and secondary legislation particularly concerning competition and
state aids, internal energy market (including directives on electricity, price transparency,
gas and electricity transit, hydrocarbons licensing, emergency response including security
stock obligations, etc.), nuclear energy, as well as energy efficiency and environmental
rules. Development of Trans-European Energy Networks and support for energy R&D

78

are other important elements of energy policy. Ongoing developments include
liberalisation of the gas sector, energy efficiency- _acquis_ and the Auto-oil programme.

In the field of nuclear energy, the Community _acquis_ has evolved substJntially from the
original EAEC Treaty to a framework of legal and political instruments, including
international agreements. At present, it addresses issues of health and safety, including
radiation protection, safety of nuclear installations, management of radioactive waste,
investment including Euratoin fi .. ancial instruments, promotion of research, nuclear .
common market, supplies, safeguards, and international relations.

The Europe Agreement provides for cooperation to develop the progressive integration of
the energy markets in Europe and includes provisions on assistance within the related
policy areas. The White Paper preparing CEECs for the internal energy market
underlines the need for full application of key internal market directives in combination
with EU competition law. As to the nuclear sector, the White Paper refers to nuclear
supply safeguards and shipments of nuclear waste.

**Descriptive Summary**

In south-east Europe Romania is the country with the largest own energy resources,
particularly of oil and gas (both on and off-shore), but also lignite, hard coal, uranium
and hydropower. It is more than 70% self-sufficient. Gas, imported for half of the
country's needs from Russia, accounts for more than 40% of the energy balance.

The oil industry includes large oil refining capacities (34 million tons a year) \\-'.ith their
associated facilities such as a pipelines and import/export terminals on the Black Sea.

Crude oil (from Russia but also the Middle East) is imported through Constanta. Gas
transits from Russia, the Ukraine and Moldova to Romania.

Romania acts also as a strategic corridor for Russian gas to the Balkans, including
Greece. Romania's strategy for connecting its electricity networks in future to the
Western European UCPTE network contributes to its role as a transit country as well as
helping it integrate into the Trans-European Energy Networks. The recent synchronous
connection, as a test, of the Romanian, Bulgarian, Greek, Serb and Albanian electricity
networks is a preliminary step towards future connection to the UCP_TE.

The solid fuel sector (producing mainly lignite, and representing a labour force of
115 000) is subsidised by the Government and needs far-reaching restructuring.

The energy sector accounts for a larger part of the country's production than any other
sector of the Romanian economy. The country's energy sector is three times less
efficient than the EU average, due to the heritage of its past: low prices, insufficient
efficiency policies, obsolete technologies etc. Inefficiencies, but also the power sector,
solid fuels and the oil sector contribute to environmental qegradation.

Romania's first nuclear power plant (Canadian Type CANDU, built with Canadian and
Italian participation) is now in operation at Cemavoda, accounting for. 8% of electricity
production in 1996. The Government considers the construction of unit two in the next
five years a goal of material importance. Also the construction of other units which

79

would conform to safety objectives generally accepted in the EU are foreseen in the
longer term, but the financing scheme is not yet established. The natural uranium used to
fuel the reactor is mined and processed into fuel in Romania and Canada.

Romania also has two research reactors. The high enriched uranium fuel has come either
from Russia or from the USA. The return of the spent fuel to the USA is arranged but
must be clarified for Russia. The structure of the electricity tariff, integrating the
different costs associated with the production of nuclear power, is in the process of being

established. '

**Current and Prospective Assessment**

The large Romanian energy sector suffers heavily from absence of investment funds,
whereas restructuring is also hampered by the absence of a clear overall energy policy.
Only parts of policies and the necessary legislation have been implemented ( e.g.
Petroleum law) but there are many more drafts which need to be passed by Parliament or
need implementation (e.g. future electricity/thermal energy law etc.).

The competition framework in the energy sector does not yet fulfil the directives of the
internal energy market in combination with the application of EC competition law. Large
vertically integrated state dominated energy companies hold monopolies in production,
transmission and distribution. However, foreign companies are already active in e.g. the
oil sector ( oil exploration and oil products retail). Energy prices, except oil prices which
reach nearly world level, are cro~s-subsided and are therefore distorted. For social
reasons household energy prices in particular are still at too low a level.

Romania does not comply with the _acquis_ on emergency preparedness, including the
obligation to hold 90 days of oil stocks. Current stocks seem to be around 30 days but
one should take account of indigenous production which diminishes the country's
stockholding obligations by a maximum of 15%. Adaptation to Community _acquis_ will
require legislation and important investments for tanks and the stocks.

Concerning the solid fuels sector, state intervention needs to be assessed against EC rules
and specific ECSC state aid legislation.

Compliance with Community rules on energy efficiency ( e.g. labelling and minimum
efficiency requirements) and the environment (e.g. fuel quality) are hampered by, for
example, the ab~ence of investment funds, although work on efficiency labelling has

sta1ied. Much remains to be done.

In this context it should be noted that the oil i•ndustry, and particularly refineries, should
adapt to EC norms and will have to face a saturated European market.

If Romania continues to cover its uranium needs through domestic production, this would
be a positive factor for the long term security of supply of an enlarged EU. The common
nuclear materials supply policy of security through diversification of sources applies, for
contracts concluded after accession. Spent fuel from Cernavoda nuclear power plant will
be stored for the first years of operation at the plant site. Longer-term solutions are not
yet defined.

80

Upon accession, Romania ·needs to comply with the provisions of the Euratom Treaty, in
particular those related to supply of nuclear material, the nuclear common market,
safeguards, health and safety_ and international agreements. Possible difficulties may
reside in the fact that it is not clear whether Romania has fully implemented some
international regimes in these areas (notably the Vienna Convention on civil liability for
nuclear damage, the Physical Protection Convention and the Nuclear Suppliers
Guidelines). Romania also h~s a full-scope safeguards agreement with the IAEA, so no
major difficulties in applying Community legislation in this area are expected. The
Western-designed nuclear plant does not present problems but specific attention should
be given to operational safety. The independence of the safety authority should be
supported.

**Conclusion**

Romania has to step up considerably its efforts in the energy sector in order to prepare for
integration.

the following matters need particularly close attention: the adjustment of monopolies,
including import and export monopolies; energy pricing; emergency preparedness
including the building-up of mandatory oil stocks; state interventions in the solid fuels
sector; developments of energy efficiency and fuel quality standards. ·

No major difficulties are foreseen for compliance with the Euratom Treaty but Romania
should implement some international nuclear-rules. Nuclear safety standards, especially
those related to plant operation, should be handled appropriately and longer-term

solutions fund for waste.

**Transport**

Community transport poiicy consist of policies and initiatives in three fundamental areas:

- improving quality by developing integrated and competitive transport systems based
on advanced technologies which also contribute to environmental and safety
objectives;

- improving the functioning of the single market in order to promote efficiency, choice
and user-friendly provision of transport services while safeguarding social standards;

- broadening the external dimension by improving transport links with third countries
and fostering the access of EU operators to other transport markets( The Common
Transport Policy Action Programme, 1995-2000)

The Europe Agreement provides approximation of the legislation with Community law
and for cooperation to restructure and modernise transport, the improvement of access to
the transport market, the facilitation of transit and the achievement of operating standards
comparable to those in the Community. The White Paper focuses on measures for the
accomplishment of internal market conditions · in the transport sector, including such
aspects as competition, legislative harmonisation and standards.

81

**Descriptive Summary**

Romania has no border with the Union, but the war in former Yugoslavia led to a
substantial rise in transit traffic, crossing Romania to avoid former Yugoslavia and mostly
using a road infrastructure which was not built for such heavy traffic Romania was faced
with the need to invest in rapid and significant improvements to its road network, most of
which are still under way, an~ to develop its limited border crossing infrastructure. Three
of the Trans-European Corridors. identified at the Pan-European Conference in Crete cross
Romanian territory.

After the political changes in 1990 and the opening-up of the country, Romania has gone
through a difficult period, with a major economic recession causing a sharp fall in traffic.
Transport demand has not yet recovered to its previous level, except for inland navigation
and air transport. The most substantial change in the modal split occurred in freight
transport, with a significant increase in the share of road. transport compared to other
modes; railways, which had an artificially enhanced role in the past, have in particular lost

market share.

Romania has to cope with many handicaps in transport: the previous Romanian policy of
autarchy and requiring full reimbursement of the foreign debts led to a lack of investment in
infrastructures and equipment for transport, especially in a situation where most public
transport equipment was imported. This problem is exacerbated by the fact that most of this
equipment came from the former Soviet Union, which means that Romania has to make
substantial provision simply for replacing non-standard and out-of-date transport equipment
at a time when the requisite financial resourc:es are not available. The development of
transport demand during the pre-accession period will therefore need to be followed
closely.

**Current and Prospective Assessment**

As regards completion of the internal market, Romania has made considerable efforts to
assimilate the _acquis._ In the international transport sector, especially the inland
waterway and combined transport sectors, Romania is already partly applying rules
similar to those of the Community Union's. In air transport, however, Romania must
continue its harmonisation efforts and move swiftly to adopt the planned measures, and
in particular the new Civil Aviation Code. The need to renew fleets could also pose
considerable financial difficulties. In the shipping sector, the main divergences from the
_acquis_ are in the area of safety, where Romania is still a long way from Community

standards.

The Romanian road haulage sector is not in full conformity with the current Community
legislation; Romanian legislation and implementation should be brought into line before
accession. These points would have to be followed during the pre-accession period, in the
field of road safety, weights and dimensions and user charges. Ensuring full compliance
with Community rules on weights and dimensions may not be achieved in the timescale of
accession, restricting the ability of the Romanian network to accept EU vehicles.

The rail and road passenger sectors pose fewer problems in terms of the adoption of the
_acquis_ than the three mentioned above, though a number of points could usefully be
clarified and certain efforts made in the rail sector. In contrast, the functioning of the

82

market in these two sectors calls for a more guarded response, structural change (privatesty le management, opening up to competition etc.) having only just begun. Both sectors
are likely to see major upheavals in the years ahead.

The development of an integrate~ and competitive transport system is an objective of
which the Romanian authorities are aware; achieving an acceptable level of safety and
optimal use of the transport ~ystem are probably going to be the two main difficulties.
Romania is making encouraging progress on safety, but is still far from Community
standards, especially in air, sea and road transport. In terms of the overall coherence of
the transport system, Romania is likely to face a steady rise in the share of road transport
and will have to focus its efforts on the use of railways and inland waterways, given that
its road network is comparatively weaker than the rail and inland waterway networks.

In order to improve links with the Member States and its neighbours, Romania is
planning to invest about ECU 1.6 million of its own budget over the period 1995-99 in
transport infrastructure used by international traffic, primarily trans-European corridors.
This sum amounts to about 1.3% of GNP; it may seem a respectable effort, but it clearly
will not be enough. Any reduction in this amount as a result of budgetary constraints
would further exacerbate the situation and handicap the country's European integration

process.

**Conclusion**

Romania has made progress in the adoption of the _acqws_ m the transport sector.
However, its entry into the internal transport market should remain subject to rapid
alignment on the _acquis._ Shipping and road haulage are the sectors most likely to pose
problems, especially with regard to safety, but efforts will also have to be made in the rail

sector.

It will also be necessary to make sure that the resources needed to lay the foundations for
the future trans-European transport network, extended to include the member countries,
are actually made available and that the road network's present shortcomings are
remedied in short order. Romania's administrative structures, and in particular bodies
supervising areas such as safety, must also be rapidly and substantially reinforced.

**Small and Medium Enterprises**

EU enterprise policy aims at encouraging a favourable environment for the development
of SMEs throughout the EU, at improving their competitiveness and encouraging their
Europeanisation and internationalisation. It is characterised by a high degree of
subsidiarity. The complementary role of the Community is defined and implemented
through a Multiannual Programme for SMEs in the EU. This programme provides the
legal and budgetary basis for the Community's specific SME policy actions. The _acquis_
has so far been limited to recommendations on specific areas, although legislation m
other sectors also affects SMEs ( e.g. competition, environment, company law).

The Europe Agreement provides for cooperation to develop and strengthen SMEs, in
particular in the private sector, _inter alia_ through provision of information and assistance

83

on legal, administrative and tax conditions. The White Paper contains no specific

measures.

**Descriptive Summary**

It is estimated that in 1995 manufacturing industry contributed 34.6% to GDP (25.2% for
manufacturing) and the service sector accounted for 37.9% of GDP. Total private sector
contribution to GDP was around 45%, while in terms of value added it was about 29%.

Around 98% of all enterprises can be classified.as SMEs (i.e. using the Government of
Romania's definition of 500 employees or less). The majority are engaged either in retail
or wholesale trade (70%) or industry (11 %). ¥

Although the Government recognises the important role that SMEs play in the economy
there is a lack of coherence in the policy and the approach to supporting SMEs. The
Government is also constrained by the lack of fiscal resources to implement activities in
support of SMEs. The main structures which currently exist for SME support have been
established and supported by donors.

A number of limited ad-hoc measures have been taken by the government in support of
SMEs. Legislation has concentrated on establishing support structures, establishing
financial instruments and simplifying the tax regime. As of l January 1996 the National
Privatisation Agency was established as the main agency responsible for developing
SME policy and managing specific measures in support of SMEs. There are also an
increasing number of professional and employers associations. Other bodies involved in
SME development include the Chamber of Commerce and Industry, donor supported
SME development centres, cooperative organisations et~.

**Current and Prospective Assessment**

SMEs are already making a significant contribution to economic recovery in Romania.
The potential exists for SMEs to play an increasingly important role in generating growth
and employment. The SME support structures that are in place provide the basic
information and business services. The political commitment towards the stimulation
and the development of the SME sector has, however, been slightly hesitant, and it is
important to achieve a higher degree of political commitment and coherence in the field
over the coming years. It would also be important to strengthen the existing support
structures, to undertake efforts to simplify the legal and administrative environment in
order to make it more SME-friendly. Efforts to increase SMEs' access to financing are
equally essential.

The on-going efforts to strengthen the SMEs during the pre-accession period will

therefore need to be continued.

**Conclusion**

Although there remains a clear need for greater coherence in SME policy, there are no
major problems -foreseen for Romania's participation in this sector.

84

**3.5** **Economic andSocial Cohesion**

**Employment and Social Affairs**

Community social policy has been developed through a variety of instruments such as
legal provisions, the European Social Fund and actions focused on specific issues,
including public health, pov~rty and the disabled. The legal _acquis_ covers health and
safety at work, labour law and working conditions, equal opportunities for men and
women, social security coordination for migrant workers and tobacco products. Social
legislation in the Union has been characterised by laying down minimum standards. In
addition, the social dialogue at European level is enshrined in the Treaty (Article 118B),
and the Protocol on social policy refers to consultation of the social partners and
measures to facilitate the social dialogue.

The Europe Agreement provides for approximation of _legislation with Community law
and cooperation on improving standards of health and safety at work, labour market
policies and the modernisation of the social security system. It also provides for
Community workers legally employed in Romania to be treated without discrimination
on grounds of nationality as regards their working conditions. The White Paper provides
for measures for approximation in all the areas of the _acquis._

**Descriptive Summary**

The social dialogue in Romania is developing, though past habits of intervention by
government representatives, disregarding the autonomy of the social partners, are hard to
eradicate. The social partners themselves, particularly the private sector employers, need
to strengthen their structures and insure their familiarity with collective bargllining, in
order to play their role fu1ly. Further privatisation may help this process. On the
employee side, the four main organisations are members of the European Trade Union
Confederation (ETUC). Employers are represented at international level through an
umbrella organisation which covers five large employers' structures.

In 1995, the unemployment rate was 8%, but substantial hidden unemployment has to be
taken into account and Romania is facing a serious problem of long-term unemployment.
In some regions with heavy job losses in traditional industries this group makes up 50%
of the unemployed.

Romania has started to develop modern labour market policies, regulations and
institutions. This process will have to be pursued for a substantial period.

The Romanian social security system is faced with serious financing problems, partially
due to difficulties in collecting contributions. Despite a growing demand for social
services, the share of GDP spent on social security is relatively low at 9% ( 1994 figures).
Although the social security system covers the majority of social risks, the actual level of
benefits provides inadequate protection against poverty. The current system tolerates
significant inequalities between categories of the population. The general administration
and organisation of the social security system need to be improved. Continued efforts are
required to ensure that measures of social protection are developed.

85

The situation of the health system is considerably lower than in EU. Communicable
diseases are a particular problem. The economic and social conditions have resulted in
the disintegration of the health system which cannot cope with the problems.

**Current and Prospective Assessment**

Romania has made improvements on the approximation to the _acquis_ with respect to
health and safety at work. · Several EC directives have already been transposed. In
September 1996 Romania adopted a new occupational health and safety act laying down
the basic principles for the protection of health and safety at work, which was modelled
on the EU framework directive. There is little legislation concerning labour inspection
standards. But it is expected that a new law on labour inspection in line with Ee and ILO
standards will be drawn up before the end 1997.

In the area of labour law, it appears that the Romanian labour legislation is not yet in line
with EU-provisions in areas such as the safeguarding of employees rights in case of a
transfer of their undertaking, in the event of collective redundancies and on the protection
of employees in the event of an insolvency of their employer. Adaptations of the existing
labour laws are necessary in the areas of the employers' obligation to inform employees
about their working conditions as well as in the area of working time. The information
and consultation of workers on company level as requested by a number of EC Directives
needs to be strengthened.

On equal opportunity, the basic provisions of EC non discrimination law between women
and men are covered by Romanian legislation. The laws in favour of women are not
always applied in practice, and the material situation of women appears to have
deteriorated. Adaptation of the legislation is needed· with regard to the protection of
pregnant women and with regard to parental leave.

The introduction of the right to free movement for **workers** **will** require changes in
national law, particularly on the access to employment and non-discriminatory treatment
based on nationality.

Concerning the right to the free movement of workers, there would appear to be no
obstacles to prevent Romania from being able to implement the provisions of the acquis
in this area. The introduction of the right to free movement will however require changes
in the national law, particularly as regards access to employment and a treatment free
from discrimination on grounds of nationality.

In the field of social security for migrant workers, accession does not, in principle, pose
major problems although certain technical adaptations will be necessary. More important
is the administrative capacity to apply the detailed co-ordination rules in cooperation with
other countries. It is not clear whether Romania has the necessary administrative
structures to carry out the tasks of co-ordination.

The two directives on warning labelling of cigarettes packages and the maximum tar
content have not yet been transposed into Romanian law.

86

**Conclusion**

Romania will need to make very considerable progress in the coming years in all areas of
social policy and, particularly on health and safety at work, public health and labour
market and employment policies. Before Romania will be able to take on the obligations
of EU membership in the field of social policy, much remains to be done with regard to
both the approximation of laws, and the strengthening of the public administration as
well as effective enforcemenf structures.

Regional Policy and Cohesion

In accordance with Title XIV of the Treaty, the Community supports the strengthening of
cohesion, mainly through the Structural Funds. Romania will have to implement these
instruments effectively whilst respecting the principles, objectives and procedures which
will be in place at the time of its accession.

- The Europe Agreement provides for cooperation on regional development and spatial
planning, notably through the exchange of information between local, regional and
national authorities and the exchange of civil servants and experts. The White Paper
contains no specific provisions .

. **Descriptive Summary**

In 1995, Romania's GDP per capita stood at some 23% of the EU average. In terms of
regional disparities, data indicates a range from 116% of the national average in
Bucharest to 54 % in the southern regions around the capital. A similar regional analysis
for employment indicates that the regional disparities are rather less pronounced although
differentiation is expected to increase as the process of economic restructuring deepens.

