RESTRICTED
WORLD TRADE WT/SPEC/14/Rev.1
17July1996
ORGANIZATION(96-2809)
Original: English
DRAFT REPORT OFTHE WORKING PARTY ON
THE ACCESSION OFBULGARIA
Revision
1. Atitsmeetings on5-6November 1986 and20February 1990, respectively, theCouncil
established aWorking Party toexamine theapplication oftheGovernment ofBulgaria toaccede to
theGeneral Agreement under Article XXXIII andtosubmit totheCouncil recommendations which
might include adraftProtocol ofAccession. Itwasunderstood thatinitsexamination, theWorking
Party would consider thecompatibility ofBulgaria 'sforeign traderegime withtheGeneral Agreement
withregardinteralia,totheprovisionsconcerningnationaltreatment,non-discrimination,State-trading,
subsidies andsafeguards. On11April 1995, theGovernment ofBulgaria advised thatithaddecided
tonegotiate theterms ofaccession oftheRepublic ofBulgaria totheAgreement Establishing theWorld
Trade Organization (hereinafter referred toasthe"WTO") under Article XIIoftheAgreement. In
pursuance ofthedecision adopted bytheGeneral Council on31January 1995, theWorking Party
ontheAccession ofBulgaria totheGATT 1947 wastransformed intoaWTO Accession Working
Party.
2. The Working Party meton15-16 July1991, 12-13 July1993, 4-5November 1993,
28-29 March 1994, 7-8July1994, 5and7July1995, 10and[29]July1996under thechairmanship
ofH.E. Mr.E.C. Selmer (Norway). Theterms ofreference andthemembership oftheWorking Party
aresetoutindocument WT/L/58.
3. TheWorking Party hadbefore it,toserve asabasis foritsdiscussion, theMemoranda on
Bulgaria'sForeignTradeRegime(L/6364andCorr.1andAdd.1,L/6512,L/6880andAdd.1-5,L/7244)
andthequestions submitted bymembers ontheforeign traderegime ofBulgaria together withthereplies
oftheBulgarian authorities thereto (L/6867, L/7309/Rev.1, L/7309/Rev.1/Add.1 andWT/SPEC/12).
Inaddition, theGovernment oftheRepublic ofBulgaria made available totheWorking Party the
following material:
*Constitution oftheRepublic ofBulgaria, adopted in1991
*LawonCommerce, adopted in1991
*LawontheOwnership andtheUseofAgricultural Lands, adopted 1991WT/SPEC/14/Rev.1
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*LawonAccountancy, adopted in1991
*LawonValue Added Tax,adopted in1993
*LawontheExcise Duties, adopted in1994
*LawontheProtection ofCompetition, adopted in1991
*LawontheBulgarian National Bank, adopted in1991
*LawontheEconomic Activity ofForeign Persons andontheProtection ofForeign Investments,
adopted in1992
*LawonTransformation andPrivatization ofState-owned andMunicipal Enterprises, adopted in
1992
*LawonBanks andCredit Activity, adopted in1992
*Patent Law, adopted in1993
*LawonCopyright andneighbouring rights, adopted in1993
*TaxAdministration Law, adopted in1993
*TaxProcedure Law, adopted in1993
*ActontheSettlement ofNon-Performing Loans Contracting Prior to31December 1990, adopted
in1993
*TheTobacco andtheTobacco Products Act,adopted in1993
*Customs Tariff oftheRepublic ofBulgaria, inforce from 1July1992
*TheBulgarian foreign trade regime under Ordinance 241ofDecember 1993 oftheCouncil of
Ministers
*Regulations 180/1993 and181/1993 onsafeguard measures andonprotection against dumped and
subsidized imports
*Bulgarian 1992 import statistics
*Information onprogress oftheprivatization process ofState andMunicipal Enterprises by
28February 1994.
*Information concerning companies offered forprivatization
*Information concerning theconsistency oftheforeign traderegime withtheWTO Multilateral Trade
Agreements
*Note onTrade Related Aspects ofIntellectual Property Rights
*Note onservices régime
General Statements
4. Inhisinitial introductory statements totheWorking Party, therepresentative ofBulgaria noted
thattheaccession toGATT 1947wasapriority forhisGovernment andanimportant objective ofthe
reformprogrammecurrentlyunderwayinBulgariawiththewhole-heartedsupportofthenewdemocratic
structures inplace since1991. Later on,priortotheconclusion oftheUruguay Round, heemphasized
Bulgaria 'sintent tobecome afullfledged member oftheWTO preferably atthesame timeandon
thesame bases astheoriginal members. Hestressed thattheBulgarian economy wasintransition.
Since 1991 hisGovernment hadpursued decidedly thetransformation toamarket economy through
afarreaching process ofstructural adjustment andliberalization which needed thefirmsupport of
theinternational community. Even though in1992 GDP percapita wasonlyUS$983, Bulgaria had
chosen nottoclaim developing country status ontheexpectation thatmembers could recognize this
position asasignificant contribution onthepartofBulgaria towards fullparticipation inthemultilateral
trading system. Headded thatin1993 duetotheconsiderable liberalization oftheBulgarian foreignWT/SPEC/14/Rev.1
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trade regime andtotheabsence oftrade policy instruments todealwiththeimportation ofgoods in
suchincreased quantities andunder suchconditions astocause orthreaten tocause serious injury to
domesticproducers,theGovernmenthadhadtointroduce,asatemporarymeasure,asystemofreference
import prices affecting some agricultural imports. Thismeasure aimed atpreventing distortions inthe
domestic market inthemeat, freshfruitandvegetable sector resulting fromtheimportation ofheavily
subsidizedagriculturalproduction.BulgariawouldalignthesemeasureswiththeAgreementEstablishing
theWTO 'srequirements upon Bulgarian accession. Inthecaseofimports ofbeverages andtobacco
products themeasure wasaimed atavoiding under invoicing. Since theearlier meetings oftheWorking
Party, thedescription andtheestablished levels ofexport taxes forsome tarifflineshadbeenchanged;
thequota amount foricecream hadbeenincreased by50percent;twoeight-digit tariff lineshadbeen
introduced intheBulgarian Customs Tariff. Healsostated thatBulgaria waspresently inadifficult
economic situation. Thiswaspartly duetotheunresolved debttotheprivate banks andpartly tothe
severe repercussions intheBulgarian economy ofthetradeandeconomic sanctions against Serbia and
Montenegro. Inobserving theUNSecurity Council embargo against Serbia andMontenegro, Bulgaria
hadsuffered hugedirect andindirect losses. Bulgaria considered thattheprompt conclusion ofthe
proceedings ofaccession totheAgreement Establishing theWTO would represent inawayanindirect
compensation forsome ofthese losses. Noting thattheBulgarian economy andforeign trade were
undergoing profound transformations, hesaidthatthisprocess would continue withadditional structural
adjustment measures toavoid internal economic andsocial tensions. Bulgaria considered theaccession
totheAgreement Establishing theWTO asaveryimportant stage intheadjustment process ofthe
Bulgarian economy totheprinciples oftheworld economy andthemultilateral trading system which
would further theparticipation ofBulgaria asareliable tradeandeconomic partner intheinternational
communityandalsocontributetothecountry'sstability.Finally,hestressedthatBulgaria'sincorporation
intothemultilateral trading system should alsobeseen asasteptowards consolidating the
democratization oftheBulgarian society.
5. NotingthatBulgariahadbeenimplementingfarreachingreformsaimedatliberalizingtheforeign
trade regime andbringing itintoconformity withthemultilateral trading system, members ofthe
Working Party welcomed theinitial application ofBulgaria foraccession totheGeneral Agreement
1947andlaterontotheAgreement Establishing theWTO. Inexpressing support andencouragement
forBulgaria 'sefforts tocontinue toreform andliberalize itseconomy, members stated theirfirm
conviction thataccession totheGATT 1947andtotheAgreement Establishing theWTO would facilitate
thecountry 'stransition toamarket economy andwould contribute toimproving thestandard ofliving
oftheBulgarian people byensuring stability andattracting further investments which would bejob
creating andleadtobetter competitive conditions forBulgaria 'sexports inworld markets. InthisregardWT/SPEC/14/Rev.1
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theynoted thatthemarket access concessions negotiated inthecontext oftheUruguay Round which
were significant would beavailable toBulgaria upon becoming aMember oftheWorld Trade
Organization.
Foreign Trade Régime
6. TheWorking Party reviewed theforeign trade régime ofBulgaria andthepossible terms of
adraftdecision andProtocol ofAccession totheWorld Trade Organization. Theviews expressed
bythemembers oftheWorking Party aresummarized below inparagraphs 7to88.
I. Agreement Establishing theWorld Trade Organization (WTO)
7. PriortoBulgaria 'sformal application foraccession totheWTO, some members oftheWorking
Party noted thatwiththeformal adoption oftheFinal ActoftheUruguay Round atMarrakesh, GATT
accession deliberations mustcontemplate theexpansion ofthenegotiations toencompass theexpanded
scope ofGATT institutions under theWTO. They sought confirmation ofBulgaria 'sintent toadhere
totheWTO andstated thataprotocol package forBulgaria thatcontemplates WTO membership would
havetoinclude theschedules required forWTO membership, i.e.,anagricultural schedule thatincludes
commitments intheareas ofmarket access, domestic supports andexport subsidies andcommitments
onmarket access forgoods andservices; theinitial submissions/notifications required bytheWTO
Agreements onImport Licensing Procedures, Technical Barriers toTrade, Customs Valuation, and
TRIMs; alistofnon-tariff barriers bytarifflinethataresubject toimport orexport quotas, automatic
ornon-automatic licensing requirements, certifications, surcharges ortaxes, oranyrestrictions that
require WTO justification inorder to(1)comply withtherequirements oftheAgreement onImport
Licensing Procedures, and(2)negotiate, asnecessary, theirelimination ortransformation towards
WTO conformity. Intheirview thepreparation oftherequired WTO schedules andthelistofthe
non-tariff measures byHSlineandtheirWTO justification would facilitate thenegotiation ofaprotocol
forBulgaria. Inthisconnection some members requested information onBulgaria 'scommitments
concerning intellectual property rights anditsintentions concerning participation intheAgreement
onTrade Related Aspects ofIntellectual Property Rights andintheGeneral Agreement onTrade in
Services.
8. Amember suggested thatinthiscase,withtheconsent oftheGovernment ofBulgaria, accession
toGATT andtheWorld Trade Organization might beaddressed jointly. Therefore, hesuggested that
theProtocol ofAccession ofBulgaria might include thefollowing additional elements: (i)WTOWT/SPEC/14/Rev.1
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consistent application oftaxes andcharges applied toimports andnon-tariff restrictions onimports
andexports; and(ii)anassurance thatperiodic updates willbeprovided covering theprocess of
privatization andtrade byState-owned enterprises.
9. Inresponse therepresentative ofBulgaria saidthatasacountry acceding toGATT 1947Bulgaria
hadbeenassociated withtheconcluding phase oftheUruguay Round Multilateral Trade Negotiations
andhadsincethattimeenvisaged commencing theprocess ofaccession totheAgreement Establishing
theWTO. HisGovernment hadbeennegotiating accession totheGeneral Agreement 1947 withthe
clearintention ofbecoming aswellanoriginal member oftheWorld Trade Organization inaccordance
withtheprovisions ofArticle XIthereof. Therefore, themarket access negotiations undertaken between
anumber ofGATT contracting parties andBulgaria hadbeenexpected toleadtotheestablishment
ofaschedule ofmarket access commitments which would beannexed totheProtocol ofAccession
totheGATT 1947, aswellastotheGATT 1994following theapproval ofthePreparatory Committee
fortheEstablishment oftheWorld Trade Organization asforeseen intheMinisterial Decision of
14April 1994 onAcceptance ofanAccession totheAgreement Establishing theWorld Trade
Organization. Duetothecomplexity ofthenegotiating process, forreasons independent ofBulgaria
thisobjective hadnotbeenattained. Therefore, on11April 1995, theGovernment ofBulgaria had
applied foraccession totheWTO Agreement inpursuance ofArticle XIIthereof andtheWorking
Party onAccession toGATT 1947 hadbeentransformed intoaWTO Accession Working Party. In
documentWT/ACC/BGR/2,BulgariahadsubmittedtotheWorkingParty,informationontheconsistency
oftheforeign trade regime ofBulgaria withtheWTO Agreement aswellasNotes onTRIPS and
Services.
Tariff Negotiations
10. TheWorking Party noted thatinresponse totheinvitation ofBulgaria, anumber ofmembers
hadentered intomarket access negotiations withBulgaria relating toitsaccession totheAgreement
Establishing theWTO. Some members oftheWorking Party saidthatinthebilateral tariffnegotiations
theywould seekthebinding ofthewhole Bulgarian tariff aswellasother tariff concessions atarate
commensurate withBulgaria 'sdevelopment levelandparticipation inworld trade. Inresponse the
representative ofBulgaria saidthathisGovernment wasready tobindthecountry 'stariff atalevel
consistent withBulgaria 'sfinancial, development andtradeneeds, ontheunderstanding thattheresulting
package oftariffandtradeconcessions would constitute thecontribution ofBulgaria tothemarket access
negotiations forthepurpose ofmembership intheWTO.WT/SPEC/14/Rev.1
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II. Economic Transition
11. Inresponse toquestions concerning recent economic developments inBulgaria, inparticular
theroleoftheState, itsshare intheproductive capacity oftheeconomy andthemanner inwhich the
ownership responsibility overfirms wasexercised, therepresentative ofBulgaria saidthattheBulgarian
economy washeavily dependent onforeign trade. Inthepastseveral years, Bulgarian foreign trade
haddeclined mainly duetothecollapse oftrade withitspartners from Central andEastern Europe
andduetothestrict application oftheembargoes towards Iraq,Serbia andMontenegro inaccordance
withUNSecurity Council resolutions. Following thedisruption oftrade withtheformer CMEA
countries, tradeflows withtheOECD countries hadgained momentum. Headded thatinparallel with
theelaboration ofanewlegislative framework, theGovernment ofBulgaria hadembarked ona
comprehensive macroeconomic stabilization andstructural reform programme withsupport fromthe
internationalfinancialinstitutions.Theprogrammeaimedattwomainpolicyobjectives.First,toachieve
progresstowardsasustainableexternalposition,includingtherevivalofforeigntrade,thediversification
ofexternal markets andanimprovement inBulgaria 'sinternational reserves position, aswellasprogress
towards resolving Bulgaria 'sexternal debtsituation. Second, tomove towards restoring macroeconomic
equilibrium through theappropriate mixoffiscal, monetary andincomes policies. Akeystepinthis
regard wastoreduce thesizeofthefiscal deficit, totighten themonetary supply andcredit expansion
andtolimit theuncontrolled income growth. Theexpectation being thatprogress towards
macroeconomic stability would create afavourable environment fortheemerging private sector and
fornon-inflationary growth. Thefollowing results hadbeenachieved inimplementing theabove-
mentioned programme. In1991-1994 important reforms hadbeen undertaken towards price
liberalization, theliberalization ofthetrade regime andtheprocess ofprivatization, aswellasinthe
financial sector andinagriculture. TheGovernment hadfreed virtually allprices intheeconomy.
Nevertheless, the1991 three-digit inflation ratehadbeensubstantially reduced andremained under
control. Thus, the1993 yearly inflation rateof63.9percenthaddecreased inFebruary 1994 toa
4.6percentmonthly level. Herecalled thatinJuly1992Bulgaria hadintroduced anewcustoms tariff
based ontheHarmonized Commodity Description andCoding System. Since thenthecustoms tariff
hadbecome themaintradepolicy instrument intheeconomy. Alleconomy units, irrespective oftheir
ownership whether private orpublic hadacquired therighttocarry outforeign trade activities. The
licensing system applied inthepastwhich hadinvolved direct government regulation ofalmost all
foreign trade hadbeen eliminated. Inthefinancial sector, atwo-tier banking system hadbeen
established. Thenational currency, theleva(BGL), hadattained internal convertibility forcurrent
account transactions. TherateoftheBGLquoted daily bytheBulgarian National Bank reflected the
average weighted rateofsales andpurchases offoreign currencies ontheinterbank market. TheWT/SPEC/14/Rev.1
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exchange rateoftheBGL quoted bytheBulgarian National Bank, served onlyasareference tothe
licensed commercial banks andexchange bureaux. Customers could freely negotiate theexchange
ratewithcommercial banks andtheforeign exchange agents licensed forcarrying outsuchoperations.
12. Inhisstatements totheWorking Party, therepresentative ofBulgaria alsorecalled thatsince
theestablishment ofparliamentary democracy intheearly 1990s, fundamental political andeconomic
changes hadtaken place inBulgaria. Thecountry hadembarked upon aradical economy reform
programme aimed attransformation toamarket economy. Thetradereform hadopened theeconomy
toexternal competition andtheLawontheEconomic Activity ofForeign Persons andontheProtection
ofForeign Investments hadalsoBulgaria 'seconomy opened toforeign investors. Themain reforms
already inplace wereasfollows: theelimination oftheStatemonopoly offoreign trade in1989, free
access toforeign exchange forcurrent account transactions in1991, thecentral roleofthetariff and
thevirtual removal ofquantitative restrictions onimports, therationalization ofthetaxation regime,
thedecentralization oftheState-owned sector andthetransfer ofproductive property totheprivate
sector.
