RESTRICTED
WORLD TRADE WT/ACC/ALB/3
13September 1995
ORGANIZATION(95-2650)
Original: English
ACCESSION OFALBANIA
Questions andReplies
totheMemorandum ontheForeign Trade Régime
(Document L/7613)
Inacommunication, dated 12November 1992, circulated asL/7120, theGovernment ofthe
Republic ofAlbania applied foraccession totheGeneral Agreement onTariffs andTrade onthebasis
ofArticle XXXIII oftheGeneral Agreement. Having regard totheDecision adopted bytheGeneral
Council on31January 1995, theWorking Party ontheAccession ofAlbania totheGATT 1947 was
transformed intoaWTO Accession Working Party. Theterms ofreference oftheWorking Party are
reproduced indocument WT/L/24. Indocument L/7613, members hadbeeninvited tosubmit questions
inwriting concerning theforeign trade régime ofAlbania. Thequestions submitted bymembers and
thereplies thereto provided bytheauthorities ofAlbania arereproduced hereunder.
Delegations wishing toraiseadditional questions concerning theforeign traderégime ofAlbania
might inform thedelegation ofAlbania (with acopytotheSecretariat) ofsuchquestions inadvance
ofthenextmeeting oftheWorking Party, sothatconsidered replies canbemade available byAlbania
tomembers atthetimeoftheWorking Party meeting.WT/ACC/ALB/3
Page2
TABLE OFCONTENTS
Section Question numbers
II. ECONOMY AND FOREIGN TRADE
A. Economy
1.(c) Institutional responsibilities inthetrade area 1-2
B. Foreign Trade
1. RoleofForeign Trade intheEconomy 3-5
III. FOREIGN TRADE RÉGIME
A. Import Regulations
3. Nomenclature 6-7
4. Evolution ofTariff Structure 8-10
6. Quotas, Licences andOther Non-Tariff Measures 11-12
7. Taxation Régime 13-22
9. Rules ofOrigin 23-27
11. Standards andCertificates 28-31
12. Sanitary andPhytosanitary Measures 32
B. Export Regulations
2. Types ofExport Taxes 33
4. Export Licensing System 34
D. Regulation ofTrade inTransit 35
IV. POLICIES AFFECTING FOREIGN TRADE
A. Privatization 36
B. State Foreign Trading Enterprises 37-40
F. Industrial Policy 41
G. Foreign Investment Policy 42-45
J. Tourism 46-47
L. FreeTrade andEconomic Zones 48
SERVICES
Financial Services -General 49
Financial Services -Banking 50-65
Financial Services -Insurance andSecurities 66WT/ACC/ALB/3
Page3
Construction 67
Professional Services 68
H. Government Procurement 69-76WT/ACC/ALB/3
Page4
CHAPTER IIECONOMY AND FOREIGN TRADE
A. Economy
1.(c) Institutional responsibilities inthetrade area
Question 1
Thememorandum explains thattheMinistry ofIndustry, Transport andTrade issues licences
for"thefewcommodities thataresubject toexport licence". What commodities aresubject to
export licences? How arethese licences applied?
Answer.
Currently nocommodities aresubject toexport licence. Theexport ofcertain commodities
isprohibited. Please seeSection III.B.4below.
Question 2
Some price controls remain. Could Albania provide further details ofthese price controls and
theprocedures usedtocalculate andadjust them. Arethere anyplans tophase outthecontrols?
TheGovernment ofAlbania indicates thatthere arestillprice controls onflour, bread, sugar
riceandalimited number ofnon-food items.
o Please provide details onthescope andoperation oftheregulatory control ofthese four
commodities.
o Does theGovernment ofAlbania plantoeliminate these controls inthefuture? Ifso,
isthere atimetable forelimination?
Answer.
BeginninginNovember1991,Albaniahasgraduallyliberalizedpricesonallbutalimitednumber
ofcommodities andservices. Controls remain onfourbasic foodcommodities -flour, bread, sugar
andrice-andthefollowing non-food items andservices provided bytheState: drinking water; steam;
electric energy; petroleum; gasoline; kerosene; some medicines; school books; public transport
forpeople; postandtelecommunications services; some agricultural services (forexample, irrigation);
andsome public registration services (forexample, registration ofcars).
Prices arecalculated taking intoaccount thefollowing: general living conditions, changes
inprices andincome levels (especially people living onfixed incomes), production costs andmarket
prices, especially inneighbouring countries.
Itisforeseen thatsome oftheremaining price controls willbeliberalized atthebeginning
of1996.WT/ACC/ALB/3
Page5
B. Foreign Trade
1. RoleofForeign Trade intheEconomy
Question 3
Please provide details onhowthesixsteps being taken toachieve theforeign trade objectives
listed inthissection arebeing implemented.
Thegovernment ofAlbania indicates thatitisundertaking steps toimprove itstrade policy.
What types of"special projects toimprove trade performance" isAlbania undertaking?
Answer.
Step1.Liberalization ofthetrade régime.
Steps havebeentaken tofurther liberalize theexport régime. In1995, licensing requirements
wereeliminated forexport ofcharcoal, unprocessed tobacco, petrol, gasoline andbenzine. Ouraim
isthetotalliberalization ofexports. Ontheimport side,themost important recent development is
thepassage on1July1995ofarevised import tariffschedule. Incomparison totheprevious schedule,
thenewschedule issimpler -three tariff levels incomparison tofour-andmore liberal inthesense
thatanoverall 5percentimport surcharge hasbeeneliminated.
Step2.Privatization offoreign trade enterprises.
Documentationrequiredfortheprivatizationofforeigntradeenterprises(forexample,documents
regarding valuation ofassets) hasbeencompleted, andsome parts ofthose enterprises havealready
beenprivatized, forexample, some warehouses. Thisprogramme iscontinuing.
Step3.Conclude economic agreements withforeign partners.
Oneofthemost important ways thatAlbania istrying toimplement thisstepisthrough its
efforts tobecome amember oftheWTO. Inaddition, Albania ispursuing discussions oneconomic
andtradeagreements withanumber ofindividual countries (forexample, Japan andFrance). Finally,
AlbaniahasconductedpreliminarydiscussionswiththeEuropeanUnionregardingapossibleAssociation
Agreement.
Step4.Undertake special projects toimprove trade performance.
Until now, nospecial projects havebeenimplemented toimprove trade performance. Two
possibilities thatareunder consideration are:(i)creation ofatrade information centre which would
provide easily accessible information tocompanies on,forexample, export regulations, customs
procedures, newlegislation affecting trade, conditions oninternational markets, etc.;and(ii)creation
ofafreetrade zone.
Step5.Reorganize theChamber ofCommerce.
Since thepassage ofalaw"OnChamber ofCommerce andIndustry" (Law number 7804 of
10March 1994), Albania hasbeendeveloping anetwork ofChambers based onthisnewlegislation.
Untilnow,reorganization of20Chambers ofCommerce andIndustry hasbeencompleted. Itisforeseen
thatatotalof36Chambers willbeestablished allaround Albania.WT/ACC/ALB/3
Page6
Step6.Encourage thecreation ofprivate business associations.
Aninformationsurveyofcompaniesinvolvedininternationaltradeactivitiesisbeingundertaken
tolearn about howgovernment policies affect theirday-to-day operations, andtomake them aware
oftherolethatanassociation ofprivate traders could playinmaintaining anopentrade régime.
Question 4
Allimports (except wheat andflour) aresubject toafixed surcharge of5percentofthecustoms
value. What steps arebeing taken toeliminate thissurcharge?
CanAlbania provide more information onthereason forandoperation ofitsfixed surcharges
onallimports except flour andwheat?
TheCustoms Office collects foritsownaccount import andexport duties, service tariffs, and
"fixed surcharges" forcommodities other thanflour andwheat.
o Why isthissurcharge applied? Why arewheat andflour exempt? Please verify what
the5percentsurcharge onthecustoms value isinaddition toother import duties.
o Does Albania plantoeliminate the5percentsurcharge maintained onmost imported
goods orincorporate itintotheimport tariff schedule when itaccedes totheWTO?
Answer.
The5percentsurcharge waseliminated on1July1995, withthepassage oftheLawon
Nomenclature ofCommodities (No.7936 of18May1995) establishing anewtariff schedule.