The Romanian Constitution (l 991) and the law on local public administration, as revised
in 1996, devolved many tasks to the 41 elected county _(judet)_ councils (plus the
municipality of Bucharest), e.g. the preparation of spatial development concept,
economic development planning and investment programmes. At a lower level, the law
on local public administration provides for self-governing municipal councils. Romania
has 2767 self-governing local authorities (80 urban municipalities and 2686 communes
representing 13 000 villages).

Romania does not display a specific regional development policy. However, its spatial
planning, under the authority of the Ministry of Public Works and Physical Planning,
comprises a comprehensive legal, administrative and operational framework.

The Developr:nent Plan includes regional development as one of its main objectives.
Indeed, its priority to reduce regional disparities embraces both the socio-economic
development of backward regional and spatial planning programmes. Moreover, it
identifies public investment programmes (economic infrastructure) and special
programmes organised at a national level for specific areas e.g. Western Carpathian
Highlands, as being the main instrument to achieve regional cohesion.

87

At the regional level development strategies were adopted at county level in 1995. They
include both regional economic development and spatial planning and are constituted of
general orientations, plans and programmes. A new law on spatial and urban planning
awaits the approval of Parliament.

Romania's financial instruments at the disposal of regional development initiatives are
limited. However, the share of development related expenditures which could constitute
potential counterpart funds to ~C structural policy cannot yet be determined. Therefore,
Romania's co-financing capacity cannot presently be evaluated with sufficient reliability

88

**Current and Prospective Assessment**

Though Romania's regional development policy remains basic and incomplete,
considerable progress has been made in establishing a spatial planning ~framework. This
experience could prove valuable for Romania when establishing a regional policy
specifically in the context of synergy in the areas of law and institution building.

At present there are elements of existing policy which are consistent with the principles
and objectives governing the operation of the structural funds. However, there is no
comprehensive framework for regional development incorporating policy, legislation and
instruments. The implementation of the principles and objectives· is rendered difficult
because of weak public administration at both a national and local level.

**Conclusion**

Romania manifests an increasing political awareness of the need for a regional policy.
Yet, Romania's administrative capacity to manage EC funds and conduct an integrated
regional development policy clearly needs to be improved. Significant work is still
required in defining a legal basis, identifying and clarifying the respective roles and
responsibilities of existing authorities and strengthening an adequate administrative
structure before Romania is able to apply the Community rules and channel the funds
from the EC structural policies.

**3.6 Quality** **of** **Life and Environment**

**Environment**

The Community's environmental policy, derived from the Treaty, aims towards
sustainability based on the integration of" environmental protection into EU sectoral
policies, preventive action, the polluter pays principle, fighting environmental damage at
the source, and shared responsibility. The _acquis_ comprises approximately 200 legal acts
covering a wide range of matters, including water and air pollution, management of waste
and chemicals, biotechnology, radiation protection, and nature protection. Member
States are required to ensure that an environmental impact assessment is carried out
before development consent is granted for certain public and private projects.

The Europe Agreement stipulates that Romanian development policies shall be guided by
the principle of sustainable development and should fully incorporate environmental
considerations. It also identifies environment as a priority for bilateral cooperation, as
well as an area for approximation legislation to that of the Community.

The White Paper covers only a small part of the environmental _acquis,_ namely productrelated legislation, which is directly related to the free circulation of goods.

**Descriptive Summary**

Romania faces very severe environmental problems, with particular challenges in all the
key areas: water quality, waste management, and air and soil pollution. 

89

The state of water resources raises many concerns: the quality of drinking water is very
poor, connection rates to sewage treatment plants are low as is the standard of treatment,
ground water pollution is extensive. Much of the water pollution in Romania is caused
by nitrates resulting from intensive agriculture. The serious pollution problems of the
Danube originate to a significant extent in Rormmia. Waste is also an area of major
concern: waste management legislation is almost non-existent, the concept of hazardous
waste has not been defined, and incineration is only intermittently practised. Air
pollution is a severe problem, the main sources of emissions being power stations and
other industrial plants (especially for heavy metals), motor vehicles and domestic
heating. Acid rain has also become a severe problem. The decrease of emissions of
pollutants since 1989 is mainly due to the decline in economic activity, but also to efforts
to remedy 'hot spots'. Nevertheless, Romania still has valuable areas of unspoiled
nature, such as the Carpathian Mountains and the Danube delta (the latter being an area
of world value for biodiversity).

Up to now, environmental issues in Romania have not been effectively addressed.
Investment is very low, compared to EC levels. and the situation is worsened by the lack
of an environmental financing instrument.

An environmental framework law has been introduced (1995) and has given priority to
waste management. However, most environmental legislation is quite old. In addition,
implementation is poor because of - among other reasons - lack of incentives, old and
wasteful production technologies; lack of financing and of human resources and low level
of public participation. The new privatisation law requires investors to provide either a
financial guarantee or a commitment to meet environmental requirements; it is also
expected that a National Environmental Fund, financed by pollution taxes and the State
budget will be in place by the end of 1997.

**Current and Prospective Assessment**

On the whole, very little has been done to date in the field of approximation of
environmental legislation to that of the Community. The years 1996/97 have been set as
the period for the elaboration of certain environmental instruments, in particular related
to legislation included in the White Paper. However, there are no specific plans for the
transposition and enforcement of the remaining part of the environmental _acquis._ The
situation is particularly serious in solid and hazardous waste management, where
legislation is almost non-existent, even though a draft law is under consideration. Much
remains to be done also in the area of radiation protection and radioactive waste
management, areas where there is a lack of safety culture. Particular attention should be
given to the quick transposition of framework directives dealing with air, waste, water
and the Integrated Pollution Prevention and Control (IPPC) directive, as well as the
establishment of financing strategies for legislation in the water, air and waste sectors
requiring major investments.

The situation is also complicated by very low environmental awareness, although
participation of NGOs in the process of the development of environmental policy is
increasing. There is, therefore, a long way to go in formal compliance with EU
requirements in Romania. Actual implementation and enforcement of the environmental
_acquis_ is .even further away, and would necessitate massive investment by both
government and enterprises, as well as the development of adequate implementation and

90

enforcement structures. The country's environmental accession strategy should include
implementation timetables for meeting the EU environmental _acquis,_ starting amongst
others with implementation of the framework and IPPC directives mentioned above.

**Conclusion**

In order to embark on a path of adaptation to the EU _acquis,_ Romania would have to
place higher priority on environmental issues, implement focused environmental
accession strategies and work programmes, significantly increase related financial and
other resources and develop its administrative capacity. If such a strategy is followed, full
transposition of the _acquis_ could be achieved in the medium to long term. However,
effective compliance with a number of pieces of legislation requiring a sustained high
level of investment and considerable administrative effort ( e.g. urban waste water
treatment, drinking water, aspects of waste management and air pollution legislation)
could be achieved only in the very long term.

Consumer Protection

The Community _acquis_ includes protection of consumers' economic interests (including
controls on misleading advertising, indication of prices, consumer credit, unfair· contract
terms, distance selling, package travel, sales away from business p_.remises and timeshare
property) as well as general safety of goods and the specific sectors of cosmetics, textile
names and toys.

The Europe Agreement provides for approximation of legislation with Community law
and cooperation with a view to achieving full compatibility between the systems of
consumer protection in Romania and the Community. Stage I measures of the White
Paper focus on improving product safety, including cosmetics, textiles and toys, and on
the protection of the economic interests of the consumer, notably measures on misleading
advertising, consumer credit, unfair contract terms and indication of prices. Stage II
measures relate to package travel, sales away from business premises and time-share
property. New EU legislation which has been adopted_ recently (distance selling) or will
be adopted soon ( comparative advertising, price indication) will also need to be taken

into account.

**Descriptive Summary**

Since 1992, Romania has developed a comprehensive institutional framework for dealing
with consumer policy. Inspired by UN Guidelines on the subject, the Consumer
Protection Act sets out the main rules and establishes the Office for Consumer Protection

(OPC). This is a state body, which is not independent, with fourteen regional branches,
responsible for coordinating and implementing policies on consumer policy, In addition,
the OPC organises the Consumer Consultative Councils which are made up of
representatives from state bodies, consumer groups and industry, both at nation,..al, county

and local level.

As a result of the OPC' s efforts to encourage grassroots consumer groups, the consumer
movement in Romania involves a large number of NGOs, incl [11] ding the Association for
the Protection of Consumers. There are occasional tensions between the consumer

91

groups and the OPC which identifies the groups entitled to participate in the consultation
process. The majority of the more than nearly hundred consumer associations are small
local groups, often linked to one of the sixteen regional federations. There is one national
federation.

**Current and Prospective Asses~ment**

The existence of the Consumer Protection Act means that most areas of consumer

protection are partially regulated. But s.ince the Act provides only the framework, there
is still a need for specific legislation to cover EC requirements.

On the protection _of_ economic interests of consumers, additional legislation is required in
certain areas, such as the indication of prices, sales away from business premises,
distance selling, timeshare property, unfair contract.terms and consumer credit. In some
cases, the Romanian hannonisation programme already provides for drafts while for
other sectors such as distance selling, there appears to be no planned initiatives.
Concerning package travel, draft legislation is apparently under preparation, and draft
laws which would bring Romanian rules on misleading advertising into line with EC
standards are under discussion.

On general product safety, Romanian legislation appears to be quite close to the principal
EC directive. The Romanian harmonisation programme provides for the elaboration of
several drafts covering the main sectors of EC consumer legislation.

The development of a strong and independent consumer movement, sustained by public
authorities, will need to accompany the introduction of the _acquis._

**Conclusion**

Romania has taken the approximation process quite far. Although the Government still
needs to put through various amendments or new draft laws, the Romanians are close to
meeting EC standards on consumer protection. But there are likely to be problems about
the effective application of the _acquis,_ particularly since the lack of resources makes its
difficult for Romania to enforce existing legislation.

**3.7** **Justice and HomeAffairs**

**The Present Provisions**

The Justice and Home Affairs (JHA) _acquis_ principally derives from the framework for
cooperation set out in Title VI (Article K) of the Treaty on European Union (TEU), "the
third pillar", although certain "first pillar" (EC Treaty) provisions and legislative
measures are also closely linked.

The EU JHA framework primarily covers: asylum; control of external borders and
immigration; customs cooperation and police cooperation against serious crime,
including drug trafficking; and judicial cooperation on criminal and civil matters. The
TEU stipulates key principles upon which such cooperation is based, notably the
European Convention on Human Rights and the 1951 Geneva Convention on the Status
of Refugees. It is also based implicitly on a range of international conventions

92

concerni_ng its fields of interest, notably those of the Council of Europe, the United
Nations and the Hague Conference. The legislative content of third pillar _acquis_ is
different from the first pillar; it consists of conventions, joint actions, joint positions and
resolutions, (including the agreed elements of draft instruments which are in negotiation).
A number of EU conventions (including the 1990 Dublin Convention, and conventions
relating to extradition, fraud and EUROPOL) have been agreed by the Council and are
now in the process of ratification by national Parliaments; several other conventions,
including one on external frontiers are in various stages of negotiation in the Council.
The JHA _acquis_ involves a high degree of practical cooperation, as well as legislation
and its effective implementation.

_The_ _New_ _Treaty_

For many of the above matters, the entry into force of the Treaty resulting from the
Amsterdam Intergovernmental Conference will mark the end of the current cooperation
framework.

Reiterating the objective of developing the Union into an "area of freedom, security and
justice", the new Treaty brings these matters, including the free movement of persor,s,

asylum and immigration, into the Community's sphere of competence.

On the free movement of persons in particular, the new Tr~aty provides for the
incorporation of the Schengen _acquis_ into the .. framework of the European Union and
binds any candidate for EU membership to accept that _acquis_ in full.

With regard to matters remaining within the cooperation framework, i.e. policing and
criminal justice, the new Treaty provides for the reinforcement of the cooperation system.

_The_ _Europe_ _Agreement_ _and_ _the_ _White_ _Paper_

The Europe Agreement includes provision for cooperation in the fight against drug abuse
and money laundering.

The White Paper does not deal directly with third pillar subjects, but reference is made to
first pillar matters such as money laundering and freedom of movement of persons which
are closely related to Justice and Home Affairs considerations. Reference is also made to
the Brussels and Rome conventions.

93

**Descriptive Summary**

_General_ _Preconditions_ _for_ _JHA_ _Cooveration_

Romania joined the Council of Europe in 1993 and has ratified the most important
instruments concerning human rights. The Constitution provides for an independent
judiciary according to the rule_ of law.

Institutional reform has still to take root in Romania. A new administrative culture has

yet to develop in most JHA institutions· in Romania. Its size and position poses a
particular challenge_ to Romania. Romanian data protection legislation is rudimentary and
Romania has not ratified the Data Protection Convention. (See also separate section on
Single Market).

_Asylum_

Romania ratified the Geneva Convention and Protocol in 1991 and put in place domestic
implementing legislation in 1996, which meets many but not necessarily all of the
provisions of the Conventions. The law contains provision for temporary protection. The
key administrative procedures for dealing with refugees and asylum seekers are in place
and a special office for dealing with this has been created. However, it is underresourced and the staff need more experience in handling asylum issues and applications.
There have been 400-500 applications for asylum for the last two years, mainly from

Asian countries.

_Immigration/Border Control_

Romania estimates there are some 18 000-20 000 illegal immigrants from Asia and
Africa on its soil. Organised crime is involved in human trafficking. As a consequence
of unsatisfactory visa, admission and border control policy, in the early 1990s the EU
placed Romania on the list of third countries for which visas are required. Romania has
now adopted the EU third country list, having suspended its visa-free agreements with 17
countries. The authorities have taken steps to reform visa-issuing procedures, to verify
invitation letters, and tighten up passport-issuing procedures. A new law on foreigners is
in preparation, aiming to tackle illegal immigration, clandestine labour, deportation of
illegal migrants and to tighten up the residence regime. Readmission agreements are in ·
place with 15 countries. Romania is also working to improve its border management
systems; information networks are limited and the frontier guard remains largely

unreformed.

_Police Cooveration_

Organised crime is substantial, and particularly prevalent in the economic and financial
spheres. It also includes trafficking in women, arms and radioactive material, drug
trafficking, counterfeiting, stolen cars, racketeering and human trafficking. There are
significant links between Romanian criminals and foreign groups. Romania is working
to bring its laws tackling organised crime into line with EU standards, for example, by
revising the criminal and civil procedure codes and seeking to tackle corruption within
the public services. Considerable work needs to be done to professionalise the police.
The Police Brigade for Combating Organised Crime takes the lead in law enforcement

94

and has a special unit dealing with financial crime. The Ministry of Finance (Customs
and Finance Guard) is also developing e»pertise. Romania has not signed the
international money laundering conventions. A draft law on the matter is being
considered. Understanding of the nature and scale of money laJndering and the
mech&nisms needed to tackle it effectively is limited. (See also separate section on
Single Market). Romania experiences no internal terrorist threat but is concerned about
the use of its soil by internatiof,al t:!rrorists. It has signed the key terrorist conventions
and has adopted appropriate fegal and administrative measures to tackle terrorism.·

Romania is an important distribution centre for drugs and a transit country in the
Northern Balkan drugs transit route. Drugs, mainly from Asia but also Africa, enter
Romania largely through the Danube ports and tourist buses. Local use is limited in scale
but consumption, including of synthetic drugs, is growing. Romania's drugs prevention
and supply reduction policies are still at an early stage of development. The Government
is planning to set up an Inter Ministerial committee for the fight against drugs. It will
oversee a coordinated national strategy to tackle drug addiction and drug trafficking.
Romania has ratified the main drugs conventions ( except money laundering). Plans are
in hand to change key elements of the law relating to drugs in order to bring it into line
with EU requirements (for example on drug precursors and money laundering).
Specialist drugs units are in place in the police and customs. Romania has ratified the
1961 and 1971 UN conventions on drugs.

_Judicial_ _Cooveration_

Romania has signed, but not ratified, the key international criminal conventions. It has
limited experience of judicial cooperation with EU countries and EU law. The criminal
code allows Judicial cooperation, but Romanian citizens,cannot be extradited ( as in some
EU member states). Judicial cooperation is permitted under the civil code. Romania
intends to accede to the Lugano Convention and in 1992 adopted a law broadly in line
with this convention. Romania has also adopted the 1980 Hague Convention on child
abduction. The judiciary is heavily overloaded and requires improvements to its
functioning to ensure the efficient handling of cases, in accordance with the Constitution.

**Current and Prospective Assessment**

Romania has made some progress in meeting the EU _acquis_ in the area of asylum, but
progress in other areas is limited. Accountability of the JHA authorities is in place
formally, but the level of public scrutiny is, in practice, limited and prosecution of abuses
rare. Romania's JHA institutions and the judiciary are at an early stage in the reform
process. There is only very limited experience at official level of JHA cooperation with

EU countries.

Long-standing problems exist in the field of immigratioi:i, visa and border control policy
which are only now being addressed. Organised crime is a particular problem and
implementing mechanisms and instruments to address it are still at an early stage. Drug
trafficking is a serious problem which is not effectively under the control of the

authorities.

95

**Conclusion**

Romania faces particular challenges in the JHA area. Until now it has made only limited
progress towards meeting the necessary conditions of the JHA _acquis._ It will be difficult
to meet the _acquis_ (present and future) requirements in the medium term. The necessary
progress in this field is dependent on a more general institutional reform which derives
from the political process.

**3.8** **External Policies**

Trade and International Economic Relations

The _acquis_ in this field is made up principally of the Community's multilateral and
bilateral commercial policy commitments, and its autonomous commercial defence
instruments.

The Europe Agreement includes provisions in several areas requiring parties to act in
accordance with WTO/GA TT principles, or other relevant international obligations.

The White Paper includes no provisions in this field.

**Descriptive Summary**

Romania is a member of the World Trade Organisation (WTO) and the GA TT Civil
Aircraft Agreement. Upon accession Romania would have to comply with the obligations
of the multilateral WTO agreements to which the Community is a party.

At present Romania does not maintain quantitative restrictions on any textile or clothing
products. On accession the Community textiles policy would be extended to Romania;
any Community restrictions still maintained at the date of accession would require
adjustment by an appropriate amount to take account of Romanian accession.

Romania maintains balance-of-payments restrictions which will have to be phased out
prior to accession.

**Current and Prospective Assessment**

On accession Romania would have to apply the Community's Common Customs Tariff,
and the external trade provisions of the Common Agricultural Policy. The post- Uruguay
Round weighted average level of most favoured nation duties for industrial products will
be 33.9% for Romania and 3.6% for the Community, although in practice Romania's
average applied duty is 20%. The progressive implementation of free trade between
Romania and the Community by the time of accession will, however, reduce the impact
on the domestic industry of applying the lower Community Common Customs Tariff.

In its relations with international organisations Romania should ensure that its actions
and commitments respect the Europe Agreement and ensure a harmonious adoption of its
future obligations as a member of the Community.

96

On accession Romania· would become party to the Community's various preferential
agreements. Preferential agreements between Romania and third countries would, m
general, have to be terminated on accession.

Romania's export restrictions on ferrous scrap are due to be eliminated by the end of

1997.

In the area of trade in services and establishment, Romania has sought to ensure that its
multilateral commitments under the GA TS are as consistent as possible with those of the.
Community. It will be important that any significant inconsistencies between Romanian
and Community commitme~ts are resolved.

On accession Romania would have to repeal national legislation in the field of
commercial defence instruments, and EC legislation would become applicable there.

Experience from previous accessions has shown that the automatic extension of existing
anti-dumping measures to new Member States prompts third countries to raise problems

- in terms· of the compatibility of this approach with relevant WTO provisions. It has also
shown that accession creates a potential for circumventing measures adopted by the
Community under the commercial defence instruments. This happens when, prior to
accession, substantial quantities of the products subject to measures are exported to the
territory of the future member state and, on accession, are autorpatically released for free
circulation in the enlarged customs territory. These two problems would have to be
addressed during Romania's pre-accession p~ase.

