Commission Report 2002 (Romania)

• Progress since the last Regular Report
• Overall assessment
• Conclusion

Chapter 26: External relations

Progress since the last Regular Report

Since the last Regular Report Romania has continued to align with the acquis on common commercial policy and to co-ordinate positions and policies within the World Trade Organisation (WTO) with the EU, in particular with regard to the Doha Development Agenda negotiations.

Romania has continued to align with the acquis on common commercial policy and has made considerable improvements with respect to meeting its obligations under the WTO and the Europe Agreement. Romania has co-ordinated with the EU when developing positions and policies within the World Trade Organisation, in particular with regard to the preparation of the Doha Development Agenda negotiations.

As regards the common commercial policy, upon accession Romania will be required to align its tariffs with those of the EC. Romania's applied tariffs currently average 19.1% (MFN) on all products, 31.7% on agricultural products, 21.4% on fishery products and 15.6% on industrial products. By comparison, EC tariffs currently stand at 6.3% on all products, 16.2% on agricultural products, 12.4% on fishery products and 3.6% on industrial products. As from January 2002, Romania eliminated all remaining customs duties for imports of industrial products originating in the EU and the free trade area for these products was fully accomplished.

Last year`s report noted that Romania had increasingly resorted to trade policies that were incompatible with its international obligations including the Europe Agreement. However, following intensive bilateral consultations with the European Commission, the Romanian authorities have taken the necessary steps to remove these trade irritants.

As regards bilateral agreements with third countries, Romania ratified a free trade agreement (FTA) with Lithuania in May 2002. Following the commitments given in the Stability Pact Memorandum of Understanding on Trade Liberalisation and Facilitation, formal negotiations were held to establish FTAs with the Republic of Yugoslavia and FYROM. Exploratory talks were held with the Republic of Albania and with Bosnia Herzegovina. In the case of Croatia, Romania has consistently supported Croatia`s accession to CEFTA, which would establish a free trade area between the two countries.

Within CEFTA, Romania signed the Additional Protocol No. 10 relating to the liberalisation of agricultural and food trade, and the Additional Protocol No. 11 relating to the origin for goods.

In June 2002, the responsibility for commercial policy (together with the Foreign Trade Department and all its staff) was transferred from the Ministry of Foreign Affairs to the Office of the Prime Minister. In operational terms, the Foreign Trade Department is headed by a State Secretary who reports directly to the Prime Minister. For all administrative issues, the department relies upon the General Secretariat of the Government. The responsibilities of the department are largely unchanged.

Romania is not an international donor and does not have a development policy although contributions are made to certain United Nations development programmes and funds. Romania is a consistent provider of humanitarian aid, most usually to countries in the Balkan, Black Sea and Central Asian regions that have been hit by natural disasters.

Overall assessment

The EU and Romania have established a framework for co-operation regarding WTO issues both at ministerial and at departmental level. Romania has been supportive of EU policies and positions within the WTO framework, in particular also during the preparation for and the launching of the Doha Development Agenda. This close co-operation should continue.

Close co-ordination should continue in order to ensure the smooth alignment of Romania`s GATS commitments with the EC`s commitments and MFN exemptions. Steps have been defined to this extent. Romania is a signatory to the Information Technology Agreement and a member of the WTO plurilateral Agreement on Trade in Civil Aircraft. With regard to the WTO Agreement on Textiles and Clothing (ATC) co-ordination has taken place within the third stage of integration under the ATC to align Romania`s integration programmes with those of the EC.

In addition to its bilateral free trade agreements with Israel, Lithuania, the Republic of Moldova, Turkey and EFTA, Romania is a member of CEFTA and was president of CEFTA`s Joint Committee in 2001. Romania needs to ensure that the Union fully informed about existing trade agreements and about any negotiations aimed at the conclusion of new trade agreements with a third country. Prior to accession, Romania will need to renegotiate or renounce all international agreements concluded with third countries that are incompatible with its future obligations as an EU Member State. Decisive steps are needed, as a matter of urgency, to bring bilateral investment treaties in conformity with the Treaty obligations. Failure to do so will mean that the conflict between the bilateral investment treaties and Treaty obligations will need to be resolved in the Accession Treaty.

Further transposition is needed to align Romania with the core EC regulation on dual use goods. Full alignment to the acquis, in particular the general export authorisations, can only take place upon accession. Romania keeps industry regularly informed of developments in this field and has developed bilateral contacts with the EU Member States to exchange best practices on export control issues.

Where medium and long-term export credits are granted, further efforts are needed to align with the acquis.

Staff levels in the Foreign Trade Department are adequate, and trade officials are well qualified and able to effectively manage Romania`s commercial policy. Over the reporting period the department has successfully improved its control over the formulation of trade policy. It has been able to resist pressures for protectionist trade measures that have been made by vested domestic interests as well as by other ministries (in particular the Ministries of Agriculture and Industry). As a result, Romania`s respect of its international trade commitments improved significantly.

It is too early to assess the impact of the latest institutional changes on this situation, i.e. the loss of a minister with direct Cabinet responsibility for trade issues. A more general concern is that frequent institutional changes inevitably reduce the ability of the Foreign Trade Department to function effectively. A period of institutional stability should be considered as a priority.

The administrative infrastructure which needs to be in place with respect to customs services is discussed in the chapter on customs union (Chapter 25 - Customs union). Control of exports and imports of dual-use goods and technologies, is the responsibility of the National Agency for the Control of Strategic Exports and of Prohibition of Chemical Weapons (ANCESIAC). There are no dedicated structures for managing development and humanitarian aid.

Conclusion

In its 1997 Opinion, the Commission concluded that Romania should to be able to meet Community requirements in this field in the medium term, provided that it reinforced its efforts to eliminate existing trade barriers in order to align itself more closely with the Community trade regime.

Since the Opinion, trade barriers have been progressively eliminated, and Romania has achieved a generally high level of alignment with the acquis.

Negotiations on this chapter have been provisionally closed. Romania has not requested any transitional arrangements. Romania is generally meeting the commitments it has made in the accession negotiations in this field.

Romania should focus further efforts on ensuring that the capacity exists to fully implement and enforce the EC acquis in this field upon accession and on taking decisive steps, as a matter of urgency, towards the renegotiation or abrogation of its bilateral investment treaties in full conformity with its EU membership obligations. A mechanism should also be established to thoroughly screen all trade-related legislation in order to ensure that it is compatible with Romania`s international obligations.

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