Question 5
Under theCustoms Code, there isaprovision for"special customs duties" inspecial cases.
o Please define andprovide examples ofthese special cases. Under whatcircumstances would
"special customs duties" beassessed? What istherateofsuchduties?
Please explain thecircumstances under which a"special customs duty" maybelevied andprovide
more details onthelevelofthese duties andproducts affected.
Would Albania supply more detail onthenature andextent ofthe"special customs duties"
mentioned onpage 11oftheMemorandum? Would Albania alsooutline thecircumstances under
which theywould apply suchduties?
Answer.
Article 12ofLawNo.7609 "OnCustoms Tariffs" provides thatspecial customs duties are
used: (i)asprotective measures, when certain goods areimported intoAlbania insuchquantity of
conditions thattheycanbecome athreat todomestic producers ofthesamegoods orcompetitive goods;
or(ii)asprohibitive measures inthefollowing circumstances:
- forphysical orjuridical persons involved inforeign economic relations whooperate contrary
tothenational interests;WT/ACC/ALB/3
Page7
- toprevent unjust competition, defined bycases described inAlbanian Laws;
- tocounter criminal actsofcompanies, countries orunions ofcountries against theRepublic
ofAlbania.
Currently, nosuchspecial customs duties areapplied.
CHAPTER III. FOREIGN TRADE REGIME
A. Import Regulations
3. Nomenclature
Question 6
Albania isintheprocess ofdeveloping acustoms nomenclature which isbased ontheHarmonized
System (HS). Please explain howthecurrent nomenclature relates totheHS.
Answer.
On1July1995, Albania began using asix-digit nomenclature based onthefirstsixdigits of
theHarmonized System.
Question 7
Does Albania intend toaccede totheInternational Convention ontheHarmonized System and
Coding system, of14June 1973, oftheWorld Customs Organization? Does theAlbanian tariff
nomenclature takeintoaccount theHarmonized System nomenclature, version 1992 and1996?
Answer.
Until now, noplans havebeen made forAlbanian participation intheConvention onthe
Harmonized System andCoding System, of14June1973, oftheWorld Customs Organization.
Thecurrent Albanian tariffnomenclature which entered intoforce on1July1995(seeanswer
toprevious question) isbased ontheHarmonized System nomenclature, version 1996.
4. Evolution ofTariff Structure
Question 8
CanAlbania letushaveacomplete tariff listatHS8digitlevelforallindustrial andagricultural
products including details oftariff rates (including Customs service tariffs) forallproducts. Does
Albania have theintention ofbinding thewhole ofitstariff atanapplied rate?
Answer.
Atariff listattheHS8digitlevel doesnotexistyetforAlbania. Asnoted above, atariff
listattheHS6digitlevelcame intoeffect on1July1995.
Adecision hasnotbeentaken yetwithrespect tothelevelorlevels atwhich Albania would
bindtariffs under theWTO.WT/ACC/ALB/3
Page8
Question 9
According totheMemorandum, motor vehicles aresubject toanimport dutyof5percent(see
Section XVII oftheexplanatory notes totheAlbanian tariff schedule) andafixed surcharge
(5percentofcustoms value). Forcustoms purposes, certain minimum prices areassumed which
varybetween US$70 andUS$220 formotorcycles and150.000 and500.000 lek(about US$1500
andUS$5000) forusedcars, buses andtrucks. Inaddition, automotive products aresubject to
a15percentturnover taxoncommodities incirculation which isapplied toallimports except
flour andwheat. Apart from these advalorem duties (customs duties, import surcharges, and
turnover tax)theAlbanian Memorandum alsorefers to"specific" duties (i.e.calculated asafixed
amount perunit) applied totheimport ofvehicles and"compound duties" (i.e.acombination
ofadvalorem andspecific duties) applied tousedvehicles (seepage 10oftheMemorandum).
Please clarify thenature ofthese duties andtheexact amount levied onimports ofautomotive
products.
Answer.
Albanian lawprovides forthree main kinds ofimport taxes (duties): advalorem duties,
calculated asapercentage ofthevalue oftheimport; specific duties, calculated asafixed taxper
unit; andcombined duties, calculated asacombination ofspecific andadvalorem duties.
Inpractice, almost allduties areadvalorem.
Regarding vehicles, duties onnewvehicles areadvalorem. Duties onusedvehicles arespecific.
Below isatableshowing thespecific dutyapplied todifferent kinds ofusedvehicles, aswellasthe
minimum prices forsuchvehicles. Duties andminimum values areexpressed inU.S.dollars.
Specific Duty Minimum Price
Motorcycle 100 200
Car 500 1500
Bus 500 5000
Minibus 300 3000
Truck 500 5000
Question 10
Does thetable of"weighted average tariff levels forthemain commodity groups" contained
inthissection include the5percentsurcharge?
Please explain how Albania 's5percent customs surcharge willbemade consistent with
GATT Article VIII which requires thatcharges (other than duties) applied toimports be
limited inamount totheapproximate costofservices rendered.
Answer.
Asnoted above, the5percentsurcharge hasbeeneliminated.WT/ACC/ALB/3
Page9
6. Quotas, Licences andOther Non-Tariff Measures
Question 11
Please provide acomplete listofproducts subject toimport prohibitions together withthereasons
fortheprohibition. Isthedomestic production ofthese products alsoprohibited?
Please provide uswithacomplete listing oftheproducts currently prohibited from import for
reasons ofheath, safety andpublic order, andthereasons eachisprohibited. Areallsuchgoods
alsoprohibited from production inAlbania?
Which agricultural imports orexports areprohibited? What kindofseeds areprohibited from
importation orexportation? Isthere alistofprohibited products? Ifso,please provide it,and
thejustification foreachban.
Answer.
Import ofthefollowing commodities isprohibited:
- military toxicmaterials, andtoxicmaterials thatareoutofdate(forsecurity andhealth reasons);
- other dangerous waste materials (forhealth reasons);
- infected herbs andherbproducts (forhealth reasons);
- seeds andseedlings which canbeusedtoproduce narcotics (forhealth reasons);
- medicines thatareoutofdateorveryclose tobeing outofdate(forhealth reasons);
- infected animals (fishes) andrelated products (forhealth reasons);
- infected liquid, gasorsolid materials (forhealth reasons);
- foodcommodities which areinfected oroutofdate(forhealth reasons);
- pesticides thatareoutofdateorveryclose tobeing outofdate(forhealth reasons);
- narcotic drugs orrawmaterials usedfortheproduction ofnarcotic drugs, aswellasother
psychotropic materials (forhealth reasons);
- materials, suchasemblems, maps orwritings, thatposeathreat tonational orsocial security
(forsecurity reasons);
Import ofthefollowing commodities issubject tolicence orspecial authorization:
- allkinds ofarms (forsecurity reasons);
- radioactive materials andstrong poisons (forhealth reasons);
- explosives, charges andbullets (forsecurity reasons);
- pesticides (forhealth reasons);WT/ACC/ALB/3
Page10
- medicines (forhealth reasons);
- seeds andseedlings foragricultural use(forenvironmental reasons);
Noagricultural commodities areprohibited from export.
Question 12
Arethere anyexport quotas orother non-tariff measures applied toexports?
Answer.
SeeSection III.B.4 below regarding export regulations.
Inaddition, regarding theexport ofdual-use (civil andmilitary) commodities andtechnology,
wearenowbeginningtoformulateregulationswhichwouldcontrolexportofdual-use(civilandmilitary)
commodities andtechnology. These regulations willbebased onexisting international agreements
onexport control.
7. Taxation Régime
Question 13
Please provide acopy ofthelawonTurnover Tax, details ofthenewVAT Lawandadetailed
summary inaGATT language.
What progress hasbeenmade ontheimposition ofavalue added taxtoreplace theturnover tax?
What istheproposed VAT rate? Which items willbesubject toVAT?
Answer.
TheLawonValue Added Taxwasapproved byParliament on27April 1995 andwillenter
intoforceinthefourth quarter of1995. Itwillapply toalltaxable goods andservices made orsupplied
intheterritory ofAlbania bytaxable persons, andallimportations ofgoods intotheterritory ofAlbania.
Alljuridical orphysical persons whose turnover exceeds orisexpected toexceed theregistration
limitareconsidered taxable persons; theyareobliged toregister astaxable persons. Theregistration
limitmayberevised bytheCouncil ofMinisters, asappropriate, taking intoaccount inflation andother
economic andadministrative factors.