Romania is a member of three out of four existing regimes for the non-proliferation of
weapons of mass destruction, and is a candidate for admission to the fourth. Romania
has not yet adopted the Community control list of dual-use items. Arms export is also
controlled. It is difficult to assess the extent to which export controls are effectively
enforced, and whether certain reservations are justified, but Romania appears to have no
major problems applying EC legislation in this field.

**Conclusion**

Romania should to be able to meet Community requirements in this field _in the medium
term, provided that they reinforce their efforts to eliminate existing trade barriers in order
to align themselves more closely with the Community trade regime.

**Development**

The _acquis_ in the development sector is made up principally of the Lome Convention,
which runs until early 2000.  - ·

Neither the Europe Agreement or the White Paper include provisions in this field.

97

**Descriptive Summary**

Romania has a number of preferential trade agreements with non-ACP less developed
countries, but no such schemes with ACP countries. No GSP schemes apply, and no duty
free access is granted.

Romania has no budget for development aid, although it has contributed to some
developing programmes of the UN agencies.

**Current and Prospective Assessment**

On accession, Romania should apply its preferential trade regime to the ACP States and
participate, together with the other member states, in financing the European
Development Fund (EDF), which provides financial aid under the Lome Convention.

Romania could confront some difficulties in applying the present Lome trade regime
integrally from the date of accession.

Normally, new member states acceife to the Lome Convention by means of a Protocol on
the date of their accession to the EU.

**Conclusion**

Romania will need to make further progress if it is to meet EU requirements in this field
within the next few years.

**Customs**

The _acquis_ in this sector is the Community Customs Code and its implementing
provisions; the EC's Combined Nomenclature; the Common Customs Tariff including
trade preferences, tariff quotas and tariff suspensions; and other customs-related
legislation outside the scope of the customs code.

The Europe Agreem~r.t covers the establishment of a free-trade area with the Community
and the prcgrt;ssive removal of customs duties on a wide range of products, according to
clear timetables starting from the date of entry into force of the agreement.

98

The White Paper includes in Stage I, measures to consolidate and streamline the free
trade established under the Europe Agreement, including legislation compatible with the
Customs Code,- Combined Nomenclature, etc. Stage II concerns the adoption of the full
Community legislation, with a view to joining the customs union upon accession.

**Descriptive Summary**

On accession the Romanian· customs authorities would be required to assume all the
responsibilities necessary for the protection and control of their part of the EU' s external
border. Besides the provisions on indirect taxation, they would be responsible for the
implementation and enforcement at the external border of the Community's common
commercial policy, the common agricultural policy, the common fisheries policy etc.

Romania's capacity fully to apply the _acquis_ presupposes the possibility to adopt and
implement Community legislation; and the existence of an adequate level of
infrastructure and equipment, in particular in terms of computerisation and investigation
means and the establishment of an efficient customs organisation with a sufficient
number of qualified and motivated staff showing a high degree of integrity.

With the support of the technical assistance provided by customs programmes, Romania
has drafted a customs code harmonised with the Community's customs code, but it has
not yet passed to Parliament. In addition, Romania has drafted legislation on counterfeit
and pirated goods based on EU legislation. Romania's customs legislation still differs in

some areas.

Romania aligned its national goods nomenclatures on the Community's Combined
Nomenclature in 1996. The Romanian administration does not yet have an integrated
tariff. This will make the comparison of the Romanian tariff rates with the Common
Customs Tariff rates difficult. Romania is not yet familiar with the Community's Binding
Tariff Information system.

Romania adopted on 31 January 1997 the new system of cumulation of origin between
European countries.

Romania has applied to become a contracting party to the EC/EFT A Conventions on
Common Transit and on the Single Administrative Document. A task force is providing
assistance in this field, but development is hindered by difficulties in the area of
guarantees. Accession to the Transit Convention will require a period of considerable
further preparation.

**Current and Prospective Assessment**

Romania would need to adapt its national procedures to the Community's legislation
regarding suspensive arrangements and customs procedures with economic impact. At
the moment of accession, some transitional arrangements would be needed, notably for
operations beginning before the date of accession but which are concluded after that date.

In its trading relations with the European Community, Romania should fully abolish the
remaining charges having equivalent effect to customs duties such as the customs

99

modernisation charge, which is still applied; Romania has committed to phasing this
charge out by 1 January 1998.

It will be important that the Romanian customs authorities can participate appropriately
in the various computerised systems necessary for the management, in the customs
union/internal market, of the customs and indirect tax provisions~ as well as the
computerised systems for mutual administrative assistance in customs, agricultural and
indirect tax matters. 

Romania would need on accession to dismantl~ customs controls at the border with EU

member states and with other ·acceding countries. The resources needed for the
reinforcement of the horde:- posts along its ... frontiers with non-EU states should be taken
into account in its strategic planning.

**Conclusion**

The Romanian customs administration is in the process of reorganisation. It will be
necessary to align the organisation to the duties that have to be carried out by a modem
customs organisation. Low salaries make it difficult to recruit staff.

It seems unlikely that Romania will be ready to fulfil the responsibilities of an EC
customs administration within the next few years.

Common Foreign and Security Policy

Since 1989, Romania has reoriented its foreign and security policy towards European and
Euro-Atlantic integration. Romania has been an active participant in the arrangements
provided for under the Union's Common.Foreign and Security Policy and when invited
has supported EU actions within that framework. Romania is a member of the UN,
OSCE, Council of Europe and many other international organisations. It is an associate
partner of WEU, participates in the NACC, the PfP and has made clear its desire to
become a member of the WEU and NA TO as soon as possible. It has participated in
IFOR/SFOR. Romania supports and participates in a number of regional organisations
including the Black Sea Economic Cooperation, the trilateral arrangements with Bulgaria
and Greece, and the CEI. It also became a member of CEFTA on I July 1997.

There are no territorial disputes between Romania and any member State of the Union.
Neither does Romania have any territorial disputes with neighbouring associated
countries. Romania and Hungary have agreed a treaty on the inviolability of their
respective borders and on pursuing international standards for the treatment of minorities.
Relations in the past have been troubled by differences with regard to the treatment of the
Hungarian minority in Romania but have improved significantly.

Relations with the Federal Republic of Yugoslavia stagnated during the period of armed
conflict in the former Yugoslavia, when Romania adhered to the sanctions regime
imposed by -the UN Security Council, but a Treaty on Friendship and Good
Neighbourliness was signed in 1996.

100

In May 1997, Romania and Ukraine initialled a treaty of good-neighbourly relations
which resolved a number of bilateral issues, and exchanged letters setting the terms for
the resolution of issues not included in the treaty. These include the border regime
between the two countries, the transit regime in the Danube delta, the delimitation of the
continental shelf and of the exclusive economic zone around Snake Island.

Relations between Romania ~nd Moldova are normal but the finalisation of a treaty may
still be complicated by certain cultural issues.

Romania has a sizeable diplomatic service which would permit it as a member of the
Union to play a full and effective role. It maintains 96 representations abroad and
employs 765 diplomatic staff.

Romania supports non-proliferation of nuclear, biological and chemical weapons and is a
signatory to all relevant international arms control agreen:ients. It exercises strict control
concerning the dual use of technology being a member or candidate member of all the
major existing export control regimes. The Romanian armed forces, which are under
democratic control, are being reorganised to meet NA TO requirements. The defence
industrial base has suffered from a number of major problems and is also in the process
of re-organisation.

In the memorandum accompanying its application for membership of the Union,
Romania confirmed that it was ready and able to participate fully and actively in the
Common Foreign and Security Policy.

The assessment of Rom~nian foreign and security policy to date leads to the expectation
that as a member it could effectively fulfil its obligations in this field.

**3.9** **Financial Questions**

**Financial Control**

The implementation of Community policies, especially for agriculture and the Structural
Funds, requires efficient management and control systems for public expenditure, with
provisions to fight fraud. Approximation of legislation is moreover needed to allow the
system of "own resources" to be introduced, with satisfactory provision for accounting.

The Europe Agreement contains no specific provisions on financial control. However, it
provides for cooperation in audit. The White Paper includes no measures in this field.

**Descriptive Summary**

The Romanian Court of Auditors set up in 1992 carries out mainly external controls.
Audits concern organisation, administration and management of state resources and of
public property. The Court reports to Parliament for every budgetary year.

Financial Control (FC) with 980 staff and State Finance Guard (SFG) with 1497 staff, set
up in 1991 within the Ministry of Finance, carry out internal controls. All economic
entities (either public or private) are subject to such controls. FC effects both a
preventive and _a posteriori_ financial control which might also concern sound financial

101

management. It is foreseen that the same system of financial control will be applied to
future Community funds as for national funds.

The customs administration is responsible for the establishment and collection of import
duties and taxes. The administration consists of a directorate general, at the level of the
Ministry of Finance, and 10 directorates including a financial control service.
Furthermore there are 10 regional directorates and 101 local offices.

With regard to fraud, the Laws No 12/1990 and No 87/1994 provide for a system of
sanctions for punishing actions against the financial interests of the State. Fraud is
regulated by the Criminal Code and by procedures foreseen in the Criminal Procedural
Code. ...

Furthermore, FC and SFG receive information and participate in international
organisations concerning money laundering and exchange experience with similar
organisation in other countries.

Although there is no one central body responsible for the fight against fraud in Romania,
amongst those authorities responsible are the Ministry of Justice, the Public Prosecutors
Office in general, the Ministry of the Interior, the Ministry of Finance, the National Bank
of Romania and the National Property Valuation Commission.

**Current and Prospective Assessment**

Romania's structures compare only to a limited extent to the Community model which
has two separate "branches" as the Romanian Court of Auditors carries out _ex ante_
controls and is not really an external control institution:

The Romanian customs legislation seems to have a certain similarity with the
Community legislation as far as incurring the customs debt is concerned, but is not fully
compatible with the EC legislation.

The accounting provisions should be more detailed in order to ensure compatibility with
the requirements of Regulation (EEC) No 1552/89. Further cooperation with the
Commission will be needed on a number of issues in order to determine the conformity
to the _acquis,_ but Romania seems to meet the general principles for having established,
concerning agricultural subsidies and structural funds, a control system that is suitable for
the necessary adjustments.

However, there is little experience of implementation of current Romanian legislation in
this area, and there is a need to establish sufficiently reliable administrative structures.

10:2

**Conclusion**

Major efforts are essential to strengthen internal financial control functions.

Budgetary Implications

The communication entitled ·"Agenda 2000" sets out the overall financial framework
which should accommodate the budget impact of any future enlargements in the medium
term. This is to ensure that any enlargement is compatible with proposed Community
policy guidelines within reasonable budget limits.

As things stand, it would be difficult, not to say premature, to attempt precise country-bycountry evaluations of the budgetary implications of each of the applicants joining the
Union. Exactly what the impact would be may vary considerably depending on a whole
series of factors: 
the date on which the applicant country joins;
developments in Community policies between now and then, in particular the
decisions to be taken on further reform of the common agricultural policy and
new guidelines for structural measures;
the progress made by the applicant countries in terms of growth, increasing their
competitiveness and productivity and their ability to absorb the _acquis;_
the transitional measures that will come out of the negoti~tions.

Only a few orders of magnitude for certain budget categories and an overall estimate can
be given purely as a guide.

**Expenditure**

If the common agricultural policy were to be reformed along the lines suggested by the
Commission, once the reforms were fully up and running and in terms of just market
intervention measures, Romania's accession would give rise to additional expenditure of
about 2-3% of the corresponding expenditure forecast for the present fifteen Member

States.

After a phasing-in period, the allocations to Romania for structural measures would
probably be no more than about 4% of its GNP.

Application of the other internal Community policies in the new member countries would
be likely to involve additional expenditure probably in excess of their relative proportion
of Union GNP, since for certain policies the additional implementing costs also depend
on the target population, the geographical area covered or the number of Member States
involved in !he coordination and harmonisation measures. By way of example,
Romania's GNP is currently 0.3% of the total Union GNP.

By contrast, Romania's accession should not involve significant additional expenditure as
far as Union external action is concerned.

103

It should not be forgotten that when an applicant country joins, the Community budget
will no longer have to bear the costs of grants the country was eligible for under the
various pre-accession programmes, such as Phare. 

In light of the above, the estimated costs of Romania's accession in the three areas
mentioned above should fall within the range of, annually, ECU 2.1 to 2.5 billion in
2005-06 (at constant 1997 prices).

**Revenue**

Assuming full application of the own resources system, the new members' contributions
to the Community budget should, in terms of total GNP and· VAT resources (taking
account of the capping rules applying to VAT), be close to the proportion of the Union's
GNP they account for, which in Romania's case is about 0.3%. Romania's portion of
traditional own resources will depend on the structure of its trade flows at the time of

accession.

To ensure that the own resources are established, monitored and made available in line
with Community regulations, Romania will have to overhaul its current customs system.
In addition, for the purposes of accurately calculating the GNP resource considerable
improvements will have to be made to the national accounts to ensure that they are
reliable, homogeneous and complete. Improving the statistics will also be essential for
drawing up the VAT own resources base, which will mean bringing ·Romania's VAT
system fully into line with the Community directives.

104

**4. Administrative Capacity to Apply the** _**Acquis**_

The European Council in Madrid in December 1995 concluded that~ the harmonious
integration into the EU of the central and eastern European applic&nt states would, in
particular, require the adjustment of their administrative structures. This chapter
examines the current state of the public administration in Romania, including relevant
aspects of the judicial system,_ and assesses the current and prospective ability to ca~ry out
the functions required of it in a modern, democratic state, with a particular focus on the
need to administer matters related to the _acquis._

**4.1 Administrative Structures**

A description of Romanian constitutional structures, their powers and responsibilities,
including those of regional and local government, is given in Chapter 1.

At the central level there are 15 ministries, in addition to the Prime Minister's Office, a

State Ownership Fund and various inspectorates. A Department for European Integration
is part of the Prime Minister's Office.

A law on the status of civil servants is under preparation. It is planned to come into force

in 1998.

The present government has stated its commitment to the political independence of the
civil service; a degree of politicisation was carried out by the previous government, but
this is now being reversed. The new law is planned to cover the question of
independence.

In 1996 there were about 12 000 civil servants in the central administration. Throughout
the country there were a further 114 000, including local government employees. Pay
levels in the private sector are considerably higher than in the civil service.

The present government rapidly made public administration reform one of its priorities.
All ministries are required to produce an internal reorganisation plan. The reform of
local government was, additionally, one of the main elements of the government's

election manifesto.

The Department for European Integration performs the central coordinating role on EU
matters. It is headed by a minister under the authority of the Prime Minister. There is
also an Interministerial Committee for European Integration chaired by the Prime
Minister. Within each ministry there is a special unit with particular responsibility for
European integration. (See also the section of the Introduction concerning relations
between the European Union and Romania).

**4.2 Administrative and JudicialCapacity**

Romania was administered under central planning during the Communist period. The
Communist system rejected the primacy of the rule of law and subjugated the law and the
administration to the implementation of Party policy. Against this background, both the
administration and the rule of law itself increasingly came_ to be seen by the public as
instruments of political control.

105

The overall structure of the Romanian public administration is not yet adequately adapted
to the tasks required of it, but the reforms set in hand may well change this quite quickly.

Across the system there is a problem of poor implementation of existing laws and
regulations. Strategic planning and analysis is also a particular weakness.

The lack of a legal basis for the civil service is a problem, both in respect of its political
independence, and more widely. However, if the new civil service law is introduced in
the planned timetable a resolution may be reached early in 1998.

The central administration is overstaffed. However, some ministries suffer staff
shortages, particularly in the area of qualified personnel. Salaries in the private sector are
much higher than in the public sector. This has led to an element of "brain drain" to the
private sector, although the main effect at the moment is to hinder recruitment more than
retention of staff.

Public confidence in the civil service is low. There can be little doubt that much of the

distrust which exists arises from the widespread corruption in the public administration.
The President's anti-corruption campaign has attracted popular support.

The present government's -emphasis on reform is welcome. But it is still too early to say
whether the .ambitious plans will be translated into reality. The concept of the civil
service as a profession is still developing. Training in good administrative practice is
limited and sporadic. · The mechanisms for personnel management are missing or
inadequate. The effectiveness of the civil service is also hindered by an unwillingness to
take personal responsibility for decisions, with the result that these are passed too high up
the chain of command, causing overload on senior staff, and delay.

The approach taken to EU matters, with the Department of European Integration and
associated structures, is a sensible one. A continued development and reinforcement of
this general approach will be nttessary.

_Kev_ _Areas_ _for_ _the_ _Imvlementation_ _of_ _the_ _Acquis_

The uniform application of EC law: The effective application of the _acquis_ presupposes
that the judicial authorities of member states are able to apply the provisions of the
Treaty dealing with ensuring the unity and application of the _acquis,_ and are able to
ensure the proper functioning of the Single Market and Community policies in general.
A high quality and well trained and resourced judiciary is necessary for the application
by the courts of EC law, including cases of direct effect, and cases of referral to the
European Court of Justice under the terms of Article 177 EC.

The judicial system in Romania has important weaknesses, particularly concerning
resources, and relevant expertise. Given this situation, the Commission has significant
doubts about the ability of the system to assure the effective application of the _acquis._

Single market: The ability of Romania to ensure the correct application of Community
requirements in the Single Market, particularly concerning the free movement of goods
and services presupposes the existence of highly developed and effective regulatory,

106

standardisation, certification and supervisory authorities, able to act fully in accordance
with EC rules. An analysis of these points is made in Chapter 3.1 (under "The Four
Freedoms").

Concerning the administrative capacity in respect of free movement of goods the
situation in Romania is unsatisfactory. Romania has yet to complete the necessary
separation between the regulatory, standardisation and certification functions. It suffers
from a lack of coordination, equipment end suitable manpower. Concerning free
movement of services the situation is not yft satisfactory, btit'progress has been made in
certain areas, such as banking. Remedies of the ~rvision Department of the National
Bank (70 staff) have to be enforced through the judiciary. The National Office for
Insurance Supervision has a staff of 14. It is not equipped to exercise effective
supervision in a rapidly expanding sector. For securities, the National Commission for
Supervision is more adequately staffed (70 staff).

In order to meet EC requirements in this area more resources will have to be devoted to
the various supervisory and regulatory functions.

Competition: As explained in Chapter 3.1 (under "Competition") enforcement of
competition law requires the establishment of anti-trust and state aid monitoring
authorities, and that the judicial system, the public administration and the· relevant
economic operators have a sufficient understanding of competitio~ law and policy.

In Romania the central authority is the Competition Council which has 63 staff; this is
adequate. The level of expertise is acceptable. The ability effectively to implement EC
requirements in this field will require further investment in human· resource development
(where considerable efforts have already been made), improvements in transparency, and
the clear delineation of functions from the state-controlled Competition Office (with 365
staff).

Telecommunications: In order to formulate and implement the many liberalisation
regulations contained in the _acquis_ in this field it is necessary to have a regulatory and
policy making body that is effectively separated from any operating company.

A new National Regulatory Agency is planned to take up full functions in 1998. This
should help to improve the administrative capacity, which is currently insufficient.

Indirect taxation: The effective administration of the indirect taxation _acquis_
presupposes structures capable of implementing the EC legislation concerning the
harmonisation of Valued Added Tax and excise duties in an environment in which fiscal

controls at internal EU frontiers have been abolished; and the excise system is based on
the tax warehouses, duty being payable at the local rate in the member state at the time
the goods are consumed. This requires a highly developed and,.__,ell trained and
resourced service, with a high degree of integrity.