Foreign Exchange Regime
13. Inresponse toquestions concerning current foreign exchange regulations, theconditions for
itsacquisition anduse,andwhether therewasanydiscrimination intheavailability ofortheexchange
rates forimports ofcapital equipment, intermediate goods, consumer goods ornewmaterials, the
representative ofBulgaria saidthatfollowing theestablishment in1991 ofaninterbankmarket the
rateoftheBGL against theUS$wasquoted daily bytheBulgarian National Bank (i.e.theCentral
Bank) andreflected theaverage weighted rateofsalesandpurchases offoreign currencies ontheinter
bankmarket. Theexchange rateoftheBGL, quoted bytheBNB, wasapplied forthepurposes of
statistics, accounting andcustoms valuation. Itwasnotobligatory fortransactions andserved only
asareference tothelicensed banks andexchange bureaux. Customers freely negotiated theexchange
ratewiththecommercial banks andtheforeign exchange agents. They hadtherighttosellorpurchase
foreign exchange without anyrestrictions. Companies could freely buyfrom theinterbankmarket
theforeign exchange needed forpayments inconnection withimports andother types ofcurrent account
transactions, aswellastrade foreign currencies among themselves. There wasnosurrender requirement
fortheforeign currency earned. Local persons andforeigners could freely trade foreign currencies
ontheinterbank currency market forcurrent account transactions. Norestrictions existed fornationals
andforeign persons toopenaccounts inforeign currencies withcommercial banks andtodispose of
thefunds intheiraccounts.WT/SPEC/14/Rev.1
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14. Some members noted thatBulgaria maintained bilateral payment agreements withanumber
ofcountries, including Albania, Belarus, Cambodia, China, Ethiopia, Finland, Ghana, Greece,
Mozambique, Peru, Romania, theRussian Federation andUkraine andasked whether tradepayments
and/or foreign exchange provisions inthese agreements differed from sucharrangements/provisions
withother countries. Inresponse therepresentative ofBulgaria saidthattheRepublic ofBulgaria did
notmaintain atpresent anyoperational bilateral payments agreements denominated innon-convertible
currencies. Nointergovernmental barter, import/export balancing orpayment inkindagreements and
clearing arrangements wereineffect inBulgaria atpresent. Trade withallcountries wasconducted
under normal commercial considerations inconvertible currencies. Some members oftheWorking
Party noted thatBulgaria maintained barter agreements andimport/export balancing arrangements.
Therepresentative ofBulgaria informed theWorking Party thatnointergovernmental barter,
import/export orpayment inkindagreements andclearing arrangements were ineffect.
Price Policy
15. Some members enquired whether theStateCouncil Decree ofFebruary 1988which authorises
theState to"prevent unlawful increases inprices" wasinforce andasked foradetailed description
ofthepricecontrolmechanism.InresponsetherepresentativeofBulgariasaidthatthe1991Constitution
stipulates initsArticle 19paragraphs 1and2thattheBulgarian economy isbased onfree
entrepreneurship andtheLawcreates andguarantees toallcitizens andlegalpersons equal juridical
conditions foreconomic activity, preventing theabuse ofmonopolies andtheunfair competition. The
application ofStateDecree 115/1988 wasenvisaged aslongassome fixedprices aswellasmonitoring
existed. Thepricecontrol mechanism which wasirrespective oftheownership embodied fixedprices,
ceiling prices andprices under Government monitoring. Fixed prices hadapplied tothefollowing
energy products: electricity; heating energy; coalforproduction purposes andforhome heating,
briquettes (imported coalforproduction purposes wasnotsubject tofixed prices). These products
wereestimated toaccount forlessthan10percentofretail andwholesale turnover. Thefixed prices
hadbeenraisedseveraltimessincetheinitialincreasein1991.Thenumberofproductsunderfixed-price
hadbeenreduced andtherestriction onpetroleum prices lessened. Some members oftheWorking
Party asked thatBulgaria notify theWorking Party ofitstimetable andplans forabolition oftheprice
controls. In1995therepresentative ofBulgaria informed theWorking Party thatprices ofgoods and
services intheRepublic ofBulgaria hadbeenliberalized. Prices were determined bythemarket.
Prices could onlyberegulated inorder toavoid theestablishment ofmonopolies, toprevent abuse
ofadominant market position, andtoprotect consumers. Asof1995, price regulation wasofthe
following types: fixed prices forelectricity, heating energy (forthepopulation); domestic coal(forWT/SPEC/14/Rev.1
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production purposes), postal andbasictelecommunication services, tobacco products forinternal sale.
These products canbesoldonlyattheprices fixed bythegovernment; ceiling prices forgasoline,
diesel oil,gasoil(forproduction purposes), fueloil,gaspropane-butane. Theprices oftheseproducts
cannot exceed thelevel determined bytheCouncil ofMinisters monthly andonthebasis ofthe
international market prices andthechanges intheUS$/BGL exchange rate; price monitoring
(surveillance) forgoods thatareofvitalimportance totheliving standards ofthepopulation andthe
national economy. These arethefollowing: foodproducts (bread, meat, milk, yoghurt, cheese, oil,
butter, eggs, macaroni, noodles, sugar, beans, lentils, riceandpotatoes), non-food products
(pharmaceuticals forhuman consumption, coalandbriquettes forthepopulation), thepassenger (rail,
urban andinterurban) roadtransport services. Theregulation oftheprices under monitoring isapplied
actually onlyonprofit margins andnotontheprices themselves. Theprofit margins fordifferent
products cannot exceed: forproducers: 12percentforfoodproducts, 20percentforpharmaceuticals
andmineral waters, 7percentforheating energy forproduction purposes, coalandbriquettes,
12percentfortransport services, 30percentfordrinking water andwater forproduction purposes
and15percentforothernon-food products; forsellers: 14percentforfoodproducts and25percent
fornon-food products. Bulgaria stated thatthepricecontrols didnotbreach theWTO national treatment
principle -domestic andimported products were treated inauniform manner thatdidnotafford
protection todomestic production, norwasthere differential treatment based ontheorigin ofthe
products. Therepresentative ofBulgaria saidthatcurrently thegoods andservices withfixed prices
account for2.20percentofGDP, goods withceiling prices 1.13percentandgoods andservices under
price monitoring 8.94percent. Thus thetotalequals to12.27 percentofGDP. Therepresentative
ofBulgaria assured theWorking Party thatthepricepolicy pursued bytheRepublic ofBulgaria aimed
attransparent rulesandregulating mechanisms directed toovercome market imperfections, imbalance
ofsupply anddemand andtheneedtomaintain control overprices ofnatural monopolies. Theprice
control measures which Bulgaria maintained didnotdiscriminate against imports. TheWorking Party
tooknoteofthese assurances.
16. Therepresentative ofBulgaria confirmed thatpricecontrols onproducts andservices inBulgaria
havebeeneliminated withtheexception ofthose listed inparagraph 15.Headded that,except inthe
caseofcriticalsituations,monopolies,theprotectionofconsumers,orabuseofdominantmarketposition
byfirms, prices forgoods andservices inevery sector inBulgaria weredetermined bymarket forces.
Hefurther confirmed thatintheapplication ofsuchcontrols, andanythatareintroduced orre-introduced
inthefuture, Bulgaria willapply suchmeasures inaWTO-consistent fashion, andtakeaccount of
theinterests ofexporting WTO members asprovided forinArticle III.9oftheGATT 1994. BulgariaWT/SPEC/14/Rev.1
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willalsopublish thelistofgoods andservices subject toStatepricecontrols intheStateGazette including
anychanges from thelistinparagraph 15.TheWorking Party tooknoteofthese commitments.
17. Therepresentative ofBulgaria stated thatthesystem ofimport reference prices applied to
agriculture hadbeeneliminated asof1January 1995, andthatsuchmeasures willnotbereintroduced
except inaccordance withWTO Agreements. TheWorking Party tooknoteofthiscommitment.
State-Owned Enterprises andPrivatization
18. Some members requested acomprehensive listofenterprises wholly orsubstantially owned
bytheStateandtheproducts inwhich theytraded aswellastheirtrade volume andvalue andasked
forinformation ontheroleoftheState inmanagement anddecision making, thebankruptcy and
liquidation ofState-owned firms. Members alsorequested adescription ofthePrivatization Law, and
thefunctions andoperations oftheAgency onPrivatization aswellasthecurrent status andthefuture
prospects oftheprivatization process. Inresponse, therepresentative ofBulgaria saidthatthenumber
ofStateenterprises wasabout 4,500. ThePrivatization Programme for1993hadenvisaged privatization
of318enterprises, including 150differentiated assets. Privatization wasoneofthemost essential
elements inthestructural reform inBulgaria. Thisprocess hadstarted atthebeginning of1992with
therestitutionlawswhichaffectedmainlyindustrialandresidentialproperty,smallshopsandagricultural
land. Thelegalregulation ofprivatization inBulgaria wascontained intheLawonTransformation
andPrivatization ofStateandMunicipal Enterprises (published inStateGazette No.38of1992). The
Stateauthoritiesengagedintheprivatizationprocessareasfollows:(i)TheParliament:adoptslegislative
acts,adopts theannual privatization programme submitted bytheCouncil ofMinisters, appoints six
members oftheSupervisory Board oftheAgency forPrivatization, supervises thefulfilment ofthe
annual privatization programme, andinparticular approves thereport onitsfulfilment given bythe
Agency forPrivatization. (ii)TheCouncil ofMinisters: adopts regulations ontheimplementation
oflegislative acts, authorises therelevant government bodies forsmall-scale privatization (lessthan
BGL 10million balance sheet value ofassets oftheenterprise under privatization), approves the
privatization ofenterprises withbalance sheetvalue ofthelong-term assets exceeding BGL200million,
appoints fivemembers oftheSupervisory Board oftheAgency forPrivatization. (iii)TheAgency
forPrivatizationisagovernmentbodyauthorizedtoorganizeandcontroltheprivatizationofState-owned
enterprises aswellastocarry outprivatization inthecases provided bythelaw.Itisabudget-financed
legalperson; licences Bulgarian andforeign appraisers, drafts theannual privatization programme and
submits ittotheCouncil ofMinisters, organizes andcontrols privatization effected byother bodies,
privatises State-owned enterprises withabalance sheet value oflong-term assets exceeding BGL 10WT/SPEC/14/Rev.1
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million (about 30percentofthetotalnumber ofState-owned enterprises). (iv)Government bodies,
authorised tocarry outsmall scaleprivatization: TheCouncil ofMinisters hasgranted privatization
competence tosome ministries andcommittees withrespect toState-owned enterprises withabalance
sheet value oflong-term assets upto10million BGL. Those government bodies takedecisions for
privatization, carry outtheprivatization process andconclude theprivatization transactions.
(v)Municipal Councils: theMunicipal Councils areresponsible fortheprivatization ofmunicipal
enterprises, regardless oftheirbalance sheet value oflong-term assets. TheLawregulates thebasic
framework within which theprocess ofprivatization iseffected. Thecompetence fortaking privatization
decisions isallocated totheStateortomunicipal bodies depending ontheformofownership andassets
tobeprivatized. TheLawprovides forequal treatment ofallparticipants inprivatization. Theright
ofpreferential participation hasbeenestablished onlyforworkers andemployees withaminimum
length ofservice attheenterprise undergoing privatization prior tothedateofdeclaration ofthe
privatization decision. Incases ofselling ofshares andstock owned bytheStateandMunicipalities,
theemployees havetherighttobuyupto20percentoftheshares ofthecommon stock ofthecapital
ofthecompany ata50percentdiscount onthefixed price. Only if30percentoftheemployees
declare thattheywillparticipate intheauction orcompetition, theybecome owners oftheassets with
a30percentreduction oftheprice, declared asdefinitive. Theoriginal selling price ofshares, the
initial price oftheauctions andthetender price atholding competition ornegotiations aredetermined
onthebasis ofavalue appraisal oftheenterprise. TheLawregulates thefollowing methods of
organizing thesaleofshares andstock owned bytheStateandtheMunicipalities which maybeapplied
simultaneously: open sale(applied onlyforshares andafter preliminary co-ordination withthe
Privatization Agency), public auction, publicly announced competition andnegotiations withpotential
buyers. ThesaleofState andmunicipal enterprises orparts thereof iseffected through auction or
competition. Theownership canbetransferred byrenting foraperiod upto25years withaclause
forbuying out;management withclause forbuying outorselling tothirdperson; salebypaying by
instalments withretention ofownership; saleunder deferment anddiscontinuation conditions suchas
maintaining theprevious activity oftheenterprise, thework places, making investments, obtaining
certainresultsetc.TheprovisionsoftheLawonTransformationandPrivatizationofStateandMunicipal
Enterprises wereapplied alsowithrespect toselling property ofStateandmunicipal enterprises that
havebeenclosed down owing toinsolvency orforother reasons, leftafterpaying offalldebts in
accordance withtherulesofclosing down incaseofinsolvency, aswellaswhole enterprises transformed
intocommercial companies ordifferentiated parts which arefully owned bytheState andthe
Municipalities withabookvalue ofthefixed assets below BGL10million. Privatization waspossible
through restitution aswell.WT/SPEC/14/Rev.1
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19. Therepresentative ofBulgaria saidthatin1994 thePrivatization Agency andthecentral
governmental bodies haveundertaken atotalnumber of610privatization procedures (489forwhole
Stateenterprises and121forpartsofStateenterprises), distributed persectors asfollows: industry -
198,trade -127,agriculture -115,tourism -85,construction -42,transport -20,others -23.The
totalnumber oftheprivatization transactions concluded in1994is171(sales ofwhole enterprises -90
(52.6 percent), salesofpartsofStateenterprises -81(47.4 percent), distributed persectors asfollows:
trade -55,construction -15,transport -10,tourism -8,others -2.During thefirstfivemonths of
1995 thetotalnumber ofinitiated privatization procedures is218,whereas thetotalnumber ofthe
transactions concluded is97.There isaclear tendency ofacceleration intheprivatization process
demonstrated bytheindex ofthetransactions concluded. AttheendofMay1995 thetotalnumber
ofinitiated privatization procedures is1228andthatoftheconcluded privatization transactions is337.
Theobjectives, priorities andfigures relevant totheprivatization process forthecurrent yearareset
inthe1995Privatization Programme (SG54/1995) adopted bytheNational Assembly. The"exemption
list"ofsome sectors thatareexcluded fromthescope oftheprivatization under thisprogramme does
notconstitute byitself aprohibition butatemporary exclusion ofalimited number ofsectors forthe
current year. Privatization ofbasic telecommunications isnotscheduled asimminent because ofthe
projects fortheir modernization financed withinvestment credits oftheWorld Bank andother
international financial institutions thatareStateguaranteed. Themachine building sector isnotin"the
exemption list". Moreover, itisamong thesectoral priorities under the1995privatization programme.
Asofmid1995thelandunder private ownership orcontrol accounts for65percentofthelandsubject
torestitution.
20. Therepresentative ofBulgaria added thatthestatus asof30June1995 oftheprivatization
process wasasfollows:WT/SPEC/14/Rev.1
Page13INFORMATION ONPROGRESS OFTHEPRIVATIZATION PROCESS OFSTATE ENTERPRISES BY30.06.1995
STEP UNDERTAKEN Privatizat Ministry of Committee of TOTAL
Agency Industry Agricult. Construct. Trade Transport. Culture Tourism Telecom. Energy Forestry
1 Decision toopen procedure 280 199 170 76 277 109 14 91 1 8 3 1228
-onwhole enterprises 229 166 98 30 141 78 13 73 1 6 3 838
17 7 9 5 4 6 48
-onseparated parts of
enterprises51 33 72 46 136 31 1 18 2 390
25 15 21 15 59 8 6 149
2 Suspended procedures 14 4 11 12 5 2 2 50
3 Tenders forevaluation
announced150 159 55 29 127 72 7 36 1 4 1 641
4 Evaluations assigned 127 150 151 61 189 76 6 34 1 4 799
5 Evaluations accepted 116 113 104 55 122 48 3 29 2 592
-returned 5 1 14 20
6 Tenders, auctions, direct
negotiat.23 37 45 39 18 2 3 167
-auctions 6 6
-tenders 3 3 22 4 2 34
-direct negotiations 20 34 17 39 14 3 127
8 7 39 6 60
7 Transactions concluded -total 63 34 73 38 90 17 2 18 1 1 337
a/. onwhole enterprises by: 34 33 33 15 24 7 2 11 1 1 161
-auctions 5 5
-tenders 4 7 11 10 15 2 49
-direct negotiations 30 26 17 3 9 7 2 9 1 1 105
6 2 2 3 1 6 20
b/. onseparated parts of
enterprises by20 1 40 23 66 10 7 167
-auctions 7 2 19 28
-tenders 11 20 10 30 3 1 75
-direct negotiations 9 1 13 11 17 7 6 64
7 1 5 10 16 3 5 47
c/. assets 9 9
8 Transactions suspended 2 1 1 2 6
9 Expenditures inthous.leva 37855 10913 6159 5712 7295 4837 405 2951 123 532 34 76816.1
10 Proceeds ofsales -in
thous.leva3399423 195571 136332 127904 224406 29331 5100 180915 2849 80 4301912.4
-paying insecurities 4082956 114893 66357 42292 342551 77291 15001 35821 8606 2445 4787813.6WT/SPEC/14/Rev.1
Page14
Duetotechnical reasons Bulgaria wasnotinaposition toprovide exactdataontheshare ofState-owned
companies inforeign trade. However, theshare oftheprivate sector inGross Domestic Product1was
asfollows:
Theshare oftheprivate sector inGross Domestic Product
(computed atcurrent price)
(percentage shares)
1990 1991 1992 1993 19941
Economic activity
Private sector -total 9.5 11.9 18.3 25.0 27.2
Agriculture andForestry 6.7 5.3 6.7 7.2 8.9
Industry21.7 2.7 4.3 6.3 5.9
Services31.1 7.3 7.3 11.5 12.4
21. Therepresentative ofBulgaria saidthatthetotal number ofprivatization transactions
scheduled forconclusion bythePrivatization Agency under the1995 Privatization Programme accounts
foratotalof170transactions. Besides, there were 34large State-owned enterprises which willbe
subject toprivatization bytheAgency forPrivatization upon approval bytheCouncil ofMinisters.
Attheenterprise levelthenational statistics account fortradeingeneral andnotaccording toentities.
Thetotalshare oftheprivate enterprises was60percent. Theshare offoreign trade accounted by
thelargestState-ownedenterprisesinmajorsectors(Bulgartabac,Balkancar,Bulgarplodexport,Bulgarian
MeatCompany,Electroimpex,Industrialimport,Intercommerce,Isotimpex,Lesoimpex,Mineralimpex,
Pharmachim, Rudmetal, Vinimpex) in1994 was7percent.