Albania 'sVATwillbebroad-based taxwithminimal exceptions. Theexceptions areasfollows:
- supply ofleased landorbuildings foraperiod exceeding 2months;
- financial services, including transactions related tocontracts forlifeinsurance andreinsurance;
- goods orservices provided inreturn forreduced payment bynon-profit organizations, such
assupply ofgoods orservices formedical anddental treatment, fortheprotection orwelfare
ofchildren andoldpeople, supplies ofeducational, cultural andsporting services andsupply
byreligious orphilosophical organizations;
- postal services;WT/ACC/ALB/3
Page11
- theBank ofAlbania (Central Bank);
- diplomats.
TheVAT rateis12.5percent. Alltaxable goods andservices aretaxed atthisrate. VAT
isassessed, charged andpaidontheimportation ofgoods asiftheVAT payable wereacustoms duty
imposed bytheCustoms Law.
Exports andinternational services arezerorated. Included inthiscategory areexports ofgoods
fromtheterritory ofAlbania, services rendered byataxable person inAlbania where thesupply takes
place outside theterritory ofAlbania, andsupply ofgoods andservices inconnection withthe
international transportation ofgoods andpassengers.
Reimbursement ofVAT isallowed iftheexcess taxcredit iscarried forward forsixsuccessive
months andtheclaimed reimbursement exceeds 400,000 lek.
VAT isbased ontheinvoice method. Aperson supplying taxable goods orservices isobliged
toissue aninvoice forthesupply atorimmediately afterthetimewhen thegood isdelivered orthe
service rendered. Invoices arecrucial documents which establish taxliability ofthesupplier andthe
taxcredit allowed totheregistered person.
TheVAT payable byataxable person foraparticular taxperiod isthetotalVAT charged for
thetaxperiod onthetotaltaxvalue oftaxable supplies made during theperiod, lessanytaxcredit
allowed tothatperson fortheperiod.
Thetaxperiod isacalendar month. TheMinister ofFinance isresponsible forthe
implementation ofVAT.
Question 14
Please elaborate further ontheapplication ofthecurrent turnover tax.Please explain theterm
"economic branch". Isitcorrect that, ingeneral, therateofturnover taxis15percentfor
commodities, services andconstruction activities soldwithin Albania, zero forexports and
20percentifsoldinAlbania butoutside theeconomic branch?
There arethree different levels ofturnover taxinAlbania (page 13).Theturnover taxis0percent
ifthecommodity issoldwithin thesame economic branch orexported. Ifthecommodity issold
outside oftheeconomic branch therateis20percent. Generally, therateis15percent. Could
Albania please explain when acommodity isconsidered tobesoldoutside theeconomic branch
andwhen the"general rate" should beapplied?
Answer.
First, wewould liketonotethattheturnover taxisbeing eliminated withtheintroduction of
avalue added tax.TheVAT willcome intoeffect during thelastquarter of1995.
Regardingtheturnovertax,asnotedtherearethreedifferentlevelsofturnovertax:zeropercent
forsaleofacommodity within thesame economic branch orwhen thecommodity isexported;
15percentwhen thecommodity issolddirectly toaconsumer (thisisthe"general rate"); and
20percentwhen thecommodity issoldtoanother economic branch.WT/ACC/ALB/3
Page12
An"economic branch" consists offirms, orsimilar economic units, engaged inup-stream or
down-stream extraction, refinement orproduction ofacommodity. Forexample, wood thatissold
toafirmthatrefines wood intocharcoal isconsidered asalewithin thesame economic branch. Wood
thatissoldtoafirmthatwilluseitinitsfoodprocessing activities isconsidered asaleoutside the
economic branch. Wood thatissoldtoafamily forheating isconsidered adirect saletotheconsumer.
Question 15
According topage 13,commodities subject toturnover taxes areexempt from excise taxes.
However, theturnover taxisapplied toallcommodities soldinAlbania. This would, aswe
understand it,mean thatnocommodities aresubject toexcise taxes. Could Albania please provide
anexplanation?
Answer.
Commodities subject toexcise taxarenotsubject totheturnover tax.(Thememorandum mis-
stated.) Seethefollowing answer foralistofthecommodities subject toexcise taxes.
Question 16
Please provide fulldetails ofexactly which products aresubject towhich rates ofexcise duty(that
istosay,towhich rates ofanyinternal taxother thanthegeneral turnover tax)andacopy of
theAlbanian excise lawandpractice andadetailed summary inaGATT language.
Answer.
Theproducts which aresubject toexcise duties are:
- tobacco andtobacco products (cigarettes, cigars, tobacco forconsumption, cigarette paper);
- alcoholic drinks (beer, wine, raki,cognac, anisette, fernet, whisky, rumandallother alcoholic
drinks);
- softandfresh drinks;
- mineral water andcarbonated water;
- electric energy;
- imported anddomestic production ofalcohol forsale;
- petroleumbyproducts(gasoline,gasoil,kerosene,valvolina,lubrificantoil,liquidgas,petroleum
coke, solvents, etc.)
- Coffee.
Foradetailed summary inaGATT language oftheAlbanian excise law,seeAnnex Dofthe
Memorandum.WT/ACC/ALB/3
Page13
Question 17
Toattract foreign investment, joint ventures andwholly foreign-owned enterprises established
after20March 1993, which areengaged inproductive activity formore thantenyears, areexempt
from excise taxes (page 13and28). What happens iftheactivity ofanenterprise using these
taxexemptions endswithin theten-year period?
Answer.
Iftheactivity ofsuchanenterprise endsbefore tenyears haveelapsed, theenterprise must
reimburse theAlbanian Government theequivalent ofthetaxfrom which itwasexempt.
Toclarify, jointventure enterprises thatareengaged inproductive activity formore thanten
years areexempt fromprofit taxes(notexcise taxes) forthefirstfouryears oftheiractivity. Exemption
fromexcise taxes applies onlyinthefollowing case: Commodities needed forinvestment intourism
activity areexempt fromexcise taxes ifcommodities ofcomparable price andquality cannot befound
intheAlbanian market (Law No.7665 of21January 1993 "ForDevelopment ofTourism Priority
Zones").
Question 18
Itappears (seeappendix D,page 66)thattheleveloftheexcise taxonalcohol forsaleismuch
higher forimported alcohol (e)50percentthanforalcohol produced domestically (f)30percent.
Isthisthecase?
Answer.
Itistrue. Thisisdone toprotect thedomestic production ofalcohol which isproduced in
oneAlbanian enterprise. Thisisatemporary measure.
Question 19
Certain imported commodities aresubject toanadditional excise taxofbetween 20and50percent
overthesame domestic commodities (seeAnnex DoftheMemorandum). What measures does
Albania intend totaketoeliminate these additional taxes andtoconform withArticle IIIofthe
GATT andtheresults oftheUruguay Round?
Theapplication ofAlbania 'sexcise taxes (including exemption frodomestic production ofalcohol
andadditional taxes of35percentto50percentforimported products), appears tobeinconsistent
withnational treatment (GATT Article III). What areAlbania 'sintentions regarding these taxes
oncetheyjointheWTO?
Answer.
Ahigher excise taxapplies tocertain imported commodities inorder toprotect domestic
production inthistransition period. Itisforeseen thatthiswillbeatemporary measure.
Question 20
Please confirm thatthesmall business taxisapplied equally todomestic andforeign traders, etc.WT/ACC/ALB/3
Page14
Answer.
Thesmall business taxisapplied equally todomestic andforeign traders.
Question 21
Please provide more details ontheLawonProperty Taxation. Arethesame rules applied to
domestic andforeign natural andlegal persons?
Answer.
Property taxes apply toallnatural andlegalAlbanian andforeign persons whoownproperty.
(Asnoted inthememorandum, foreigners donothavetheright toownland, butdohavetheright
toownrealestate, suchashouses, office buildings, etc.)
Taxation onagricultural landisapplied asafixed taxUS$15-60 peryearforeachhectare
depending ontheland'sfertility, which isclassified intencategories. Forbuildings, thetaxrateis
calculated asafixed ratebased onsurface area, location andpurpose ofuse.
Thesame rules apply todomestic andforeign natural andlegalpersons.
Question 22
CanAlbania advise itstimetable fortheremoval oftheremaining price controls onimports?
(page 14andAnnex E)
Answer.