,..
In Romania the relevant authority is the Ministry of Finance (a central Ministry and 41
regional offices) with about 20 000 staff (Customs and Excise officers). Around 50 000
staff would be required, but there are recruitment difficulties. VAT on imports is
collected by the customs service (4,500 staff), and excise by the Financial Guard (1,110
staff). Due to a large turnover of staff, resulting partly from trained staff being recruited

107

by the private sector, it is difficult to assess the capacities of existing staff. In order to
ensure the effective administration of the _acquis_ in this area it will be necessary to make
a major effort to ensure adequate staffing levels and professionalism, including training
measures and increases in pay.

Agriculture: The administrative requirements in the agricultural area primarily concern
veterinary and plant-health control, to protect public health and ensure the free movement
of agricultural goods; and the ability to administer the mechanisms and requirements of
the CAP, including high standards of financial control and official statistics. These
points are dealt with in Chapter 3.4 (under "Agriculture"); general standards in the
statistical field are e:eamined in Chapter 3.3 (under "Statistics").

Concerning the administrative capacity in respect of veterinary and plant-health controls,
in Romania these are not in accordance with EC requirements, particularly in respect of
inspection of live animals and animal products. There are 5,000 veterinary inspectors.
Numbers of staff in the food inspectorate are not currently available to the Commission.
Concerning the administration of general CAP requirements, improvements in the current
administrative structures will be required.

In order to meet EC requirements in this area, major improvements will be necessary.

Transport: The application of the EU internal market and competition requirements to
the transport sector, the development of relevant infrastructure products, and other
aspects of the transport _acquis_ will present administrative challenges to new member

states.

The responsible government authority in Romania is the Ministry of Transport
(34 7 staff). There is a shortage of qualified staff. This raises particular concerns with
regard to enforcement of safety controls, in a context where safety issues are already a

concern.

Employment and social policy: A central administrative requirement in respect of the
_acquis_ in this area is adequate inspection capacity, particularly concerning health and
safety at work.

In Romania the labour inspectorate has about 300 staff, and requires considerable
reinforcement of staff resources and expertise.

Regional policy and cohesion: The main administrative requirements in this area are the
existence of appropriate and effective administrative bodies, and in particular a high
degree of competence and integrity in the administration of Community funds.

Romania does not have a specific regional development policy. The situation concerning
financial control is not satisfactory (see the section, below, on "Financial control"). The
effective administration of the _acquis_ in this area will require significant work in various
areas, including the creation of an appropriate administrative structure.

Environment: Because EC environmental policy, involves the integration of
environmental protection into EC sectoral policies the administrative requirement is
potentially very wide, affecting many bodies not normally associated with environmental

108

protection. However, the main responsibility lies with environment ministries and
various subsidiary bodies.

In Romania the Environment Ministry employs 200 staff. Monitoring is carried out by the
Research and Environmental Engineering Institute, enforcement by the Ministry, the
State Inspectorate, and 41 county agencies. These arrangements are not adequate since
environmental awareness is very low, and the current structures are inefficient. The
effective administration of the _acquis_ in this area will require massive investment,
combined with a redefinition of administrative responsibilities and targeted training

courses.

Consumer protection: In this area, the effective administration of the _acquis_ requires the
allocation of overall responsibility to a specific state body through which the formulation,
implementation and enforcement of consumer policy and consumer protection legislation

can be undertaken.

In Romania, a specific consumer protection body, the Office for Consumer Protection
(688 staff), has been created which reports directly to the Prime Minister. As regards nongovernmental consumer bodies these remain far too weak. There remains confusion
about the exact scope and objectives of consumer policy. This in part explains difficulties
in the effective enforcement t>f consumer laws; however, other factors which need to be
addressed include a lack of expert staff, organisational· deficits, ~nd a lack of sensitivity
to consumer questions among the judiciary.

Justice and home affairs: Oversight of justice and home affairs questions falls to justice
and interior ministries. The administrative structures need to be -able to deal effectively
with asylum and migration questions, border manage.~1ent, police cooperation and
judicial cooperation. There is an overriding need for sufficient and properly trained staff
with a high degree of integrity.

In Romania the justice and interior ministries are adequately staffed. The capacity to
handle asylum and migration questions is not yet assured; administrative procedures are
in place for dealing with refugees, though the system is undc;r-funded and under-staffed.
Border management systems are inefficient, though reforms are planned. The police
service needs to be restructured to better tackle organised crime. Judicial cooperation is
limited and the judiciary currently does not function adequately. The effective
administration of the _acquis_ in this area requires considerable investment in technical and
human resources ( especially training), improved accountability of JHA actors, and urgent
steps to combat corruption.

Customs: Applying the _acquis_ in this area requires an adequate level of infrastructure
and equipment, including computerisation and investigation resources, and the
establishment of an efficient customs organisation with a sufficient number of qualified
and motivated staff showing a hi[h degree of integrity.

,.
In Romania the customs service employs 4 600 staff. Due to a high turnover of staff, it is
difficult to estimate their efficiency, and therefore the ade~uacy of staffing levels. The
effective aC:.ninistration of the _acquis_ in this area will require greater resources (in
particular in training and modern management), and steps need to be taken urgently to
tackle corruption.

109

Financial control: The protection of the Community's financial interests requires the
development of anti-fraud services, training of specialised staff (investigators,
magistrates) and the reinforcement of systems of specific cooperation. The
implementation of Community policies, especially for agriculture and the Structural
Funds, requires efficient management and control systems for public expenditure, with
provisions to fight fraud. Administratively it is essential to have a clear separation
between external and internal control. Police and judicial authorities need to be able
effectively to handle complex transnational financial crime (including fraud, corruption
and money laundering) which could affecfthe Community's financial interests.

In Romania the main external control body is the Romanian Court of Auditors. The
number of staff employed is not currently available to the Commission. The effective
administration of the _acquis_ in this area will require major efforts to ensure that
efficiently functioning administrative structures, properly resourced, are in place.

**4.3 General Evaluation**

Romania's administrative structures will require a major, concerted and sustained effort
of reform if there is to be adequate capacity in the medium term effectively to administer
the _acquis._

Concerning the judicial capacity effectively to apply Community law, definitive
evaluation at this stage is difficult.

I h)

**C.** **SUMMARY AND CONCLUSION**

**k**
Romania submitted its application for membership of the European Union on 22 June
1995. Its request is part of the historic process of ending the division of Europe and
consolidating the establishment of democracy across the continent.

In accordance with the provisions of Article O of the Treaty, the Commission has, at the·
request of the Council, prepared an Opinion on Romania's request for membership.

Romania's preparation for membership is going forward notably ·on the basis of the
**Europe Agreement** which entered into force in February 1995. Implementation of the
**White Paper** of May 1995 on the Internal Market, another essential element of the preaccession strategy, is going ahead on the basis of a harmonisation programme revised by
the new government. The government has also reinforced the mechanisms for
coordinating its policies for European integration.

In preparing its Opinion, the Commission has applied the **criteria established at the**
**Copenhagen European Council** of June 1993. The Conclusions of this Council stated
that those candidate countries of Central and Eastern Europe who wish to do so shall
become members of the Union if they meet the following conditions:

stability of institutions guaranteeing democracy, the rule of law, human rights and
respect for and protection of minorities;

- the existence of a functioning market economy, as well as the ability to cope with
competitive pressures and market forces within the Union;

- the ability to take on the obligations of membership, including adherence to the aims
of political, economic and monetary union.

A judgment on these three groups of criteria - political, economic, and the ability to take
on the _acquis_ - depends also on the capacity of a country's administrative and legal
systems to put into effect the p~inciples of democracy and the market economy and to
apply and enforce the _acquis_ in practice.

The **method** followed in preparing these Opinions has been to analyse the situation in
each candidate country, looking forward to the medium term prospects, and taking into
account progress accomplished and reforms already under way. For the political criteria,
the Commission has analysed the current situation, going beyond a formal account of the
institutions to examine how democracy and the rule of law operate in practice .

.L Political Criteria

Romania has democratic institutions whose stability now seems secure. They still need
to be consolidated by fuller respect in practice for the rule of law at all levels of the
structures of government. Elections are free and fair, and in November 1996 led to
genuine alternation of power.

i 11

A number of gaps remain as regards respect for fundamental rights, even if the measures
adopted and the undertakings given by the Romanian authorities since November 1996
constitute progress. Considerable efforts are still needed in the fight against corruption,
and in order to improve the operation of the judicial system and the protection of
individual rights against the police and the secret services as well as during the operation
of the penal system.

If the Hungarian minority seems well integrated in the light of recent improvements in
their situation, this does not seem to be the case for the Roma, who constitute a
significant minority.

Reforms undertaken for protection of children placed in orphanages constitute significant
progress, but still need to achieve their full results.

Current improvements following the arrival in power of a new government make it
possible to conclude that Romania is on the way to satisfying the political criteria set by
the European Council at Copenhagen.

~ Economic Criteria

After several earlier unsuccessful efforts at reform of the Romanian economy, the new
government elected in November 1996 has put in place a radical programme of
macroeconomic stabilisation and structural reform. This policy is being implemented at
a time of diminishing growth (7._1 % in 1995, 4.1% in 1996), accelerating inflation
(56.9% in 1996) and deteriorating budget and trading deficits.

Romania has a population of 22.6 million and GDP per head is 24% of the EU average.
The agricultural sector employs more than one third of the working population and
contributes 20% of the Gross Value Added. There are still substantial structural

problems despite recent privatisation. Trade with the EU represents 55% of Romania's
exports and 52% of its imports.

On the basis of its analysis, the Commission's judgement as to **Romania's ability to**
**meet the economic criteria** established at Copenhagen is as follows:

Romania has made considerable progress in the creation of a **market economy.** The
reorientation of economic policy since the recent change of government has meant a
change for the better, but much still needs to be done. While prices have been almost
fully liberalized, property rights are not yet fully assured for land, the legal system is still
fragile and policy making on economic issues has not always been coherent. Further
efforts to consolidate the administrative and legal framework and to address persistent
macroeconomic imbalances, are required to ensure a stable environment.

Romania would face serious difficulties to cope with **competitive pressure and market**
**forces within the Union** in the medium term. It has made progress recently towards
improving the competitive capacity of its economy, notably by addressing major
distortions such as low energy prices, by accelerating privatization, and by beginning to
liquidate large loss-making state owned firms. However, much of Romania's industry is
obsolete and agriculture needs to be modernised. The low levels of research and

112

development, and of s~iJls among the workforce also suggest that the economy needs a
number of years of sustained structural reform.

3.t.. Capacity to take on the. obligations of membership

Romania's ability to take on the _acquis_ has been judged according to several indicator~:

the obligations set out in toe Europe Agreement, particularly those relating to the right
of establishment, national treatment, free circulation of goods, intellectual property
and public procurement;

  - implementation of the measures set out in the White Paper as essential for establishing
the single market;

  - progressive transposition of the other parts of the _acquis._

Romania has made significant efforts to comply with its obligations under the Europe
. Agreement and with the recommendations of the White Paper; but the rate of
transposition is too low.

Romanian legislation has only taken on a small part of the _acquis_ relating to the key
elements of the **single market** including competition, except in respect of industrial and
intellectual property. The scale of progress still needed requires very substantial and
sustained efforts, both in approximation of legislation and in the creation of structures for
implementing it. Complete restructuring 6f the financial sector, in order to re-establish
essential public and investor confidence in it, is among the highest priorities.

In general, the weakness of public administration constitutes a serious problem, putting
into question both the rate and the quality of approximation of legislation. The various
structures necessary for applying legislation on the single market are not currently
capable of carrying out their roles.

As for **the other parts** **of** **the** _**acquis,**_ if Romania pursues its work of transposition, it
should not have significant difficulty in applying it in the medium term in the following
fields: education, training and youth; research and technological development; fisheries;
small and medium enterprises; consumer protection; international trade relations; and
development.

By contrast, substantial efforts will be needed in the fields of telecommunications; audiovisual; taxation and customs.

Romania has not yet created the conditions which are conducive to a dynamic and
competitive private sector. Its **industry** therefore will only be ready in the long term to
withstand competitive pressures in the single market.

For the **environment,** very important efforts will be needed, including massive
investment and strengthening of administrative capacity for enforcement of legislation.
Full compliance with the _acquis_ could only be expected in the very long term and would
necessitate increased levels of public expenditure.

113

Romania has made some progress in taking on the _acquis_ for **transport.** It needs to
increase its efforts, notably in respect of road freight transport and in the ~aritime and
rail sectors. Romania will also need to provide the investment necessary to complete the
European transport network, which is an essential element of the effective operation of
the single market.

Romania still needs to make substantial efforts to bring its **employment and social**
**affairs** standards into line with ·those of the EU. Progress is particularly needed in
respect of labour law and health and safety. There also needs to be an effective labour
inspectorate.

On **regional policy** Romania has barely started to put in place the structures needed to
use effectively the Union's structural funds. It will also need to establish effective
systems of financial control.

Romania needs to implement fundamental reform of its **agricultural** sector before it can
fulfil the obligations of membership. Particular effort will be needed to restructure the
sector and the agrifood industry and to put in place health and quality control
mechanisms. Romania will also need to strengthen the administrative structures
responsible for implementing the common agricultural policy.

For **energy** efforts are still needed on price fixinP-, state intervention in the solid fuel and
uranium sectors and the operation of monopolies. Romania has at Cernavoda a nuclear
power station which produces around 8% of the country's electricity. It was built in
accordance with Western technology. A solutic~n will need to be found to the problem of

nuclear waste.

On the basis of the analysis of Romania's capacity to apply the _acquis,_ it is not yet
possible to be sure when it could become able to take and implement the measures
necessary to remove the controls at **borders** between Romania and member states of the

Union and to establish them instead at the Union's external border.

Romania does not seem to be in a position to participate in the third stage of **economic**
**and monetary union** which implies coordination of economic policies and the complete
liberalisation of movement of capital. It is premature to judge whether Romania will be
in a position by the time of its accession, to participate in the Euro area. That will depend

on how far the success of its structural transformation enables it to achieve and sustain

permanently the convergence criteria. These are however not a condition for
membership.

Romania faces a particular challenge in **justice and home affairs.** So far it has made
limited progress in taking on the _acquis_ in this field. The new government has
undertaken an ambitious programme to introduce the essential institutional reforms.

Romania should be able to fulfil its obligations in respect of the **common foreign and**
**security policy.**

Romania has recently improved its relations with its neighbours . particularly with
Hungary and Ukraine, and has settled most of its disputes with these countries.

114

~ Administrative and Legal Capacity

Romania's administrative structures will need a major and sustained effort of reform if it
is to have the capacity to apply the _acquis_ effectively.

The capacity of the judicial system to ensure uniform application of Community law is of
great importance, especially for implementation of the single market. It is not yet
possible to judge Romania's prospects in this sector.

**CONCLUSION**

In the light of these considerations, the Commission concludes that :

    - the current improvement in Romania, following the arrival in power of a new
government, indicates that Romania is on its way to satisfy the political criteria;

    - Romania has made considerable progress in the creation of a market economy,
but it would still face serious difficulties to cope with competitive pressure and market
forces within the Union in the medium term;

    - despite the progress that has been made, Romania has neither transposed nor
taken on the essential elements of the _acquis,_ particularly as regards the internal market.
It is therefore uncertain whether Romania will be in a position to assume the obligations
of membership in the medium term. In addition, considerable efforts will be needed in
the areas of environment, transport, employment and social affairs, justice and home
affairs as well as agriculture. More generally, substantial administrative reform will be
indispensable if Romania is to have the structures to apply and enforce the _acquis_
effectively.

In the light of these considerations, the Commission considers that negotiations for
accession to the European Union should be opened with Romania as soon as it has made
sufficient progress in satisfing the conditions of membership defined by the European
Council in Copenhagen.

The reinforced pre-accession strategy will help Romania to prepare itself better to meet
the obligations of membership, and to take action to improve the shortcomings identified
in the Opinions. The Commission will present a report no later than the end of 1998 on
the progress Romania has achieved.

115

**ANNEX**

**COMPOSITION OF PARLIAMENT**

**Results** **of** **the last parliamentary elections (November 1996)**

|Political alliances Abbreviation|Col2|CHAMBER|SENATE|
|---|---|---|---|
|~~Political alliances~~<br>~~Abbreviation~~<br><br>|~~Abbreviation~~<br>|~~Seats~~<br>|~~Seats~~<br>|
|~~Democratic ConventionofRomania~~<br>|~~DCR~~<br>|~~122~~<br>|~~53~~<br>|
|~~PartyofSocial DemocracyofRomania~~<br>|~~PSDR~~<br>|~~91~~<br>|~~41~~<br>|
|~~Social Democratic Union~~<br><br><br><br>|~~lJSD~~<br>|~~53~~<br>|~~23~~<br>|
|~~Hungarian~~<br>~~Democratic~~<br>~~Union~~<br>~~of~~<br>Romania<br>|~~UDMR~~<br>|~~25~~<br>|~~11~~<br>|
|~~Greater Romania Party~~<br>|~~PRM~~<br>|~~19~~<br>|~~8 ~~<br>|
|~~Romanian National Unity Party~~|~~PUNR~~|~~18~~|~~7 ~~|

_ti&_

SINGLE. MARKET: WHITE PAPER MEASURES

This table is based on information provided by the Romanian authorities and confirmed by them as correct as at the end of June 1997. It does not
indicate the Commission's agreement with their anlllysis. The table includes directives and regulations cited in the White Paper which total 899.
These have been listed in accordance with the categorization used in the White Paper and in relation to the policy areas covered. The table
shows the number of measures for which the Romanian authorities have notified the existence of adopted legislation having some degree of
compatibility with the corresponding White Paper measures.

