USTR - 1996 National Trade Estimate-Bulgaria
Office of the United States Trade Representative

 

1996 National Trade Estimate-Bulgaria

In 1995, the United States had a trade deficit with Bulgaria of $51 million, $51 million less than in 1994. U.S. merchandise exports to Bulgaria totaled $132 million, $22 million or 20 percent greater than those in 1994. Bulgaria was the United States' one hundred-first largest export market in 1995. U.S. imports from Bulgaria totaled $183 million in 1995, a $29 million decrease from 1994.

In 1995, Bulgaria's economy continued to gain momentum after bottoming out in 1993. GDP grew by 2.5 percent, inflation was held to under 33 percent (after exploding to 122 percent in 1994), interest rates fell by half to their lowest point since the transition to a market economy began, and the exchange rate remained fairly stable under tight monetary policy. Bulgaria's foreign trade, which continued to be increasingly oriented towards Europe, went into surplus.

Nevertheless, macroeconomic stability is fragile, and Bulgaria has yet to undertake the structural reforms required to control losses in state-owned industries and place the banking sector in a solvent condition. Without an agreement with the World Bank and IMF, Bulgaria will be hard-pressed to finance fully the $1.25 billion in external debt payments which come due in 1996.

Bulgaria's Socialist government has hesitated to take hard decisions to close down large loss-making state enterprises and insolvent banks. Privatization of state-owned businesses has stagnated, although a voucher privatization program was inaugurated in January, 1996.

IMPORT POLICIES

A U.S.-Bulgaria bilateral trade agreement providing mutual most-favored-nation status has been in place since 1991.

Average Bulgarian import tariffs are relatively high, including in areas of key concern to U.S. exporters, such as food products, and agricultural goods and inputs. Unlike some other countries in the region, Bulgaria still applies tariffs to capital goods intended for the operation of investment projects. Some U.S. investors report that high import tariffs on products needed for the operation of their establishments in Bulgaria serve as a significant barrier to investment.

In January 1996, Bulgaria implemented tariff rate quotas for certain products (mainly agricultural and some pharmaceutical) under Council of Ministers decree 266.

Bulgaria's Association Agreement with the EU phases out industrial product tariffs between Bulgaria and the EU while U.S. exporters still face duties. In some instances, this has created in most sectors a competitive disadvantage for U.S. exporters. The Agreement provides improved reciprocal market access to certain farm products.

Bulgaria is currently in the process of acceding to the WTO. The United States is seeking to resolve its tariff concerns through bilateral negotiations related to Bulgaria's accession.

GOVERNMENT PROCUREMENT

There are no standardized government-wide regulations addressing public procurement. Bidders complain that tendering processes are frequently subject to irregularities, fueling speculation that corruption is pervasive.

INTELLECTUAL PROPERTY PROTECTION

The U.S.–Bulgaria bilateral Trade and Intellectual Property Agreement required Bulgaria to implement regulations to protect intellectual property, and to accede to major international IPR conventions. Adoption of new patent and copyright laws brought the Bulgarian IPR system up to international standards generally, but enforcement remains seriously deficient.

In April, 1995, following a government-to-government exchange of letters with the United States, Bulgaria agreed to strengthen copyright protection and enforcement. As a result, during 1995, Bulgaria acceded to the Rome and Geneva Phonograms Conventions, enacted changes to the penal code to make IPR infringements subject to criminal prosecution and imprisonment, and took action against some producers and distributors of pirated products.

In December, 1995, the International Federation of the Phonographic Industry (IFPI) signed an agreement with the major distributor of pirated sound recordings under which the latter committed itself to deal only in licensed products. A local IFPI chapter has also been established. Nevertheless, video compact disc and computer program piracy remains a serious concern. The problem is compounded by the export of many of these illegal recordings to other countries.

Other U.S. industries report that lack of effective IPR enforcement (including inadequate penalties for infringement) prevents their greater investment in Bulgaria. They also cite the illegal use of trademarks as a barrier to the Bulgarian market.

INVESTMENT BARRIERS

On September 23, 1992, the United States and Bulgaria signed a bilateral investment treaty, which was implemented on May 3,1994.

Overall U.S. investment in Bulgaria remains low compared to other countries in the region. Besides the tariff and intellectual property problems cited in the previous sections, U.S. industries also report that the lack of transparency of regulations is a significant barrier to investment. Other companies cite a lack of coherent government strategy to encourage investment. Some companies have also reported crime as a barrier to investment.

 
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