While Albania doesnothaveaprecise timetable inplace, ithasinitiated stepstowards basing
import values ontransaction value, rather thanonminimum import prices. Currently, some Albanian
officials arereceiving training intechniques ofcalculating andapplying transaction value. Inaddition,
adraftlawontransaction value isunder preparation.
9. Rules ofOrigin
Question 23
Please confirm that"principle transformation" should read"principal transformation".
Answer.
Confirmed.
Question 24
Please explain whyacertificate oforigin isrequired inallcases, evenwhen preferential tariff
rates arenotbeing sought?
Answer.
Albania doesnotaccord tariff preferences forparticular countries orimported commodities.
Certificates oforigin forimported commodities aretherefore notrequired forreasons having todoWT/ACC/ALB/3
Page15
withtariff preferences. Among thereasons whysuchdocuments arerequired: first, prevention of
contraband andtradeinproducts thatdonothavealicence; second, fortheapplication ofembargoes.
Question 25
Apart from thecountry oforigin, isanyother information required onthecertificate oforigin,
suchasthename ofthefactory ortheproducer?
Answer.
Apart from thecountry oforigin, thecertificate alsoindicates thename oftheproducer or
company, aswellasadescription ofthegoods thataretobeexported, thequantity, andthedocument
number.
Question 26
Must exports ofsteelproducts beaccompanied byacertificate oforigin? Ifso,why?
Answer.
Forsteelproducts, evenforsmall quantities, acertificate oforigin isrequired. Thiscertificate
isgiven forsteelproducts ofAlbanian origin which benefit from preferential tariffs intheEuropean
Community.
Question 27
Arethere anyplans tosimplify customs formalities?
Answer.
Currently, weareattempting tosimplify customs formalities, suchassimplifying documents
required attheborder customs.
11. Standards andCertificates
General information.
According toLaw No.7630, dated 28October 1992, theDepartment ofStandards and
Certification (DSC) deals withstandardization, accreditation andcertification, andrelated activities
Albanian standards -referred toas"STASH standards" for"Standarde Shqiptare" -arecompiled
byallinterested parties andapproved bytheStandardization Council attached totheDSC.
Standards existforasetofabout 4,500 products. Compliance withstandards ismandatory
for60percentofthese products, andvoluntary for40percent. Standards aremandatory forcertain
products inorder toensure health, theenvironment andsafety.
InAlbania, there isnolawaddressing theresponsibility oftheproducer, oranylegislation
related togeneral safety ofproducts andother technical regulations. Thatiswhy60percentofSTASH
standards aremandatory.WT/ACC/ALB/3
Page16
DSCintends toprepare assoonaspossible anewproject lawonstandards andcertification.
Thelawwould bedesigned toreflect thetransformation ofoureconomy intoafreemarket economy
andtoincrease thecompatibility oftheAlbanian standardization system withEuropean standards.
Thedraftlawwould takeintoaccount theexperience ofEastern European Countries.
According tothisdraftlaw,theDSC shalldealonlywithstandardization, certification and
accreditation, andshallnotlonger beacheck andcontrol organ. Moreover, alltheSTASH standards
willbevoluntary. (Thestandards which arecurrently mandatory would bevoluntary afteroneortwo
years following theapproval ofthislaw.) Under thenewlaw,responsibility fordetermining which
STASH standards willbemandatory, aswellasforcompiling andimproving technical regulations
andthecontrol oftheirimplementation, willbelong totherespective ministries.
Question 28
Please provide details ofproducts subject tomandatory standards testing andquality certification.
Please supply thereasons whyeachofthese products issubject tothese requirements. Whoissues
thequality certificate?
Answer.
Theproducts thataresubject tomandatory standards testing are:food, pharmaceuticals, a
partofagricultural, chemical, electro-technical products andspecial standards related tosafety oflife.
Asnoted above, these products aresubject tostandards testing andquality certification inorder to
ensure protection ofhealth, environment andsafety. TheDepartment ofStandards andQuality (DSC)
istheorgan thatissues thequality certificate.
Question 29
HowwelldoAlbania'smandatorystandardscorrespondwithinternationalstandards?WillAlbania
harmonize their standards, andinthatcase, when?
Answer.
Most oftheSTASH mandatory standards correspond partially withtechnical regulations of
western countries. Ourstandards were harmonized twoyears agowithEastEuropean countries '
standards, butsince twoyears agotheharmonization withISO,FAO, EN,UNI, CEIandASTM has
begun. DSC isgoing thisyeartoadopt most ofENstandards asSTASH ENstandards.
Question 30
Areinternational certification systems accepted?
Answer.
DSChasadopted asSTASH standards, theISO9002andisgoing toadopt twoother standards
ofthisseries. Based ontheexperience ofcomparable West European institutions (BSI, SIS,DIN,
VDE, UNI, CEN andISO) andrecommendations oftheirexperts iscompiled theDSC products
Certification Regulation. DSC isgoing tobegin voluntary certification inJune. Seeing thatone
international company likestobecertified according toISO9000 series, DSC isgoing tostartthis
yeartheQuality System Certification (based onWest European countries 'experts).WT/ACC/ALB/3
Page17
Question 31
Please supply further information onthemandatory standards andmethod ofcertification for
agricultural andstock breeding products. Doanynon-mandatory standards existforagricultural
products andhowarethese standards applied andquality certified?
Answer.
Ingeneral, agricultural products arenotsubject tomandatory standards, while stock breeding
products are.
12. Sanitary andPhytosanitary Measures
Question 32
What aretheintentions ofAlbania withregard totheSPSAgreement?
Answer.
Weareassessing theobligations oftheSPSAgreement incomparison tothecurrent stateof
sanitary andphyto-sanitary regulations andinstitutions inAlbania. Wearecautiously optimistic that
Albania 'sprogress inthisareawillallow ustoadhere totheSPSAgreement, butwewould appreciate
theopportunity toexchange views withWTO members before taking adecision.
B. Export Regulations
2. Types ofExport Taxes
Question 33
CanAlbania confirm thatthe100percentexcise taxonexports ofunprocessed leather andtobacco
arenolonger collected orlevied?
Answer.
Yes,theexcise taxonexports ofunprocessed leather andtobacco arenotcollected anymore.
4. Export Licensing System
Question 34
WhatstepsisAlbaniatakingtoeliminatetheexportlicensingrequirementsandexportprohibitions?
Arethere anyexport quotas orother non-tariff measures applied toexports?
Answer.
Albaniahastakenconsiderablestepstoeliminateexportlicensingrequirementsandprohibitions.
Indeed, theexport regime hasbeencompletely liberalized except forexport prohibitions oncertain
wood products andscrap metals, asfollows (Decision oftheCouncil ofMinisters No.360of
10July1995):
- firewood;WT/ACC/ALB/3
Page18
- unprocessed wood;
- sawed wood andbeams;
- waste andscrap precious metals;
- waste andscrap ironandsteel;
- waste andscrap copper;
- copper ingots;
- waste andscrap nickel;
- waste andscrap aluminium (except forwaste aluminium packaging, suchasaluminium cans
forsoftdrinks, which hadbeenimported);
- waste andscrap lead;
- waste andscrap zinc;
- waste andscrap tin.
Currently, nocommodities aresubject toexport licence. Albania 'saimisthefullliberalization
ofexport activity.
D. Regulation ofTrade inTransit
Question 35
Albania isaContracting Party tothe1975TIRConvention. However, Albania seems nottoapply
thisConvention duetothefactthatanational guaranteeing association hasnotyetbeenestablished.
IsthisConvention tobeimplemented?
Answer.
Wewould liketoclarify thatAlbania has,infact,implemented theTIRConvention since it
became aparty totheConvention in1975. From 1975 until 1991, theagency responsible for
implementingtheConventionwasTrans-Shqip,aState-ownedcompany.InAugust1991,theAssociation
ofAlbanian Transporters -ANALTIR -wascreated andregistered asaninternational transport
association. Since thattimetheAssociation hasbeenfulfilling itsroleinaccordance withinternational
standards, thanks inparttotechnical assistance provided bytheAlbanian Ministry ofIndustry, Transport
andTrade andtheDutch Ministry ofTransport.
CHAPTER IV. POLICIES AFFECTING FOREIGN TRADE
A. Privatization
Question 36
What isbeing done toencourage foreign participation intheprivatization process?
Answer.