|White Paper chapters|Directives<br>Stage Stage<br>I 11/111|Col3|Regula hons<br>Stage Stage<br>I 11/111|Col5|Total|
|---|---|---|---|---|---|
|~~I.FreeMovementofCapital~~<br>~~Romania~~<br>NumberofWhite Paper measures<br>2.FMand ~~SafetyofIndustrialProducts~~<br>~~Romania~~<br>NumberofWhitePaper measures<br>3.Comp~~etition~~<br>~~Romania~~<br>NumberofWhitePaper measures<br>~~4.Social policyandaction~~<br>~~Romania~~<br>NumberofWhite Paper measures<br><br>|~~0 ~~<br>3 <br>|~~0 ~~<br>l <br>|0 <br>0 <br>|0 <br>0|0 <br>4|
|~~I.FreeMovementofCapital~~<br>~~Romania~~<br>NumberofWhite Paper measures<br>2.FMand ~~SafetyofIndustrialProducts~~<br>~~Romania~~<br>NumberofWhitePaper measures<br>3.Comp~~etition~~<br>~~Romania~~<br>NumberofWhitePaper measures<br>~~4.Social policyandaction~~<br>~~Romania~~<br>NumberofWhite Paper measures<br><br>|~~34~~<br>56<br>|~~63~~<br>104<br>|~~1 ~~<br>4 <br>|2 <br>l|100<br>~~165~~|
|~~I.FreeMovementofCapital~~<br>~~Romania~~<br>NumberofWhite Paper measures<br>2.FMand ~~SafetyofIndustrialProducts~~<br>~~Romania~~<br>NumberofWhitePaper measures<br>3.Comp~~etition~~<br>~~Romania~~<br>NumberofWhitePaper measures<br>~~4.Social policyandaction~~<br>~~Romania~~<br>NumberofWhite Paper measures<br><br>|~~3 ~~<br>3|~~0 ~~<br>0 <br>|~~1 ~~<br>l <br>|0 <br>0 <br>~~0~~ <br>2|4 <br>4|
|~~I.FreeMovementofCapital~~<br>~~Romania~~<br>NumberofWhite Paper measures<br>2.FMand ~~SafetyofIndustrialProducts~~<br>~~Romania~~<br>NumberofWhitePaper measures<br>3.Comp~~etition~~<br>~~Romania~~<br>NumberofWhitePaper measures<br>~~4.Social policyandaction~~<br>~~Romania~~<br>NumberofWhite Paper measures<br><br>|10<br>12<br>|~~15~~<br>15<br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|25<br>29|
|~~5.Agriculture~~<br>~~Romania~~<br>NumberofWhite Paper measures<br><br>|~~69~~<br>93<br>|~~25~~<br>46<br>|~~7 ~~<br>62<br>|~~0 ~~<br>2|~~10~~1 <br>203|
|~~6.Transport~~<br>~~Romania~~<br>NumberofWhitePaper measures<br><br>|~~17~~<br>19<br>|~~11~~<br>15<br>|~~3 ~~<br>8 <br>|~~9 ~~<br>13<br>|~~40~~ <br>55 <br>1 <br>I <br>~~3~~8 <br>45 <br>~~1~~1 <br>16<br>2 <br>4 <br>0 <br>0 <br>4 <br>6 <br>|
|~~7.Audiovisual~~<br>~~Romania~~<br>NumberofWhitePaper measures<br><br>|~~1 ~~<br>l <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|
|~~8.Environment~~<br>~~Romania~~<br>NumberofWhite Paper measures<br><br>|~~26~~<br>31<br>|~~7 ~~<br>7 <br>|~~5 ~~<br>7 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|
|~~9.Telecommunication~~<br>~~Romania~~<br>NumberofWhite Paper measures<br><br>|~~8 ~~<br>9 <br>|~~3 ~~<br>7 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|
|~~1 O.DirectTaxation~~<br>~~Romania~~<br>NumberofWhitePaper measures<br><br>|~~1 ~~<br>2 <br>|~~1 ~~<br>2 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|
|~~11.Freemovementofgoods~~<br>~~Romania~~<br>NumberofWhitePaper measures<br><br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|
|~~12.PublicProcurement~~<br>~~Romania~~<br>NumberofWhite Paper measures<br><br>|~~4 ~~<br>5 <br>|~~0 ~~<br>l <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|
|~~13.Financial services~~<br>~~Romania~~<br>NumberofWhitePapermeasures<br><br>|~~12~~<br>13<br>|~~7 ~~<br>8 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~19~~<br>21<br>|
|~~14.Protectionofpersonaldata~~<br>~~Romania~~<br>NumberofWhitePapermeasures<br><br>|~~0 ~~<br>0 <br>|~~0 ~~<br>2 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>2 <br>|
|~~IS.CompanyLaw~~<br>~~Romania~~<br>Number ofWhitePapermeasures<br><br>|~~2 ~~<br>2 <br>|~~3 ~~<br>3 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>1 <br>|~~5 ~~<br>6 <br>|
|~~16.Accountancy~~<br>~~Romania~~<br>Number ofWhitePaper measures<br><br>|~~3 ~~<br>3 <br>|~~1 ~~<br>2 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~4 ~~<br>5 <br>|
|~~17.Civil law~~<br>~~Romania~~<br>NumberofWhitePapermeasures<br><br>|~~0 ~~<br>l <br>|~~1 ~~<br>1 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~1 ~~<br>2 <br>|
|~~18.Mutual rec.ofprof.Qual.~~<br>~~Romania~~<br>NumberofWhitePapermeasures<br><br>|~~0 ~~<br>2 <br>|~~10~~<br>16<br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~10~~<br>18<br>|
|~~19.Intellectualproperty~~<br>~~Romania~~<br>NumberofWhitePapermeasures<br><br>|~~5 ~~<br>5 <br>|~~3 ~~<br>3 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>3 <br>|~~8 ~~<br>11<br>|
|~~20.Energy~~<br>~~Romania~~<br>Number ofWhitePapermeasures<br><br>|~~8 ~~<br>10<br>|~~0 ~~<br>2 <br>|~~1 ~~<br>3 <br>|~~0 ~~<br>0 <br>|~~9 ~~<br>15<br>|
|~~21.Customs law~~<br>~~Romania~~<br>Number ofWhitePapermeasures<br><br>|~~2 ~~<br>2 <br>|~~1 ~~<br>1 <br>|~~12~~<br>14<br>|~~14~~<br>184<br>|~~29~~<br>201<br>|
|~~22.IndirectTaxation~~<br>~~Romania~~<br>NumberofWhitePapermeasures<br><br>|~~7 ~~<br>15<br>|~~3 ~~<br>54<br>|~~0 ~~<br>0 <br>|~~0 ~~<br>6 <br>|~~10~~<br>75<br>|
|~~23.ConsumerProtection~~<br>~~Romania~~<br>NumberofWhitePapermeasures<br><br>|~~5 ~~<br>8 <br>|~~0 ~~<br>3 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~5 ~~<br>II<br>|
|~~Total~~<br>~~Romania~~<br>Number ofWhitePapermeasures|~~217~~<br>295|~~154~~<br>293|~~30~~<br>99|~~25~~<br>212|~~426~~<br>899|

_(If_

STATISTICAL DATA

If not explicitly stated otherwise, data contained in this annex are collected from,,National Commission for
Statistics (COMISIA NA TI ON ALA PENTRU STA TISTICA)" with whom Eurostat · and Member States'
statistical offices are co-operating since several years in the framework of the Phare programme. Regular data
collection and dissemination are-part of this co-operation process with the aim to enable the application of EU
laws and practices in statistics. The data presented below have been compiled as far as possible using EU
definitions and standards which in som_e cases differ from national practices. This may occaasionally give rise
to differences between the data presented here and those shown elsewhere in the opinion, which are generally
based on the individual applicant countries' updated repli~s to the questionnaire sent to them in April 1996.
Toe exact compatibility with EU standards on statistics and thus the comparability with EU figures can still not
be guaranteed, particularly those statistics. that have not been supplied through Eurostat, but have been
delivered directly by the countries concerned. Wherever available, methodological notes are given describing
. content and particularities of statistical data presented in this annex. Data correspond to the information
available as of May 1997.

|BASIC DATA|1990|1993|1994|1995|1996|
|---|---|---|---|---|---|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~**1990**~~|~~**1993**~~|~~**1994**~~<br>|~~**1995**~~|~~**1996**~~|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~I ~~~~**000hectares**~~<br><br><br><br>|~~I ~~~~**000hectares**~~<br><br><br><br>|~~I ~~~~**000hectares**~~<br><br><br><br>|~~I ~~~~**000hectares**~~<br><br><br><br>|~~I ~~~~**000hectares**~~<br><br><br><br>|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services||~~23839.0~~|~~23839.0~~<br>|~~23839.0~~|~~23839.0~~|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~in 1000~~<br><br><br><br>|~~in 1000~~<br><br><br><br>|~~in 1000~~<br><br><br><br>|~~in 1000~~<br><br><br><br>|~~in 1000~~<br><br><br><br>|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services||~~22748.0~~<br>11579.0<br>11169.0|~~22712.0~~<br><br>11569.0<br><br>11143.0<br>|~~22656.0~~<br><br>11548.0<br><br>11108.0|~~22608.0~~<br><br>11527.0<br><br>11081.0|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~per I km2~~<br><br><br>|~~per I km2~~<br><br><br>|~~per I km2~~<br><br><br>|~~per I km2~~<br><br><br>|~~per I km2~~<br><br><br>|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~97.7~~|||~~95.l~~<br>|~~94.8~~|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~in %oftotal population~~<br><br><br>|~~in %oftotal population~~<br><br><br>|~~in %oftotal population~~<br><br><br>|~~in %oftotal population~~<br><br><br>|~~in %oftotal population~~<br><br><br>|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~54.3~~|||~~54.9~~<br>|~~54.9~~|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~per IOOOofpopulation~~<br><br><br><br>|~~per IOOOofpopulation~~<br><br><br><br>|~~per IOOOofpopulation~~<br><br><br><br>|~~per IOOOofpopulation~~<br><br><br><br>|~~per IOOOofpopulation~~<br><br><br><br>|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services||~~11.6~~<br>11.0<br>|~~11.7~~<br><br>10.9<br>|~~12.0~~<br><br>10.4<br>|~~12.6~~<br>10.2|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~European Currency Unit~~<br><br>|~~European Currency Unit~~<br><br>|~~European Currency Unit~~<br><br>|~~European Currency Unit~~<br><br>|~~European Currency Unit~~<br><br>|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~118~~<br>1294|||~~79~~<br>1203<br>||
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~in%ofTotal Gross Value~~~~**Added**~~<br><br>|~~in%ofTotal Gross Value~~~~**Added**~~<br><br>|~~in%ofTotal Gross Value~~~~**Added**~~<br><br>|~~in%ofTotal Gross Value~~~~**Added**~~<br><br>|~~in%ofTotal Gross Value~~~~**Added**~~<br><br>|
|**Total Area**<br>Population (endofthe period)<br>-Total<br>- Females<br>-Males<br>Population density<br>UrbanPopulation<br>Deathsrate<br>Birthsrate<br>IncomeandGDPpercapita<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>Structureofproduction:shareofbranchGVA<br>-agriculture<br>-industry<br>-construction<br>-services|~~21.8~~<br>40.5<br>_5.4_<br>32.3|||~~20.5~~<br>35.7<br>6.8<br>36.9||

share of branch GVA in 1990 share of branch GVA in 1995

0
# nJ,

- 21.8 - 20.5

~~•~~ ~~-agriculture~~ ~~•~~     - ~~agriculture~~

II [-industry ] **0369**          - **fil** -industry

.0.0 .o.o

0 -construction D -construction

-services -services

- 

-services

                     

               - - Others
###### os.4 [~ ]

##### ~

- - Others

06,8

Popui:.tion (end of period), Population density and Urban population: Data for 1996 refer to 1 st July.

- s'iructurc of productiori:. ~hue r:f branch of GVA: Services include statistical discrepancy.

_!tP_

NATIONAL ACCOUNTS

|Col1|1990|1991|1992|1993|1994|1995|
|---|---|---|---|---|---|---|
|Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product<br>Gross Domestic Product<br>Final consumption expenditure<br>-ofhouseholdsandNPISH<br>-ofgeneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services<br>Final consumption expenditure<br>-ofhouseholds and NPISH<br>-of~eneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services|~~inMillionsofNational Currency~~<br><br><br><br><br><br>|~~inMillionsofNational Currency~~<br><br><br><br><br><br>|~~inMillionsofNational Currency~~<br><br><br><br><br><br>|~~inMillionsofNational Currency~~<br><br><br><br><br><br>|~~inMillionsofNational Currency~~<br><br><br><br><br><br>|~~inMillionsofNational Currency~~<br><br><br><br><br><br>|
|Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product<br>Gross Domestic Product<br>Final consumption expenditure<br>-ofhouseholdsandNPISH<br>-ofgeneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services<br>Final consumption expenditure<br>-ofhouseholds and NPISH<br>-of~eneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services|~~857851~~|~~2203912~~|~~6029168~~<br>|~~20035719~~<br>|~~49773186~~|~~72559700~~|
|Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product<br>Gross Domestic Product<br>Final consumption expenditure<br>-ofhouseholdsandNPISH<br>-ofgeneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services<br>Final consumption expenditure<br>-ofhouseholds and NPISH<br>-of~eneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services|~~inBillionsofECU~~<br><br><br><br><br>|~~inBillionsofECU~~<br><br><br><br><br>|~~inBillionsofECU~~<br><br><br><br><br>|~~inBillionsofECU~~<br><br><br><br><br>|~~inBillionsofECU~~<br><br><br><br><br>|~~inBillionsofECU~~<br><br><br><br><br>|
|Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product<br>Gross Domestic Product<br>Final consumption expenditure<br>-ofhouseholdsandNPISH<br>-ofgeneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services<br>Final consumption expenditure<br>-ofhouseholds and NPISH<br>-of~eneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services|~~30.0~~|~~23.3~~|~~IS.I~~<br>|~~22.S~~<br>|~~25.1~~<br>|~~27.3~~|
|Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product<br>Gross Domestic Product<br>Final consumption expenditure<br>-ofhouseholdsandNPISH<br>-ofgeneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services<br>Final consumption expenditure<br>-ofhouseholds and NPISH<br>-of~eneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services|~~inPurchasing Power Standard~~~~**percapita**~~<br><br><br>|~~inPurchasing Power Standard~~~~**percapita**~~<br><br><br>|~~inPurchasing Power Standard~~~~**percapita**~~<br><br><br>|~~inPurchasing Power Standard~~~~**percapita**~~<br><br><br>|~~inPurchasing Power Standard~~~~**percapita**~~<br><br><br>|~~inPurchasing Power Standard~~~~**percapita**~~<br><br><br>|
|Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product<br>Gross Domestic Product<br>Final consumption expenditure<br>-ofhouseholdsandNPISH<br>-ofgeneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services<br>Final consumption expenditure<br>-ofhouseholds and NPISH<br>-of~eneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services|~~3414~~|||~~3633.0~~<br>|~~3780.0~~|~~4055.0~~|
|Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product<br>Gross Domestic Product<br>Final consumption expenditure<br>-ofhouseholdsandNPISH<br>-ofgeneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services<br>Final consumption expenditure<br>-ofhouseholds and NPISH<br>-of~eneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services|~~% change overtheprevious year~~<br><br><br><br><br>|~~% change overtheprevious year~~<br><br><br><br><br>|~~% change overtheprevious year~~<br><br><br><br><br>|~~% change overtheprevious year~~<br><br><br><br><br>|~~% change overtheprevious year~~<br><br><br><br><br>|~~% change overtheprevious year~~<br><br><br><br><br>|
|Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product<br>Gross Domestic Product<br>Final consumption expenditure<br>-ofhouseholdsandNPISH<br>-ofgeneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services<br>Final consumption expenditure<br>-ofhouseholds and NPISH<br>-of~eneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services|~~-5.6~~<br>8.9<br>7.9<br>8.1<br>-35.6<br>-39.4<br>18.4|~~-12.9~~<br><br>-11.8<br><br>-16.3<br>10.6<br><br>-31.6<br><br>-17.9<br><br>-29.6|~~-8.8~~<br><br>-5.6<br>-7.S<br><br>2.2<br><br>11.0<br><br>2.9<br><br>7.5<br>|~~1.5~~<br><br>1.2<br>0.9<br><br>2.7<br><br>8.3<br><br>11.1<br><br>4.4<br>|~~3.9~~<br><br>3.8<br><br>2.4<br><br>11.0<br><br>20.7<br>19.0<br><br>2.8|~~7.1~~<br><br>14.3<br><br>19.0<br><br>-7.6<br><br>8.6<br><br>32.6<br><br>44.8|
|Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product<br>Gross Domestic Product<br>Final consumption expenditure<br>-ofhouseholdsandNPISH<br>-ofgeneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services<br>Final consumption expenditure<br>-ofhouseholds and NPISH<br>-of~eneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services|~~in% ofGrossDomestic Product~~<br><br><br><br><br><br>|~~in% ofGrossDomestic Product~~<br><br><br><br><br><br>|~~in% ofGrossDomestic Product~~<br><br><br><br><br><br>|~~in% ofGrossDomestic Product~~<br><br><br><br><br><br>|~~in% ofGrossDomestic Product~~<br><br><br><br><br><br>|~~in% ofGrossDomestic Product~~<br><br><br><br><br><br>|
|Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product(CurrentPrices)<br>Gross Domestic Product<br>Gross Domestic Product<br>Final consumption expenditure<br>-ofhouseholdsandNPISH<br>-ofgeneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services<br>Final consumption expenditure<br>-ofhouseholds and NPISH<br>-of~eneral government<br>Gross fixed capital formation<br>Exportsofgoods and services<br>Importsofgoods and services|~~79.2~~<br>65.9<br>13.3<br>19.8<br>16.7<br>26.2|~~75.9~~<br><br>60.7<br><br>15.2<br><br>14.4<br> <br>17.6<br> <br>21.5|~~77.0~~<br><br>62.7<br><br>14.3<br><br>19.2<br> <br>27.8<br><br>36.2|~~76.0~~<br><br>63.7<br><br>12.3<br> <br>17.9<br><br>23.0<br> <br>28.0|~~77.3~~<br><br>63.5<br><br>13.8<br> <br>20.3<br> <br>24.9<br> <br>27.0|~~80.8~~<br><br>68.6<br><br>12.2<br><br>21.9<br> <br>27.8<br> <br>33.0|

GDP(% Change over the previous year)

MAIN ECONOMIC INDICATORS

|Col1|1990|1991|1992|1993|1994|1995|1996|
|---|---|---|---|---|---|---|---|
|Inflationrate<br>Industrialproductionvolumeindices<br>Grossagriculturalproductionvolumeindices<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>GrossForeigndebt<br>Balanceofpayments<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~percentage change over the previous year~~<br><br><br><br><br><br>|~~percentage change over the previous year~~<br><br><br><br><br><br>|~~percentage change over the previous year~~<br><br><br><br><br><br>|~~percentage change over the previous year~~<br><br><br><br><br><br>|~~percentage change over the previous year~~<br><br><br><br><br><br>|~~percentage change over the previous year~~<br><br><br><br><br><br>|~~percentage change over the previous year~~<br><br><br><br><br><br>|
|Inflationrate<br>Industrialproductionvolumeindices<br>Grossagriculturalproductionvolumeindices<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>GrossForeigndebt<br>Balanceofpayments<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~5.1~~|~~170.2~~|~~210.4~~<br>|~~256.1~~<br>|~~136.7~~<br>|~~32.3~~|~~38.8~~|
|Inflationrate<br>Industrialproductionvolumeindices<br>Grossagriculturalproductionvolumeindices<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>GrossForeigndebt<br>Balanceofpayments<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~previous year • I 00~~<br><br><br>|~~previous year • I 00~~<br><br><br>|~~previous year • I 00~~<br><br><br>|~~previous year • I 00~~<br><br><br>|~~previous year • I 00~~<br><br><br>|~~previous year • I 00~~<br><br><br>|~~previous year • I 00~~<br><br><br>|
|Inflationrate<br>Industrialproductionvolumeindices<br>Grossagriculturalproductionvolumeindices<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>GrossForeigndebt<br>Balanceofpayments<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets||||~~101.1~~<br>110.2<br>|~~103.3~~<br><br>100.2<br>|~~109.4~~<br><br>104.5|~~109.4~~<br><br>104.5|
|Inflationrate<br>Industrialproductionvolumeindices<br>Grossagriculturalproductionvolumeindices<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>GrossForeigndebt<br>Balanceofpayments<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|||||~~8.1~~<br>22.6<br>5.3<br>|~~8 ~~<br><br>20.8<br>5.4|~~8 ~~<br><br>20.8<br>5.4|
|Inflationrate<br>Industrialproductionvolumeindices<br>Grossagriculturalproductionvolumeindices<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>GrossForeigndebt<br>Balanceofpayments<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~inBillionsofUSD~~<br><br><br><br><br>|~~inBillionsofUSD~~<br><br><br><br><br>|~~inBillionsofUSD~~<br><br><br><br><br>|~~inBillionsofUSD~~<br><br><br><br><br>|~~inBillionsofUSD~~<br><br><br><br><br>|~~inBillionsofUSD~~<br><br><br><br><br>|~~inBillionsofUSD~~<br><br><br><br><br>|
|Inflationrate<br>Industrialproductionvolumeindices<br>Grossagriculturalproductionvolumeindices<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>GrossForeigndebt<br>Balanceofpayments<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~2.169~~|~~3.549~~|~~3.708~~<br>|~~4.327~~<br>|~~5.481~~<br>|||
|Inflationrate<br>Industrialproductionvolumeindices<br>Grossagriculturalproductionvolumeindices<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>GrossForeigndebt<br>Balanceofpayments<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~inmillionsofUSD~~<br><br><br><br><br><br><br>|~~inmillionsofUSD~~<br><br><br><br><br><br><br>|~~inmillionsofUSD~~<br><br><br><br><br><br><br>|~~inmillionsofUSD~~<br><br><br><br><br><br><br>|~~inmillionsofUSD~~<br><br><br><br><br><br><br>|~~inmillionsofUSD~~<br><br><br><br><br><br><br>|~~inmillionsofUSD~~<br><br><br><br><br><br><br>|
|Inflationrate<br>Industrialproductionvolumeindices<br>Grossagriculturalproductionvolumeindices<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>GrossForeigndebt<br>Balanceofpayments<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~5775~~<br>-9202<br>-3427<br>-177<br>161<br>-3337<br>1606<br>1843|~~4266~~<br><br>-5372<br><br>-1106<br><br>-139<br>15<br><br>-1012<br><br>1059<br><br>-187|~~4364~~<br><br>-5784<br><br>-1420<br><br>-168<br>-87<br><br>-1564<br><br>1054<br><br>113|~~4892~~<br><br>-6020<br><br>-1128<br><br>-115<br><br>-145<br><br>-1174<br><br>968<br>54|~~6151~~<br><br>-6562<br><br>-411<br>-171<br>-129<br><br>-428<br><br>952<br><br>-618|~~7910~~<br><br>-9487<br>-1577<br>-190<br><br>-241<br><br>-1639<br><br>847<br><br>257|~~8239~~<br>-10368<br>-2130<br>-271<br>-314<br>-2336<br>2935<br>-217|

**Inflation rate:** Percentage change of yearly average over the previous year - all items index (data are based on national CPis which are
not strictly comparable).