22. Therepresentative ofBulgaria added thatState intervention intheeconomic activity ofall
companies hasbeenabolished. Article 19oftheConstitution ofBulgaria states, interalia,thatthe
economy ofBulgaria isbased ontheprinciples ofthefreeentrepreneurship andthatthelegislation
1Computed atbasis prices
2Including construction
3Including transport, communication, trade, housing, public utilities andhousehold services, science
andtechnology, education, culture andart,health, social insurance, finance, credit andinsurance.WT/SPEC/14/Rev.1
Page15
shallcreate andassure equal legalconditions forcarrying outeconomic activities foralllegalandnatural
persons,thusestablishingtheprincipleofnon-discriminationbetweenState-ownedandprivateenterprises.
Privileged protection ofState property hasbeendeleted inthePenal Code. Moreover, theLawon
theProtection ofCompetition of1991prevented enterprises fromabusing theirdominant position which
could leadtoarestriction ofcompetition. The1991LawonCommerce andallother legislation provide
foralegalstatus ofState-owned enterprises entirely identical withthatofprivate enterprises. Upon
the"corporatization", i.e.thetransformation ofStateorganizations intojoint-stock orlimited liability
companies, their autonomy from theGovernment isguaranteed sothattheir activity isbased on
commercial considerations only. Thus theState'sroleinState-owned enterprises isrestricted tothat
ofanordinary shareholder. TheState-owned enterprise isanindependent legalperson being atitular
ofitsproperty andacting onitsowneconomic andlegalresponsibility. State-owned enterprises are
inaposition todefine independently theirownmarket behaviour, toimplement itthrough therespective
operational decisions andtoconclude commercial transactions ofanykindinaccordance withthe
customary business practice andthelegislation inforce. Neither economic norlegalprivileges are
granted tothembytheGovernment. Thelegalstatus, theposition oftheStateasaregular shareholder
andtheidentical legalandeconomic treatment ofState-owned andprivate enterprises areguarantees
thattheStatewillnotbeinvolved inenterprise policy making. Themembers oftheManagement and
Supervisory boards oftheState-owned enterprises areappointed pursuant toArticle 137,paragraph
1,subparagraph 5andArticle 221,paragraph 1oftheLawofCommerce. Theselection process is
based oncertain requirements withrespect toeducation, qualification, business experience, etc.The
candidates foranappointment should meettheabove mentioned criteria. Individual candidacies are
consideredonacompetitivebasis.TheselectedcandidatesorcandidatenegotiateaManagementContract
withtherespective governmental body. Thiscontract regulates therelations between theManagement
andSupervisory Boards andtherelevant governmental body. AsaruletheManagement Contracts
areofthreeyears duration andcanbeterminated ongrounds strictly defined sothatastable management
oftheState-owned enterprises isguaranteed inaccordance withthegeneral requirement ofcompliance
withthelabour legislation inforce. TheBankruptcy Lawhadbeenadopted in1994, asSG63/1994.
Itformed PartIVoftheCommercial Lawandwasentitled "Insolvency" Inthelaw,there were no
privileges forState-owned firms orinterference oftheStateinthebankruptcy procedures. Insolvent
companies canbeoffered forliquidation bytheState orbytheservicing banks. However there is
adifference intheprocedure: theCouncil ofMinisters ortheappropriate Minister simply issues a
formal decision tosucheffect, whereas thebanks andcreditors havetostartformal proceedings before
thecourt.
23. Finally, therepresentative ofBulgaria saidthatinDecember 1993, theParliament hadadopted
theLawontheSettlement ofNon-Performing Loans Contracted Prior to31December 1990. LoansWT/SPEC/14/Rev.1
Page16
contracted bycompanies andbanks withState-ownership over50percentbefore 31December 1990
andwitharrears ofmore than180dayswould bereplaced bylong-term bonds denominated inBGL
andinUS$. Thebonds issued inpursuance oftheprovisions ofthisLawcould beusedbothassecurities
andintheprocess ofprivatization. Within three months from thetransformation oftheloans, the
managing bodies ofthecompanies should develop programmes forrestructuring aimed atstabilizing
thefinancial situation oftheenterprises. Therepresentative ofBulgaria confirmed thattheMinistry
ofFinance andtheBulgarian National Bank maintained apolicy ofnotgranting orguaranteeing loans
toStateowned enterprises foroperational purposes. Headded thatthebreak-up ofmostlarge State-
ownedenterprisesintosmallerunitshadbeenvirtuallycompleted.Thesenewenterpriseswereregistered
under the1991 LawonCommerce (theCompany Act)ascommercial companies (both joint-stock
companies andlimited liability companies) withtheStateasasingle shareholder, thuslegally prepared
forprivatization. Inconclusion, therepresentative ofBulgaria expressed theviewthattherestitution
ofmany urban properties andprivatization hadcreated adynamic private sector which already accounts
forathirdofalleconomic activity inthecountry.
24. Anumber ofmembers oftheWorking Party expressed appreciation fortheclarifications
concerning thestatus andprospects forBulgaria 'sefforts toprivatize State-owned enterprises andthe
manner inwhich theState exercised itsownership inState-owned firms andtheroleofState-owned
enterprises ininternational trade. These members noted, however, thatwhile Bulgaria wasconstructing
thelegalframework forequality oftreatment ofprivate enterprises withStatefirms andtheeventual
separation offormer Statefirms fromgovernment association afterprivatization, thecurrent rulesfor
themanagement ofState-owned firms contemplated aStateroleinenterprise operations. Forexample,
Government ministries appointed theManagement andSupervisory Boards thatselect themanagement
ofState firms andthatnegotiate theterms ofaManagement Contract withtheselected individuals.
These contracts regulated therelationship between management, labour, andtheState, andtherewere
areas, suchastheestablishment ofsubsidiaries, where themanagement wasrequired toconsult with
theGovernment. Even though Bulgaria hadstated thattheGovernment wasnotliable forState
enterprises debt,themostrecent regulations hadtransferred theultimate responsibility foragreatdeal
ofStateenterprise debtfromthebanks totheGovernment, inorder toallow thebanks toreorganize
theirroleinBulgaria 'seconomy andfreeupresources fornewloans. In1994, afullseparation of
theStatefromthestillsizeableandeconomicallycriticalState-ownedsectorwasnotpossible.Moreover,
intheirview, Bulgaria 'sprivatization process wasproceeding veryslowly because oftheapproximately
4,500 State firms slated fortransfer toprivate ownership under theLawonTransformation and
Privatization ofStateandMunicipal Enterprises, Bulgaria waspreparing some 400Statefirms forsale
andthereasons forcautious progress were clear. Itwould appear, therefore, thatthesetting upof
aneconomic basisindependent oftheBulgarian Statewould bealong-term project. While respectingWT/SPEC/14/Rev.1
Page17
Bulgaria 'sstatements concerning itsultimate goals andintent toestablish amarket-driven economy
based onprivate ownership, these members believed thatforaccession totheAgreement Establishing
theWTO therelationship between theBulgarian Stateanditstrade andindustry hadtobeclear. As
aminimum theyexpected transparency anddialogue asBulgaria 'seconomic transition progressed and
would intend toaddress these issues intheProtocol ofAccession ofBulgaria. Amember recalled
thatBulgaria hadthecommitment tokeeptheWTO informed ofthesedevelopments. Therepresentative
ofBulgaria affirmed hisGovernment 'sintention toensure thetransparency ofitsnational tradepolicies
andpractices under theregular trade policy reviews intheWTO, including thewider background of
national andeconomic development. Thiswasnottoberegarded asabasisfortheimposition ofspecific
obligations under theAgreements orasabasis fortheadoption ofnewspecial policy commitments.
Bulgariacouldnotundertakecommitmentsexceedingtheregularmembershipobligations.TheRepublic
ofBulgaria wascommitted tofulfilthenotification requirements ensuing fromtheexisting procedures
intheWTO Agreements. TheWorking Party tooknoteofthiscommitment.
25. Therepresentative ofBulgaria confirmed thattheformer State monopoly inforeign trade in
Bulgaria hasbeenabolished andthatnorestrictions existontherightofforeign anddomestic individuals
andenterprises toimport andexport goods andservices within Bulgaria 'scustoms territory, except
asprovided forinWTO Agreements. Hefurther confirmed thatindividuals andfirms werenotrestricted
intheirability toimport orexport based ontheirregistered scope ofbusiness, andthecriteria for
registration ofcompanies inBulgaria were generally applicable andpublished intheState Gazette.
TheWorking Party tooknoteofthese commitments.
26. Attherequest ofamember oftheWorking Party, therepresentative ofBulgaria agreed that
itwasimportant toensure fulltransparency andtokeepWTO Members informed ofitsprogress in
thereform ofitstransforming economic andtraderégime. Hestated thathisGovernment would provide
promptly toWTO Members information ondevelopments initsprogramme ofprivatization along the
linesofthatprovided totheWorking Party, andonother issues related toitseconomic reforms as
relevant toitsobligations under theWTO. Hestated that,asarule,"promptly" would mean notless
thanonceevery 18months. TheWorking Party tooknoteofthiscommitment.
III. Tariff Policy
Customs Tariff
27. Some members oftheWorking Party noted thatBulgaria hadrelatively highandrecently
increased average tariff levels which forsome items hadreached 40-55 percent, particularly inthe
agricultural sector. Theyrequested thatBulgaria justify theseratesanddescribe howthetariffstructureWT/SPEC/14/Rev.1
Page18
would develop overthenext5-10years. Inresponse therepresentative ofBulgaria saidthatasaresult
oftheprice reform theremoval oftheimport restrictions andthedrastic changes inimport licensing,
tariffs hadbecome themain trade policy instrument. Anewimport tariff based ontheHarmonised
CommodityDescriptionandCodingSystemwasinforceinBulgariaasof1July1992.Thenewcustoms
tariffcontainedninety-sixchapters,1,241four-digitheadings,5,018six-digitheadingsand845eight-digit
headings. TheTariff contains twocolumns. Thefirstcolumn specifies rates under Bulgaria 's
Generalized System ofPreferences scheme. Thesecond column specifies most-favoured-nation rates
(m.f.n.). Imports fromleast-developed countries weresubject tozerotariffrates. Thetariffforimports
fromcountries which donotapply m.f.n. treatment toBulgaria were200percentofthem.f.n. rate.
Theaverage nominal m.f.n. tariff ratewas17.96 percent. Thetrade weighted average form.f.n.
imports was13.72 percent. Forindustrial products, theaverage nominal ratewas16.69 percent
andthetrade weighted average was12.50 percent. Foragricultural products, thelevels were25.97
percentand30.91 percent,respectively. Bulgaria 'smaximum tariff of55percentapplied tothree
agricultural items. Bulgaria 'stariff hadfivebasic m.f.n. ratesranging from 5to40percent. The
mostcommon ratewas25percentrepresenting almost 31percentofalltariff lines. Only8percent
oftarifflinesfellunder therateof40percentaccounting forlessthan5percentoftotal1992imports.
Thegreatest share ofimports (34percent) fellunder thelowest rateof5percent. Thepreferential
margin under Bulgaria 'sGeneralized System ofPreferences scheme varied from20to40percentof
themostfavoured nation (m.f.n.) rates. Asafuture member oftheWorld Trade Organization, Bulgaria
would aimatfurther development oftheprocess ofliberalization under theconditions andinconformity
withtheGATT 1994 andtheAgreement Establishing theWTO rules andpractices.
Surcharges
28. Some members oftheWorking Party requested information onthe3percentimport surcharge
introduced on1August 1993aswellasthecalendar foritselimination. Therepresentative ofBulgaria
saidthatasof1August 1993, atemporary import surcharge wasintroduced inorder toforestall the
imminent threat ofaserious decline intheforeign exchange reserves. The1993 surcharge affected
equallyalltradeexceptsomeproductsessentialfortheeconomy(energyproductsandbaserawmaterials)
andwasapplied onanergaomnes basisincluding thetrading partners withwhom Bulgaria 'scommercial
relations arebased onfreetrade agreements. Therepresentative ofBulgaria added thataschedule
ofelimination wasannounced atthetimeoftheintroduction ofthemeasure in1993, andBulgaria
hadcomplied withthisschedule strictly. Until theendof1993, theimport surcharge was3percent.
Ithadbeenreduced to2percentfortheyear1994, andto1percentfor1995. Therepresentative
ofBulgaria stated thattheimport surcharge of1percentadvalorem (introduced in1993) hadbeen
eliminated on1January 1996. However, inviewoftheverydifficult balance ofpayments position,WT/SPEC/14/Rev.1
Page19
theGovernment oftheRepublic ofBulgaria decided tointroduce, effective 4June1996, atemporary
importsurchargeof5percentadvalorem.Adescriptionofthesurcharge,thereasonsforitsimposition,
andtheprecise product coverage asreflected inWT/SPEC/41, areannexed tothisReport.
29. Therepresentative ofBulgaria stated thataccording tocurrent regulations, thesurcharge
introducedat5percentadvaloremon4June1996wasappliedtoallimportsfromallsources(including
preferentialtradingpartners)withtheexceptionofthelistofproductscontainedinWT/SPEC/41annexed
tothisReport. Thesurcharge would bereduced to4percenton1July1997, to2percenton
1July1998, to1percenton1July1999, andfinally eliminated on30June2000. Heconfirmed
thatthesurcharge wastobebased onthecustoms value ofthegoods andwould beadded totheapplied
tariffratesandwould notalterthecommitments undertaken intheSchedule ofConcessions onGoods
annexed totheProtocol. After accession, theGovernment ofBulgaria would immediately enter into
consultations withtheWTO toreview themeasure within theframework ofWTO provisions governing
theapplicationofmeasuresforBalanceofPaymentspurposescontainedinArticleXIIoftheGATT1994
andtheWTO Understanding ontheApplication ofMeasures forBalance ofPayments purposes, and
would review remaining measures onanannual basis. Ifitwasdetermined inthecourse ofanyof
these consultations thatBulgaria wasnolonger justified inapplying suchmeasures forbalance of
payments purposes, theGovernment ofBulgaria would advance theelimination ofthissurcharge.
Hefurther confirmed thatBulgaria would notexpand thelistofexempted import categories without
consultations withtheWTO toensure thatthesurcharge wasnotbeing applied selectively, andthat
anysubsequent application ofcustoms duties, charges andsurcharges toimports byBulgaria willbe
inaccordance withtheprovisions ofWTO Agreements. TheWorking Party tooknoteofthese
commitments.
30. Therepresentative ofBulgaria stated that,asofthedateofaccession, theonlycharges applied
toimports would betheimport dutyandtheCustoms Clearance Fee,andtheimport surcharge as
described inparagraph 29.Anyother charges applied toimports afterthistimewould beinaccordance
withWTO provisions. Reflecting thissituation, heconfirmed thatBulgaria would notlistanyadditional
charges initsgoods market access schedule under Article II.1(b) oftheGATT 1994. TheWorking
Party tooknoteofthese commitments.
Import Taxes
31. Inresponse toquestions concerning import taxes, therepresentative ofBulgaria saidthatthe
15percentimport taxapplied in1991 inaddition totheimport dutyhadbeenabolished withthe
introduction ofthenewimport tariff. However, asof1July1992animport taxhadbeenintroducedWT/SPEC/14/Rev.1
Page20
foralimited number ofproducts. Thelisthadbeenreduced in1993 andimport taxes wereapplied
tofrozen beef,veal,porkandpoultry meat, yoghurt, butter, freshgrapes (from 1Julyto31October),
fresh apples (from 1August to31December), fresh tomatoes, cucumbers, peppers, processed fruit,
fruitjuices. Theimport taxwasapplied alsoonimports ofsome perfumery andcosmetics items.
Theimport taxhadvaried from 5percent(juices andperfumes) to25percent(frozen pork, veal,
beefandpoultry meat). Asof1July1993, Bulgaria hadeither eliminated or,inthecaseofafew
agricultural items, incorporated theimport taxes intothecustoms tariff. Thischange wasergaomnes
andaffected trade under preferential agreements. TheWorking Party tooknoteofthisstatement.
Finally, therepresentative ofBulgaria saidthatanimport taxof10percentofthecustoms value was
payable onsecond-hand motor vehicles which hadbeenregistered fornotlessthan10years (ameasure
which actually substituted aformer banonimports ofusedautomobiles ofnotlessthan10years).
Thetaxwasapplied forecological reasons. Amember oftheWorking Party questioned theconformity
ofthe10percenttaxonimports ofusedautomobiles withArticle IIIoftheGATT 1994 asthetax
isnotapplied toautos ofsimilar vintage when soldbyadomestic owner.
32. Therepresentative ofBulgaria stated thatthe10percenttaxonimports ofusedautomobiles
wasapplied forecological reasons. Bythedateofaccession, thetaxwould berevised toensure that
usedautomobiles whether imported orsoldwithin theBulgarian customs territory would bearthesame
taxuponsale,importationorresaleoftheautomobile.TheWorkingPartytooknoteofthiscommitment.
Duty Exemptions
33. Some members requested information ondutyexemptions forcertain imports, aswellas
information onhowtariff ratequotas wereallocated. Therepresentative ofBulgaria saidthatsome
goods were temporarily exempted from import duties forsocial andecological considerations. The
listofexemptions wasbeing gradually reduced. Exempted fromduties weretheimports ofbabyfood,
rawmaterials andsubstances fortheproduction ofmedicines, animal feed, farming equipment and
spares, plantprotection chemicals andsome fertilizers, ambulance cars,equipment forenvironmental
protection aswellasmeasurement andcontrol devices forenvironmental analysis, molasses, non-
processed timber, medical appliances andequipment. Alltariff exemptions wereimplemented ona
ergaomnes basis without anydifferentiation astotheorigin and/or conditions ofimportation. The
tariff ratequotas wereallocated ona"first come, firstserved" basis. Thelistofproducts subject to
temporary dutysuspension orunder tariff quotas weredetermined bytheannexes oftheRegulation
oftheCouncil ofMinisters No.307/1994.WT/SPEC/14/Rev.1
Page21
34. Therepresentative ofBulgaria confirmed thattheaccess totheduty-free andreduced-duty tariff
ratequotas (TRQs) applied ontheproducts listed inparagraph 33willbeadministered onanon-
discriminatory basisamong allimport suppliers. TheWorking Party tooknoteofthesecommitments.