ForourGovernment attracting foreign investment hasbeenandcontinues tobeanimportant
component oftheprivatization strategy. Inorder toattract foreign investors, theNational Agency
ofPrivatization (NAP) hascontinuous connections withAlbania 'sCentre forForeign Investment
Promotion. TheCentre provides information about investment possibilities, investment related laws
andprocedures, aswellasinvestment facilities.WT/ACC/ALB/3
Page19
NAP collaborates withAlbanian embassies abroad, withforeign embassies inAlbania, and
withpotential investors byproviding them detailed information about enterprises andother objects
tobeprivatized.
B. State Foreign Trading Enterprises
Question 37
TheAlbanian State trading enterprises areexpected tobeprivatized inthebeginning of1995.
Isthebeginning of1995stillvalid? Doesprivatization mean thatallimport andexport monopolies
willbeabolished orwillenterprises, governmental ornon-governmental, which havebeengranted
exclusive orspecial rights orprivileges according toArticle XVII stillcontinue toexist?
Answer.
Thetarget dateforprivatization ofState-trading enterprises -beginning of1995 -hasbeen
postponed untillaterin1995.
Itisintended thatalltheState-trading enterprises (STEs) willbeprivatized. When thisprocess
iscomplete, noSTEwillexistanymore. Moreover, noenterprise hasorwillhaveamonopoly, or
exclusive orspecial rights orprivileges regarding trade.
Thecurrent situation isasfollows. AlltheAlbanian State-trading enterprises haveprepared
evaluations ofState-owned properties thatwillbeprivatized. Some STEs havebeenprivatized (sold)
partially, while others areintheprocess ofprivatization.
Question 38
Please indicate whether (and ifsowhich) anyState Foreign Trading Enterprises aregranted
exclusive orspecial rights toimport andexport.
Answer.
NoState foreign trading enterprise hasexclusive orspecial rights toimport orexport.
Question 39
Albania indicates ithastwoStateforeign trading enterprises foragricultural products, "Eksimagro
andAlimpeks" andthatthese willbeprivatized byearly 1995. Please confirm thistimetable.
Answer.
Eksimagro andAlimpeks areintheprocess ofbeing privatized. Auctions willbeorganized
soonbytheNational Agency forPrivatization (NAP). Information about theauctions hasbeenpublished
inAlbanian newspapers. Theprivatization process forbothisexpected tobecompleted inthesecond
halfof1995.
Question 40
Would Albania provide further details ontheoperations oftheMinistry ofAgriculture 'sState
trading enterprises -"Eksimagro" and"Alimpeks"? Wewould require information onboththeir
exporting andimporting operations.WT/ACC/ALB/3
Page20
Answer.
Formerly, Eksimagro andAlimpeks enjoyed alegalmonopoly fortrade inagricultural, food,
medicinal andrelated products. They arestillState-owned enterprises, buttheynolonger enjoy this
monopoly, under laworinpractice.
Eksimagro continues toimport andexport medicines, pesticides, grain, cornandconserved
meat. Alimpeks ismainly engaged inexporting tobacco, cigarettes, medicinal plants, alcoholic drinks
andconserved food. Alimpeks imports onbehalf offoodprocessing enterprises machinery and
equipment, rawmaterials andsubsidiary materials suchassugar, cans, sheet metal forcans, candy
wrapping paper, cacao beans andtobacco.
Wedonothaveprecise figures onEksimagro 'sorAlimpek 'sshare oftotaltrade inthese
products, butprivate traders areclearly taking anactive roleinexporting andimporting ofthese
products.
F. Industrial Policy
Question 41
How doesAlbania intend toreactivate itsindustrial sector?
Answer.
Conditions intheStatebudget severely limitthepossibilities forreactivating Albania 'sindustrial
sector. Withtheassistance oftheinternational community, theGovernment ofAlbania ismaking efforts
toreconstruct 32large enterprises which arepotentially viable. TheAgency forReconstruction of
Enterprises (ERA) isleading thiseffort withfinancial support from theWorld Bank.
Developmentofsmallandmediumsizedenterprises(SME)isbeingpursuedthroughtheactivities
ofanSME foundation funded byECPHARE, theGerman Government andtheAlbanian Government.
AnAlbanian-American Enterprise Fund, which would alsofocus onSME development, isinthefinal
stages ofpreparation. Essentially, these funds attempt toencourage SME development byidentifying
promisingbusinessactivities,extendingcredit,andprovidingbusinessadvicetoAlbanianentrepreneurs.
Oneofthemostimportant ways inwhich theGOA istrying toreactivate theindustrial sector
isthrough theprivatization ofindustrial State-owned enterprises aswellastheprivatization ofother
sectors oftheeconomy. Inthisregard, themain privatization oflarge industries isbeing carried out
in1995.
G. Foreign Investment Policy
Question 42
Does Albania have anyintention ofchanging thelegislation relating tolandownership? Ifso,
within what time-frame? Willthere stillbeanyrestrictions onownership?
Answer.
InJuly1995, Albania passed legislation toallow foreign ownership ofland. Itisourhope
thatthisstepwillfacilitate andencourage greater foreign investment. Wewilltransmit acopyofthe
lawinanofficial WTO language assoonasatranslation isavailable.WT/ACC/ALB/3
Page21
Question 43
TheMemorandum submitted byAlbania refers tomany legislative texts, andinparticular the
Foreign Investment Lawof2November 1993. Please would youmake available acopy anda
detailed summary inanofficial GATT/WTO language.
Answer.
Acopyoftheinvestment lawinanofficial GATT/WTO language hasbeenforwarded tothe
Secretariat. Foradetailed resume, please seepages 27and28oftheMemorandum.
Question 44
Theonlyexception tonational treatment provided forintheAlbanian Foreign Investment Law
appears toconcern theacquisition ofland. What about theacquisition ofrealestate intheform
ofbuildings oroffices? Isthisprohibited forforeign investors?
Answer.
Foreign acquisition ofrealestate -buildings andoffices -ispermitted. Under theLawon
Foreign Investment of2November 1993, onlyforeign acquisition oflandwasprohibited. Asnoted
above, thisprohibition isbeing liberalized.
Question 45
National treatment relates toinvestments made inAlbania. Arethere anylimitations onmarket
access within themeaning ofArticle XVIoftheGATS, i.e.sectors forwhich thenumber ofservice
providersisrestrictedasregardsforeign/Nationalinvestors?Isthereaceilingonforeigninvestment
inanysectors?
Answer.
There aresome restrictions which appear tobemarket access limitations inthesense of
Article XVIoftheGeneral Agreement onTrade inServices (GATS). Forexample, regarding legal
services, onlyanAlbanian national canserve asanattorney atlaworapublic notary. Regarding
accounting services, limited liability companies above acertain sizeareobliged touseindependent
Albanian-based accounting experts toaudit theirannual accounts. Such experts must beregistered
onalistofcertified accountants established bytheCouncil ofMinisters. TheCouncil ofMinisters
hastheauthority todefine thecriteria forbeing registered. Inthefishing sector, onlyAlbanian nationals
canacquire theAlbanian flagfortheirboats.
There arenoservice sectors inwhich there exists aceiling onthelevelofforeign investment.
J. Tourism
Question 46
What aretheconditions forthegrant ofpermits bytheTourism Development Committee? There
seems tobearestriction onpossible operations. Onwhat basis areservice providers selected?WT/ACC/ALB/3
Page22
Answer.
TheTourism Development Committee isaninterministerial body which isresponsible for
approving orrefusing applications byphysical orjuridical persons forthegranting ofpermits toconduct
tourism activities inPriority Tourism Development Zones (Law No.7665 of21January 1993 "On
Priority Tourism Development Zones", promulgated byDecree No.446of2February 1993 ofthe
President oftheRepublic ofAlbania").
Adecision togrant ornotgrant apermit isbased onananalysis ofthefollowing elements:
(i) submission ofapreliminary study bytheapplicant;
(ii) submission ofanexplanatory paper ontheproject;
(iii) fulfilment ofapplication form requirements, which include allthecriteria thatarerequested
concerning expected profits andthepromoted activity.
Question 47
What aretheconditions forbuilding andoperating ahotel complex?
Answer.
Based ontheLawNo.7665dated 21January 1993"OnPriority Tourism Development Zones",
theconditions forestablishing ahotel (orother activity) within apriority tourism development zone:
(i) presentation ofadraftinvestment proposal;
(ii) presentation ofanexplanatory paper indicating theamount ofinvestment, technical-economic
indicators, structure capacity, andother datarelated tothat;
(iii) fulfilment ofapplication form requirements anditssubmission totheTourism Development
Committee.
