Romania

REFERENCES

Commission Opinion [COM(97) 2003 final - Not published in the Official Journal]Commission Report [COM(98) 702 final - Not published in the Official Journal]Commission Report [COM(99) 510 final - Not published in the Official Journal]Commission Report [COM(2000) 710 final - Not published in the Official Journal]Commission Report [COM(2001) 700 final - SEC(2001) 1753 - Not published in the Official Journal]Commission Report [COM(2002) 700 final - SEC(2002) 1409 - Not published in the Official Journal]Commission Report [COM(2003) 676 final - SEC(2003) 1211 - Not published in the Official Journal]Commission Report [COM(2004) 676 final - SEC(2004) 1200 - Not published in the Official Journal]Commission Report [COM (2005) 534 final - SEC (2005) 1354 - Not published in the Official Journal] Treaty of Accession to the European Union [Official Journal L 157 of 21.06.05]

SUMMARY

In its opinion of July 1997, the European Commission expressed the view that Romania had not yet created the conditions required for the development of a dynamic and competitive private sector. Its industry would only be ready to withstand competitive market pressures in the long term. Comprehensive restructuring had to be undertaken to prepare for future accession, and a high degree of political and administrative commitment was required to remove the remaining barriers to private-sector growth. There was still a considerable amount of work to be done, in particular to restructure the largest of the loss-making, State-owned enterprises.

The November 1998 report confirmed that some progress had been made, in particular with the restructuring of autonomous administrations and the privatisation of some industrial sectors. It remained to be seen whether the reorganisation of autonomous administrations and the planned privatisation of major State enterprises would lead to a reduction of economic imbalances, and an upturn in investment and industrial activity in viable sectors within an acceptable period of time. If not implemented effectively, a further deterioration of the macro-economic situation would be unavoidable.

In its October 1999 report, the Commission noted that the government had begun its industry reform, even though the authorities had yet to implement a strategic industrial policy, and to build necessary capacity in the Ministry of Industry and Trade. Continuing obstacles to progress in this field included the lack of effective restructuring plans, dubious stability of conditions for foreign investment, underdeveloped domestic demand for products and the indebtedness of many large companies.

The November 2000 report stressed that the restructuring and privatisation processes were delayed and lack transparency. Constant amendments to the legal environment have had a negative effect on privatisation, restructuring and investments. In order to create a sound environment for trade, problems such as corruption and the black market must be resolved.

The November 2001 report noted the progress Romania had achieved with respect to industrial policy and small and medium-sized enterprises (SMEs). However, there was still a considerable amount to be done.

The October 2002 report outlined the progress made on industrial policy, although progress with privatisation had been slow. Despite the efforts undertaken, there was a need to further improve the environment for SMEs.

The November 2003 report considered that Romania had made progress in setting up the structures to implement its industrial policy and in the field of privatisation. It had also made considerable efforts to improve the business environment for SMEs.

The October 2004 report noted that Romania was making steady progress in the field of industrial policy. However, it needed to rise to the major challenge of implementing this policy.

The October 2005 report considers that Romania should be able to implement the Community acquis concerning industrial strategy as soon as it joins the EU. However, it must continue its efforts to respect its commitments.

The Treaty of Accession was signed on 25 April 2005 and accession took place on 1 January 2007.

COMMUNITY ACQUIS

EU industrial policy seeks to enhance the competitiveness of enterprises, as well as rates of employment and living standards. It aims to promote, within the European Community, an environment which is conducive to initiative, to the creation and development of enterprises (particularly SMEs), to industrial cooperation, and to exploiting the industrial potential of innovation, research and technological development policies. With this in view, Community strategy consists, on the one hand, of defining policy principles and, on the other hand, of producing horizontal and sectoral industrial policy communications. EU industrial policy borrows instruments from other Community policies, some related to the operation of markets (product specification and market access, trade policy, State Aid and competition policy) and others related to industry's capacity to adapt to change (stable macro-economic environment, technology, training etc.).

In order to cope with competitive pressure and market forces within the Union, the industry of applicant countries needs to have achieved a certain level of competitiveness by the time of accession. The applicant countries need to be seen as pursuing policies aimed at open and competitive markets along the lines set out in Article 157 of the Treaty on European Union. Cooperation between the EU and the candidate countries in the fields of industrial cooperation, investment, industrial standardisation and conformity assessment, as provided for in the Europe Agreement, is also an important indicator of development in the right direction.

EVALUATION

In its 1997 opinion, the Commission had noted that Romanian industry was not very well advanced in the process of adapting to a market-based economy. Since then, Romania has developed an industrial policy that generally complies with Community principles in this area. Romania's industrial strategy is now market-based, stable and predictable. The document on Romania's industrial policy and the related Action Plan comply with the requirements of the chapter on industrial policy, but need to be updated. Improvement of the business environment, promotion of foreign investment and acceleration of the privatisation process have all been achieved and efforts to restructure the steel industry are continuing. Some underlying structural weaknesses (economic, administrative and legal) do, however, still limit the effectiveness of this policy.

In order to complete its preparations for accession, Romania now needs to focus its efforts on privatisation and restructuring. It must thus ensure full implementation of its privatisation policy and solve the disputes arising from the privatisation process, particularly in the period following privatisation. Romania should also press on with restructuring the key industrial sectors, in particular by genuinely implementing the strategy for restructuring the steel industry, while ensuring that this is done in line with the acquis as regards competition and State aid. The strategy adopted in 2002 needs to be updated and the structures and administrative framework put into place must be reinforced.

This chapter has been provisionally closed, no transitional arrangements have been requested and Romania has met its commitments (see the 2002 Report).

Since the Commission's 1997 Opinion, Romania has adopted a number of initiatives to support the development of small and medium-sized enterprises (SMEs) and their economic importance has increased substantially. SME policy is now broadly in line with the principles and objectives of EU enterprise policy.

Romania participates in the multiannual programme for enterprises and entrepreneurship, particularly SMEs, and signed up to the European Charter for Small Enterprises in 2002. The Strategy for SME development has been updated for the period 2004-2008. Progress has been made in simplifying and improving administrative procedures and the business environment for SMEs. A Guarantee Fund has been set up to provide easier access to finance. In addition, a law on incentives for the establishment and development of SMEs, which includes a definition of SMEs, was adopted in 2004.

In order to complete its preparations for accession, Romania's efforts should remain focused on the full and efficient implementation of its SME strategy and the European Charter for Small Enterprises. In addition, it should continue improving the business environment by ensuring that legislation is stable and by simplifying the legal and administrative environment of SMEs. Finally, Romania should guarantee full alignment with the Community definition of SMEs.

This chapter has been provisionally closed, no transitional arrangements have been requested and Romania has met its commitments (see the 2002 Report).

Last updated: 13.02.2006