Customs Fee
35. Therepresentative ofBulgaria confirmed thatby31December 1997 Bulgaria would bring
itscustoms clearance feeintoconformity withArticle VIIIoftheGATT 1994. Inthisregard, from
thattimerevenues collected through theapplication oftheCustoms Clearance Feewould beusedsolely
fortheoperation ofcustoms clearance ofimports andexports towhich thefeewasapplied, andtotal
annual revenues fromcollection ofthefeewould notexceed thecostofcustoms clearance operations
items subject tothefees. Information regarding theapplication andlevelofthefee,revenues collected
andtheirusewould beprovided toWTO Members upon request. TheWorking Party tooknoteof
these commitments.
Export Taxes
36. Inresponse toquestions concerning theexport taxes levied byBulgaria andtheirrates, the
representative ofBulgaria saidthatasofNovember 1993 export taxes werelevied oneleven groups
ofproduct, notably rawmaterials suchassunflower seedandoil,hides andskins, timber, firewood,
wood intherough, waste andscrap paper, wool, grain flourandother products. Inreply toaquestion
asking whytheexport taxeswerenecessary, therepresentative ofBulgaria saidthatwerespecific taxes
applied toprevent orrelieve critical shortages offoodstuffs andother essential products, consistent
withArticle XIoftheGATT 1994. Thistaxwastemporary andwould bedismantled when thedomestic
supply situation improved. TheWorking Party tooknoteofthisstatement.
37. Therepresentative ofBulgaria stated thathisGovernment applied export taxes fortherelief
ofcritical shortages offoodstuffs orincases ofcritical short supply forthedomestic industry, and
thatafteraccession, anysuchtaxes would beapplied inaccordance withtheprovisions oftheWTO
Agreement. Henoted that,atthecurrent time, Bulgaria applied theexport taxes onlytothegoods
andservices listed intheAnnex 2totheReport. Bulgaria would, afteraccession, minimize itsuse
ofsuchtaxes andconfirmed thatanychanges intheapplication ofsuchmeasures, theirlevel, scope,
orjustification, would bepublished intheState Gazette. TheWorking Party tooknoteofthese
commitments.WT/SPEC/14/Rev.1
Page22
Implementation ofArticle X
38. Therepresentative ofBulgaria stated that,from thedateofaccession, alllawsandother
normative actsrelated totradewillbepublished intheStateGazette promptly. Asarule,"promptly"
under theWTO Agreements would mean twoweeks prior toimplementation, unless alonger period
isspecified under therelevant WTO Agreement. Hestated further thattheywillbeaccessible totraders
priortoimplementation, andthatnolaw,rule,etc.related tointernational tradewillbecome effective
prior tosuchpublication. TheWorking Party tooknoteofthiscommitment.
IV. Fiscal Policy
39. Inresponse tosome members whorequested information concerning internal taxes andthe
treatment ofimports inBulgaria 'sfiscal legislation, including thetreatment ofinputs andother
exemptions thereof, therepresentative ofBulgaria saidthatfiscal policy wasplaying acrucial role
inthestabilization andrestructuring effort. Itsprincipal objectives were tocontain andreduce the
budget deficit inrelation toGDP, toreduce theredistributive roleoftheStatebudget through asharp
decrease ofbothrevenues andexpenditures inrelation toGDP, andtocontribute tokeeping inflationary
processes under control. Important stepshadbeentaken inthecontext ofacomprehensive fiscal reform
inlinewiththeprinciples ofamarket economy andBulgaria hadintroduced avalue-added tax.The
percentage ofrevenues from taxes andother duties inrelation toGDP hadfallen from 42.9percent
in1990 to29.8percent in1992 andto32.2percentfor1993.
40. Pursuant totheLawonExcise Tax,effective on1April 1994, thefollowing goods andservices
aresubject toexcise taxattherateslisted below:
A. GOODS:
1.Beer-ordinary 1.5BGL/litre; 2.Beer-stabilized -2BGL/litre; 3.Wines -upto15percent,
vol.withtheexception ofnatural sparking wines -6BGL/litre; 4.Ordinary brandies from
fruits, ordinary brandies, desert andaromatized wines, natural sparking wines, natural fruit
liquors -30BGL/litre; 5.Alcoholic beverages including brandy andwinebrandy -40BGL/litre;
6.Luxurious beverages withhighcontent ofalcohol including whisky andcognac (V.S.O.P.) -
160BGL/litter; 7.Tobacco products: 7.1.Cigarettes -Luxurious -1000 BGL/1000 pieces,
7.2.Cigarettes -representative -600BGL/1000 pieces, 7.3.Cigarettes -ordinary -300
BGL/1000 pieces, 7.4.Cigarettes without filter -100BGL/1000 pieces, 7.5.Cigars -400
BGL/100 pieces, 7.6.Tobacco forcigarettes, pipes, forchewing andsnuff -1000BGL/1 kg.;
8.Coffee andtea(with theexception oftheherbandfruitteas)-30percent;9.Leather andWT/SPEC/14/Rev.1
Page23
furclothing -40percent;10.Passenger carswithacylinder capacity from1800to2500cm3-
10percent; 11.Passenger carsmore than2500 cm3-40percent; 12.Articles ofprecious
metals, including jewellery -20percent;13.Perfumery andcosmetics inaerosol containers -
40percent; 14.Gasoline withanoctane number upto96-70percent, 14.1. Lead free
gasoline withanoctane number upto96-60percent; 15.Gasoline withanoctane number
more than96-110percent,15.1. Leadfreegasoline withanoctane number more than96-
100percent;16.Diesel fuel-30percent;17.Erotic andpornographic works -70percent;
18.Audio -visual devices -10percent;
B. SERVICES:
19.Entry tickets forbars, music halls, erotic andother likeperformances -50percent;
C. WINESANDOTHERSPIRITSPRODUCEDBYNATURALPERSONSFROMTHEIROWN
PRIME MATERIALS FOR THEIR OWN CONSUMPTION:
20.Wines -2BGL perlitre; 21.Brandies -0.3BGL perevery alcoholic degree.
D. HAZARDOUS GAMES:
22.Lotteries andraffles 50percent;23.Betsontheresults ofcompetitions andotheraccidental
events -5timethemax. gain; 24.Coin anddiskoperated games, class B15000 BGL each
three months; 25.Coin anddiskoperated games, classCincasino 30000 BGL eachthree
months; 26.Casino roulettes -3000000 BGL eachthree months; 27.Other casino operated
games andtables 500000 BGLeachthreemonths; 28.Bingo 300000 BGLeachthreemonths.
41. Therepresentative ofBulgaria added thattheLawonValue Added Tax(VAT) hadentered
intoforce on1April 1994. TheLawhadestablished auniform 18percentrateforgoods andservices
withashort listoftemporary exceptions including aschedule fortheirelimination. Bulgaria had
submitted detailed information ontheLawonVAT. Inresponse toaquestion, therepresentative of
Bulgaria stated thattheVAT andexcise taxlawsmade nodifferentiation between imported and
domestically produced goods. Some members saidthatintheareaofcertain distilled spirits significant
volume importations tended tobemore heavily taxed thandomestic products. Therepresentative of
Bulgaria replied thattheproducts subject toexcise taxation weredescribed bytheirphysical commercial
characteristics andnotinterms oforigin. Bulgaria 'sexcise taxregime complied withthem.f.n. and
national treatment. Domestic andimported goods weresubject toequal excise taxrates. Theexcise
taxislevied andcollected asfollows:
(a) Fordomestic production: levied andcollected fromtheproducer ofgoods orthesupplier of
services asapercentage (oranabsolute amount) oftheselling price without excise, onthe
dateofinvoicing;WT/SPEC/14/Rev.1
Page24
(b) Forimported goods: levied andcollected bythecustoms authorities from theimporter asa
percentage (oranabsolute amount) ofthecustoms value plusduties andfeesonthedatethe
customs control iseffected.
Theexcise taxispayable onlyonce(i.e.one-stage tax),anditisnotcollected atsubsequent transactions.
Concerning VAT, hesaidthatnoexemptions wereprovided fordomestic agricultural products sold
byproducers. There wasatemporary listofsome foodproducts namely, bread, milk, cheese which
werenotsubject toVATuntiltheVATlawhadbeeninplaceforthreeyears. Thistemporary exemption
applied tobothdomestic andimported products.
42. Inconclusion some members oftheWorking Party saidthat,intheirview, Bulgaria levied
some border charges which, ifnotconsistent withtheprovisions oftheGATT 1994, should beeither
modified, oreliminated asaresult ofBulgaria 'scommitments intheProtocol ofAccession. Those
members acknowledged, nonetheless, thatthenewValue Added TaxLawhadgreatly improved the
transparency andequity ofBulgaria 'staxsystem vis-a-vis imports.
43. Therepresentative ofBulgaria saidthatuponaccession totheAgreement Establishing theWTO,
hisGovernment would usetheauthority toapply taxes andsurcharges onimports andexports in
conformity withtheprovisions oftheGATT 1994, inparticular Articles III,VI,VIII, XII,XVIII and
XIXthereof. Therepresentative ofBulgaria stated thatasof31December 1997, Bulgaria would apply
itsexcise taxrates onbeer, wine, distilled spirits andtobacco products instrict compliance with
Article IIIoftheGATT 1994, inanon-discriminatory manner toimported anddomestically produced
goods. During thisperiod, Bulgaria willnotincrease thedifference intheamount oftaxbetween
imported anddomestically produced goods. Asof31December 1997, Bulgaria willimplement anew
system ofexcise taxes onbeer, wine, spirits andcigarettes, which iscurrently being developed, that
envisages thefollowing methods ofdetermination oftheexcise taxlevels: (a)fordistilled spirits, on
thebasis ofpercentage alcohol content; and(b)forbeer, wine andcigarettes, anidentical taxon
imported anddomestically produced articles, oronthebasis ofspecific, measurable characteristics
oftheproduct orthecomponent partsoftheproduct, which criteria willbeconsistent withArticle III
oftheGATT 1994, published andreadily available toimporters, exporters anddomestic producers.
TheWorking Party tooknoteofthese commitments.WT/SPEC/14/Rev.1
Page25
V. Non-Tariff Measures
Import andExport Licensing
44. SomemembersoftheWorkingPartyrequestedthatBulgariaprovidealistofnon-tariffmeasures
bytariff linesincluding licensing, quotas andanyother restrictions andexplain theirjustification.
Intheirviewanumber ofthequotas andlicensing requirements onproducts suchastobacco, citrus,
etc.appeared tobesubstantively and/or procedurally notinconformity withWTO obligations. In
response therepresentative ofBulgaria submitted alistofnon-tariff measures bytarifflines, including
thelistofproducts subject toautomatic andnon-automatic import licensing. Withregard tolicensing,
hesaidthattheCouncil ofMinisters wasthebodyauthorized todetermine therange ofgoods subject
tolicensing. Licensing wasapplied inafairandequitable manner. Theinformation thatisstrictly
necessary foralicensing regime inaccordance withArticle 1.5oftheAgreement onImport Licensing
Procedures wasrequired tobesubmitted insupport ofanapplication foralicence, forinstance
commercial andtaxregistration certificates, anddocuments necessary tocertify thedateintheimport
licensing application form. Automatic licences wereapplied formonitoring purposes andwereissued
within oneday.Non-automatic licences were granted within fiveworking daysfrom thedateof
application. Nofeeswerecharged fortheissuing oflicences. Licences wereissued bytheMinistry
ofTrade. Theimport licensing regime inforce hasbeenestablished byGovernment Ordinance No.
72/1993 (published inStateGazette No.30/1993) anditsrespective amendments. Imports intoBulgaria
wereliberalized andwerenotsubject toimport licensing, unless explicitly stated. Exceptions were
stipulated for(a)goods subject tocontrol regime under international commitments undertaken by
Bulgaria;(b)goodsunderquantitativerestrictionsifimportquotaswereestablished.Automaticlicensing
wasapplied formonitoring purposes onimports ofthefollowing items: coal,crude oilandliquid fuels,
alcoholic beverages, meat, dairy products, ferrous andnon-ferrous metals. Imports ofalcoholic
beverages (HS22030000, ex2204, 2205, 2207, 2208) weresubject toautomatic licensing formonitoring
purposes. There hadbeenimport quota of12,000 tonsfortobacco (HS2401, 24039100). Thisquota
hadbeeneliminated bytheendof1993. Exports oftobacco andproducts thereof (Chapter 24ofthe
HS)weresubject toautomatic licensing. Imports ofnuclear materials, dangerous waste, plantprotection
chemicals, asbestos, andmanufactured tobacco, tobacco products, natural gas,etc.weresubject to
non-automatic licensing. Imports ofessential oilswerenotsubject tolicensing. Therestrictions on
tobacco andproducts thereof hadbeenintroduced ontheground thatcertain imports, bythequantity
andconditions under which theywere performed, caused orthreatened tocause aserious injury to
domestic producers oflikeordirectly competitive products. Thenon-automatic licensing ofimports
ofpharmaceutical products, rawmaterials andsubstances fortheirproduction wasaimed atprotecting
human andanimal health. Themeasure wasapplied formonitoring purposes anddidnotconstitute
adisguised restriction ontrade. Thesolerequirement forgranting thelicences wastheregistrationWT/SPEC/14/Rev.1
Page26
oftheproduct withtheMinistry ofHealth. Headded thatatpresent there wasnoproduct prohibited
forimport inBulgaria. However, imports ofmaterials andwaste dangerous totheenvironment were
subject tonon-automatic licensing, andtoapproval inwriting fromtheMinistry ofEnvironment. The
importation ofplant protection chemicals hadtobeapproved bytheMinistry ofAgriculture. The
approval wassubject tothechemicals being registered inBulgaria. Import licences weregranted by
theMinistry ofTrade within 5daysfrom theapplication.
Import andExport Quotas
45. Some members enquired about theconsistency ofcertain quotas withtheGATT 1994. In
response therepresentative ofBulgaria saidthatpursuant totheLawonEstablishment ofSingle-person
State-owned Enterprises (State Gazette 55/1991), theBulgarian Government could establish quantitative
restrictions onimports andexports. Asof1January 1994 Bulgaria applied animport quota onthe
following product only: HS21050000, icecream ready forconsumption, 1,500 tons. Theimport quota
onicecream hadbeenintroduced bytheGovernment onatemporary basistosupport aninfant industry
inaneconomy intransition. Theimport ceiling wasadministered through animport licensing system.
Duetoadeterioration intheeconomic conditions fordomestic production oftobacco inrecent years,
andwiththeviewtoavoiding serious social tension insome underdeveloped regions ofthecountry,
theGovernment hadreplaced theimport quota ontobacco withimport licensing. TheGovernment
hadestablished temporary quantitative restrictions oncertain exports, toensure adequate supplies in
thedomestic market andprevent orrelieve critical shortages. Presently Bulgaria applied export quotas
onthefollowing items: ex0104000 Female livestock forbreeding, bovine liveanimals ofmore than
12months: 4,800; ex01042000 ex0102 Ovine andcaprine liveanimals, ofmore than18months:
750.Certain quota amounts under VERs weredefined intherespective agreements: withtheEuropean
Communities ontextiles andclothing, ferrous metals, livesheep andgoatandmeatthereof; withthe
United States ontextiles andclothing; withCanada ontextiles andclothing. Alistofcereals essential
forthenutrition ofthepopulation aswellasafewtarifflinescovering basicfodder hadbeentemporarily
prohibited forexport. Withtheexception ofmaize, theexport banoncertain grains hadbeenreplaced
byautomatic licensing. Anexport banforferrous andnon-ferrous scrap andcopper ingots andbillets
wasinplace except forstainless steelscrap withtheview tosolving transitional problems inthe
economy. Export restrictions wereapplied toChristmas trees, andrough hewn timber because they
wereexhaustible natural resources; andtosunflower seeds because theywereanessential foodstuff
incritical shortage. Theagricultural export restrictions currently ineffect weretemporarily applied
toprevent orrelieve critical shortages onthedomestic market andwould bedismantled inresponse
toanimproved domestic market situation.WT/SPEC/14/Rev.1
Page27
46. Some members oftheWorking Party proposed andtherepresentative ofBulgaria accepted
thatthequantitativerestrictionsmaintainedbyWTOMembersonimportsoftextilesandclothingproducts
originating inBulgaria thatareinforce onthedateprior tothedateoftheaccession ofBulgaria to
theWTO shallbenotified totheTextiles Monitoring Body (TMB) asbeing thebaselevels forthe
purpose ofapplication ofArticles 2and3oftheWTO Agreement onTextiles andClothing. Thus,
forthepurpose ofBulgaria 'saccession totheWTO, thephase "daypriortothedateofentry intoforce
oftheWTO Agreement" contained inArticle 2.1oftheAgreement onTextiles andClothing shall
bedeemed torefertothedayprior tothedateofaccession ofBulgaria totheWTO. Tothese base
levels theincrease ingrowth ratesprovided forinArticles 2.13and2.14oftheAgreement onTextiles
andClothing shallbeapplied, asappropriate, from thedateofaccession ofBulgaria totheWTO.
47. Inconclusion therepresentative ofBulgaria confirmed that,inthecontext ofitsaccession to
theAgreement Establishing theWTO, theBulgarian Government would useitsauthority tosuspend
orprohibit imports andexports orotherwise restrict theirquantities inconformity withtheprovisions
oftheGATT 1994 inparticular Articles XI,XII,XIII, XIX, XXandXXI. TheWorking Party took
noteofthiscommitment.
48. TherepresentativeofBulgariaconfirmedthat,fromthedateofaccession,Bulgariawilleliminate
andshallnotintroduce, re-introduce orapply quantitative restrictions onimports orother non-tariff
measures suchaslicensing, quotas, bansandother restrictions having equivalent effect thatcannot
bejustified under theprovisions oftheWTO Agreement. Inthisregard, Bulgaria willeliminate, as
ofthedateofaccession, itsdiscretionary licensing régime andanyother WTO inconsistent measures
ontobaccoimportsandonotherproductscoveredbytheWTOAgreementonAgriculture.TheWorking
Party tooknoteofthese commitments.
Agreement onImplementation ofArticle VIofGATT 1994 andAgreement onSubsidies and
Countervailing Measures
49. Inresponse toquestions concerning Bulgaria 'sregulations onsafeguards andunfair trade
practices, therepresentative ofBulgaria saidthattheRegulation oftheCouncil ofMinisters No.181
dated 15September 1993which hadestablished thegeneral legalframework attempted toincorporate
thebasic elements oftherelevant GATT 1994 provisions including inparticular theAgreement on
theImplementation ofArticle VIoftheGATT 1994andtheAgreement onSubsidies andCountervailing
Measures. TheRegulation contains definitions ofdumping, subsidy, serious injury, theextent ofthe
offsetting measures (duty) andtheprocedures tobefollowed inorder toapply theoffsetting measures.