Fortheestablishmentofahoteloutsideofaprioritydevelopmentzone,conditionsaredetermined
bythelocalmunicipality.
L. FreeTrade andEconomic Zones
Question 48
Please provide more details onthepossible creation offree-trade zones andtherules which would
govern suchzones.
Answer.
Inorder toattract foreign investment, andtaking intoaccount thepoorstateofAlbania 's
infrastructure, Albania islooking atpossibilities forthecreation ofindustrial parks thatwould provide
investors withthebasicinfrastructure thattheyneedtofulfiltheirgoals. On5June1995, theCouncil
ofMinisters approved adraftDecision forthecreation ofindustrial parks. Thefirstindustrial park
would becreated inthetown ofDurres.
Industrial parks foreseen bythisDecision would nothavethestatus offreetrade zones; they
would besubject tothesamecustoms regulations thatapply toallofAlbania. However, thepossibility
ofturning industrial parks intoexport processing zones andfinally intofreetrade zones isunder
consideration.WT/ACC/ALB/3
Page23
SERVICES
Financial Services -General
Question 49
Does Albania intend tosubmit asubstantial offer onfinancial services intheframework ofthe
GATS, binding liberal market access conditions andnational treatment guarantees onanMFN
basis forforeign financial institutions?
Answer.
Weconsider thatourofferonfinancial services willbeasubstantial one,andwelookforward
toexchanging views onthisandother aspects oftheGATS.
Financial Services -Banking
Question 50
Please provide adetailed description oftheAlbanian banking andinsurance market, inparticular
asregards thebasic legal conditions.
Answer.
Adescription oftheinsurance market isprovided below inthesection "Financial Services -
Insurance andSecurities". Adescription oftheAlbanian banking market appears onpages 23and
24oftheMemorandum onForeign Trade Régime. Thefollowing information covers some recent
developments inthebanking system, focusing ontheactivities ofthecentral bank.
Since mid-1992 theBank ofAlbania hasmade significant progress inassuming thefunctions
ofacentral bank. Astable macroeconomic environment inthecourse ofthelastthree years bears
testimony tothesuccessful monetary policy ofthebankofAlbania. Already thenucleus ofamodern
system ofmonetary policy andcontrol hasbeencreated withtheintroduction ofreserve requirements,
adiscount window, andaninterest ratepolicy. Theimmediate target istomake these instruments
progressively more effective andmonetary policy asconsistent aspossible withtheoverall programme
objectives forinflation, thebalance ofpayments, andgrowth. TheBankofAlbania hasbrought interest
ratestopositive reallevels andintends togradually shiftfromadministered towards market determined
rates. Theintroduction ofTreasury Billswillalsoallow theBank ofAlbania tostartinfluencing the
banks 'liquidity bywayofopen market operations, while sales tothenon-bank public should help
tolimitthegovernment 'srecourse tobankfinancing.
TheBank ofAlbania recently liberalized further theexchange system releasing itfrom any
restrictions forcurrent transactions. Theexchange rateforthelekisfreely determined inthedomestic
interbank market, which competes withanactive dealer andbureau market. Theexchange ratehas
remained broadly stable sincelate1992andduring 1993appreciated inrealterms byabout 25percent.
Inthecourse ofthelastthree years theBank ofAlbania andthebanks ingeneral havestrengthened
theirforeign reserve position asanimportant precondition forthemtoincreased access andconfidence
ininternational financial markets.
TherearethreeState-ownedbanks.TheNationalCommercialBankisthelargestsingleoperating
bankinthecountry withanetwork of32branches. Most ofitsliabilities consist ofenterprise deposits
andasignificant portion ofitslending istoState-owned enterprises. TheSavings Bankcurrently holdsWT/ACC/ALB/3
Page24
about 85percentofhousehold deposits. Itslending portfolio, although small, isrising fast.Itslending
activity isdirected mainly totheprivate sector withshort-term loans. Both banks handle foreign
exchange transactions withenterprises andindividuals, andtheNational Commercial Bankisauthorized
toborrow abroad initsownname. TheRural Commercial Bank wascreated in1993 asthe"good
bank" outoftheashes oftheoldBank forAgriculture andDevelopment. TheBank carries outnormal
commercial banking activities withspecial emphasis ontheagriculture sector.
TheBank ofAlbania recognizes thecrucial roleofforeign capital andtechnology forthe
modernization ofthebanking system, andtherefore welcomes foreign investment inthissector. The
establishment inlate1992 ofthefirstjointventure bankinAlbania (Italian Albanian Bank) wasan
important stepforward inthisregard. There isoneother jointventure bankwithAlbanian Stateand
foreign private participation (Albanian-Arabian Islamic Bank) andonlywholly private foreign bank
(Dardania Bank). Banks arefreetoexpand intothefullrange ofuniversal banking products andservices.
Through thelicensing process, theBankofAlbania willbeabletobetter determine thebonafides
ofpotential applicants forbank licences. Newandtransparent licensing procedures areadopted in
consistence withinternational standards. Theminimum required capital fortheestablishment ofanew
bankranges fromUS$500.000 toUS$7.000.000. Thenewregulation package willleave room tothe
creation ofnewprivate banks aswellasincentives forthesound operation oftheAlbanian financial
system.
Financial sector reforms, inwhich theBank ofAlbania hasembarked inconcert withthe
Government, aimatincreasing thecentral bank'sefficiency asamonetary authority, thedevelopment
ofanumber ofcommercial banks capable ofperforming basic banking services, thecreation ofan
efficient payment system andthedevelopment ofanappropriate regulatory framework.
Question 51
Willforeign banks bepermitted tododirect branching without prior establishment ofasubsidiary
inAlbania? IfLawNo.7764concerning foreign investment applies tobanks aforeign investment
mayberegistered asabranch.
Answer.
Foreign banks arepermitted tobranch directly intoAlbania without prior establishment ofa
subsidiary. Theyare,ofcourse, required toobtain alicence tooperate ascommercial banks. Conditions
forobtaining alicence aresetoutinthe"Regulations fortheGranting ofaLicence toOperate asa
Private Bank intheRepublic ofAlbania".
Question 52
Doanyceilings apply onforeign shareholding injoint-venture banks?
Answer.
There arenoceilings onforeign shareholding injoint-venture banks.
Question 53
Aremerchant banks permitted? TheMemorandum onlyrefers tocommercial banks.WT/ACC/ALB/3
Page25
Answer.
Atthistimethere doesnotexistalegalframework formerchant banking.
Question 54
Dothelisted "primary responsibilities" oftheAlbanian Central Bank (e.g. foreign currency
operations, issue ofcheques andbonds, buying andselling ofobligations andguaranteed papers
issued byfinancial institutions) constitute adefacto monopoly oftheCentral Bank forthese
activities? Ifso,doesAlbania envisage toreduce existing monopolies?
Answer.
Theabove-mentioned "primary responsibilities" oftheAlbanian Central Bankconstitute neither
a"dejure" nora"defacto" monopoly oftheBank ofAlbania inthese activities.
Question 55
Could Albania provide further information about thenewguidelines forthelicensing ofbanks,
which were issued bytheAlbanian Central Bank in1994?
Answer.
Under separate cover weshallsendacopyof"Regulations fortheGranting ofaLicence to
Operate asaPrivate Bank intheRepublic ofAlbania", approved inJune1995.
Question 56
Could Albania setouttheminimum capital requirements applied toforeign banks andtheir
difference withregard tothose requirements applied todomestic banks?
Answer.
Theminimum capital requirement applied toforeign banks isabout US$2 million. Fordomestic
banks itisabout US$1 million.
Question 57
TheMemorandum indicates thatforeign banks receive national treatment except intworespects.
Please explain therationale behind thedifferent provisions forminimum capital requirements
forforeign banks. Also, please explain therationale behind theprohibition offoreign banks from
accepting deposits from natural orjuridical Albanian persons.
Answer.
AproposedamendmenttothebankinglawsubmittedrecentlytotheAlbanianParliamentforesees
tolifttheprohibition onforeign bankbranches engaging inacceptance ofdeposits from natural and
juridical Albanian persons.
