23 main bottleneck. It is the weakest area of trade facilitation in Bulgaria relative to the levels of efficiency achieved on average by CEEC-8 on four trade facilitation indicators. It is 26 percentage points below the CEEC-8 average level and 46 percentage points below the average for EU-15. It also stands at 65 percent of Romania’s level in port efficiency. In all, the gap is larger than in IT infrastructure indicating a longer way to go to achieve CEEC-8 levels of efficiency.

**Table 10:** _Indicators of telecommunications services in Bulgaria in comparative perspective in 1999, 2001 and 2002_

||Teleph<br>(per 1,0|one main<br>00 peopl|lines<br>e)|Teleph<br>waiting<br>1,000)|one mai<br>list (per|nlines,<br>|Teleph<br>cost of<br>(US$ p<br>minute|one aver<br>local cal<br>er three<br>s)|age<br>l<br>|Teleph<br>cost of<br>(US$ p<br>minute|one ave<br>call to U<br>er three<br>s)|rage<br>S<br>|Interna<br>teleco<br>traffic (<br>subscr|tional<br>m, outgo<br>minutes<br>iber)|ing<br>per|
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
||1999|2001|2002|1999|2001|2002|1999|2001|2002|1999|2001|2002|1999|2001|2002|
|Average CEEC-8<br>of which:|333|339|n/a|19.9|8.2|2.1|0.10|0.10|0.11|2.42|1.37|1.29|89|88|99|
|Hungary|371|375|361|7.8|2.03|0.79|0.13|0.09|0.13|1.4|0.98|0.79|61|51|66|
|**Bulgaria**|**342**|**359**|**368**|**42**|**23**|**19**|**0.00**|**0.00**|**0.02**|**n/a**|**2.37**|**1.45**|**39**|**43**|**48**|
|Romania|167|184|194|33|26|24|n/a|n/a|0.11|2.35|1.96|1.82|41|44|50|
|Average SEE-3|143|185|195|18|15|n/a|0.02|0.02|0.02|4.12|3.16|2.44|227|155|149|
|_Bulgaria interms of _|_percent _|_of _||||||||||||||
|Average CEEC-8<br>of which:|103|106|n/a|213|285|1844|2|2|18|n/a|173|113|44|49|48|
|Hungary|92.3|95.8|102|542|1148|2380|2|2|15|n/a|242|185|63|84|73|
|Romania|205|196|189|127|90|77|n/a|n/a|18|n/a|121|80|94|99|95|
|Average SEE-3|239|194|189|229|155|n/a|13|9|109|n/a|75|59|17|28|32|

Notes: SEE-3 includes only Albania, Moldova and Serbia and Montenegro, as no data available for other SEE economies. Source: World Development Indicators, World Bank’s SimaWeb database.

Second, reforms of port management have barely begun. The state of the art arrangements call for the introduction of the landlord port, with the separation of operational and commercial functions, privatization of port services, concessioning of large container and bulk terminals to private operators. Bulgaria’s Ministry of Transport and Communications issued a port operator's concession program notice only in 2004 (see www.mtc.government.bg **)** . It has invited interested parties to participate in the future bidding process for operation and maintenance of ports’ terminals, as well as for the investment program for reconstruction and development of the existing and new terminals. The focus so far has been almost exclusively on airports leaving aside maritime ports, even more pertinent to trade in goods. A competitive tender, announced in August 2004, is limited to two airports in Bourgas and Varna. As of the end of January 2005, the concession rights for Burgas and Varna airports, which are expected to attract investments of nearly EUR 130 M over the next couple of years have not been allotted.

Yet, Bulgaria will have to address these inefficiencies before accession to the EU. The EU has been undergoing liberalization of rail transport, landing rights and access to airports (allocation of slots). It has abolished the queuing system for inland waterway markets and has been enforcing of rules on work practices in the road haulage sector. Furthermore, new rules call for the separation of public monopoly providers of port, rail and other transport services and reporting on the results of each of their activities in order to identify cross subsidies and end them. They call for the shifting to a system of direct subsidies, as opposed to indirect ones, designed to achieve social objectives such as universal service and, consequently, banning cross-subsidies from freight to passenger traffic or from ports to rail. There is clearly a need to accelerate reform effort in these areas.

The desirability of fast convergence to the _acquis communautaire_ underlying the single market for services applies also to air transport services, which has so far remained outside Bulgaria’s reform agenda. Despite ill-fated privatization of the national flag carrier, the approach to aviation policy has remained in the old mould of the exclusive route rights. Instead of moving to a new approach emphasizing open skies and unilateral liberalization, the bilateral system of air transport regulations, based on a positive list approach limiting provision of services to those that are explicitly permitted,<sup>16</sup> has been retained. Leaving aside safety 16 According to this approach, a service can be provided only if it is explicitly permitted.