Under theprovisions oftheRegulation, ananti-dumping dutymaybeimposed onanyproduct whoseWT/SPEC/14/Rev.1
Page28
importation inBulgaria through theeffects ofdumping causes orthreatens tocause serious injury to
aBulgarian industry. Aproduct isconsidered asbeing dumped ifitsexport price toBulgaria isless
thanthenormal value ofthelikeproduct intheordinary course oftrade inthecountry oforigin or
export. Acountervailing dutymaybeimposed forthepurpose ofoffsetting theeffect ofasubsidy
bestowed inthecountry oforigin orexport whose importation inBulgaria causes serious injury to
aBulgarian industry. TheRegulation stipulates thatthedetermination ofserious injury shallbemade
onlyifthedumped orsubsidized imports through theeffects ofdumping orsubsidization arecausing
injury. Injuries caused byother factors which individually orincombination alsoadversely affect the
Bulgarian industry under consideration mustnotbeattributed tothedumped orsubsidized imports.
50. Some members oftheWorking Party expressed concern thattheprovisions oftheRegulation
were imprecise anddidnotreflect theprecise requirements oftheAgreement onSubsidies and
Countervailing Measures andtheAntidumping Agreement inmatters suchasconversion ofcurrencies,
salesbelow cost, price averaging, domestic judicial review, timelimits, etc.Therepresentative of
Bulgaria saidthatwhen certain provisions didnotspecify particular procedures, administrative practice
would ensure compliance withtherequirements oftheAgreement onImplementation ofArticle VI
oftheGATT 1994 (Antidumping Agreement). Subsequent amendments totheRegulation tomake
itcompatible withtheWTO Agreement onSubsidies andCountervailing Measures andtheAntidumping
Agreement werecurrently under consideration. Finally, therepresentative ofBulgaria saidthatpursuant
toArticle V,paragraph 4oftheConstitution dulyratified andpublished international treaties became
partofdomestic law,andhadpriority overtherulesofdomestic lawintheevent ofacontradiction.
Thus, compatibility withWTO obligations would beguaranteed inageneral waythrough theratification
oftheaccession ofBulgaria totheWTO bytheNational Assembly.
51. Amember oftheWorking Party stated thathisGovernment hadreviewed thedraftRegulation
onAnti-Dumping andCountervailing Measures provided bytheBulgarian delegation, andthat,with
afewexceptions,thedraftregulationappearedtotrackthelanguageoftheAgreementsonAnti-Dumping
andSubsidies andCountervailing Measures astheyrelate totheinvestigation anddisposition ofunfairly
traded imports. There wereanumber ofareas, however, where amendments tothedraftregulation
could strengthen itsconsistency withtheAgreement andprevent future conflicts based onthesupremacy
ofinternational agreements ratified byBulgaria overdomestic law. These included thefollowing:
TheRegulation should provide explicitly forjudicial review oftheadministrative decisions made on
Anti-DumpingandCountervailingMeasurescases,asisrequiredbybothAgreements.Ifsuchprovisions
existinother Bulgarian lawsthataddress this,theyshould bereferenced inthelaw; TheRegulation
should provide for"sunset review" ofexisting actions, asrequired bytheAgreements; TheRegulationWT/SPEC/14/Rev.1
Page29
should contain language addressing adjustment tocostfor"start upoperations" asprovided forin
footnote 6oftheAgreement; TheRegulation should provide thatnormal value maybedetermined
onlybythecostofproduction inthecountry oforigin plusareasonable amount foradministrative
andselling costsandforprofits. Thereference to"anyother costs" which doesnothaveacounterpart
intherelevant textoftheWTO Agreement, should bedropped; TheRegulation should beamended
toensure thatconstructed export price canbeusedasopposed toexport price, onlywhen there isa
compensatory relationship. Thereference to"orforother reasons theprice actually ...isunreliable"
should bedropped since itdoesnothaveacounterpart intherelevant textoftheWTO Agreement
(Article 2.3); TheRegulation should beamended toincorporate thejustification forcomparing that
normal value established onaweighted average basiswiththatdetermined onatransaction bytransaction
basis;TheRegulationdoesnotincorporatetheconceptthattolimittheexaminationeithertoareasonable
number ofinterested parties orproducts byusing samples should onlyoccur ifthesamples taken are
statistically valid. Itshould beexpanded toincorporate these concepts; TheRegulation allows an
affirmative determination based onthreat ofmaterial injury "where aparticular market situation is
likely todevelop intoactual injury". Incontrast, thestandard intheAnti-dumping Agreement is"injury
mustbeclearly foreseen andimminent". Bulgaria should alterthelawormake specific assurances
totheWorking Party thattheformulation intheAgreement willtakeprecedence; TheRegulation
should ensure thatitslanguage defining thenumber ofproducers thatconstitute an"industry" forthe
purposesofmakingacomplaintisconsistentwiththeprovisionsoftheAgreement(Article5.4)requiring
thatindustry support bebased ontotalproduction, defined asdomestic industry representing 50percent
ofthetotalproduction ofthelikeproduct produced bythatportion ofthedomestic industry expressing
either support fororopposition totheapplication, andthatnoinvestigation shallbeinitiated when
domestic producers expressly supporting theapplication account forlessthan25percentoftotal
production ofthelikeproduct produced bythedomestic industry; Article 23.2oftheAgreement should
make itclearthatthe30dayperiod forresponding toaquestionnaire "shall becounted fromthedate
ofreceipt ofthequestionnaire" asprovided forinArticle 6.1.1 Footnote 15oftheAnti-Dumping
Agreement; Article 30.1(c) ofthedraftlegislation should indicate thataprovisional measure applied
cannot bemore thanestimated amount oftheanti-dumping dutyorlevelofsubsidization.
52. ThisWorking Party member wentontostatethatBulgaria should beprepared toconfirm in
theProtocol that,notwithstanding thepossibility thatBulgaria 'sfuture legislation intheareaofanti-
dumping andcountervailing measures, which iscurrently indraftandunder consideration, maycontain
provisions nottotally inconformity withtheWTO Agreements onAnti-Dumping andSubsidies and
Countervailing Measures, Bulgaria would enforce theprovisions ofthese Agreements intheconduct
ofanyinvestigations inthese areas.WT/SPEC/14/Rev.1
Page30
53. Therepresentative ofBulgaria confirmed thatitwasBulgaria 'sintent thatitslegislation conform
totheprovisionsoftheWTOAgreementsonAnti-DumpingandSubsidiesandCountervailingMeasures,
andthatdraftlegislation wasunder consideration toaccomplish thatgoal. Hefurther confirmed that,
fromthedateofaccession, andnotwithstanding anyprovision ofdomestic lawtothecontrary, Bulgaria
would administer allproceedings andmeasures taken foranti-dumping orcountervailing dutypurposes
infullconformity withtheprovisions ofthese WTO Agreements, andthatnoaction would betaken
bytheGovernment ofBulgaria thatdeparted fromtheprovisions ofthese agreements. TheWorking
Party tooknoteofthiscommitment.
54. Inresponse toquestions bymembers oftheWorking Party, therepresentative ofBulgaria said
thatasaresult oftheprice liberalization, subsidies hadbeendrastically curtailed -from 16-17 per
centofGDP in1990 tolessthan2percentofGDP in1992 and1.69percentin1993. Since 1991,
noexport subsidies were being applied inBulgaria. Some members requested clarification ofthis
statement. Therepresentative ofBulgaria stated thatnosubsidies contingent onexport performance,
Government export credits atmore favourable thanordinary rates, taxexemption schemes related to
theproductionanddistributionofexportedproductsweremadeavailable.Thestatementdidnotenvisage
explicitly theprovisions ofArticle 3oftheSubsidies andCountervailing Measures Agreement. Bulgaria
would apply Article 29andtherespective provisions ofArticles 3,and6.1oftheSubsidies and
Countervailing Measures Agreement. Asacountry intheprocess oftransformation from centrally
planned intoamarket andfreeenterprise economy, Bulgaria would liketobenefit from thespecial
treatment provided inArticle 29oftheSubsidies andCountervailing Measures Agreement, upon
appropriate notification. Therepresentative ofBulgaria noted thatproduction subsidies wereapplied
primarily for:(i)compensating higher production costsinsomevitalsectors (energy andtransportation)
withconsiderable social implications; (ii)social considerations (including support forproducers in
mountainous regions andfordisadvantaged regions ofthecountry). TheBulgarian Government would
continue itspolicy offurther scaling down subsidies. Headded thatasaresult oftheunprecedented
scale ofeconomic reform andexclusively toalleviate social problems thefollowing sectors ofthe
economy received financial assistance fromtheState: (i)Energy production: The1995 Statebudget
allocated 3564 million BGL fortheproduction ofenergy. Self-financing ofenergy production was
envisaged inthefuture. (ii)Agriculture.
55. TherepresentativeofBulgariaconfirmedthathisGovernmentdoesnotmaintainsubsidieswhich
meet thedefinition ofaprohibited subsidy, within themeaning ofArticle 3oftheAgreement on
Subsidies andCountervailing Measures, andwould therefore notinvoke provisions intheAgreement
thatprovidefortheprogressiveeliminationofsuchmeasureswithinafixedperiodoftime.TheWorking
Party tooknoteofthiscommitment.WT/SPEC/14/Rev.1
Page31
Agreement onAgriculture
56. IndocumentsSpec(95)4andaddendaandWT/SPEC/12,therepresentativeofBulgariasubmitted
theAgriculture Country Schedule ofBulgaria. Inresponse tosome members, heexplained themeaning
oftheterms applied administered prices, external reference price andproduct specific bonus usedin
some ofthesupporting tables. Heconfirmed thatthesystem ofreference prices hadbeeneliminated
asof1January 1995. Since 1991, Bulgarian agriculture wasundergoing areform process consisting
oftherestitution oflandandtheprivatization ofthefoodindustry. Thecollapse oftheformer centrally
planned economy andthelackofproper market structures hadledtoadropinagricultural production.
Themain instrument forsupport ofagriculture inthe1991-1994 period wasthesubsidization ofthe
interest rate. TheleveloftheAMS relative toGDPintheagriculture sector fortheperiod 1991-1994
wasasfollows:
Year GDP agriculture AMS (%)
1991 993mln.XEU 161.7 mln.XEU 16
1992 791mln.XEU 156 mln.XEU 19
1993 837mln.XEU 130.4 mln.XEU 16
1994 1150mln.XEU 69.3 mln.XEU 6
Therepresentative ofBulgaria added thatthe1993 State budget hadallocated 964million BGL as
technical assistance fortheagrarian reform thatincludes: Restoration oftheproperty rights on
farm lands; Legal procedures attheestablished Commissions fortherestoration ofthelands and
atthecourts. Forthelandowners there wasafive-year income taxandprofit taxrelief from the
entry intoforce oftheLawontheOwnership andUseofAgricultural Land, i.e.from 1March
1991. Therecovery oftheecologically polluted areas wasfinanced bytheState. The1993 State
budget hadallocated 63million BGL insubsidies forthemountainous areas, thebreak-down of
theamount wasasfollows: transportation ofbread: 15million BGL; transportation ofother
basic foodstuffs: 48million BGL. Other assistance granted toagriculture in1993 wasasfollows:
(1)1billion BGL -forcredits, (2)750million BGL -fortheconstruction, reconstruction,
modernization andmaintenance oftheirrigation system; (3)276million BGL -forfinancing
expenses intheveterinary field; (4)22million BGL -allocated under theLawonthepreservation
ofcultivated lands andpastures (Article 15and17)forfinancing thesoilconservation. The
representative ofBulgaria added thatprogress intherestitution ofarable landhadnecessitated the
establishment ofsupport fortheemerging agriculture sector. Because ofthereform ofthe
agricultural sector, an"Agricultural Fund" hadbeen established in1995. TheFund directed a
certain percentage ofGDP foragricultural support through guaranteed minimum prices, export
subsidies, subsidies forfuel, storage andother related activities. Inaddition, proceeds from theWT/SPEC/14/Rev.1
Page32
privatization ofthefoodindustry would alsobeallocated foragricultural development. Tobacco
growers alsoreceived support. Headded thatBulgarian lawensured non-discriminatory access
tocredits. Asbanks determined their credit policy independently, theaccess tocredits didnot
depend onthetypeofownership oftheborrower. Private andState-owned companies aswellas
jointventures hadequal access tocredit. There wasnoobligation forthebanks tomake loans to
State enterprises asapercentage ofthebankcapital oronanyother basis.
57. The representative ofBulgaria confirmed that after accession totheAgreement
Establishing theWTO, hisGovernment would observe theprovisions ofArticle XVIoftheGATT
1994, including thenotification provisions ofparagraph 1ofArticle XVIoftheGATT 1994 andof
theAgreement onSubsidies andCountervailing Measures. Inpursuance oftheagriculture country
schedule, theGovernment ofBulgaria would alsocomply withtheprovisions oftheWTO Agreement
onAgriculture. TheWorking Party tooknoteofthese assurances.
58. ThescheduleofBulgaria'sExportSubsidiesCommitments(PartIV)hasbeenincludedinPartIV
oftheSchedule (document WT/SPEC/14/Rev.1/Add.1). Theinitial andfinalcommitments arebased
onthemost recent representative period forwhich statistical information wasavailable. Anearlier
period thanthemostrecent three yearperiod wasaccepted byWTO Members onlybecause thelatter
wasnotregarded asrepresentative duetotheUnited Nations embargo applied totheformer Republic
ofYugoslavia.
Agreement onSafeguards
59. Some members oftheWorking Party expressed concern thattheadministration oftheLaw
onSafeguards setoutinRegulation No.180insome respects suchastheuseofthedesignations critical
circumstances, market disruption, broad section ofconsumers, provisional measures, etc.failed to
conform totheprovisions oftheWTO Agreement onSafeguards andrequested clarification concerning
Bulgaria 'ssafeguards regime. Inresponse, therepresentative ofBulgaria saidthattheMinistry of
TradeandForeignEconomicCooperationwastheauthoritycompetenttomaketheseriousinjuryfinding
(Article 5,paragraph 1oftheRegulation). Forthepurpose ofconducting theinvestigation anad-hoc
commission isestablished including representatives oftheMinistry ofIndustry, theMinistry of
AgricultureandtheFoodIndustries,theMinistryofFinance(GeneralCustomsDirectorate),theMinistry
ofForeign Affairs andtheMinistry ofTrade andForeign Economic Cooperation. Theinvestigation
iscarried outunder anadministrative non-judicial procedure. TheCouncil ofMinisters isauthorized
toadopt thesafeguard measure (Article 6oftheRegulation). TheMinistry ofFinance (General Customs
Directorate) isempowered astotheenforcement ofthesafeguard measure (§1oftheTransitionalWT/SPEC/14/Rev.1
Page33
andFinal Provisions oftheRegulation). During safeguard investigations, theauthority wasrequired
togiveinterested parties opportunities tomake submissions. Theauthority wasrequired toestablish
thatthere hadbeenavolume increase ineither absolute orrelative terms, andthatthose imports had,
through factors suchaslossofproduction, productivity, decline incapacity utilization, etc.,hadcaused
serious injury tothedomestic industry. When anallegation ofathreat ofserious injury wasmade,
theinvestigating authorities wererequired toexamine whether itwasclearly foreseeable thattherate
ofimports would increase, andthatactual injury waslikely toresult. Thecurrent Regulation provided
amaximum period oftwoyears fortheapplication ofsafeguard measures. Asafeguard measure could
notberenewed, however, ifasafeguard measure wasinplace forlessthantwoyears, itcould be
extended. Therepresentative ofBulgaria stated thattheRegulation establishing theregime didnot
presently permit thetaking ofprovisional measures. Amendments werecurrently being prepared to
make theRegulation fully compatible withtheAgreement onSafeguard Measures, inrespect of
provisional safeguard measures. Uptonowsafeguard measures hadonlybeenimplemented onthe
imports ofmatches where areference price hadbeenestablished.
Agreements onTechnical Barriers toTrade andSanitary andPhytosanitary Measures
60. SomemembersrequestedadditionalinformationonstandardsandenquiredhowBulgariaintended
toimplement therequirements oftheAgreements onTechnical Barriers toTrade. Inresponse, the
representative ofBulgaria provided information ontheprocedure ineffect under theImplementation
Rules concerning thesubmission ofthedraft standards totherelevant governmental bodies; the
consideration ofthecomments received theapproval bytechnical standardization committees, the
evaluation ofthedraft standards andthefinaladoption bytheCommittee onStandardization and
Metrology. Under Regulation No.1/1994 oftheCommittee onStandardization andMetrology
(SG7/1994) there wasamechanism fortheimplementation ofinternational andregional standards
intheRepublic ofBulgaria. TheRegulation oftheCouncil ofMinisters onCertification ofthe
Manufactured Products intheRepublic ofBulgaria (SG40/1988) laiddown therulesforcertification
ensuring apositive assurance ofconformity withthenational standards ("technical regulations") by
acertificate and/or averified compliance mark. Healsoprovided information setting outthechanges
being made totheBulgarian standards regime which would bebrought intoconformity withtheWTO
Agreement. TheBulgarian Committee onStandardization andMetrology monitored international
standards. Bulgaria requested an18month transitional period forimplementation oftheAgreement
onTechnical Barriers toTrade. Bulgaria explained thatitrequired thetransitional period inorder
toreorganize itsnational standards system, tobeabletocomply withthenotification requirements
oftheAgreement. Adraftregulation oftheCouncil ofMinisters onCertification ofProducts fortheir
Assessment forConformity withStandards wasbeing prepared andanewStandardization LawwouldWT/SPEC/14/Rev.1
Page34
bedrafted based ontheISO/IEC Code ofGood Practices forConformity Assessment. Henoted that
Bulgaria would beprepared tocomply withthetransparency requirements andtheobligation toestablish
anenquiry point. Finally, therepresentative ofBulgaria saidthatthere were other actsrelating to
thesaleofgoods intheRepublic ofBulgaria (e.g.labelling, packaging, weights andmeasures, etc.).