Regarding different minimum capital requirements, thisisnotintended tobearestriction or
barrier toforeign bankentry -webelieve thattheUS$2 million minimum forforeign banks comparesWT/ACC/ALB/3
Page26
favourably withsuchrequirements inother countries -butrather reflects thedifficulty thatAlbanians
havetoaccumulate significant amounts ofcapital.
Question 58
Iscross-border supply possible; canforeign banks provide services inAlbania without prior
establishment inthecountry assubsidiary orbranch?
Answer.
Without priorestablishment, foreign banks cannotprovide services intheAlbanian territory.
Question 59
Consumption abroad: CanAlbanian residents consume banking services outside theAlbanian
territory without anyrestrictions, since onlyoutward transfers byemigrants atthetimetheyleave
Albania arelisted asunrestricted operations?
Answer.
Except foroutward transfers byemigrants atthetimetheyleave Albania, allother outward
capital transfers arerestricted.
Question 60
Acceptance ofdeposits from natural andjuridical Albanian persons isanimportant activity for
foreign banks. Does Albania envisage tolifttheprohibition onforeign bank branches toengage
insuchactivities?
Answer.
AproposedamendmenttothebankinglawsubmittedrecentlytotheAlbanianParliamentforesees
tolifttheprohibition onforeign bankbranches engaging inacceptance ofdeposits from natural and
juridical Albanian persons.
Question 61
Please indicate what restrictions onpayments forcurrent transactions stillexist. Arethere any
requirements other thanthenotification requirement fortransfers above US$5,000?
Answer.
There arenorestrictions onpayments forcurrent transactions. Inaddition, there areno
requirements other thanthenotification requirement fortransfers above US$5,000.
Question 62
Please provide more information ontheprogress made todateinestablishing current account
convertibility.WT/ACC/ALB/3
Page27
Answer.
Asnoted intheMemorandum, Albania expects tobeinaposition toestablish current account
convertibility bytheendof1995.
Question 63
Foreign exchange system andrelations withtheIMF. What restrictions existoncapital transfers
inthecontext offoreign direct investment? What arethecriteria forapproval bytheBank of
Albania forcapital transfers other thanthose operations granted automatic approval? Isthere
anappeals process iftheBank doesnotapprove thetransfer?
Answer.
Inthecontext offoreign direct investment, theLawonForeign Investment provides theright
totransfer outoftheterritory oftheRepublic ofAlbania allassets related toaforeign investment,
including:
- returns;
- compensation pursuant toexpropriation ornationalization;
- payments arising outofaninvestment dispute;
- payments made under acontract, including accrued interest payments made pursuant
toaloanagreement;
- proceeds from thesaleorliquidation ofanyorallpartofaninvestment; and
- thereturn ofshareholder 'sequity resulting from thediminution ofcapital when a
company hasdecreased itscapital inaccordance withAlbanian legislation.
Outside thecontext offoreign direct investment, outward capital transfers arepermitted only
byemigrants atthetimetheyleave Albania.
Question 64
CanAlbania confirm thataccording toLawNo.7729of20July1993, foreign financial institutions
willbeexempted from withholding taxes ontransfer ofincome outofAlbania?
Answer.
According toLawNo.7729 of20July1993, foreign investors, including foreign financial
institutions, areexempted from withholding taxes ontransfer ofincome outofAlbania.
Question 65
Does LawNo.7764 concerning foreign investment fully apply toforeign banks andinsurance
companies, inparticular asregards national treatment guarantees, repatriation ofprofits and
capital, security against nationalization, andtheapplication ofinternational dispute settlement
decisions?
Answer.
Regarding insurance companies, forthetimebeing theforeign investment lawdoesnotapply
astheinsurance sector isaState monopoly.WT/ACC/ALB/3
Page28
Regarding banks, withtheexception ofminimum capital requirements, andtheacceptance
ofdeposits byforeign bankbranches, national treatment applies fullytoforeign aswellasdomestic
banks. Asnoted above, aproposed amendment tothebanking lawsubmitted recently totheAlbanian
Parliament foresees tolifttheprohibition onforeign bankbranches engaging inacceptance ofdeposits
from natural andjuridical Albanian persons.
Financial Services -Insurance andSecurities
Question 66
Please provide further details about theexisting régime inthese sectors.
Answer.
Inthepast,insurance activity wascarried outbytheSavings andInsurance Institute, apublic
institution thatacted intwomainareas: administering people 'sdeposits andinsurances. Theinsurance
aspect ofitsactivity wasconcerned onlywithcargo, hullandmachinery insurance forAlbanian flag
vessels, aswellassome agriculture andlivestock insurances. Other types ofinsurance were not
available. Reinsurance relationships existed onlywithrespect tocargo insurance.
InJuly1991,theAlbanianParliamentapprovedalawwhichstatedthattheactivitiesofinsurance
andreinsurance inAlbania aretobecarried outbytheInsurance Institute ofAlbania (INSIG). INSIG
is100percentState-owned andisthesolecompany entitled toactintheAlbanian insurance market.
INSIG performs itseconomic andfinancial activities inanindependent way. INSIG 'srelations with
theState areaccomplished through payment oftaxes. INSIG hasitsownmanagement bodies: the
Administrative Council andtheGeneral Manager. Theauthority ofthose bodies isstipulated bystatute,
which isapproved bytheMinister ofFinance.
Under Albanian law,insurance isobligatory incertain cases, anddiscretionary inother cases.
Cases where insurance isobligatory aresetoutbyspecific law,except forobligatory insurance ofState
property, which issetoutbygovernment decision.
INSIG provides arange ofnon-life insurance coverage. Insurance isobligatory inthefollowing
cases:
- thirdparty liability insurance formotor vehicle owners;
- insurance ofState property;
- insurance ofgoods imported byState-owned enterprises;
- hullinsurance fortheAlbanian Merchant Fleet;
- passenger insurance (only bytrain).
Other kinds ofinsurance handled byINSIG areonadiscretionary basis:
- fireandallied perils insurance;
- civilengineering insurance;
- agriculture insurance;
- livestock insurance;
- motor vehicle (Casco) insurance;
- cargo insurance;
- personal accident insurance;
- traveller 'shealth insurance, etc.WT/ACC/ALB/3
Page29
Insurance formotor vehicles andinsurance ofStateproperty arethetwomostimportant areas,
accounting forabout 80percentofgross premiums. Given thelackofastock exchange market in
Albania, INSIG hasfocused itsfundinvestments inbankdeposits aswellasinrealproperty likehotels,
flats, etc.
INSIG isgradually adding tothelistofnon-life insurance thatitcurrently offers, andismaking
preparations tobegin offering lifeinsurance.
Adraftinsurance lawisunder preparation which willlaythebasisforexercising andsupervising
insurance andreinsurance activities, andfortheliberalization oftheinsurance market. According
tothisdraft, itisprovided thatINSIG willchange intoajoint-stock company, which shallform the
basis foritsprivatization onceastock exchange market hasbeenestablished.
Construction
Question 67
Could Albania submit itsregulatory environment relating toconstruction, taking intoaccount
inparticular theprohibition ontheacquisition oflandforforeigners. Under what conditions
canaforeign investor establish aconstruction firminAlbania? What areitsoperating conditions?
Answer.
Foreign firms arefreetoestablish andcarry outtheiractivities inthefields ofconstruction
andproduction ofconstruction materials. They mayestablish asawholly foreign-owned enterprise,
orthrough thecreation ofajoint-venture withanAlbanian private orState-owned enterprise. The
recentlegislationprovidingforforeignownershipofAlbanianlandfacilitatestheestablishmentofforeign
firms inconstruction andother sectors.
Foreign construction firms arefreetoparticipate intenders organized withAlbanian budget
funds, aswellaswithforeign donor funds.
Based onaDecision oftheCouncil ofMinisters (No.613of13December 1993), before
beginning theiractivity inAlbania, foreign construction firms andfirms forproduction ofconstruction
materials mustregister theirhome country licence inalicence book intheMinistry ofTourism and
Construction. Thisinvolves providing theMinistry withinformation about thekindofactivity the
firmintends toconduct, thehome country licence, andadeclaration which states thatduring thefirm's
stayinAlbania itwillrespect alltheAlbanian lawsandtechnical conditions. Thisinformation must
betranslated andnotarized.
Prior tobeginning aspecific construction project, afirmmustsecure abuilding permit from
theMunicipality.
Professional Services
Question 68
Areanyactivities reserved forAlbanian nationals (nationality conditions)?
