Introductory statement by

  H.E.  Mr. Cristian COLTEANU,
Secretary of State for Foreign Trade and Economic Promotion,
Ministry of Foreign Affairs,
Head of the Delegation of Romania

Geneva, 11 June 2001

Mr Chairman,
Distinguished Representatives,
Ladies and Gentlemen,

It is a great honour for me to head, for the first time, Romania’s Delegation to a session of the Joint EFTA-Romania Committee.  We are here prepared for an open and friendly discussion on maters related to the implementation of the FTA and on identifying additional means to amplify the trade flows between our countries.

Mr Chairman,

The EFTA States and Romania reached an historical decision, in December 1992, when signing the FTA. The radical changes opening the way of democracy and market economy in Romania were thus recognised. New opportunities for increased trade were set up through the establishment of a free trade area.

Since the entry into force of the FTA between the EFTA States and Romania, new developments in the European integration process and its consolidation have been registered for each of the Parties to the Agreement. The establishment of the EEA (European Economic Area) involving the EU and all current EFTA’s States is a proof. Romania’s decisive orientation towards accession to the EU and the negotiations under way for this goal are another proof.

All the Parties to the Agreement are also original Members of the WTO, which rules and disciplines are now a common feature for all of us. We are also working closer within the WTO in its current activities as well as in preparing the coming Ministerial Conference.

At this Sixth session of the Joint Committee, all the Parties to the FTA have to welcome that the provisions of the Agreement, as initially negotiated, are being enforced accordingly to the agreed timetables. Moreover, a number of improvements have been agreed and enforced during the period elapsed since the agreement has been put into force. I will recall, inter alia, the European cummulation of origin and a number of other amendments to the original agreement creating new trade opportunities for the Parties.

We are now so close to the celebration of a decade of application of the Agreement.  All of us - as Parties to the Agreement - have to express our satisfaction that the provisions aiming at establishing the free trade area have been rigorously enforced by all and each of the Parties to the Agreement.

While recognising and highly appreciating the correct enforcement of the Agreement, it is also our duty to better understand and identify, by common efforts, solutions for two factual questions concerning the modest levels of trade flows between EFTA States and Romania:

why they are   not in line with the patterns of their overall foreign trade flows, and in particular with their European trade flows; and 

why they are registering a continuous decline (as trade share) in  their overall exports and imports in a time where all Parties are involved in a closer co-operation with the EU and their trade in the region is continuously increasing in absolute and relative terms?

In this frame, we believe that one of our priorities for the next future should be to start a common reflection on how to increase and diversify bilateral trade, and take full advantage of the preferential trade regime, including through higher FDIs.

Mr. Chairman,

The economies of our countries have a substantial potential for further development of the mutual trade. I would like to briefly point out some key elements of the economic situation in Romania as well as of the Government Program for 2001-2004.

Romania’s economy is, as size, the second largest one in Central Europe and has a great economic potentiality deriving from:

significant and well trained human resources, including high skilled IT specialists, a developed network of research and design institutes and a moderate wage structure;

an important agricultural potential, a good industry, energy and raw materials ensuring prospects for the development of many economic sectors;

an industrial structure that, in spite of weaknesses inherited from the centrally planned regime, can reach high technological and economic performances, through completion of the privatisation, restructuring investments and a better management.

The main target is re-launching the economy, reversing the severe recession occurred during the transition process which led to the production and investments decline, hyperinflation, trade and balance of payments deficits, high unemployment. The Government program is based on structural adjustment and economic development policies aiming to stop the decline of the economy, create the pre-requisites for economic recovery and prepare Romania for accession to the EU.

Recent data indicates that:

In the year 2000 the GDP registered an increase of 1.6% after several years of dramatic decline. Its positive trend is continuing, preliminary figures for the first Quarter of 2001 indicating a raise of 4.6%.

The industrial output is still well below its 1990 level, but a growth of 4.2% was registered in the first Quarter 2001 as compared to the same period of the previous year.

A growth of 4.7% is registered in the same period in investments.

New jobs have been consequently created and the unemployment rate fall to 9.9% in April 2001 from 10.4% in March 2001 and 11.9 in April last year.

The foreign trade is continuing its dynamic trend registered in the previous years. However, the growth of the imports is higher than that of the exports: 36.8% and 19.6% respectively, resulting an increase of the trade deficit from 297.7 millions US Dollars in the First Quarter 2000 to 820.1 millions US Dollars in the first Quarter 2001. It is worth also to emphasise that in March this year the monthly value of the exports was for the first time higher than 1 billion Dollars (more precisely 1047 millions US Dollars).