These lawsandregulations wereapplied uniformly todomestic andimported products andwerenot
administered soastoconstitute anarbitrary ordisguised restriction oninternational trade.
61. Some members requested information onhowBulgaria intended toimplement therequirements
oftheAgreement onSanitary andPhytosanitary Measures (SPS). Inresponse therepresentative of
BulgariasaidthatBulgariansanitaryandphytosanitarymeasuresconformedinprinciplewithinternational
standards, guidelines orrecommendations. Bulgaria wasasignatory tothefollowing conventions and
agreements inthisfield: Codex Alimentarius; International Agreement fortheEstablishment ofthe
International Office ofEpizootics; International Convention forPlant Protection; Convention onthe
Establishment oftheEuropean andMediterranean Plant Protection Organization; Convention onthe
International Trade inEndangered Species ofWildFauna andFlora. Improvements might benecessary
insome areas, e.g.thepublication ofregulations, inparticular toallow areasonable interval between
thepublication ofasanitary orphytosanitary measure anditsentry intoforce. However, such
improvements which would fundamentally strengthen transparency didnotcontradict theexisting
regulations inBulgaria. Therefore, Bulgaria didnotexpect substantial difficulties inadapting sanitary
andphytosanitaryregulationstotherequirementsoftheAgreementonSPS.Withreferencetoregulation
No.87of19February 1993onquality control attheborder, hesaidthatthequality control waseffected
bytheofficers oftheDirectorate ofBorder Quality Control within theCommittee forStandardization
andMetrology. Imports andexports were released attheborder upon presentation bytheexporter
orimporter ofaquality certificate orprotocol forthepreliminary testofsamples. Such certificates
orprotocols could beissued byanyauthorized laboratory intheterritory ofthecountry. Headded
thatthedraftLawonPlant Protection wasataninitial stageofpreparation. Thedrafthadbeendebated
internally intheMinistry ofAgriculture andFood Industries andwould besubmitted totherelevant
governmental bodies. Thedraft lawwasconsistent withtheWTO Agreement onSanitary and
Phytosanitary Measures, aswellaswiththeinternational conventions forplantprotection andquarantine
ofwhich Bulgaria wasasignatory.
62. Therepresentative ofBulgaria stated thatBulgaria would apply theWTO Agreements on
Technical Barriers toTrade andSanitary andPhytosanitary Measures fromthedateofaccession without
recourse toanytransition period. Hefurther confirmed that,inparticular, Bulgaria would apply the
same controls, criteria andrulesregarding technical regulations, standards certification andlabelling
requirements toimported anddomestic goods, andwould notusesuchregulations torestrict imports.WT/SPEC/14/Rev.1
Page35
Bulgaria would ensure thatitstechnical regulations, standards certification andlabelling requirements
arenotapplied toimports inanarbitrary manner, inawaythatdiscriminates between supplier countries
where thesame conditions apply orasadisguised restriction oninternational trade. Bulgaria willnot
require additional certification orsanitary registration forproducts which havebeencertified assafe
forhuman useandconsumption byrecognized foreign orinternational bodies. Bulgaria would also
ensure that,fromthedateofaccession, itscriteria forgranting priorauthorization orsecuring required
certification or'sanitary registration 'forimported products willbepublished andavailable totraders,
andthatitssanitary andothercertification requirements areadministered inatransparent andexpeditious
manner. Bulgaria would bewilling toconsult withWTO Members concerning theeffect ofthese
requirements ontheirtrade withaviewtoresolving specific problems. TheWorking Party tooknote
ofthese commitments.
FreeTrade Zones
63. Inresponse toquestions concerning thefreetrade zones, therepresentative ofBulgaria said
thatthese zones hadbeenestablished byDecree No.2242 of1987. TheDecree defines afreetrade
zoneasanareainwhich foreign economic entities orjointventures mayconduct economic activities
without theobligation topaycustoms duties ontheirimports andwithcertain taxadvantages. There
wasa5yearprofit taxrelief foractivities inthezones. Upon theexpiry ofthegrace period, therate
oftheprofit taxwas20percent. There wasnotimelimitfortheexistence ofthezones. There were
seven freetrade zones intheregions ofthecities ofRousse, Vidin, Bourgas, Plovdiv, Dragoman,
Haskovo andSvilengrad. Theactivities mostcommon inthefreetradezones included handling, storage
andwarehousing. Goods andservices exported fromthefreetrade zones tothecustoms territory of
Bulgaria were subject tothecustoms duties, charges andtaxation currently inforce inthecustoms
territory ofBulgaria, i.e.normal tariffs andtaxeswereapplied toexports fromthezones intoBulgarian
customs territory. There were noexceptions tothisrule.Therepresentative ofBulgaria added that
asof1October 1993, theprofit taxrelief forfirms thatlocate inthefreetrade zones wasnolonger
ineffect. Thecommon profit taxof40percentinforce ontheterritory ofBulgaria wasapplied.
However, legalpersons whohadstarted using these incentives would continue tobenefit fromthem
untiltheexpiration oftheperiod accorded. TheWorking Party tooknoteofthese assurances.
State Trading Enterprises
64. Recalling theprovisions ofArticle XVII oftheGATT 1994, several members oftheWorking
Party noted thatwhile Bulgaria hadabolished theState legal monopoly onforeign trade atleast60
percentofBulgaria 'sexports andimports werestillgenerated byState-owned enterprises andinmanyWT/SPEC/14/Rev.1
Page36
cases werestillcarried outbythesame trading enterprises thatformerly haddefined andcontrolled
thistrade. Intheviewofsome members oftheWorking Party, afullseparation oftheState from
thestillsizable andeconomically critical State-owned sector didnotseem possible. Even thecurrent
rulesforthemanagement ofState-owned firms clearly contemplated arolefortheStateintheoperations
ofcertain enterprises. Inaddition Bulgaria 'sprivatization process wasproceeding slowly. Outof
the4,500 State-owned firms which would betransferred toprivate ownership under theLawon
Transformation andPrivatization ofState andMunicipal Enterprises, Bulgaria wasstillintheearly
stages ofpreparing some ofthemforsale. These members requested thatBulgaria provide fulldetails
oftheroleoftheStateinmanagement anddecision making inenterprises wholly orsubstantially owned
bytheState, andtheproducts which theytraded. Inthisregard special reference wasmade tothe
Statetradingcompaniesontobaccoandtobaccoproducts(Bulgartabac)andwinesandspirits(Vinimpex).
65. TherepresentativeofBulgariapointedoutthatasof1July1991,theCommercialLaw(Company
Act)wasinforce. Pursuant tothislaw,economic activities could becarried outonthebasisofvarious
forms ofownership including private, municipal, Stateandjointventures withforeign participation.
Article 1.1oftheCompany Actdefined theconduct oftrade(domestic orinternational) as"commercial
activity". Tocarry onthatactivity, businesses mustbeincorporated, pursuant totheCompany Act.
Thisrequired thatallnatural andlegalpersons, whether Bulgarian orwithforeign participation, have
theirbusiness entered inacommercial register heldinaDistrict Court. Following incorporation,
businesses acquired therighttocarry outeconomic activities, including foreign trade activity. No
companies hadexclusive orprivileged import rights. Theimportation ofallgoods maybeeffected
byanyeconomic entity, irrespective ofitsownership. State-owned trading companies performed foreign
trade activities solely onthebasis ofcommercial considerations, competing witheachother andwith
theprivate companies. Noting thatState intervention intheeconomic activity ofallcompanies had
beenabolished, hereiterated thatArticle 19oftheConstitution ofBulgaria states, interalia,thatthe
economy ofBulgaria isbased ontheprinciple ofthefreeentrepreneurship andthatthelegislation shall
create andassure equal legalconditions forcarrying outeconomic activities foralllegalandnatural
persons,thusestablishingtheprincipleofnon-discriminationbetweenState-ownedandprivateenterprises.
Therefore,State-ownedenterpriseswereinapositiontodefineindependentlytheirownmarketbehaviour,
toimplement itthrough therespective operational decisions andtoconclude commercial transactions
ofanykindinaccordance withthecustomary business practices andthelegislation inforce. Neither
economic norlegalprivileges weregranted tothembytheGovernment. Headded thatatpresent there
werenoStatetrading monopolies inBulgaria. Itseemed thatBulgaria hadhadonlyoneStatetrading
enterprise within themeaning ofArticle XVII oftheGATT 1994, Bulgartabac. There were no
enterprises having theprincipal responsibility forimport orexport ofanycommodities andproducts.
Neither private norState-owned enterprises inBulgaria were bound byanyobligation concerningWT/SPEC/14/Rev.1
Page37
production ortrade inanyproducts orgoods, norwithrespect tothevolume, value oftrade, product
composition oftheirsalesandpurchases, etc.Allenterprises acting under Bulgarian legislation are
entitled toinclude inthescope oftheiractivities foreign trade withnolimitations withrespect tothe
product coverage oftheirtrade. Forthefirsthalfof1993 according toanestimate oftheMinistry
ofTrade thefollowing companies hadhadasignificant activity inforeign trade: Balcancar, Pharmachim,
Nephtochim,Bulgartabac,Energoimpex,Chimimport,Kremikovtzy,Ruen,Plama.Theprincipalactivity
ofsome ofthem (Balcancar, Pharmachim, Nephtochim, Bulgartabac) wasinthefieldofproduction.
Alistoftheenterprises inwhich theStatehadownership participation wasinpreparation, eventhough
there were difficulties, resulting from thechanges inthestatistical system, andoftheidentification
numbers ofenterprises. TheLawonCommerce andtheLawontheProtection ofCompetition did
notpermit theGovernment toinstruct State-owned enterprises intheconduct ofdomestic orforeign
tradeoperations. TheGovernment wasnotinaposition toprevent anyenterprise under itsjurisdiction
fromacting asnormal market operators inaccordance withtheprinciples ofArticle XVII oftheGATT
1994andespecially withitsparagraph 1(c).Allother laws, ordinances andregulations dealing with
theactivity oftheeconomic operators inBulgaria were consistent withtheLawonCommerce and
provisions oftheConstitution which excluded State monopolies ontrade.
66. Therepresentative ofBulgaria added thatwithin themeaning andunder theconditions setout
inArticle XVII oftheGATT 1994, Bulgaria hadhadonlyoneState-trading company, Bulgartabac,
which according tothe1947LawonStateMonopoly onTobacco hadexclusive rights ontradeinraw
tobacco andthemanufacturing oftobacco products. However, the1947 LawonStateMonopoly on
Tobacco hadbeenrepealed bythe1993Tobacco andtheTobacco Products Actandthe"Bulgartabac"
enterprise hadbeentransformed intoaholding ofsmaller joint-stock andlimited liability companies
registered under the1991 LawonCommerce. Bulgartabac didnothavedominant market positions
ininternal andforeign trade intobacco products butenjoyed adominant position intheproduction
oftobacco products andtrade inrawtobacco. Vinimpex didnothaveamonopoly position inforeign
tradeinwinesandspirits.VinimpexcouldnotbeconsideredaState-tradingenterprisewithinthemeaning
ofArticle XVII asitwasnotgranted bytheStateanyexclusive orspecial privileges andhadstatutory
authority fordeciding onimports andexports. Therepresentative ofBulgaria additionally noted that
partsofVinimpex hadrecently beenprivatized. "Vinimpex" continued totradeinalcoholic beverages
butdidnothaveadominant position onthemarket. Itwasoneofthemany companies thattrade in
alcoholic beverages. Hereiterated there wasnoState monopoly intrade inalcoholic beverages in
Bulgaria. AsofNovember 1990, theCouncil ofMinisters haddiscontinued theexistence ofthe
enterprise Vinprom, andtheproducers ofwines andalcoholic beverages wereregistered asindependent
legalpersonswiththerighttoconductforeignanddomestictradeontheirownorthroughintermediaries.
Anyfirmorindividual wasfreetoimport alcoholic beverages. The1992imports ofalcoholic beveragesWT/SPEC/14/Rev.1
Page38
effected byprivate companies hadaccounted for75.8percentoftotalimports ofalcoholic beverages.
Henoted alsothatin1992 noted alsothattheshare ofsome oftheformer major foreign trade
organizations responsible foragricultural commodity imports andexports hadbeenasfollows:
Company Commodity Imports Exports
BULGARPLODEXPORT fresh vegetables 0 0.73%
LBBULGARICUM dairy products 3.84% 7.99%
BULGARIAN MEAT Co liveanimals andmeat
thereof0 4.74%
RODOPAIMPEX liveanimals andmeat
thereof4.24%
67. Therepresentative ofBulgaria confirmed thathisGovernment would apply itslaws and
regulations governing thetrading activities ofState-owned enterprises inconformity withtherelevant
provisions oftheWTO Agreement, inparticular andwhere relevant, Article XVII oftheGATT 1994,
theWTO Understanding onthatArticle, andArticle VIIIoftheGATS. Inthisregard, henoted the
listofState-owned firms contained inWT/ACC/BGR/3, some ofwhich were intheprocess of
privatization. HealsosaidthatBulgaria would abide bytheprovisions fornotification, non-
discrimination, andtheapplication ofcommercial considerations fortradetransactions foranyenterprise
whose activities were subject toArticle XVII oftheGATT 1994, theWTO Understanding onthat
Article andArticle VIIIoftheGATS. TheWorking Party tooknoteofthese commitments.
Customs Valuation
68. Members oftheWorking Party reviewed information provided byBulgaria onitscustoms
valuationrégimeinWT/ACC/BGR/2,concerningtheapplicationofRegulationNo.35/26February1992
(Decree 35/92) published inStateGazette 20/10 March 1992. Members oftheWorking Party noted
thatDecree 35didnotfullyimplement theWTO Agreement ontheImplementation ofArticle VIIof
theGATT 1994 (Customs Valuation Agreement). Amember stated thatmuch ofthelanguage and
terminology usedinDecree 35departed markedly fromthatoftheValuation Agreement. Thismember
urged Bulgaria toresolve theseapparent discrepancies between itslegislation inthisareaanditsWTO
customs valuation obligations.
69. Therepresentative ofBulgaria stated thathisGovernment intended tobeinfullconformity
withtheAgreement onCustoms Valuation priortoaccession. Hestated thatBulgaria hadimplementedWT/SPEC/14/Rev.1
Page39
newcustoms valuation regulations. These werecontained inRegulation oftheCouncil ofMinisters
No.39 of8March 1996(Regulation 39/96) onthedetermination ofcustoms value ofgoods, imported
intheRepublic ofBulgaria, which waspublished inState Gazette No.22 of1996. Theregulations
were elaborated byInstruction No.2 oftheMinister ofFinance of12March 1996, concerning the
particulars ofthecustoms value, which waspublished inState Gazette No.24 of1996. Boththese
regulations were provided totheWorking Party inBulgaria 'sdraftnotifications, asrequested bya
member. Bulgaria subsequently indicated initsdraftnotifications thatitapplies inpractice, based
onArticle8ofRegulationoftheCouncilofMinistersNo.39of8March1996(publishedinStateGazette
No.22 of1996), theprovision ofparagraph 2oftheDecision of24September 1984ontheValuation
ofCarrier Media Bearing Software forDataProcessing Equipment andtheprovisions oftheDecision
of26April 1984ontheTreatment ofInterest Charges inCustoms Value ofImported Goods (VAL/8 -
adopted bytheWTO Committee on12May1995). Therepresentative ofBulgaria stated thatthese
provisions represented afullimplementation oftheAgreement onCustoms Valuation, asrequested
bytheWorking Party.
70. Members oftheWorking Party noted thatRegulation 39/96 wasasageneral matter, in
conformity withtheprovisions oftheWTO oncustoms valuation, andcommended Bulgaria onits
efforts toamend current practice tobring ituptoWTO norms. Amember noted thatthereweresome
provisions where clarification onterminology andapplication could improve thetext,forexample,
theprecise meaning inArticle 1.10and1.12ofRegulation 39/96 ofgoods "declared forfreecirculation
inBulgaria" andwhether thereferences inArticle 1.13and1.14areactually totransaction value.
Itwould alsobeuseful toclarify inArticle 10who, ultimately, isresponsible forproviding the
information necessary forappraisement oftheimported goods. Finally, itisnotclearfrom whence
isderived thedefinition inArticle 1.12forasaleforexportation. Thismember sought Bulgaria 's
clarification ofthesepoints, butwasotherwise satisfied thatBulgaria 'sregulations oncustoms valuation
were adequate toimplement theCustoms Valuation Agreement.
71. Therepresentative ofBulgaria indicated thatitwillfullyapply theWTO provisions concerning
customs valuation from thedateofaccession, including, inaddition totheAgreement onthe
Implementation ofArticle VIIoftheGATT 1994, theprovisions fortheValuation ofCarrier Media
BearingSoftwareforDataProcessingEquipmentandtheprovisionsontheTreatmentofInterestCharges
inCustoms Value ofImported Goods. Hefurther confirmed that,asaninternational agreement, the
provisions oftheWTO Agreement ontheImplementation ofArticle VIIoftheGATT 1994 would
supersede domestic lawafteraccession. TheWorking Party tooknoteofthiscommitment.WT/SPEC/14/Rev.1
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Rules ofOrigin
72. Members oftheWorking Party noted theinformation provided byBulgaria inWT/ACC/BGR/2
andinitsdraftsubmission onRules ofOrigin. Thisinformation wasnot,however, adequate toassess
theconsistency ofBulgaria 'slawsandregulations onrules oforigin withtheWTO Agreement. A
member oftheWorking Party sought further information from Bulgaria concerning itsprocedural
protection andthebasis fordetermination oforigin, asfollows: DidBulgaria 'slegislation and
implementation ofitsrégime intheareaofrulesoforigin provide forrulings within 150daysofinitiation
ofcustoms formalities? Didimporters havetherightofappeal? Were theadministrative andjudicial
rulings thatemerged fromthisprocess binding onallparties involved? Wasthe"50percentofvalue"
criteriareportedinWT/ACC/BGR/2theonlycriterionappliedbyBulgariaforsubstantialtransformation?