Forwhat professions does aregulatory organization exist inAlbania (accountants, lawyers,
architects)?WT/ACC/ALB/3
Page30
Could Albania provide information onhowthese professions areregulated? Donon-governmental
bodies exist? What aretheconditions ofaccess tothese professions forforeigners?
Answer.
Atthistimetwolegal professions arereserved forAlbanians: attorneys atlawandpublic
notaries. Inthiscontext, there exists aChamber ofLawyers andaChamber ofNotaries forAlbanian
professionals inthese fields. These organizations arenotopentonon-Albanians.
Regarding accounting services, limited liability companies above acertain sizeareobliged
touseindependent Albanian-based accounting experts toaudit theirannual accounts. Such experts
mustberegistered onalistofcertified accountants established bytheCouncil ofMinisters. TheCouncil
ofMinisters hastheauthority todefine thecriteria forbeing registered.
H. Government Procurement
Question 69
Please provide further details onthelawonGovernment Procurement which isbeing developed
andacopy ofthelawwhen itisready, together withadetailed summary inaGATT language.
Answer.
AcopyofthenewlawonGovernment Procurement, inanofficial WTO language, isbeing
provided totheSecretariat under separate cover.
Thenewlawcanbesummarized asfollows:
Purpose: Thepurpose ofthelawistopromote economy andefficiency intheuseofpublic
funds while ensuring thatpublic procurement procedures arefair,transparent andnon-discriminatory.
Scope: Thelaw,andinparticular opentendering, willapply toallpublic procurement valued
above acertain threshold (thisthreshold willbesetoutintheimplementing regulations which have
notyetbeenwritten), except iftheCouncil ofMinisters decides thatitisintheinterest ofnational
security ornational defence tousedifferent procurement procedures.
Transparency: Thelaw,theprocurement regulations andallrelated matters shallbepromptly
made accessible tothepublic andsystematically maintained.
Institutions: Thelawprovides forthecreation ofaPublic Procurement Agency. TheAgency
reports totheCouncil ofMinisters andisthecentral organ forcoordination andimprovement ofthe
public procurement process inAlbania. Among itstasks, theAgency:
- submits proposals forprocurement regulations totheCouncil ofMinisters;
- editsandissues aPublic Procurement Bulletin tobeusedforinvitations totender and
other announcements relevant topublic procurement;
- prepares standard documents tobeusedinconnection withpublic procurement;
- gives advice andinstructions toprocuring entities inundertaking procurement;WT/ACC/ALB/3
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- ensures theproper application oftheprocurement lawandprocedures, andprepares
anannual report totheCouncil ofMinisters;
- performs administrative reviews ofcomplaints.
Non-Discrimination: Thelawprovides thatphysical orjuridical persons shallnotbeexcluded
fromparticipation inpublic procurement onthebasisofnationality, andthatqualification requirements
apply equally toallcandidates. Tender documents shall contain sufficient information toenable
competition among tenderers totakeplace onthebasis ofcomplete, neutral andobjective terms.
Procurement Methods: Thelawprovides forprocurement through thefollowing methods:
opentendering; restricted tendering; direct procurement; two-stage tendering. Thepreferred method
ofprocurement isopentendering. Aprocuring entity mayuseaprocedure other thanopentendering
onlypursuant toArticles 18-22oftheprocurement law.
Restricted tendering (Article 18)maybeusedwhen (a)thegoods, construction orservices
areavailable onlyfromalimited number ofsuppliers; and(b)theestimated value ofthecontract does
notexceed athreshold setoutintheprocurement regulations.
Direct procurement (Article 19)canbeused(a)when intheabsence ofcompetition orfor
technical reasons thegoods, construction orservices canbesupplied orprovided onlybyonecandidate;
(b)incertain defined circumstances, suchasdelivery ofspecialized, non-interchangeable replacement
parts; and(c)forsmall value purchases ofreadily available goods when thecontract price doesnot
exceed anamount stated intheprocurement regulations.
Two-stage tendering (Article 20)maybeusedinthecaseoflarge orcomplex contracts for
which openorrestricted tendering isnotsuitable because ofthedifficulty indefining precisely the
goods ortheconstruction. Inafirststage, technical information isrequested astovarious possible
means ofmeeting theobjectives. Inasecond stage, priced tenders areinvited onthebasisoftechnical
specifications andother datachosen onthebasis ofthefirststage.
Open international tendering: Open international tendering shallbeusedwhenever inopen
tendering aneffective competition cannot beobtained unless foreign firms areinvited totender.
Question 70
Please listministries andassociated agencies atthecentral level, local andregional authorities,
anyadditional entities orState enterprises withindependent purchasing authority. Where possible,
please supply information onthepurchasing volumes operated bythose authorities, broken down
bysupplies, works andservices.
Answer.
Ineverycentralorlocalorgan,includingStateenterprises,thereexistsaprocurementcommission
which isresponsible forprocurement ofcommodities andservices.
Question 71
What isthemanagement structure ofAlbania 'ssystem ofgovernment procurement? Isthere
acentral agency thatpurchases onbehalf ofallcentral government agencies, ordoindividual
government departments holdtheir ownprocurement budgets?WT/ACC/ALB/3
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Answer.
There isnocentral agency thatpurchases onbehalf ofallgovernment agencies. Individual
agencies -moreprecisely theprocurement commission within theagency -havetheauthority toprocure
goods andservices using money thattheyhavebeenallocated bytheState budget.
Question 72
Isthere acentral agency which controls theapplication ofthelegal system ormonitors
infringements ofprocurement law?
Answer.
Under thenewProcurement Lawacentral Procurement Agency willbecreated andwillreport
totheCouncil ofMinisters. Among other tasks (seedetailed summary above), theAgency willbe
responsible forimplementing procurement policy, andensuring thatprocuring entities respect the
procurement lawandprocedures.
Question 73
According totheMemorandum, Albanian procurement lawmakes provision foradomestic
preference system. How isthiscompatible withtheauction anddirect negotiation procurement
procedures? How isthiscompatible withtheobjective ofcreating alawthatprovides for"fair
andequitable treatment forallsuppliers"?
Answer.
ThenewLawonPublic Procurement doesnotprovide fordomestic preferences. Thelaw
provides fortransparent, non-discriminatory procedures based oninternational standards. Weare
working hardtoensure thatthenewlawwillbeimplemented inamanner thatensures fairandequitable
treatment forallsuppliers.
Question 74
Cansuppliers whodispute theaward ofacontract seekredress through national courts ora
tribunal system? What remedies (forexample damages orretendering ofcontract) areavailable?
Answer.
Supplierswhodisputetheawardofacontractmayseekredressthroughthenationalcourtsystem.
Prior totheawarding ofacontract, anycandidate isfreetoseekadministrative review ofanactor
omission byaprocuring entity which thecandidate considers tobeabreach oftheprocurement law,
procurement regulations oranyinstructions issued pursuant thereto. Acomplaint shall, inthefirst
instance, besubmitted totheheadoftheprocuring entity. Ifthecandidate isnotsatisfied withthe
decision oftheheadoftheprocuring entity, thecandidate isentitled tosubmit acomplaint tothecentral
Procurement Agency. TheAgency, unless itdismisses thecomplaint, mayprohibit theprocuring entity
from acting ordeciding unlawfully, ormayannul anunlawful actordecision byaprocuring entity.
TheAgency must issue itsdecision within 30daysofreceiving thecomplaint.WT/ACC/ALB/3
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Question 75
Dodetailed rules existontherequirement topublish tender andcontract award notices? Ifso,
what information must these notices contain, andwhere aretheypublished?
Answer.
Rules onthepublication oftender andcontract awards aresetoutinthenewlawonPublic
Procurement. Details ontheimplementation ofthose ruleswillbesetoutinimplementing regulations,
which haveyettobedeveloped. Information related toprocurement tenders andcontract awards will
beincluded inaprocurement bulletin. Under theprocurement law,invitations totender aretobe
advertised inatleasttwonational newspapers ofgeneral circulation.
Question 76
What statistics does theAlbanian government collect onprocurement? Could theAlbanian
government make these statistics available totheWorking Party?
Answer.
Atthistime, theMinistry ofFinance collects dataonpublic procurement. Under thenew
Procurement Law,thecentral Procurement Agency willcollect andpublish information onprocurement
(tenders, contract awards, etc.).