Industrial production volume indices: Industrial production covers mining and quarrying, manufacturing and electricity, gas and water
supply (according to the NACE Classification Sections C,D,E). The industrial production indices are calculated based on the
physical industrial output of approximate 600 representative products and groups of products, weighted with the 1991 added

value at factors' cost.

**Gross agricultural production volume indices:** The indices of the gross agricultural production is calculated on the basiss of the
previous year.

Unemployment rate (by ILO methodology): This rate is derived from LFSS (Labor Force Survey) observing the following ILO

definitions and recommendations:

_**Labor force**_ employed and unemployed persons in the sense of the lLO definitions stated below.
_**The employed**_ all persons aged 15+, who during the reference period worked at least one hour for wage or salary or other
remuneration as employees, entrepreneurs, members of cooperatives or contributing family workers. Members of armed forces
and women on child-care leave are included.

_**The unemployed**_ all persons aged 15+, who concurrently meet all three conditions of the ILO definition for being classified as
the unemployed: (i) have no work, (ii) are actively seeking a job and (iii) are ready to take up a job within a fortnight.

**Gross foreign debt:** Debt is extracted form the OECD's External Debt Statistics.

Balance of payments: Data is derived from IMF d·atabase, their comparability with respective EU statistics can not be guaranteed, but
balance of payments is compiled mainly in accordance to IMF standards. Balance in trade of goods in accordance with balance
of payments principles. Exports and imports are both in f.o.b. values. Net income incl'..1des direct, portfolio and other
investment income, compensation of employees. Current account balance by definition of IMF 5th Manual, capital transfers are
excluded. Reserve assets: it means changes in reserve assets during the year;(+) signifies an increase,(-) a decrease in reserve

assets.

/20

FOREIGN TRADE

|Imports and exports (current prices) •<br>- Imports<br>- Exports<br>- Balance of trade<br>External trade volume indices<br>- Imports<br>- Exports<br>Structure of imports by SITC (current prices)<br>- (0+1) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>- 5 chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>Structure of export by SITC (current prices)<br>- (0+ I) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>- 5 chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>External trade price indices<br>- Imports<br>- Exports|1993|1994|1995|1996|
|---|---|---|---|---|
|**Imp**~~**orts and exports (current prices)**~~<br>~~• ~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StructureofimportsbySITC(current prices)**<br>- (0+1) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>StructureofexportbySITC(currentprices)<br>- (0+ I) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>Externaltradeprice indices<br>- Imports<br>- Exports|~~inmillionsofUSO~~<br><br><br><br>|~~inmillionsofUSO~~<br><br><br><br>|~~inmillionsofUSO~~<br><br><br><br>|~~inmillionsofUSO~~<br><br><br><br>|
|**Imp**~~**orts and exports (current prices)**~~<br>~~• ~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StructureofimportsbySITC(current prices)**<br>- (0+1) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>StructureofexportbySITC(currentprices)<br>- (0+ I) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>Externaltradeprice indices<br>- Imports<br>- Exports|~~6693.5~~<br>4968<br>-1725.5|~~7201.5~~<br><br>6~06.8<br><br>-994.7<br>|~~10413.5~~<br><br>7974.3<br><br>-2439.2<br>|~~10226.2~~<br>7778.2<br>-2447.9|
|**Imp**~~**orts and exports (current prices)**~~<br>~~• ~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StructureofimportsbySITC(current prices)**<br>- (0+1) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>StructureofexportbySITC(currentprices)<br>- (0+ I) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>Externaltradeprice indices<br>- Imports<br>- Exports|~~**previousyear**• I 00~~|~~**previousyear**• I 00~~|~~**previousyear**• I 00~~|~~**previousyear**• I 00~~|
|**Imp**~~**orts and exports (current prices)**~~<br>~~• ~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StructureofimportsbySITC(current prices)**<br>- (0+1) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>StructureofexportbySITC(currentprices)<br>- (0+ I) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>Externaltradeprice indices<br>- Imports<br>- Exports|||||
|**Imp**~~**orts and exports (current prices)**~~<br>~~• ~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StructureofimportsbySITC(current prices)**<br>- (0+1) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>StructureofexportbySITC(currentprices)<br>- (0+ I) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>Externaltradeprice indices<br>- Imports<br>- Exports|~~in% oftotal Import~~<br><br><br><br>|~~in% oftotal Import~~<br><br><br><br>|~~in% oftotal Import~~<br><br><br><br>|~~in% oftotal Import~~<br><br><br><br>|
|**Imp**~~**orts and exports (current prices)**~~<br>~~• ~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StructureofimportsbySITC(current prices)**<br>- (0+1) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>StructureofexportbySITC(currentprices)<br>- (0+ I) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>Externaltradeprice indices<br>- Imports<br>- Exports|~~**13.8**~~<br>6.2<br>25.8<br>0.2<br>9.1<br>15.7<br>22.3<br>6.6|~~8.5~~<br><br>~~. ~~5.8<br><br>23.6<br><br>0.3<br>9.1<br><br>18.5<br>25.3<br><br>8 <br>|~~8.2~~<br>5.3<br><br>21.4<br>0.2<br>10.5<br>19.8<br>24.8<br>8.9<br>|~~6.7~~<br>5.6<br>21.1<br>0.2<br>9.9<br>21.9<br>25<br>8.7|
|**Imp**~~**orts and exports (current prices)**~~<br>~~• ~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StructureofimportsbySITC(current prices)**<br>- (0+1) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>StructureofexportbySITC(currentprices)<br>- (0+ I) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>Externaltradeprice indices<br>- Imports<br>- Exports|~~in%oftotal Export~~<br><br><br><br>|~~in%oftotal Export~~<br><br><br><br>|~~in%oftotal Export~~<br><br><br><br>|~~in%oftotal Export~~<br><br><br><br>|
|**Imp**~~**orts and exports (current prices)**~~<br>~~• ~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StructureofimportsbySITC(current prices)**<br>- (0+1) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>StructureofexportbySITC(currentprices)<br>- (0+ I) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>Externaltradeprice indices<br>- Imports<br>- Exports|~~5.1~~<br>4 <br>10<br>1.3<br>8 <br>27.4<br>17.1<br>27|~~5.4~~<br><br>4.5<br><br>10<br>0.8<br><br>9.6<br>24.3<br>14.3<br>30.6<br>|~~5.5~~<br>3.8<br>7.9<br>I <br>10.8<br>25.9<br>13.l<br><br>31.7<br>|~~7.7~~<br>3.9<br>7.8<br>0.9<br>IO.I<br>23.2<br>13.5<br>32.7|
|**Imp**~~**orts and exports (current prices)**~~<br>~~• ~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StructureofimportsbySITC(current prices)**<br>- (0+1) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>StructureofexportbySITC(currentprices)<br>- (0+ I) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>Externaltradeprice indices<br>- Imports<br>- Exports|~~previous year= I 00~~|~~previous year= I 00~~|~~previous year= I 00~~|~~previous year= I 00~~|
|**Imp**~~**orts and exports (current prices)**~~<br>~~• ~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StructureofimportsbySITC(current prices)**<br>- (0+1) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>StructureofexportbySITC(currentprices)<br>- (0+ I) food and live animals, beverage and tabacco<br>- 2 crude materials, inedible<br>- 3 mineral fuels and lubricants<br>- 4 animal and vegetable oils etc.<br>-_ 5_chemicals and related products<br>- 6 manufactured goods classified chiefly by material<br>- 7 machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>Externaltradeprice indices<br>- Imports<br>- Exports|||||

Imports and exports (current prices): Trade data exclude direct re-exports, trade in services and trade with customs free zones as well
as licenses, know-how and patents. The data are based upon the special trade system. _Trade Classifications_ : Romania is using
the commodity classification according to the _Combined Nomenclature. Import_ & _export:_ The value of imported and exported
commodities has been established on the basis of the _FOB_ effective prices for _exports_ and of _C/F_ effective pr.ices for _imports._
The transformation of CIF imports in FOB imports has been calculated by means of a transformation CIF/FOB coefficient, that
in 1995 and 1996 is equal with 1.0834; this value was established by research at the main commercial societies. The customs
statistics is utilized for monitoring of foreign trade data. Eurostat has converted National Currencies to the US dollar by
applying the International Monetary Fund annual average exchange rates.

Structure of external trade by SITC (current prices): Trade data exclude direct re-exports, trade in services and trade with customs
free zones as well as licenses, know-how and patents. The data.are based upon the special trade system. _Trade Classifications:_
Romania is using the commodity classification according to the _Combined Nomenclature._ _Imports_ & _Exports:_ The value of
imported and exported commodities has been established on the basis of the _FOB_ effective prices for _exports_ and of _CIF_
effective prices for _**imports.**_ The transformation of CIF imports in FOB. imports has been calculated by means of a
transformation CIF/FOB coefficient, that in 1995 and 1996 is equal with 1.0834; this value was established by research at the
main commercial societies. The imported and exported commodities are classified by using the Combined Nomenclature which
also lies on the basis of custom tariff

_!2J_

|FOREIGN TRADE|1993|Col3|1994|Col5|199S|Col7|1996|Col9|
|---|---|---|---|---|---|---|---|---|
||~~**1993**~~|~~**1993**~~|~~**1994**~~<br>|~~**1994**~~<br>|~~**199S**~~<br>|~~**199S**~~<br>|~~**1996**~~|~~**1996**~~|
|~~**Structureofimportsbymain countries (current prices)**~~<br>1stpartner<br>2nd partner<br>3rd partner<br>4th partner<br>5th partner<br>others<br>**Structureofexportsbymain countries (current prices)**<br>1st partner<br>2nd partner<br>3rd partner<br>4th partner<br>5th partner<br>others|~~**in**% ~~~~**oftotalimports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalimports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalimports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalimports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalimports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalimports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalimports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalimports**~~<br><br><br><br><br><br><br><br>|
|~~**Structureofimportsbymain countries (current prices)**~~<br>1stpartner<br>2nd partner<br>3rd partner<br>4th partner<br>5th partner<br>others<br>**Structureofexportsbymain countries (current prices)**<br>1st partner<br>2nd partner<br>3rd partner<br>4th partner<br>5th partner<br>others|~~**DE**~~<br>**RU**<br>**IT**<br>**IR**<br>**FR**|~~15.8~~<br>11.7<br>9.4<br>9.3<br>7.8<br>· 46|~~**DE**~~<br><br>**RU**<br><br>**IT**<br>us<br><br>**IR**<br>|~~**18**~~<br>13.8<br>11.8<br>6.5<br>6.2<br>43.7<br>|~~**DE**~~<br><br>**IT**<br><br>**RU**<br>**FR**<br><br>us<br><br>|~~17.5~~<br>13.3<br>12<br>5.2<br>4.1<br>47.9|~~**DE**~~<br>IT<br><br>**RU**<br>**FR**<br>**KR**<br>|~~17.1~~<br>15.6<br>12.6<br>_5 _<br>3.8<br>45.9|
|~~**Structureofimportsbymain countries (current prices)**~~<br>1stpartner<br>2nd partner<br>3rd partner<br>4th partner<br>5th partner<br>others<br>**Structureofexportsbymain countries (current prices)**<br>1st partner<br>2nd partner<br>3rd partner<br>4th partner<br>5th partner<br>others|~~**in**% ~~~~**oftotalexports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalexports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalexports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalexports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalexports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalexports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalexports**~~<br><br><br><br><br><br><br><br>|~~**in**% ~~~~**oftotalexports**~~<br><br><br><br><br><br><br><br>|
|~~**Structureofimportsbymain countries (current prices)**~~<br>1stpartner<br>2nd partner<br>3rd partner<br>4th partner<br>5th partner<br>others<br>**Structureofexportsbymain countries (current prices)**<br>1st partner<br>2nd partner<br>3rd partner<br>4th partner<br>5th partner<br>others|~~**DE**~~<br>**CN**<br>**IT**<br>**TR**<br>**RU**|~~14.3~~<br>8.6<br>8.3<br>5.7<br>4.5<br>58.6|~~**DE**~~<br><br>IT<br>**FR**<br><br>**CN**<br><br>**TR**<br>|~~16.1~~<br>12,9<br>5.1<br>4.5<br>4.1<br>57.3|~~**DE**~~<br><br>IT<br>**FR**<br>**TR**<br>**NL**|~~18.1~~<br>15.7<br>5.8<br>4.4<br>3 <br>_53_|~~**DE**~~<br><br>**IT**<br><br>**FR**<br><br>**TR**<br><br>**NL**|~~18.1~~<br>16.7<br>5.6<br>_5 _<br>4.2<br>50.4|

Structure ofexport by main partners

in 1996 'oE

18:1%

Structure **of import** **by** **main** **partners**

**in** **1996**

DE

17.1%

IT

16.7%

KRFR

3.8~.0%

IT

_IS.6%_

12.6%

45.9%

**Korea** (Republic of)

Netherlands

Russian Federation

Turkey

United States

CN

DE

FR

IR

IT

50.4%

NL

4.2% S.0%

China

Germany

France

Iran (Islamic Republic of)

Italy

**KR**

NL

RU

TR

us

SOCIAL INDICATORS

|Col1|1991|1991|1993|1994|199S|
|---|---|---|---|---|---|
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|~~**thousand**~~<br><br><br><br><br>|~~**thousand**~~<br><br><br><br><br>|~~**thousand**~~<br><br><br><br><br>|~~**thousand**~~<br><br><br><br><br>|~~**thousand**~~<br><br><br><br><br>|
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|~~23192.27~~|~~22811.39~~<br>|~~22778.53~~<br>|~~22748.03~~<br>|~~22712~~|
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|~~**in**% ~~~~**oftotalpopulation**~~<br>|~~**in**% ~~~~**oftotalpopulation**~~<br>|~~**in**% ~~~~**oftotalpopulation**~~<br>|~~**in**% ~~~~**oftotalpopulation**~~<br>|~~**in**% ~~~~**oftotalpopulation**~~<br>|
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|||. <br>||~~20.8~~<br>16.7<br>28.3<br>22.4<br>11.8|
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|~~**totalnumber**~~<br><br><br><br>|~~**totalnumber**~~<br><br><br><br>|~~**totalnumber**~~<br><br><br><br>|~~**totalnumber**~~<br><br><br><br>|~~**totalnumber**~~<br><br><br><br>|
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|~~275275~~<br>251760<br>6258<br>1910<br>183388<br>37031|~~260393~~<br><br>263855<br><br>6080<br><br>1700<br><br>174593<br>29290<br>|~~249994~~<br><br>263323<br><br>5822<br><br>1582<br><br>161595<br><br>31193<br>|~~246736~~<br>266101<br><br>5894<br><br>1623<br><br>154221<br><br>39633<br>||
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|~~per1000of~~~~**population**~~<br><br><br><br><br>|~~per1000of~~~~**population**~~<br><br><br><br><br>|~~per1000of~~~~**population**~~<br><br><br><br><br>|~~per1000of~~~~**population**~~<br><br><br><br><br>|~~per1000of~~~~**population**~~<br><br><br><br><br>|
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|~~7.91~~<br>1.6<br>1.01<br>-17.44<br>-16.43<br>1.56<br>22.73<br>6.89|~~7.66~~<br><br>1.29<br>-0.15<br><br>-1.29<br><br>-1.44<br><br>1.51<br><br>23.35<br><br>6.49<br>|~~7.10~~<br><br>1.37<br>-0.59<br><br>-0.86<br><br>-1.44<br>1.44<br><br>23.29<br><br>6.29<br>|~~6.78~~<br><br>1.74<br><br>-0.8<br><br>-0.72<br><br>-1.57<br><br>1.41<br><br>23.89<br><br>6.53|~~6.8~~<br>1.5<br>21.2|
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|~~.,~~<br>~~atbinh~~<br>|~~.,~~<br>~~atbinh~~<br>|~~.,~~<br>~~atbinh~~<br>|~~.,~~<br>~~atbinh~~<br>|~~.,~~<br>~~atbinh~~<br>|
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|~||..<br>||~~65.7~~<br>73.4|
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|~~**at6Syears**~~<br>|~~**at6Syears**~~<br>|~~**at6Syears**~~<br>|~~**at6Syears**~~<br>|~~**at6Syears**~~<br>|
|~~**Population on 1 January**~~<br>**Proportionofpopulation by age(1January 199S)**<br>y014<br>yl5_24<br>y25_44<br>y45_64<br>y65_max<br>**Live births**<br>**Deaths**<br>**Infant deaths**<br>- Less than 1 year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>**Crude marriage rate**<br>Crudedivorcerate<br>**Natural**growth**rate**<br>Net migratio:i**rate**<br>**Total popula(ion growth rate**<br>**Total fertility..ate**<br>**Infant mortality rate**<br>**Late foetal mortality rate**<br>**Life expectancy**<br>- Males<br><br>- Females<br>**Life expectancy**<br>- Males<br>- Females|||||~~12.8~~<br>15.3|

Population on 1 January: The 1991 net migration and increase/decrease have been affected by statistical differences between the

1 intercensital population estimates and the results of the January 1992 census.

**Net Migration:** The 1991 net migration has been affected by statistical differences between the intercensiHil population estimates and
the results of the January 1992 census.

**Total population growth:** The 1991 increase/decrease has been affected by statistical differences between the intercensital population
estimates and the results of the January 1992 census.