What would happen ifnoonecountry could befound toaccount for50percentofthevalue? What
wasthebasis fordetermining thecomposition ofthe50percentofvalue, i.e.,whatcomponents of
thevalue ofthegoodwerecounted -onlyinputs/materials, direct andindirect labour, profit, interest,
depreciation? Thismember sought Bulgaria 'sresponses tothese questions anditsassurances that
deficiencies inthese areas would becorrected prior toBulgaria 'saccession.
73. Therepresentative ofBulgaria confirmed thatBulgaria would remedy anydepartures from
fullconformity withtheWTO Agreement onRules ofOrigin prior toitsaccession, andthatbythat
time,Bulgaria 'sapplication ofrulesoforigin forbothMFN andpreferential tradewould beadministered
inconformity withtheprovisions oftheAgreement. TheWorking Party tooknoteofthiscommitment.
VI. Trade Agreements
Regional Trade Agreements
74. Some members oftheWorking Party expressed theconcern thattherelatively highandrecently
increased m.f.n. tariff levels would leadtotrade distortions against Bulgarian m.f.n. trading partners
andrequested detailed information andtrade dataontheagreements establishing preferential access
totheBulgarian market. Inresponse therepresentative ofBulgaria saidthatinMarch 1993, Bulgaria
hadsigned theEurope Agreement withtheEuropean Community providing fortheestablishment of
afree-trade areainaten-year period. ThisAgreement would eliminate trade barriers forindustrial
goods andimprove market access foragricultural products. Theprocess oftrade liberalization was
asymmetrical duetotheeconomic disparities between Bulgaria andtheEC. AlsoinMarch 1993,
Bulgaria hadsigned aFreeTrade Agreement withtheEFTA States covering tradeinindustrial products,
fishandprocessed agricultural goods. TheAgreement paralleled theEurope Agreement withtheEC.WT/SPEC/14/Rev.1
Page41
TherewasalsoanasymmetryintheimplementationscheduleoftradeliberalizationinfavourofBulgaria.
Bilateral Agreements ontrade inagricultural goods witheachindividual EFTA Statehadbeensigned
onthesame date. In1992 Bulgaria 'simports from EFTA States andtheEChadaccounted for6.8
percentand32.6percentrespectively oftotalimports. Their relative shares hadincreased in1992
asaconsequence ofthecontraction ofBulgarian tradeandthepartial reorientation totheOECD markets
following theCMEA dissolution. Therepresentative ofBulgaria added thatatthismoment his
Government wasnotinaposition tosubmit information ontrade flows intheframework oftheFTAs
forthefollowing reasons: bothagreements hadrecently entered intoforce sothere wasnotenough
empirical evidence foranalysis; theimplementation ofbothagreements hadbeenstrongly hampered
because ofUNsanctions imposed onSerbia andMontenegro, sotrade flows wereheavily distorted;
thestatistical system wasundergoing aprocess oftransformation. However, newinformation would
besubmitted assoonasavailable. Therepresentative ofBulgaria saidthatinBulgaria 'sviewthefree
tradeagreements wereinconformity withtherulesandconditions ofArticle XXIV oftheGATT 1994
andhisGovernment wasready tocomply withtherelevant Understanding agreed inthecontext of
WTO Agreement. TheWorking Party tooknoteofthese assurances.
Bilateral Trade Agreements
75. Withreferencetobilateraltradeagreements,therepresentativeofBulgariasaidthatanAgreement
forTrade Relations between theRepublic ofBulgaria andtheUnited States hadbeensigned on22
April 1991. Byvirtue ofthisAgreement thetwocountries hadextended toeachother m.f.n. treatment.
Asfrom1January 1991, tradewiththeformer CMEA countries wasconducted inconvertible currencies
andatworld prices. Thenewtradeagreements withtheformer CMEA countries wereconsistent with
therequirements ofGATT 1994andcontained them.f.n. clause. Identical tradeagreements hadbeen
signed withsome oftheStates oftheformer Soviet Union, namely Belarus, Lithuania, Russia, and
Ukraine.
76. Therepresentative ofBulgaria stated thathisGovernment would observe theprovisions of
theWTO including Article XIVoftheGATT 1994andArticle VoftheGATS initstradeagreements
andwould ensure thattheprovisions oftheseWTO Agreements fornotification, consultation andother
requirements concerning preferential trading systems, freetrade areas andcustoms unions ofwhich
Bulgaria isamember aremetfrom thedateofaccession. TheWorking Party tooknoteofthese
commitments.WT/SPEC/14/Rev.1
Page42
VII. Multilateral andPlurilateral Trade Agreements
77. Attheinitial stages ofthedeliberations, several members oftheWorking Party noted that
Bulgaria wasamember ofTokyo Round Arrangements onBovine MeatandDairy Products. Recalling
thatBulgaria hadhadobserver status inanumber ofMTN Agreements, e.g.theCodes onImport
Licensing Procedures, Technical Barriers toTrade, Subsidies andAnti-Dumping, thesemembers later
onrequested thatBulgaria clarified itsintentions astojoining theMultilateral Trade Agreements.
Inresponse therepresentative ofBulgaria informed theWorking Party, thatBulgaria wasready, at
thetimeofaccession totheAgreement Establishing theWTO, toaccept theWTO Agreement and
theMultilateral Trade Agreements annexed thereto. Indocument WT/ACC/BGR/2, therepresentative
ofBulgaria submitted detailed information concerning theconsistency ofhiscountry 'sforeign trade
régime withtheWTO Multilateral Trade Agreements. With respect totheCustoms Valuation
Agreement, therepresentative ofBulgaria further informed thatasofMarch 1996 Decree No.35
governing therespective procedures hasbeensuperseded byanewregulation No.39/1996 thatprovides
forimplementation oftheWTO Agreement ontheImplementation ofArticle VIIoftheGATT 1994,
including theunderstanding onthevaluation ofsoftware thatisappended totheAgreement. Bulgaria
notified Regulation 39/1996 totheWorking Party. With regard totheAgreement onSubsidies and
Countervailing Measures andtheAgreement onImplementation ofArticle VIoftheGATT 1994, he
stated thatsome transitional periods would berequired taking intoconsideration theprovisions for
economies intransition. Headded thatBulgaria would consider acceding totheAgreement on
Government Procurement aftertheadoption ofthenecessary legal basis. Herecalled thatBulgaria
wasamember oftheArrangements onBovine Meat andDairy Products andtheProtocols thereof
andthathisGovernment hadsigned, subject toratification, themodified Plurilateral Trade Agreements
inMarrakesh. Bulgaria would comply withtheconditions formembership intheWTO which included
acceptanceofalltheMultilateralTradeAgreements.TherepresentativeofBulgariastatedhisassumption
thatnothing intheProtocol ofAccession wentbeyond obligations required tobeundertaken byBulgaria
intheWTO Agreements. TheWorking Party tooknoteofthese assurances.
78. Therepresentative ofBulgaria confirmed that,uponaccession, hisGovernment would notify
theCommittee onGovernment Procurement ofitsintention toaccede totheAgreement onGovernment
Procurement andseekobserver status inthatCommittee. Hefurther confirmed thatBulgaria willinitiate
negotiations formembership intheAgreement bytabling anentity offer prior to30June1997. He
alsoconfirmed that,iftheresults ofthenegotiations aresatisfactory totheinterests ofBulgaria and
theother members oftheAgreement, Bulgaria willcomplete negotiations formembership inthe
Agreement by31December 1997. TheWorking Party tooknoteofthiscommitment.WT/SPEC/14/Rev.1
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79. Therepresentative ofBulgaria stated thathisGovernment would accede totheAgreement on
Trade inCivil Aircraft atthetimeofaccession.
Agreement onTrade Related Investment Measures (TRIMs)
80. Inresponse toquestions concerning theconsistency oftheforeign trade regime ofBulgaria
theAgreement onTRIMs, therepresentative ofBulgaria saidthatcurrent Bulgarian legislation did
notprovideforlocalcontentandtradebalancingrequirements.Bulgariawouldundertakenottomaintain
measures inconsistent withtheprovisions ofArticles IIIandXIofGATT 1994.
81. Therepresentative ofBulgaria stated thatBulgaria doesnotmaintain measures thatarenot
inconformity withtheAgreement onTrade-Related Investment Measures andwould therefore not
invoke provisions intheAgreement thatprovide fortheprogressive elimination ofsuchmeasures within
afixed period oftime. TheWorking Party tooknoteofthiscommitment.
VIII Agreement onTrade Related Aspects ofIntellectual Property Rights (TRIPS)
82. Some members oftheWorking Party requested information onBulgaria 'sacceptance of
international agreements onintellectual property, thecompliance withtheirsubstantive obligations,
theprotection ofcomputer programs, rental rights, therights ofperformers, theterms ofprotection,
therights ofbroadcasters, compulsory licensing, exclusions frompatentability, etc.Concerning TRIPS,
therepresentative ofBulgaria saidthatBulgaria isasignatory tothefollowing international treaties,
conventions andagreements related tointellectual property:
A.World Intellectual Property Organization: 1.Convention Establishing theWorld Intellectual Property
Organization (since 8January 1970); 2.Paris Convention fortheProtection ofIndustrial Property
Ratification (since 13June1921); 3.Madrid Agreement fortheRepression ofFalse orDeceptive
Indications ofSource onGoods (since 12August 1975); 4.Madrid Agreement Concerning the
International Registration ofMarks (since 1August 1985); 5.Lisbon Agreement fortheProtection
ofAppellations ofOrigin andtheir International Registration (since 12August 1975); 6.Patent
Cooperation Treaty (since 21May1984); 7.Budapest Treaty ontheInternational Recognition of
theDeposit ofMicroorganisms forthePurposes ofPatent Procedure (since 8May1978); 8.Nairobi
Treaty ontheProtection oftheOlympic Symbol (since 6May1984); 9.Bern Convention forthe
Protection ofLiterary andArtistic Works (since 5December 1921); 10.International Convention
fortheProtection ofPerformers, Producers ofPhonograms andBroadcasting Organizations, adopted
atRome on26October 1961; and11.Convention fortheProtection ofProducers ofPhonograms
Against Unauthorized Duplication ofTheir Phonograms, adopted atGeneva on29May1971. TheWT/SPEC/14/Rev.1
Page44
Government oftheRepublic ofBulgaria intended tojointheHague Agreement Concerning the
InternationalDepositofIndustrialDesignsof6November1925.B.UNESCO:1.UniversalCopyright
Convention asrevised atParison24July1971(since 5December 1921). Therepresentative ofBulgaria
saidthatinorder tobecome amember oftheWorld Trade Organization, Bulgaria would accept the
Agreement onTrade-Related Aspects ofIntellectual Property Rights, including Trade inCounterfeit
Goods (TRIPS) setoutinAnnex 1BoftheAgreement Establishing theWTO. Therepresentative of
Bulgaria saidthattheLawonCopyright andNeighbouring Rights andthePatent Lawcomplied with
therulesoftheTRIPS Agreement. Heconfirmed thatanopportunity forjudicial review wasprovided.
Headded therefore, Bulgaria would adapt itsdomestic legislation asnecessary. The1991 Lawon
Protection ofCompetition provides fortheprotection oftrade secrets. TheLawonProtection of
Competition hasprovisions onanticompetitive practices incontractual licences. Under Bulgarian
legislation therewerenorestrictions onthelicensing ofintellectual property. Theadministrative system
forenforcement ofintellectual property rights inplace included unitsintheMinistry ofCulture (for
copyright andneighbouring rights) andinthePatent Office (forindustrial property rights). Under
thePenal Code charges maybepressed against copyright infringers incasetheyuseillegally atrademark
orservice mark, appellation oforigin orindustrial design withthepurpose ofunfair competition.
Article 227ofthePenal Code provides forsuchcases imprisonment ofnotmore thanoneyearof
community service orafineof10,000BGLs. TheLawonAmendment tothePenal Code adopted
bytheNational Assembly on17May1995(SG50/1995) hadintroduced criminalization forcopyright
andneighbouring rights 'infringers. Bulgarian legislation provided forthefullranges ofrelief required
bytheTRIPS Agreement, withtheexception ofborder measures. ThenewdraftLawonCustoms
included specific provisions andprocedures incompliance withArticles 50-60 oftheTRIPS Agreement.
TheWorking Party tooknoteofthese assurances.
83. Therepresentative ofBulgaria confirmed thathisGovernment would apply theprovisions of
theAgreement onTrade-Related Aspects ofIntellectual Property Rights bythedateofitsaccession
totheWTO, without recourse toanytransitional period. TheWorking Party tooknoteofthis
commitment.
IX General Agreement onTrade inServices (GATS)
84. Some members oftheWorking Party requested information concerning emergency safeguard
measures andrestrictions oninternational payments andtransfers forcurrent transactions. Indocument
WT/ACC/BGR/2, therepresentative ofBulgaria submitted anoteconcerning tradeinservices. Bulgaria
alsoinvited interested members tosubmit assoonaspossible theirrequest listsconcerning possible
servicescommitments.IndocumentWT/SPEC/14/Add.2/Rev.1,therepresentativeofBulgariasubmittedWT/SPEC/14/Rev.1
Page45
arevised draftschedule concerning initial commitments ontrade inservices which would beannexed
totheGATS. Therepresentative ofBulgaria saidthatinrespect ofemergency safeguard measures
andrestrictions oninternational payments andtransfers forcurrent transactions, Bulgaria would comply
withtheGATS andtherequirements specified thereunder. Headded thatbeing aneconomy intransition
andhaving serious external financial difficulties, Bulgaria maintained restrictions oncapital transfers
inorder toensure themaintenance oftheleveloffinancial reserves adequate fortheservicing ofits
external debt. These restrictions wereapplied onanon-discriminatory andtemporary basis, andthey
areconsistent withtheArticles ofAgreement oftheInternational Monetary Fund.
85. Members oftheWorking Party commended Bulgaria forthebroad commitments tonational
treatment andmarket access forforeign service suppliers offered intherevised draftservices schedule
andindicated thatthislevel ofcommitment demonstrated thatBulgaria ismoving towards greater
integration withglobal services markets. Therepresentative ofBulgaria added thathisGovernment
would needatransitional period offiveyears fromthedateofaccession during which market access
forfirms wishing toestablish acommercial presence could besuspended fornewentrants foraperiod
notexceeding twoyears. Bulgaria would apply thelimitation onlytotheextent necessary toaddress
specific adjustment concerns andwould notify theappropriate GATS bodyofitsintent toapply such
measures asleasttwomonths inadvance ofapplication. Healsostated thathisGovernment would
beprepared toconsult ontheapplication ofsuchlimitations withinterested WTO Members.
86. Inthelightofthelevelofcommitments undertaken byBulgaria andgiven Bulgaria 'sconcerns,
some members oftheWorking Party approved theinclusion ofatransition period asdescribed below:
(a)Asatransitional measure lasting upto31December 2000, Bulgaria mayimpose, inorder toaddress
specific adjustment concerns, asuspension ofitscommitments topermit aforeign service supplier
toestablish aninitial oranadditional commercial presence inBulgaria. Those commitments which
maybesuspended areaslisted intheschedule ofspecific commitments onservices annexed tothe
Protocol ofAccession ofBulgaria; (b)Themaximum duration ofanysuspension described in
paragraph 44(a) shall betwoyears, except thatinnocase shall anysuspension lastbeyond
31December 2001. Nosuspension maybeextended beyond thislimitandnolatersuspension may
beimposed withrespect tothesamecommitments involved, inwhole orinpart,inanearlier suspension.
Except inthecaseofexpansion ofanexisting commercial presence toanewgeographic location, this
limitation shall notapply toforeign service suppliers thathave already established inBulgaria a
commercial presence, asdefined inArticle XXVIII(d) oftheGATS, priortothedatethatthesuspension
isimplemented; (c)Twomonths before taking anyaction under thislimitation, Bulgaria willinform
theGATS Council andrelevant sectoral committees oftheGATS Council ofthemeasure itintends
totake, itsduration andthecircumstances thatrequire ittotakesuchaction. AtthetimeBulgariaWT/SPEC/14/Rev.1
Page46
notifies theGATS Council andrelevant sectoral committees oftheGATS Council ofitsintent toapply
themeasure, Bulgaria willalso, upon request, immediately enter intoconsultations withanyWTO
Member affected byapplication ofthelimitation withaviewtoreaching agreement onalteration or
withdrawal ofthesuspension. Ifconsultations donotleadtoanagreement between Bulgaria andthe
WTO Member concerned, Bulgaria shallbefreetoapply thesuspension tothenotified sectors noless
thantwomonths from thedateofitsoriginal notification.
87. Some members oftheWorking Party considered nevertheless thatthelevelofcommitments
could beimproved ormade clearer. Itwassuggested thatsome measures listed inthedraftschedule
could stillbeclarified when theschedules ofcommitments willbeverified from atechnical point of
view. Asfarasimprovement ofcommitments wasconcerned, amember insisted onconsidering also
commitments onbasic telecommunications, inparticular inlightoftheDecision onCommitments in
Basic Telecommunications adopted bytheCouncil forTrade inServices on30April 1996. Given
thatmembers have timeuntil 15February 1997 toconsider their commitments inthissector, a
contribution from Bulgaria wasexpected aswell. Reference wasalsomade tomarket access
commitments forfinancial leasing infinancial services. Therepresentative ofBulgaria explained that
services wasanewagreement andthatsome experience withscheduling andliberalization oftrade
inservices wasnecessary, particularly within itsadministration. Bulgaria waswilling, however, to
consider further commitments soastocomply, asother WTO members, withtheobligations resulting
from theGATS.
Review ofCommitments andTransitional Periods
88. Therepresentative ofBulgaria alsostated thathisGovernment would notify theWTO Secretariat
annually oftheimplementation ofthephased commitments withdefinitive datesforcompliance referred
toinparagraphs 29,35,43,78and86ofthisReport andwould identify anydelays inimplementation
together withthereasons therefore. TheWorking Party tooknoteofthiscommitment.
