US on Romania: high taxes, small penalties

Romania is being closely watched by the US chief trade negotiator due to the excessive protectionism of the customs valuation system and the delay in deregulating certain sectors such as telecommunications, according to the US Trade Representative (USTR) 2001 report.

USTR, headed by the main commercial policy adviser of the US President, is a governmental agency, which searches and creates new business opportunities for American businesspersons.

The authors of the report claim the Romanian procedures of customs valuation for imports, based on reference prices, which are much higher than market prices, “have significantly impeded” the access to the market for U.S. exporters.

At the same time, Romanian producers claim that reference prices used as the main trade protection tool and as the basis for calculating customs duties are sometimes too low, making room for foreign products at low prices.

As this system violates the World Trade Organisation (WTO) agreement on Customs Valuation, the U.S. commenced a WTO Dispute Settlement case in May 2000, which is yet to end.

USTR also feels that the verification procedures utilised by Romanian customs officials include several “unnecessary” requirements, a concern to US businesses.

The agency also blames Romania’s enforcement against copyright piracy and trademark counterfeiting (especially of U.S. distilled spirits), considering it “inadequate.” USTR makes a special reference to pharmaceuticals, for which Romanian law does not yet appear to provide protection for confidential test data.

With respect to service barriers, USTR mentions that the foreign lawyers cannot provide legal advice on foreign or international law without being licensed in the practice of Romanian law and that the RomTelecom tariffs are subject to governmental supervision.

The agency feels that Romania still needs to establish a transparent, non-discriminatory licensing system for fixed telephony as specified in the WTO agreement.

As for discriminatory practices to which foreign investors are subjected to, the USTR report calls to attention the case of European Drinks, a company which had the Finance Ministry’s approval for the rescheduling of $200 million in debts in 1998.

USTR specifies that it is precisely such practices that made the underground economy reach about half of the nominal Gross Domestic Product value.