/2 _3_

LABOUR MARKET

|Col1|1993|1994|1995|Col5|
|---|---|---|---|---|
|~~Economic ActivityRate(ILOmethodology)~~<br>Averageemployment<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>Registeredunemployment(endofperiod)<br>.|~~Economic ActivityRate(ILOmethodology)~~<br>Averageemployment<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>Registeredunemployment(endofperiod)<br>.|~~Economic ActivityRate(ILOmethodology)~~<br>Averageemployment<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>Registeredunemployment(endofperiod)<br>.|~~Economic ActivityRate(ILOmethodology)~~<br>Averageemployment<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>Registeredunemployment(endofperiod)<br>.|~~Economic ActivityRate(ILOmethodology)~~<br>Averageemployment<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>Registeredunemployment(endofperiod)<br>.|
|~~Economic ActivityRate(ILOmethodology)~~<br>Averageemployment<br>Unemploymentrate(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>Registeredunemployment(endofperiod)<br>.|~~10.4~~|~~10.9~~|~~9.5~~|6.3|

|Col1|1993|1994|1995|1996|
|---|---|---|---|---|
|~~**Average paid**employmentindices by~~~~**NACE classes**~~<br>- Agriculture, hunting, forestry and fishing<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity, gas and water<br>- Construction<br>- Transport, storage and communication<br>**Monthly wages and salaries indices**<br>- real<br>- nominal|~~previous year~~~ ~~I 00~~<br><br><br>|~~previous year~~~ ~~I 00~~<br><br><br>|~~previous year~~~ ~~I 00~~<br><br><br>|~~previous year~~~ ~~I 00~~<br><br><br>|
|~~**Average paid**employmentindices by~~~~**NACE classes**~~<br>- Agriculture, hunting, forestry and fishing<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity, gas and water<br>- Construction<br>- Transport, storage and communication<br>**Monthly wages and salaries indices**<br>- real<br>- nominal|~~99.2~~<br>96.9<br>92.2<br>100.2<br>116.8<br>94.3<br>83.2<br>296.5|~~88.7~~<br><br>99.1<br><br>93.6<br><br>103.9<br><br>96<br>94.5<br><br>100.l<br><br>237.7|~~87.4~~<br>97.l<br><br>90.4<br><br>100.1<br><br>**86.1**<br>95.5<br>111.9<br><br>148.9|107.5<br>149.3|

|Col1|in% of popul 64.9|lation age+ IS 67.2|Col4|
|---|---|---|---|
||~~64.9~~<br>|~~67.2~~<br>||
|~~in thousand~~<br><br><br>|~~in thousand~~<br><br><br>|~~in thousand~~<br><br><br>|~~in thousand~~<br><br><br>|
|~~10062~~|~~10011~~<br>|~~9493~~<br>||
|~~in% oflabour force~~<br>|~~in% oflabour force~~<br>|~~in% oflabour force~~<br>|~~in% oflabour force~~<br>|
||~~8.1~~<br>22.6<br>5.3<br>|~~8 ~~<br><br>20.8<br>5.4<br>|~~8 ~~<br><br>20.8<br>5.4<br>|

Economic activity rate (ILO Methodology): - Percentage of labor force in the total population aged 15+. This rate is derivated of
LFSS (Labor Force Survey) observing the following ILO definitions and recommendations where:
_Labor force_ employed and unemployed persons in the sense of the ILO definitions stated below.

_Tire employed_ all persons aged 15+, who during the reference period worked at least one hour for wage or salary or other
remuneration as employees, entrepreneurs, members of cooperatives or contributing family workers. Members of armed forces
and women on child-care leave are included.

_Tire unemployed_ all persons aged 15+, who concurrently meet all three conditions of the ILO definition for being classified as
the unemployed: (i) have no work, (ii) are actively seeking ajob and (iii) are ready to take up a job within a fortnight.

**Unemployment rate (by ILO methodology):** This rate is derived from LFSS (Labor Force Survey) observing the following lLO
definitions and recommendations (see ILO definitions above).

**Average employment:** For the years 1993, 1994 and 1995, the data refer to the civilian employment resulted from:

         - enterprises survey that comprise:

              - all enterprises with 200 or more employees,

              - representative sample for enterprises with less 200 employees.

         - administrative sources.

Beginning with the year 1995, the data refer to the total employment ( included armed forces) resulted from Quarterly household
labour force survey.
For 1996, the annual average employment data is not available, but the quarterly data for 1996 is available:
QI 1996 9896
Q2 1996 11410
Q3 1996 11543
Q4 1996 11592

**Average paid employment indices by NACE classes:** The data for entrepreneurial sphere cover in all enterprises with 200 or more
employees, and representative sample for enterprises with less than 200 employees.

**Registered unemployment (end** **of** **period):** Registered unemployment in per cent: - percentage of unemployed registered in civil
economically active population, based on Labour force sample survey (LFSS). The unemployment rate is calculated on the base
of the civilian active population.

Monthly wages and salaries indices: Index numbers of monthly _real_ wages and salaries is derived from index of _net_ nominal wages
divided by consumer price index of employees. The data for entrepreneurial sphere cover in: all enterprises with 200 or more
employees, and representative sample for enterprises with less than 200 employees.

_/2}1_

PUBLIC FINANCE

|Col1|1990|1991|1992|1993|1994|199S|
|---|---|---|---|---|---|---|
|~~**Government budget**~~<br>-Consolidated central government revenue<br>-Grants<br>-Consolidated central government expenditure<br>-Consolidated general government expenditure<br>-Consolidated central government deficit/surplus<br>-General government deficit/surplus<br>Governmentbudget<br>-Consolidated central government expenditure<br>-Consolidated general government expenditure<br>-Consolidated central government deficit/surplus<br>-General government deficit/surplus|~~inBillionsor~~~~**national**currency~~<br><br><br><br><br>|~~inBillionsor~~~~**national**currency~~<br><br><br><br><br>|~~inBillionsor~~~~**national**currency~~<br><br><br><br><br>|~~inBillionsor~~~~**national**currency~~<br><br><br><br><br>|~~inBillionsor~~~~**national**currency~~<br><br><br><br><br>|~~inBillionsor~~~~**national**currency~~<br><br><br><br><br>|
|~~**Government budget**~~<br>-Consolidated central government revenue<br>-Grants<br>-Consolidated central government expenditure<br>-Consolidated general government expenditure<br>-Consolidated central government deficit/surplus<br>-General government deficit/surplus<br>Governmentbudget<br>-Consolidated central government expenditure<br>-Consolidated general government expenditure<br>-Consolidated central government deficit/surplus<br>-General government deficit/surplus|~~297.91~~<br>289.87<br>332.46<br>8.04<br>8.72|~~822.81~~<br><br>779.98<br><br>826.82<br><br>42.83<br><br>44.82|~~2200.47~~<br><br>2406.03<br><br>2479.2<br>-205.56<br><br>-198.95<br>|~~6389.17~~<br><br>6311.76<br><br>6686.95<br><br>77.41<br><br>97.89<br>|~~14884.3~~<br><br>15913.1<br><br>16927<br>-1028.8<br><br>-971.33||
|~~**Government budget**~~<br>-Consolidated central government revenue<br>-Grants<br>-Consolidated central government expenditure<br>-Consolidated general government expenditure<br>-Consolidated central government deficit/surplus<br>-General government deficit/surplus<br>Governmentbudget<br>-Consolidated central government expenditure<br>-Consolidated general government expenditure<br>-Consolidated central government deficit/surplus<br>-General government deficit/surplus|~~in% orGross Domestic Product~~<br><br><br><br><br>|~~in% orGross Domestic Product~~<br><br><br><br><br>|~~in% orGross Domestic Product~~<br><br><br><br><br>|~~in% orGross Domestic Product~~<br><br><br><br><br>|~~in% orGross Domestic Product~~<br><br><br><br><br>|~~in% orGross Domestic Product~~<br><br><br><br><br>|
|~~**Government budget**~~<br>-Consolidated central government revenue<br>-Grants<br>-Consolidated central government expenditure<br>-Consolidated general government expenditure<br>-Consolidated central government deficit/surplus<br>-General government deficit/surplus<br>Governmentbudget<br>-Consolidated central government expenditure<br>-Consolidated general government expenditure<br>-Consolidated central government deficit/surplus<br>-General government deficit/surplus|~~33.8~~<br>38.8<br>0.9<br>1.0|~~35.4~~<br><br>37.5<br><br>1.9<br><br>2.0|~~39.9~~<br><br>41.1<br><br>-3.4<br><br>-3.3|~~31.5~~<br>33.3<br><br>0.4<br>0.5|~~32.0~~<br><br>34.0<br><br>-2.l<br>-2.0||

**Government budget:** These data relate to central and general government as published in the IMF's _Government Finance Statistics_
_Yearbook_ _(J_ _996) (GFSY);_ included also is the country's presentation in the _GFSY._
Because the _GFSY_ does not present statistics for general government, but for individual levels of government separately, the
consolidated series presented here were obtained from central and local government data and adjusted in consolidation for the
identified intergovernmental transfers.
Even though the statistics cover the central and local government published in _GFSY,_ the coverage may not be exhaustive if
some central or local government units are not included in that coverage. A measure of the exhaustiveness of the coverage can
be obtained by comparing in the _GFSY_ the note on the coverage of data for individual countries with the list of central and local
government units provided.
It should be noted that the deficit/surplus used here is equal to revenue and grants minus expenditure, and does not take
lending minus repayments into account (see further below).
The netting of inter-government transfers carried-out in the attached tables is limited to the current and capital transfers
consisting of the identified grants and current and capital subsidies between the levels of government. Other types of
transactions occurring between government levels, such as the payments of taxes and employers' social security contributions,
and the reciprocal purchases of goods and services are not normally classified as inter-governmental transfers have not been
eliminated in the consolidation process. Finally, whether the absence of data for current and capital transfers should be
attributed to the absence of transfer or to lack of data is unclear; in all cases absence of information on transfers have been

deemed to represent zero-transfers.
_a._ _**Government expenditure**_ consists of general government cash expenditures on current and capital goods and
services, interest payments and current and capital transfers but excludes non-cash transactions.
_**b.**_ _**Deficit/surplus**_ equals cash revenue and cash grants minus cash expenditure. This measure of the deficit/surplus
differs from that used in GFS which equals cash revenue and cash grants, minus cash expenditure, minus net lending. This
exclusion of net lending(consisting, in the _GFS_ methodology, of operations in financial assets and liabilities carried out for
specific policy purposes, rather than for liquidity purposes) brings the measure of the deficit/surplus presented here closer to the
national accounts concept of net borrowing/net lending. Also, as a result of this exclusion, receipts from privatisation (classified
as repayments in the _GFS_ methodology) do not enter in the determination of the deficit/surplus presented in the attached tables
(and therefore do not reduce the deficit).,..

|FINANCIAL SECTOR|1990 1991 1992 1993 1994 1995 1996|Col3|Col4|Col5|Col6|Col7|Col8|
|---|---|---|---|---|---|---|---|
||~~1990~~<br>~~1991~~<br>~~1992~~<br>~~1993~~<br>~~1994~~<br>~~1995~~<br><br>~~1996~~|~~1990~~<br>~~1991~~<br>~~1992~~<br>~~1993~~<br>~~1994~~<br>~~1995~~<br><br>~~1996~~|~~1990~~<br>~~1991~~<br>~~1992~~<br>~~1993~~<br>~~1994~~<br>~~1995~~<br><br>~~1996~~|~~1990~~<br>~~1991~~<br>~~1992~~<br>~~1993~~<br>~~1994~~<br>~~1995~~<br><br>~~1996~~|~~1990~~<br>~~1991~~<br>~~1992~~<br>~~1993~~<br>~~1994~~<br>~~1995~~<br><br>~~1996~~|~~1990~~<br>~~1991~~<br>~~1992~~<br>~~1993~~<br>~~1994~~<br>~~1995~~<br><br>~~1996~~|~~1990~~<br>~~1991~~<br>~~1992~~<br>~~1993~~<br>~~1994~~<br>~~1995~~<br><br>~~1996~~|
|~~Monetary~~~~**aggregates**~~<br>- Monetary aggregateMI<br>- Quasi money<br>Totalreserves ( gold excluded,endofperiod)<br>Averageshortterminterestrates<br>- lending rate<br>- deposit rate<br>Officialdiscountrate(endofperiod)<br>USD**exchange rates**<br>Averageofperiod<br>Endofperiod<br>ECU**exchange rates**<br>Averageofperiod<br>Endofperiod|~~Billions (10"9)ofUSDollars~~<br><br><br><br>|~~Billions (10"9)ofUSDollars~~<br><br><br><br>|~~Billions (10"9)ofUSDollars~~<br><br><br><br>|~~Billions (10"9)ofUSDollars~~<br><br><br><br>|~~Billions (10"9)ofUSDollars~~<br><br><br><br>|~~Billions (10"9)ofUSDollars~~<br><br><br><br>|~~Billions (10"9)ofUSDollars~~<br><br><br><br>|
|~~Monetary~~~~**aggregates**~~<br>- Monetary aggregateMI<br>- Quasi money<br>Totalreserves ( gold excluded,endofperiod)<br>Averageshortterminterestrates<br>- lending rate<br>- deposit rate<br>Officialdiscountrate(endofperiod)<br>USD**exchange rates**<br>Averageofperiod<br>Endofperiod<br>ECU**exchange rates**<br>Averageofperiod<br>Endofperiod|~~1.75~~<br>~~2.57~~<br>~~2.75~~<br>1.76<br>3.46<br>4.34<br><br>~~2.77~~<br>4.75|~~1.75~~<br>~~2.57~~<br>~~2.75~~<br>1.76<br>3.46<br>4.34<br><br>~~2.77~~<br>4.75|~~1.75~~<br>~~2.57~~<br>~~2.75~~<br>1.76<br>3.46<br>4.34<br><br>~~2.77~~<br>4.75|~~1.75~~<br>~~2.57~~<br>~~2.75~~<br>1.76<br>3.46<br>4.34<br><br>~~2.77~~<br>4.75|~~1.75~~<br>~~2.57~~<br>~~2.75~~<br>1.76<br>3.46<br>4.34<br><br>~~2.77~~<br>4.75|~~1.75~~<br>~~2.57~~<br>~~2.75~~<br>1.76<br>3.46<br>4.34<br><br>~~2.77~~<br>4.75|~~1.75~~<br>~~2.57~~<br>~~2.75~~<br>1.76<br>3.46<br>4.34<br><br>~~2.77~~<br>4.75|
|~~Monetary~~~~**aggregates**~~<br>- Monetary aggregateMI<br>- Quasi money<br>Totalreserves ( gold excluded,endofperiod)<br>Averageshortterminterestrates<br>- lending rate<br>- deposit rate<br>Officialdiscountrate(endofperiod)<br>USD**exchange rates**<br>Averageofperiod<br>Endofperiod<br>ECU**exchange rates**<br>Averageofperiod<br>Endofperiod|~~Millions (10"6)ofUS Dollars~~<br><br><br>|~~Millions (10"6)ofUS Dollars~~<br><br><br>|~~Millions (10"6)ofUS Dollars~~<br><br><br>|~~Millions (10"6)ofUS Dollars~~<br><br><br>|~~Millions (10"6)ofUS Dollars~~<br><br><br>|~~Millions (10"6)ofUS Dollars~~<br><br><br>|~~Millions (10"6)ofUS Dollars~~<br><br><br>|
|~~Monetary~~~~**aggregates**~~<br>- Monetary aggregateMI<br>- Quasi money<br>Totalreserves ( gold excluded,endofperiod)<br>Averageshortterminterestrates<br>- lending rate<br>- deposit rate<br>Officialdiscountrate(endofperiod)<br>USD**exchange rates**<br>Averageofperiod<br>Endofperiod<br>ECU**exchange rates**<br>Averageofperiod<br>Endofperiod|~~995~~<br>~~2086~~<br>~~1579~~<br><br>~~2103~~|~~995~~<br>~~2086~~<br>~~1579~~<br><br>~~2103~~|~~995~~<br>~~2086~~<br>~~1579~~<br><br>~~2103~~|~~995~~<br>~~2086~~<br>~~1579~~<br><br>~~2103~~|~~995~~<br>~~2086~~<br>~~1579~~<br><br>~~2103~~|~~995~~<br>~~2086~~<br>~~1579~~<br><br>~~2103~~|~~995~~<br>~~2086~~<br>~~1579~~<br><br>~~2103~~|
|~~Monetary~~~~**aggregates**~~<br>- Monetary aggregateMI<br>- Quasi money<br>Totalreserves ( gold excluded,endofperiod)<br>Averageshortterminterestrates<br>- lending rate<br>- deposit rate<br>Officialdiscountrate(endofperiod)<br>USD**exchange rates**<br>Averageofperiod<br>Endofperiod<br>ECU**exchange rates**<br>Averageofperiod<br>Endofperiod|~~% perannum~~|~~% perannum~~|~~% perannum~~|~~% perannum~~|~~% perannum~~|~~% perannum~~|~~% perannum~~|
|~~Monetary~~~~**aggregates**~~<br>- Monetary aggregateMI<br>- Quasi money<br>Totalreserves ( gold excluded,endofperiod)<br>Averageshortterminterestrates<br>- lending rate<br>- deposit rate<br>Officialdiscountrate(endofperiod)<br>USD**exchange rates**<br>Averageofperiod<br>Endofperiod<br>ECU**exchange rates**<br>Averageofperiod<br>Endofperiod||||70<br>|58|35|35|
|~~Monetary~~~~**aggregates**~~<br>- Monetary aggregateMI<br>- Quasi money<br>Totalreserves ( gold excluded,endofperiod)<br>Averageshortterminterestrates<br>- lending rate<br>- deposit rate<br>Officialdiscountrate(endofperiod)<br>USD**exchange rates**<br>Averageofperiod<br>Endofperiod<br>ECU**exchange rates**<br>Averageofperiod<br>Endofperiod|~~I USD•... ROL~~<br><br><br><br><br>|~~I USD•... ROL~~<br><br><br><br><br>|~~I USD•... ROL~~<br><br><br><br><br>|~~I USD•... ROL~~<br><br><br><br><br>|~~I USD•... ROL~~<br><br><br><br><br>|~~I USD•... ROL~~<br><br><br><br><br>|~~I USD•... ROL~~<br><br><br><br><br>|
|~~Monetary~~~~**aggregates**~~<br>- Monetary aggregateMI<br>- Quasi money<br>Totalreserves ( gold excluded,endofperiod)<br>Averageshortterminterestrates<br>- lending rate<br>- deposit rate<br>Officialdiscountrate(endofperiod)<br>USD**exchange rates**<br>Averageofperiod<br>Endofperiod<br>ECU**exchange rates**<br>Averageofperiod<br>Endofperiod|~~307.95~~<br>~~760.05~~<br>~~1655.09~~<br>~~2033.28~~<br>460<br>1276<br>1767<br>2578<br><br>~~3085.39~~<br>4035|~~307.95~~<br>~~760.05~~<br>~~1655.09~~<br>~~2033.28~~<br>460<br>1276<br>1767<br>2578<br><br>~~3085.39~~<br>4035|~~307.95~~<br>~~760.05~~<br>~~1655.09~~<br>~~2033.28~~<br>460<br>1276<br>1767<br>2578<br><br>~~3085.39~~<br>4035|~~307.95~~<br>~~760.05~~<br>~~1655.09~~<br>~~2033.28~~<br>460<br>1276<br>1767<br>2578<br><br>~~3085.39~~<br>4035|~~307.95~~<br>~~760.05~~<br>~~1655.09~~<br>~~2033.28~~<br>460<br>1276<br>1767<br>2578<br><br>~~3085.39~~<br>4035|~~307.95~~<br>~~760.05~~<br>~~1655.09~~<br>~~2033.28~~<br>460<br>1276<br>1767<br>2578<br><br>~~3085.39~~<br>4035|~~307.95~~<br>~~760.05~~<br>~~1655.09~~<br>~~2033.28~~<br>460<br>1276<br>1767<br>2578<br><br>~~3085.39~~<br>4035|
|~~Monetary~~~~**aggregates**~~<br>- Monetary aggregateMI<br>- Quasi money<br>Totalreserves ( gold excluded,endofperiod)<br>Averageshortterminterestrates<br>- lending rate<br>- deposit rate<br>Officialdiscountrate(endofperiod)<br>USD**exchange rates**<br>Averageofperiod<br>Endofperiod<br>ECU**exchange rates**<br>Averageofperiod<br>Endofperiod|~~I ECU•... ROL~~<br><br><br><br><br><br><br>|~~I ECU•... ROL~~<br><br><br><br><br><br><br>|~~I ECU•... ROL~~<br><br><br><br><br><br><br>|~~I ECU•... ROL~~<br><br><br><br><br><br><br>|~~I ECU•... ROL~~<br><br><br><br><br><br><br>|~~I ECU•... ROL~~<br><br><br><br><br><br><br>|~~I ECU•... ROL~~<br><br><br><br><br><br><br>|
|~~Monetary~~~~**aggregates**~~<br>- Monetary aggregateMI<br>- Quasi money<br>Totalreserves ( gold excluded,endofperiod)<br>Averageshortterminterestrates<br>- lending rate<br>- deposit rate<br>Officialdiscountrate(endofperiod)<br>USD**exchange rates**<br>Averageofperiod<br>Endofperiod<br>ECU**exchange rates**<br>Averageofperiod<br>Endofperiod|~~28.563~~<br>~~94.659~~<br>~~399.751~~<br>~~890.018~~<br>~~1980.655~~<br>~~2659.551~~<br>47.320<br>253.436<br>557.014<br>1423.598<br>2173.478<br>3388.111<br>~~4740.472~~<br>5055.815|~~28.563~~<br>~~94.659~~<br>~~399.751~~<br>~~890.018~~<br>~~1980.655~~<br>~~2659.551~~<br>47.320<br>253.436<br>557.014<br>1423.598<br>2173.478<br>3388.111<br>~~4740.472~~<br>5055.815|~~28.563~~<br>~~94.659~~<br>~~399.751~~<br>~~890.018~~<br>~~1980.655~~<br>~~2659.551~~<br>47.320<br>253.436<br>557.014<br>1423.598<br>2173.478<br>3388.111<br>~~4740.472~~<br>5055.815|~~28.563~~<br>~~94.659~~<br>~~399.751~~<br>~~890.018~~<br>~~1980.655~~<br>~~2659.551~~<br>47.320<br>253.436<br>557.014<br>1423.598<br>2173.478<br>3388.111<br>~~4740.472~~<br>5055.815|~~28.563~~<br>~~94.659~~<br>~~399.751~~<br>~~890.018~~<br>~~1980.655~~<br>~~2659.551~~<br>47.320<br>253.436<br>557.014<br>1423.598<br>2173.478<br>3388.111<br>~~4740.472~~<br>5055.815|~~28.563~~<br>~~94.659~~<br>~~399.751~~<br>~~890.018~~<br>~~1980.655~~<br>~~2659.551~~<br>47.320<br>253.436<br>557.014<br>1423.598<br>2173.478<br>3388.111<br>~~4740.472~~<br>5055.815|~~28.563~~<br>~~94.659~~<br>~~399.751~~<br>~~890.018~~<br>~~1980.655~~<br>~~2659.551~~<br>47.320<br>253.436<br>557.014<br>1423.598<br>2173.478<br>3388.111<br>~~4740.472~~<br>5055.815|