Conclusions
89. TheWorking Party tooknoteoftheexplanations andstatements ofBulgaria concerning its
foreign trade regime, asreflected inthisreport. TheWorking Party tooknoteofthestatements and
assurances given byBulgaria inrelation tocertain specific matters which arereproduced inparagraphs
15,31,36,57,63,74,77and82ofthisreport. TheWorking Party tooknoteofthecommitments
given byBulgaria inrelation tocertain specific matters which arereproduced inparagraphs 16,17,
24,25,26,29,30,32,34,35,37,38,43,47,48,53,55,62,67,71,73,76,78,81,83,86andWT/SPEC/14/Rev.1
Page47
88ofthisReport. TheWorking Party tooknotethatthese commitments hadbeenincorporated in
Paragraph 2oftheProtocol ofAccession ofBulgaria totheWTO.
90. Having carried outtheexamination oftheforeign trade régime ofBulgaria andinthelight
oftheexplanations, statements, assurances, commitments andconcessions made bytherepresentative
ofBulgaria, theWorking Party reached theconclusion thatBulgaria beinvited toaccede tothe
Agreement Establishing theWTO under theprovisions ofArticle XII.Forthispurpose theWorking
Party hasprepared thedraftDecision andProtocol ofAccession reproduced intheAppendix tothis
Report, andtakes noteofBulgaria 'sSchedule ofSpecific Commitments onServices (document
WT/SPEC/14/Add.2/Rev.1) anditsSchedule ofConcessions andCommitments onGoods
(document WT/SPEC/14/Rev.1/Add.1) thatareannexed totheProtocol. Itisproposed thatthesetexts
beadopted bytheGeneral Council when itadopts theReport. When theDecision isadopted, the
ProtocolofAccessionwouldbeopenforacceptancebyBulgariawhichwouldbecomeaMember30days
afteritaccepts thesaidProtocol. TheWorking Party agreed therefore, thatithadcompleted itswork
concerning thenegotiations fortheaccession ofBulgaria totheAgreement Establishing theWTO.WT/SPEC/14/Rev.1
Page48
APPENDIX
ACCESSION OFBULGARIA
Draft Decision
TheGeneral Council,
Having regard totheresults ofthenegotiations directed towards theaccession oftheRepublic
ofBulgaria totheAgreement Establishing theWorld Trade Organization andhaving prepared aProtocol
fortheAccession ofBulgaria.
Decide, inaccordance withArticle XIIoftheAgreement Establishing theWorld Trade
Organisation, thattheRepublic ofBulgaria mayaccede totheAgreement Establishing theWorld Trade
Organisation ontheterms setoutinthesaidProtocol.WT/SPEC/14/Rev.1
Page49
PROTOCOL FOR THE ACCESSION OFBULGARIA
TOTHE MARRAKESH AGREEMENT ESTABLISHING
THE WORLD TRADE ORGANIZATION
DRAFT
TheWorld Trade Organization (hereinafter referred toasthe"WTO"), pursuant totheapproval
oftheGeneral Council oftheWTO accorded under Article XIIoftheMarrakesh Agreement Establishing
theWorld Trade Organization (hereinafter referred toasthe"WTO Agreement"), andtheRepublic
ofBulgaria, (hereinafter referred toas"Bulgaria"),
Taking noteoftheReport oftheWorking Party ontheAccession ofBulgaria WTO Agreement
indocument .......................................... (hereinafter referred toasthe"Working Party Report"),
Having regard totheresults ofthenegotiations ontheAccession ofBulgaria WTO,
Agree asfollows:
PartI-General
1. Upon entry intoforce ofthisProtocol, Bulgaria accedes totheWTO Agreement pursuant to
Article XIIofthatAgreement andthereby becomes aMember oftheWTO.
2. TheWTO Agreement towhich Bulgaria accedes shallbetheWTO Agreement asrectified,
amended orotherwise modified bysuchlegalinstruments asmayhaveentered intoforce before the
dateofentry intoforce ofthisProtocol. ThisProtocol, including thecommitments referred toin
paragraph 89oftheWorking Party Report which arehereby incorporated intothisProtocol, shallbe
anintegral partoftheWTO Agreement.
3. Except asotherwise provided forintheparagraphs referred toinparagraph 89oftheWorking
Party Report, those obligations intheMultilateral Trade Agreements annexed totheWTO Agreement
thataretobeimplemented overaperiod oftimestarting withtheentry intoforce ofthatAgreement
shallbeimplemented byBulgaria asifithadaccepted thatAgreement onthedateofitsentry into
force.
4. Bulgaria maymaintain ameasure inconsistent withparagraph 1ofArticle IIoftheGATS
provided thatsuchameasure isrecorded intheListofArticle IIExemptions annexed tothisProtocol
andmeets theconditions oftheAnnex totheGATS onArticle IIExemptions.WT/SPEC/14/Rev.1
Page50
PartII-Schedules
5. TheSchedules annexed tothisProtocol shall become theSchedule ofConcessions and
Commitments annexed totheGeneral Agreement onTariffs andTrade 1994 (hereinafter referred to
asthe"GATT 1994") andtheSchedule ofSpecific Commitments annexed totheGeneral Agreement
onTrade inServices (hereinafter referred toas"GATS") relating toBulgaria. Thestaging ofthe
concessions andcommitments listed intheSchedules shallbeimplemented asspecified intherelevant
parts oftherespective Schedules.
6. Forthepurpose ofthereference inparagraph 6(a)ofArticle IIoftheGATT 1994 tothedate
ofthatAgreement, theapplicable dateinrespect oftheSchedules ofConcessions andCommitments
annexed tothisProtocol shallbethedateofentry intoforce ofthisProtocol.
PartIII-Final Provisions
7. ThisProtocol shall beopen foracceptance, bysignature orotherwise, byBulgaria until
30April 1997.
8. ThisProtocol shallenter intoforce onthethirtieth dayfollowing thedayofitsacceptance.
9. ThisProtocol shallbedeposited withtheDirector-General oftheWTO. TheDirector-General
oftheWTO shallpromptly furnish acertified copyofthisProtocol andanotification ofacceptance
byBulgaria thereto pursuant toparagraph 7toeachMember oftheWTO andtoBulgaria.
10. ThisProtocol shallberegistered inaccordance withtheprovisions ofArticle 102oftheCharter
oftheUnited Nations.
Done atGeneva this....dayof....onethousand ninehundred andninety ......, inasingle
copyintheEnglish, French andSpanish languages, eachtextbeing authentic.WT/SPEC/14/Rev.1
Page51
ANNEX I
SCHEDULE CXXXIX -BULGARIA
PartI-Goods
[Circulated indocument WT/SPEC/14/Rev.1/Add.1 ]
PartII-Services
[Circulated indocument WT/SPEC/14/Add.2/Rev.1 ]WT/SPEC/14/Rev.1
Page52
ANNEX 1
totheReport oftheWorking Party ontheAccession ofBulgaria
INFORMATION ONTHE INTRODUCTION OFATEMPORARY SURCHARGE
ONIMPORTS INTO THE REPUBLIC OFBULGARIA
FOR BALANCE OFPAYMENTS REASONS
Theintroduction ofanimport surcharge
Pursuant toRegulation oftheCouncil ofMinisters No.118of30May1996(published inState
Gazette No.48of1996) theGovernment oftheRepublic ofBulgaria hasintroduced a5%temporary
surcharge onimports ofgoods intotheRepublic ofBulgaria (except alimited listofproducts essential
fortheeconomy -seeAnnex), witheffect from 4June1996 inorder toforestall animminent threat
ofserious decline inBulgaria 'sforeign exchange reserves. TheGovernment decided torespond by
introducing theleastdisruptive measures.
Theimport surcharge shallbecalculated onthecustoms value oftheimported goods. The
import surcharge shallbeinvoiced, paidandcharged together withtheamounts ofassessed customs
duty.
Thesurcharge willbegradually phased inaccordance withthefollowing schedule:
from June4,1996 tillJune30,1997 -5%
from July1,1997 tillJune30,1998 -4%
from July1,1998 tillJune30,1999 -2%
from July1,1999 tillJune30,2000 -1%.
Theimport surcharge willbeeliminated from July12000.
Reasons fortheadoption ofarestrictive measure
Marked progress instabilization wasachieved in1995: inflation fellsharply, economic growth
increased,andthebalance-of-paymentsstrengthened.However,thesestabilizationgainswereshort-lived
because ofdeeply entrenched problems offinancial undiscipline intheenterprise sector andinsolvency
ofthebanking system. Years ofdelay haveladen thebudget withdebt,undermined monetary control,
andnowthreaten fiscal sustainability. Since thelatter halfof1995adepletion oftheexchange reserves,
arenewed pressure ontheexchange rateandrealinterest rateswere observed.
Significant changes inthemacroeconomic environment, including aweakening ofeconomic
growth andrevenues, higher thanexpected inflation andnominal interest rates, amuch sharper than
expected depreciation oftheBulgarian lev,widespread withdrawal ofdeposits (particularly offoreign
exchange) fromthebanking sector andthelossofgreater partofthecountry 'sforeign exchange reserves
followed in1996.
There isaconsiderable uncertainty about balance-of-payments prospects for1996. Although
theoverall balance-of-payments fortheyear1995 waspositive, thenegative trend became obvious
inthelastquarter of1995. Thedeficit forthefirstquarter of1996oftheoverall balance-of-payments
wasUS$583.5 million.WT/SPEC/14/Rev.1
Page53
Bothexternal andinternal factors arelikely toreduce export volume in1996. Export volume
isexpected tofallslightly because ofweakforeign demand insomeimportant tradepartners forBulgaria,
lower international prices formetals (animportant export commodity forBulgaria), weakcrops, higher
domestic energy prices, enterprise restructuring andtheattended slowdown indomestic production.
Thecapital account ofthebalance-of-payments isexpected todeteriorate markedly in1996
(from US$150million in1995to647million in1996) duetolarge amortization payments andlarge
capital outflows inthefirsthalfof1996which arenotexpected tobefullyreversed inthesecond half
oftheyear.
Official reserves (including gold)havefallen toaprecariously lowlevel(lessthanUS$1billion)
andareestimated tohavedeclined byaround US$650million inthefirsthalfof1996.
Inthiseconomic situation, thehighexternal indebtedness isasubstantial factor indevising
theappropriate economic policies andmeasures.
Theforeign debtpayments willreach theirpeakofUS$1186 million in1996, andin1997
and1998willremain atsubstantially thesamehighlevel-US$1117.3 million andUS$1012.6 million
respectively. Intheyears 1999 and2000 thepayments willbecome lower, butwillstillremain at
averyhighlevel-US$848million andUS$725.5 million respectively.
TheRepublic ofBulgaria isfullydetermined torestore theconfidence initsnational currency
andinitsability tosustain theregular servicing ofitsexternal debt. Forthispurpose, theGovernment
hasundertaken anumber ofmeasures toincrease budget revenues andtoimprove itsbalance-of-payment
position. Onthebasisofthese measures, itexpects toconclude aStand-by Agreement withtheIMF,
andaStructural Adjustment LoanwiththeWorld Bank. Oneoftherequirements toreduce thefinancing
gapistoensure asurplus ofthetrade balance inspiteoftheaverse effects onexports inthepresent
economic situation.
Themeasures oftheGovernment aretargeted toincrease theofficial reserves toUS$1.3billion
byend-1996 andUS$1.7billion byend-1997 (wellbelow threeandahalfmonths ofimports ofgoods
andnon-factor services), toimprove theoverall balance-of-payments byreducing itsdeficit to
US$244million bytheendof1996.
Aprogramme, supported bytheIMFandtheWBisbeing launched. Anagreement wasreached
inprinciple withtheIMFonacomprehensive programme ofeconomic andstructural reform designed
todealdecisively withtheproblems presently confronting Bulgaria which comprises policies tobe
supported byaFund arrangement. Theprogramme includes theclosure orisolation fromthebanking
system ofmostloss-making state-owned enterprises andtheliquidation ofsome ofthemajor insolvent
banks (both state-owned andprivate). Some 40000people willlosetheirjobs(i.e.0.1-1.5% of
thelabour force). TheBulgarian National Bank (theCentral Bank) petitioned theCourt toinitiate
bankruptcy proceedings foranumber ofinsolvent trade banks.
Thesurcharge alternative measures
After considering different options aiming atforestalling theimminent threat ofaserious decline
inBulgaria foreign exchange reserves, theGovernment haschosen themeasure thatleastdistorts trade.
Inaccordance withtheUnderstanding ontheBalance-of-Payments Provisions oftheGATT 1994, the
import surcharge asaprice-based measure isconsidered tohavelessdisruptive effect ontrade than
alternative quantitative restrictions orothersimilar measures, sinceitwillnotinterfere withthepolicies
aimed atgranting alltraders equal opportunity toengage ininternational commerce.WT/SPEC/14/Rev.1
Page54
Because ofitscomprehensive trade coverage, thesurcharge isnotusedforthepurpose of
protecting anyspecific industry orsector oftheeconomy.
Theimpose surcharge willonlybeapplied tocontrol thegeneral levelofimports andwillnot
exceed whatisnecessary toaddress thebalance-of-payments situation.
Intaking thisaction Bulgaria recognizes thatnoviable alternative options areavailable under
thepresent circumstances, forthefollowing reasons:
1. thehighlevelofexisting external debtcallsforrestraint inseeking newcredit facilities which
could beusedtosupport thebalance ofpayments;
2. asevere depletion offoreign exchange reserves hastobeavoided inorder tomaintain the
debt-servicing schedule andsafeguard theinternal convertibility ofthenational currency which
iscrucial forthecontinuing liberalization ofexternal trade;
3. incarrying outitsdomestic economic policies, theBulgarian government hasalready employed
arange ofgenerally recognized instruments aimed atsecuring thebalance-of-payments
equilibrium byalternative means. Bulgaria hasmade considerable effort toobtain progress
inthetransitions toamarket-based system. Trade policies andexchange system reforms have
beengeared towards reducing distortions totrade, encouraging market forces, andintegrating
Bulgaria intotheworld economy. Thetemporary import surcharge isintroduced toprotect
theimplementation oftheliberalization measures andtoassure theircontinuity. While taking
suchmeasures, theGovernment ofBulgaria wishes tomaintain alsoitspolicy ofopenaccess
toconvertible currency resources forallbusiness agents, soastoencourage theiractivities
andpromote thespirit offreeenterprise.
GATT justification ofthemeasures taken
Thesurcharge willbeadministered consistently withtheprocedures established under the
respective Articles oftheGATT 1994andaccording totheprovisions ofthe1979Declaration onTrade
Measures Taken forBalance-of-Payments Purposes andtheUnderstanding onBalance-of-Payments
Provisions oftheGATT 1994.
Bulgaria 'sviewthatthesurcharge described above isinconformity withtheessential standard
ofconsistency withtherelevant GATT/WTO provisions andpractices isbased, interalia,onthe
following features ofthismeasure:
1. thereasons thatleadtothenecessity ofintroducing theimport surcharge fallunder the"special
factor" qualification (e.g.inArticle XII:2 oftheGATT 1994);
2. therestrictive impact ontrade willbeconfined towhatisconsidered necessary formeeting
thestated objective ofthemeasure, asprovided forintheGATT 1994;
3. theimport surcharge ispricebased, uniform andnon-discriminatory, administered withregard
toimports covered bythemeasure fromallsources ofimports, asrequired byArticle XIII:1
oftheGATT 1994. Thisaffects equally alltrade, including thetrading partners withwhom
Bulgaria 'scommercial relations arebased onArticle XXIV oftheGATT 1994;
4. theintention oftheBulgarian government istopursue itsreform programme through economic
measures which expand, rather thancontract, international trade. Inthisrespect, andin
conformity withGATT/WTO requirements, thesurcharge willbeprogressively relaxed and
eliminated according totheschedule indicated above;WT/SPEC/14/Rev.1
Page55
5. themeasure isconsidered bytheBulgarian government asbeing potentially lesstradedisruptive
thanquantitative restrictions onimports orother similar measures.
Asregards foreign exchange policy, Bulgaria intends tomaintain, protect andexpand thepresent
system ofvirtually unrestricted internal convertibility. Infact,theconvertibility forcurrent account
operations hasbeenoneofthekeyinstruments inourefforts todevelop market economy. Theselection
offoreign exchange controls, rather thanthesurcharge, would havemeant andunacceptable reversal
ofthispolicy.WT/SPEC/14/Rev.1
Page56
ANNEX
Description ofproducts Tariff itemNo.
Crude oil ex2709 00
Natural gas 2711 11000
2711 21000
Electrical energy 2716 00000
Coalandbriquettes 2701
Lignite 2702
Coke andsemi-coke ofcoaloflignite 2704
Nuclear fuel ex2844 20
Copper oresandconcentrates 2603 0000
Unwrought aluminium 7601
Chemical wood pulp 4703
4704
Polyvinyl chloride ex3904
Cotton 5201
Medicaments 3003
3004
Rawcanesugar 1701
Wheat 1001
Maize forforage 1005 90001
Wheat flour ex1101 00000WT/SPEC/14/Rev.1
Page57
ANNEX 2
totheReport oftheWorking Party ontheAccession ofBulgaria
LIST OFEXPORT TAXES APPLIED INTHE REPUBLIC OFBULGARIA
Description ofproducts Bulgarian
Customs
Tariff No
1. Liveanimals:
horses 0101 11
0101 19
bovine animals 0102
sheep andgoats 0104
2. Seasnails ex0307 91
3. Hides andskins:
rawhides andskins ofbovine animals 4101
rawhides andskins ofsheep andgoats 4102
4103 10
rawpigskins ex4103 90
4. Wood:
fuelwood ex4401
wood intherough, coniferous andnon-coniferous
withthediameter oftheslender edgeexceeding 4cm,excl.
cerise, acacia, lime-tree ex4403
wood chipped lengthwise:
-planks anddetails ofallkinds ofwood, excl. walnut,
cerise, acacia andlime-treeex4407
-walnut wood, sliced lengthwise
-beams:
.ofallkinds ofwood, excl. walnut, cerise, acacia and
lime-tree
.ofwalnut
-details ofwalnut, anysize
5. Waste ofpaper andpaperboard 4707
6. Wool:
greasy wool, fleece-washed
degreased wool, notcarbonised
noils ofwool oroffineanimal hair
wool tops5101 11
5101 19
5101 21
5101 29
5103 10
5105 10
5105 21
5105 29
7. Waste andscrap:
ferrous, andremelting scrap ingots ofironorsteel
ofaluminium
ofzinc7204
7602
7902
8. Copper products 7419 91
7419 99