Foreign Direct Investments made in Romania reached more than 6 billions US Dollars at the end of 2000. According to provisional data of the National Bank, Direct and Portfolio Foreign Investments reached 276 millions US Dollars in the first two months of this year.  

Mr. Chairman,

The above mentioned recent features of Romanian economy could represent encouraging signs of the economic policy of the Government. One of the main targets of the Governing Program for the period 2001-2004 is the recovery of the national economy. In order to succeed, special attention is attached to:

an appropriate structural adjustment aiming at efficiency and competitiveness;

setting up a strong and efficient private sector, through continuation and completion of the privatisation of major industrial companies;

stimulation of foreign investments;

development of the foreign trade and improvement of the business environment;

promoting a wide and permanent dialogue with the international financial institutions for setting up an effective partnership, as well as a reliable climate.

I would like to point out some of the recent measures, adopted by the Government, for general improvement of the business environment, as well as for the setting up of a more stable and predictable legal framework.

In order to speed up the privatisation process, including higher foreign participation, a new strategy has been developed. Guidelines have been drawn-up, as well as approaching ways to this important and sensitive topic. The Authority for Privatisation and Management of State Ownership is presently working, in co-operation with World Bank experts, to prepare an unique privatisation code, with the aim of simplifying and harmonising procedures and regulations in the field. The objective of the completion of the privatisation of the major industrial companies was clearly established. The privatisation will include, in the next months, a number of such companies, for example plants producing steel, tractors, electric equipment. We are confident that we will thus enlarge the list of already registered “success stories” in privatisation also in the banking sector (ROMANIAN BANK FOR DEVELOPMENT and BANKPOST), in the machines building industry (the car maker AUTOMOBILE DACIA), in telecommunications (ROMTELECOM), shipbuilding and in the field of rolling stock.

As regards the foreign direct investment area, a draft law has been drawn up, presently being under debate in the Parliament Commissions. It is foreseen to strengthen incentives for investment and simplify procedures. A Department for Foreign Investors was set up, under the direct co-ordination of the Romanian Prime Minister, backing up major investments exceeding 10 millions US Dollars. A Ministry of Small and Medium Sized Enterprises has been established which, among other tasks, envisage to set up an information center dedicated to the SMEs’ business development.

As regards the European integration process, Romania’s accession to the EU represents a strategic priority and adequate measures were already taken in order to accelerate the process of negotiation and to fill the gap vis-à-vis other countries that are currently more advanced in this process. Romania’s intention is to provisionally close, by 2004, all the chapters of negotiation, thus ensuring the technical premises for finalising shortly thereafter the negotiations. January 1st, 2007 is being maintained as a deadline for accession of Romania to the EU. The Government pays thorough attention to the preparation and conclusion of the chapters with strong impact on the running of the market economy in Romania.  

Mr. Chairman,

Before concluding, I would like to briefly refer to the status of economic relations between Romania and EFTA States.

We have noticed that there are differences between the trade flows data presented by Romania and the EFTA side. In spite of these differences both data are conducive to similar qualitative assessments.

First, significant fluctuations of the exports and the imports on a year-to-year basis were registered.

Second, the share of the mutual trade in the overall trade is decreasing.

In this context, it still remains an important potential to be explored in order to reach higher dynamic and values of the trade flows between Romania and each of the EFTA Member States. We also point out that investors from EFTA States are already present in Romania. Their investment amounted to 157 millions of US Dollars at the end of 2000, Switzerland ranking among the first 12 foreign investors in Romania.  It is encouraging to note that the share of the EFTA origin capital in the overall FDI investment in Romania is higher as compared to the corresponding trade figures (2.5% as compared with 1.2%, in 2000). However, being well known the huge potential of your countries, on one hand, and the good opportunities offered in this area by the Romanian economy, on the other hand, there is good prospective of improvement in this area too.

Consequently, I would suggest to promote enhanced co-operation and exchange of information, including through IT channels, between our national bodies in charge with trade and economic promotion. The Ministry of Foreign Affairs of Romania, through its Department for Foreign Trade and Economic Promotion is ready to contribute to this process. 

I would also like to suggest to work together to establish an EFTA-ROMANIA BUSINESS FORUM as a mean for enlarged and closer contacts between business people and professional associations from our countries. This would be complementary to other promotional activities carried out on a bilateral basis and would contribute to a higher awareness of the trade and investment opportunities in the free trade area between our countries and their integration in the European structures.

Thank you for the kind attention.

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