**Monetary aggregates (end** **of** **period):** _**Money (Ml)**_ Includes demand deposits and currency outside banks. _**Quasi money (QM)**_
Include time, savings and foreign currency deposits. Eurostat has converted National Currencies to the US dollar by applying
the International Monetary Fund annual end of period exchange rates.

Total **reserves** (gold **excluded, end** of **period):** The statistics on official foreign reserves are extracted from the IMF's monthly
International Financial Statistics (IFS). Total reserves (gold excluded) are defined as the sum of central bank holdings of
foreign currencies and other (gross) claims on non-residents; this definition excludes claims on residents denominated in foreign
currency. According to the definition; official foreign reserves are calculated at market exchange rates and prices in force at the
end of the period under consideration. Total reserves (gold excluded) published in IFS may differ from the figures published by
the national authorities. Some factors contributing to possible differences are the valuation of the reserve position in the Fund,

and a different treatment of claims in non-convertible currencies.

**USD exchange rates:** International Monetary Fund exchange rates as present in the publication: "Statistiques Financieres

I nternationales".

INFLATION (12 months changes)
Percentage change of the CPis with the current month compared with the corresponding month of the previous year (t/t-12)

|Col1|Jan I Feb I Mar I Apr I May I Jun I Jul I Aug I Sep I Oct . I Nov I Dec|
|---|---|
|~~**1993**~~<br>**1994**<br>**1995**<br>**1996**|272.0<br>264.1<br>260.9<br>248.1<br>180.2<br>172.S<br>144.S<br>124.6<br>110.4<br>**88.8**<br>~ <br>70.1<br>61.7<br>57.3<br>50.6<br>40.5<br>34.6<br>29.6<br>28.0<br>26.0<br>28.2<br>25.3<br>24.3<br>25.8<br>27.8<br>28.3<br>28.7<br>34.2<br>33.8<br>43.9<br>44.2<br>45.3<br>47.4<br>56.9|

Inflation(% change of CPI)

300.0

250.0

200.0

150.0

100.0

50.0

0.0

....

Inflation (12 months changes): Inflation rates (12 months change~) are percentage changes of the CPls with the current month
compared with the corresponding month of the previous year. Inflation rates are based on national CPls which are not strictly
comparable between candidate countries or with those based on EU HICPs (different methods, concepts, practices in the
calculation ofCP.Is). Inflation (12 months changes) is based on ILO data. '

**INDUSTRY**

|Structure of GDP by economic activities (NACE, current prices)<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distribution of electricity, gas and water<br>Industrial production volume indices by NACE classes<br>-Total<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distribution of eiectricity, gas and water|1993|1994|1995|1996|
|---|---|---|---|---|
|~~**StructureofGDPbyeconomic activities (NACE, current prices)**~~<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity, gas and water<br>**Industrial production volume indicesbyNACE classes**<br>-Total<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofeiectricity, gas and water|~~in~~_"_~~_lo_ofGross Domestic Product~~<br><br>|~~in~~_"_~~_lo_ofGross Domestic Product~~<br><br>|~~in~~_"_~~_lo_ofGross Domestic Product~~<br><br>|~~in~~_"_~~_lo_ofGross Domestic Product~~<br><br>|
|~~**StructureofGDPbyeconomic activities (NACE, current prices)**~~<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity, gas and water<br>**Industrial production volume indicesbyNACE classes**<br>-Total<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofeiectricity, gas and water|~~32.8~~<br>26.6<br>3.9|~~33~~<br><br>28.7<br><br>4.2<br>|34.6<br><br>|36|
|~~**StructureofGDPbyeconomic activities (NACE, current prices)**~~<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity, gas and water<br>**Industrial production volume indicesbyNACE classes**<br>-Total<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofeiectricity, gas and water|~~**previousyear**• I 00~~<br><br><br>|~~**previousyear**• I 00~~<br><br><br>|~~**previousyear**• I 00~~<br><br><br>|~~**previousyear**• I 00~~<br><br><br>|
|~~**StructureofGDPbyeconomic activities (NACE, current prices)**~~<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity, gas and water<br>**Industrial production volume indicesbyNACE classes**<br>-Total<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofeiectricity, gas and water|~~IOI.I~~<br>98.6<br>100.7<br>106.9|~~l03.3~~<br><br>101.8<br><br>103.8<br><br>99.9|~~109.4~~<br><br>99.4<br>112.l<br><br>103.3|~~109.9~~<br>99.3<br>112.5<br>101.7|

Structure of GDP by economic activities (NACE classes, current prices): - is expressed at basic prices. Since 1995 data for
manufacturing include mining and quarrying, manufacturing and electricity, gas and water supply (C+D+E=total industry).

Industrial production volume indices by NACE classes: Industrial production covers mining and quarrying, manufacturing and
electricity, gas and water supply (according to the NACE Classification Sections C,D,E). The industrial production indices are
calculated based on the physical industrial output of approximate 600 representative products and groups of products, weighted
with the 1991 added value at factors' cost.

|INFRASTRUCTURE|1985 I 1990 I 1995 I 1996|
|---|---|
||~~**1985**I ~~~~**1990**I ~~~~**1995**I ~~~~**1996**~~<br>|
|**Railway network**<br>Lengthofmotorways<br>**Numberofinhabitants per passenger car**|~~in Km per 1000 Km2~~<br>|
|**Railway network**<br>Lengthofmotorways<br>**Numberofinhabitants per passenger car**|47.41<br>~~47.61~~<br>47.71<br>|
|**Railway network**<br>Lengthofmotorways<br>**Numberofinhabitants per passenger car**|~~Kilometre~~|
|**Railway network**<br>Lengthofmotorways<br>**Numberofinhabitants per passenger car**|727991<br>728161<br>728591<br>|
|**Railway network**<br>Lengthofmotorways<br>**Numberofinhabitants per passenger car**|~~inhabitants~~<br>|
|**Railway network**<br>Lengthofmotorways<br>**Numberofinhabitants per passenger car**|~~I ~~<br>181<br>101|

Number of inhabitants per one passenger car: Data exclude minibuses.

**AGRICULTURE**

|Share of GDP<br>- Agriculture, hunting, forestry and fishing (Nace A+B)<br>Gross agricultural production volume indices<br>Main crops by area<br>- Cereals<br>- of which: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>Main crops by yield<br>- Cereals<br>- of which: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet|1992|1993|1994|1995|1996|
|---|---|---|---|---|---|
|**Shareof** ~~**GDP**~~<br>- Agriculture, hunting, forestry and fishing (Nace A+B)<br>Grossagriculturalproductionvolume indices<br>**Main crops by area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main crops by yield**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet|in %ofGross Domest~~ic Product~~<br><br><br><br>|in %ofGross Domest~~ic Product~~<br><br><br><br>|in %ofGross Domest~~ic Product~~<br><br><br><br>|in %ofGross Domest~~ic Product~~<br><br><br><br>|in %ofGross Domest~~ic Product~~<br><br><br><br>|
|**Shareof** ~~**GDP**~~<br>- Agriculture, hunting, forestry and fishing (Nace A+B)<br>Grossagriculturalproductionvolume indices<br>**Main crops by area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main crops by yield**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet||~~21~~<br>|~~19.9~~<br>|~~19.9~~<br>|~~19.3~~|
|**Shareof** ~~**GDP**~~<br>- Agriculture, hunting, forestry and fishing (Nace A+B)<br>Grossagriculturalproductionvolume indices<br>**Main crops by area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main crops by yield**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet|~~Previous year~~~ ~~I 00~~<br><br><br><br>|~~Previous year~~~ ~~I 00~~<br><br><br><br>|~~Previous year~~~ ~~I 00~~<br><br><br><br>|~~Previous year~~~ ~~I 00~~<br><br><br><br>|~~Previous year~~~ ~~I 00~~<br><br><br><br>|
|**Shareof** ~~**GDP**~~<br>- Agriculture, hunting, forestry and fishing (Nace A+B)<br>Grossagriculturalproductionvolume indices<br>**Main crops by area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main crops by yield**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet||~~110.2~~<br>|~~100.2~~<br>|~~104.5~~<br>|~~101.8~~|
|**Shareof** ~~**GDP**~~<br>- Agriculture, hunting, forestry and fishing (Nace A+B)<br>Grossagriculturalproductionvolume indices<br>**Main crops by area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main crops by yield**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet|~~in 1000~~~~**Hectares**~~<br><br><br><br><br>|~~in 1000~~~~**Hectares**~~<br><br><br><br><br>|~~in 1000~~~~**Hectares**~~<br><br><br><br><br>|~~in 1000~~~~**Hectares**~~<br><br><br><br><br>|~~in 1000~~~~**Hectares**~~<br><br><br><br><br>|
|**Shareof** ~~**GDP**~~<br>- Agriculture, hunting, forestry and fishing (Nace A+B)<br>Grossagriculturalproductionvolume indices<br>**Main crops by area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main crops by yield**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet|~~5757.5~~<br>1460.8<br>219<br>180<br>47|~~6383~~<br><br>2281.6<br><br>249<br>97<br>42<br>|~~6553~~<br><br>2412.2<br><br>249<br>130<br>39<br>|~~6438.6~~<br><br>2480.8<br><br>244<br>133<br><br>40<br>|~~5847.2~~<br>1780.6<br>257<br>136<br>39|
|**Shareof** ~~**GDP**~~<br>- Agriculture, hunting, forestry and fishing (Nace A+B)<br>Grossagriculturalproductionvolume indices<br>**Main crops by area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main crops by yield**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet|~~in I 00~~~~**kg/Hectares**~~<br><br><br><br><br>|~~in I 00~~~~**kg/Hectares**~~<br><br><br><br><br>|~~in I 00~~~~**kg/Hectares**~~<br><br><br><br><br>|~~in I 00~~~~**kg/Hectares**~~<br><br><br><br><br>|~~in I 00~~~~**kg/Hectares**~~<br><br><br><br><br>|
|**Shareof** ~~**GDP**~~<br>- Agriculture, hunting, forestry and fishing (Nace A+B)<br>Grossagriculturalproductionvolume indices<br>**Main crops by area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main crops by yield**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet|~~21.3~~<br>22.0<br>118.9<br>161<br>268.7|~~24.2~~<br><br>23.3<br><br>149.0<br>182.8<br>326.3|~~27.7~~<br>25.4<br><br>**118.5**<br><br>212.6<br>309.2|~~30.8~~<br>30.9<br>123.6<br><br>199.3<br><br>270.6|~~24.3~~<br>17.66<br>139.5<br>209.6|

|Sales or procurement of animal for slaughter<br>- pigs<br>- cattle<br>- poultry<br>Livestock breeding intensity ( end of period)<br>- cattle<br>- of which: cows<br>- sheep<br>- pigs|1992|1993|1994|1995|1996|
|---|---|---|---|---|---|
|Salesorp~~rocurementofanimalforslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity( endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs|~~in1000 tonsoflive weight~~<br><br><br><br>|~~in1000 tonsoflive weight~~<br><br><br><br>|~~in1000 tonsoflive weight~~<br><br><br><br>|~~in1000 tonsoflive weight~~<br><br><br><br>|~~in1000 tonsoflive weight~~<br><br><br><br>|
|Salesorp~~rocurementofanimalforslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity( endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs||~~646~~<br>330<br>163<br>|~~618~~<br><br>340<br>123<br>|~~561~~<br><br>298<br>152<br>|~~594~~<br>303<br>159|
|Salesorp~~rocurementofanimalforslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity( endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs|~~heads per I 000~~~~**Ha**ofagrirultural land~~<br><br><br><br>|~~heads per I 000~~~~**Ha**ofagrirultural land~~<br><br><br><br>|~~heads per I 000~~~~**Ha**ofagrirultural land~~<br><br><br><br>|~~heads per I 000~~~~**Ha**ofagrirultural land~~<br><br><br><br>|~~heads per I 000~~~~**Ha**ofagrirultural land~~<br><br><br><br>|
|Salesorp~~rocurementofanimalforslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity( endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs||~~243~~<br>121<br>773<br>|~~235~~<br>121<br><br>736<br>|~~236~~<br>122<br><br>702<br>|~~250~~<br>133<br>663|
|Salesorp~~rocurementofanimalforslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity( endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs|~~heads per I 000~~~~**Ha**ofarable~~~~**land**~~<br><br><br>|~~heads per I 000~~~~**Ha**ofarable~~~~**land**~~<br><br><br>|~~heads per I 000~~~~**Ha**ofarable~~~~**land**~~<br><br><br>|~~heads per I 000~~~~**Ha**ofarable~~~~**land**~~<br><br><br>|~~heads per I 000~~~~**Ha**ofarable~~~~**land**~~<br><br><br>|
|Salesorp~~rocurementofanimalforslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity( endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs||~~991~~|~~830~~|~~853~~||

|LTURE|1992|1993|1994|1995|1996|
|---|---|---|---|---|---|
||~~**1992**~~|~~**1993**~~<br>|~~**1994**~~<br>|~~**1995**~~<br>|~~**1996**~~|
|~~**y land-use categories**~~<br><br>ultural land<br>t<br>e land<br>anent meadows and pastures<br>**l land by legal status**<br>enterprise<br>eratives<br>s|~~in1000~~~~**Hectares**~~<br><br><br><br><br><br>|~~in1000~~~~**Hectares**~~<br><br><br><br><br><br>|~~in1000~~~~**Hectares**~~<br><br><br><br><br><br>|~~in1000~~~~**Hectares**~~<br><br><br><br><br><br>|~~in1000~~~~**Hectares**~~<br><br><br><br><br><br>|
|~~**y land-use categories**~~<br><br>ultural land<br>t<br>e land<br>anent meadows and pastures<br>**l land by legal status**<br>enterprise<br>eratives<br>s|~~23839~~<br>14790<br>6682<br>9357<br>4830|~~23839~~<br><br>14793<br><br>6681<br><br>9341<br><br>4852<br>|~~23839~~<br><br>14798<br>6680<br>9338<br><br>**4872**<br>|~~23839~~<br><br>14797<br><br>6680<br><br>9337<br><br>4890<br>|~~23839~~<br>14743<br>9336<br>4869|
|~~**y land-use categories**~~<br><br>ultural land<br>t<br>e land<br>anent meadows and pastures<br>**l land by legal status**<br>enterprise<br>eratives<br>s|~~in% ofagricultural land~~<br><br><br>|~~in% ofagricultural land~~<br><br><br>|~~in% ofagricultural land~~<br><br><br>|~~in% ofagricultural land~~<br><br><br>|~~in% ofagricultural land~~<br><br><br>|
|~~**y land-use categories**~~<br><br>ultural land<br>t<br>e land<br>anent meadows and pastures<br>**l land by legal status**<br>enterprise<br>eratives<br>s||~~30~~<br>12<br>58|~~30~~<br><br>12<br>58|~~28~~<br>12<br>60||

Structure of GDP by economic activities (NACE classes, current prices): - is expressed at basic prices.

Gross agricultural production volume indices: Data are calculated on the basis of the previous year.

Sales or procurement of animals for slaughter: The data refer to the _sales_ of agricultural products outside the Division 01:
Agriculture.

Romania

1994

Legend:

_N_ Country boundary

_N_ Region boundary

COUNTRY NAME

REGIONNAME

_CITY NAME_

Selected major settlements:
(1 000 Inhabitants)
O 200- 250

 - 250- 500

 - 500- 1000

 - >1000

General information about the country:
Age groups On years):

CJ <15

... 15- 65
**1111** >65

Living standard (in 1993): ECU 975

{GDPpercapla)

Area: 238 391 km [2 ]

Administrative regions: 41

Population: 22 730 600

Source:....,.. Commllllon tor 8IIIIIIIDe
**CatognlphyandglOIJllpblclnfannlllon** **m.** **.....** **M** **..** QISCO

0 60 160km
## w

Romania

1994

_N_ Country boundary
_N_ Main railway line

Ferry connection

_N_ Motorway

/V National road, Double lane

National road

Principal road

_1_ "v/                                                                          - Main naVigable waterway

lnfras1ructl6e **dala** **not** **available** for UA **and** **MD**

Selected major settlements:
(1 000 inhabitants)

o 200-· 250

                                                  - 250- 500

                                  - 500-1000

                      - - >.1000

General infonnation about the country:
Age groups _On_ years):

c:=i <15
**1111** 15- 65

.. >65

Living standard (in 1993): ECU 975

**(GOP** **ps** **oaplla)**

Area: 238 391 km2

Administrative regions: 41

Population: 22 730 600

**Soulm:Nlllkllwlleomm.lonba.dllll,a**
**~llldgaogrllptllo** **lnfannlllon** **nw,ww;w-.** Cll8CO

0 50 150km
#### ~

ISSN 0254-1475

COM(91) **2003 final**

### **DOCUMENTS**

EN **11** **01** **06**

Catalogue number CB-C0-97-383-EN-C

ISBN 92-78-22961-X

Office for Official Publications of the European Communities

L-2985 Luxembourg

_132_